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Triumph Group Inc. Reports Operating Results (10-Q)

February 04, 2010 | About:
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10qk

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Triumph Group Inc. (TGI) filed Quarterly Report for the period ended 2009-12-31.

Triumph Group Inc. has a market cap of $857.3 million; its shares were traded at around $51.45 with a P/E ratio of 9.8 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.TGI is in the portfolios of Private Capital of Private Capital Management, Arnold Schneider of Schneider Capital Management, Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

Net sales increased by $28.3 million, or 9.9%, to $313.5 million for the quarter ended December 31, 2009 from $285.2 million for the quarter ended December 31, 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 $34.6 million in net sales for the quarter ended December 31, 2009. Organic sales declined approximately $6.3 million, or 2.2%, primarily as a result of the reduction in demand for business jets, major program delays (particularly in the 747-8 program), the decline in the regional jet market due to the overall economy, lower passenger and freight traffic and airline inventory de-stocking. Prior year sales were negatively impacted by the Boeing strike.

Cost of sales increased by $24.6 million, or 12.0%, to $229.0 million for the quarter ended December 31, 2009 from $204.4 million for the quarter ended December 31, 2008. This increase includes the impact of the fiscal 2009 acquisitions noted above, which contributed $27.2 million. Gross margin for the quarter ended December 31, 2009 was 27.0%, as compared to 28.3% for the prior year period. Excluding the effects of the fiscal 2009 acquisitions, gross margin was 27.7% for the quarter ended December 31, 2009, compared with 28.3% for the quarter ended December 31, 2008. Gross margin for the quarter ended December 31, 2009 was negatively impacted by approximately $11.5 million of sales recognized at zero margin representing progress payments for ongoing negotiations of a retroactive pricing agreement, which we expect to finalize during the quarter ending March 31, 2010.

Segment operating income increased by $4.0 million, or 10.9%, to $40.5 million for the quarter ended December 31, 2009 from $36.5 million for the quarter ended December 31, 2008. The increase includes $3.9 million contributed from the fiscal 2009 acquisitions.

Corporate expenses increased by $1.5 million, or 24.5%, to $7.5 million for the quarter ended December 31, 2009 from $6.1 million for the quarter ended December 31, 2008. Corporate expenses increased primarily due to increases in healthcare costs ($0.7 million) and stock based compensation ($0.2 million). In addition, we have charged to expense approximately $0.8 million start up costs related to the Mexican facility, predominately recorded within corporate expenses.

Interest expense and other increased by $3.1 million, or 65.7%, to $7.8 million for the quarter ended December 31, 2009 compared to $4.7 million for the prior year period. This increase was due to higher average debt outstanding during the quarter ended December 31, 2009 as compared to the quarter ended December 31, 2008, including the Senior Subordinated Notes Due 2017 (the 2017 Notes), as well as higher interest rates on our revolving credit facility. Effective April 1, 2009, the Company adopted FASB Staff Position (FSP) No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1), which was primarily codified into Topic 470, Debt in the Accounting Standard Codification (ASC). The retroactive application of FSP APB 14-1 resulted in the recognition of additional pre-tax non-cash interest expense for the three months ended December 31, 2008 of $1.5 million, or $0.06 per diluted share. The results of operations for the three months ended December 31, 2009 also include $1.5 million of non-cash interest expense.

Loss from discontinued operations before income taxes was $19.1 million for the quarter ended December 31, 2009, compared with a loss from discontinued operations before income taxes of $1.3 million, for the quarter ended December 31, 2008. Due to failed negotiations with certain potential buyers of the business occurring during the quarter ended December 31, 2009, the Company reassessed its estimated fair value of the business based on current viable offers to purchase the business, recent performance results and overall market conditions, resulting in a write-down, which was applied to accounts receivable, inventory and property, plant and equipment. The Company recognized a pre-tax loss of $17.4 million in the third quarter of fiscal 2010, based on the write-down of the carrying value of the business to estimated fair value less cost to sell. The benefit for income taxes was $6.6 million for the quarter ended December 31, 2009 compared to a benefit of $0.4 million in the prior year period.

Read the The complete Report

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