Q3 2022 Triumph Group Inc Earnings Call
Speaker 1: Earlier today, we reported our third quarter results for fiscal year 2022. Triumph generated positive free cash flow and improving margins in our core systems and support segments.
Earlier today, we reported our third quarter results for fiscal year, 2022, triumph generated positive free cash flow and improving margins in our core systems and support segment.
Speaker 1: Our team continues to deliver against our strategic plan in a challenging environment. Triumph is emerging as a new company. We are meeting the target.
Our team continues to deliver against our strategic plan and the challenging environment.
<unk> is emerging as a new company.
We are meeting the targets laid out in our transformation plan.
Speaker 1: where a company focused on meeting our full year objectives and accelerating organic growth as a leading pure play systems and aftermarket company.
We're a company focused on meeting our full year objectives, and accelerating organic growth as a leading pure play systems and aftermarket company.
Speaker 1: We recently exited the last of our 747 production facilities and announced the sale of our Stewart, Florida Air Force Base.
We recently exited the last of our 747 production facilities.
And announced the sale of our Stuart, Florida Aerostructures business.
Speaker 1: Steward is the last large structures facility in our portfolio, and the exit is a major minority.
Stuart is the last large structures facility in our portfolio.
And the exit is a major milestone for trial.
Speaker 1: And our focus on winning is paying off. In the fiscal year today, we've secured over $2 billion in new orders across the company. On slide 4, I summarized the
And our focus on winning is paying off.
In the fiscal year to date, we have secured over $2 billion and new orders across the company.
On slide four I summarize some of the quarter's highlights.
Speaker 1: First, we generated pre-cash flow of $7 million, driven by improving operations and reduced working capital.
First we generated free cash flow of $7 million, driven by our improving operations and reduced working capital.
Cost reductions lean events, and a more favorable sales mix as well as retirement of programmatic risks yielded a 20% EBITDA margin in our systems and support segment.
Speaker 1: Cost reductions, lean events, and a more favorable sales mix, as well as retirement of programmatic risks, yield at a 20% EBIT at margin in our systems and support architecture and
Speaker 1: As experienced by many of our peers, organic sales declined slightly due to short-term order deferrals on commercial widebody and military OEM platforms, though partially offset by return of the product.
As experienced by many of our peers organic sales declined slightly due to short term order deferrals on commercial wide body and military OEM platforms.
So partially offset by returning MRO orders.
This temporary flat spot in the recovery is expected to abate early in our fiscal 2023.
Speaker 1: temporary flat spot in the recovery is expected to abate early in our fiscal 2020
Speaker 1: And last, our actions to mitigate supply chain constraints have lessened the impact on Triumph as we partner with our customers to ensure supply continuity and affordability.
And last our actions to mitigate supply chain constraints have lessened the impact on triumph as we partner with our customers to ensure supply continuity and affordability.
Speaker 1: The four gym covers the quarters results. I'd like to provide context on how we are positioning triumph in the macro environment. Merch...
Before Jim cover the quarter's results I'd like to provide context on how we are positioning triumph in the macro environment.
Commercial aircraft deliveries are on the rise.
Speaker 1: 2021 Airbus delivered 611 commercial aircraft and Boeing 340 for a total of 951 aircraft, up 33% from 2020.
In 2021, Airbus delivered 611 commercial aircraft and Boeing $340 for a total of 951 aircraft up 33% from 2020.
2022, combined deliveries are projected to exceed <unk> hundred aircrafts.
Speaker 1: 2022 combined deliveries are projected to exceed 1,400 aircraft of further 47 percenting.
A further 47% increase.
Additionally, net commercial transport orders for Airbus and Boeing totaled approximately 1040 for the year.
Speaker 1: Additionally, that commercial transport orders for Airbus and Boeing totaled approximately a 1,040 for the year.
Speaker 1: Marking an exit from the COVID-19-induced aviation down to
Marketing and exit from the Covid induced aviation downturn.
The freighter market continues to be strong with wide body fleets up 36% and narrow body up 50% since the beginning of the pandemic.
Speaker 1: The freighter market continues to be strong with wide body fleets up 36% and narrow body up 50% since the beginning of the pandemic. Utilization is all-
Utilization is also up 25%.
Both passenger to freighter conversions and OEM freighter production.
Speaker 1: Both passenger to freighter conversions and OEM freighter production provide opportunities.
To provide opportunities for trial.
Speaker 1: we pursue cargo door actuation and insulation opportunities for conversions and have substantial content on the new A350 and triple-7X freighter.
As we pursue cargo door actuation and installation opportunities for conversions and have substantial content on the new <unk> hundred 50, and Triple seven X freighters.
Increases in both commercial transport and freighter markets provide reason for optimism over our planning horizon.
Speaker 1: increases in both commercial transport and freighter markets provide reason for optimism over our planning horizon.
Narrow body looks strong also try and shipments to Boeing and Airbus for the 737, and <unk> hundred $23 21 were up 54% quarter over quarter.
Speaker 1: Crime shipments to Boeing and Airbus from the 737 and A320-321 were up 54% quarter over quarter.
Speaker 1: Backlog for 737 and A320-321 is up 47 percent and 27 percent respectively year over year.
Backlog for 737, and <unk> hundred $23, 21 is up 47% and 27% respectively year over year.
Speaker 1: plans for the 737 MAX return to service in China, Indonesia, Hong Kong, and Ethiopia. Provide tailwinds on both the OEM and aftermarket domain.
Plans for the 737, Max returned to service in China, Indonesia, Hong Kong, and Ethiopia provide tailwind on both the OEM and aftermarket demand.
Speaker 1: of the aviation recovery, though paused by the Omicron variant, continues to be up.
The trajectory of the aviation recovery, so paused by the Omicron variant continues to be upward.
The broad recovery of these platforms benefits triumphs as our year to date book to Bill ratio through December reached 115% led.
Speaker 1: The broad recovery of these platforms benefits triumphs as our year-to-date book-to-bill ratio through December reached 1.15 led by our actuation.
Led by our actuation business.
While orders were up short term systems and support revenues in the quarter declined as a result of timing of deferments compared to prior year and sequentially.
Speaker 1: While orders are up short-term systems and support revenues in a quarter decline as a result of timing or deferment, compared to prior year, and sequential...
707 production accounted for roughly half of the decline while delayed military rotorcraft deliveries accounted for the balance we expect both of these headwinds to abate in the coming quarters.
Speaker 1: 787 production accounted for roughly half of the decline, while delayed military rotorcraft deliveries accounted for the balance.
Speaker 1: We expect both of these headwinds to evade in the coming quarter.
Anticipated ramp up of 787 shipments coupled with recently secured pricing resets will aid topline and margin expansion in the coming quarters.
Speaker 1: The anticipated ramp up of 787 shipments coupled with recently secured pricing resets will aid top line and margin expansion in the coming quarter.
Speaker 1: New ones for the quarter can be seen on slides 5 and 6.
New awards for the quarter can be seen on slides five and six <unk>.
Speaker 1: Tribe continues to win in the competitive market on the strength of our platform and company, innovation. Thank you.
<unk> continues to win in a competitive market on the strength of our platform incumbency innovation.
And IP.
We've won more than $2 billion of new orders year to date, that's a year to date record since 2016.
Speaker 1: We have won more than $2 billion of new orders here today. That's a year-to-day record since 2016.
Speaker 1: We set an internal goal to expand sales from new products, platforms and customers by 25% over the next three years.
We set an internal goal to expand sales from new products platforms and customers by 25% over the next three years.
Speaker 1: Order from these sources are up 38% for prior year.
Orders from these sources are up 38% from prior year.
<unk> interior business as a global market leader in thermal acoustic cabin installation.
Speaker 1: Prime's interior business is a global market leader and thermal acoustic cabin insulation.
Speaker 1: We were recently selected to design and build the A220's entire installation package, adding to our current role supplying the cabin floor.
We were recently selected to design and build the <unk> hundred <unk> entire installation package, adding to our current role supplying the cabin floor.
Speaker 1: This builds on our A350 Cabin installation systems.
This builds on our <unk> hundred 50 cabin installation systems content.
Speaker 1: coupled with recent Boeing long term agreements for installation and ducting.
Coupled with recent Boeing long term agreements for installation and ducting.
Interiors is well positioned to capitalize on the market recovery and anticipated rate increases.
Speaker 1: materials is well positioned to capitalize on the market recovery and anticipated rate increase.
Speaker 1: Our actuation business won four awards, an innovative ultramarcanical actuator for Raytheon's next gen jammer, a holdback bar for an undisclosed lock.
Our actuation business won four awards and innovative electromechanical actuator for Raytheon's Nexgen jammer.
I'll hold back bar for an undisclosed Lockheed Martin platform.
Speaker 1: a weapons bay door actuation order for the FARA Future Vertical Lift Program.
Our weapons Bay door actuation order for the far future vertical lift program.
Speaker 1: and an integrated hydraulic power pack for a passenger to freight or conversion.
And an integrated hydraulic power pack for a passenger to freighter conversion program.
Speaker 1: Mechanical Solutions Business, the market leader in precision low hysteresis control cable.
Chemical solutions business, a market leader in precision low hysteresis control cables.
Was awarded the design and build contract for the <unk> hundred 50 light attack aircraft.
Speaker 1: was awarded to design and build contract for the Caledist B250 Light Attack Aircraft.
Speaker 1: They also awarded a remote mechanical valve actuation system for French nuclear power.
We were also awarded a remote mechanical valve actuation system for our French nuclear power plant.
And then the geared solutions business, which is the largest third party aerospace gear provider in the world.
Speaker 1: And then the geared solutions business, which is the largest third party aerospace gear provider in the world, we finalized large contract extension with Rolls Royce for a suite of military and commercial applications.
We finalized large contract extension with Rolls Royce for our suite of military and commercial applications.
Speaker 1: Finally, our product support business formally launched the Excel JV to overhaul the cell components on the 787 and 737 MAX, while extending our aftermarket offload partnerships with Collins on the Lamardi ACRJ and with Brazilian airline goal on their 737 fleet.
Finally, our product support business formally launched the excel JV to overhaul nacelle components on the 787% and 737 Max.
While extending our aftermarket offload partnerships with Collins on the Bombardier C RJ and with Brazilian airline goal on their 737 fleet.
Speaker 1: Product support continues to win in this competitive MRO market. For OEMs, appreciate our dependability, quality, and consistent turnaround time.
Product support continues to win in this competitive MRO market, where Oems appreciate our dependability quality and consistent turnaround times.
Speaker 1: Turning briefly to our supply chain, we continue to focus on cost for materials, labor and overhead, given the ongoing inflationary market pressure.
Turning briefly to our supply chain, we continue to focus on cost for materials labor and overhead given the ongoing inflationary market pressures.
Speaker 1: Balancing risk and opportunity with respect to commodities and supply.
Balancing risk and opportunity with respect to commodities and supply chain inflation.
Speaker 1: over the next three years are existing contracts provisions help protect against increases in material costs by employing annual price index adjust.
Over the next three years, our existing contracts provisions help protect against increases in material costs by employing annual price index adjustments.
Speaker 1: based on industry indices and general protections against material price changes above certain threshold levels.
Based on industry indices, and general protections against material price changes above certain threshold levels.
Speaker 1: Prime recently held a supplier conference with our top 50 partners.
Brian recently held a supplier conference with our top 50 partners.
Speaker 1: where we discussed how to mitigate anticipated supply chain constraints expected over the next 12 to 18 months.
Where we discussed how to mitigate anticipated supply chain constraints expected over the next 12 to 18 months and stress the importance of preparing for the coming ramp we.
Speaker 1: and stress the importance of preparing for the coming ramp.
Speaker 1: We presented the latest production rates across all our platforms and had three OEMs speak about the importance of early hiring in CAPEX Invest.
We presented the latest production rates across all our platforms and had three Oems speak about the importance of early hiring and Capex investments.
Speaker 1: To avoid the bottlenecks we saw in 2018-2019 before the pandemic. We've been encouraged by the suppliers follow through on the joint actions we adopted and are staying in lockstep with the OEMs on their delivery forecast. The pandemic created many challenges.
To avoid the bottlenecks we saw in 2018 2019 before the pandemic.
We've been encouraged by the suppliers follow through on the joint actions, we adopted and are staying in lockstep with the Oems on their delivery forecast.
The pandemic created many challenges, but also opportunities.
Speaker 1: Triumph is renewing the social contract with our employees to include greater flexibility and career opportunities for both salary and hourly team members. To make Triumph a preferred place to work.
<unk> is renewing the social contract with our employees to include greater flexibility and career opportunities for both salary and hourly team members to make triumph a preferred place to work.
Speaker 1: pandemic has illustrated that we can more sustainably balance the needs of our employees and our company to achieve higher levels of employee satisfaction and performance. This discussions underway across every level of our organization.
Pandemic has illustrated that we can more sustainably balanced the needs of our employees and our company to achieve higher levels of employee satisfaction and performance. This discussions underway across every level of our organization.
Speaker 1: Referred to internally as the new deal, we are tapping into the demonstrated levels of workforce engagement and virtual collaboration tools to reinvent the office and fact.
<unk> to internally as the new deal.
We are tapping into the demonstrated levels of workforce engagement and virtual collaboration tools to reinvent the office and factory as we accelerate the adoption of empowered cross functional teams across the company.
Speaker 1: This week, accelerate the adoption of empowered cross-functional teams across the country.
Speaker 1: As a result, we anticipate higher levels of productivity towards our stated goal of doubling profitability.
As a result, we anticipate higher levels of productivity towards our stated goal of doubling profitability.
In my view, our new approach to workforce engagement will be one of our most valuable lessons from the pandemic.
Speaker 1: In my view, our new approach to workforce engagement will be one of our most valuable lessons from the pandemic.
Speaker 1: summary, try up group marches in the quarter and our core systems and support business and retired several non-recurring cash use.
In summary, triumph grew margins in the quarter and our core systems and support business and retired several nonrecurring cash uses.
Speaker 1: short-term order deferrals on 787 and military-oEM production are expected to abate in our fiscal 2023 and are being offset by our new contract win.
Short term order deferrals on 787 and military OEM production are expected to abate in our fiscal 2023 and are being offset by our new contract wins.
Speaker 1: Our actions in this quarter combine with OEM and MRO rate increases. We'll support our expanded margins and
Our actions in this quarter combined with OEM and MRO rate increases will support our expanded margins and improved cash flow.
Speaker 1: Putting us on a solid path to deliver growth while de-leveraging the company.
Putting us on a solid path to deliver growth while deleveraging the company.
Year over year.
Speaker 1: We move forward. We are investing in our people, operations and products.
As we move forward, we are investing in our people operations and products to ensure triumph remains differentiated in the market.
Speaker 1: Sure, try and remain differentiated in the market and delivers enhanced shareholder value year over year.
And delivers enhanced shareholder value year over year.
Speaker 1: With that, Jim will now take us to the results for the quarter and more detail. Jim, thanks, Dan, and good morning, everyone. As I review the financial results for the quarter.
With that Jim will now take us through the results for the quarter in more detail Jim.
Thanks, Dan and good morning, everyone.
As I review the financial results for the quarter. Please refer to the presentation posted with our earnings release today.
Speaker 1: The prime force cash positive and profitable this quarter. Want to put the gap and adjust.
Frank was cash positive and profitable this quarter on both a GAAP and adjusted basis.
Speaker 1: I will be discussing adjusted results. So please see our earnings press release and the supplemental slides in the presentation for the explanation of our adjustments. One page.
I will be discussing adjusted results. So please see our earnings press release and the supplemental slides in our presentation with the explanation of our adjustments.
On page seven our consolidated results for the quarter.
Speaker 1: Revenue of $319 million reflects increased revenue from narrow body and biz jet platforms and growth in third part
Revenue of $319 million reflects increased revenue from narrow body and biz jet platforms and growth in third party MRO revenue.
Speaker 1: This was offset by the combination of the 787 rate reductions and short term military
This was offset by the combination of the 787 rate reductions in short term military OEM delivery timing.
Speaker 1: Continuing this shift towards our core, systems and support revenue now make some 74% of total revenue in the quarter. Up from 62% a year.
Continuing the shift towards our core systems and support revenue now makes up 74% of total revenue in the quarter up from 62% a year ago.
Adjusted operating income of $33 million represents a 10% operating margin an increase from 9% a year ago.
Speaker 1: Just an offering income of $33 million represents a 10% operating margin, an increase from 9% a year ago. This is the support generated of state.
Systems and support generated substantially all of the operating income this quarter.
Those that are adjustments are getting smaller with only a $5 million difference between the $28 million GAAP operating income and $33 million adjusted operating income this quarter <unk>.
Speaker 1: Those that are adjustments are getting smaller with only a $5 million difference between the $28 million gap operating income and $33 million adjusted operating income this quarter.
Reinforcing <unk> ability to become predictably profitable.
Speaker 1: All of the $5 million adjustment is attributable to the structure's segment.
All of the $5 million adjustment is attributable to the structures segment. This quarter due to our 737 production facility shutdown in Grand Prairie, Texas, which was completed in December and the shutdown of our interiors facility in Spokane, Washington, which will be complete in the first half of this calendar year.
Speaker 1: Due to our 747 production facility shutdown in Grammary Tech
Speaker 1: completed in December . And the shutdown of our interior facility in Spokane, Washington, which will be complete in the first-
Turning to page eight youll see our system to support results and highlights.
Speaker 1: According to page 8, you'll see our systems and support results in highly
Speaker 1: Revenue in the quarter include higher narrow body and bizjet platform revenue and a 12% increase in our third party emerald revenue over the prior year quarter. It was offset by delivery timing in our military OEM.
Revenue in the quarter include higher narrow body and Biz jet platform revenue and a 12% increase in our third party MRO revenue over the prior year quarter.
It was offset by delivery timing in our military OEM programs and the 787 short term volume decreases.
Speaker 1: Systems in support operating income was $41 million or 17% for the quarter, which is a 60 basis point.
Systems and support operating income was $41 million or 17% for the quarter.
Which is a 60 basis point increase over last year on an adjusted basis.
Speaker 1: This symptom that support EBITAP was $47 million or 20% a 220 basis in point increase over last year. A measurable step towards our goal of doubly-
System to support EBITDA was $47 million or 20% or 220 basis point increase over last year, a measurable step towards our goal of doubling EBITDA over the next three years.
Speaker 1: Previously announced sale of systems and supports at Starrerton UK facility and the sale and licensing of certain related legacy product lines closed in early October . We used them that proceeds to reduce debt.
The announced sale of systems and supports established in UK facility and the sale and licensing of certain related legacy product lines closed in early October .
We used the net proceeds to reduce debt.
On page nine Youll find structures results and highlights Dr.
Speaker 1: Drugs revenue of $83 million was up 3% organically over last year. That's excluding the vestiture.
<unk> revenue of $83 million was up 3% organically over last year, that's excluding divestitures and sunsetting programs.
Speaker 1: 737 production rate increases contributed to their organic
737 production rate increases contributed to the organic growth.
Speaker 1: 26% of total revenue we continue to make good progress on the revenue makes shift towards
At 26% of total revenue, we continue to make good progress on the revenue mix shift towards systems and support.
Speaker 1: Into the quarter we exit our last 747 production facility on time and under
We ended the quarter, we exited our last 747 production facility on time and under budget.
Speaker 1: The Stewart Structures Facility is expected to close in the first half of this counter.
Sale of the Stewart structures facility is expected to close in the first half of this calendar year.
Speaker 1: This vestibular will complete our comprehensive exercises of our buildup print and contract manufacturing structures.
This divestiture will complete our comprehensive exit of our build to print and contract manufacturing structures business.
Given the pending exited structures, we're evaluating supplemental disclosures to provide additional insight into our continuing business going forward.
Speaker 1: Even the pending exit of structures, we're evaluating supplemental disclosures to provide additional insight into our continuing business going forward. On page 10 is our free cash.
On page 10 is our free cash flow walk for the quarter and year to date.
Consistent with our guidance, we generated $7 million of free cash flow in the quarter.
Speaker 1: We generate $7 million of free cash flowing.
Speaker 1: to reduce non-recranked cash uses and are on track to increase our free cash flow generation in Q4.
We continue to reduce non recurring cash uses and are on track to increase our free cash flow generation in Q4.
Speaker 1: I've expected free cash flow this quarter included $28 million of non-recurring cash drivers, including 21 million advance liquidations, and 8 million of funds.
As expected free cash flow this quarter included $28 million of nonrecurring cash drivers, including $21 million advance liquidations and $8 million of funding of previously accrued 747 losses.
Speaker 1: We expect a total of 166 million of non-recurring cashews is for the full year as detailed on the SWOT.
We expect a total of $166 million of nonrecurring cash uses for the full year as detailed on the slide.
Capital expenditures increased to $7 million this quarter with investment in our systems and support segment.
Speaker 1: Apple expenditures increased to $7 million as quarter with investment in our systems and support segment in support of rising OEM and MRO demand and sustaining supporting infrastructure improvements.
Port of rising OEM, and MRO demand and sustaining supporting infrastructure improvements.
On page 11 is a schedule of our net debt and liquidity.
During the quarter, we paid down our first lien notes by $24 million from the proceeds of this average and divestiture.
Speaker 1: During the quarter, we paid down our first link notes by $24 million from the proceeds of the Savage In The Best.
Speaker 1: We also extended the maturity of our receivables securitization facility to November of 2024 and increased its capacity from $75 to $100 million.
We also extended the maturity of our receivables securitization facility to November of 2024, and increase its capacity from $75 million to $100 million.
It serves as a low cost source of contingent liquidity.
At the end of the quarter, we had about $1 4 billion of net debt down 11% from a year ago. We.
Speaker 1: But in the end of the quarter, we had about $1.4 billion in that debt. Down 11% from a year.
Speaker 1: We also had $250 million of cash and availability, which is more than sufficient for our projected needs. Our next step maturities are.
We also had $250 million of cash availability, which is more than sufficient for our projected needs. Our next debt maturities over two five years from now we are deleveraging by reducing debt with proceeds from divestitures and by expanding free cash flow and EBITDA in our continuing businesses.
Speaker 1: We are deleverging by reducing debt with proceeds from the vestiges and by expanding free cash flow and EBITAP and our continuing businesses. On page 12, you'll find a summary of our fiscal 22 guidance.
On page 12, you'll find a summary of our fiscal 'twenty two guidance.
Based on anticipated aircraft production rates and excluding the impacts of potential divestitures for fiscal 'twenty. Two we expect revenue of approximately $1 5 billion.
Speaker 1: With fiscal 22, we expect revenue of approximately $1.5 billion. We expected just a DPS.
We expect adjusted EPS of $8 90 per diluted share.
Speaker 1: cash taxes net of refunds received or expected to be approximately $5 million dollars
Cash taxes net of refunds received are expected to be approximately $5 million in the year.
Speaker 1: I would say that we are going to continue to expect interest expense to be approximately $140 million, including $137.99 of cash.
Continue to expect interest expense to be approximately $140 million, including $137 million of cash interest.
Speaker 1: full year we expect to use $125 million of cash from operations with approximately $25 million in capital expenditures resulting in free cash use of approximately $150 million.
For the full year, we expect to use a $125 million of cash from operations with approximately $25 million in capital expenditures, resulting in free cash use of approximately $150 million.
We continue to achieve our goals and have made significant progress in improving the predictability of our profitability and cash flow.
Speaker 1: We can see that it achieves our goals and a basic significant progress in improving the predictability of our profitability and capital.
Our portfolio actions operational efficiencies improved pricing cost reductions and increases in volume will all contribute to improving margins and cash flow moving forward.
Speaker 1: portfolio actions, operational efficiencies, improved pricing, cost reductions, and increases in volume will all contribute to improving margin of the cash flow moving.
We are stronger and more competitive today for all the actions we have and are taking.
Speaker 1: We are stronger and more competitive today for all the actions we have in our taking. Most importantly,
Most importantly.
Triumph is now primarily assistance and support company.
Speaker 1: Our mix of business includes more IP based the Spheres revenue than it has.
Our mix of business includes more IP based on spares revenue than it has in the past.
Speaker 1: We can earn higher margins, less capital, and we could in our former build a proof.
We can earn higher margins with less capital than we could in our former build to print businesses.
Speaker 1: to invest in our people who develop and deliver unique and valuable solutions for our customers, which results with sustainable, profitable growth.
We continue to invest in our people to develop and deliver unique and valuable solutions for our customers, which results in a sustainable profitable growth.
Now I'll turn the call back to Dan Dan.
Dan.
Thanks, Jim Despite the market dynamics I am pleased with our third quarter and fiscal year to date results, providing us with solid momentum to deliver a strong fourth quarter of fiscal 2022.
Speaker 1: Thanks Jim. Despite the market dynamics, I'm pleased with our third quarter in fiscal year-to-date results, providing us with solid momentum to deliver a strong fourth quarter of fiscal 2022.
Speaker 1: Winning new IT-based business and exiting build-up print structures are at the core of our path to value as we continue our work towards our desired business portfolio.
Winning new IP based business and exiting build to print structures are.
We are at the core of our path to value as we continue our work towards our desired business portfolio.
Speaker 1: Looking ahead, we remain focused on the elements within our control as demonstrated by our pivot to growth through new wins and strategic partnerships, both of which will enable triumph to further diversify our backlog and increase our top and bottom line.
Looking ahead, we remain focused on the elements within our control and as demonstrated by our pivot to growth.
Through new wins and strategic partnerships, both of which will enable triumph to further diversify our backlog and increase our top and bottom lines.
Speaker 1: I look forward to reporting on our progress as we continue our efforts to further unlock the hidden value across our business and deliver value for the benefit of all our stakeholders.
I look forward to reporting on our progress as we continue our efforts to further unlock the hidden value across our business and deliver value for the benefit of all our stakeholders.
We're happy now to take any questions.
Speaker 2: At this time, the officers of the company would like to open the forum to any questions that you may have. We ask that you limit yourself to one question and one follow up to give everyone the opportunity to participate.
At this time the officers of the company would like to open the forum to any questions that you may have.
Yes that you limit yourself to one question and one follow up to give everyone the opportunity to participate.
Speaker 2: If you are using a speaker phone, please speak up the handset before pressing any numbers.
If youre using a speakerphone, please pick up the handset before pressing any numbers.
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Should you have a question. Please press star one on your push button.
Should you wish should we draw your question press the pound key.
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Please standby for your first question.
Sheila yes.
Speaker 2: Kila Kaya Guru, we state your affiliation followed by your questions.
Please state your affiliation followed by your question.
Speaker 3: Good morning, Ganon Jim. It's Sheila from Jeffries. Can you talk about the structure of business? Now that sewer is, you know, on its way to being finalized, what we should think about your revenue and EBITDA profile, you know, given, what sort of revenue run rate and given about break even margins, thus quarter?
Good morning, Dan and John .
Please.
Can you talk about the structures business now that correct.
Unafraid of being finalized.
We should think about your revenue and EBITDA.
Profile, given what sort of revenue run rate.
About breakeven margins next quarter.
Speaker 1: Thanks, you all. Good morning. You know, the structures business didn't contribute a lot to EBITDA. We've got it to break even. And it will benefit from some of the tailwinds of 737, which is seeing now and then from 787 when that comes back. But structures, the continuing business there is the interiors.
Thanks, Joe Thanks, Joe and good morning.
Yes, the structures business didn't contribute a lot to EBITDA, we've got it to breakeven.
It will benefit from some of the tailwind.
737, which is seeing now and then from 717 that comes back.
But structures.
Continuing business there is in the interiors business.
Speaker 1: That's much, it's very different than the large metallic structures business that we've been investing.
That's very different than the large metallic structures business that.
We've been divesting.
Speaker 1: the interior business just signs of long-term contracts with major OEMs and it's going to see improving margins by and returning. It's a very different business because it's smaller parts. They're unique. We do a little bit of proprietary content in there. So in terms of the size of the business, it's going to be much smaller. And what's most important is that we're really our systems and aftermarket company now. So the size of structures that's shrinking, with the ...
Stuart as part of.
The interiors business just signed some long term contracts with major Oems.
And it's going to see improving margins.
Volume returning.
It's a very different business because its smaller parts, they're unique we do have a little bit of proprietary content in there.
So <unk>.
In terms of the size of the business is going to be much smaller.
And what's most important is that we're really our systems and aftermarket company now.
So the size of structures is shrinking.
But the size of the systems.
And in the aftermarket business is about 74% of revenue.
Speaker 1: And the aftermarket business is about 74% of revenue, and it's contributing all of the profitability of it.
And it's contributing all of the profitability in the quarter.
Sure.
Speaker 3: Sure, and so for fiscal 23, do we think about the interior of business as around 175, 200 million is that sort of a size? And maybe as a follow up, I don't know if you provided proceeds to the Stewart-Divestiture, but if you're willing to give that.
Fiscal 2003, do we think about the I'm curious business was around $175 million to $200 million of that sorry, the size and maybe as a follow up.
I don't know if you provided proceeds.
Mr Chairman, if youre willing to get that.
The details of Stewart will be disclosed when we close the transaction in the coming months, so we havent given that yet.
Speaker 1: Yeah, the details of steward will be disclosed when we close the transaction in the coming months. So we haven't given that yet. In terms of the size of structures moving forward, I think you're in the ballpark and it could be higher than that given the return of volumes on some of the major programs.
In terms of the size of the structure and moving forward I think you are in the ballpark.
It can be higher than that given.
<unk> volumes most of the major programs.
Okay, great. Thank you.
Speaker 2: Thank you. Peter Armin, please state your affiliation followed by your
Thank you Peter Arment. Please state your affiliation followed by your question.
Speaker 4: Dan, maybe you could just talk about systems margins, kind of sustainability, high, 17% in the quarter, but just how you're thinking about the ability to sustain kind of high-teens margins, particularly as volume starts to pick up as we get into physical 23.
Dan maybe you could just talk about systems margins kind of sustainability.
19% in the quarter, but just how youre thinking about.
The ability to sustain kind of high teens margins, particularly as volume starts to pick up as we head into fiscal 'twenty three.
Speaker 1: Our goal is not to sustain them, Peter, to increase them into the 20s.
Our goal is not to sustain him theatres to increase them into the Twenty's and our our path to that is one part mix change, where we increased the contribution of MRO and spares versus OEM that started two years ago. When we combined our third party MRO and OEM.
Speaker 1: and our path to that is one part mixed change.
Speaker 1: where we increase the contribution of MRO in Spares versus OEM. That started two years ago when we combined our third party MRO and OEM, MRO businesses.
MRO businesses to help our OEM businesses.
Grow their aftermarket and recapture the tail. So thats a multi year initiative, that's going to benefit us going forward.
Speaker 1: grow there after market and recapture the tail. So that's a multi-year initiative.
Speaker 1: The second enabler for the system's margins exiting or renegotiating.
Enabler for the systems margins exiting or renegotiating.
Speaker 1: programs that have margins below our weighted cost cap.
Programs that have margins below our our weighted cost of capital.
Speaker 1: So in Q3, we continue this cadence of meeting with OEMs, making the case for either...
And so in Q3, we continued this cadence of meeting with Oems.
Making the case for either price ups or.
Sourcing the work at another customer and Thats also going to be kicking in over.
Speaker 1: sourcing the work at another customer and that's also going to be kicking in.
Speaker 1: multiple years as those new contracts replace the ones that are running out.
Multiple years as those new contracts replace the ones that are running out and.
And the third initiative is this products I mentioned in my script about growing revenue to the point, where 25% of our sales comes from new products customers and markets and so this is where the IP.
Speaker 1: products I mentioned in my script about growing revenue to the point where 25% of our sales comes from new products, customers and markets. And so this is where the IP based products that are in development right now, I just came back from our Flemmins North Carolina plant where I walk through all of the test labs where they have new fuel pumps, new hydraulic pumps.
Based products that are in development right now I just came back from our <unk> North Carolina plant, where our walk through all of the test labs, where they have new fuel pumps, new hydraulic pumps.
Speaker 1: that are in qualification. And a lot of those have been developed with customer money, what we call CRAD, contract research and development. So as those products come in, we'll be able to enhance our margins. So it's really the combination of those three drivers to get systems where we want to. So we'll be able to get systems where we want to.
That are in qualification.
Those have been developed with customer money, what we call crowd contract research and development. So as those products come in we'll be able to enhance our margin. So it's really the combination of those three drivers to get systems, where we want them to be.
I appreciate that and just as a follow up just circling back to the comment on question on Stuart is there any.
Speaker 4: appreciate that and just in the follow up just circle back to the comment question on Stewart. Is there any any details regarding You know if you've had any custard agreement yet on the sale or what can you provide us whether that's already been
Any details regarding.
If you've had any customer agreements yet on the sale or what can you provide us whether that's already been approved.
Speaker 1: Thanks, Peter. So we started the dialogue with Boeing on Stewart three, four years ago.
Yes. Thanks, Thanks, Peter So we started the dialogue with Boeing on Steward three four years ago with Kevin Shan CFO of Boeing commercial and so it's been a partnership trying to identify the best long term partner to own it.
Speaker 1: with Kevin Sham, CFO of Boeing Commercial. And so it's been a partnership trying to identify the best long-term partner on it. Triumph has improved the business on our watch.
<unk> has improved the business on our watch.
Speaker 1: become stable as the source of delivery. It's a business that has been profitable for us. But we're not the right long-term owner. It's not an area we want to continue to invest. But there are other buyers. And I think to her, you know, it wasn't clear at the end who would win the race. And part of the delay was we had multiple interested parties.
<unk> become stable as the source of delivery.
It's a business that has been profitable for us, but we're not the right long term owner, it's not an area. We want to continue to invest but there are other buyers and I think they're her wasn't clear at the end who would win the race and part of the delay was we had multiple interested parties, but to her being a <unk>.
Speaker 1: but the her being a, you know, a first tier.
First tier supplier and an OEM in their own right with our desire to expand their U S footprint.
Speaker 1: and an OEM in their own right with a desire to expand their US footprint.
Speaker 1: and increase Boeing content. It's gonna be a tremendous owner and they did have meetings with Boeing prior to the announcement.
An increase of Boeing content.
It's going to be a tremendous owner and they did have meetings with Boeing prior to the to the announced signing.
Speaker 1: And I understand, I was not in those meetings, I understand they went well. Triumph is committed to a smooth transition.
I understand I was not in those meetings understand they went well.
<unk> is committed to a smooth transition.
Speaker 1: we are going delivery on time with quality and that's a challenge every day we intend to fulfill it.
Boeing delivery on time with quality and Thats a challenge every day, we intend to fulfill it.
Speaker 1: We understand the importance to Boeing on both the tank and the freighter.
We understand the importance to Boeing on both the tank and the freighter.
Speaker 1: The weighing center sections that are produced there as well as triple seven parts and some parts for goal stream. So early discussions have begun and we're confident that it will be a Consent will be received and we'll close on a timely basis.
The wing center sections that are produced there as well as triple seven parts and some parts for Gulfstream. So early discussions have begun and we're confident that it will be a consensus will be received and we will close on a timely basis.
I appreciate it thanks Dan.
Thank you.
Speaker 2: He said, Seasmin, we state your affiliation followed by your questions.
Six min.
Please state your affiliation followed by your question.
Speaker 5: Okay, good morning. It's Seth from J.F.E. Morgan. Guys, I wonder once the Stewart Transaction is closed, how you plan to report? Will there still be a structures segment comprised solely of the interior's business? Will there be no segments or will there be new segments?
Hey, good morning, it's SaaS from Jpmorgan.
Guys I wonder once the.
Ah Stewart transaction is closed how do you plan to report will there still be structures segment comprised.
Solely of the interiors business will there be.
No segments or will there be new segments.
Yes, great question, we are committed to provide transparency and the kind of visibility that analysts and investors could model the company properly.
Speaker 1: Yeah, great question. We're committed to provide transparency and the kind of visibility that analysts and investors can model a company properly.
Speaker 1: Underneath systems there really are five operating companies.
Underneath systems, they are really our five operating companies.
Speaker 1: each with two to three hundred million sales. So, one of the ideas we're kicking around and we welcome feedback from investors is reporting on that level rather than reporting tasks in TSS. There's some work involved to do that. You've got to go back a couple of years and report it in that breakout. But the key is that we operate, organize, and report in a consistent manner.
Each with $2 million to $300 million in sales so.
One of the one of the ideas, we're kicking around and we welcome feedback from investors is is reporting on that level rather than reporting task in TSS Theres. Some work involved to do that you've got to go back a couple of years.
We reported in that breakout, but the key is that we operate organize and report in a consistent manner.
Speaker 1: And we're working on the plans to do that. We'll discuss it with the board here in February . And our goal is to let you know the game plan in April . We start the new year, but you have our commitment to provide the kind of visibility necessary to understand the company. Jim.
And we're working on the plans to do that we will discuss it with the board here in February and our goal is to let you know the game plan in April we start the new year, but you have our commitment to provide the kind of visibility necessary to understand the company Jim.
Speaker 1: Yes, I've really looked to provide a couple of mental disclosures was what I mentioned in Myanmar. To go a little deeper, but within the existing structure right.
Yes, I've already looked to provide supplemental disclosure was what I mentioned in my remarks.
Total deeper but within the existing structure right now.
So we won't provide that transparency and information, but we don't want to create extra work, especially for investors to have to go and look at things. Historically, so we'll talk to many investors over the coming months and make a determination for that go forward.
Speaker 1: So we want to provide that transparency information, but we don't want to create extra work, especially for investors to have to go and look at things historically. So we'll talk to many investors over the coming months and make a determination.
Speaker 5: Great, thanks. And then just as a follow up, Dan, if I could dig in a little bit more about the IP and proprietary content that you mentioned and apologize for a bit of a series of questions here, but any color you could provide would be good. I guess historically, kind of thought of maybe the old integrated systems business, maybe being 15 to 20%.
Great. Thanks, and then.
Just as a follow up.
Dan if I could.
<unk> taken a little bit more about the.
The IP and proprietary.
Content that you mentioned and I apologize for a bit of a series of questions here, but any.
Color you could provide would be good I guess historically.
Kind of a thought of maybe the old.
Integrated systems business, maybe being 15% to 20%.
Speaker 5: proprietary aftermarket and that would include both commercial and military. I guess, you know, how do you think about where that is now and I guess putting it in the context of systems and support versus?
Proprietary aftermarket.
And that would include both commercial and military I guess, how do you think about where that is now and I guess, putting it in the context of our systems and support versus firstly, all integrated systems and then the 25% that you talked about is that sort of.
Speaker 5: for sealed integrated systems and then the 25% that you talked about is that sort of a, you know, is that the goal from
Is that the goal from from where we are now.
Speaker 5: from where we are now, and how long you kind of think about it taking to get there and how far some of the work that you talked about today gets you along that path.
And how long you kind of think about it taking team to get there and how far some.
Some of the work that you talked about today gets you along that path.
Speaker 1: I'll start with the second part on growing revenue, 25% of it being from new products, customers, markets. We initiated that goal in our fiscal 22, so we're 10 months into it. And when you set a goal like that, it starts with...
I'll start with the second part on growing revenue, 25% of it being from new products customers markets. We initiated that goal in our fiscal 'twenty. Two so we're 10 months into it.
And when you set a goal like that it starts with <unk>.
Speaker 1: adjusting your strategy, that leads to captures, that leads to orders, and then sales materialized. So you can't go from...
Adjusting your strategy that leads to captures that leads to orders and then sales.
Serialized so you can't go from.
Speaker 1: Aspirator a goal to to to sales in one step yet to go through the Pivot to that but when I mentioned that our orders coming from Those sources are up 38 percent. It's a really good sign that our team has made that pivot and they've started to Engage new customers. You know, I mentioned in the quarter Some of our press releases were now heavy into the freighter conversion Markets when
Aspiration goal.
Sales in one step you have to go through the pivot to that but when I mentioned that our orders coming from both sources were up 38%. It's a really good sign that our team has made that pivot and they've started to engage new customers I mentioned in the quarter. Some.
Some of our press releases, we're now heavy ended the freighter conversion markets win.
Speaker 1: an operator requires, let's say, used A321s that got to modify the fuselage and put it in the main cargo door and at actuation we provide that. But they have to modify the interior, we do that work.
When our.
Operator acquired let's say used <unk> hundred 20 ones, they've got to modify the fuselage and put it in our main cargo door at actuation, we provide that.
They have to modify the interior we do that work.
So that's an example of new products New services, they excel America's JV with Air France KLM is another example.
Speaker 1: So that's an example of new products, new services. Big Cell, America's JV with Air France KLM is another example. And we've been working on this for a couple of years. It's now officially live. And what it's focused on in partnership with Air France, which is a 14,000 person, you know, MRO business, that will have all the North and South Americans.
We've been working on this for a couple of years is now officially live and what it's focused on in partnership with Air, France, which is a 14000 person.
MRO business that will have all of the north and South American.
Speaker 1: 737, MAX, the 787, the 8320 NEO, the 8350s, all the new and coming aircrafts on the cell, overhaul repair work, mostly thrusters, so that's another example of another partnership and going after.
737.
Max the 787% to <unk> hundred 20, <unk> hundred <unk> all of the new incoming.
Aircrafts.
Sell overhaul repair work, mostly thrust reversers. So thats. Another example of another partnership and going after.
Speaker 1: new new segment, new platforms that are currently not in our third party Emerald Business. As far as IP, what we're really focused on
New.
New segment, new platforms that are currently not in our third party MRO business as far as IP.
But we're really focused on is our core products.
Speaker 1: Philpoms, actuation, heating changes.
Fuel pumps actuation.
Exchangers and engine controls so those four products and.
Speaker 1: engine controls, those four products. And when Triumph was tied on cash as we've been for the last few years, we really had to work with customer-funded R&D.
Triumph was tight on cash as we have been for the last few years, we really had to work with customer funded R&D.
Speaker 1: And we've been very successful at that. Companies like GE have helped develop like the next generation military fuel pump that will benefit multiple plants.
And we've been very successful at that companies like GE have helped develop like the next generation military fuel pump that will benefit multiple platforms and thats. The key is is don't do one shot.
Speaker 1: And that's the key is don't do one shot IP that's a point solution for a program but develop a core product that can be applied to multiple applications and platforms.
IP, that's a point solution for program, but develop a core product that can be applied to multiple applications and platforms.
Speaker 1: So we're all about that, trying to figure out how to both develop and partnership with our customers and then apply these new products. The percentage of IP are higher than I think you called it, like 15%. Yeah, it's worth 60%. In fact...OOM.
<unk>.
We're all about that trying to figure out how to.
Both developed in partnership with our customers and then apply these these new products the percentage of IP are higher than I think you called out at 15%.
It's more like 60% in the systems that support business.
Speaker 1: IP driven and when you add in the sole source it can be up to 90% in that
Driven and when you add in the sole source it can be up to 90% in that segment. So we plan to continue to expand that.
Speaker 1: So we just plan to continue to expand that. And one other change that relates to this is try and fuse to go to market through separate companies and sell peace parts. Now we go to market on subsystems like landing gear where we can not only sell the actuators that raise lower gear.
One other change that relates to this is trying to use to go to market.
Two separate companies and sell piece parts now we go to market on sub systems like landing gear, where we can not only sell the actuators that.
Raised lower gear, but the up locks as well it's been a good platform for us.
Speaker 1: well, it's been a good platform for us. And our Seattle R&D side is now developing programs that benefit multiple VM sites across the company. So we're excited about it. The leadership team knows that they have to pivot from contraction and divestiture to growth, and the IP business will be a key part of that. Thank you very much.
And our Seattle R&D side is now.
Developing programs that benefit multiple.
OEM sites across the company. So we're excited about the leadership team knows that they have to pivot from contraction in divestiture.
Growth in the IP business will be key part of it.
Great. Thank you very much thank you.
Okay.
Speaker 2: Thank you. Miles Walton, please state your affiliation, followed by your question.
Thank you Myles.
Myles Walton please state your affiliation followed by your question.
Speaker 4: Exit the EBS. Good morning. I was hoping you could give us some color on the EPS implied for the fourth quarter and sort of what's underlying. Obviously an increase in exit margins, I think somewhere in the 12 to 13%. And I wonder is the aviation manufacturing jobs program in that number, I think there's still about 17 million left to run through the P&L. Is that the source of the upside to EPS?
Thanks UBS.
Good morning, I was hoping you could give us some color on the EPS implied for the fourth quarter and sort of whats underlying obviously.
An increase in exit margins I think somewhere in the 12% to 13%.
And I Wonder is the aviation manufacturing jobs program.
In that number I think theres still about $17 million left to run through the P&L and is that the source of the upside to EPS.
Yeah. Thanks allows us Jim.
Speaker 1: Okay, thanks, Miles, this Jim. That is part of the mix. Certainly the MJP money, we got 10 million in the quarter of cash. We recognized about 2.7 in the third quarter. And that can recognize over the six month period. So there will be some of that in the...
That is part of the mix is certainly the MJ P money, we got $10 million in the quarter of cash we recognized about $2 seven in the third quarter.
And that gets recognized over the six month period. So there will be some of that in the fourth quarter fourth quarter is also seasonally strong quarter and of course, we're seeing the ramp on certain programs. We have some delays in military programs that should benefit there was a delay in Q3 will benefit Q4.
Speaker 1: Fourth course is also a seedling strong quarter and of course we're seeing the ramp on certain programs. We have some delayed the military programs that
Speaker 1: It was a delay in Q3, it was a benefit Q4. So it's a lot in the mix, but that is part of it. And we're pleased that the government is providing that support to make sure we have a tailored workforce that continues, so we're ready for the ramp.
It's a lot in the mix, but that is part of it and we're pleased that the governor is providing that support to make sure. We have tailored workforce that continues so we're ready for the ramp moving forward.
Speaker 4: And then just the clarification on upper Dan or Dan, but the doubling of EBITDA from 2022 to 2025 fiscal, is that, you know, it looks like implied EBITDA for this year, somewhere in the EBITDAp, I imagine you're, we're talking about somewhere in the 180 range, I think based on your numbers. Is that doubling that number or doubling it less the divestitures that you made?
Okay, and then just a clarification on that.
For Dan or Jim, but the doubling of EBITDA from 2022 to 2025 fiscal is that.
<unk>.
It looks like the implied EBITDA for this year somewhere in the EBIT.
EBIT tap I imagine you are talking about somewhere in the 180 range I think based on your numbers.
Is that doubling that number or doubling it less the divestitures that you made.
Speaker 1: And we're so to target so it would be doubling in the continuing business of course we can't double
And target.
So to targets so it will be doubling the continuing business of course, we can't double.
EBIT that we may have sold businesses, but if you look at what we did in the quarter, it's about $41 $42 million of EBITDA in the quarter for the whole company.
Speaker 1: e-bidap that we may have sold with businesses, but if you look at what we did in the quarter, it's about 41, 42 million, it'll be a bit of a gap in the quarter for the full company. And year to date, I think we're at 123 million, but the fourth quarter is the strongest quarter of...
And year to date I think we're at $123 million for the fourth quarter is the strongest quarter of the year.
Speaker 1: It's a target we're working towards internally. We see the levers to get there and look forward to giving guidance in the future towards that.
It's a target we're working towards internally, we see the levers to get there.
Look forward to giving guidance in the future towards that.
Okay alright, thank you.
Speaker 2: Thank you. David Strauss, a peace state, your affiliation, followed by your question.
Thank you.
David Strauss. Please state your affiliation followed by your question.
Yes, Thank you Barclays.
Hi, Jim the 166 million in nonrecurring cash items.
Speaker 6: Jim the 166 million in on recurring cash items in. What does that bucket look like in 23?
What does that market look like in 'twenty three.
Speaker 1: Yes, thanks Dave. Well, you know, I can tell you what's going on the current here. We got 28 million of those in the current quarter, 21 million liquidation or advances, 8 million on the 4-7 funding. The 4-7 shipped out.
Yes, Thanks, Dave.
What I can tell you is what's going on in the current year, we had $28 million of those in the current quarter $21 million of liquidation of advances $8 million of the $4 seven funding 407 shipped out.
Speaker 1: The production is complete, we have some shipments in the first half of this year. So there'll be some wrap up on 4.7, but that shouldn't be that large. The advances at the end of December were about 124 million. And...
Production is complete we had some shipments in the first half of this year. So it will be some wrap up on 47, but that shouldnt be that large.
<unk> at the end of December were about $124 million.
And we've already.
We spent our $21 million in liquidation in Q4, So we're down right now at this point in time about $103 million of events.
Speaker 1: We spent our 21 million liquidation in Q4, so we're down right now at this point in time about 103 million.
Speaker 1: And then between now and when we announce the steward closure, we'll be able to tell you more about what the pommies and liquidations are remaining.
And then between now and when we announced the Stewart closure will be able to tell you more about what the timing of the liquidation of the remaining events, which will be.
Speaker 6: Okay, on 747 you are applying the cash cost or normal current cash costs are going to be higher in 23 than 22
Okay.
Seven you are applying the cash cost or nonrecurring cash costs are going to be higher in 2022.
Speaker 1: no no no that that they're winding down that there's going to be some residual as we close up the remaining factory where we're storing them and shipping them from but it was only eight million dollars in this quarter and it'll be best less moving
No no that that theyre winding down that theres going to be some residual as we close up the remaining factory where were storing them and shipping them from.
It was only $8 million in this quarter and it'll be best less moving forward, Okay got it.
Speaker 6: Okay, got it. And any sort of early look on pension income, what that could look like in 23 versus, I guess you're running this year, like 55, 56 million pension open.
<unk>.
Any any sort of early look on pension income what that was.
That could look like in 2003 versus I guess youre running this year like 50 556 million pension and OPEC.
Speaker 1: You have to be the most important part of pension is what funding we have to put into the trust. And there's no funding required over the next four years than our forecast right now. So interest rate going up is going to reduce our liability.
As mentioned to me the most important part pensioners with funding we have to put into the trust and Theres no funding required over the next four years in our forecast right now so interest rates going up is going to reduce our liability.
So I don't have exact number, but it's not going to change materially and if it does it's going to be a noncash change.
Speaker 1: So I don't have exact number but it's not going to change materially and if it does it's going to be a non-cash change. Got it. Okay.
Got it okay. Thanks very much.
Thank you.
Michael <unk>. Please state your affiliation followed by your question.
Speaker 2: Michael Kermoli, please state your evaluation followed by your question.
Yes.
Speaker 4: Truest securities. Thanks, good morning guys. Maybe Jim just to stay on David's line of questioning on the cash. I guess, some of you're not going to give some sort of walk here to 23, but should we just assume as things stand today without any detail from Stuart, you still have about 20 million per quarter of liquidations?
True Securities.
Good morning, guys.
Maybe.
Jim just to stay on David's line of questioning on the cash I guess.
Youre not going to give some sort of walk year to 23, but it should we just assume as things stand today without any details from Stuart you still have about $20 million per quarter of liquidations, and then can you give us a sense.
Speaker 4: And then can you give us a fence, you know, what did Stuart or what will it come bought or contribute to free cash flow this year and catbacks so we can kind of get some sort of level setting for next year?
What did Stuart.
What will it.
Contribute to free cash flow this year in Capex. So we can kind of get some sort of level setting for next year.
Speaker 1: Yeah, sure. In terms of advances, next year will be the last year, there's any advanced liquidation. And the exact timing of those is going to be determined between now and the store closed.
Yeah sure in terms of advances next year will be the last year, there's any advanced liquidations and the exact timing of those is going to be determined between now and the store closings.
Speaker 1: In terms of CAPEX run rate, we did spend 7 million of living in the quarter, and as a normalized run rate moving forward for the continuing business. Remember that with the remaining portfolio, it's much less capital intense. Actually more R&D intense, and we're spending more on R&D, both customer-funded and funding ourselves. And that's gonna help us improve our margins and our mix of it.
In terms of Capex run rate, we did spend $7 million I believe in the quarter and that's <unk>.
A normalized run rate moving forward for the continuing business remember that with the remaining portfolio, it's much less capital intense, especially more R&D intense and we're spending more on R&D.
Both from customer funded in funding ourselves and Thats going to help us improve our margins and our mix of business moving forward.
Speaker 4: Out of the capex issue, how much was related to Stuart?
Okay.
Out of the out of the Capex. This year, how much was related to Stewart.
Okay.
Speaker 6: $70 million. A couple million dollars maybe. Hello. Okay. Okay. And then just last one, on the guidance, the drivers to the downward revisions, to the low end of the ranges on revenue and cash. First, I'm assuming Stuart still in there, and is that just the function of kind of what you called out the 787 and the deferred military orders things, sliding into 23.
There's very little as a couple of million dollars, maybe hello, okay. Okay.
And then just last one on the guidance the drivers to the downward revisions to the low end of the ranges on revenue and cash flow.
I'm, assuming steward selling still in there and is that just a function of kind of what you called out the 787% deferred military orders things sliding into 'twenty three.
Speaker 1: Yes, exactly right. Some sewer is bill in there in the guidance until we actually close. Got it. Alright, great. Thanks.
Yes, it's exactly right. So Stuart is still in there.
Guidance until we actually close.
Got it alright, great. Thanks, guys. Thank you.
Thank you.
Speaker 2: Mariana Perez-Mora, we state your affiliation followed by your question.
Mariana Perez Mora. Please state your affiliation followed by your question.
Everyone. This is Mario <unk> from Bank of America.
Thanks, Brian .
Speaker 7: So this is a follow up to Mike's question. One, it's also related to free cash flow. How should we think about made to long-term target free cash flow? And what are the key variables that will determine when and if you are able to achieve that?
So this is a follow up to Mike's question one.
It's also related to free cash flow.
How should we think about mid to long term target free cash flow and what are the key variables that will determine when and if you are able to achieve that.
Speaker 1: So thanks for having me. The cash flows positive this quarter. It's going to be more positive in Q4.
So thanks Marianna cash flows positive this quarter, it's going to be more positive in Q4.
Speaker 1: and the drivers for cash will move before it. I can tell you what they are and you can do your own work until we give guidance to determine what you think we can achieve relative to our peer group.
The drivers for cash flow moving forward I can tell you what they are and you can do real work until we give guidance to determine what you think we can achieve relative to our peer group, but these portfolio actions have been important they are improving our margins moving forward.
Speaker 1: But these portfolio actions have been important. They're improving our margins moving forward. And for example, our aftermarket business, which is so important because it has higher margin, it spares and repairs, has moved from 24% in last year's third quarter, up to 32% in this...
For example, our aftermarket business, which is so important because it is higher margin and spares and repairs has moved from 24% in last year's third quarter up to 32% this quarter.
Speaker 1: So that's going to be an important source of cash flow on March as we move forward. The operational efficiencies, we spent a lot of time on restructuring that's really reduced substantially now with the 4.7 being less piece of it and Spokane. That's going away in the benefits of the restructuring actions and our ability to focus on our operating efficiencies in the core business are going to have the benefits to profitability and cash flow.
So that's going to be.
Of cash flow margins moving forward the operational efficiencies. We've spent a lot of time on the restructuring thats really reduced substantially now with the $4 7 million last piece of it in Spokane, that's going away and the benefits of the restructuring actions and our ability to focus on our operating efficiencies in the core business are going to have a benefit to <unk>.
Stability and cash flow as well.
Speaker 1: We've been able to reset pricing on some key programs where we're not making money previously to some normalized margins, and that's going to be helpful.
We've been able to reset pricing on some key programs were not making money previously to some normalized margins and thats going to be helpful.
Speaker 1: We've been able to get cost reductions working with our supply chain.
We've been able to get cost reductions working with our supply chain.
Speaker 1: and increases in volume are going to drive the bottom line. As we see, we turn to service on the 737 MAX and the 787 and some of the military.
And increases in volume are going to drive the bottom line as we see return to service on the 707, Max and the 787 and some of the military programs start to ramp back up.
Speaker 1: So there's a lot of tailwinds for us moving forward on profitability cash flow. It's not going to happen overnight as, you know,
So there's a lot of tailwind for us moving forward on profitability cash flow, it's not going to happen overnight.
Pat last couple of years.
Speaker 1: has been lumpy but we're certainly much more predictable and profitable business now. And we've just completed that Stewart-Devestiture and announced the enclosure that we'll look for to give more insight into the drivers with any...
It's been lumpy, but we're certainly much more predictable and profitable business now and we've just completed that Stuart divestiture.
Announcer closure that we will look forward to give more insight into the drivers within each of the offices.
Speaker 7: Thank you. And then my follow up is on interior business. Could you mind discussing what is the breakdown between now-body and live-body exposure? I've done before, I haven't go to two very long days I've done before, I've done before, I haven't gone to two very long days
Thank you and then my follow up is on the ETF business would you mind discussing what is the breakdown between narrow body and wide body.
Hello.
Well.
First tell you that.
Speaker 1: Are we in business? Is 74% last year down to 66?
OEM businesses is 74% last year down to 66 this year.
Speaker 1: Our largest program for an air body right now is the Airbus program, followed by 737. So you can look in the presentation on page 14 and you'll see a breakdown of all of our programs and what percentage of backlog they comprise. So for example, A321 is 7% of our overall backlog.
Our largest program for narrow body right now is the Airbus program, followed by 737. So you can look in the presentation on page 14, and Youll see a breakdown of all of our programs and what percentage of backlog that comprise so for example, <unk> hundred 21.
7% of our overall backlog.
Speaker 1: And you can see by the color cutting on there what portion is in the structures business and what is in
And you can see by the color coating on there what portion is in the structures business and what is in the.
Systems and support business, that's the gray side. So I think we are.
Speaker 1: So I think we provide this additional information a couple quarters ago to start to give people better insights into what the quality of our backlog is and what sales going forward is going to look.
Providing this additional information a couple of quarters ago to start to get people better insights into what the quality of our backlog is in with sales go forward, it's going to look like.
Thank you.
Yes.
Speaker 2: If there are no further questions, this concludes today's Triumph Group's third quarter fiscal year 2022 earnings conference call. This call will have a replay that will be available today at 11.30am Eastern Standard Time, through the 24th at 11.59pm Eastern Standard Time.
Since there are no further questions. This concludes today.
<unk> group's third quarter fiscal year 2020 earnings conference call.
This call will have a replay that will be available today at 11 30, a M. Eastern standard time through the 24th at 11 59 P M Eastern standard time.
Speaker 2: You can access the replay by dialing 1-800-585-8367. And then during access code 6195-355. Again, to access the report, you can dial 1-800-585-8367.
You can access the replay by dialing one 805 85867, and then doing access code six 195.
The five five again Jacksons. The reports you can dial one 800 580 58367.
Speaker 2: and enter in the access code 6195355. Thank you all for participating and have a nice day. You may not
And the access code six one.
90 5355.
You all for participating and have a nice day.
You may now disconnect.
Yeah.
Okay.
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Speaker 8: No.
Yes.
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Speaker 9: ["DOUNA Pieterweg Tmejn Vlog.
Okay.
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