Triumph Group Inc.
) affiliate, Triumph Aerostructures-Vought Aircraft Division, won
a contract to supply fuselage segments, rudder and elevators for
the second-generation E-Jets of Brazilian aircraft manufacturer
). The contract is roughly worth $1.7 billion over its lifetime.
Per the contract, Triumph Group will design and build the center
fuselage section III, rear fuselage section, and also the rudder
and elevator components on the tail section of Embraer's
second-generation family of E-Jets.
Over the next four years, Triumph Group intends to spend around
$130 million for the development of the parts, with $25 million
to be incurred in fiscal year 2014.
Wayne, PA-based Triumph Group offers a variety of products and
services to the aerospace industry. Triumph is capable of
producing 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 present contract is a major one for Triumph Group as it
expands the company's presence in the jet market. Embraer expects
to officially launch the program later this year, with deliveries
set to start in 2018.
The introduction of the new generation jets, with advanced
features is expected to make Embraer the leader in the 70 to 120
seat airline market. The company has its operations in 42
The second generation E-Jets comprise state-of-the-art engines,
along with new aerodynamically advanced wings, full fly-by-wire
flight controls, and advancements in other systems. This is
expected to result in double-digit improvements in fuel burn,
maintenance costs, emissions and external noise.
Currently, Triumph Group seems to be busy acquiring and adding to
its portfolio. Recently, the company completed the acquisition of
the pump and engine control systems business of Goodrich
United Technologies Corp.
). Last month, it took over Primus Composites from
Precision Castparts Corp.
) for an undisclosed amount. This move comes as a part of the
company's strategy to widen its global footprint and expand its
structural composite potential.
Primus Composites is a global supplier of composite and
metallic propulsion and structural composite components and
assemblies. Its main customers include Airbus SAS, Rolls Royce,
Aircelle and Bombardier Inc.
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
PRECISION CASTP (PCP): Free Stock Analysis
TRIUMPH GRP INC (TGI): Free Stock Analysis
UTD TECHS CORP (UTX): Free Stock Analysis
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Triumph Group's organic growth has also been reasonably strong
based on the addition of products and services, expansion of
operating capacity and marketing of a complete product portfolio.
However, we remain concerned about the uncertainty related to
defense budgets as the demand for Triumph Group's military and
defense products is largely dependent on government defense
spending. Moreover, with energy as well as commodity prices
increasing daily, the company may find it more challenging to
maintain and expand margins further. The company presently
retains a short-term Zacks Rank #4 (Sell).