Triumph Group Reports Third Quarter Fiscal 2010 Results

• Net sales for third quarter fiscal 2010 increased 10% over the prior fiscal year to $313.5 million
• Operating income for third quarter fiscal 2010 increased 8% to $32.9 million
• Income from continuing operations for third quarter fiscal 2010 was $18.1 million, or $1.08 per diluted share
• Net income for third quarter fiscal 2010 was $5.6 million, or $0.34 per diluted share, which included a non-cash impairment charge of $17.4 million in discontinued operations
• Cash flow from operations for third quarter fiscal 2010 was $53.2 million, a 106% increase, and year to date was $126.5 million, a 65% increase

Triumph Group, Inc. (NYSE:TGI) today reported that net sales for the third quarter of the fiscal year ending March 31, 2010 totaled $313.5 million, a ten percent increase from last year’s third quarter net sales of $285.2 million. Income from continuing operations for the third quarter of fiscal year 2010 was $18.1 million, or $1.08 per diluted share, versus $20.1 million, or $1.21 per diluted share, for the third quarter of the prior year. Net income for the third quarter of fiscal year 2010 was $5.6 million, or $0.34 per diluted share, versus $19.2 million, or $1.16 per diluted share, for the third quarter of the prior year. The loss from discontinued operations for the quarter included an impairment charge of $17.4 million. The number of shares used in computing diluted earnings per share for the third quarter of fiscal 2010 was 16.7 million shares. During the quarter, the company generated $53.2 million of cash flow from operations. The results for the quarter included $1.5 million of incremental non-cash interest expense associated with the adoption of APB 14-1, which required a change in the accounting for convertible debt interest, and approximately $1.8 million of interest expense associated with the $175 million in aggregate principal amount of senior subordinated notes issued during the quarter. Approximately $0.8 million of start up costs related to the Mexican facility were also included in the results for the quarter. Prior year results were restated to reflect the adoption of APB 14-1, resulting in an incremental $1.5 million of interest expense over the previously reported amount.

Net sales for the nine months of fiscal year 2010 were $942.8 million, a one percent increase from net sales of $929.2 million last fiscal year. Income from continuing operations for the first nine months of fiscal year 2010 was $60.3 million, or $3.62 per diluted share. Net income for the first nine months of fiscal year 2010 was $43.1 million, or $2.59 per diluted share. During the nine months ended December 31, 2009, the company generated $126.5 million of cash flow from operations.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $262.9 million compared to $222.8 million in the prior year, an increase of eighteen percent. After adjusting for the effect of last year’s Boeing strike, organic sales decreased eight percent over the prior year primarily due to continued softness in the business jet and regional jet markets. Operating income for the third quarter of fiscal year 2010 was $39.1 million, compared to $34.3 million for the prior year period, a fourteen percent increase. Operating income for the quarter included $1.2 million of legal expenses associated with the ongoing trade secret litigation, an increase of eighty-two percent over the prior year period. Margins for the quarter were negatively impacted by approximately $11.5 million of sales recognized at zero margin representing progress payments for ongoing negotiations of a retroactive pricing agreement, which is expected to be finalized during the quarter ending March 31, 2010.

Aftermarket Services

The Aftermarket Services segment reported net sales for the quarter of $51.4 million, compared to $63.1 million in the prior year period, a decrease of nineteen percent primarily due to lower passenger and freight traffic and the continued effects of deferring maintenance and inventory de-stocking. Operating income for the third quarter of fiscal year 2010 was $1.4 million, compared to $2.2 million for the prior year period.

Outlook

Commenting on the company’s performance and its outlook, Richard C. Ill, Triumph’s Chairman and Chief Executive Officer, said, "In light of the current market environment, we are pleased with our third quarter performance. During the quarter, our backlog grew sequentially and we continued to execute well, contain costs, and generate very strong cash flow. In addition, we successfully completed a high yield debt offering, which added both strength and flexibility to our balance sheet. These key elements position us well to invest in and grow our company.”

"Based on current projected aircraft production rates and our existing share count, we now expect that earnings per share from continuing operations for the current fiscal year will be approximately $4.80 per diluted share, which includes the after-tax impact of the interest expense associated with the recently issued senior subordinated notes of approximately $0.22 per diluted share.”

As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2010 third quarter 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. An audio replay will be available from February 4^th until February 11^th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1427249.

Triumph Group, Inc., headquartered in Wayne, Pennsylvania, designs, engineers, manufactures, repairs and overhauls aircraft components and accessories. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.

More information about Triumph can be found on the company’s website at http://www.triumphgroup.com.

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 expectations of future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, and earnings results for fiscal 2010. 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’s reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009.

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 recent 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 EBITDA, which is our income from continuing operations before interest, income taxes, depreciation and amortization. We disclose 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 EBITDA as an operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is income from continuing operations. In calculating EBITDA, we exclude from income from continuing operations 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. 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 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 EBITDA to income from continuing operations 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 EBITDA.

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 15 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our income from continuing operations has included significant charges for depreciation and amortization. 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 EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe EBITDA is a measure of our ongoing operating performance because the isolation of non-cash charges, such as depreciation and amortization, 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 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 income from continuing operations to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:

• Amortization expenses 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.
• 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.