10-Q 1 tgi-20231231.htm 10-Q 10-Q
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United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended December 31, 2023

 

or

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Transition Period From _________ to ________

 

Commission File Number: 1-12235

 

TRIUMPH GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

51-0347963

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

 

 

 

 

 

 

555 E Lancaster Avenue, Suite 400, Radnor, Pennsylvania

19087

(Address of principal executive offices)

(Zip Code)

 

(610) 251-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $.001 per share

 

TGI

 

New York Stock Exchange

Purchase Rights

 

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one)

 

 

 

 

 

 

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, on February 5, 2024, was 76,866,074.

 


 

 

 


 

Table of Contents

TRIUMPH GROUP, INC.

TABLE OF CONTENTS

 

 

 

Page

Number

Part I. Financial Information

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets at December 31, 2023 and March 31, 2023

1

 

Condensed Consolidated Statements of Operations - Three and nine months ended December 31, 2023 and 2022

2

 

Condensed Consolidated Statements of Comprehensive (Loss) Income - Three and nine months ended December 31, 2023 and 2022

3

 

Condensed Consolidated Statements of Stockholders' Deficit - Three and nine months ended December 31, 2023 and 2022

4

 

Condensed Consolidated Statements of Cash Flows - Nine months ended December 31, 2023 and 2022

6

 

Notes to Condensed Consolidated Financial Statements - December 31, 2023

7

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4.

Controls and Procedures

42

 

 

 

Part II. Other Information

43

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

43

Item 3.

Defaults Upon Senior Securities

43

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

43

Item 6.

Exhibits

43

Signatures

 

45

 

 

 

 

 


 

TRIUMPH GROUP, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(Dollars in thousands, except per share data)

 

 

 

December 31,

 

 

March 31,

 

 

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

162,899

 

 

$

227,403

 

Trade and other receivables, less allowance for credit losses
   of $
4,628 and $5,477

 

 

127,494

 

 

 

156,116

 

Contract assets

 

 

89,406

 

 

 

86,740

 

Inventory, net

 

 

352,188

 

 

 

309,084

 

Prepaid expenses and other current assets

 

 

16,578

 

 

 

14,073

 

Assets held for sale - current

 

 

180,642

 

 

 

140,096

 

Total current assets

 

 

929,207

 

 

 

933,512

 

Property and equipment, net

 

 

141,583

 

 

 

138,622

 

Goodwill

 

 

511,571

 

 

 

509,449

 

Intangible assets, net

 

 

67,308

 

 

 

73,898

 

Other, net

 

 

26,913

 

 

 

28,697

 

Assets held for sale - noncurrent

 

 

 

 

 

30,666

 

Total assets

 

$

1,676,582

 

 

$

1,714,844

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

3,342

 

 

 

3,162

 

Accounts payable

 

 

133,550

 

 

 

173,575

 

Contract liabilities

 

 

40,182

 

 

 

44,095

 

Accrued expenses

 

 

140,092

 

 

 

141,679

 

Liabilities related to assets held for sale - current

 

 

32,216

 

 

 

34,413

 

Total current liabilities

 

 

349,382

 

 

 

396,924

 

Long-term debt, less current portion

 

 

1,627,810

 

 

 

1,688,620

 

Accrued pension and other postretirement benefits

 

 

301,661

 

 

 

359,375

 

Deferred income taxes

 

 

7,356

 

 

 

7,268

 

Other noncurrent liabilities

 

 

60,653

 

 

 

59,988

 

Liabilities related to assets held for sale - noncurrent

 

 

 

 

 

65

 

Stockholders' deficit:

 

 

 

 

 

 

Common stock, $.001 par value, 200,000,000 and 100,000,000 shares authorized, 76,856,572
   and
65,432,589 shares issued; 76,855,941 and 65,432,589 outstanding

 

 

77

 

 

 

65

 

Capital in excess of par value

 

 

1,107,241

 

 

 

964,741

 

Treasury stock, at cost, 631 and 0 shares

 

 

(5

)

 

 

 

Accumulated other comprehensive loss

 

 

(534,676

)

 

 

(554,646

)

Accumulated deficit

 

 

(1,242,917

)

 

 

(1,207,556

)

Total stockholders' deficit

 

 

(670,280

)

 

 

(797,396

)

Total liabilities and stockholders' deficit

 

$

1,676,582

 

 

$

1,714,844

 

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales

 

$

284,955

 

 

$

261,662

 

 

$

833,456

 

 

$

805,104

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

 

214,972

 

 

 

190,014

 

 

 

618,742

 

 

 

588,009

 

Selling, general and administrative

 

 

42,846

 

 

 

39,497

 

 

 

135,479

 

 

 

142,019

 

Depreciation and amortization

 

 

7,383

 

 

 

7,798

 

 

 

22,062

 

 

 

24,473

 

Legal judgment loss

 

 

 

 

 

 

 

 

1,338

 

 

 

 

Restructuring

 

 

43

 

 

 

 

 

 

1,985

 

 

 

1,074

 

Loss (gain) on sale of assets and businesses

 

 

 

 

 

720

 

 

 

12,208

 

 

 

(103,163

)

 

 

 

265,244

 

 

 

238,029

 

 

 

791,814

 

 

 

652,412

 

Operating income

 

 

19,711

 

 

 

23,633

 

 

 

41,642

 

 

 

152,692

 

Non-service defined benefit income

 

 

(820

)

 

 

(8,576

)

 

 

(2,460

)

 

 

(25,725

)

Debt modification and extinguishment (gain) loss

 

 

(1,046

)

 

 

1,441

 

 

 

(5,125

)

 

 

1,441

 

Warrant remeasurement gain, net

 

 

 

 

 

(5,537

)

 

 

(8,545

)

 

 

(5,537

)

Interest expense and other, net

 

 

32,419

 

 

 

30,769

 

 

 

94,354

 

 

 

83,262

 

(Loss) income from continuing operations before income taxes

 

 

(10,842

)

 

 

5,536

 

 

 

(36,582

)

 

 

99,251

 

Income tax expense

 

 

1,069

 

 

 

24

 

 

 

3,348

 

 

 

2,669

 

(Loss) income from continuing operations

 

 

(11,911

)

 

 

5,512

 

 

 

(39,930

)

 

 

96,582

 

(Loss) income from discontinued operations, net of tax expense of $2,246, $376, $3,459, and $1,232, respectively

 

 

(3,991

)

 

 

5,440

 

 

 

4,569

 

 

 

10,554

 

Net (loss) income

 

$

(15,902

)

 

$

10,952

 

 

$

(35,361

)

 

$

107,136

 

(Loss) earnings per share—basic:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income per share - continuing operations

 

$

(0.15

)

 

$

0.09

 

 

$

(0.55

)

 

$

1.49

 

(Loss) Income per share - discontinued operations

 

 

(0.05

)

 

 

0.08

 

 

 

0.06

 

 

 

0.16

 

(Loss) earnings per share

 

$

(0.20

)

 

$

0.17

 

 

$

(0.49

)

 

$

1.65

 

Weighted average common shares outstanding—basic

 

 

76,895

 

 

 

65,066

 

 

 

73,200

 

 

 

64,969

 

(Loss) earnings per share—diluted:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income per share - continuing operations

 

$

(0.15

)

 

$

 

 

$

(0.55

)

 

$

1.37

 

(Loss) Income per share - discontinued operations

 

 

(0.05

)

 

 

0.08

 

 

 

0.06

 

 

 

0.16

 

(Loss) earnings per share

 

$

(0.20

)

 

$

0.08

 

 

$

(0.49

)

 

$

1.53

 

Weighted average common shares outstanding—diluted

 

 

76,895

 

 

 

68,454

 

 

 

73,200

 

 

 

66,346

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

2


 

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net (loss) income

 

$

(15,902

)

 

$

10,952

 

 

$

(35,361

)

 

$

107,136

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

7,021

 

 

 

14,050

 

 

 

5,565

 

 

 

(8,765

)

Defined benefit pension plans and other postretirement benefits:

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification to net (loss) income - net of tax expense

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net loss, net of taxes of $0 and $0, respectively

 

 

6,424

 

 

 

6,574

 

 

 

19,271

 

 

 

19,722

 

Recognized prior service credits, net of taxes of $0 and $0, respectively

 

 

(1,251

)

 

 

(1,251

)

 

 

(3,752

)

 

 

(3,752

)

Total defined benefit pension plans and other postretirement benefits, net of taxes

 

 

5,173

 

 

 

5,323

 

 

 

15,519

 

 

 

15,970

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain arising during the period, net of tax expense of $0 and $0, respectively

 

 

161

 

 

 

2,374

 

 

 

727

 

 

 

2,110

 

Reclassification of gain included in net earnings, net of tax expense of $0 and $0, respectively

 

 

(80

)

 

 

(222

)

 

 

(1,841

)

 

 

(1,169

)

Net unrealized gain (loss) on cash flow hedges, net of tax

 

 

81

 

 

 

2,152

 

 

 

(1,114

)

 

 

941

 

Total other comprehensive income

 

 

12,275

 

 

 

21,525

 

 

 

19,970

 

 

 

8,146

 

Total comprehensive (loss) income

 

$

(3,627

)

 

$

32,477

 

 

$

(15,391

)

 

$

115,282

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Stockholders' Deficit

For the three and nine months ended December 31, 2023

(unaudited)

(Dollars in thousands)

 

 

Outstanding
Shares

 

 

Common
Stock
All Classes

 

 

Capital in
Excess of
Par Value

 

 

Treasury
Stock

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Accumulated
Deficit

 

 

Total

 

March 31, 2023

 

 

65,432,589

 

 

$

65

 

 

$

964,741

 

 

$

 

 

$

(554,646

)

 

$

(1,207,556

)

 

$

(797,396

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,163

)

 

 

(18,163

)

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,704

 

 

 

 

 

 

3,704

 

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,173

 

 

 

 

 

 

5,173

 

Change in fair value of foreign currency
   hedges, net of income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(337

)

 

 

 

 

 

(337

)

Share-based compensation

 

 

300,102

 

 

 

 

 

 

3,622

 

 

 

 

 

 

 

 

 

 

 

 

3,622

 

Repurchase of restricted shares for
   minimum tax obligation

 

 

(103,996

)

 

 

 

 

 

 

 

 

(1,235

)

 

 

 

 

 

 

 

 

(1,235

)

Retirement of treasury shares

 

 

 

 

 

 

 

 

(414

)

 

 

414

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan

 

 

12,907

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

 

 

 

 

150

 

Warrant exercises, net of
   income taxes of $
0

 

 

1,122,438

 

 

 

1

 

 

 

13,481

 

 

 

 

 

 

 

 

 

 

 

 

13,482

 

Issuance of shares on pension contribution

 

 

3,200,000

 

 

 

4

 

 

 

38,311

 

 

 

821

 

 

 

 

 

 

 

 

 

39,136

 

June 30, 2023

 

 

69,964,040

 

 

$

70

 

 

$

1,019,891

 

 

$

 

 

$

(546,106

)

 

$

(1,225,719

)

 

$

(751,864

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,296

)

 

 

(1,296

)

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,160

)

 

 

 

 

 

(5,160

)

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,173

 

 

 

 

 

 

5,173

 

Change in fair value of foreign currency
   hedges, net of income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(858

)

 

 

 

 

 

(858

)

Share-based compensation

 

 

127,324

 

 

 

 

 

 

3,677

 

 

 

47

 

 

 

 

 

 

 

 

 

3,724

 

Repurchase of restricted shares for
   minimum tax obligation

 

 

(4,944

)

 

 

 

 

 

 

 

 

(47

)

 

 

 

 

 

 

 

 

(47

)

Employee stock purchase plan

 

 

13,443

 

 

 

 

 

 

166

 

 

 

 

 

 

 

 

 

 

 

 

166

 

Warrant exercises, net of
   income taxes of $
0

 

 

6,735,798

 

 

 

7

 

 

 

81,939

 

 

 

 

 

 

 

 

 

 

 

 

81,946

 

September 30, 2023

 

 

76,835,661

 

 

$

77

 

 

$

1,105,673

 

 

$

 

 

$

(546,951

)

 

$

(1,227,015

)

 

$

(668,216

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,902

)

 

 

(15,902

)

Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,021

 

 

 

 

 

 

7,021

 

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,173

 

 

 

 

 

 

5,173

 

Change in fair value of foreign currency
   hedges, net of income taxes of $
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81

 

 

 

 

 

 

81

 

Share-based compensation

 

 

2,174

 

 

 

 

 

 

1,442

 

 

 

 

 

 

 

 

 

 

 

 

1,442

 

Repurchase of restricted shares for
   minimum tax obligation

 

 

(631

)

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

(5

)

Employee stock purchase plan

 

 

18,737

 

 

 

 

 

 

126

 

 

 

 

 

 

 

 

 

 

 

 

126

 

December 31, 2023

 

 

76,855,941

 

 

$

77

 

 

$

1,107,241

 

 

$

(5

)

 

$

(534,676

)

 

$

(1,242,917

)

 

$

(670,280

)

 

4


 

 

 

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Stockholders' Deficit

For the three and nine months ended December 31, 2022

(unaudited)

(Dollars in thousands)

 

 

Outstanding
Shares

 

Common
Stock
All Classes

 

Capital in
Excess of
Par Value

 

Treasury
Stock

 

Accumulated
Other
Comprehensive
Loss

 

Accumulated
Deficit

 

Total

March 31, 2022

 

64,614,382

 

$64

 

$973,112

 

$(96)

 

$(463,354)

 

$(1,297,149)

 

$(787,423)

Net loss

 

 

 

 

 

 

(10,342)

 

(10,342)

Foreign currency translation
   adjustment

 

 

 

 

 

(10,382)

 

 

(10,382)

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

5,323

 

 

5,323

Change in fair value of foreign
   currency hedges, net of income
    taxes of $
0

 

 

 

 

 

(838)

 

 

(838)

Share-based compensation

 

471,676

 

1

 

1,656

 

 

 

 

1,657

Repurchase of shares for share-based
   compensation minimum
   tax obligation

 

(172,282)

 

 

 

(3,442)

 

 

 

(3,442)

Retirement of treasury shares

 

 

 

(3,538)

 

3,538

 

 

 

Employee stock purchase plan

 

6,605

 

 

160

 

 

 

 

160

June 30, 2022

 

64,920,381

 

$65

 

$971,390

 

$—

 

$(469,251)

 

$(1,307,491)

 

$(805,287)

Net income

 

 

 

 

 

 

106,526

 

106,526

Foreign currency translation
   adjustment

 

 

 

 

 

(12,433)

 

 

(12,433)

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

5,324

 

 

5,324

Change in fair value of foreign currency
   hedges, net of income taxes of $
0

 

 

 

 

 

(373)

 

 

(373)

Share-based compensation

 

51,426

 

 

3,970

 

 

 

 

3,970

Repurchase of shares for share-based
   compensation minimum
   tax obligation

 

(4,022)

 

 

 

(48)

 

 

 

(48)

Retirement of treasury shares

 

 

 

 

48

 

 

 

48

Employee stock purchase plan

 

12,698

 

 

170

 

 

 

 

170

September 30, 2022

 

64,980,483

 

$65

 

$975,530

 

$—

 

$(476,733)

 

$(1,200,965)

 

$(702,103)

Net income

 

 

 

 

 

 

10,952

 

10,952

Foreign currency translation
   adjustment

 

 

 

 

 

14,050

 

 

14,050

Pension liability adjustment, net of
   income taxes of $
0

 

 

 

 

 

5,323

 

 

5,323

Change in fair value of foreign
    currency hedges, net of income
    taxes of $
0

 

 

 

 

 

2,152

 

 

2,152

Issuance of warrants on common shares

 

 

 

(19,500)

 

 

 

 

(19,500)

Share-based compensation

 

 

 

890

 

 

 

 

890

Employee stock purchase plan

 

14,983

 

 

173

 

 

 

 

173

December 31, 2022

 

64,995,466

 

$65

 

$957,093

 

$—

 

$(455,208)

 

$(1,190,013)

 

$(688,063)

 

5


 

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

 

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

2022

 

Operating Activities

 

 

 

 

 

 

Net (loss) income

 

$

(35,361

)

 

$

107,136

 

Adjustments to reconcile net (loss) income to net cash used in
   operating activities:

 

 

 

 

 

 

Depreciation and amortization