A month has gone by since the last earnings report for Triumph Group (TGI - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Triumph Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Triumph Group Q1 Earnings Lag Estimates, Sales Fall Y/Y
Triumph Group first-quarter fiscal 2021 (ended Jun 30, 2020) adjusted loss was 19 cents per share, wider than the Zacks Consensus Estimate of a loss of 17 cents. The bottom line also deteriorated from earnings of 46 cents recorded in the prior-year quarter.
Including one-time adjustments, the company incurred GAAP loss of $5.35 per share in the fiscal first quarter against earnings of 36 centsreported in the year-ago quarter.
Reduced sales and operating income in the fiscal first quarter resulted in the deterioration in the bottom-line figure.
Net sales in the quarter under review came in at $495.1 million, outpacing the Zacks Consensus Estimate of $463 million by 7%. However, the top line slumped 32.2% on a year-over-year basis.
After taking divestitures into account, organic sales in the quarter went down 29% year over year due to declines in Aerospace Structures associated with planned reductions from the company’s portfolio transformation and the COVID-19 pandemic.
In first-quarter fiscal 2021, the company generated adjusted operating income of $15.4 million, which declined 62.9% from the year-ago quarter’s figure. Adjusted operating margin of 3.1%
contracted 260 basis points from 5.7% in the first-quarter of fiscal 2020.
Interest expenses and other amounted to $35 million, up from $27.5 million in the prior-year quarter.
Backlog came in at $2.70 billion, down year over year and on a sequential basis due to sunsetting programs and recent production rate reductions.
Aerospace Structures: Segment sales totaled $257.9 million, down 38.5% from $419.2 million in the year-ago quarter. The segment incurred operating loss of $256.1 million, reflecting a significant deterioration from the year-ago period.
Systems & Support: Segment sales declined 24% year over year to $257.9 million. Operating income was $25.4 million, reflecting deterioration from the year-ago quarter’s operating income of $44 million.
As of Jun 30, 2020, Triumph Group’s cash and cash equivalents totaled $30.9 million compared with $53.6 millionas of Dec 31, 2019.
Its long-term debt (excluding current portion) amounted to $1.56 billion as of Jun 30, 2020, compared with $1.40 billion as of Dec 31, 2019.
Net cash used in operating activities in the first quarter of fiscal 2021 was $197.5 million compared tonet cash generated worth $5 million a year ago.
The company’s capital expenditures were $7.7 million in the fiscal first quarter compared with $7.1 million in the year-earlier quarter.
Triumph Group provided financial guidance for fiscal 2021. The company expects to generate net sales of $1.8-$1.9 billion. The Zacks Consensus Estimate for revenues of $1.99 billion lies above the company provided guidance.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -2300% due to these changes.
At this time, Triumph Group has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Triumph Group has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.