TGI Outshines, Sharpens Outlook

On July 28, Triumph Group Inc. (TGI - Analyst Report) reported encouraging results for the first quarter of fiscal 2012. First-quarter earnings per diluted share came in at $1.00 excluding Vought acquisition expense, showing an improvement from 66 cents in the year-ago comparable quarter. Results also surpassed the Zacks Consensus Estimate of 85 cents

The improvement was attributable to increased year-over-year revenue growth, supported by operating income and margin expansion across all business segments. Significant cash flow generated during the quarter along with stronger balance sheet and backlog also fuelled growth.

Revenue

In the first quarter of 2012, net sales shot up 108% year over year to $845.1 million, with organic growth reaching roughly 13%.

Segment wise, sales from Aerostructures surged 178.1% to $643.3 million from $231.3 million in the prior-year comparable quarter. Aerospace System revenue grew 13.3% year over year to $133.0 million, while Aftermarket Services increased 17.7% to $70.4 million from $59.8 million in the year-ago quarter.

Margins

Operating income in the first quarter accelerated to $105.4 million from $32.9 million during the prior-year quarter. Operating margin increased to 12.5% from 8.1% in first-quarter 2011.

In the first quarter of fiscal 2012, EBITDA jumped 166.8% to $127 million year over year. EBIDTA margin rose to 15% compared with 11.7% in the year- ago quarter.

Income from continuing operations increased 339.6% year over year to $50.9 million in the reported quarter.

Balance Sheet

Exiting the first quarter, Triumph’s cash and cash equivalents was approximately $36.4 million compared with $39.3 million in the previous quarter. Long-term debt (net of current portion) was up sequentially at $1,068.5 million from $1,011.8 million in the previous quarter.

Cash Flow

Cash flow from operations was recorded at $116.3 million (prior to the pension contribution of $25.0 million) up from $ 22.7 million in the year ago quarter. The capital spending plummeted to $ 15.7 million sequentially from $16.9 million in the prior year quarter.

Outlook

Management bears a favorable outlook for the major markets and expects to enhance current production rates. For fiscal 2012, management anticipates earnings per share from continuing operations to be approximately $4.35 per diluted share excluding integration costs.

Strategic contract wins, a two-for-one stock split and doubling of quarterly dividend reflect the company’s continued commitment toward the share holders.

Based in Wayne, Pennsylvania, Triumph Group offers a variety of products and services to the aerospace industry. The company serves commercial and regional airlines, air cargo carriers, as well as OEMs of commercial, regional, business and military aircrafts. It faces stiff competition from its peers, such as AAR Corp. (AIR - Analyst Report) and Goodrich Corp. (GR - Analyst Report).                               

We currently maintain a long-term Outperform recommendation on the stock. Triumph Group has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).

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Read the full analyst report on GR

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