Investor Presentation

Transcription

1 November 2017 Investor Presentation Daniel J. Crowley, President and Chief Executive Officer James F. McCabe Jr., Senior Vice President and Chief Financial Officer Sheila G. Spagnolo, Vice President, Tax and Investor Relations

2 Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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, 2017.

3 Company Overview Global leader in manufacturing aerospace structures, aircraft systems and components, repair and overhaul Four operating segments: Integrated Systems Aerospace Structures Precision Components Product Support Supplier to all major aircraft Original Equipment Manufacturers (OEMs) NYSE:TGI Headquarters: Berwyn, PA Incorporated: 1993 Employees: ~13,900 Fiscal year ending: March 31 Regional, 2% Non-Aviation, 1% Business, 18% Sales by Market (FY 17) $3.5B Provides maintenance, repair and overhaul (MRO) services to numerous passenger airlines and cargo carriers Military, 22% worldwide Commercial, 57% Market cap as of 9/30/17: $1.45B Shares outstanding: 49.6M FY 17 revenues: $3.5B FY 17 adjusted EPS: $6.54M Backlog as of 9/30/17: $4.3B

4 Investment Considerations Operational and financial transformation being led by new management team with significant industry experience Well positioned on large mature platforms balanced with high growth potential development programs Poised for growth in high margin Integrated Systems and Product Support segments Broad range of design and manufacturing capabilities producing proprietary products for mission critical applications Sole source supplier on numerous aircraft platforms Improved balance sheet strength and liquidity provide financial flexibility to fund transformation initiatives

5 FY18 Budget $ Billions Market Trends Military Military budget outlook $632B (+OSC) Triumph opportunities on multiple platforms: - T-X, B21, MQ-25, T-38/F15 SLEPS, Light Attack CH-53K ramp up adds nearer term growth Commercial Commercial aviation remains long term growth industry - 41,000+ new airplanes in next 20 years - 11 year production backlog at current production rates - Triumph benefiting from narrow-body rate increases Increasing long-range business jet outlook Higher efficiency engine development programs ecommerce shipments driving aircraft sales and MRO A/C deliveries & MRO center of mass shifting to Asia Vertical integration, off-shoring, IP ownership M&A accelerating Healthy market, growing demand, increasing opportunities. 5

6 Serving the entire aircraft lifecycle at all levels of the supply chain Engineering: A highly skilled team of professionals paired with our worldclass test lab and advanced tooling process Manufacturing & Assembly: Manufactures, finishes, and assembles components and sub-assemblies from nearly every material used in the industry Systems: Designs, develops and supports proprietary components, subsystems and systems Support: Tailors solutions to best fit any operator or platform by providing rotables and alternate repair solutions to help mitigate cost risks

7 Global Operating Footprint Approximately 13,900 employees and 17 specialized operating companies with locations across the United States, Europe, Asia, and Mexico

8 Integrated Systems ~$1.0B Product Support ~$340M (FY 17) Revenue Consolidated Highlights Precision Components ~$1.0B Aerospace Structures ~$1.3B Sales by Market (FY 17) $3.5B Regional, 2% Business, 18% Non-Aviation, 1% Adjusted Segment Operating Income (FY 17) $500M Product Support, 11% Precision Components, 9% Military, 22% Commercial, 57% Aerospace Structures, 37% Integrated Systems, 43%

9 Integrated Systems Superior design, development and support of proprietary components and systems as well as production of complex assemblies using external designs

10 Overview Products & Services Major Customers Business Overview Sales by Market (FY 17) $1.0B Regional, 3% Non-Aviation, 3% Business, 6% Integrated solutions, including design, development, and support of components and systems and sub-systems Boeing Airbus Lockheed Martin GE $1.0B Revenue (FY 17) ~2,776 Employees 18 Locations Military, 36% Commercial, 52% Capabilities Actuation & Controls Gear Systems Thermal Management Fuel Systems Flight Controls

11 Integrated Systems Highlights Broad platform participation Well positioned on ramping aircraft programs Engaged on new start programs Targeting own aftermarket Winning dual-source opportunities/takeaways Player in aircraft electrification TGI investment priority

12 Product Support Superior lifecycle solutions for commercial, regional and military aircraft for OEMs and operators

13 Overview Products & Services Major Customers Business Overview Sales by Market (FY 17) $1.0B Regional, 2% Business, 8% Non-Aviation, 1% Close-tolerance parts to customer designs and model definition Boeing Airbus Northrop Grumman $1.0B Revenue (FY 17) ~5,437 Employees 26 Locations Military, 18% Bell Helicopter Commercial, 71% Capabilities Structural Component Repair Accessory Component Repair Line Maintenance Fuel System Services Interior Refurbishment

14 Product Support Highlights Strong customer relationships Supporting out of production and new fleets Partnering with OEMs on sustainment LTAs Winning new MRO work Partnering with leading distribution companies Expanding customer base

15 Precision Components Unparalleled precision component capability, including a wide range of metal and composite structures

16 Overview Products & Services Major Customers Business Overview Sales by Market (FY 17) $1.0B Regional, 2% Business, 8% Non-Aviation, 1% Close-tolerance parts to customer designs and model definition Boeing Airbus Northrop Grumman $1.0B Revenue (FY 17) 5,479 Employees 26 Locations Military, 18% Bell Helicopter Commercial, 71% Capabilities Small to Medium Machining Complex Machining Composites Long & Large Machining Specialty Machining Fabrications

17 Precision Components Highlights New leadership appointed Rationalized footprint into centers of excellence Bidding consolidation savings into new bids Increased work share on F-35 components BU leading new business win rate

18 Aerospace Structures Extensive capabilities to engineer complex metallic and composite aerostructures

19 Overview Products & Services Tier 1 capabilities to manufacture large complex structures and integrate sub-systems for military and commercial OEMs Major Customers Gulfstream Boeing Airbus Bombardier Business Overview $1.3B Revenue (FY 17) ~4,480 Employees 8 Locations Sales by Market (FY 17) $1.3B Business, 39% Military, 14% Commercial, 47% Capabilities Aircraft Wings Fuselages Fuselage Panels Empennage Nacelle Products

20 Aerospace Structures Highlights Strength of relationships with key customers reaffirmed Supplier relationships secured E2 and Global 7000 transitioning to production Redefining strategic footprint Exceeded site reduction cost targets

21 Top Programs Integrated Systems Aerospace Structures Precision Components Airbus A320, A321 Boeing 737 Boeing 787 Boeing V-22 Boeing AH-64 Boeing CH-47 Lockheed Martin C-130 Sikorsky UH60 Lockheed Martin F-35 Boeing 777 Represents 58% of Integrated Systems backlog Gulfstream Boeing 767, Tanker Bombardier Global Airbus A330, A340 Boeing 747 Boeing V-22 Boeing 777 NG Global Hawk Bell Helicopter 525 Embraer E2 Represents 97% of Aerospace Structures backlog Boeing 777 Boeing 787 Airbus A350 Boeing 737 Boeing 767, Tanker Boeing V-22 Boeing F-15 Bell Helicopter AH1 Bombardier C Series NG Global Hawk Represents 73% of Precision Components backlog 21

22 Transformation Plan Initiatives Develop Foundation Strengthen Senior Leadership team Restructure from 6 to 4 market focused business units Reduce operating companies from 47 to 17 Build new culture Execute on 3 Imperatives Rollout new Triumph Operating System (TOS) companywide to enhance efficiencies Reduce staffing, improving competitiveness Align performance incentives with value creation Become Predictably Profitable Enhance financial flexibility with bank financing and restructure of long-term debt Implement $300 million cost reduction initiative by FY19 Consolidate 9 sites plus 3 divestitures, reducing square footage by ~1.3 million sq. ft. Divest non-core operating companies up to 10% of revenue Execute cash conversion initiatives One Triumph Deliver on Customer Commitments Achieve consistent green performance on all programs Reduce number of red programs by 80% Bring capacity inline with industry benchmarks Improve supply chain Pursue Attractive Organic Growth Restart organic growth engine Pursue key wins on growth platforms Add new business development talent Resolve long-standing disputes with key customers Develop cross-portfolio solutions for customers Receive follow-on work

23 Transformation Progress Enabling Increased Efficiency Completed 822 continuous improvement events YTD $43M in cost reduction YTD towards $96M goal Two additional facility closures announced in Q2 3rd divestiture successfully completed in Q2 Reduced footprint by 1.3M sq. ft. to date Closed Bombardier Global 7000 negotiations in Q2 Improved working capital management Cost reductions on track, enhancing competiveness and financial performance 23

24 Transformation on Track

25 Driving Organic Growth Competitive Wins Customer BU A320 V2500 Support AA / VA TPS CFM56 Int. Gear Box GE TIS Follow-on Business Customer BU V-22 Sponson & Fuse Comp's Boeing TPC ECS Ducting & Floor Panels Boeing TPC C5 MLG Rotary Actuators DLA TIS Partnership Customer BU T-X Trainer Structure & Systems Boeing TAS +7% +41% $12B Pipeline (50% Military)..7% YTD backlog growth to $4.3B 25

26 Summary Financial Results Fiscal Year ends March 31 ($ in millions) FY 15 FY 16 FY 17 Net Sales $3,888.7 $3,886.1 $3,532.8 Operating Income ( )* 56.9 Adjusted EPS Adjusted EBITDA (167.1) *FY 16 included $1,434.2m of non-cash impairment charges and provisions for forward losses

27 Recent Quarterly Results ($ in millions) FY 18 Q2 FY 17 Q2 Variance % Net Sales $745 $875 (15)% Operating Income (73)% Operating Margin 3% 8% Adjusted Operating Income (43)% Adjusted Operating Margin 7% 10% Revenue & Earnings ramp through 2H FY'18 Organic sales decrease was 12% Net sales decrease due to: Boeing and Gulfstream program completions and rate reductions Timing of deliveries on certain programs Partially offset by increased production on 767/Tanker & Global Hawk/Triton Adjusted operating income excludes: $20M loss on divestiture $11M restructuring costs Adjusted operating income and margin improved sequentially 27

28 Free Cash Flow Walk - FY'18 Q2 Consolidated ($ in millions) FY 18 Q2 FY 18 YTD Net Income $ (5) $ (7) Non-cash items: Depreciation & Amortization Interest Expense & Other Amortization of Acquired Contracts (28) (57) Loss on divestiture Pension Income (15) (30) OPEB Income (3) (6) Income Tax Benefit (1) (2) Cash uses: Working Capital Usage (221) (300) Interest Payments (8) (32) Capital Expenditures (11) (23) OPEB Payments (3) (6) Tax Payments (2) (5) Free Cash Use $ (211) $ (322) Q2 Cash Drivers Development programs used $33M Restructuring used $10M Net working capital usage of $221M includes: Reduction of customer advances Build of production inventory Reduced vendor financing Peak cash usage through Q3, recovering in Q4 On track to achieve guidance 28

29 Improved Balance Sheet Strength & Liquidity ($ in millions) FY 18 Q2 Cash $ (34) $800M Revolving Credit Facility 117 $125M Receivable Securitization Facility 89 Capital Leases Senior Notes Due Completed $500M bond offering Amended and extended Securitization Facility Cash and Availability ~ $680M Senior Secured Leverage Ratio ~ 1.1x Interest Coverage Ratio ~ 3.5x 2014 Senior Notes Due Senior Notes Due Other Debt 8 Net Debt $ 1,416 Enhanced Financial Strength & Liquidity 29

30 w FY'18 Guidance FY 18 Guidance Net Sales $3.1B - $3.2B Adjusted EPS * $ $2.75 Free Cash Use ^ ($450M) - ($500M) Effective Tax Rate ~ 6% Capital Expenditures $80M - $90M $50M - $60M *excludes restructuring costs of $54M for FY'18 ^ Potential opportunity to lower through release of valuation allowance and use of deferred tax benefits from prior divestitures. Expect third quarter effective tax rate of approximately 15% Expect stronger 2nd half results, with Q4 better than Q3

31 Focused on Value Creation Leading positions in key aerospace segments Experienced management team Strengthening balance sheet to reinvest Operational turnaround yielding benefits

32 Our Vision Our Mission Our Values 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. 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. Integrity Continuous Improvement Teamwork Innovation Act with Velocity 32

33 Appendix 33

34 Management Bios Daniel J. Crowley, President and Chief Executive Officer Daniel J. Crowley was named President & CEO of Triumph Group in January Mr. Crowley joins Triumph from Raytheon Company, where he served as President of Integrated Defense Systems since 2013, with annual revenues over $6 billion, and Network Centric Systems from 2010 until Mr. Crowley brings 33 years of industry experience, including key leadership roles in the development, production and deployment of some of the largest and most complex aerospace and defense products, such as the P-3 and S-3 aircraft, the Atlas launch vehicle, commercial and classified spacecraft, the THAAD and Patriot defense missile defense systems, flight training and logistics, the F-35 Joint Strike Fighter and air traffic control systems. Prior to working at Raytheon, Mr. Crowley served in a variety of leadership positions at Lockheed Martin, including President of their training and logistics business, Executive Vice President of the F-35 Joint Strike Fighter Program and Chief Operating Officer of Lockheed Martin Aeronautics. As COO, Mr. Crowley was responsible for supporting Lockheed Martin s key tactical fighter and military transport programs as well as the Advanced Development Programs (Skunk Works ) organization. While serving as Executive Vice President of the F-35 Joint Strike Fighter Program, Mr. Crowley was responsible for the design, development and transition to initial production of three fighter variants and logistics system. Under his oversight, critical franchise aerospace and defense programs have contributed billions of dollars in backlog and revenue to their respective prime contractors in support of domestic and international customers. He earned a bachelor s degree in mechanical engineering and a master s degree in manufacturing systems engineering from the University of Texas at Austin. Mr. Crowley also received a master s degree in management from Stanford University as a Sloan Fellow. James F. McCabe, Senior Vice President and Chief Financial Officer James F. McCabe joined Triumph in August 2016 from Steel Partners Holdings, where he last served as Senior Vice President and CFO, President, Shared Services, and SVP and CFO of its affiliates Handy & Harman and Steel Excel. Prior to joining Steel Partners Holdings, Mr. McCabe served as Vice President, Finance and Treasurer of American Water s Northeast Region, and President and CFO of Teleflex Aerospace, which served the global aviation industry. Mr. McCabe received a Bachelor of Science degree in business and economics from Lehigh University. He is a certified public accountant and Six Sigma Green Belt, and served as a member of the Board of Governors and the Civil Aviation Council Executive Committee for the Aerospace Industries Association. 34

35 Non-GAAP Disclosure Non-GAAP Financial Measures Disclosures FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain, non-gaap financial measures in our public releases. Currently, the non- GAAP financial measures that we disclose is Adjusted EBITDA, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, deprecation and amortization. We disclose Adjusted EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-gaap financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-gaap financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations. We view Adjusted EBITDA as an operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-gaap financial measures as a result of these exclusions. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA as a substitute for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA. Adjusted EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our net income has included significant charges for depreciation and amortization. Adjusted EBITDA excludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, overtime, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA to provide a financial measure by which to compare our operating performance against that of other companies in our industry. Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and the material limitations associated with using this non-gaap financial measure as compared to net income: Divestitures may be useful for investors to consider because they reflect gains or losses from sale of operating units. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. Legal settlements may be useful to investors to consider because they reflect gains or losses from disputes with third parties. We do not believe that these gains or losses necessarily reflect the current and ongoing cash earnings related to our operations. Curtailments, settlements and early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) necessarily reflect the current and ongoing cash earnings related to our operations. Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of below market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. Amortization expenses (including impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. Deprecation may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these changes necessarily reflect the current and ongoing cash charges related to our operating cost structure. -More-

36 Non-GAAP Disclosure (Continued) Non-GAAP Financial Measures Disclosures (continued) FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. Management compensates for the above-described limitations of using non-gaap measures by using a non-gaap measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business. The following table shows our Adjusted EBITDA reconciled to our net income for the indicated periods (in thousands): Twelve Months Ended March 31, Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): Net Loss $ (42,952) $ (1,047,960) Add-back: Income Tax (Benefit) Expense 19,340 (111,187) Interest Expense and Other 80,501 68,041 Curtailment (Gain) Loss (1,244) Loss on divestitures 19,124 Legal Settlement (Gain) Charge, net 5,476 Amortization of Acquired Contract Liabilities (121,004) (132,363) Depreciation and Amortization 443,244 1,052,116 Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") $ 398,253 $ (167,121) Net Sales # $ 3,532,799 $ 3,886,072 Adjusted EBITDA Margin # 11.7% (4.5)% # Net Sales includes Amortization of Acquired Contract Liabilities. Since Adjusted EBITDA excludes Amortization of Acquired Contract Liabilities, we've also excluded it from Net Sales in arriving at Adjusted EBITDA margin throughout this document.

37 Non-GAAP Disclosure (Continued) Non-GAAP Financial Measures Disclosures (continued) FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted 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 tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs. Twelve Months Ended March 31, 2017 Pre-Tax After-Tax Diluted EPS Loss from Continuing Operations - GAAP $ (23,612) $ (42,952) $ (0.87) Triumph Aerospace Structures - Goodwill impairment 266, , Loss on divestitures 19,124 17, Income from Continuing Operations ex-goodwill impairment & divestitures 261, , Transformation related costs: Restructuring costs (non-cash) 10,797 9, Restructuring costs (cash) 42,177 38, Other adjustments: Triumph Precision Components - Strike related costs 15,701 14, Triumph Precision Components - Inventory write-down 6,089 5, Triumph Aerospace Structures - UAS program 14,200 13, Adjusted Income from Continuing Operations - Non-GAAP $ 350,774 $ 323,201 $ 6.54 * * Difference due to rounding

38 Non-GAAP Disclosure (Continued) Non-GAAP Financial Measures Disclosures (continued) FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted 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 tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs. Twelve Months Ended March 31, 2016 Pre-Tax After-Tax Diluted EPS Loss from Continuing Operations - GAAP $ (1,159,147) $ (1,047,960) $ (21.29) Adjustments: Triumph Aerospace Structures - Goodwill / Tradename impairment 874, , Triumph Aerospace Structures - Bombardier impairment 399, , Triumph Aerospace Structures forward loss ^ 161,400 99, Restructuring charges 80,956 49, Other inventory impairments 34,353 21, Legal settlements, net 5,476 3, Curtailment (gain) loss (1,244) Valuation allowance 146, Adjusted Income from Continuing Operations - Non-GAAP $ 395,913 $ 264,816 $ 5.37 * * Difference due to rounding ^FY forward loss was driven by customer imposed production rate reductions; operational and contractual improvements in FY 17 resulted in partial reversals of this reserve and have not been removed from adjusted earnings in FY 17.

39 Non-GAAP Disclosure (Continued) Non-GAAP Financial Measures Disclosures (continued) FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) Cash provided by operations has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for and consideration of strategic acquisitions, stock repurchases 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 available for debt reduction. Twelve Months Ended March 31, Cash flow from operations $ 281,319 $ 83,863 Less: Capital expenditures (51,832) (80,047) Sale of assets 16,823 Sale of businesses 69,364 Free cash flow $ 315,674 $ 3,816 We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital: Calculation of Net Debt March 31, March 31, Current portion $ 160,630 $ 42,441 Long-term debt 1,035,670 1,374,879 Total debt 1,196,300 1,417,320 Plus: Deferred debt issuance costs 11,752 8,971 Less: Cash (69,633) (20,984) Net debt $ 1,138,419 $ 1,405,307 Calculation of Capital Net debt $ 1,138,419 $ 1,405,307 Stockholders' equity 846, ,944 Total capital $ 1,984,892 $ 2,340,251 Percent of net debt to capital 57.4% 60.0%

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