Triumph Group Inc.
) fell approximately 8% to $72.30 on Wednesday, Sep 18, 2013,
after it forewarned that its fiscal year 2014 profit would be
impacted by charges primarily associated with the 747-8 program.
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Triumph Group manufactures aircraft structures and is a supplier
for the aerospace giant
The Boeing Co.
) 747-8 aircraft. The company expects to incur $68 million or 83
cents per share in pre-tax additional program costs this fiscal
year ending March 2014 for slashed profits expected from its
Of the estimated incremental costs, about $44.0 million, or 53
cents per share, would be accounted for in the company's second
quarter fiscal 2014 results. About $11 million of the costs, or
14 cents a share, will be recorded in the third quarter and the
balance $13 million, or 16 cents a share, will be included in the
Much to Triumph's woes 747-8 sales have been weak at Boeing for
some time now, forcing the company to cut down on production
while its other models continued to do well. Higher labor and
transportation costs have further damaged Triumph's profit
margins on the program to the mid-single digits.
Triumph pointed out that its 747-8 production lot will be 80%
completed by the end of the second quarter and will likely be
concluded by the end of the third quarter. Owing to escalating
costs, Triumph's expected profitability on the next production
lot has declined substantially. However, the present and future
production lots will likely be profitable.
Wayne, Pa.-based Triumph Group offers a variety of products and
services to the aerospace industry. Triumph produces a wide range
of aircraft parts including hydraulic, mechanical and
electromechanical control systems, aircraft and engine
accessories, structural components, auxiliary power units, and
avionics and aircraft instruments.
The company's earnings during fiscal first quarter 2014 ended Jun
31, 2013, beat the Zacks Consensus Estimate as well as the
year-earlier adjusted profit level on the back of solid execution
and lower costs.
Triumph will update its full-year guidance when it reports
second-quarter results. Earlier, it had guided sales for fiscal
year 2014 in the range of $3.8 billion to $4.0 billion and
earnings per share from continuing operations of $5.65 to $5.75
per diluted share. Adjusted earnings per share from continuing
operations for fiscal year 2014 were expected in a band of $6.30
to $6.40 per diluted share.
The company presently retains a short-term Zacks Rank #3 (Hold).
In the near term, we would advise investors to accumulate its
short-term Zacks Rank #1 (Strong Buy) peers
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Elbit Systems Ltd.