UPDATES FISCAL 2023 SALES & EARNINGS GUIDANCE

BERWYN, Pa., Aug. 3, 2022 /PRNewswire/ -- Triumph Group, Inc. (NYSE:TGI) ("TRIUMPH" or the "Company") today reported financial results for its first quarter of fiscal 2023, which ended June 30, 2022.

First Quarter Fiscal 2023

Net sales of $349.4 million
Operating income of $14.7 million with operating margin of 4%; adjusted operating income of $32.6 million with adjusted operating margin of 9%
Net loss of $10.3 million, or ($0.16) per share; adjusted net income of $7.5 million, or $0.12 per diluted share
Cash flow used in operations of $93.0 million; core cash used in operations of $72.0 million

Fiscal 2023 Guidance

Net sales of approximately $1.3 billion
GAAP earnings per diluted share of between $1.51 - $1.71
Adjusted earnings per diluted share of between $0.28 - $0.48, down $0.12 due to a reduction in non-cash pension income
Cash used in operations of ($30.0) million to ($40.0) million, includes core cash flow from operations of between $30.0 million - $45.0 million

"TRIUMPH generated organic sales growth in our continuing operations driven by improving commercial OEM and MRO demand." said Dan Crowley, TRIUMPH's chairman, president and chief executive officer. "Our actions to mitigate supply chain constraints and work with our customers and suppliers to ensure continuity and affordability continue to differentiate TRIUMPH. With a growing and profitable backlog, TRIUMPH is well positioned to benefit from continued strength across nearly all of our end markets."

Mr. Crowley continued, "Consistent with our strategic plan, TRIUMPH recently completed the divestiture of its last remaining large structures operation. Our first quarter results keep us on track to achieve our full year objectives, and with our goal to double profitability over fiscal years 2022 to 2025, driven by improved OEM production rates, expanded MRO volumes, enhanced pricing from recent contract extensions and a lower cost structure. We remain focused on investing in our people, operations, and products for the benefit of all stakeholders."

First Quarter Fiscal 2023 Overview

Excluding divestitures and exited programs, sales for the first quarter of fiscal 2023 were up 1% organically from the prior year period as increases in commercial narrow-body production offset decreased military rotorcraft volume.

First quarter operating income of $14.7 million includes $0.7 million of restructuring costs related to our structures facility exits and $17.2 million reduction of revenue for consideration payable to customer related to the Stuart divestiture. Cost of sales benefited from the Aviation Manufacturing Jobs Protection Program by $5.0 million in the quarter. Net loss for the first quarter of fiscal 2023 was $10.3 million, or ($0.16) per share primarily due to the items noted above. On an adjusted basis, net income was $7.5 million, or $0.12 per diluted share.

TRIUMPH's results included the following:

*($ millions except EPS)*	Pre-tax		After-tax		EPS
Income from Continuing Operations - GAAP	$	(8.6)	$	(10.3)	$	(0.16)
Restructuring costs (cash)		0.7		0.7		0.01
Consideration payable to customer related to divestiture^		17.2		17.2		0.26
Adjusted Income from Continuing Operations - non-GAAP *	$	9.3	$	7.5	$	0.12
^ Recorded in net sales
* Difference due to rounding

The number of shares used in computing diluted earnings per share for the first quarter of 2023 was 65.3 million.

Adjusting for the impact of the Stuart divestiture, backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.53 billion, up 7% from the prior year, primarily on commercial narrow body platforms.

For the first quarter of fiscal 2023, cash flow used in operations was $93.0 million.

Outlook

The Company's outlook reflects adjustments detailed in the attached tables.

Based on expected aircraft production rates, and the resulting demand on each of our facilities, the Company expects net sales for fiscal 2023 will be approximately $1.3 billion.

The Company expects GAAP fiscal 2023 earnings per diluted share of $1.51 to $1.71, up $1.11 from prior guidance due to impacts of the Stuart divestiture and our interim pension re-measurement. The Company expects adjusted earnings per diluted share of $0.28 - $0.48, down $0.12 due to a reduction in non-cash pension income.

The Company expects fiscal 2023 cash used in operations of ($30.0) million to ($40.0) million, including core cash flow from operations of approximately $30.0 million to $45.0 million and core free cash flow of approximately break-even to $15.0 million.

Conference Call

TRIUMPH will hold a conference call today, August 3rd, at 8:30 a.m. (ET) to discuss the first quarter of fiscal 2023 results. The conference call will be available live and archived on the Company's website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast, and the presentation has been posted on the Company's website at http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from August 3rd to August 10th by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International), passcode #8597845.

About TRIUMPH

TRIUMPH, headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.

More information about TRIUMPH can be found on the Company's website at www.triumphgroup.com.

Forward Looking Statements

Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about financial and operational performance, revenues, earnings per share, cash flow or use, cost savings and operational efficiencies and organizational restructurings. All forward-looking statements involve risks and uncertainties which could affect the Company's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
	Three Months Ended
	June 30,
CONDENSED STATEMENTS OF OPERATIONS	2022		2021
Net sales	$	349,384	$	396,646
Cost of sales (excluding depreciation shown below)		272,400		293,678
Selling, general & administrative		51,745		56,251
Depreciation & amortization		9,806		15,431
Restructuring costs		699		4,485
Loss on sale of assets and businesses, net		—		5,969
Operating income		14,734		20,832
Interest expense and other, net		31,912		38,558
Debt extinguishment loss		—		9,689
Non-service defined benefit (income) expense		(8,586)		1,722
Income tax expense		1,750		1,214
Net loss	$	(10,342)	$	(30,351)
Loss per share - basic:
Net loss	$	(0.16)	$	(0.47)
Weighted average common shares outstanding - basic		64,820		64,299
Loss per share - diluted:
Net loss	$	(0.16)	$	(0.47)
Weighted average common shares outstanding - diluted		64,820		64,299

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
BALANCE SHEETS	Unaudited June 30, 2022		Audited March 31, 2022
Assets
Cash and cash equivalents	$	134,636	$	240,878
Accounts receivable, net		168,104		178,663
Contract assets		97,394		101,828
Inventory, net		379,929		361,692
Prepaid and other current assets		26,144		19,903
Assets held for sale		78,794		60,104
Current assets		885,001		963,068
Property and equipment, net		165,670		169,050
Goodwill		507,988		513,722
Intangible assets, net		81,875		84,850
Other, net		26,927		30,476
Total assets	$	1,667,461	$	1,761,166
Liabilities & Stockholders' Deficit
Current portion of long-term debt	$	2,968	$	3,268
Accounts payable		132,734		161,534
Contract liabilities		53,914		171,763
Accrued expenses		168,818		208,059
Liabilities related to assets held for sale		185,096		57,519
Current liabilities		543,530		602,143
Long-term debt, less current portion		1,587,073		1,586,222
Accrued pension and post-retirement benefits, noncurrent		287,621		301,303
Deferred income taxes, noncurrent		7,256		7,213
Other noncurrent liabilities		47,268		51,708
Stockholders' Deficit:
Common stock, $.001 par value, 100,000,000 shares authorized, 64,920,381 and 64,629,279 shares issued		65		64
Capital in excess of par value		971,390		973,112
Treasury stock, at cost, 0 and 14,897 shares		—		(96)
Accumulated other comprehensive loss		(469,251)		(463,354)
Accumulated deficit		(1,307,491)		(1,297,149)
Total stockholders' deficit		(805,287)		(787,423)
Total liabilities and stockholders' deficit	$	1,667,461	$	1,761,166

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
	Three Months Ended June 30,
	2022		2021
Operating Activities
Net loss	$	(10,342)	$	(30,351)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,806		15,431
Amortization of acquired contract liability		(523)		(1,214)
Loss on sale of assets and businesses		—		5,969
Curtailments, settlements, and special termination benefits loss, net		—		16,078
Other amortization included in interest expense		1,562		4,002
Provision for (recovery of) credit losses		200		(28)
Share-based compensation		1,578		2,247
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures:
Trade and other receivables		4,474		(1,321)
Contract assets		(8,638)		(4,426)
Inventories		(19,190)		(9,354)
Prepaid expenses and other current assets		(7,538)		(3,633)
Accounts payable, accrued expenses, and contract liabilities		(56,352)		(128,922)
Accrued pension and other postretirement benefits		(8,322)		(13,713)
Other, net		255		(279)
Net cash used in operating activities		(93,030)		(149,514)
Investing Activities
Capital expenditures		(3,044)		(2,112)
(Payments on) proceeds from sale of assets and businesses		(2,322)		180,478
Purchase of facility related to divested businesses		—		(21,550)
Net cash (used in) provided by investing activities		(5,366)		156,816
Financing Activities
Retirement of debt and finance lease obligations		(990)		(350,688)
Premium on redemption of First Lien Notes		—		(7,489)
Repurchase of shares for share-based compensation minimum tax obligation		(3,442)		(2,336)
Net cash used in financing activities		(4,432)		(360,513)
Effect of exchange rate changes on cash		(3,414)		815
Net change in cash and cash equivalents		(106,242)		(352,396)
Cash and cash equivalents at beginning of period		240,878		589,882
Cash and cash equivalents at end of period	$	134,636	$	237,486

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
	Three Months Ended
	June 30,
SEGMENT DATA	2022			2021
Net sales:
Systems & Support	$	254,643		$	258,413
Aerospace Structures		94,753			138,252
Elimination of intersegment sales		(12)			(19)
	$	349,384		$	396,646
Operating income (loss):
Systems & Support	$	33,151		$	35,546
Aerospace Structures		(2,301)			11,223
Corporate		(14,538)			(23,690)
Share-based compensation expense		(1,578)			(2,247)
	$	14,734		$	20,832
Operating margin %
Systems & Support		13.0	%		13.8	%
Aerospace Structures		(2.4)	%		8.1	%
Consolidated		4.2	%		5.3	%

Depreciation and amortization:
Systems & Support	$	7,521		$	8,504
Aerospace Structures		1,696			6,159
Corporate		589			768
	$	9,806		$	15,431
Amortization of acquired contract liabilities:
Systems & Support	$	(523)		$	(1,202)
Aerospace Structures		—			(12)
	$	(523)		$	(1,214)
Capital expenditures:
Systems & Support	$	2,879		$	1,102
Aerospace Structures		56			652
Corporate		109			358
	$	3,044		$	2,112

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures

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 measure that we disclose is Adjusted EBITDA and Adjusted EBITDAP, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and special termination benefits, legal settlements, loss on divestitures, share-based compensation expense, depreciation and amortization and Adjusted EBITDA, less pension & other postretirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated and Adjusted EBITDAP 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 and Adjusted EBITDAP as 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 and Adjusted EBITDAP, 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 and Adjusted EBITDAP are not measurements 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 or Adjusted EBITDAP as substitutes 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 and Adjusted EBITDAP to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review the 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 and Adjusted EBITDAP.

Adjusted EBITDA and Adjusted EBITDAP 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 25 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 and Adjusted EBITDAP exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP 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, share-based compensation and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide a financial measure by which to compare our operating performance against that of other companies in our industry.

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP 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.
Consideration payable to a customer related to a divestiture may be useful for investors to consider because it reflects consideration paid to facilitate the ultimate sale of operating units. We do not believe these charges necessarily reflect the current and ongoing cash earnings related to our operations.
Non-service defined benefit income (inclusive of certain pension related transactions such as curtailments, settlements, early retirement or other incentives) may be useful to investors to consider because they represent the cost of post-retirement benefits to plan participants, net of the assumption of returns on the plan's assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) 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 expense and nonrecurring asset impairments (including goodwill, intangible asset impairments, and nonrecurring rotable inventory impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of tradenames, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP, or, in the case of nonrecurring asset impairments, the impact of unusual and nonrecurring events affecting the estimated recoverability of existing assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure,
Share-based compensation may be useful for investors to consider because it represents a portion of the total compensation to management and the board of directors. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
Depreciation 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 charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
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.

FINANCIAL DATA (UNAUDITED)

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

The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the indicated periods (in thousands):
	Three Months Ended
	June 30,
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (Adjusted EBITDAP):	2022			2021
Net loss	$	(10,342)		$	(30,351)
Add-back:
Income tax expense		1,750			1,214
Interest expense and other, net		31,912			38,558
Debt extinguishment loss		—			9,689
Pension charges		—			16,078
Consideration payable to customer related to divestiture^		17,185			—
Loss on sale of assets and businesses, net		—			5,969
Share-based compensation		1,578			2,247
Amortization of acquired contract liabilities		(523)			(1,214)
Depreciation and amortization^		9,806			15,431
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")	$	51,366		$	57,621
Non-service defined benefit income (excluding pension charges)		(8,586)			(14,356)
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")	$	42,780		$	43,265
Net sales	$	349,384		$	396,646
Net income (loss) margin		(3.0)	%		(7.7)	%
Adjusted EBITDAP margin		11.7	%		10.9	%
^Reported in net sales

	Three Months Ended June 30, 2022
				Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP):	Total			Systems & Support			Aerospace Structures			Corporate/ Eliminations
Net loss	$	(10,342)
Add-back:
Non-service defined benefit income		(8,586)
Income tax expense		1,750
Debt extinguishment loss		—
Interest expense and other, net		31,912
Operating income (loss)	$	14,734		$	33,151		$	(2,301)		$	(16,116)
Consideration payable to customer related to divestiture^		17,185			—			17,185			—
Share-based compensation		1,578			—			—			1,578
Amortization of acquired contract liabilities		(523)			(523)			—			—
Depreciation and amortization		9,806			7,521			1,696			589
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")	$	42,780		$	40,149		$	16,580		$	(13,949)
Net sales	$	349,384		$	254,643		$	94,753		$	(12)
Adjusted EBITDAP margin		11.7	%		15.8	%		14.8	%	n/a
^Reported in net sales

FINANCIAL DATA (UNAUDITED)

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

Non-GAAP Financial Measure Disclosures (continued)
	Three Months Ended June 30, 2021
				Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP):	Total			Systems & Support			Aerospace Structures			Corporate/ Eliminations
Net loss	$	(30,351)
Add-back:
Non-service defined benefit expense		1,722
Income tax expense		1,214
Debt extinguishment loss		9,689
Interest expense and other, net		38,558
Operating income (loss)	$	20,832		$	35,546		$	11,223		$	(25,937)
Loss on sales of assets & businesses, net		5,969			—			—			5,969
Share-based compensation		2,247			—			—			2,247
Amortization of acquired contract liabilities		(1,214)			(1,202)			(12)			—
Depreciation and amortization		15,431			8,504			6,159			768
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")	$	43,265		$	42,848		$	17,370		$	(16,953)
Net sales	$	396,646		$	258,413		$	138,252		$	(19)
Adjusted EBITDAP margin		10.9	%		16.7	%		12.6	%	n/a

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

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 per diluted share, before non-recurring costs have 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.

	Three Months Ended June 30, 2022
	Pre-Tax		After-Tax		EPS
Loss from continuing operations - GAAP	$	(8,592)	$	(10,342)	$	(0.16)
Adjustments:
Restructuring costs		699		699		0.01
Consideration payable to customer related to divestiture^		17,185		17,185		0.26
Adjusted income from continuing operations - non-GAAP*	$	9,292	$	7,542	$	0.12
^ Recorded in net sales
* Difference due to rounding

	Three Months Ended June 30, 2021
	Pre-Tax		After-Tax		Diluted EPS
Loss from continuing operations - GAAP	$	(29,137)	$	(30,351)	$	(0.47)
Adjustments:
Loss on sale of assets and businesses, net		5,969		5,969		0.09
Restructuring costs		4,485		4,485		0.07
Pension curtailment charge		16,078		16,078		0.25
Refinancing cost		9,689		9,689		0.15
Adjusted loss from continuing operations - non-GAAP*	$	7,084	$	5,870	$	0.09
* Differences due to rounding

	Fiscal 2023
	Diluted EPS
	Guidance
Initial earnings per share guidance range	$0.40 - $0.60
Impact of interim pension remeasurement		(0.12)
Restructuring costs		(0.01)
Consideration payable to customer related to divestiture		(0.26)
Gain on sale of assets and business (Q2)		1.53
Curtailment charge related to divestiture (Q2)		(0.03)
Updated earnings per share guidance - GAAP	$1.51 - $1.71
*Adjustments:*
Restructuring costs		0.01
Consideration payable to customer related to divestiture		0.26
Gain on sale of assets and business		(1.53)
Curtailment charge related to divestiture		0.03
Adjusted earnings per share guidance - non-GAAP	$0.28-$0.48

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

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, 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.

	Three Months Ended June 30,
	2022			2021
Operating income - GAAP	$	14,734		$	20,832
Adjustments:
Loss on sale of assets and businesses, net		—			5,969
Restructuring costs		699			4,485
Consideration payable to customer related to divestiture^		17,185			—
Adjusted operating income - non-GAAP	$	32,618		$	31,286
Adjusted operating margin		8.9	%		7.9	%

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.

Fiscal 2023 outlook includes cash used in operations, core cash from operations and core free cash flow. We use core cash from operations and core free cash flow to measure performance of our continuing operations. The following table reconciles cash used in operations to core cash flow from operations and core free cash flow.

	Three Months Ended June 30,				Fiscal 2023 Guidance
$ in millions	2022		2021
Cash used in operating activities	$	(93.0)	$	(149.5)	$ (40.0) - $ (30.0)
*Plus:*
Non-core cash use^		(21.0)		—	$ (70.0) - $ (75.0)
Core cash (used in) provided by operations	$	(72.0)	$	(149.5)	$ 30.0 - $ 45.0
*Less:*
Capital expenditures		(3.0)		(2.1)	~ $ (30.0)
Core free cash (use) flow	$	(75.1)	$	(151.6)	$ -- - $ 15.0

^ Non-core cash use estimate includes remaining cash related to the exit or sale of legacy structures facilities and programs.

View original content:https://www.prnewswire.com/news-releases/triumph-reports-first-quarter-fiscal-2023-results-301598567.html

SOURCE Triumph Group

TRIUMPH REPORTS FIRST QUARTER FISCAL 2023 RESULTS