First Quarter FY’ Conference Call · B737 Interiors –MRO & Expendables US Airline TPS...

Daniel J. Crowley, President and Chief Executive Officer

James F. McCabe Jr., Senior Vice President and Chief Financial Officer

First Quarter FY’20 Earnings Conference Call

2TRIUMPH GROUP / Q1 FY’20 / July 31, 2019

Forward Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking

statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “project”, “may”, “will”,

“should”, “could”, or similar words suggesting future outcomes or outlooks. These forward-looking statements include, but are not limited to,

statements of expectations of or assumptions about strategic actions, objectives, expectations, intentions, aerospace market conditions, aircraft

production rates, financial and operational performance, revenue and earnings growth and profitability and earnings results. These statements are

based on the current projections, expectations and beliefs of Triumph’s management. These forward looking statements involve known and unknown

risks, uncertainties and other factors which could cause actual results to differ materially from any expected future results, performance or

achievements, including, but not limited to, competitive and cyclical factors relating to the aerospace industry, dependence on some of Triumph’s

business from key customers, requirements of capital, uncertainties relating to the integration of acquired businesses, general economic conditions

affecting Triumph’s business segments, product liabilities in excess of insurance, technological developments, limited availability of raw materials or

skilled personnel, changes in governmental regulation and oversight and international hostilities and terrorism. Further information regarding the

important factors that could cause actual results, performance or achievements to differ from those expressed in any forward looking statements can

be found in Triumph’s reports filed with the SEC, including in the risk factors described in Triumph’s Annual Report on Form 10-K for the fiscal year

ended March 31, 2019.


Overview

Organic revenue up 6% Q1

− All business units delivered organic revenue growth

Positive Cash Flow from Operations

− Free Cash use minimal

Program transitions progressing on schedule

− Transferred G650 final wing build

Reaffirms full year FY’20 Revenue, EPS and FCF guidance

Strong start to FY20


Sales Growth Drivers

Q1 Full Year

FY'19 $833M $3.4B

Divestitures (146M) (560M)

FY’19 Adjusted $687M $2.8B

TISOrganic

5% 1-5%Narrow body and engine components ramping, military platforms

TPSOrganic

7% 1-3%Domestic and Asia Accessory Components

TASOrganicQ1 primarily driven by legacy programs and engineering servicesFY driven by sunsetting programs

6% (4%)- 0%

FY’20 $730M $2.8B - $2.9B

All business units growing organically in first quarter


All business units winning, partnerships expanding

Organic Growth

Competitive Wins Customer BUB787 Composite Components Boeing Commercial TASLongitude MLG Actuator Cessna TISF-22 Actuator Overhaul Harris Corporation TISB737 Airframe Accessories US Cargo Airline TPS

Follow-on Business Customer BUV-22 Pylon Conversion Actuator Boeing Defense TISB767 AC Main Power Generator US Cargo Airline TPSB737 Interiors – MRO & Expendables US Airline TPSAftermarket Pumps & Valves Foreign Military TISLegacy Engine Overhaul Engine OEM’s TIS

Partnerships Customer BUeVTOL Engineering Services Jaunt Air Mobility TASMRO Strategic Partnership Air France TPSMRJ SpaceJet M100 Engineering Services MITAC TAS

• TIS Q1 Book to Bill: ~1.1:1

• TGI Reportable Backlog: $3.7B


Source: 2019 Oliver Wyman Global Fleet MRO Market Forecast

Total MRO Spend by Region: 2019 - 2029

TIS TPS PN

MRO Sites

Triumph MRO Coverage

Well-positioned to support robust global MRO demand

PN= Partnerships


Source: 2019 Oliver Wyman Global Fleet MRO Market Forecast

TGI MRO Focused on Components Segment

Triumph’s proprietary component portfolio well matched with market demand

• Gearboxes• Fuel & Hydraulic pumps, power packs, & RATs• Nose wheel steering• Power transfer units• Actuation & uplocks• Flight control surfaces

• Heat exchangers• Air & Vapor cycle machines• Thrust reversers• Inlets, nacelles• Hydraulic fuses, accumulators,

and control valves

• FADEC units• Generators• Fuel metering units• Winglets• Interior components• Insulation


Aftermarket Cross-Selling Strategy

Collaborating across business units to grow aftermarket

OEM Spare End Item Sales

OEM Spare Piece Part Sales

OEM Test, Repair &

Overhaul Services

Third-Party Test, Repair &

Overhaul Services

Triumph Integrated Systems Triumph Product Support

Repair Management Services

Platform OEMs Distributors Airlines &

Operators

Innovative Support Solutions

Military Engine / System

OEMs

Customers Actions:

− Assess leakage

− Upgrade talent

− Export Best Practices between businesses

− Engage TPS sales team

− Enhance customer support & responsiveness

− Go to Market as one TGI MRO team (1-833-FLY-WTGI)

− Create one face to the customer

− Continued execution of strategic partnership efforts to drive global reach


Consolidated Quarterly Results

($ in millions) FY’20 Q1 FY’19 Q1

Net Sales $730 $833

Operating Profit/(Loss) 36 (67)

Operating Margin 5% (8)%

Adjusted Operating Income* $42 $29

Adjusted Operating Margin 6% 3%

Organic sales increase of 6%

− Increase across all business units

FY’20 Q1 Adjusted operating income excludes:

− $3M restructuring costs

− $3M loss on sale

FY’19 Q1 Adjusted operating income excludes:

− $87M non-cash ASU 2017-07 pension charge

− $5M loss on assets held for sale

− $4M restructuring costs

Execution and portfolio actions enhanced operating results

*See Appendix for Non-GAAP reconciliation


Revenue

Integrated Systems

Highlights

• YTD Book to Bill of 1.1:1

• Successful Black Hawk test flight of TIS sensor fuel module

Financial

• Net sales increase included:

− Organic growth ~5% driven by increased volume on engine and military rotorcraft components

• Operating margin decline versus prior year driven by sales mix shift and costs relating to restructuring

• Restructuring costs impact on margin was 100 bps, excluding margins consistent with prior year

Growing topline – deliveries accelerate in Q2

$252 $241

0

100

200

300

Q1 FY'20 Q1 FY'19

OperatingIncome &

Margin

$35 $35

0

10

20

30

40

Q1 FY'20 Q1 FY'19

14.7% margin13.8% margin

First flight of Sikorsky Black Hawk Optionally Piloted Vehicle with TIS

sensor feel module


Revenue

Product Support

Partnering to expand global reach

$62 $66

0

20

40

60

80

Q1 FY'20 Q1 FY'19

OperatingIncome &

Margin

$9$8

0

5

10

Q1 FY'20 Q1 FY'19

11.6% margin15.0% margin

Highlights

• Forming strategic alliance with AirFrance-KLM announced at Paris Air Show

• Selected by a leading U.S. airline to provide MRO services for seats, passenger service units and sidewalls on narrow body aircraft

• Selected by a leading regional U.S. airline to provide MRO services on heat transfer units fleetwide

Financial

• Sales growing excluding divestitures

− Organic growth up 7%; Asia and US both experiencing growth

− Domestic - strong accessory component repair and increased pricing

− Asia - structural component repair and an increase in parts trading

• Operating margin increase of 340 bps

− Driven by implemented cost reduction initiatives and consolidations and improved pricing on accessory component repairs

TPS Announces Strategic Alliance with Air France KLM at Paris Air Show


Revenue

Aerospace Structures

Well positioned to compete in FY’20

$419$532

0

200

400

600

Q1 FY'20 Q1 FY'19

OperatingIncome &

Margin

$12

-$80-100

-80

-60

-40

-20

0

20

Q1 FY'20 Q1 FY'19

(14.9)% margin2.9% margin

Highlights

• Awarded Wing Center Section and Aft Fuselage producibility work packages on M100 SpaceJet Program

• Completed last G650 wing in Tulsa on-schedule

Financial

• Sales growing excluding divestitures

− Organic growth of 6% due to volume increases on legacy programs mainly, G550, HALE and 787 and engineering services

• Margin increase driven by

− Cost reduction initiatives and lower headcount

− Prior year includes ($87M) impact related to pension accounting

Mitsubishi Space Jet


Free Cash Flow Walk

Cash Drivers

Restructuring used $3M in Q1

Q1 FY’20 Net working capital growth of $44M includes:

− $20M advance liquidations

− $14M use on G280

− Increased inventory on ramping programs in TIS

See Appendix for reconciliation of cash used in operations to free cash use

Consolidated ($ in millions) FY’20 Q1

Q1 cash use supports path to positive FCF in FY’20

Net Income $ 18

Non-cash items:

Depreciation & Amortization 44

Interest Expense & Other 27

Amortization of Acquired Contracts (17)

Loss on divestiture 3

Pension Income (11)

OPEB Income ( 3)

Income Tax Expense 5

Cash uses:

Working Capital Change (44)

Interest Payments (13)

Capital Expenditures (8)

OPEB Payments (3)

Tax Payments, net (1)

Free Cash Use $ (3)


Net Debt & Liquidity

($ in millions) FY’20 Q1

Strong liquidity while maintaining covenant compliance

Cash and Availability ~ $520M

Senior Secured Leverage Ratio ~0.92x vs. 3.50x

Interest Coverage Ratio ~3.04x vs. 2.50x

Cash $ (29)

$700M Revolving Credit Facility 185

$125M Receivable Securitization Facility 58

Capital Leases 29

2013 Senior Notes Due 2021 375



Net Debt $ 1,418


FY’20 Guidance

*Represents the normalized tax rate which has the potential to be reduced through partial release of the valuation allowance

Business focused on core growth, improved margins and FCF generation

TGI Guidance

Revenue $2.8B – $2.9B

Adjusted EPS $2.35 – $2.95

FCF $0M – $50M

Capex $50M – $60M

Effective Tax Rate* ~21%


FY’20 Cash Flow Guidance

Generating positive Cash from Operations and Free Cash Flow

See Appendix for reconciliation of cash used in operations to free cash use

TGI Guidance

Cash from operations $50M – $110M

Capex $50M – $60M

FCF $0M – $50M

Advance Liquidations ($80M)


Concluding Remarks

• Delivered solid Q1 results

• Maintain positive Free Cash Flow guidance in FY’20

• Good momentum and strong start to FY’20


Our Vision

We aspire to be the premier design, manufacturing and support company whose comprehensive capabilities, integrated processes and innovative employees advance the safety and prosperity of the world.

Our Mission

As One Team, we partner with our customers to triumph over the hardest aerospace, defense and industrial challenges, enabling us to deliver value to our shareholders.

Our Values

Integrity

Continuous Improvement

Teamwork

Innovation

Act with Velocity


Appendix


Top Programs

Integrated Systems Aerospace Structures

Boeing 737 (all models)

Airbus A320, A321

Boeing 787

Boeing AH-64

Boeing CH-47

Sikorsky UH60

Lockheed Martin C-130

Sikorsky CH53

Boeing 777

Lockheed Martin F-35

Represents 57% of

Integrated Systems backlog

Gulfstream

Boeing 767, Tanker

Boeing 787

Boeing 747

Boeing 737 (all models)

Boeing 777

Airbus A330, A340

Airbus A350

Boeing V-22

NG Global Hawk

Represents 91% of

Aerospace Structures backlog


Supplemental Data

Pension/OPEB Analysis ($ in millions) FY’20 FY’19

Pension Expense (Income) ^ ≈ ($45) ≈ ($51)

Cash Pension Contribution ≈ $2 ≈ $5

OPEB Expense (Income) ^ ≈ ($11) ≈ ($10)

Cash OPEB Contribution ≈ $11 ≈ $12

^ Excludes impact from one-time adjustments such as curtailments, settlements or special termination benefits.


Non-GAAP Disclosure

Non-GAAP Financial Measure Disclosures (continued)

Adjusted income from continuing operations before income taxes, adjusted income from continuing operations and adjusted

income from continuing operations diluted per share, before non-recurring costs has been provided for consistency and comparability.

These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes,

income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP.

The following table reconciles income from continuing operations before income taxes, income from continuing operations and

income from continuing operations per diluted share, before non-recurring costs.

Pre-tax After-tax Diluted EPS

Income from Continuing Operations- GAAP 22,895$ 18,088$ 0.36$

Adjustments:

Loss on divestitures - incurred to date 3,136 2,477 0.05

Restructuring costs - incurred to date 2,964 2,342 0.05

Adjusted Income from Continuing Operations- non-GAAP 28,995$ 22,907$ 0.46$

Pre-tax After-tax Diluted EPS

Loss from Continuing Operations- GAAP (75,503)$ (76,534)$ (1.54)$

Adjustments:

Adoption of ASU 2017-07 87,241 85,474 1.72

Loss on divestitures 4,719 4,719 0.09

Restructuring costs (cash) 4,047 3,359 0.07

Adjusted Income from Continuing Operations- non-GAAP 20,504$ 17,018$ 0.34$

(dollars in thousands)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

FINANCIAL DATA (UNAUDITED)

June 30, 2019

Three Months Ended

June 30, 2018

Three Months Ended


Non-GAAP Disclosure


Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring

expenses, gains/losses on divestitures, defined benefit plan gains/losses from curtailments, settlements, etc; impairments of goodwill and other assets.

Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation.

The following table reconciles our Operating income to Adjusted Operating income as noted above.

June 30, 2019 June 30, 2018

Operating Income (Loss) - GAAP 35,511$ (66,548)$

Adjustments:

Adoption of ASU 2017-07 - 87,241

Restructuring costs (cash) 2,964 4,047

Loss on divestitures 3,136 4,719

Adjusted Operating Income-non-GAAP 41,611$ 29,459$

Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in

planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in

isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results

presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.

2019 2018

Cash flow provided by (used in) operations 5,018$ (65,714)$

Less:

Capital expenditures (8,090) (12,200)

Free cash use (3,072)$ (77,914)$

Three Months Ended

June 30,

Three Months Ended


TRIUMPH GROUP, INC. AND SUBSIDIARIES(dollars in thousands)


Non-GAAP Disclosure


(dollars in thousands)


TRIUMPH GROUP, INC. AND SUBSIDIARIES

The Company provides cash flow guidance on non-GAAP basis adjusting capital expenditures from cash from operations to arrive at free cash flow.

The following table reconciles cash from operations on a GAAP basis to free cash flow guidance.

Cash flow from operations

Less:

Capital expenditures

Free cash flow

FY 20 Cash Flow

Guidance Range

$50,000 - $110,000

$50,000 - $60,000

$0 - $50,000

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