Why Aerospace Company Triumph Shares Are Tumbling Today

Triumph Group Inc TGI shares are trading lower after the company reported below-consensus third-quarter results and cut the FY24 outlook.

Sales of $285.0 million (+13% Y/Y organically) missed the consensus of $368.4 million. The company reported an adjusted EPS loss of $(0.16), missing the consensus of $0.14.

Adjusted operating income was $19.8 million (vs. $24.4 million a year ago), with an adjusted operating margin of 6.9%, down from 9.3%.

Adjusted EBITDAP fell to $27.7 million from $32.6 million in the prior year quarter, and the margin contracted to 9.8% from 12.5% a year ago.

Operating cash flow stood at $27.6 million, and free cash flow reached $22.4 million. The backlog was $1.87 billion, up 18% Y/Y, led by commercial OEM platforms.

FY24 Outlook Cut: Triumph lowered net sales guidance to $1.17 billion-$1.20 billion (from $1.43 billion-$1.47 billion earlier) vs. $1.46 billion street view.

Triumph now projects an operating income of $100.0 million to $110.0 million (vs. $152.0 million to $167.0 million prior) and adjusted EBITDAP of $157.0 million to $167.0 million (vs. $216.0 million to $231.0 million earlier).

Triumph reaffirmed cash flow from operations outlook of $65 million-$85 million.

Dan Crowley, chairman, president and chief executive officer, said, “We expect a very strong fourth quarter that benefits from deferred deliveries, historical seasonality, improving mix and incremental price improvements as well as working capital investments we made in the first half of the year.” 

In December 2023, the company announced the sale of its Product Support business to AAR Corp AIR in a transaction valued at $725 million.

Crowley added, “Following the divestiture, we are right sizing our cost structure to achieve our multi-year profit margin and cash flow targets. By strengthening our balance sheet and focusing on our OEM component, spares and IP-based aftermarket business, TRIUMPH will further improve its capacity to win and profitably grow in the expanding markets we serve.”

Price Action: TGI shares are down 17.2% at $13.61 on the last check Wednesday.