Triumph Group Inc.
) adjusted earnings from continuing operations for the fiscal
second quarter 2014 ended Sep 30, 2013, came in at $1.01 per
share, easily beating the Zacks Consensus Estimate of 90 cents.
However, the quarterly result decreased 35.7% from the
year-earlier adjusted profit of $1.57 per share.
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Including the costs related to the Jefferson Street facility
move, GAAP earnings per share reported by the company were 94
cents, down from $1.53 per share in the prior-year quarter.
The company is working to shift its production operations from
the Jefferson Street location to the new facility being built in
Red Oak, Texas. The move is expected to be completed in 2015.
In the reported quarter, net sales increased 3.1% year over year
to $967.3 million. The reported figure also comfortably surpassed
the Zacks Consensus Estimate of $957 million. The year-over-year
increase reflects a significant rise in revenues at Aerospace
Systems partially offset by a decline in Aerostructures and
Aftermarket Services revenues.
However, organic sales for the quarter decreased 4% primarily due
to production rate cuts on
The Boeing Company
) 767 and 747-8 programs, a decrease in military sales and lower
Operating income in the fiscal second quarter decreased
approximately 35% year over year to $93 million.
Segment sales were $690.7 million, down 3.3% year over year.
Organic sales were down 5.0% due to production rate cuts on the
767 and 747-8 programs, a decrease in military sales and a
decline in non-recurring revenue.
Segment sales jumped 36.9% year over year to $205.5 million. The
significant increase was driven by the benefits from the
acquisitions of Triumph Processing-Embee Division and Triumph
Engine Control Systems. Organic sales for the quarter
declined 3.0% due to decreased military sales and also a decline
in non-recurring revenue.
Segment revenue was $73.0 million, down 4.1% year over year due
to the impact of the Instrument Companies divestiture. Organic
sales were up 5.0%.
Exiting the second quarter 2014, Triumph's cash balance was $22.4
million compared with $32.0 million as of Mar 31, 2013. Total
debt was $1,448.3 million, up from $1,329.9 million as of Mar 31,
2013. The debt-to-capitalization ratio in the reported quarter
stood at 39.5%.
For fiscal year 2014, the company reaffirmed its sales forecast
in the range of $3.8 billion to $4.0 billion. Adjusted earnings
per share from continuing operations for fiscal year 2014 are
expected to be $5.25 per share. This excludes costs related to
the Jefferson Street move.
Including the after-tax impact of additional program costs
associated with the 747-8 program, the impact of Boeing's recent
announcement to reduce the production rate on the 747-8 to 1.5
per month and costs associated with the anticipated refinancing
of Senior Subordinated Notes due 2017 in the third quarter of
fiscal year 2014, the company expects earnings per share of $4.60
for fiscal year 2014.
Triumph Group's top and bottom line succeeded in beating the
Zacks Consensus Estimate. The company continues to progress well
on its Jefferson Street to Red Oak move. Also, the acquisitions
made by the company are adding to its top line.
However, these acquisitions have weighed upon the company's cash
position. Also, the company is burdened with additional program
costs primarily associated with the 747-8 program and production
rate cuts on the 767 and 747-8 programs. Other factors that could
act as headwinds include cyclicality of the aerospace market,
lower demand on the military front and foreign currency
fluctuations. Triumph has a Zacks Rank #5 (Strong Sell).
Among the stocks worth considering in the space are
Spirit AeroSystems Holdings, Inc.
), both with a Zacks Rank #2 (Buy).