Triumph Group Inc. (TGI) filed Quarterly Report for the period ended 2009-09-30.
Triumph Group Inc. designs engineers manufactures repairs and overhauls aircraft components. The company serves a broad worldwide spectrum of the aviation industry including commercial airlines and air cargo carriersas well as original equipment manufacturers of aircraft and aircraft components. The company also distributes processes and fabricates metal products. Triumph Group Inc. has a market cap of $785.1 million; its shares were traded at around $47.11 with a P/E ratio of 8.5 and P/S ratio of 0.7. The dividend yield of Triumph Group Inc. stocks is 0.3%. Triumph Group Inc. had an annual average earning growth of 2.2% over the past 10 years.
Highlight of Business Operations:
Net sales decreased by $10.3 million, or 3.2%, to $313.1 million for the quarter ended September 30, 2009 from $323.4 million for the quarter ended September 30, 2008. The acquisitions of Merritt Tool Company, Inc. (now Triumph Structures — East Texas), Saygrove Defence & Aerospace Group Limited (now Triumph Actuation & Motion Control Systems-UK), the aviation segment of Kongsberg Automotive Holdings ASA (now Triumph Controls-U.K and Triumph Controls-Germany) and The Mexmil Company, LLC (now Triumph Insulation Systems), collectively the “fiscal 2009 acquisitions,” contributed $25.0 million in net sales for the quarter ended September 30, 2009. Excluding the effects of the fiscal 2009 acquisitions, organic sales declined $35.2 million, or 10.9%, primarily as a result of the reduction in demand for business jets, major program delays (particularly in the 747-8 and 787 programs), the decline in the regional jet market due to the overall economy, lower passenger and freight traffic and airline inventory de-stocking.
Segment operating income decreased by $6.8 million, or 13.9%, to $42.6 million for the quarter ended September 30, 2009 from $49.4 million for the quarter ended September 30, 2008. The decrease was a direct result of the decline in gross margin ($5.6 million) due to lower sales volume as described above and increases in depreciation and amortization ($2.0 million) due to the fiscal 2009 acquisitions.
Corporate expenses decreased by $1.3 million, or 18.8%, to $5.4 million for the quarter ended September 30, 2009 from $6.7 million for the quarter ended September 30, 2008. Corporate expenses decreased primarily due to a decline in workers compensation ($0.6 million). In addition, we have charged to expense approximately $1.0 million start up costs related to the Mexican facility, predominately recorded within corporate expenses.
Aerospace Systems: The Aerospace Systems segment net sales decreased by $1.2 million, or 0.4%, to $256.4 million for the quarter ended September 30, 2009 from $257.6 million for the quarter ended September 30, 2008. The decrease was primarily due to declines in organic sales of $26.1 million resulting from reductions in the business jet and regional jet markets due to the overall economic conditions and major program delays (particularly in the 787 and 747-8 programs), offset by the additional sales associated with the fiscal 2009 acquisitions of $25.0 million.
Aerospace Systems segment operating income decreased by $7.4 million, or 16.0%, to $39.1 million for the quarter ended September 30, 2009 from $46.5 million for the quarter ended September 30, 2008. Operating income decreased due to declines in gross margin primarily resulting from lower sales volume of business jet and regional jet products, as described above, and the increased depreciation and amortization expense ($2.0 million) primarily as a result of the fiscal 2009 acquisitions, increased incentive compensation ($1.0 million), partially offset by gross margins from the fiscal 2009 acquisitions.
Aftermarket Services segment operating income increased by $0.6 million, or 20.2%, to $3.5 million for the quarter ended September 30, 2009 from $2.9 million for the quarter ended September 30, 2008. Operating income increased primarily due to improved results at our Phoenix APU operations, as the prior year period included cost overruns, excess overhead and higher than expected warranty expenses. The quarter ended September 30, 2008 included charges for changes in estimates under certain power-by-the-hour contracts ($3.1 million) and additional provision for bad debts ($0.5 million). While the results of our Phoenix APU operations continue to improve, operating margins continued to be dilutive to the segment’s results.
TGI is in the portfolios of Private Capital of Private Capital Management, Arnold Schneider of Schneider Capital Management.
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