UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-12235
Triumph Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
51-0347963
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
555 E Lancaster Avenue, Suite 400, Radnor, Pennsylvania 19087
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 251-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.001 per share
TGI
New York Stock Exchange
Purchase rights
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
(Check one)
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of September 30, 2024, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $977 million. Such aggregate
market value was computed by reference to the closing price of the Common Stock as reported on the New York Stock Exchange on September 30, 2024. For purposes of making
this calculation only, the Registrant has defined affiliates as including all directors and executive officers.
The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, on May 19, 2025, was 77,715,067.
Documents Incorporated by Reference
Portions of the following document are incorporated herein by reference:
The Proxy Statement of Triumph Group, Inc. to be filed in connection with our 2025 Annual Meeting of Stockholders is incorporated in part in Part III hereof, as specified herein.
Table of Contents
Item No.
Page
PART I
4
Item 1.
Business
4
General
4
Products and Services
4
Proprietary Rights
5
Sales, Marketing, and Engineering
5
Backlog
5
Dependence on Significant Customers
6
Competition
6
Government Regulation, including Environmental Regulations and Industry Oversight
6
Human Capital Resources
7
Executive Officers
8
Recent Developments
10
Available Information
10
Item 1A.
Risk Factors
11
Item 1B.
Unresolved Staff Comments
22
Item 1C.
Cybersecurity
22
Item 2.
Properties
23
Item 3.
Legal Proceedings
23
Item 4.
Mine Safety Disclosures
24
PART II
25
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
25
Item 6.
[Reserved]
26
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
27
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 8.
Financial Statements and Supplementary Data
40
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
86
Item 9A.
Controls and Procedures
86
Item 9B.
Other Information
89
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
89
PART III
90
Item 10.
Directors, Executive Officers, and Corporate Governance
90
Item 11.
Executive Compensation
90
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
90
Item 13.
Certain Relationships and Related Transactions, and Director Independence
90
Item 14.
Principal Accountant Fees and Services
90
PART IV
91
Item 15.
Exhibits, Financial Statement Schedules
91
Item 16.
Form 10-K Summary
95
4
PART I
Item 1. Business
Cautionary Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our future
operations and prospects, including statements that are based on current projections and expectations about the markets in which we operate,
and management's beliefs concerning future performance and capital requirements based upon current available information. Such statements
are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this
document, words like "may," "might," "will," "expect," "anticipate," "plan," "believe," "potential," and similar expressions are intended to identify
forward-looking statements. Actual results could differ materially from management's current expectations. For example, there can be no
assurance that additional capital will not be required, and that such amounts may be material, or that additional capital, if required, will be
available on reasonable terms, if at all, at such times and in such amounts as may be needed by us. In addition to these factors, among other
factors that could cause actual results to differ materially, are uncertainties relating to the occurrence of any event, change or other circumstances
that could give rise to the termination of the Merger Agreement (as defined below), inability to complete the Merger (as defined below) because,
among other reasons, conditions to the closing of the proposed transaction may not be satisfied or waived, uncertainty as to the timing of
completion of the Merger, restrictions or prohibitions under certain covenants in the Merger Agreement during the pendency of the Merger that
may impact the Company’s ability to pursue certain business opportunities, potential adverse effects or changes to relationships with customers,
employees, suppliers or other parties resulting from the announcement or completion of the Merger, significant costs associated with the Merger,
potential litigation relating to the Merger that could be or has been instituted against the Company, Parent (as defined below) or their respective
directors and officers, including the effects of any outcomes related thereto, possible disruptions from the proposed transaction that could harm
the Company’s or Parent’s business, including current plans and operations; the general economic conditions affecting our business segments;
severe disruptions to the economy, the financial markets, and the markets in which we compete, including as a result of changes in regulations or
tariffs; dependence of certain of our businesses on certain key customers; and the risk that we will not realize all of the anticipated benefits from
efforts to optimize our asset base, as well as competitive factors relating to the aerospace industry. For a more detailed discussion of these and
other factors affecting us, see the risk factors described in "Item 1A. Risk Factors."
General
Triumph Group, Inc. ("Triumph," the "Company," "we," "us," or "our") was incorporated in 1993 in Delaware. Our companies design, engineer,
manufacture, repair, and overhaul a broad portfolio of aerospace and defense systems, subsystems, components, and structures. We serve the
global aviation industry, including original equipment manufacturers (“OEMs”) and the full spectrum of military and commercial aircraft operators
through the aircraft life cycle.
Products and Services
We offer a variety of products and services to the aerospace industry through two operating segments: (i) Triumph Systems & Support, whose
companies design, develop, and support proprietary components, subsystems, and systems; produce complex assemblies using external
designs; and provide full life cycle solutions for commercial, regional, and military aircraft and (ii) Triumph Interiors, whose companies supply
commercial, business, and regional manufacturers with insulation parts, interior and composite components to Triumph and customer designs,
and the manufacture of thermo-acoustic insulation, environmental control system ducting, and other aircraft interior components for major
aerospace OEMs. We also maintain full maintenance, repair, and overhaul capabilities for all Triumph products across Systems & Support and
Interiors, including the manufacture of spare parts.
Systems & Support’s capabilities include landing gear-system design; hydraulic, mechanical, and electromechanical actuation; hydraulic power
generation and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions;
active and passive thermal systems including vapor cycle systems and heat exchangers; and fuel pumps, fuel metering units, and full authority
digital electronic control ("FADEC") fuel systems.
The products and capabilities within this group include the design, manufacture, build and repair of:
Aircraft and engine-mounted accessory drives
Thermal control systems and components
Cargo hooks
High lift and utility actuation
Cockpit control levers
Hydraulic systems and components
Control system valve bodies
Landing gear actuation systems
5
Electronic engine controls
Landing gear components and assemblies
Cyber protected process controllers
Main engine gear box assemblies
Geared transmissions and drive train components
Main fuel pumps and afterburner fuel pumps
Fuel-metering units
Vibration absorbers
Interiors products include thermo-acoustic insulation systems, environmental control system ducting, and other aircraft interior components.
Proprietary Rights
We benefit from our proprietary rights relating to designs, engineering and manufacturing processes, and repair and overhaul procedures. For
some products, our unique manufacturing capabilities are required by the customer's specifications or designs, thereby necessitating reliance on
us for the production of such specially designed products.
We view our name and trademark as significant to our business as a whole. Our products are protected by a portfolio of patents, trademarks,
licenses, or other forms of intellectual property that expire at various dates in the future. We continually develop and acquire new intellectual
property and consider all of our intellectual property to be valuable. However, based on the broad scope of our product lines, management
believes that the loss or expiration of any single intellectual property right would not have a material adverse effect on our results of operations,
our financial position, or our business segments. Our policy is to file applications and obtain patents for our new products as appropriate, including
product modifications and improvements. While patents generally expire 20 years after the patent application filing date, new patents are issued
to us on a regular basis.
Sales, Marketing, and Engineering
Each of our operating companies maintains responsibility for selling and marketing its specific products. These businesses are responsible for
selling aerospace engineered products, integrated assemblies, cabin acoustic insulation and repair and overhaul services, reaching across our
operating companies, to our OEM, military, airline, and air cargo customers. In certain limited cases, we use independent, commission-based
representatives to serve our customers' changing needs in some of the markets and geographic regions in which we operate.
Triumph has established multiple Customer Focus Teams ("CFT"), which are cross functional teams focused on Triumph’s activities,
performance, growth plans and coordination with certain large customers.
Our business development teams and CFTs operate as the front end of the selling process, establishing and maintaining relationships, identifying
opportunities to leverage our brand, and providing service for our customers. We meet our customers’ needs by designing systems that integrate
the capabilities of our companies.
Our government and defense contracts consist of both sole source and competitive products. We generally do not bid or act as the primary
contractor but will typically bid and act as a subcontractor on contracts on a fixed-price basis. We generally sell to our other customers on a fixed
price, negotiated contract, or purchase order basis.
When subcontracting, there is a risk of nonperformance by our subcontractors, which could lead to disputes regarding quality, cost or impacts to
production schedules. Additionally, economic environment changes, natural disasters, trade sanctions, tariffs, budgetary constraints, earthquakes,
fires, extreme weather conditions, or pandemics, affecting the prime contractor and our subcontractors may adversely affect their ability to meet
or support our performance requirements, or may constrain our supply chain.
Backlog
We have a number of long-term agreements with several of our customers. These agreements generally describe the terms under which the
customer may issue purchase orders to buy our products and services during the term of the agreement. These terms typically include a list of the
products or repair services customers may purchase, initial pricing, anticipated quantities and, to the extent known, delivery dates. In tracking and
reporting our backlog, however, we include amounts for which we have actual purchase orders with firm delivery dates or contract requirements
within the next 24 months, and, for Interiors, whose sales are driven primarily by long-term agreements with Boeing and Airbus, we also include
an estimate of expected purchase orders with anticipated delivery dates or contract requirements within the next 24 months. Our backlog
primarily relates to sales to our OEM customer base as purchase orders issued by our aftermarket customers are usually completed within a short
period of time. As a result, our backlog data relates primarily to the OEM customers. Other than the estimate of expected purchase orders for
Interiors, the backlog information set forth below does not include the sales that we expect to generate from long-term agreements for which we
do not have actual purchase orders with firm delivery dates.
6
As of March 31, 2025, our backlog was approximately $1.90 billion, of which $1.54 billion and $0.36 billion related to Systems & Support and
Interiors, respectively, including approximately $0.32 billion of Interiors backlog that is based on expected purchase orders from major customers.
As of March 31, 2024, our backlog was approximately $1.90 billion, of which $1.56 billion and $0.34 billion related to Systems & Support and
Interiors, respectively, including approximately $0.31 billion of Interiors backlog that is based on expected purchase orders from major customers.
Of the existing backlog of $1.90 billion, we estimate approximately $1.19 billion will be shipped by March 31, 2026. Refer to "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" for further information on our backlog.
Dependence on Significant Customers
As disclosed below in Note 18 to the consolidated financial statements, a significant portion of our net sales are to the Boeing Company
(“Boeing”). Refer to Note 18 for specific disclosure of the concentration of net sales and accounts receivable to Boeing. A significant reduction in
sales to Boeing may have a material adverse impact on our financial position, results of operations, and cash flows.
Competition
We compete primarily with Tier 1 and Tier 2 systems suppliers and component manufacturers, some of which are divisions or subsidiaries of
other large companies, in the manufacture of aircraft, systems components, and subassemblies.
Competition for the repair and overhaul of aviation components comes from four primary sources, some of whom possess greater financial and
other resources than we have and, as a result, may be in a better position to handle the current environment: OEMs, major commercial airlines,
government support depots, and independent repair and overhaul companies. Some major commercial airlines continue to own and operate their
own service centers, while others sell or outsource their repair and overhaul services to other aircraft operators or third parties. Large domestic
and foreign airlines that provide repair and overhaul services typically provide these services not only for their own aircraft but for other airlines as
well. OEMs also maintain service centers that provide repair and overhaul services for the components they manufacture. Many governments
maintain aircraft support depots in their military organizations that maintain and repair the aircraft they operate. Independent service organizations
also compete for the repair and overhaul business of other users of aircraft components. Due to the proprietary nature of our products, these
competitors and other parties often source their component spare parts from us.
Participants in the aerospace industry compete primarily on the basis of breadth of technical capabilities, quality, delivery performance, capacity,
and price.
Government Regulation, Including Environmental Regulations and Industry Oversight
Government Regulation and Industry Oversight
The aerospace industry is highly regulated in the United States by the Federal Aviation Administration ("FAA") and in other countries by similar
agencies. We must be certified by the FAA and, in some cases, by individual OEMs, in order to engineer and service parts and components used
in specific aircraft models. If material authorizations or approvals were revoked or suspended, our operations would be adversely affected. New
and more stringent government regulations may be adopted, or industry oversight heightened, in the future, and these new regulations, if
enacted, or any industry oversight, if heightened, may have an adverse impact on us.
We must also satisfy the requirements of our customers, including OEMs, that are subject to FAA regulations, and provide these customers with
products and repair services that comply with the government regulations applicable to aircraft components used in commercial flight operations.
The FAA regulates commercial flight operations and requires that aircraft components meet its stringent standards. In addition, the FAA requires
that various maintenance routines be performed on aircraft components, and we currently satisfy these maintenance standards in our repair and
overhaul services.
Generally, the FAA only grants approvals for the manufacture or repair of a specific aircraft component. The FAA approval process may be costly
and time-consuming. In order to obtain an FAA Air Agency Certificate, an applicant must satisfy all applicable regulations of the FAA governing
repair stations. These regulations require that an applicant have experienced personnel, inspection systems, suitable facilities, and equipment. In
addition, the applicant must demonstrate a need for the certificate. An applicant must procure manufacturer’s repair manuals from design
approval holders, including Triumph when applicable, relating to each particular aircraft component. Because of these regulatory requirements,
the application process may involve substantial cost.
The certification processes for the European Aviation Safety Agency ("EASA"), which regulates this industry in the European Union; the Civil
Aviation Administration of China; and other comparable foreign regulatory authorities, are similarly stringent,
7
involving potentially lengthy audits. EASA was formed in 2002 and is handling most of the responsibilities of the national aviation authorities in
Europe, such as the United Kingdom Civil Aviation Authority.
Our operations are also subject to a variety of worker and community safety laws. For example, the Occupational Safety and Health Act of 1970
("OSHA") mandates general requirements for safe workplaces for all employees in the United States. In addition, OSHA provides special
procedures and measures for the handling of hazardous and toxic substances. Specific safety standards have been promulgated for workplaces
engaged in the treatment, disposal, or storage of hazardous waste. We believe that our operations are in material compliance with OSHA's health
and safety requirements.
Environmental Regulation
Our business, operations, and facilities are subject to numerous stringent federal, state, local, and foreign environmental laws and regulations by
government agencies, including the Environmental Protection Agency ("EPA"). Among other matters, these regulatory authorities impose
requirements that regulate the emission, discharge, generation, management, transportation and disposal of hazardous materials, pollutants, and
contaminants; govern public and private response actions to hazardous or regulated substances which may be or have been released to the
environment; and require us to obtain and maintain licenses and permits in connection with our operations. This extensive regulatory framework
imposes significant compliance burdens and risks on us. Although management believes that our operations and our facilities are in material
compliance with such laws and regulations, future changes in these laws, regulations, or interpretations thereof or the nature of our operations or
regulatory enforcement actions which may arise may require us to make significant additional capital expenditures to ensure ongoing compliance
or engage in remedial actions.
Certain of our facilities, including facilities acquired and operated by us or one of our subsidiaries, have at one time or another been under active
investigation for environmental contamination by federal or state agencies when acquired, and at least in some cases, continue to be under
investigation or subject to remediation. We are frequently indemnified by prior owners or operators and/or present owners of the facilities for
liabilities that we incur as a result of these investigations and the environmental contamination found that predates our acquisition of these
facilities, subject to certain limitations. We also maintain a pollution liability policy that provides coverage for certain material liabilities associated
with the cleanup of on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at
third-party sites), in each case, to the extent not otherwise indemnified. This policy applies to all of our manufacturing and assembly operations
worldwide. Also, the need for remediation of potential environmental contamination could be identified at facilities formerly owned by us that have
been divested as part of restructuring and related initiatives, and such obligations could be material. If we are required to pay the expenses
related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a material
adverse effect on us.
There have not been, and we do not expect there to be in the near term, material impacts on our business, financial condition or results of
operations as a result of compliance with legislation or regulatory rules regarding climate change; from the known physical effects of climate
change; or as a result of supporting our environmental, social, and governance ("Corporate Citizenship") initiatives. Further increases in
regulation and other climate change concerns, however, could subject us to additional costs and restrictions, and we are not able to predict how
such regulations or concerns would affect our business, operations or financial results.
Human Capital Resources
Our success greatly depends on identifying, attracting, engaging, developing, and retaining a highly skilled workforce in multiple areas, including
engineering, manufacturing, information technology, cybersecurity, business development, finance, and strategy and management. Our human
capital management strategy places significant importance on attracting and developing a talented and diverse workforce by creating a workplace
that is engaging and inclusive and promotes a culture of innovation, excellence, and continuous improvement. The objectives of our human
capital management strategy are aligned with and support our strategic and financial goals.
We use a wide variety of human capital measures in managing our business, including talent acquisition, retention, and development metrics; and
employee safety and health metrics.
Several of our subsidiaries are parties to collective bargaining agreements with labor unions. Under those agreements, we currently employ
approximately 465 full-time employees. Currently, approximately 13% of our 3,696 permanent employees are represented by labor unions and
approximately 37% of net sales are derived from the facilities at which at least some employees are unionized. Of the 465 employees represented
by unions, no employees are working under contracts that have expired.
Our inability to negotiate an acceptable contract with any of our labor unions could result in strikes by the affected workers and increased
operating costs as a result of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike or other work
stoppage, or if other employees were to become unionized, we could experience a significant disruption of our operations and higher ongoing
labor costs, which could have an adverse effect on our business and results of operations.
8
Talent Acquisition, Retention, and Development
Hiring, developing, and retaining talented employees, particularly in highly technical areas, is an integral part of our human capital management.
In addition to our focus on recruitment, we monitor attrition rates, including with respect to top talent. We believe that the commitment and
connection of employees to their workplace, what we refer to as employee engagement, is a critical component of retention of top talent. We
periodically conduct surveys of our workforce designed to gauge “employee engagement”. Our Employee Engagement Team monitors the
responses to these surveys in our pursuit of continuously improving our employee engagement metrics. We also continue to invest in technology
that supports the effectiveness, efficiency, and engagement of our employees, including advancement with our human resources information
systems, communication tools and processes.
We also attract and reward our employees by providing market-competitive compensation and benefit practices that cover the many facets of
health, including resources and programs designed to support physical, mental, and financial wellness. We also provide tuition reimbursement
and other educational and training opportunities to our employees.
Employee Safety and Health
Ensuring the safety of our employees is a top priority for us. Our safety and health program seeks to enhance business value by creating a safe
and healthy work environment, promote the resiliency of our workforce and engage our employees. We provide health and safety guidance and
resources to all of our businesses in order to ensure occupational safety, reduce risk, and prevent incidents. Our values include the commitment
of each person to creating a safe work environment for themselves and their team members, and, through various programs and activities, we
recognize individuals in our organization who make significant contributions to workplace safety.
We monitor the effectiveness of our safety and health program by comparing recordable incidents and incident severity to specific performance
metrics established annually. We measure the volume of safety incidents through the total recordable incident rate (“TRIR”) metric. This rate is
measured on a calendar year basis, and the table below reflects our results over the three most recent calendar years:
Calendar year ended
Safety Metric
2024
2023
2022
TRIR
0.6
0.8
1.17
TRIR = total number of recordable cases x 200,000 / total hours worked
Community Service and Philanthropy
Since 2011, we have demonstrated a deep dedication to Corporate Citizenship through our Wings community outreach program. Through Wings,
based on the needs of their communities, our employees around the world create and implement service projects by partnering with local
nonprofit organizations and engage in meaningful volunteer projects that directly benefit local charities committed to serving the needs of others.
The Company enjoys partnering in local communities, and team-based volunteer events help bring our employees together as one team serving
its communities. We provide our employees up to 8 hours paid vacation so that they may volunteer with charitable or community-enrichment
organizations.
In 2008, the Triumph Group Charitable Foundation was formed and funded. In fiscal year of 2025, the Triumph Group Charitable Foundation
allocated approximately $0.5 million to approximately 130 recipient organizations. These organizations were principally nominated by our
employees. The Triumph Group Charitable Foundation makes contributions to organizations that are focused on improving our communities;
supporting veterans and military families; and advancing education, particularly in the areas of science, technology, engineering, and
mathematics (“STEM”).
Executive Officers
Our current executive officers are:
Name
Age
Position
Daniel J. Crowley
62
Chairman, President and Chief Executive Officer
James F. McCabe, Jr.
62
Senior Vice President, Chief Financial Officer
Jennifer H. Allen
53
Senior Vice President, Chief Administrative Officer, General Counsel and Secretary
Thomas A. Quigley, III
48
Vice President, Investor Relations, Mergers & Acquisitions and Treasurer
Kai W. Kasiguran
39
Vice President, Controller
Daniel J. Crowley was appointed President and Chief Executive Officer and a director of the Company on January 4, 2016. He was elected Chair
of the Board of Directors of the Company on November 17, 2020. Mr. Crowley was elected as an independent director to Knowles Corporation’s
Board of Directors on July 26, 2022. Previously, Mr. Crowley served as a corporate vice president and President of Integrated Defense Systems
at Raytheon Company from 2013 until 2015, and as President of Network
9
Centric Systems at Raytheon Company from 2010 until 2013. Prior to joining Raytheon Company, Mr. Crowley served as Chief Operating Officer
of Lockheed Martin Aeronautics after holding a series of increasingly responsible assignments across its space, electronics, and aeronautics
sectors.
James F. McCabe, Jr. has been our Senior Vice President and Chief Financial Officer since August 2016. He joined the Company from Steel
Partners Holdings, where he served in a number of roles from 2007 to 2016, including the following: Senior Vice President and CFO, President,
Shared Services, and Senior Vice President 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 from 2004 to 2007, and President and CFO
of Teleflex Aerospace from 1991 to 2003, which served the global aviation industry. He has previously qualified as 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.
Jennifer H. Allen has been a Senior Vice President and our Chief Administrative Officer, General Counsel and Secretary since September 2018.
She joined Triumph Group from CIRCOR International, Inc., where she was Senior Vice President, General Counsel & Secretary from 2016 to
2018. Previously, she was Vice President & Associate General Counsel – Corporate for BAE Systems, Inc., from 2010 to 2016, a member of the
mergers and acquisition group in the New York office of Jones Day from 2005 to 2010, and a member of the business and finance group in the
Philadelphia office of Morgan, Lewis & Bockius LLP from 1996 to 2001.
Thomas A. Quigley, III has been our Vice President, Investor Relations, Mergers & Acquisitions and Treasurer since September 2022. From
December 2019 to September 2022, Mr. Quigley served as our Vice President, Investor Relations and Controller. From November 2012 to
December 2019, Mr. Quigley served as our Vice President and Controller, and served as the Company's principal accounting officer. Mr. Quigley
previously served as the Company's SEC Reporting Manager from 2009 to 2012. From 2002 until joining Triumph in 2009, Mr. Quigley held
various roles within the audit practice of KPMG LLP, including Senior Audit Manager.
Kai W. Kasiguran was appointed our Vice President, Controller and Principal Accounting Officer in September 2022. Mr. Kasiguran previously
served in a variety of roles at the Company from 2018 to 2022, most recently as the Company’s Assistant Controller, Corporate. From 2011 until
joining the Company in 2018, Mr. Kasiguran held various roles within the audit practice of Ernst & Young, LLP, including Senior Audit Manager.
Recent Developments
On February 2, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Titan BW Acquisition Holdco Inc., a
Delaware corporation (“Parent”), and Titan BW Acquisition Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent
(“Merger Sub”). Parent and Merger Sub are affiliates of funds managed by Warburg Pincus LLC (“Warburg Pincus”) and Berkshire Partners LLC
(“Berkshire”).
The Merger Agreement provides that, among other things, and on the terms and subject to the conditions of the Merger Agreement, (a) Merger
Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent, and (b)
at the closing of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of the Company (the “Common
Stock”) issued and outstanding immediately prior to the Effective Time (other than (i) shares of Common Stock owned directly by Parent or
Merger Sub or any direct or indirect wholly owned subsidiary of Parent (other than Merger Sub), (ii) shares of Common Stock owned by any direct
or indirect subsidiary of the Company and (iii) shares of Common Stock held by any holder who has not voted in favor of the Merger and who is
entitled to demand and properly demands appraisal of such Common Stock pursuant to Section 262 of the Delaware General Corporation Law
(the “DGCL”) and, as of the Effective Time, has not failed to perfect, or not effectively waived, withdrawn or lost rights to appraisal under the
DGCL) will be converted into the right to receive $26.00 in cash, without interest and subject to applicable tax withholdings.
On April 16, 2025, our stockholders approved the Merger. Additionally, the required waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, with respect to the Merger expired at 11:59 p.m. Eastern Time on March 10, 2025. The Company also
received the required regulatory approvals under the foreign investment law in the United Kingdom from the UK Investment Security Unit on April
16, 2025 and under the EU Merger Regulation from the European Commission on April 25, 2025. The Merger is expected to close before or
during the second half of calendar year 2025, subject to customary closing conditions, including (i) receipt of required regulatory approvals under
certain regulatory laws, including applicable foreign direct investment laws in France and Germany and (ii) the satisfaction or waiver of customary
closing conditions set forth in the Merger Agreement.
10
Available Information
For more information about us, visit our website at www.triumphgroup.com. The contents of the website are not part of this Annual Report on
Form 10-K. Our electronic filings with the Securities and Exchange Commission ("SEC") (including Forms 10-K, 10-Q and 8-K, proxy statements,
on Schedule 14A, and any amendments to these reports) are available free of charge through our website as soon as reasonably practicable after
we electronically file with or furnish them to the SEC. The SEC maintains an internet site that contains reports, proxy and information statements,
and other information regarding issuers who file electronically with the SEC at www.sec.gov.
In addition, electronic copies of the Company’s SEC filings will be made available, free of charge, on written request.
11
Item 1A. Risk Factors
Strategic Risks
Strategic risk relates to our future business plans and strategies, including the risks associated with the global macro-environment; competitive
threats; the demand for our products and services; the success of our investments in technology and innovation; our portfolio of businesses and
capital allocation decisions; dispositions, acquisitions, joint ventures, and restructuring activity; intellectual property; and other risks.
The failure to complete our announced Merger could have a material adverse effect on our business, results of operations, financial
condition, cash flows and stock price.
On February 3, 2025, the Company announced that it entered into a Merger Agreement under which affiliates of Warburg Pincus LLC and
Berkshire Partners LLC will acquire the Company through a newly formed, co-owned entity. The transaction is expected to close before or during
the second half of calendar year 2025, subject to customary closing conditions, including receipt of required regulatory approvals. There is no
assurance that all of the conditions of the Merger Agreement will be satisfied, or that the Merger will be completed on the announced terms, within
the expected timeframe or at all. The closing of the Merger may be delayed, or the transaction may not be completed, due to a number of factors,
including as a result of the failure to obtain regulatory approval or to satisfy any other requisite closing conditions.
If the transaction does not close, we could suffer consequences that may have an adverse effect on our business, financial condition, operating
results, cash flows and stock price. To the extent that the market price of our common stock reflects the assumption that the Merger will be
completed, the price of our stock could decline. The Company may experience adverse effects or changes to relationships with customers,
employees, suppliers or other parties resulting from the failure to complete the Merger. There may be potential litigation relating to the Merger that
could be instituted against the Company.
Factors that have an adverse impact on the aerospace industry may adversely affect our results of operations and liquidity.
A substantial percentage of our gross profit and operating results derive from commercial aviation. Our operations have been focused on
designing, engineering, manufacturing, repairing and overhauling a broad portfolio of aircraft components, accessories, subassemblies, and
systems. Therefore, our business is directly affected by economic factors and other trends that affect our customers in the aerospace industry,
including a possible decrease in outsourcing by OEMs and aircraft operators or projected market growth that may not materialize or be
sustainable. We are also significantly dependent on sales to the commercial aerospace market, which has been cyclical in nature with significant
downturns in the past. When these economic and other factors adversely affect the aerospace industry, they tend to reduce the overall customer
demand for our products and services, which decreases our operating income. Economic and other factors that might affect the aerospace
industry such as disruption in the supply chain, high inflation, or the impact of tariffs has had and may in the future have an adverse impact on our
results of operations and liquidity. An increase in energy costs and the price of fuel to the airlines could result in additional pressure on the
operating costs of airlines. The market for jet fuel is inherently volatile and is subject to, among other things, changes in government policy on jet
fuel production; fluctuations in the global supply of crude oil; disruptions in oil production or delivery caused by hostility in oil-producing areas; or
potential legislation or strategic initiatives to address climate change by reducing greenhouse gas emissions, creating carbon taxes, or
implementing or otherwise participating in cap and trade programs. Airlines are sometimes unable to pass on increases in fuel prices or other
costs to customers by increasing fares due to the competitive nature of the airline industry, and this compounds the pressure on operating costs.
Other events of general impact such as natural disasters, pandemics, war, terrorist attacks affecting the industry or pandemic health crises may
lead to declines in the worldwide aerospace industry that could adversely affect our business and financial condition.
In addition, demand for our maintenance, repair and overhaul services is strongly correlated with worldwide flying activity. A significant portion of
the MRO activity required on commercial aircraft is mandated by government regulations that limit the total time or number of flights that may
elapse between scheduled MRO events. As a result, although short-term deferrals are possible, MRO activity is ultimately required to continue to
operate the aircraft in revenue-producing service. Therefore, over the intermediate and long term, trends in the MRO market are closely related to
the size and utilization level of the worldwide aircraft fleet, as reflected by the number of available seat miles, commonly referred to as ASMs, and
cargo-ton miles flown. Consequently, conditions or events that contribute to declines in worldwide ASMs and cargo miles flown, such as those
mentioned above, could negatively impact our MRO business.
Changes in levels of U.S. Government defense spending or overall acquisition priorities could negatively impact our financial position
and results of operations.
We derive a significant portion of our revenue from the U.S. Government, primarily from defense-related programs with the U.S. Department of
Defense (“U.S. DoD”). Levels of U.S. defense spending are very difficult to predict and may be impacted by numerous factors such as the political
environment, U.S. foreign policy, macroeconomic conditions, ongoing or emerging
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geopolitical conflicts such as conflict between Russia and Ukraine and developments in the conflict in the Middle East, and the ability of the U.S.
Government to enact relevant legislation such as authorization and appropriations bills. Accordingly, long-term uncertainty remains with respect to
overall levels of defense spending and it is likely that U.S. Government discretionary spending levels will continue to be subject to pressure.
In addition, there continues to be uncertainty with respect to program-level appropriations for the U.S. DoD and other government agencies within
the overall budgetary framework described above. While we expect funding for major military programs to remain stable, uncertainty remains
because defense budgets in fiscal year 2025 and beyond have not been finalized. Future budget cuts associated with the authorizations and
appropriations process could result in reductions, cancellations, and/or delays of existing contracts or programs. Any of these impacts could have
a material effect on the results of our operations, financial position and/or cash flows.
In addition, as a result of the significant ongoing uncertainty with respect to both U.S. defense spending levels and the nature of the threat
environment, we expect the U.S. DoD to continue to emphasize cost-cutting and other efficiency initiatives in its procurement processes. If we can
no longer adjust successfully to these changing acquisition priorities and/or fail to meet affordability targets set by the U.S. DoD customer, our
revenues and market share would be further impacted.
The profitability of certain development and production programs depends significantly on the assumptions surrounding satisfactory
settlement of claims and assertions.
For certain of our new development programs, we regularly commence work or incorporate customer-requested changes prior to negotiating
pricing terms for engineering work or the product pricing which has been modified. We typically have the contractual right to negotiate pricing for
customer-directed changes. In those cases, we assert to our customers our contractual rights to obtain the additional revenue or cost
reimbursement we expect to receive upon finalizing pricing terms. An expected recovery value of these assertions is incorporated into our
estimates when applying contract accounting. Our inability to recover these expected values, among other factors, could result in the recognition
of a forward loss on these programs or a lower than expected profit margin and could have an adverse effect on our results of operations.
Throughout the course of our programs, disputes with suppliers or customers could arise regarding unique contractual requirements, quality,
costs or impacts to production schedules. If we are unable to successfully and equitably resolve such claims and assertions, our business,
financial condition, results of operations, customer relationships and related transactions could be materially adversely affected.
In addition, negotiations over our price claims may lead to disputes with our customers that may result in litigation and its associated costs and
risks of damages, penalties and injunctive relief, any of which could have a material, adverse effect on our business and results of operations.
Implementing new programs and technologies subjects us to operational uncertainty.
New programs with new technologies typically carry risks associated with design responsibility, development of new production tools, hiring and
training of qualified personnel, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and unique
contractual requirements, supplier performance, subcontractor performance, ability of the customer to meet its contractual obligations to us, and
our ability to accurately estimate costs associated with such programs. In addition, any new aircraft program may not generate sufficient demand
or may experience technological problems or significant delays in the regulatory certification or manufacturing and delivery schedule. If we were
unable to perform our obligations under new programs to the customer's satisfaction or manufacture products at our estimated costs; if we were
to experience unexpected fluctuations in raw material prices or other fluctuations, including the impact of new or changing tariffs, in supplier costs
leading to cost overruns; if we were unable to successfully perform under revised design and manufacturing plans or successfully and equitably
resolve claims and assertions; or if a new program in which we had made a significant investment was terminated or experienced weak demand,
delays or technological problems, our business, financial condition and results of operations could be materially adversely affected. This risk
includes the potential for default, quality problems, or inability to meet weight requirements and could result in low margin or forward loss
contracts, and the risk of having to write-off inventory or contract assets if they were deemed to be unrecoverable over the life of the program. In
addition, beginning new work on existing programs also carries risks associated with the transfer of technology, knowledge and tooling.
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Cancellations, reductions or delays in customer orders may adversely affect our results of operations.
Our overall operating results are affected by many factors, including the timing of orders from large customers and the timing of expenditures to
manufacture parts and purchase inventory in anticipation of future sales of products and services. A large portion of our operating expenses is
relatively fixed. Because several of our operating locations typically do not obtain long-term purchase orders or commitments from our customers,
they must anticipate the future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with
customers as to their anticipated future requirements. These historic patterns may be disrupted by many factors, including changing economic
conditions, inventory adjustments, or work stoppages or labor disruptions at our customers' locations. Cancellations, reductions or delays in
orders by a customer or group of customers could have a material adverse effect on our business, financial condition, and results of operations.
A significant decline in business with a key customer could have a material adverse effect on us.
As disclosed in Note 18, a significant portion of our net sales is to Boeing. As a result, a significant reduction in purchases by Boeing could have
a material adverse impact on our financial condition, results of operations, and cash flows. In addition, some of our individual companies rely
significantly on particular customers, the loss of which could have an adverse effect on those businesses.
Competitive pressures may adversely affect us.
We have numerous competitors in the aerospace industry. We compete primarily with the top-tier systems integrators and the manufacturers that
supply them, some of which are divisions or subsidiaries of OEMs and other large companies that manufacture aircraft components and
subassemblies. Our OEM customers, which include Boeing, Airbus, BAE, Bell Helicopter, Bombardier, GE Aerospace, Gulfstream, Honeywell,
Lockheed Martin, Northrop Grumman, RTX Corporation, Rolls Royce and Sikorsky, may choose not to outsource production of systems,
subsystems, components, or aerostructures due to, among other things, a desire to vertically integrate direct labor and overhead considerations,
capacity utilization at their own facilities, or a desire to retain critical or core skills. Consequently, traditional factors affecting competition, such as
price and quality of service, may not be significant determinants when OEMs decide whether to produce a part in-house or to outsource. We also
face competition from non-OEM component manufacturers, including Parker, Eaton, Honeywell, Transdigm, and Safran. Competition for the
repair and overhaul of aviation components comes from three primary sources: OEMs, major commercial airlines and independent repair and
overhaul companies.
We may need to expend significant capital to keep pace with technological or climate change related developments in our industry.
The aerospace industry is constantly undergoing development and change, and it is likely that new products, equipment, and methods of repair
and overhaul service will be introduced in the future. For example, demand for products that are less carbon-intensive or that align with
customers’ sustainability goals is expected to increase as a result of market demand, investor preferences, government legislation, and the
aerospace industry’s response risks created by climate change. Failure to react timely to these trends and manage the Company’s product
portfolio and innovation activities responsively could decrease the competitiveness of the Company’s products and result in the de-selection of the
Company as a partner of choice. In order to keep pace with any new developments, such as sustainable energy solutions like the accommodation
and integration of sustainable aviation fuels (“SAF”); hydrogen fuel; blended wing body aircraft; or other technological developments in our
industry, including open rotor concepts and electrification, we may need to expend significant capital to purchase new equipment and machines or
to train our employees in the new methods of production and service. In addition, the failure to set goals, take actions, make progress and report
against, commensurate with relevant market competitors, our sustainability strategy, could harm our reputation, and our ability to compete and to
attract top talent or the deselection of the Company as a partner or supplier of choice.
We may not realize our anticipated return on capital commitments made to expand our capabilities.
We continually make significant capital expenditures to implement new processes and to increase both efficiency and capacity. Some of these
projects require additional training for our employees and not all projects may be implemented as anticipated. If any of these projects do not
achieve the anticipated increase in efficiency or capacity, our returns on these capital expenditures may be lower than expected.
14
We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions from
restructuring, facility consolidations, realignment, cost reduction and other strategic initiatives.
Over the past several years, we have implemented a number of restructuring, realignment and cost-reduction initiatives, including facility
consolidations, organizational realignments and reductions in our workforce. While we have realized some efficiencies from these actions, we
may not realize the benefits and synergies of these initiatives to the extent we anticipated. Further, such benefits may be realized later than
expected, and the ongoing difficulties in implementing these measures may be greater than anticipated, which could cause us to incur additional
costs or result in business disruptions. In addition, if these measures are not successful or sustainable, we may be compelled or decide to
undertake additional realignment and cost-reduction efforts, which could result in significant additional charges. Moreover, if our restructuring and
realignment efforts prove ineffective, our ability to achieve our other strategic and business plan goals may be adversely affected.
We do not own certain intellectual property and tooling that is important to our business.
Our business also depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our
contracts with our OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated
if we violate certain of these restrictions. Our loss of a contract with an OEM customer and the related license rights to use an OEM's intellectual
property or tooling could materially adversely affect our business.
The effects of potential future public health crises, epidemics, pandemics or similar events on our business, operating results and cash
flows are uncertain.
A pandemic or other health crisis could have a significant negative impact on the U.S. and global economy; disrupt global supply chains; result in
significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place”; and create significant disruption of the
financial markets, all of which affect the demand for our products and services and could materially impact our financial condition or results of
operations.
Our business and results of operations could be adversely affected by disruptions in the global economy caused by geopolitical
conflicts, related sanctions and other developments.
The ongoing conflicts between Ukraine and Russia and developments in the conflict in the Middle East, and related political and economic
consequences, such as sanctions and other measures imposed by the European Union, the U.S., and other countries and organizations in
response, may continue to cause disruption and instability in global markets, supply chains, and industries that directly or indirectly affect the
aerospace industry. As a result of these geopolitical conflicts, businesses in the U.S. and globally have experienced shortages in materials and
increased costs for transportation, energy, and raw materials, as well as increased risk of cyber attacks, inflationary pressures, and market
volatility. The extent and duration of the war, sanctions, and resulting market disruptions are impossible to predict, and our business and results
of operations could be adversely affected.
Changes to U.S. tariff and import/export regulations may have a negative effect on our business, financial condition and results of
operations.
Since February 2025, the U.S. government has issued several executive orders imposing tariffs on imports from many countries with whom the
U.S. engages in trade. In response to those tariffs, certain of the impacted countries have announced, and in some cases imposed, counter tariffs
on goods that are imported from the U.S. We have operations, customers and suppliers in the U.S., Mexico, Canada and other countries and
regularly import and export goods and services to and from those countries. We are pursuing a variety of actions designed to mitigate the
potential impact of tariffs, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, (ii) implementing a duty
drawback program, (iii) evaluating operational and supply chain changes, and (iv) where feasible, increasing the prices of our goods and services.
Despite these countermeasures, if the imposition of current tariff levels is sustained, we expect our profitability, cash flows and estimates inherent
in our financial statements to be negatively affected. The uncertainty caused by these tariff developments also could materially adversely affect
global economic conditions and the stability of global financial markets, which could in turn negatively impact our customers, suppliers, and us.
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Operational Risks
Operational risk relates to risks arising from systems, processes, people, and external events that affect the operation of our businesses. It
includes risks related to product and service life cycle and execution; product safety and performance; information management and data
protection and security, including cybersecurity; and supply chain and business disruption.
Our business could be negatively affected by cyber or other security threats or other disruptions.
Our businesses depend heavily on information technology and computerized systems to communicate and operate effectively. Our systems and
technologies, or those of third parties on which we rely, could fail or become unreliable due to equipment failures, software viruses, cyber threats,
terrorist acts, natural disasters, power failures or other causes. These threats arise in some cases as a result of our role as a defense contractor.
Our customers, including the U.S. Government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our
products, and we may incur additional cost to comply with such demands.
We have faced and may continue to face cybersecurity threats. These cybersecurity threats are evolving and include, but are not limited to,
malicious software; ransomware; attempts to gain unauthorized access to our sensitive information, including that of our customers, suppliers,
subcontractors, and joint venture partners; and other electronic security breaches that could lead to disruptions in mission critical systems,
unauthorized release of confidential or otherwise protected information and corruption of data. For example, on July 27, 2024, the Company
identified a cybersecurity incident involving unauthorized access to certain of its information technology systems. The Company has since
restored the affected information technology systems, resumed normal operations and determined that the cybersecurity incident has not had and
is not reasonably likely to have a material impact on the Company’s financial condition or results of operations.
Additionally, our systems are decentralized, which presents various risks, including the risk that we may be slower or less able to identify or react
to problems affecting a business function than we would be in a more centralized, enhanced environment. In addition, “company-wide” business
initiatives, such as the integration of information technology systems, carry a higher risk of failure. Depending on the nature of the initiative, such
failure could result in loss of revenues, product development delays, compromise, corruption or loss of confidential, proprietary or sensitive
information (including personal information or technical business information), remediation costs, indemnity obligations and other potential
liabilities, regulatory or government action, breach of contract claims, contract termination, class action or individual lawsuits from affected parties,
negative media attention, reputational damage, and loss of confidence from our government clients.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified and could have a material adverse effect
on our reputation, operating results and financial condition.
Any significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue.
We are highly dependent on the availability of essential raw materials such as metallics and composites, and purchased machined components,
engineered component parts and special processes from our suppliers, many of which are available only from single customer-approved sources.
Moreover, we are dependent upon the ability of our suppliers to provide raw materials and components that meet our specifications, quality
standards and delivery schedules. Our suppliers' failure to provide expected raw materials or component parts could require us to identify and
enter into contracts with alternate suppliers that are acceptable to both us and our customers, which could result in significant delays, expenses,
increased costs (including late delivery penalties under contracts with our customers), and management distraction and adversely affect
production schedules and contract profitability.
We have from time to time experienced limited interruptions of supply, and we may experience a significant interruption in the future. Our
continued supply of raw materials and component parts is subject to a number of risks, including:
•
availability of capital to our suppliers;
•
workforce shortages at our suppliers;
•
the destruction of our suppliers' facilities or their distribution infrastructure;
•
a work stoppage or strike by our suppliers' employees;
•
the failure of our suppliers to provide raw materials or component parts of the requisite quality;
•
the failure of essential equipment at our suppliers' plants;
•
the failure or shortage of supply of raw materials to our suppliers;
•
contractual amendments and disputes with our suppliers;
•
reduction to credit terms; and
•
geopolitical conditions in the global supply base, including tariffs.
16
In addition, some contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject to
termination on a relatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions,
including inflationary pressures and tariffs, and substantial increases in prices could increase our operating costs, which, as a result of our fixed-
price contracts, we may not be able to recoup through increases in the prices of our products.
Due to economic difficulty, we may face pressure to renegotiate agreements resulting in lower margins. Our suppliers may discontinue the
provision of products to us at attractive prices or at all, and we may not be able to obtain such products in the future from these or other providers
on the scale and within the time periods we require. Furthermore, substitute raw materials or component parts may not meet the strict
specifications and quality standards we and our customers demand, or that the U.S. Government requires. Additionally, climate change increases
the risk of potential supply chain and operational disruptions from weather events and natural disasters. The chronic physical impacts associated
with climate change, for example, increased temperatures, changes in weather patterns, and rising sea levels, could significantly increase costs
and expenses and create additional supply chain and operational disruption risks. If we are not able to obtain key products on a timely basis and
at an affordable cost, or we experience significant delays or interruptions of their supply, revenues from sales of products that use these supplies
will decrease.
Significant consolidation by aerospace industry suppliers could adversely affect our business.
The aerospace industry continues to experience consolidation among suppliers and customers. The supplier consolidation is in part attributable to
aircraft manufacturers more frequently awarding long-term sole-source or preferred supplier contracts to the most capable suppliers, thus
reducing the total number of suppliers. This consolidation could cause us to compete against certain competitors with greater financial resources,
market penetration and purchasing power. When we purchase component parts and services from suppliers to manufacture our products,
consolidation reduces price competition between our suppliers, which could diminish incentives for our suppliers to reduce prices. If this
consolidation continues, our operating costs could increase, and it may become more difficult for us to be successful in retaining key customers.
Our business could be materially adversely affected by product warranty obligations or disposition related obligations.
Our operations expose us to potential liability for warranty claims made by customers or third parties with respect to aircraft components that have
been designed, manufactured, or serviced by us or our suppliers. We have in the past and from time to time have ongoing dialogue with our
customers regarding warranty claims. Material product warranty obligations could have a material adverse effect on our business, financial
condition and results of operations.
As part of the transformation of our business over the last decade, we have engaged in a number of dispositions. Dispositions involve a number
of risks and present financial, managerial and operational challenges, including diversion of management attention from running our core
businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses,
potential disputes with the acquirers of the disposed businesses and potential losses, write-downs or other adverse impacts on our financial
statements or results of operations. As a result, we may not realize some or all of the anticipated benefits of our dispositions. For further
information on commitments and contingencies, see Note 17.
Any product liability claims in excess of insurance may adversely affect our financial condition.
Our operations expose us to potential liability for personal injury or death as a result of the failure of an aircraft component that has been serviced
by us or the failure of an aircraft component designed or manufactured by us. While we believe that our liability insurance is adequate to protect
us from these liabilities, our insurance may not cover all liabilities. Additionally, should insurance market conditions change, general aviation
product liability, insurance coverage may not be available in the future at a cost acceptable to us. Any material liability not covered by insurance
or for which third-party indemnification is not available could have a material adverse effect on our financial condition.
The lack of available skilled personnel may have an adverse effect on our operations.
From time to time, some of our operating locations have experienced difficulties in attracting and retaining skilled personnel to design, engineer,
manufacture, repair and overhaul sophisticated aircraft components, and this risk can be higher during periods of high inflation due to resulting
pressure on wages. Our ability to operate successfully could be jeopardized if we are unable to attract and retain a sufficient number of skilled
personnel to conduct our business.
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Our fixed-price contracts may commit us to unfavorable terms.
A significant portion of our net sales is derived from fixed-price contracts under which we have agreed to supply components systems or services
for a price determined on the date we entered into the contract. Contract terms vary but are generally less than five years in length. Several
factors may cause the costs we incur in fulfilling these contracts to vary substantially from our original estimates, and we generally bear the
majority of risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on these contracts. In a fixed-price
contract, we may be required to fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing
these contracts. This risk is greater in periods of high inflation or global instability, including tariff implementation. Because our ability to terminate
contracts is generally limited, we may not be able to terminate our performance requirements under these contracts at all or without substantial
liability and, therefore, in the event we are sustaining reduced profits or losses, we could continue to sustain these reduced profits or losses for
the duration of the contract term. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control
costs during performance of a fixed-price contract may reduce our profitability or cause losses on programs.
Due to the size and long-term nature of many of our contracts, we are required by GAAP to estimate sales and expenses relating to
these contracts in our financial statements, which may cause actual results to differ materially from those estimated under different
assumptions or conditions.
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP").
These principles require our management to make estimates and assumptions regarding our contracts that affect the reported amounts of
revenue and expenses during the reporting period. Accounting for revenue recognized over time requires judgment relative to assessing risks,
estimating contract sales and costs, and making assumptions for schedule and technical issues. Due to the nature of certain of our contracts, the
estimation of total sales and cost at completion is complicated and subject to many variables. While we base our estimates on historical
experience and on various assumptions that we believe to be reasonable under the circumstances at the time made, actual results may differ
materially from those estimated.
Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.
Our manufacturing facilities or our customers' facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity. We maintain
property damage and business interruption insurance at the levels typical in our industry or for our customers and suppliers, however, a pandemic
or other major catastrophe, such as an earthquake, hurricane, fire, flood, tornado or other natural disaster at any of our sites, or war or terrorist
activities in any of the areas where we conduct operations could result in a prolonged interruption of our business. Any disruption resulting from
these events could cause significant delays in shipments of products and the loss of sales and customers, and we may not have insurance to
adequately compensate us for any of these events. For leased facilities, timely renewal of leases and risk mitigation from the sale of our leased
facilities is required to avoid any business interruption.
We may be subject to work stoppages at our facilities or those of our principal customers and suppliers, which could seriously impact
the profitability of our business.
Our unionized workforces and those of our customers and suppliers may experience work stoppages during collective bargaining agreement
negotiations. If we are unable to negotiate a contract with those workforces, our operations may be disrupted, and we may be prevented from
completing production and delivery of products from those facilities, which would negatively impact our results. Contingency plans have been
developed that would allow production to continue in the event of a strike.
Financial Risks
Financial risk relates to our ability to meet financial obligations and mitigate exposure to broad market risks, including funding and liquidity risks,
such as risk related to our credit ratings and our availability and cost of funding; credit risk; inflation risk, and volatility in foreign currency
exchange rates, interest rates, and commodity prices. Liquidity risk refers to the potential inability to meet contractual or contingent financial
obligations (whether on- or off-balance sheet) as they arise and could potentially impact
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our financial condition or overall safety and soundness. Credit risk is the risk of financial loss arising from a customer or counterparty failure to
meet its contractual obligations to us.
Our debt could adversely affect our financial condition and our ability to operate and grow our business. The terms of the indenture
governing our 9.000% Senior Secured First Lien Notes due 2028 (the "2028 First Lien Notes") impose significant operating and financial
restrictions on us and our subsidiaries, which could also adversely affect our operating flexibility and put us at a competitive
disadvantage by preventing us from capitalizing on business opportunities and additional financing may not be available on terms
acceptable to us.
The terms of the indenture governing our 2028 First Lien Notes and our receivables securitization facility (the "Securitization Facility") impose
significant operating and financial restrictions on us and require us to comply with various financial and other covenants, which, among other
things, limit our ability to incur additional indebtedness, create liens, dispose of assets, and enter into certain transactions. We are in compliance
with all of our debt covenants.
We cannot assure you that we will be able to remain in compliance with such covenants in the future or, if we fail to do so, that we will be able to
obtain waivers from the applicable holders of such indebtedness or amend such covenants and other terms of the agreements governing such
indebtedness on commercially reasonable terms, if at all. Failure to comply with such covenants will entitle the applicable holders of such
indebtedness to exercise remedies, including to require immediate repayment of outstanding amounts and to terminate commitments under such
indebtedness, which could have a material adverse effect on our business, operations, and financial condition.
We may need to obtain additional financing in order to meet our debt obligations as they come due, to support our operations and/or to make
acquisitions. Our access to the debt capital markets and the cost of borrowings are affected by a number of factors, including market conditions
and the strength of our credit ratings. If we cannot obtain adequate sources of credit on favorable terms, or at all, our business, operations, and
financial condition could be adversely affected. We may also seek transactions to extend the maturity of our debt, reduce leverage or obtain
covenant flexibility. Such transactions could result in us incurring additional secured debt or issuing additional equity, which could increase the
risks described above.
Volatility in the financial markets may impede our ability to successfully access capital markets and ensure adequate liquidity and may
adversely affect our customers and suppliers.
Turmoil in the capital markets may impede our ability to access the capital markets when we would like, or need, to raise capital or may restrict
our ability to borrow money on favorable terms. Such market conditions could have an adverse impact on our flexibility to react to changing
economic and business conditions and on our ability to fund our operations and capital expenditures in the future. In addition, interest rate
fluctuations, financial market volatility, or credit market disruptions may also negatively affect our customers' and our suppliers' ability to obtain
credit to finance their businesses on acceptable terms. As a result, our customers' need for and ability to purchase our products or services may
decrease, and our suppliers may increase their prices, reduce their output or change their terms of sale. If our customers' or suppliers' operating
and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, our customers may not be able to pay,
or may delay payment of, accounts receivable owed to us, and our suppliers may restrict credit or impose different payment terms. Any inability of
customers to pay us for our products and services or any demands by suppliers for different payment terms may adversely affect our earnings
and cash flow.
Our expansion into international markets may increase credit, currency and other risks, and our current operations in international
markets expose us to such risks.
As we pursue customers in Asia, South America and other less developed aerospace markets throughout the world, our inability to ensure the
creditworthiness of our customers in these areas could adversely impact our overall profitability. In addition, with operations in France, Germany,
Mexico, and the United Kingdom, and customers throughout the world, we are subject to the legal, political, social and regulatory requirements,
and economic conditions of other jurisdictions. In the future, we may also make additional international capital investments, including further
acquisitions of companies outside the United States or companies having operations outside the United States. Risks inherent to international
operations include, but are not limited to, the following:
•
difficulty in enforcing agreements in some legal systems outside the United States;
•
imposition of additional withholding taxes or other taxes on our foreign income, tariffs or other restrictions on foreign trade and
investment, including currency exchange controls;
•
fluctuations in exchange rates which may affect demand for our products and services and may adversely affect our profitability in U.S.
dollars;
•
inability to obtain, maintain or enforce intellectual property rights;
•
changes in general economic and political conditions in the countries in which we operate;
19
•
unexpected adverse changes in the laws or regulatory requirements outside the United States, including those with respect to
environmental protection, disclosure of social and environmental risks, opportunities, and impact, export duties and quotas;
•
failure by our employees or agents to comply with U.S. laws affecting the activities of U.S. companies abroad;
•
difficulty with staffing and managing widespread operations; and
•
difficulty of and costs relating to compliance with the different commercial and legal requirements of the countries in which we operate.
Financial market conditions may adversely affect the benefit plan assets for our defined benefit plans, increase funding requirements
and materially impact our statements of financial position and cash flows.
Our benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments
in other alternative investments. The current market values of all of these investments, as well as the related benefit plan liabilities are impacted
by the movements and volatility in the financial markets. In accordance with the Compensation—Retirement Benefits topic of the Accounting
Standards Codification ("ASC"), we have recognized the overfunded or underfunded status of a defined benefit postretirement plan as an asset or
liability on our balance sheet, and will recognize changes in that funded status in the year in which the changes occur. The funded status is
measured as the difference between the fair value of the plan's assets and the projected benefit obligation. A decrease in the fair value of these
plan assets or a decrease in interest rates resulting from movements in the financial markets will increase the underfunded status of the plans
recorded on our consolidated balance sheets and result in additional cash funding requirements to meet the minimum required funding levels.
Prolonged periods of inflation where we do not have adequate inflation protections in our customer contracts could have a material
adverse effect on our results of operations.
A majority of our sales are conducted pursuant to medium- or long-term contracts that set fixed unit prices. Certain, but not all, of these contracts
provide for price adjustments for index-based inflation or adjustments related to updated or final product cost for certain components. Ongoing
inflationary pressures have caused and may continue to cause certain of our material and labor costs to increase, which can adversely affect our
profitability and cash flows, particularly when we are unable to increase customer contract values or pricing to offset those pressures. Although
we have attempted to minimize the effect of inflation on our business through contractual protections, our contracts that are medium- to long-term
fixed price contracts increase our exposure to sustained or higher than anticipated increases in costs of labor or material. Prolonged global
inflationary pressures have also impacted energy, freight, raw material, interest rates, labor, and other costs, and we may experience reduced
levels of profitability as a result of ongoing inflationary pressures.
Legal & Compliance Risks
Legal and compliance risk relates to risks arising from the government and regulatory environment and action and from legal proceedings and
compliance with integrity policies and procedures, including those relating to financial reporting and environmental, health, and safety matters.
Government and regulatory risk includes the risk that the government or regulatory actions will impose additional cost on us or require us to make
adverse changes to our business models or practices.
Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices,
the violation of which could adversely affect our operations.
We must comply with all applicable export control laws and regulations of the United States and other countries. Rising threats of international
tariffs, including tariffs applied to goods traded between the U.S. and jurisdictions in which we do business, could materially and adversely affect
our business and results of operations.
Additionally, United States laws and regulations applicable to us include the Arms Export Control Act, the International Traffic in Arms Regulations
("ITAR"), the Export Administration Regulations ("EAR"), and the trade sanctions laws and regulations administered by the United States
Department of the Treasury's Office of Foreign Assets Control ("OFAC"). EAR restricts the export of dual-use products and technical data to
certain countries, while ITAR restricts the export of defense products, technical data and defense services. The U.S. Government agencies
responsible for administering EAR and ITAR have significant discretion in the interpretation and enforcement of these regulations. We cannot
provide services to certain countries subject to United States trade sanctions unless we first obtain the necessary authorizations from OFAC. In
addition, we are subject to the Foreign Corrupt Practices Act, which generally bars bribes or unreasonable gifts to foreign governments or
officials.
Violations of these laws or regulations could result in significant additional sanctions, including fines, more onerous compliance requirements,
more extensive debarments from export privileges, loss of authorizations needed to conduct aspects of our
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international business, and criminal penalties and may harm our ability to enter into contracts with the U.S. Government. A future violation of ITAR
or the other regulations enumerated above could materially adversely affect our business, financial condition and results of operations.
The construction of aircraft is heavily regulated, and failure to comply with applicable laws could reduce our sales or require us to
incur additional costs to achieve compliance, and we may incur significant expenses to comply with new or more stringent
governmental regulation.
The aerospace industry is highly regulated in the United States by the FAA and in other countries by similar agencies. We must be certified by the
FAA and, in some cases, by individual OEMs in order to engineer and service parts, components and aerostructures used in specific aircraft
models. If any of our material authorizations or approvals were revoked or suspended, our operations would be adversely affected. New or more
stringent governmental regulations may be adopted, or industry oversight heightened in the future, and we may incur significant expenses to
comply with any new regulations or any heightened industry oversight.
Any exposure to environmental liabilities may adversely affect us.
Our business, operations and facilities are subject to numerous stringent federal, state, local, and foreign environmental laws and regulations, and
we are subject to potentially significant fines or penalties, including criminal sanctions, if we fail to comply with these requirements. In addition, we
could be affected by future laws and regulations, including those imposed in response to climate change concerns and other actions commonly
referred to as "green initiatives." Compliance with current and future environmental laws and regulations currently requires, and is expected to
continue to require, significant operating and capital costs.
Pursuant to certain environmental laws, a current or previous owner or operator of a contaminated site may be held liable for the entire cost of
investigation, removal or remediation of hazardous materials at such property. Innocent Landowner Regulations require an Environmental Site
Assessment prior to acquisition to prevent unknowingly acquiring impaired property. Once identified, if the transaction continues, the impairment
is not covered by insurance. Although management believes that our operations and facilities are in material compliance with such laws and
regulations, future changes in such laws, regulations, or interpretations thereof or the nature of our operations or regulatory enforcement actions,
which may arise, may require us to make significant additional capital expenditures to ensure compliance in the future. Certain of our facilities,
including facilities acquired and operated by us or one of our subsidiaries, have at one time or another been under active investigation for
environmental contamination by federal or state agencies when acquired and, at least in some cases subject to remediation. Lawsuits, claims and
costs involving sites undergoing remediation efforts and other environmental matters exist and may arise in the future. Individual facilities of ours
have also been subject to investigation on occasion for possible past waste disposal practices which might have contributed to contamination at
or from remote third-party waste disposal sites. In some instances, we are indemnified by prior owners or operators and/or present owners of the
facilities for liabilities that we incur as a result of these investigations and the environmental contamination found that predates our acquisition of
these facilities, subject to certain limitations, including, but not limited to, specified exclusions, deductibles and limitations on the survival period of
the indemnity. We also maintain a pollution liability policy that provides coverage, subject to specified limitations, for specified material liabilities
associated with the cleanup of certain on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including
Superfund liabilities at third-party sites), in each case, to the extent not otherwise indemnified. However, if we are required to pay the
21
expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a
material adverse effect on our financial position, results of operations, and cash flows.
We could become involved in intellectual property litigation, which could have a material and adverse impact on our profitability.
We and other companies in our industry possess certain proprietary rights relating to designs, engineering, manufacturing processes, and repair
and overhaul procedures. In the event that we believe that a third party is infringing upon our proprietary rights, we may bring an action to enforce
such rights. In addition, third parties may claim infringement by us with respect to their proprietary rights and may initiate legal proceedings
against us in the future. The expense and time of bringing an action to enforce such rights or defending against infringement claims can be
significant. Intellectual property litigation involves complex legal and factual questions, which makes the outcome of any such proceedings subject
to considerable uncertainty. Not only can such litigation divert management's attention, but it can also expose us to damages and potential
injunctive relief, which, if granted, may preclude us from making, using, or selling particular products or technology. The expense and time
associated with such litigation may have a material and adverse impact on our profitability.
Our reputation; our ability to do business; and our financial position, results of operations, and/or cash flows may be impacted by the
improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate.
We have implemented policies, procedures, training, and other compliance controls and have negotiated terms designed to prevent misconduct
by employees, agents, or others working on our behalf or with us that would violate the applicable laws of the jurisdictions in which we operate,
including laws governing improper payments to government officials, the protection of export controlled or classified information, cost accounting
and billing, competition and data privacy. However, we cannot ensure that we will prevent all such misconduct committed by our employees,
agents, subcontractors, suppliers, business partners, or others working on our behalf or with us, and this risk of improper conduct may increase
as we expand globally. Improper actions by those with whom or through whom we do business (including our employees, agents, subcontractors,
suppliers, or business partners) could subject us to administrative, civil or criminal investigations and monetary and non-monetary penalties,
including suspension and debarment, which could negatively impact our reputation and ability to conduct business and could have a material
adverse effect on our financial position, results of operations and/or cash flows.
The U.S. Government is a significant customer of our largest customers, and we and they are subject to specific U.S. Government
contracting rules and regulations.
The military aircraft manufacturers' business, and by extension, our business, is affected by the U.S. Government's continued commitment to
programs under contract with our customers. The terms of defense contracts with the U.S. Government generally permit the government to
terminate contracts partially or completely, either for its convenience or if we default by failing to perform under the contract. Termination for
convenience provisions provide only for our recovery of unrecovered costs incurred or committed, settlement expenses and profit on the work
completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S.
Government in procuring undelivered items from another source. On contracts where the price is based on cost, the U.S. Government may review
our costs and performance, as well as our accounting and general business practices. Based on the results of such audits, the U.S. Government
may adjust our contract-related costs and fees, including allocated indirect costs. In addition, under U.S. Government purchasing regulations,
some of our costs, including most financing costs, portions of research and development costs, and certain marketing expenses may not be
subject to reimbursement.
We bear the potential risk that the U.S. Government may unilaterally suspend our customers or us from new contracts pending the resolution of
alleged violations of procurement laws or regulations. Sales to the U.S. Government are also subject to changes in the government's procurement
policies in advance of design completion. An unexpected termination of, or suspension from, a significant government contract, a reduction in
expenditures by the U.S. Government for aircraft using our products, lower margins resulting from increasingly competitive procurement policies,
a reduction in the volume of contracts awarded to us, or substantial cost overruns could have a material adverse effect on our financial condition,
results of operations and cash flows.
We are subject to the requirements of the National Industrial Security Program Operating Manual for facility security clearance, which
is a prerequisite for our ability to perform on classified contracts for the U.S. Government.
U.S. DoD facility security clearance is required in order to be awarded and be able to perform on classified contracts for the U.S. DoD and certain
other agencies of the U.S. Government, which is a significant part of our business. We have obtained clearance at appropriate levels that require
stringent qualifications, and we may be required to seek higher level clearances in the future. We
22
cannot assure you that we will be able to maintain our security clearance. If for some reason our security clearance is invalidated or terminated,
we may not be able to continue to perform our present classified contracts or be able to enter into new classified contracts, which could affect our
ability to compete for and capture new business.
Our business is subject to regulation in the United States and internationally.
The manufacturing of our products is subject to numerous federal, state and foreign governmental regulations. The number of laws and
regulations that are being enacted or proposed by various governmental bodies and authorities is increasing. Compliance with these regulations
is difficult and expensive. If we fail to adhere, or are alleged to have failed to adhere, to any applicable federal, state, or foreign laws or
regulations, or if such laws or regulations negatively affect sales of our products, our business, prospects, results of operations, financial condition
or cash flows may be adversely affected. In addition, our future results could be adversely affected by changes in applicable federal, state, and
foreign laws and regulations, or the interpretation or enforcement thereof, including those relating to manufacturing processes, product liability,
government contracts, trade rules and customs regulations, intellectual property, consumer laws, privacy laws, environmental protection, climate
change, as well as accounting standards and taxation requirements (including tax-rate changes, new tax laws, or revised tax law interpretations).
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
Our cybersecurity program is designed to safeguard our information systems and protect confidentiality, integrity, and availability of those
information systems and the information residing therein. Our cybersecurity risk management program is integrated with our broader enterprise
risk management programs under the oversight of our Chief Administrative Officer ("CAO") and the Enterprise Risk Management Committee. The
CAO reports to the CEO and is responsible for our overall information and data security strategy, cybersecurity risk policies and procedures, as
well as evaluating and managing any material risks from cyber threats. Our Chief Information Security Officer ("CISO") reports directly to our CAO
and leads our cybersecurity and compliance department.
The cybersecurity and compliance department, in conjunction with our Computer Security Incident Response Team ("CSIRT"), designs,
implements, and executes continuous monitoring processes for our information systems. Our monitoring programs include the deployment of
advanced security measures and regular system audits to identify potential vulnerabilities. The CSIRT is responsible for the detection and
assessment of cybersecurity threats and incidents in accordance with a formal risk assessment matrix established in cooperation with our
Cybersecurity Disclosure Committee. This risk assessment matrix establishes a framework for notification of an incident to the Cybersecurity
Disclosure Committee and, if appropriate, the Audit Committee or Board of Directors. The CISO also partners with internal functions such as
finance, legal, and internal audit, as well as third-party consultants who perform risk-based assessments against the National Institute of
Standards and Technology (“NIST”) 800-171 Rev2 and Cybersecurity Maturity Model Certification with recommendations, in designing,
implementing, executing, monitoring, and improving our cybersecurity risk management program and strategy, helping ensure such programs and
strategy align with our business and operational objectives. Results of third-party assessments are shared with the Audit Committee or Board of
Directors.
In the event of a cybersecurity incident, the CSIRT has an Incident Response Plan that outlines the steps that are designed to help ensure
regulatory requirements are met and cyber vulnerabilities, if any, are addressed. We periodically conduct "tabletop" exercises to simulate
cybersecurity incidents and help ensure that we are prepared to respond to such incidents in accordance with our internal policies and programs,
as well as applicable laws and regulations. In addition, tabletop exercises allow us to identify areas for potential improvement and maturation of
our Incident Response Plan, or other aspects of our cybersecurity risk management program. These exercises have included participation by
members of our Cybersecurity Disclosure Committee, including our CAO and Chief Financial Officer.
We have established a supply chain risk management program, which is a cross-functional program that forms part of our Enterprise Risk
Management program and is supported by our security, compliance, and supply chain organizations. Through this evolving program, we assess
the risks from cybersecurity threats that impact suppliers and third-party service providers with whom we share personal identifying and
confidential information. We continue to assess and evolve our oversight processes to
23
mature how we manage cybersecurity risks associated with the products and services we procure. We generally require our suppliers to adopt
security practices based on industry-recognized standards.
We have experienced, and may experience in the future, either directly or through our supply chain or other channels, cybersecurity incidents. To
date, we are not aware of risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially
affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition. For
additional information about risks associated with cybersecurity, refer to “Our business could be negatively affected by cyber or other security
threats or other disruptions” in Item 1A. Risk Factors.
Governance
Our Board of Directors has overall responsibility for risk oversight and has delegated oversight of cybersecurity risks to the Audit Committee. The
Audit Committee reports on its activities, findings, and other matters to the full Board of Directors quarterly, or more frequently as events or
circumstances may require. The Audit Committee is charged with reviewing our cybersecurity processes for assessing key strategic, operational,
and compliance risks. The CAO and CISO present an update to the Audit Committee on our cybersecurity risks and risk management strategies
and processes at each regularly scheduled, quarterly meeting. These presentations include assessments on the threat landscape; emerging
risks, threats, or vulnerabilities; updates on our risk management activities, including investments in risk mitigation and governance; compliance
with laws and regulations; internal controls; and updates on incidents.
At the management level, we have established two committees that are directly involved in managing and responding to cybersecurity risks and
incidents: the Enterprise Risk Management Committee and the Cybersecurity Disclosure Committee. The Enterprise Risk Management
Committee is responsible for assessing enterprise risk and overseeing our enterprise risk management programs, including the cybersecurity risk
management programs described above. The Cybersecurity Disclosure Committee is a subcommittee of our Disclosure Committee and is
responsible for assessing the materiality of identified cybersecurity incidents resulting from our monitoring programs described above and
informing the Chair of the Audit Committee, the Audit Committee, or the Board of Directors, as appropriate. The CISO has responsibility for
notifying the CAO and the Cybersecurity Disclosure Committee of potentially material cybersecurity incidents based on an established policy and
risk assessment matrix that incorporates an evaluation of quantitative and qualitative factors such as potential impact on results of operations and
financial condition, compliance with laws and regulations, and impact on key stakeholders such as employees and business partners. The CISO
has over fifteen years of cybersecurity risk management experience and has served the Company for over twenty years in various roles involving
managing information technology, security and compliance functions, including developing key enterprise capabilities such as security
engineering and strategies on information security risk management.
The CAO and Chief Financial Officer are members of both the Enterprise Risk Management Committee and the Cybersecurity Disclosure
Committee and are supported by our information security, compliance, contracts, treasury, investor relations, operations, and supply chain
organizations so that identified issues can be addressed in a timely manner and incidents are reported to the appropriate regulatory bodies as
required.
Item 2. Properties
As of March 31, 2025, we conducted business from office and operating facilities throughout the United States and select global markets, with our
largest international facilities being located in the United Kingdom and Mexico. We also lease a facility in Radnor, Pennsylvania, for our corporate
headquarters.
We believe that our properties have been adequately maintained, are in good operating condition, and are suitable to support our operations for
the foreseeable future.
Item 3. Legal Proceedings
On December 12, 2023, a complaint was filed in the Supreme Court of the State of New York by Daher, the buyer of the Stuart facility, against
TAS and the Company, alleging claims for breach of contract and fraudulent inducement of contract arising out of the sale of the Stuart facility.
The Complaint alleges that TAS failed to disclose known and widespread paint issues, as well as certain supplier and production issues at the
facility, which rendered certain representations and warranties about the financial condition of the Stuart facility and the products manufactured by
the Stuart facility false. The Complaint seeks damages of approximately $130.0 million consisting of (a) approximately $60.0 million Daher
agreed to pay Boeing for alleged non-conformities in products Daher manufactured and/or sold to Boeing after the closing; (b) approximately
$30.0 million for future opportunities Daher claims to have lost; and (c) approximately $40.0 million for internal costs Daher claims to have
incurred in fixing alleged non-conformities in products. The divestiture agreement relating to the sale of the Stuart facility contains an $18.75
24
million general cap on breaches of representations (other than certain specified representations) and a $25.0 million cap on breaches of certain
specified representations related to contracts and product warranties, in each case absent certain circumstances, including fraud or breaches of
fundamental or tax representations. Previously, on June 16, 2023, the Company entered into a settlement agreement with the buyer of the Stuart
facility resolving a working capital dispute with the buyer resulting in an amount of $2.4 million payable to the Company and resolving claims by
the buyer related to the accounts payable representation and warranty under the purchase agreement resulting in an amount of $9.2 million
payable to the buyer, with such amount applicable to the general cap referred to above. The amounts were settled on a net basis by the Company
paying $6.8 million to the buyer.
TAS and the Company dispute that they engaged in any fraudulent conduct, dispute that they breached the representations and warranties in the
divestiture agreement, dispute the damages claimed (and that Daher could, in any event, recover any damages in excess of the liability caps set
forth in the divestiture agreement) and intend to vigorously defend this matter. The Company believes that the likelihood of further loss is remote,
and the amount of potential loss, if any, cannot be reasonably estimated at this time.
On May 7, 2024, a complaint was filed in the Court of Chancery of the State of Delaware by Qarbon, the buyer of the Red Oak facility, against
TAS and the Company, alleging claims for breach of contract, fraudulent inducement of contract, and unjust enrichment arising out of the sale of
the Red Oak facility. The complaint alleges that TAS failed to disclose potential future losses associated with the Boeing T-7A trainer program,
which rendered certain representations and warranties about the financial condition of the Red Oak facility false. The complaint seeks partial
rescission of the divestiture agreement as it relates to assignment of the T-7A contract and damages for past and future losses in an unspecified
amount under the T-7A contract. On July 11, 2024, TAS and the Company filed a motion to dismiss Qarbon’s complaint in its entirety. On
October 16, 2024, Qarbon filed an amended complaint rather than an answering brief. On November 22, 2024, TAS and the Company filed a
motion to dismiss Qarbon’s amended complaint. The Court of Chancery has not yet ruled on the motion to dismiss.
TAS and the Company dispute that they engaged in any fraudulent conduct, dispute that they breached the representations and warranties in the
divestiture agreement (all of which expired more than two years ago under the terms of the divestiture agreement and with respect to which buyer
had procured a representations and warranties insurance policy), dispute the damages claimed (and that Qarbon could, in any event, recover any
damages in excess of the liability caps set forth in the divestiture agreement), dispute that unjust enrichment and partial rescission would be
legally appropriate remedies, and intend to vigorously defend this matter. The Company believes that the likelihood of loss is remote, and the
amount of potential loss, if any, cannot be reasonably estimated at this time.
In the ordinary course of business, we are involved in other disputes, claims and lawsuits with employees, suppliers and customers, as well as
governmental and regulatory inquiries, that are deemed to be immaterial. Some may involve claims or potential claims of substantial damages,
fines, penalties or injunctive relief regarding unique contractual requirements, quality, costs, or impacts to production schedules. In addition, in
connection with certain other divestitures made by the Company, we have received claims relating to closing working capital adjustments to
purchase prices as well as claims regarding alleged violations of contractual terms, representations, and warranties of the sale agreements and
demands for honoring guarantee or indemnification obligations.
While we cannot predict the outcome of any pending or future litigation, proceeding or claim and no assurances can be given, we intend to
vigorously defend claims brought against the Company. If we are unable to successfully and equitably resolve such claims and assertions, our
business, financial condition, and results of operations could be materially adversely affected.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Our common stock is traded on the New York Stock Exchange under the symbol "TGI." As of May 19, 2025, there were approximately 113
holders of record of our common stock and we believe that our common stock was beneficially owned by approximately 22,061 persons.
Dividend Policy
During fiscal 2025 and 2024, we made no declaration or payments of dividends due to the March 2020 suspension of our dividend program. This
suspension is still in place. Our declaration and payment of cash dividends in the future and the amount thereof will depend upon our results of
operations, financial condition, cash requirements, future prospects, limitations imposed by credit agreements or indentures governing debt
securities and other factors deemed relevant by our Board of Directors. No assurance can be given that cash dividends will be declared and paid
at historical levels or at all. Certain of our debt arrangements restrict our paying dividends and making distributions on our capital stock, except for
the payment of stock dividends and redemptions of an employee's shares of capital stock upon termination of employment. We currently have an
accumulated deficit which could limit or restrict our ability to pay dividends in the future. Pursuant to the terms of the Merger Agreement, without
the prior written consent of Parent, we are prohibited from declaring or paying any dividends on, or making any other distributions (whether in
cash, stock or property or any combination thereof) in respect of, any of our capital stock, other equity interests or voting securities, other than
dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent.
Repurchases of Stock
In December 1998, we announced a program to repurchase up to 500,000 shares of our common stock. In February 2008, the our Board of
Directors authorized an increase in our existing stock repurchase program by up to an additional 500,000 shares of its common stock. In February
2014, our Board of Directors authorized an increase in our existing stock repurchase program by up to an additional 5,000,000 shares of its
common stock. Though no purchases have been made in recent years, to the extent permitted by documentation governing our indebtedness,
repurchases may be made from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at
prevailing prices. No time limit has been set for completion of the program. As of May 28, 2025, we remain able to purchase an additional
2,277,789 shares under such program. We currently have an accumulated deficit which, together with certain restrictive covenants imposed by
credit agreements or indentures governing debt securities, could limit or restrict our ability to repurchase stock in the future.
Pursuant to the terms of the Merger Agreement, without the prior written consent of Parent, we are prohibited from repurchasing, redeeming, or
otherwise acquiring, or offering to repurchase, redeem, or otherwise acquire, any of our common stock except for acquisitions, or deemed
acquisitions, of our common stock in connection with (i) the withholding of taxes in connection with the exercise, vesting and settlement of equity
awards in accordance with the terms thereof as in effect as of the date of the Merger Agreement granted to employees and non-employee
directors under our stock incentive plans disclosed in Note 16 and (ii) forfeitures of such equity awards.
26
Performance Graph
The following graph compares the cumulative 5-year total return provided stockholders on our common stock relative to the cumulative total
returns of the Russell 1000 index, the Russell 2000 index and the S&P Aerospace & Defense index. An investment of $100 (with reinvestment of
all dividends) is assumed to have been made in our common stock and in each of the indexes on March 31, 2020, and its relative performance is
tracked through March 31, 2025.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*
Among Triumph Group, Inc., and The Russell 1000 and 2000 Indexes
And The S&P Aerospace & Defense Index
* $100 invested on March 31, 2020, in stock or index, including reinvestment of dividends.
Fiscal year ended March 31,
2020
2021
2022
2023
2024
2025
Triumph Group, Inc.
100.00
271.89
373.96
171.45
222.49
374.85
Russell 1000
100.00
160.59
181.90
166.63
216.40
233.32
Russell 2000
100.00
194.85
183.57
162.27
194.25
186.46
S&P Aerospace & Defense
100.00
139.78
159.84
166.45
184.05
220.03
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Item 6. [Reserved]
Not Applicable.
27
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere herein.
OVERVIEW
Business
We are a major supplier to the aerospace industry and have two reportable segments: (i) Systems & Support, whose companies’ revenues are
derived from integrated solutions, including design, development, production and support of proprietary components, subsystems and systems,
production of complex assemblies using external designs; and (ii) Interiors, whose companies' revenues are primarily derived from supplying
commercial and regional manufacturers with thermo-acoustic insulation, composite components, ducting and primarily to customer designs and
model-based definition.
Proposed Merger
On February 2, 2025, we entered into a definitive agreement under which affiliates of Warburg Pincus LLC and Berkshire Partners LLC will
acquire the Company through a newly formed, co-owned entity. The transaction is expected to close before or during the second half of calendar
year 2025, subject to customary closing conditions, including receipt of required regulatory approvals. Refer to Note 1 for further disclosure.
Summary of Significant Financial Results
Significant financial results for the fiscal year ended March 31, 2025, include:
•
Net sales increased 5.9% to $1.26 billion.
•
Operating income was $139.4 million.
•
Income from continuing operations was $35.9 million, or $0.46 per diluted common share.
•
Net income, including income from discontinued operations, was $40.9 million or $0.52 per diluted common share.
•
Backlog of our continuing operations was consistent with prior year at $1.90 billion.
•
We generated $37.9 million of cash flows from operating activities.
Warrants Distribution
As disclosed in Note 2, on December 19, 2022, we issued approximately 19.5 million Warrants to holders of record of common stock as of the
Record Date. Each Warrant represented the right to purchase initially one share of common stock at an exercise price of $12.35 per Warrant.
Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain circumstances, Designated
Notes (as defined in Note 2). Approximately 8.1 million warrants were exercised between the date of the Warrants initial distribution on December
19, 2022, through July 6, 2023. In the year ended March 31, 2024, approximately 7.7 million warrants were exercised for total cash proceeds, net
of transaction costs, of approximately $80.0 million. On July 6, 2023, the Company redeemed all of the approximately 11.4 million outstanding
Warrants for a total redemption price of less than $0.1 million. In total, as a result of the Warrant exercises, from the date of issuance on
December 19, 2022, through redemption on July 6, 2023, the Company increased its cash by approximately $84.1 million and reduced debt by
approximately $14.4 million.
Significant Developments in Key Programs
Discussion of significant developments on key programs is included below.
Boeing 737
The Boeing 737 program represented approximately 9% and 14% of net sales for the fiscal years ended March 31, 2025 and 2024,
respectively, inclusive of both OEM production and aftermarket sales. Of the total revenue recognized on the 737 program, OEM
production revenue represented approximately 70% and 88% for the years ended March 31, 2025 and 2024, respectively. In January
2025, Boeing publicly disclosed that it had finalized the International Association of Machinists and Aerospace Workers (IAM) agreement
and that production of the 737 had resumed with plans to gradually increase the production rate. In April 2025, Boeing publicly disclosed
737 production rates had gradually increased in Boeing's first fiscal quarter, and production was still expected to reach 38 per month by the
end of calendar year 2025. While the temporary work stoppage had a short-term impact on our fiscal 2025 results, we do not expect the
impact to be material to our results of operations or financial condition in fiscal 2026 and beyond.
Boeing 787
The Boeing 787 program represented approximately 8% and 5% of net sales for the fiscal years ended March 31, 2025 and 2024,
respectively, inclusive of both OEM production and aftermarket sales. Of the total revenue recognized on the 787
28
program, OEM production revenue represented approximately 69% and 80% for the years ended March 31, 2025 and 2024, respectively.
We expect net sales on the 787 program to increase in fiscal 2026 and represent more than 10% of net sales. In April 2025, Boeing
publicly disclosed the 787 program continued to stabilize production at five per month and reaffirmed expectations of an increase to seven
per month in calendar 2025. In May 2025, Boeing announced that it had entered into an agreement with Qatar Airways in which the carrier
will purchase 130 787 Dreamliners, the largest order to date for the 787 program.
No other programs are expected to represent more than 10% of our consolidated net sales.
Discontinued Operations and Divestitures
In March 2024, we completed the sale of third-party maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie,
Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support”) and recognized a gain in the fourth quarter of
fiscal 2024. As a result of this transaction, we have classified the Product Support results of operations for all periods presented as discontinued
operations and these operations are no longer reported as part of the Systems & Support reportable segment. As a result, and unless specifically
stated, all discussions regarding results for years ended March 31, 2025 and 2024, reflect results from our continuing operations. In July 2024,
the Company finalized certain purchase price adjustments principally related to the transferred working capital of the divested Product Support
operations and recognized a gain of approximately $5.0 million in the year ended March 31, 2025. The gain is included within discontinued
operations on the accompanying consolidated statement of operations.
Refer to Note 3 for further discussion of this and other divestiture transactions.
RESULTS OF OPERATIONS
The following includes a discussion of our consolidated and business segment results of operations for the year ended March 31, 2025,
compared with the year ended March 31, 2024. Our diverse structure and customer base do not allow for precise comparisons between periods
of the impact of price and volume changes to specific line items in our results of operations. However, we have disclosed the significant variances
between the respective periods. A discussion of our consolidated and business segment results of operations for the year ended March 31, 2024,
compared with the year ended March 31, 2023, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended March 31,
2024, filed with the Securities and Exchange Commission (the "SEC") on May 31, 2024, and is incorporated by reference.
Non-GAAP Financial Measures
We prepare and publicly release annual audited and quarterly unaudited financial statements prepared in accordance with U.S. GAAP. In
accordance with Securities and Exchange Commission (the "SEC") rules, we also disclose and discuss certain non-GAAP financial measures in
our public filings and earnings releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our income
(loss) from continuing operations before interest and gains or losses on debt modification or extinguishment, income taxes, amortization of
acquired contract liabilities, costs incurred pertaining to shareholder cooperation agreements, consideration payable to customers related to
divestitures, legal contingency losses (including legal judgments and settlements), gains/loss on divestitures, merger transaction costs,
gains/losses on warrant remeasurements and warrant-related transaction costs, share-based compensation expense, depreciation and
amortization (including impairment of long-lived assets), and the effects of certain pension charges such as curtailments, settlements,
withdrawals, and other early retirement incentives; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension expense or benefit
(excluding pension charges already adjusted in Adjusted EBITDA). We disclose Adjusted EBITDA on a consolidated and Adjusted EBITDAP on a
consolidated and a reportable 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 with our previously reported results of operations.
We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measures and, as such, we believe that the U.S. GAAP financial
measure most directly comparable to such measures is income (loss) from continuing operations. In calculating Adjusted EBITDA and Adjusted
EBITDAP, we exclude from income (loss) 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 continuing 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 U.S. GAAP and should not be considered as a measure of
liquidity, as an alternative to income (loss) from continuing operations, or as an indicator of any other measure of performance derived in
accordance with U.S. GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as a
substitute for any U.S. GAAP financial measure, including income (loss) from continuing operations. In addition, we urge investors and potential
investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted
29
EBITDAP to income (loss) from continuing operations set forth below, in our earnings releases, and in other filings with the SEC and to carefully
review the U.S. 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 U.S. GAAP financial information with our Adjusted EBITDA
and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP are 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 U.S. 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 income (loss) from continuing operations 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 are measures of our ongoing operating performance because the
isolation of noncash charges, such as depreciation and amortization, and nonoperating items, such as interest, income taxes, pension and other
postretirement benefits, 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 financial measures 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 (loss) from continuing operations to calculate
Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using these non-GAAP financial measures as compared
with income (loss) from continuing operations:
•
Merger transaction costs may be useful for investors to consider because they represent costs in connection with the Merger
Agreement that have already been incurred and are not contingent upon the consummation of the merger transaction. We do not
believe these charges necessarily reflect the current and ongoing cash earnings related to our operations.
•
Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from
sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings
related to our operations.
•
Warrants remeasurement gains or losses and warrant-related transaction costs may be useful for investors to consider because they
reflect the mark-to-market changes in the fair value of our warrants and the costs associated with warrants issuance. 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.
•
Shareholder cooperation expenses may be useful for investors to consider because they represent certain costs that may be
incurred periodically when reaching cooperative agreements with shareholders. We do not believe these charges necessarily reflect
the current and ongoing cash earnings related to our operations.
•
Legal contingencies loss, when applicable, may be useful for investors to consider because it reflects gains or losses from legal
disputes with third parties. We do not believe these gains or losses reflect the current and ongoing earnings related to our
operations.
•
Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of certain pension
related transactions such as curtailments, settlements, withdrawals, and early retirement or other incentives) may be useful for
investors to consider because they represent the cost of postretirement 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 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 noncash earnings on
the fair value of off-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 and intangible asset impairments) may be useful for
investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of trade
names, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized
under U.S. GAAP. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our
operating cost structure.
30
•
Depreciation may be useful for investors to consider because it generally represents 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.
•
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.
•
The amount of interest expense and other, as well as debt modification and extinguishment gains or losses, 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 and debt extinguishment gains or losses 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 and Adjusted EBITDAP reconciled to our income (loss) from continuing operations for the
indicated periods (in thousands):
Fiscal year ended March 31,
2025
2024
2023
Income (loss) from continuing operations (U.S. GAAP measure)
$
35,856
$
(34,467) $
72,417
Income tax expense
5,589
7,123
3,360
Interest expense and other
87,628
123,021
115,211
Debt modification and extinguishment loss
5,369
1,694
33,044
Warrant remeasurement gain, net
—
(8,545)
(8,683)
Legal contingencies loss
13,664
7,338
—
Consideration payable to customer related to divestiture
—
—
17,185
Shareholder cooperation expenses
—
1,905
—
Loss (gain) on sale of assets and businesses, net
—
12,208
(101,523)
Share-based compensation
13,010
9,445
8,913
Amortization of acquired contract liabilities
(3,133)
(2,721)
(2,500)
Merger transaction costs
11,909
—
—
Depreciation and amortization
29,587
29,625
32,259
Adjusted EBITDA (non-GAAP measure)
199,479
146,626
169,683
Non-service defined benefit loss (income) (excluding pension related charges)
4,983
(2,372)
(19,664)
Adjusted EBITDAP (non-GAAP measure)
$
204,462
$
144,254
$
150,019
31
Fiscal year ended March 31, 2025, compared with fiscal year ended March 31, 2024
Fiscal Year Ended March 31,
(In thousands)
2025
2024
Commercial OEM
$
522,358
$
530,263
Military OEM
273,846
261,918
Total OEM Revenue
796,204
792,181
Commercial Aftermarket
205,288
164,014
Military Aftermarket
210,662
183,108
Total Aftermarket Revenue
415,950
347,122
Non-Aviation Revenue
46,675
50,019
Amortization of acquired contract liabilities
3,133
2,721
Total Net Sales
$
1,261,962
$
1,192,043
Net Sales
Commercial OEM sales decreased $7.9 million, or 1.5%, primarily due to decreased sales volume on the Boeing 737 program and other
commercial fixed wing platforms, which were partially offset by increased sales on the Boeing 787 program, increased business jets volume, and
a favorable settlement resulting in near-term improved pricing in Interiors across multiple programs for fiscal 2025 deliveries.
Military OEM sales increased $11.9 million, or 4.6%, primarily due to increased sales on the F/A-18, AH-64, CH-47, UH-60, and CH53 platforms,
which were partially offset by decreased sales on the E-2C and F-15 platforms.
Commercial Aftermarket sales increased $41.3 million, or 25.2%, primarily due to increased spares sales on Boeing commercial platforms as well
as a spare parts intellectual property transaction of approximately $4.6 million in the current year, partially offset by decreased spares volumes on
the Bell 429, Cessna 525, and the Global G500 platforms as well as a prior year intellectual property transaction of approximately $4.2 million.
Military aftermarket sales increased $27.6 million, or 15.0%, primarily due to increased spares sales across several platforms including the C-130,
E-2C, CH-47, and CH-53 and a military spare parts intellectual property transaction of approximately $5.0 million. Repair and overhaul sales
were up modestly primarily due to increased volumes on CH-47, AH-64, and F-15.
Non-aviation sales decreased approximately $3.3 million, or 6.7%, primarily driven by decreased sales of non-aircraft military components.
Year Ended March 31,
2025
2024
(in thousands)
Operating income
$
139,425
$
86,454
Non-service defined benefit expense (income)
4,983
(2,372)
Debt modification and extinguishment loss
5,369
1,694
Warrant remeasurement gain, net
—
(8,545)
Interest expense and other, net
87,628
123,021
Income tax expense
5,589
7,123
Income (loss) from continuing operations
$
35,856
$
(34,467)
Operating Income
Consolidated gross profit margin increased to 31.5% for the year ended March 31, 2025, from 27.1% for the year ended March 31, 2024. The
increased mix in aftermarket sales as a percentage of total sales, including the net year over year effect of spare parts intellectual property
transactions disclosed above, and the favorable settlement and increased pricing in Interiors offset challenges from continued inflationary
increases in labor and material costs and lower production rates on the Boeing 737. Operating income increased approximately $52.9 million
primarily due to the increased margins as well as the prior year divestiture loss of $12.2 million related to the sale of our Stuart, Florida
manufacturing operations, partially offset by the $13.7 million legal contingencies loss disclosed in Note 17, approximately $11.9 million in merger
transaction costs related to the Merger Agreement, and increased incentive compensation and research and development expenses.
32
Debt Modification and Extinguishment
Debt modification and extinguishment losses were approximately $5.4 million in the year ended March 31, 2025, as compared to $1.7 million in
the year ended March 31, 2024. The current period extinguishment losses were the result of the redemption of $120.0 million in 2028 First Lien
Notes in the three months ended June 30, 2024.
Warrant Remeasurement Gain
No warrant remeasurement gains were recognized in the year ended March 31, 2025, due to the fiscal 2024 redemption of all outstanding
Warrants on July 6, 2023, for a total redemption price of less than $0.1 million.
Interest Expense and Other
Interest expense and other decreased due to lower debt levels primarily due to the redemption of approximately $556.7 million of long-term debt
in the fourth quarter of fiscal 2024 and an additional $120.0 million redemption of long-term debt in the first quarter of fiscal 2025.
Non-service Defined Benefit Expense (Income)
Non-service defined benefit income decreased by $7.4 million to benefit expense of $5.0 million, primarily due to changes in actuarial
assumptions and experience.
Income Taxes
The income tax expense was $5.6 million for the fiscal year ended March 31, 2025, reflecting an effective tax rate of 13.5%. During the fiscal
year ended March 31, 2025, we adjusted the valuation allowance against the consolidated net deferred tax asset by $0.5 million primarily due to
utilization of net operating loss carryforwards, disallowed interest expense deductions, research and development cost amortization, and pension
and other postretirement benefit plans. As of March 31, 2025, management determined that it was necessary to maintain a valuation allowance
against principally all of our net deferred tax assets.
Business Segment Performance
We report our financial performance based on the following two reportable segments: Systems & Support and Interiors. Our Chief Operating
Decision Maker ("CODM") utilizes Adjusted EBITDAP as a primary measure of profitability to evaluate the performance of our segments and
allocate resources.
The results of operations among our reportable segments vary due to differences in competitors, customers, extent of proprietary deliverables
and performance. For example, Systems & Support, which generally includes proprietary products and/or arrangements where we become the
primary source or one of a few primary sources to our customers, our unique manufacturing capabilities command a higher margin.
Refer to Item 1 for further details regarding the operations and capabilities of each of our reportable segments.
We currently generate a majority of our revenue from sales to OEMs and aftermarket MRO services in the commercial airline and military and
defense markets. Our growth and financial results are largely dependent on continued demand for our products and services within these
markets. If any of the related industries experiences a downturn, our clients in these sectors may conduct less business with us. The loss of one
or more of our major customers or an economic downturn in the commercial airline or the military and defense markets could have a material
adverse effect on our business.
Business Segment Performance—Fiscal year ended March 31, 2025, compared with fiscal year ended March 31, 2024
Year Ended March 31,
% Change
% of Total Sales
2025
2024
2025
2024
(in thousands)
Net sales
Systems & Support
$
1,118,405 $
1,028,425
8.8%
88.6%
86.3%
Interiors
143,581
164,440
(12.7)%
11.4%
13.8%
Elimination of inter-segment sales
(24)
(822)
97.1%
(0.0)%
(0.1)%
Total net sales
$
1,261,962 $
1,192,043
5.9%
100.0%
100.0%
Systems & Support:
Net sales increased $90.0 million, or 8.7%, due to growth across all aviation sales channels. Commercial OEM primarily increased due to
volumes on 787, business jets, and other narrowbody aircraft sales, which were partially offset by decreased sales on the 737 program. Military
OEM grew primarily due to increased volume on F/A-18 and multiple military rotorcraft platforms, including AH-64, CH-47, CH-53, and UH-60.
Commercial aftermarket grew primarily due to increased spares sales on Boeing commercial platforms, partially offset by reduced volumes on
Bell 429 and Cessna 525 platforms. Military aftermarket
33
grew primarily on increased spares volumes on the E-2, C-130, CH-47, CH-53, UH-60, and other military rotorcraft platforms as well as a spare
parts intellectual property transaction of approximately $5.0 million in the current year, which were partially offset by reduced spares and repair
and overhaul sales on the V-22 and lower spares volume on the AH-64 platform.
Interiors
Net sales decreased by $20.9 million, or 12.7%, as reduced volume on the 737 program was partially offset by increased sales volume on the
Boeing 787 program, and a favorable settlement and near-term improved pricing in Interiors across multiple programs for fiscal 2025 deliveries.
Year Ended March 31,
% Change
% of Segment Sales
2025
2024
2025
2024
(in thousands)
Adjusted EBITDAP
Systems & Support
$
250,830 $
200,074
25.4%
22.5%
19.5%
Interiors
7,823
(5,000)
256.5%
5.5%
(3.0)%
Total Segment Adjusted EBITDAP
258,653
195,074
32.6%
20.6%
16.4%
Less: Unallocated Corporate EBITDAP
(54,191)
(50,820)
(6.6)%
n/a
n/a
Total Consolidated Adjusted EBITDAP
$
204,462 $
144,254
41.7%
16.2%
12.1%
Systems & Support
Adjusted EBITDAP increased by $50.8 million, or 25.4%, primarily due to the increased mix in aftermarket sales as a percentage of total sales,
including the net year over year effect of spare parts intellectual property transactions disclosed above. These margin benefits were partially
offset by continued inflationary increases in labor and material costs, increased research and development expense, and increased incentive
compensation expense.
Interiors
Adjusted EBITDAP increased by approximately $12.8 million, primarily due to the favorable settlement and price increases disclosed above,
partially offset by decreased sales volume and continued inflationary increases in labor and material costs. These factors also drove the increase
in Adjusted EBITDAP as a percentage of segment sales.
Unallocated Corporate EBITDAP
Corporate expenses consist primarily of compensation, benefits, professional services and other administrative costs incurred by the corporate
offices and increased primarily due to increased incentive compensation expense.
Liquidity and Capital Resources
Discontinued Operations
The accompanying consolidated statements of cash flows do not present the cash flows from discontinued operations separately from cash flow
from continuing operations. Capital expenditures and other operating and investing noncash items of the discontinued operations for the years
ended March 31, 2025, 2024, and 2023, were immaterial.
The following discussion of our liquidity and capital resources includes cash flows from discontinued operations.
Operating Cash Flows
Our working capital needs are generally funded through our current cash and cash equivalents, cash flows from operations, and proceeds from
the Securitization Facility. For the fiscal year ended March 31, 2025, we generated cash of $37.9 million from operating activities, compared with
a net cash inflow of $9.4 million for the fiscal year ended March 31, 2024, an improvement of $28.5 million. Cash flows were primarily driven by
timing of receivables and payables, including an increase of approximately $22.2 million in customer advances as of March 31, 2025, as
compared with March 31, 2024. In both fiscal 2025 and 2024, operating cash outflows were used to support inventory increases in response to
anticipated increasing demand. Interest payments were approximately $90.6 million for the twelve months ended March 31, 2025, as compared
to approximately $148.0 million for the twelve months ended March 31, 2024, with the decrease due to lower debt levels. Other significant
operating cash flow transactions included:
•
We contributed approximately $22.7 million to our U.S. qualified pension plan in the year ended March 31, 2025, and no cash
contributions were made in the year-ended March 31, 2024.
•
We paid approximately $14.0 million in income taxes in the year ended March 31, 2025, as compared to approximately $11.8 million
paid in the year ended March 31, 2024, with both periods including comparable income tax payments related to the taxable income
generated upon the divestiture of Product Support.
•
We paid approximately $2.5 million in merger transaction costs related to the Merger Agreement in the year ended March 31, 2025,
as compared with $12.5 million in transaction costs related to the Product Support divestiture.
Investing Cash Flows
34
Cash flows used in investing activities for the fiscal year ended March 31, 2025, decreased by $711.3 million from the cash flows provided by
investing activities for the fiscal year ended March 31, 2024. Cash flows used in investing activities for the fiscal year ended March 31, 2025, were
principally related to capital expenditures of approximately $19.1 million. Cash flows provided by investing activities for the year ended March 31,
2024, included net proceeds from the sale of assets and businesses of approximately $713.4 million, principally from approximately $720.3 million
of proceeds from the sale of Product Support, partially offset by payments related to sale of assets and businesses of approximately $6.8 million
as a result of the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement
and the finalization of certain purchase price adjustments related to the transferred working capital of the divested operations, as described in
Note 3 and Note 17. Cash flows used in investing activities for the fiscal year ended March 31, 2024, also included capital expenditures of $21.8
million. We currently expect capital expenditures in fiscal 2026 to be in the range of $30.0 - $35.0 million. The majority of our planned fiscal 2026
capital expenditures are capital investments designed to improve our manufacturing efficiency and expand our capabilities.
Financing Cash Flows
Cash flows used in financing activities for the fiscal year ended March 31, 2025, were $129.7 million, compared with cash flows used in financing
activities for the fiscal year ended March 31, 2024, of $534.3 million. Financing cash flows for the year ended March 31, 2025, pertain primarily to
our redemption of approximately $120.0 million of our 2028 First Lien Notes at a redemption price equal to 103% of the principal amount
redeemed, resulting in a premium upon redemption of $3.6 million, and draws and subsequent redemption under our securitization facility of
$40.0 million. Financing cash flows for the year ended March 31, 2024, were principally the result of approximately $80.0 million in proceeds, net
of related transaction costs, from Warrant exercises, and approximately $608.7 million in debt redemptions. As of March 31, 2025, we had
$277.2 million of cash on hand and approximately $54.2 million was available under the Securitization Facility after giving effect to approximately
$20.8 million in outstanding letters of credit, all of which were accruing interest at 0.125% per annum.
Refer to Note 3 and 17 for disclosures related to certain indemnifications, consent-to-assignment agreements, and guarantee agreements
associated with our divestiture activities.
In December 2021, The Organization for Economic Cooperation and Development adopted rules for a global minimum tax framework to serve as
a model to member nations (“BEPS Pillar Two”). In response, various governments have enacted, are in the process of enacting, or are
considering legislation to adopt this global minimum tax. We have assessed the impact of Pillar Two on our operations and currently do not
expect that it will result in substantial tax costs to us. As legislation is not final in many jurisdictions and is subject to change, it is possible that
later developments will present a greater cost than those currently expected.
We currently expect fiscal 2026 operations to result in net cash inflows, however, due to cyclicality we anticipate using cash over the first half of
fiscal 2026 and generating in the second half. We believe, based on an assessment of our current cash holdings as presented on the
accompanying consolidated balance sheet as of March 31, 2025, as well as current market conditions, that cash flows from operations will be
sufficient to meet anticipated cash requirements for our current operations for at least the next 12 months, with additional liquidity available under
the Securitization Facility or any similar replacement facility we may establish. We also believe, based on our current cash, our fiscal 2026
operating cash flow expectations, and the expected expansion of cash flows from operations subsequent to fiscal 2026, that we have the ability to
generate and obtain adequate amounts of cash to meet anticipated cash requirements for the foreseeable future. We continually evaluate
opportunities to access the credit and capital markets. We may also seek transactions to extend the maturity of our indebtedness, reduce
leverage, or decrease interest expense. Such transactions could include one or more repurchases or exchanges of our outstanding indebtedness.
These transactions could increase our total amount of secured indebtedness or be dilutive to stockholders. There can be no assurances if or
when we will consummate any such transactions or the timing thereof.
The 2028 First Lien Notes are our senior obligations and rank equally in right of payment with all of our other future senior indebtedness and
senior in right of payment to all of our existing and future subordinated indebtedness.
The 2028 First Lien Notes are (a) effectively senior to all existing and future second lien obligations and all existing and future unsecured
indebtedness of the Company and the Guarantor Subsidiaries, but only to the extent of the value of the Collateral (as defined below), and after
giving effect to any permitted additional first lien secured obligations and other permitted liens of senior or equal priority; (b) secured by the
Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to a Collateral Trust Agreement (as
defined below); (c) effectively subordinated to any existing and future obligations of the Company and the Guarantor Subsidiaries that are secured
by assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and (d) structurally
subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee
the 2028 First Lien Notes, including the Securitization Facility.
The 2028 First Lien Notes are guaranteed on a full, senior, joint and several basis by certain of the Company’s domestic restricted subsidiaries
(the “Guarantor Subsidiaries”). Currently, our only domestic consolidated subsidiaries that are not guarantors of the 2028 First Lien Notes (the
"Non-Guarantor Subsidiaries") are: (i) the receivables securitization special purpose entity, and (ii)
35
charitable foundation entity. The 2028 First Lien Notes and the related guarantees are secured by first-priority liens on substantially all of our
assets and our subsidiary guarantors, whether now owned or hereafter acquired (the “Collateral”).
Pursuant to the documentation governing the 2028 First Lien Notes, we may redeem some or all of the 2028 First Lien Notes prior to their stated
maturities, subject to certain limitations set forth in the indenture governing the 2028 First Lien Notes and, in certain cases, subject to significant
prepayment premiums. We are obligated to offer to repurchase the 2028 First Lien Notes at specified prices as a result of certain change-of-
control events and a sale of all or substantially all of our assets. These restrictions and prohibitions are subject to certain qualifications and
exceptions.
The indenture governing the 2028 First Lien Notes, as well as Securitization Facility, contain covenants and restrictions that, among other things,
limit our ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on our assets; (ii) make dividend payments, other distributions
or other restricted payments; (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments or
investments; (iv) enter into sale and leaseback transactions; (v) merge, consolidate, transfer or dispose of substantially all of their assets; (vi)
incur additional indebtedness; (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries (in the case of the 2028
First Lien Notes); and (viii) enter into transactions with affiliates. We are currently in compliance with all covenants under our debt documents and
expect to remain in compliance for the foreseeable future.
For further information on our long-term debt, see Note 10.
The following tables present summarized financial information of the Company and the Guarantor Subsidiaries on a combined basis. Consistent
with the presentation of discontinued operations on the accompanying consolidated statements of operations as a separate line below income
(loss) from continuing operations, the operating results of Guarantor Subsidiaries that are part of discontinued operations are only included in the
table below within net income. The combined summarized financial information eliminates intercompany balances and transactions among the
Company and the Guarantor Subsidiaries and equity in earnings and investments in any Guarantor Subsidiaries or Non-Guarantor Subsidiaries.
The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the
issuer and Guarantor Subsidiaries.
Parent and Guarantor Summarized Financial Information
March 31,
Summarized Balance Sheet
2025
in thousands
Assets
Due from non-guarantor subsidiaries
$
249
Current assets
649,608
Noncurrent assets
632,614
Noncurrent receivable from non-guarantor subsidiaries
81,094
Liabilities
Due to non-guarantor subsidiaries
31,042
Current liabilities
345,972
Noncurrent liabilities
1,302,116
Year Ended
Summarized Statement of Operations
March 31, 2025
in thousands
Net sales to non-guarantor subsidiaries
$
1,280
Net sales to unrelated parties
1,177,341
Gross profit
367,423
Income from continuing operations before income taxes
24,222
Net income
29,373
36
Our expected future cash flows for the next five years for long-term debt, leases and other obligations are as follows:
Payments Due by Period
Contractual Obligations
Total
Less than
1 Year
1 - 3 Years
4 - 5 Years
After
5 Years
(in thousands)
Debt principal
$
983,724
$
8,984
$
964,472
$
5,944
$
4,324
Debt interest
258,965
87,480
170,366
792
327
Operating leases
18,885
3,928
6,222
2,971
5,764
Purchase obligations
782,799
566,683
214,363
1,678
75
Total
$
2,044,373
$
667,075
$
1,355,423
$
11,385
$
10,490
(1)
Includes fixed-rate interest only.
The above table excludes unrecognized tax benefits of approximately $12.6 million as of March 31, 2025, since we cannot predict with
reasonable certainty the timing of cash settlements with the respective taxing authorities.
In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at March 31, 2025, as
detailed in the following table. Our other postretirement benefits are not required to be funded in advance, so benefit payments are paid as they
are incurred. Our expected net contributions and payments are included in the table below:
Pension
Benefits
(in thousands)
Projected benefit obligation at March 31, 2025
$
1,423,104
Plan assets at March 31, 2025
1,151,233
Projected contributions by fiscal year
2026
39,499
2027
37,376
2028
34,052
2029
30,811
2030
24,869
Total 2026 - 2030
$
166,607
Our total expected remaining net contributions to our qualified U.S. defined benefit pension plans in years beyond fiscal 2030 are approximately
$20.4 million. Current plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining
requirements for represented employees.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and
results of operations, and that require the use of complex and subjective estimates based upon past experience and management's judgment.
Because of the uncertainty inherent in such estimates, actual results may differ from these estimates. Below are those policies applied in
preparing our consolidated financial statements that management believes are the most dependent on the application of estimates and
assumptions. For additional accounting policies, refer to Note 2 to the accompanying consolidated financial statements.
Revenue Recognition and Contract Balances
Our accounting policy regarding revenue recognition is disclosed in Note 2 to the consolidated financial statements. As described in Note 2, for
certain contracts and performance obligations, we are required to exercise judgment when developing assumptions regarding expected total
costs to fulfill performance obligations, variable consideration, and the standalone selling price of a performance obligation. Specifically,
assumptions regarding the total costs require judgment with regard to materials, labor, and overhead costs that are affected by our ability to
achieve technical requirements and schedule requirements, as well as our estimation of internal and subcontractor performance projections,
anticipated volume, asset utilization, and inflation trends. We continually review and update our assumptions based on market trends and
program performance. When we satisfy a performance obligation and recognize revenue over time, material changes in assumptions may result
in positive or negative cumulative catch-up adjustments related to revenues previously recognized or, in some cases, forward loss contract
reserves.
Commitments and Contingencies
(1)
37
Our results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement,
and claims for third-party property damage or personal injury stemming from alleged environmental torts. We record accruals for legal matters or
other potential loss contingencies when the information available indicates that it is probable that a liability has been incurred and the amount of
the loss can be reasonably estimated. We make adjustments to these accruals to reflect the impact and status of negotiations, settlements,
rulings, advice of counsel, and other information or events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits
and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In
making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to,
the nature of specific claims including unasserted claims, our experience with similar types of claims, the jurisdiction in which the matter is filed,
input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms or commercial
negotiations, and the matter's status. Considerable judgment is required in determining whether to establish a contingent loss accrual when an
adverse judgment is rendered against the Company in a court proceeding. In such situations, we will not recognize a loss if, based upon a
thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully
overturned on appeal. Refer to Note 17 for further disclosure regarding commitments and contingencies.
Postretirement Plans
Certain of our current and former employees participate in defined benefit pension and other postretirement defined benefit plans (collectively,
referred to as “defined benefit plans”) in the United States and the United Kingdom, which we sponsor. The determination of projected benefit
obligations and the recognition of expenses related to defined benefit pension plans are dependent on various assumptions. The most significant
of these assumptions are the discount rates and the long-term expected rates of return on plan assets. Actual results that differ from our
assumptions are accumulated and amortized for each plan to the extent required over the estimated future life expectancy of plan participants.
We could be required to make future contributions to our defined benefit pension and postretirement benefit plans as a result of adverse changes
in interest rates and the capital markets. Adverse changes in the securities markets or interest rates, changes in actuarial assumptions, and
legislative or other regulatory actions could substantially increase the costs of these plans and could result in a requirement to contribute
additional funds to the plans. The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-
effective manner possible as demographics, life expectancy and country-specific pension funding rules change.
Significant Assumptions
We develop assumptions using relevant experience, in conjunction with market-related data for each plan. Assumptions are reviewed annually
with third party consultants and adjusted as appropriate. Refer to Note 15 for details regarding the assumptions used to estimate projected benefit
obligations and net periodic benefit cost as they pertain to our defined benefit pension plans.
Expected Return on Plan Assets
We determine our expected return on plan assets by evaluating both historical returns and estimates of future returns. Specifically, we
consider the plan’s actual historical annual return on assets and historical broad market returns over long-term time frames based on our
strategic allocation, which is detailed in Note 15. Future returns are based on independent estimates of long-term asset class returns. Based
on this approach, the weighted average long-term expected annual rate of return on assets was estimated at 7.93% and 7.94% for fiscal years
2025 and 2024, respectively.
Discount Rate
The discount rate is used to calculate the present value of expected future benefit payments at the measurement date. A decrease in the
discount rate increases the present value of benefit obligations and generally decreases pension expense. The discount rate assumption is
based on current investment yields of high-quality fixed income investments during the retirement benefits maturity period. The pension
discount rate is determined by considering an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty
years, developed by the plan’s actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop a
single discount rate matching the plan’s characteristics. The discount rate assumption will change from measurement date to measurement
date as market yields on high quality corporate bonds change.
38
Sensitivity Analysis
Pension Expense
A 25 basis point change in each of the long-term expected rate of return on plan assets and discount rate would have the following effect on
the combined U.S. defined benefit pension plans’ pension expense for the next 12 months:
Increase/(Decrease) in Pension Expense
25 Basis Point Increase
25 Basis Point Decrease
(In thousands)
Expected long-term rate of return on plan assets
$
(2,874) $
2,874
Discount rate
$
230 $
(254)
Projected Benefit Obligation
Funded status is derived by subtracting the respective year-end values of the projected benefit obligations (“PBO”) from the fair value of plan
assets. The sensitivity of the PBO to changes in the discount rate varies depending on the magnitude and direction of the change in the
discount rate. Refer to Note 15 for a quantitative sensitivity analysis for the PBO.
Income Tax
We follow ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute criteria for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition.
We recognize deferred tax assets and liabilities based on the differences between the financial statement basis and the tax basis of assets,
liabilities, net operating losses and tax carryforwards. A valuation allowance is required to be recognized to reduce the recorded deferred tax
asset to the amount that will more likely than not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income by jurisdiction during the periods in which those temporary differences become deductible or when carryforwards can be
utilized. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in this
assessment. As of March 31, 2025, we have a valuation allowance against substantially all of our net deferred tax assets given the insufficient
positive evidence to support the realization of our deferred tax assets. A reduction in the valuation allowance could result in a significant
decrease in income tax expense in the period that the reduction is recorded. However, the exact timing and amount of the reduction in our
valuation allowance are unknown at this time and will be subject to the earnings level we achieve as well as our projected income in future
periods.
Recently Issued Accounting Pronouncements
Refer to Note 1 for disclosure of the effects of recently issued accounting guidance, if any, that are significant to our financial reporting.
39
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Foreign Exchange Risk
We are subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. We use
foreign currency forward contracts to hedge the price risk associated with forecasted foreign denominated payments related to our ongoing
business. Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates. At March 31, 2025, a 10% change in
the exchange rate in our portfolio of foreign currency contracts would not have a material impact on the unrecognized gains or losses recognized
within operating income. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses
or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When
taken together, these forward currency contracts and the offsetting underlying commitments do not create material market risk.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our long-term debt. Our long-term debt is carried at amortized cost
and fluctuations in interest rates do not impact our consolidated financial statements. However, the fair value of our outstanding debt, which pays
interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in
periods of increasing rates of interest. The information below summarizes our market risks associated with debt obligations and should be read in
conjunction with Note 10 of the notes to the accompanying consolidated financial statements.
The following table presents principal cash flows and the related interest rates. Fixed interest rates disclosed represent the weighted average rate
as of March 31, 2025.
Expected Years of Maturity
Next
12
Months
13 - 24
Months
25 - 36
Months
37 - 48
Months
49 - 60
Months
Thereafter
Total
Fixed rate cash flows (in thousands)
$
8,984 $
2,822 $ 961,650 $
2,989 $
2,955 $
4,324 $
983,724
Weighted average interest rate (%)
8.93%
8.96%
8.95%
7.33%
7.33%
7.33%
There are no other significant market risk exposures.
40
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Triumph Group, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Triumph Group, Inc. (the Company) as of March 31, 2025 and 2024, the
related consolidated statements of operations, comprehensive income (loss), stockholders' deficit and cash flows for each of the three years in
the period ended March 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company at March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in
the period ended March 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control–Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 28, 2025
expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Realizability of Deferred Tax Assets
Description of the
Matter
As described in Note 12 of the consolidated financial statements, at March 31, 2025, the Company had deferred tax
assets for deductible temporary differences and tax attributes of $44.3 million (net of a $399.7 million valuation
allowance). Deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available
evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
Auditing the Company’s analysis of the realizability of its deferred tax assets required complex auditor judgment
because the amounts are material to the financial statements and the assessment process involves significant
judgment to determine the future reversal pattern of existing taxable temporary differences and other assumptions of
future taxable income that may be affected by future market or economic conditions.
41
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address
the risks of material misstatement relating to the realizability of deferred tax assets. This included controls over the
scheduling of the future reversal pattern of existing taxable temporary differences that have been identified as a source
of future taxable income.
To test the Company’s assessment of the realizability of deferred tax assets and the resulting valuation allowance, our
audit procedures included, among others, testing the Company’s calculation of future taxable income from the reversal
of existing temporary taxable differences and evaluating the scheduling of the reversal patterns. In addition, we
compared taxable income in prior carryback years, if any, to the Company’s income tax returns; considered the
feasibility of tax planning strategies; and, evaluated projected future taxable income exclusive of reversing temporary
differences and carryforwards. We involved our tax professionals to assist in evaluating the application of tax law,
including any changes in the tax law, in the Company’s consideration of the sources of future taxable income.
Defined Benefit Pension Obligations
Description of the
Matter
At March 31, 2025, the Company’s aggregate defined benefit pension obligation was $1.4 billion and the net periodic
benefit expense was $13.3 million. As described in Note 15 of the consolidated financial statements, the Company
updates the estimates used to measure the defined benefit pension obligation and plan assets in the fourth quarter and
upon a remeasurement event.
Auditing the defined benefit pension obligations and the related net periodic benefit expense, associated with certain of
the Company’s defined benefit pension plans, required complex auditor judgment and technical expertise due to the
judgmental nature of the actuarial assumptions (e.g., discount rate, mortality rate, expected return on plan assets) used
in the measurement process. These assumptions had a significant effect on the projected benefit obligation and the net
periodic benefit expense.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
management’s determination of the defined benefit pension obligation calculations, the significant actuarial
assumptions described above, and the data inputs provided to the Company’s actuarial specialists associated with
certain of the Company’s defined benefit pension plans.
To test the defined benefit pension benefit obligation, and the related net periodic benefit expense associated with
certain of the Company’s defined benefit pension plans, our audit procedures included, among others, evaluating the
methodology used, the significant actuarial assumptions described above, the underlying data used by management
and its actuaries and the appropriateness of management’s judgments in applying the authoritative accounting
literature. We compared the actuarial assumptions used by management to historical trends and evaluated the change
in the defined benefit pension from prior year resulting from the change in service cost, interest cost, benefit payments,
and actuarial gains and losses. In addition, we involved our actuarial specialists to assist in evaluating management’s
methodology for determining the actuarial assumptions. For example, we evaluated management’s methodology for
determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the
defined benefit pension obligation. As part of this assessment, we compared the projected defined benefit pension cash
flows to prior year amounts and compared the current year benefits paid to the prior year projected cash flows. To
evaluate the mortality rate, we assessed whether the information is consistent with publicly available information, and
whether any market data adjusted for entity-specific adjustments were applied. We also tested the completeness and
accuracy of the underlying data, including the participant data provided to the Company’s actuarial specialists. Lastly,
to evaluate the expected return on plan assets, we assessed whether management’s assumptions were consistent with
a range of returns for a portfolio of comparative investments.
42
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1993.
Philadelphia, Pennsylvania
May 28, 2025
43
TRIUMPH GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
March 31,
March 31,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
277,164 $
392,511
Trade and other receivables, less allowance for credit losses
of $4,574 and $4,773
154,888
138,272
Contract assets
69,752
74,289
Inventory, net
357,323
317,671
Prepaid expenses and other current assets
19,736
16,626
Total current assets
878,863
939,369
Property and equipment, net
154,538
144,287
Goodwill
512,342
510,687
Intangible assets, net
56,191
65,063
Other, net
24,994
26,864
Total assets
$
1,626,928 $
1,686,270
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt
$
8,984
3,200
Accounts payable
162,917
167,349
Contract liabilities
78,430
55,858
Accrued expenses
144,747
129,855
Total current liabilities
395,078
356,262
Long-term debt, less current portion
963,715
1,074,999
Accrued pension and other postretirement benefits
277,509
283,634
Deferred income taxes
7,268
7,268
Other noncurrent liabilities
59,804
68,521
Stockholders' deficit:
Common stock, $.001 par value, 200,000,000 shares authorized, 77,435,476
and 76,923,691 shares issued and outstanding
77
77
Capital in excess of par value
1,118,610
1,107,750
Accumulated other comprehensive loss
(540,835)
(517,069)
Accumulated deficit
(654,298)
(695,172)
Total stockholders' deficit
(76,446)
(104,414)
Total liabilities and stockholders' deficit
$
1,626,928 $
1,686,270
See accompanying notes to consolidated financial statements.
44
TRIUMPH GROUP, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
Year ended March 31,
2025
2024
2023
Net sales
$
1,261,962 $
1,192,043 $
1,130,562
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
863,826
869,201
809,882
Selling, general and administrative
210,078
180,247
191,087
Depreciation and amortization
29,587
29,625
32,259
Legal contingencies loss
13,664
7,338
—
Restructuring
5,382
6,970
3,172
Loss (gain) on sale of assets and businesses, net
—
12,208
(101,523)
1,122,537
1,105,589
934,877
Operating income
139,425
86,454
195,685
Non-service defined benefit expense (income)
4,983
(2,372)
(19,664)
Debt modification and extinguishment loss
5,369
1,694
33,044
Warrant remeasurement gain, net
—
(8,545)
(8,683)
Interest expense and other, net
87,628
123,021
115,211
Income (loss) from continuing operations before income taxes
41,445
(27,344)
75,777
Income tax expense
5,589
7,123
3,360
Income (loss) from continuing operations
35,856
(34,467)
72,417
Income from discontinued operations, net of tax expense of $0, $11,788 and $2,728,
respectively
5,018
546,851
17,176
Net income
$
40,874
$
512,384
$
89,593
Earnings (loss) per share—basic:
Earnings (loss) per share - continuing operations
$
0.46
$
(0.46)
$
1.12
Earnings per share - discontinued operations
0.06
7.38
0.26
Earnings per share
$
0.52
$
6.92
$
1.38
Weighted average common shares outstanding—basic
77,325
74,149
65,021
Earnings (loss) per share—diluted:
Earnings (loss) per share - continuing operations
$
0.46
$
(0.46)
$
0.96
Earnings per share - discontinued operations
0.06
7.38
0.24
Earnings per share
$
0.52
$
6.92
$
1.20
Weighted average common shares outstanding—diluted
77,857
74,149
71,721
See accompanying notes to consolidated financial statements.
45
TRIUMPH GROUP, INC.
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in thousands)
Year ended March 31,
2025
2024
2023
Net income
$
40,874 $
512,384 $
89,593
Other comprehensive (loss) income:
Foreign currency translation adjustment
(9,618)
5,057
(1,273)
Defined benefit pension plans and other postretirement benefits:
Amounts arising during the period - net of tax expense
Prior service credit, net of taxes of $0, $0 and $0, respectively
3,126
—
—
Actuarial (loss) gain, net of taxes of $0, $0 and $0, respectively
(41,047)
12,511
(113,232)
Reclassification to net income - net of tax expense
Amortization of net loss, net of taxes of $0, $0 and $0, respectively
29,113
26,159
26,728
Recognized prior service credits, net of taxes of $0, $0 and $0, respectively
(5,002)
(5,002)
(5,002)
Total defined benefit pension plans and other postretirement benefits (expense) income, net of
taxes
(13,810)
33,668
(91,506)
Cash flow hedges:
Unrealized (loss) gain arising during the period, net of tax expense of $0, $0 and $0,
respectively
(2,888)
796
2,265
Reclassification of loss (gain) included in net earnings, net of tax expense of$0, $0 and $0,
respectively
2,550
(1,944)
(778)
Net unrealized (loss) gain on cash flow hedges, net of tax
(338)
(1,148)
1,487
Total other comprehensive (loss) income
(23,766)
37,577
(91,292)
Total comprehensive income (loss)
$
17,108 $
549,961 $
(1,699)
See accompanying notes to consolidated financial statements.
46
TRIUMPH GROUP, INC.
Consolidated Statements of Stockholders' Deficit
(Dollars in thousands)
Outstanding
Shares
Common
Stock
All Classes
Capital in
Excess of
Par Value
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
March 31, 2022
64,614,382 $
64 $
973,112 $
(96) $
(463,354) $
(1,297,149) $
(787,423)
Net income
—
—
—
—
—
89,593
89,593
Foreign currency translation
adjustment
—
—
—
—
(1,273)
—
(1,273)
Pension liability adjustment, net of
income taxes of $0
—
—
—
—
(91,506)
—
(91,506)
Change in fair value of foreign currency
hedges, net of income taxes of $0
—
—
—
—
1,487
—
1,487
Share-based compensation
554,169
1
9,009
—
—
—
9,010
Repurchase of restricted shares for
minimum tax obligation
(194,728)
—
—
(3,547)
—
—
(3,547)
Retirement of treasury shares
—
—
(3,643)
3,643
—
—
—
Employee stock purchase plan
48,623
—
660
—
—
—
660
Issuance of warrants on common shares
—
—
(19,500)
—
—
—
(19,500)
Warrant exercises, net of
income taxes of $0
410,143
—
5,103
—
—
—
5,103
March 31, 2023
65,432,589
65
964,741
—
(554,646)
(1,207,556)
(797,396)
Net income
—
—
—
—
—
512,384
512,384
Foreign currency translation
adjustment
—
—
—
—
5,057
—
5,057
Pension liability adjustment, net of
income taxes of $0
—
—
—
—
33,668
—
33,668
Change in fair value of foreign currency
hedges, net of income taxes of $0
—
—
—
—
(1,148)
—
(1,148)
Share-based compensation
511,823
—
9,398
47
—
—
9,445
Repurchase of restricted shares for
minimum tax obligation
(134,177)
—
—
(1,629)
—
—
(1,629)
Retirement of treasury shares
—
—
(718)
761
—
—
43
Employee stock purchase plan
55,220
—
598
—
—
—
598
Warrant exercises, net of
income taxes of $0
7,858,236
8
95,420
—
—
—
95,428
Issuance of shares on pension contribution
3,200,000
4
38,311
821
—
—
39,136
March 31, 2024
76,923,691
77
1,107,750
—
(517,069)
(695,172)
(104,414)
Net income
—
—
—
—
—
40,874
40,874
Foreign currency translation
adjustment
—
—
—
—
(9,618)
—
(9,618)
Pension liability adjustment, net of
income taxes of $0
—
—
—
—
(13,810)
—
(13,810)
Change in fair value of foreign currency
hedges, net of income taxes of $0
—
—
—
—
(338)
—
(338)
Share-based compensation
658,054
—
13,010
—
—
—
13,010
Repurchase of restricted shares for
minimum tax obligation
(184,380)
—
—
(2,707)
—
—
(2,707)
Retirement of treasury shares
—
—
(2,707)
2,707
—
—
—
Employee stock purchase plan
38,111
—
557
—
—
—
557
March 31, 2025
77,435,476 $
77 $
1,118,610 $
— $
(540,835) $
(654,298) $
(76,446)
See accompanying notes to consolidated financial statements.
47
TRIUMPH GROUP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Fiscal Year Ended March 31
2025
2024
2023
Operating Activities
Net income
$
40,874 $
512,384
$
89,593
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization
29,587
33,250
35,581
Amortization of acquired contract liability
(3,133)
(2,721)
(2,500)
Gain on sale of assets and businesses
(5,018)
(556,161)
(101,523)
Curtailments, settlements, withdrawals, and special termination benefits loss, net
—
—
14,644
Loss on modification and extinguishment of debt
5,369
1,694
32,613
Other amortization included in interest expense
4,016
5,925
6,416
Provision for credit losses
75
1,136
1,594
Provision for deferred income taxes
—
—
14
Warrants remeasurement gain
—
(8,545)
(9,796)
Share-based compensation
13,010
9,445
8,913
Changes in other assets and liabilities, excluding the effects of
acquisitions and divestitures:
Trade and other receivables
(15,892)
7,879
(26,433)
Contract assets
4,555
9,584
(9,055)
Inventories
(39,294)
(17,460)
(28,187)
Prepaid expenses and other current assets
(4,252)
(2,919)
1,970
Accounts payable, accrued expenses, and contract liabilities
34,389
13,506
(35,733)
Accrued pension and other postretirement benefits
(21,102)
(3,916)
(32,562)
Other, net
(5,299)
6,362
2,200
Net cash provided by (used in) operating activities
37,885
9,443
(52,251)
Investing Activities
Capital expenditures
(19,056)
(21,827)
(20,676)
(Payments on) proceeds from sale of assets and businesses
(2,290)
713,413
(6,220)
Investment in joint venture
—
(1,661)
(272)
Net cash (used in) provided by investing activities
(21,346)
689,925
(27,168)
Financing Activities
Proceeds from issuance of long-term debt
40,000
2,000
1,235,000
Retirement of debt and finance lease obligations
(163,393)
(608,701)
(1,126,501)
Payment of deferred financing costs
—
(2,368)
(17,097)
Proceeds on issuance of common stock, net of issuance costs
—
79,961
4,090
Premium on redemption of long-term debt
(3,600)
(3,600)
(26,157)
Repurchase of shares for share-based compensation
minimum tax obligation
(2,707)
(1,629)
(3,547)
Net cash (used in) provided by financing activities
(129,700)
(534,337)
65,788
Effect of exchange rate changes on cash
(2,186)
77
156
Net change in cash and cash equivalents
(115,347)
165,108
(13,475)
Cash and cash equivalents at beginning of period
392,511
227,403
240,878
Cash and cash equivalents at end of period
$
277,164 $
392,511 $
227,403
See accompanying notes to consolidated financial statements.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
1. BACKGROUND AND BASIS OF PRESENTATION
Triumph Group, Inc. ("Triumph" or the "Company") is a Delaware corporation which, through its operating subsidiaries, designs, engineers,
manufactures and sells products for the global aerospace original equipment manufacturers ("OEMs") of aircraft and aircraft components and
repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis.
Triumph and its subsidiaries (collectively, the "Company") are organized based on the products and services that they provide. The Company has
two reportable segments: Systems & Support and Interiors.
Systems & Support consists of the Company’s operations that provide integrated solutions, including design; development; and support of
proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include
hydraulic, mechanical and electromechanical actuation, power and control; a complete suite of aerospace gearbox solutions, including engine
accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units, and Full
Authority Digital Electronic Control fuel systems; and hydromechanical and electromechanical primary and secondary flight controls. As disclosed
in Note 3, in December 2023 the Company entered into a definitive agreement with AAR Corp. (“AAR”), to sell Systems & Support's maintenance,
repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi,
Thailand (“Product Support”). As a result of this agreement, the Company has classified the Product Support results of operations for all periods
presented as discontinued operations, and these operations are no longer reported as part of the Systems & Support reportable segment. This
transaction closed in March 2024; refer to Note 3 for further disclosure.
Interiors consists of the Company’s operations that have historically supplied commercial, business, and regional manufacturers with large
metallic structures and continues to supply aircraft interior systems, including air ducting and thermal acoustic insulations systems. Subsequent to
the divestitures disclosed in Note 3, the remaining operations of Interiors are those that supply commercial and regional manufacturers with
aircraft interior systems.
The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts
and transactions have been eliminated from the consolidated financial statements.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.
Proposed Merger
On February 2, 2025, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Titan BW Acquisition Holdco
Inc., a Delaware corporation (“Parent”), and Titan BW Acquisition Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of
Parent (“Merger Sub”). Parent and Merger Sub are affiliates of funds managed by Warburg Pincus LLC (“Warburg Pincus”) and Berkshire
Partners LLC (“Berkshire”).
The Merger Agreement provides that, among other things, and on the terms and subject to the conditions of the Merger Agreement, (a) Merger
Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent, and (b)
at the closing of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of the Company (the “Common
Stock”) issued and outstanding immediately prior to the Effective Time (other than (i) shares of Common Stock owned directly by Parent or
Merger Sub or any direct or indirect wholly owned subsidiary of Parent (other than Merger Sub), (ii) shares of Common Stock owned by any direct
or indirect subsidiary of the Company and (iii) shares of Common Stock held by any holder who has not voted in favor of the Merger and who is
entitled to demand and properly demands appraisal of such Common Stock pursuant to Section 262 of the Delaware General Corporation Law
(the “DGCL”) and, as of the Effective Time, has not failed to perfect, or not effectively waived, withdrawn or lost rights to appraisal under the
DGCL) will be converted into the right to receive $26.00 in cash, without interest and subject to applicable tax withholdings.
The Merger is expected to close before or during the second half of calendar year 2025, subject to customary closing conditions, including,
among other things, receipt of certain regulatory approvals. Pursuant to the terms of the Merger Agreement, without the prior written consent of
Parent, we are prohibited from declaring or paying any dividends on, or making any other distributions (whether in cash, stock or property or any
combination thereof) in respect of, any of our capital stock, other equity interests or voting securities, other than dividends and distributions by a
direct or indirect wholly owned subsidiary of the Company to its parent.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
49
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of significant segment
expenses and other segment items on an annual and interim basis. The Company adopted ASU 2023-07, applying it retrospectively. The
adoption resulted in additional disclosures in Note 20.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"),
which improves income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation
and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax
disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The ASU indicates that
all entities will apply its guidance prospectively with an option for retroactive application to each period in the financial statements. ASU 2023-09 is
applicable to the Company beginning with the fiscal 2026 Annual Report on Form 10-K and the Company is currently evaluating the impact to its
interim and annual report disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation
Disclosures("ASU 2024-03"). ASU 2024-03 requires the disclosure of certain cost and expense information included on the consolidated
statements of operations on a disaggregated basis. The updated guidance is effective for fiscal years beginning after December 15, 2026 and
interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 is
applicable to the Company beginning with the fiscal 2028 Annual Report on Form 10-K and the Company is currently evaluating the impact to its
interim and annual report disclosures.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash
equivalents approximates carrying value.
Trade and Other Receivables, net
Trade and other receivables are recorded net of an allowance for expected credit losses. Trade and other receivables include amounts billed and
currently due from customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The
Company pools receivables that share underlying risk characteristics and records the allowance for expected credit losses based on a
combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific
collectibility matters when they arise. The Company writes off balances against the allowance for expected credit losses when collectibility is
deemed remote. The Company's trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the
customer base. For the years ended March 31, 2025, 2024, and 2023, credit loss expense and write-offs were immaterial.
Trade and other receivables, net composed of the following:
March 31,
2025
2024
Total trade receivables
$
151,049 $
139,012
Other receivables
8,413
4,033
Total trade and other receivables
159,462
143,045
Less: Allowance for credit losses
(4,574)
(4,773)
Total trade and other receivables, net
$
154,888 $
138,272
Goodwill and Intangible Assets
The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Under ASC 350,
goodwill and intangible assets with indefinite lives are not amortized; rather, they are tested for impairment on at least an annual basis. Intangible
assets with finite lives are amortized over their useful lives.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
50
The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment
involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than
its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is more likely than not that the fair
value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative
assessment is performed as required by ASC 350 to determine whether a goodwill impairment exists at the reporting unit.
The quantitative test is used to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value
exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value,
then an impairment loss occurs. The impairment is measured by using the amount by which the carrying value exceeds the fair value not to
exceed the amount of recorded goodwill. The determination of the fair value of its reporting units is based, among other things, on estimates of
future operating performance of the reporting unit being valued. The Company is required to complete an impairment test for goodwill and record
any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates
and require interim impairment assessments.
When performing the quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future
net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method
("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows
include the continued market acceptance of the products and services offered by the businesses, the development of new products and services
by the businesses and the underlying cost of development, the future cost structure of the businesses and future technological changes. The
Company also incorporates market multiples for comparable companies in determining the fair value of its reporting units. Any such impairment
would be recognized in full in the reporting period in which it has been identified. The fair value estimates resulting from the application of these
methodologies are based on inputs classified within Level 3 of the fair value hierarchy, as described below.
During the fourth quarter of the fiscal years ended March 31, 2025 and 2024, the Company performed its annual goodwill impairment assessment
for each of its reporting units with no impairment identified.
Finite-lived intangible assets are amortized over their useful lives ranging from 10 to 30 years. The Company continually evaluates whether
events or circumstances have occurred that would indicate that the remaining estimated useful lives of long-lived assets, including intangible
assets, may warrant revision or that the remaining balance may not be recoverable. Long-lived assets are evaluated for indicators of impairment.
When factors indicate that long-lived assets, including intangible assets, should be evaluated for possible impairment, an estimate of the related
undiscounted cash flows over the remaining life of the long-lived assets, including intangible assets, is used to measure recoverability based on
the primary asset of the asset group. Some of the more important factors management considers include the Company's financial performance
relative to expected and historical performance, significant changes in the way the Company manages its operations, negative events that have
occurred, and negative industry and economic trends. If the estimated undiscounted cash flows are less than the carrying amount, measurement
of the impairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the
present value of expected future cash flows associated with the use of the asset.
See below for the Company's accounting policy regarding fair value measurements and the definition of fair value levels.
Revenue Recognition and Contract Balances
The Company's revenue is principally from contracts with customers to provide design, development, manufacturing, and support services
associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms
and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the
Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply
agreements. Additionally, a majority of the Company’s agreements with customers include options for future purchases. Such options primarily
reduce the administrative effort of issuing subsequent purchase orders and generally do not represent material rights granted to customers. The
Company generally enters into agreements directly with its customers and is the principal in substantially all current contracts.
The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and
conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors
when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual
terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the
customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not
created until a purchase order is issued by a
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
51
customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a
contract is identified for accounting and financial reporting purposes.
Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates
whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise
is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service.
The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the
customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the
Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or
services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and
manufactured components, as well as spare parts and repairs for OEMs.
The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in
the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions
such as unpriced contract modifications, claims (when a legal basis exists), cost-sharing provisions, and other receipts or payments to customers.
The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its
customers. Variable consideration is only included in the transaction price to the extent that the Company has determined that it is probable that a
significant reversal of cumulative revenue recognized for the contract will not occur when the uncertainty associated with the variable
consideration is resolved, and any excess variable consideration above such included amount is considered constrained. Consideration paid or
payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later
of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's
contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120
days of delivery.
The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any
sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.
The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective
of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each
performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a
customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the
same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company
uses either the “Expected Cost Plus a Margin” or "Adjusted Market Assessment" approaches to estimate stand-alone selling price. Expected
costs are typically derived from the available periodic forecast information.
Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to
each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and
engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance
obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs
on these contracts because of the continuous transfer of control to the customer as represented by contractual terms that entitle the Company to
the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or
for work performed on a customer-owned asset.
With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The
Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer
that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of
costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on
contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based
on negotiated or estimated purchase contract terms, historical performance trends and other economic projections. Significant factors that
influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business
volume assumptions, and asset utilization.
Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net
sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
52
cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss
reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required and are
included in contract liabilities on the accompanying consolidated balance sheets. The Company believes that the accounting estimates and
assumptions made by management are appropriate, however actual results could differ materially from those estimates.
For the fiscal years ended March 31, 2025 and 2024, cumulative catch-up adjustments resulting from changes in estimated contract values and
contract costs during the fiscal year were immaterial.
For the fiscal year ended March 31, 2023, cumulative catch-up adjustments resulting from changes in estimates increased revenue, operating
income, income from continuing operations before income taxes, net income, and diluted earnings per share - continuing operations by
approximately $21,208, $27,963, $27,963, $27,963, and $0.39, respectively. The cumulative catch-up adjustments to operating income for the
fiscal year ended March 31, 2023, included gross favorable adjustments of approximately $32,699 and gross unfavorable adjustments of
approximately $4,736.
Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the
customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct
the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers
to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as
incurred.
The Company updates the estimated transaction price, including its assessment of whether an estimate of variable consideration is constrained,
at the end of each reporting period to represent faithfully the circumstances present at the end of the reporting period and the changes in
circumstances during the reporting period. Any portion of the change in transaction price that is allocated to satisfied and partially satisfied (when
control transfers over time) performance obligations is recognized as revenue in the period of the transaction price change as a cumulative catch-
up adjustment.
Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition of contract assets and
liabilities. Refer to Note 4 for further discussion.
Warrants
On December 1, 2022, the Company’s board of directors declared a distribution to holders of the Company’s shares of common stock in the form
of warrants to purchase shares of common stock (the “Warrants”). Holders of common stock received three Warrants for every ten shares of
common stock held as of December 12, 2022 (the "Record Date"). The Company issued approximately 19.5 million Warrants on December 19,
2022, to holders of record of common stock as of the close of business on the Record Date.
Each Warrant represented the right to purchase initially one share of common stock, at an exercise price of $12.35 per Warrant, subject to certain
anti-dilution adjustments. Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain
circumstances, certain of the Company's outstanding notes (the "Designated Notes").
The common stock warrants were accounted for as derivative liabilities in accordance with ASC 815-40 and included within accrued liabilities on
the accompanying consolidated balance sheets. The Company measured the Warrants at fair value as of the issuance date using a Monte Carlo
pricing model, a Level 3 fair value measurement (as described below), due to the level of market activity. Inherent in the option pricing simulation
are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimated the volatility of the
Warrants based on implied and historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury zero-
coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Warrants. The expected life of the Warrants was
based on the Company’s ability to redeem the Warrants, subject to a 20 calendar-day notice period, as well as the automatic acceleration of the
Expiration Date following the Price Condition Date. During the three months ended December 31, 2022, due to increased trading volume, the
Company began remeasuring outstanding Warrants using the Warrants trading price, a Level 1 fair value measurement (as described below).
The Warrants were remeasured at each balance sheet date. Warrants remeasurement adjustments were recognized in warrant remeasurement
gain, net on the accompanying consolidated statements of operations.
At distribution, the fair value of the Warrants was $19,500. Approximately 7.7 million Warrants were exercised in the year ended March 31, 2024,
resulting in total cash proceeds, net of transaction costs, of approximately $79,961, and $8,532 of warrants remeasurement gain was recognized
in the year ended March 31, 2024. On July 6, 2023, the Company redeemed all of the approximately 11.4 million remaining outstanding Warrants
for a total redemption price of approximately $11 pursuant to its June
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
53
16, 2023, notice of redemption, and, as a result of such redemption, no warrants remain outstanding as of March 31, 2025 and 2024.
Leases
The Company leases office space, manufacturing facilities, land, vehicles, and equipment. The Company determines if an agreement is or
contains a lease at the lease inception date and recognizes right-of-use assets (“ROU”) and lease liabilities at the lease commencement date. A
ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”).
ROU assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's
obligation to make lease payments arising from the lease. The determination of the length of lease terms is affected by options to extend or
terminate the lease when it is reasonably certain that the Company will exercise that option. The existence of significant economic incentive is the
primary consideration when assessing whether the Company is reasonably certain of exercising an option in a lease. Both finance and operating
lease ROU assets and liabilities are recognized at commencement date and measured as the present value of lease payments to be made over
the lease term. As the interest rate implicit in the lease is not readily available for most of the Company's leases, the Company uses its estimated
incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from
information available at the lease commencement date. The lease ROU asset recognized at commencement is adjusted for any lease payments
related to initial direct costs, prepayments, and lease incentives.
For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, lease expense comprises the
amortization of the ROU assets recognized on a straight-line basis generally over the shorter of the lease term or the estimated useful life of the
underlying asset and interest on the lease liability. Variable lease payments not dependent on a rate or index are recognized when the event,
activity, or circumstance in the lease agreement upon which those payments are contingent is probable of occurring and are presented in the
same line of the consolidated balance sheet as the rent expense arising from fixed payments. The Company has lease agreements with lease
and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for
all classes of underlying assets.
Retirement Benefits
Defined benefit pension plans are recognized in the consolidated financial statements on an actuarial basis. A significant element in determining
the Company's pension expense (income) is the expected long-term rate of return on plan assets. This expected return is an assumption as to the
average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected pension benefit
obligation. The Company applies this assumed long-term rate of return to a calculated value of plan assets, which recognizes changes in the fair
value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension expense
(income) . The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains
(losses) affects the calculated value of plan assets and, ultimately, future pension expense (income).
The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments are
recognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a
significant number of employees for some or all of their future service.
Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are
recognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
54
From time to time, the Company may enter into transactions that relieve it of primary responsibility for all or more than a minor portion of certain of
its pension benefit obligations. When these transactions are effected through an irrevocable action that relieves the Company of primary
responsibility for its pension or other postretirement benefit obligations and eliminates significant risks related to the obligation and the related
assets used to effect the transaction, they are considered settlements, as defined by ASC 715, Compensation – Retirement Benefits. When a
transaction meets the definition of a settlement, at the time of settlement the Company recognizes as a gain or loss the pro rata amount of the net
gain or loss in accumulated other comprehensive loss based on the proportion of the projected benefit obligation settled to the total projected
benefit obligation.
As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs
that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of
events and circumstances impacting the pension costs.
At March 31 of each year, the Company determines the fair value of its pension plan assets as well as the discount rate to be used to calculate
the present value of plan liabilities. The discount rate is an estimate of the interest rate at which the pension benefits could be effectively settled.
In estimating the discount rate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to
be available during the period to maturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least
the second-highest rating given by a recognized ratings agency.
Contingencies
Contingencies are existing conditions, situations or circumstances involving uncertainty as to possible gain or loss that will ultimately be resolved
when future events occur or fail to occur. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory
investigations and proceedings, product quality, and gains or losses resulting from other events and developments. Liabilities for loss
contingencies are accrued in the amount of the Company's best estimate for the ultimate loss when a loss is considered probable of having been
incurred and is reasonably estimable. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-
end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and
when it is reasonably possible that a loss will be incurred or the amount of a loss will exceed the recorded provision. The Company regularly
reviews contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range
of loss can be made. Contingencies that might result in gains are generally not accrued until the contingencies are resolved and the gain is
realized or realizable. Refer to Note 17 for further disclosure.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value
measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market
in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value
hierarchy has three levels of inputs that may be used to measure fair value: Level 1—Unadjusted quoted prices in active markets for identical
assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or
similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level
3—Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring the warrants (refer to the
above disclosure), when disclosing the fair value of its long-term debt not recorded at fair value (see Note 10) and when measuring its pension
and postretirement plan assets (see Note 15).
Income Taxes
The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax
assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting
bases of the Company's assets and liabilities. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not
that the asset will not be realized.
Management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses
a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50%
chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax
position that meets the more-likely-than-not recognition criterion. The amounts ultimately
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
55
paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial
statements of the Company in future periods. The Company recognizes penalties and interest accrued related to income tax liabilities in the
provision for income taxes on its consolidated statements of operations.
Warranty Reserves
A reserve has been established to provide for the estimated future cost of assurance-type warranties on our delivered products. The Company
periodically reviews the reserves and adjustments are made accordingly. A provision for warranty on products delivered is made on the basis of
historical experience and identified warranty issues. Warranties cover such factors as non-conformance to specifications and defects in material
and workmanship. The majority of the Company's agreements include a three-year warranty, although certain programs have warranties up to 20
years. Warranty provisions and expenditures were immaterial for the years ended March 31, 2025, 2024, and 2023. Warranty reserves are
included in accrued expenses and other noncurrent liabilities on the consolidated balance sheets. Refer to Note 8 and Note 11 for warranty
reserve balances as of March 31, 2025 and 2024.
Supplemental Cash Flow Information
In November 2021, the Company entered into an agreement with the DOT under the AMJP for a grant of up to $21,259. The receipt of the full
award was primarily conditioned upon the Company committing to not furlough or lay off a defined group of employees during the six-month
period of performance between November 2021 and May 2022. The Company received approximately $19,400 under the agreement, of which
approximately $8,770 was received in the year ended March 31, 2023. In July 2022, the Company received a letter from the DOT confirming that
the Company had satisfied the reporting requirements under the AMJP. In the year ended March 31, 2023, the Company recognized as a
reduction in cost of sales approximately $4,700 resulting from this grant.
For the fiscal years ended March 31, 2025, 2024, and 2023, the Company paid $13,982, $11,771, and $4,565, respectively, for income taxes, net
of income tax refunds received.
3. DIVESTED OPERATIONS AND ASSETS HELD FOR SALE
Fiscal 2024 Divestiture and Discontinued Operations
In December 2023, the Company’s Board of Directors committed to a plan, and the Company entered into a definitive agreement with AAR, to sell
Product Support for cash proceeds of $725,000 subject to adjustments related to the closing balance sheet and certain transaction expenses.
This transaction closed on March 1, 2024, and the Company recognized a gain of approximately $548,250, net of transaction costs and certain
other purchase price adjustments. In July 2024, the Company finalized certain purchase price adjustments principally related to the transferred
working capital of the divested operations and recognized a gain of approximately $5,018 in the year ended March 31, 2025. The gain is included
within discontinued operations on the accompanying consolidated statement of operations.
Product Support companies provided aftermarket maintenance, repair, and overhaul solutions for commercial, regional and military aircraft. As a
result of this transaction, effective in the third quarter of fiscal 2024, we classified our results of operations for all periods presented to reflect
Product Support as discontinued operations. Under the terms of the purchase agreement, we guaranteed the performance of certain of the
divested legal entities pursuant to pre-existing performance guarantee agreements covering contracts with specific customers existing at the
closing date. With the exception of a small number of contracts, these contracts have been fully satisfied as of March 31, 2025, and any
remaining contracts associated with pre-existing performance guarantee agreements are expected to be satisfied within the next twelve months.
There is no limitation to the maximum potential future liabilities under these guarantee agreements; however, we are fully indemnified by the
buyer, AAR, against such losses that may arise from their failure to perform under the related contracts. The Company has also indemnified the
buyer for a period of three years from the date of the transaction on product liability or warranty claims related to Product Support products and
operations prior to the transaction date to the extent such claims exceed an aggregate amount of $1,000. Other than these guarantees, a short-
term transition services agreement, commercial purchases and sales, which are not significant and are entered into in the ordinary course of
business, and other customary short-term transitional activities, the Company has had no further continuing involvement with Product Support.
The following table shows the results of Product Support within discontinued operations for the fiscal years ended March 31, 2024, and 2023.
Income from discontinued operations in the year ended March 31, 2025, pertains to the purchase price adjustments described above.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
56
Year ended March 31,
2024
2023
Major line items constituting pretax income of discontinued operations
Net sales
$
240,954 $
248,566
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
184,304
181,717
Selling, general and administrative
20,246
19,343
Depreciation and amortization
3,625
3,322
Restructuring
—
1,777
Gain on sale of discontinued operations, net of transaction costs
(548,250)
—
(340,075)
206,159
Operating income
581,029
42,407
Interest expense and other, net
22,390
22,503
Income from discontinued operations before income taxes
558,639
19,904
Income tax expense
11,788
2,728
Income from discontinued operations
$
546,851 $
17,176
The Company's accounting policy to allocate to discontinued operations other consolidated interest that is not directly attributable to or related to
other operations of the entity based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the
disposal transaction to the sum of total net assets of the consolidated group plus consolidated debt, adjusted for debt that will be assumed by the
buyer; debt that is required to be paid as a result of the disposal transaction; and debt that can be directly attributed to other operations of the
entity. In applying the above policy, the Company allocated interest expense to discontinued operations of approximately $21,857 and $21,619,
in the years ended March 31, 2024 and 2023, respectively.
The accompanying consolidated statements of cash flows do not present cash flows from discontinued operations separately from cash flows
from continuing operations. Capital expenditures and other operating and investing noncash items of the discontinued operations for the years
ended March 31, 2025, 2024, and 2023, were immaterial.
Fiscal 2023 Divestitures
In January 2022, the Company’s Board of Directors committed to a plan to sell its manufacturing operations located in Stuart, Florida. In February
2022, the Company entered into a definitive agreement with the buyer of these manufacturing operations. This transaction closed in July 2022.
The Company recognized a gain of approximately $96,800, net of transaction costs in fiscal year 2023, which is presented on the accompanying
consolidated statements of operations within loss (gain) on sale of assets and businesses for the year ended March 31, 2023. In the year ended
March 31, 2024, the Company paid $6,800 to the buyer of the Stuart manufacturing operations and recognized a loss of approximately $3,900
due to the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement and the
finalization of certain purchase price adjustments related to the transferred working capital of the divested operations. Additionally, in the year
ended March 31, 2024, the Company recognized a loss on sale of approximately $8,300 related to an adjustment that would have reduced the
fiscal 2023 gain on sale. Other claims for indemnification with the Buyer of the Stuart facility (refer to Note 17) remain outstanding. The operating
results of the Stuart, Florida, manufacturing operations are included within the Interiors reportable segment through the date of divestiture.
4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point
in time. Additionally, the Company disaggregates revenue based on the end market where products and services are transferred to the customer.
The Company’s principal operating segments and related revenue are discussed in Note 20, Segments.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
57
The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the years ended
March 31, 2025, 2024, and 2023:
Year Ended
March 31,
2025
2024
2023
Systems & Support
Satisfied over time
$
331,288 $
317,242 $
322,043
Satisfied at a point in time
783,976
707,667
594,417
Revenue from contracts with customers
1,115,264
1,024,909
916,460
Amortization of acquired contract liabilities
3,133
2,721
2,500
Total Systems & Support revenue
1,118,397
1,027,630
918,960
Interiors
Satisfied over time
$
120,091 $
135,872 $
189,710
Satisfied at a point in time
23,474
28,541
21,892
Revenue from contracts with customers
143,565
164,413
211,602
Total Interiors revenue
143,565
164,413
211,602
Total revenue
$
1,261,962 $
1,192,043 $
1,130,562
The following table shows disaggregated net sales by end market (excluding intercompany sales) for the years ended March 31, 2025, 2024, and
2023.
Year Ended
March 31,
2025
2024
2023
Systems & Support
OEM Commercial
$
384,547 $
368,340 $
333,809
OEM Military
273,846
261,918
260,943
MRO Commercial
200,677
162,331
123,435
MRO Military
210,662
183,108
165,814
Non-aviation
45,532
49,212
32,459
Revenue from contracts with customers
1,115,264
1,024,909
916,460
Amortization of acquired contract liabilities
3,133
2,721
2,500
Total Systems & Support revenue
$
1,118,397 $
1,027,630 $
918,960
Interiors
OEM Commercial
$
137,811 $
161,923 $
207,672
OEM Military
—
—
108
MRO Commercial
4,611
1,683
2,713
Non-aviation
1,143
807
1,109
Revenue from contracts with customers
143,565
164,413
211,602
Total Interiors revenue
143,565
164,413
211,602
Total revenue
$
1,261,962 $
1,192,043 $
1,130,562
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
58
Contract Assets and Liabilities
Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which
amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer
and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product.
Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that
share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current
economic conditions and management’s expectations of future economic conditions, and specific collectibility matters when they arise. Contract
assets are presented net of this reserve on the accompanying consolidated balance sheets. For the years ended March 31, 2025, 2024, and 2023
credit loss expense and write-offs related to contract assets were immaterial.
Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations
under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than
those pertaining to forward loss reserves are derecognized when or as revenue is recognized.
Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract
specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights
and obligations. When contract modifications include additional performance obligations that are distinct and at relative stand-alone selling price,
they are accounted for as a new contract and performance obligation and are recognized prospectively. Contract modifications that are for goods
or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are
accounted for as if they were part of that existing contract. For such contracts, the effect of a contract modification on the transaction price and the
Company’s measure of progress for the performance obligations is recognized as an adjustment to revenue (either as an increase in or a
reduction of revenue) on a cumulative catch-up basis. When contract modifications do not include additional performance obligations but the
remaining goods and services are distinct from those already provided, the Company treats the modification as the termination of the existing
contract and the creation of a new contract, and the total remaining transaction price is allocated to the remaining performance obligations using
the relative stand-alone selling price as of the date of the modification and is recognized prospectively.
Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table
summarizes the Company’s contract assets and liabilities balances:
March 31, 2025
March 31, 2024
Change
Contract assets
$
69,752 $
74,289 $
(4,537)
Contract liabilities
(87,591)
(65,358)
(22,233)
Net contract asset
$
(17,839) $
8,931 $
(26,770)
The change in contract assets is the result of amounts billed in excess of revenue recognized during the year ended March 31, 2025. The
change in contract liabilities was the result of the receipt of additional customer advances in excess of revenue recognized during the year ended
March 31, 2025. For the period ended March 31, 2025, the Company recognized $29,630 of revenue that was included in the contract liability
balance at the beginning of the period.
Performance Obligations
Customers generally contract with the Company for requirements in a segment relating to a specific program, and the Company’s performance
obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs. A single
contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements.
As of March 31, 2025, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be
recognized in the future as noted in the table below. Such amounts do not include contract consideration that is excluded from the estimated
transaction price of contracts due to constraints of variable consideration as described in Note 2. The Company expects options to be exercised
in addition to the amounts presented below.
Total
Less than
1 year
1-3 years
4-5 years
More than 5
years
Unsatisfied performance obligations
$ 1,729,372 $
978,333 $
720,719 $
29,796 $
524
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
59
5. INVENTORIES
Inventories are carried at the lower of cost (average-cost or specific-identification methods) or net realizable value. The Company expenses
general and administrative costs related to products and services provided under commercial terms and conditions as incurred. The Company
determines the cost of inventories sold by the first-in, first-out or average cost methods.
The components of inventories are as follows:
March 31,
March 31,
2025
2024
Raw materials
$
42,828 $
25,224
Work-in-process, including manufactured and purchased components
300,576
277,471
Finished goods
11,727
12,554
Rotable assets
2,192
2,422
Total inventories
$
357,323 $
317,671
Inventories, summarized in the table above, are presented net of valuation reserves of $56,223 and $53,539 as of March 31, 2025 and 2024,
respectively
6. PROPERTY AND EQUIPMENT
Property and equipment, which include equipment under finance lease and leasehold improvements, are recorded at cost and depreciated over
the estimated useful lives of the related assets, or the lease term if shorter in the case of leasehold improvements, using the straight-line method.
Buildings and improvements are depreciated over a period of 15 to 40 years, and machinery and equipment are depreciated over a period of 7 to
15 years (except for furniture, fixtures and computer equipment, which are depreciated over a period of 3 to 10 years).
Net property and equipment is:
March 31,
2025
2024
Land
$
16,022 $
16,705
Construction-in-process
27,959
15,875
Buildings and improvements
105,100
103,560
Machinery and equipment
352,410
341,355
501,491
477,495
Less: accumulated depreciation
346,953
333,208
$
154,538 $
144,287
Depreciation expense for the fiscal years ended March 31, 2025, 2024, and 2023, was $20,679, $20,732 and $21,567, respectively, which
includes depreciation of assets under finance lease.
7. GOODWILL AND OTHER INTANGIBLE ASSETS
The following is a summary of the changes in the carrying value of goodwill by reportable segment, for the fiscal years ended March 31, 2025 and
2024:
Systems & Support
March 31, 2024
$
510,687
Effect of exchange rate changes
1,655
March 31, 2025
$
512,342
Systems & Support
March 31, 2023
$
509,449
Effect of exchange rate changes
1,238
March 31, 2024
$
510,687
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
60
As of March 31, 2025 and 2024, Interiors had gross goodwill of $475,302 and $475,302, respectively, which was fully impaired.
Intangible Assets
The components of intangible assets, net are as follows:
March 31, 2025
Weighted-
Average Life
(in Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Customer relationships
18.6
155,132
(99,788)
55,344
Product rights, technology and licenses
12.1
33,972
(33,188)
784
Other
30.0
300
(237)
63
Total intangibles, net
$
189,404 $
(133,213) $
56,191
March 31, 2024
Weighted-
Average Life
(in Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Customer relationships
18.6
154,885
(90,888)
63,997
Product rights, technology and licenses
12.1
33,927
(32,934)
993
Other
30.0
300
(227)
73
Total intangibles, net
$
189,112 $
(124,049) $
65,063
Amortization expense for the fiscal years ended March 31, 2025, 2024, and 2023, was $8,908, $8,893, and $10,692, respectively. Amortization
expense for the five fiscal years succeeding March 31, 2025, by year is expected to be as follows: 2026: $8,916; 2027: $7,967; 2028: $7,304;
2029: $6,429; 2030: $6,429, and thereafter: $19,146.
8. ACCRUED EXPENSES
Accrued expenses consist of the following items:
March 31,
2025
2024
Accrued pension
$
732
$
757
Accrued other postretirement benefits
1,613
2,126
Accrued compensation and benefits
58,294
53,971
Accrued interest
3,617
4,021
Accrued warranties
16,086
13,537
Accrued workers' compensation
3,009
4,145
Accrued income tax
4,655
10,026
Accrued indemnification liability
17,429
7,338
Operating lease liabilities
2,828
2,833
All other
36,484
31,101
Total accrued expenses
$
144,747
$
129,855
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
61
9. LEASES
The components of lease expense for the year ended March 31, 2025, 2024, and 2023, are disclosed in the table below.
Year Ended March 31,
Lease Cost
Financial Statement Classification
2025
2024
2023
Operating lease cost
Cost of sales,
Selling, general and administrative
expense, or
Income from discontinued operations $
5,317
$
6,169 $
8,561
Variable lease cost
Cost of sales,
Selling, general and administrative
expense, or
Income from discontinued operations
1,060
1,548
1,431
Financing Lease Cost:
Amortization of right-of-use assets
Depreciation and amortization
Income from discontinued operations
2,552
2,661
2,760
Interest on lease liability
Interest expense and other
Income from discontinued operations
1,883
1,388
1,377
Total lease cost (1)
$
10,812
$
11,766 $
14,129
(1)
Total lease cost does not include short-term leases or sublease income, both of which are immaterial.
Supplemental cash flow information for the years ended March 31, 2025, 2024, and 2023, including cash flow information for discontinued
operations, is disclosed in the table below.
Year Ended March 31,
2025
2024
2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used in operating leases
$
4,047
$
3,522 $
7,204
Operating cash flows used in finance leases
1,883
1,376
1,377
Financing cash flows used in finance leases
3,235
3,810
3,293
ROU assets obtained in exchange for lease liabilities
Operating leases
189
849
5,054
Finance leases
12,318
3,132
1,553
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
62
Supplemental balance sheet information related to leases as of March 31, 2025 and 2024, is disclosed in the table below.
March 31,
Leases
Classification
2025
2024
Assets
Operating lease ROU assets
Other, net
Assets held for sale
$
12,516 $
14,438
Finance lease ROU assets, cost
Property and equipment, net
Assets held for sale
44,542
32,712
Accumulated amortization
Property and equipment, net
Assets held for sale
(25,648)
(23,668)
Finance lease ROU assets, net
18,894
9,044
Total lease assets
$
31,410 $
23,482
Liabilities
Current
Operating
Accrued expenses
Liabilities related to assets held for sale
$
2,828 $
2,833
Finance
Current portion of long-term debt
8,717
2,934
Noncurrent
Operating
Other noncurrent liabilities
Liabilities related to assets held for sale
11,502
13,643
Finance
Long-term debt, less current portion
14,373
11,074
Total lease liabilities
$
37,420 $
30,484
Information related to lease terms and discount rates as of March 31, 2025 and 2024, is disclosed in the table below.
March 31,
2025
2024
Weighted average remaining lease term (years)
Operating leases
6.5
7.2
Finance leases
4.3
7.1
Weighted average discount rate
Operating leases
7.2%
7.3%
Finance leases
7.5%
7.5%
The maturity of the Company's lease liabilities as of March 31, 2025, is disclosed in the table below.
Operating
leases
Finance
leases
Total
FY2026
$
3,928 $
9,586
$
13,514
FY2027
3,888
3,418
7,306
FY2028
2,334
3,179
5,513
FY2029
1,588
3,208
4,796
FY2030
1,383
2,993
4,376
Thereafter
5,764
3,572
9,336
Total lease payments
18,885
25,956
44,841
Less: Imputed interest
(4,555)
(2,866)
(7,421)
Total lease liabilities
$
14,330 $
23,090
$
37,420
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
63
10. LONG-TERM DEBT
Long-term debt consists of the following:
March 31,
2025
2024
Finance leases
$
23,090 $
14,008
Senior secured first lien notes due 2028
958,890
1,078,890
Other notes
1,744
1,900
Less: debt issuance costs
(11,025)
(16,599)
972,699
1,078,199
Less: current portion
8,984
3,200
$
963,715 $
1,074,999
Receivables Securitization Program
In connection with the Securitization Facility, the Company sells on a revolving basis certain eligible accounts receivable to Triumph Receivables,
LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits
sponsored by financial institutions. The Company is the servicer of the trade accounts receivable under the Securitization Facility. Interest rates
are based on the Bloomberg Short Term Bank Yield Index (“BSBY”), plus a 2.25% fee on the drawn portion and a fee ranging from 0.45% to
0.50% on the undrawn portion of the Securitization Facility. The drawn fee may be reduced to 2.00% depending on the credit rating of the
Company. Collateralized letters of credit incur fees at a rate of 0.125%. The Company secures its trade accounts receivable, which are generally
non-interest-bearing, in transactions that are accounted for as borrowings pursuant to ASC 860, Transfers and Servicing. The Company has
established a letter of credit facility under the Securitization Facility. Under the provisions of the letter of credit facility, the Company may request
the Securitization Facility’s administrator to issue one or more letters of credit that will expire no later than 12 months after the date of issuance,
extension or renewal, as applicable.
As of March 31, 2025, the maximum amount available under the Securitization Facility was $75,000. The actual amount available under the
Securitization Facility at any point in time is dependent upon the balance of eligible accounts receivable as well as the amount of letters of credit
outstanding.
At March 31, 2025 and 2024, there were $0 in borrowings and $20,804 and $19,570, respectively, in letters of credit outstanding under the
Securitization Facility, primarily to support insurance policies. The Securitization Facility expires in December 2025.
The agreements governing the Securitization Facility contain restrictions and covenants, including limitations on the making of certain restricted
payments; creation of certain liens; and certain corporate acts such as mergers, consolidations and the sale of all or substantially all the
Company’s assets.
Senior Secured First Lien Notes due 2028
On March 14, 2023, the Company issued $1,200,000 principal amount of 9.000% Senior Secured First Lien Notes due March 15, 2028, pursuant
to an indenture among the Company, the Guarantor Subsidiaries, and U.S. Bank National Association, as trustee (the “2028 First Lien Notes”).
The 2028 First Lien Notes were sold at 100% of the principal amount and have an effective interest yield of 9.000%. Interest is payable semi-
annually in cash in arrears on March 15 and September 15 of each year, commencing on September 15, 2023. In the twelve months ended
March 31, 2024, the Company recognized a gain of approximately $3,400 related to an adjustment to its deferred debt issuance costs, a portion
of which related to fiscal 2023. The total issuance costs incurred in connection with the issuance of the 2028 First Lien Notes were approximately
$23,000, which were deferred and are being amortized over the term of the 2028 First Lien Notes.
The 2028 First Lien Notes and the guarantees are first lien secured obligations of the Company and the Guarantor Subsidiaries. The 2028 First
Lien Notes:
(i)
rank equally in right of payment to any future senior indebtedness of the Company and Guarantor Subsidiaries;
(ii)
are effectively senior to all future second lien obligations and all future unsecured indebtedness of the Company and the Guarantor
Subsidiaries, but only to the extent of the value of the Collateral (as defined below), and after giving effect to any permitted additional
first lien secured obligations and other permitted liens of senior or equal priority);
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
64
(iii)
are senior in right of payment to all future subordinated indebtedness of the Company and the Guarantor Subsidiaries;
(iv) are secured by the Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to the
Collateral Trust Agreement;
(v)
are effectively subordinated to any existing and future obligations of the Company and the Guarantor Subsidiaries that are secured by
assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and
(vi) are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future
subsidiaries that do not guarantee the 2028 First Lien Notes, including the Securitization Facility.
The 2028 First Lien Notes are guaranteed on a full, senior, joint and several basis by each of the Guarantor Subsidiaries. In the future, each of
the Company’s domestic restricted subsidiaries (other than any domestic restricted subsidiary that is a receivable subsidiary) that (1) is not an
immaterial subsidiary, (2) becomes a borrower under any of its material debt facilities or (3) guarantees (a) any of the Company’s indebtedness or
(b) any indebtedness of the Company’s domestic restricted subsidiaries, in the case of either (a) or (b), incurred under any of the Company’s
material debt facilities, will guarantee the 2028 First Lien Notes. Under certain circumstances, the guarantees may be released without action by,
or consent of, the holders of the 2028 First Lien Notes.
The 2028 First Lien Notes and the guarantees are secured, subject to permitted liens, by first-priority liens on substantially all of the Company’s
and the Guarantor Subsidiaries’ assets (including certain of the Company’s real estate assets), whether now owned or hereafter acquired, other
than certain excluded property, which liens will secure permitted additional first lien obligations on a pari passu basis, subject to the Collateral
Trust Agreement (the “Collateral”). Under certain circumstances, the Collateral may be released without action by, or the consent of, the holders
of the 2028 First Lien Notes. The 2028 First Lien Notes and the guarantees will not be secured by the assets of Non-Guarantor Subsidiaries,
which include the unrestricted subsidiaries to whom certain of the Company’s accounts receivables are and may in the future be sold to support
borrowing under the Securitization Facility.
A collateral trust agreement (the “Collateral Trust Agreement”) among the Company, the Guarantor Subsidiaries, the Collateral Trustee and U.S.
Bank National Association, in its capacity as the trustee for the 2028 First Lien Notes, sets forth therein the relative rights with respect to the
Collateral as among the trustee for the 2028 First Lien Notes and certain subsequent holders of first lien obligations and covering certain other
matters relating to the administration of security interests. The Collateral Trust Agreement generally controls substantially all matters related to the
Collateral, including with respect to decisions, distribution of proceeds or enforcement. Pursuant to the Collateral Trust Agreement, on the issue
date of the 2028 First Lien Notes the Collateral Trustee will control certain matters related to the Collateral that the Collateral Trust Agreement
specifies are in its discretion. If the Company incurs certain types of additional first lien obligations, the Controlling First Lien Holders (as defined
in the Collateral Trust Agreement) will have the right to control decisions relating to the Collateral that are outside the Collateral Trustee’s
discretion under the Collateral Trust Agreement and the 2028 Note holders may no longer be in control of such decisions.
The Company may redeem the 2028 First Lien Notes, in whole or in part, at any time or from time to time on or after March 15, 2025, at specified
redemption prices, plus accrued and unpaid interest, if any, to the redemption date. At any time or from time to time prior to March 15, 2025, the
Company may redeem the 2028 First Lien Notes, in whole or in part, at a redemption price equal to 100% of their principal amount plus a make
whole premium, together with accrued and unpaid interest, if any, to the redemption date. In addition, the Company may redeem up to 40% of the
aggregate principal amount of the outstanding 2028 First Lien Notes prior to March 15, 2025, with the net cash proceeds from certain equity
offerings at a redemption price equal to 109.000% of their principal amount, together with accrued and unpaid interest, if any, to the redemption
date.
If the Company experiences specific kinds of changes of control, the Company is required to offer to purchase all of the 2028 First Lien Notes at a
purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.
The 2028 First Lien Notes Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries
to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions; (iii) make other restricted payments and investments; (iv) create
liens; (v) incur restrictions on the ability of restricted subsidiaries to pay dividends or make certain other payments; (vi) sell assets, including
capital stock of restricted subsidiaries; (vii) enter into sale and leaseback transactions; (viii) merge or consolidate with other entities; and (ix) enter
into transactions with affiliates. In addition, the 2028 First Lien Notes Indenture requires, among other things, the Company to provide financial
and current reports to holders of the 2028 First Lien Notes or file such reports electronically with the SEC. These covenants are subject to a
number of exceptions, limitations and qualifications set forth in the Indenture, as well as suspension periods in certain circumstances.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
65
In March 2024, using approximately $129,827 of the proceeds from the sale of Product Support, the Company redeemed $120,000 principal
amount of 2028 First Lien Notes at a purchase price of 103% of the aggregate principal amount, plus accrued and unpaid interest and
repurchased in an asset sale tender offer $1,110 principal amount of 2028 First Lien Notes at a purchase price of 100% of the aggregate principal
amount, plus accrued and unpaid interest. This redemption resulted in a debt extinguishment loss of approximately $5,463 in the year ended
March 31, 2024.
In May 2024, the Company redeemed an additional $120,000 of its 2028 First Lien Notes at a redemption price equal to 103% of the principal
amount redeemed plus accrued and unpaid interest to, but not including, the redemption date. This redemption resulted in a debt extinguishment
loss of approximately $5,369 in the year ended March 31, 2025.
Senior Notes Due 2025
On August 17, 2017, the Company issued $500,000 principal amount of 7.750% Senior Notes due August 15, 2025 (the "2025 Notes"). In the
year ended March 31, 2023, following the Warrants issuance on December 19, 2022, $976 in principal amount of 2025 Notes were used to pay
the exercise price for approximately 0.1 million Warrants. Resulting extinguishment losses from the write-off of deferred debt issuance costs in
the year ended March 31, 2023, were immaterial.
In the year ended March 31, 2024, approximately $13,404 in principal amount of the 2025 Notes were used to pay the exercise price for
approximately 0.9 million Warrants. In August 2023, the Company executed a 10b5-1 repurchase plan agreement with a third-party (the "Agent")
granting the Agent the authority to repurchase on the open market up to $50,000 in principal amount of the 2025 Notes, subject to specific
conditions, including daily volume and market prices. Pursuant to this agreement, in the year ended March 31, 2024, the Company used
approximately $48,062 to redeem $50,000 principal amount of the 2025 Notes. In March 2024, using approximately $437,590 of the proceeds
from the sale of Product Support, the Company redeemed the remaining outstanding $435,621 principal amount of 2025 Notes plus accrued and
unpaid interest. The extinguishment gains on these transactions totaled approximately $500 in the year ended March 31, 2024.
Senior Secured First Lien Notes due 2024 and Senior Secured Notes Due 2024
During the year ended March 31, 2023, the Company sold intellectual property that required redemption of $19,340 of the outstanding principal
balance and payment of a premium of approximately $1,287. On March 14, 2023, the Company used $1,068,831 of the proceeds from the
issuance of the 2028 First Lien Notes (i) to call all outstanding 2024 First Lien Notes, (ii) to acquire a portion of the 2024 Second Lien Notes that
the Company had offered to purchase as part of a tender offer, and (iii) to redeem the balance of the 2024 Second Lien Notes that were not
tendered in such tender offer. The Company recognized additional net extinguishment losses of approximately $31,600 upon these redemptions
and repurchases.
Financial Instruments Not Recorded at Fair Value
Carrying amounts and the related estimated fair values of the Company's long-term debt not recorded at fair value in the accompanying
consolidated financial statements are as follows:
March 31, 2025
March 31, 2024
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
$
972,699
$
1,032,867
$
1,078,199
$
1,154,245
The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the
Company's existing debt arrangements or broker quotes on the Company's existing debt (Level 2 inputs).
Interest paid on indebtedness during the fiscal years ended March 31, 2025, 2024, and 2023, amounted to $90,550, $147,975 and $138,464,
respectively. The Company also made redemption premium payments of approximately $3,600, $3,600, and $26,157, in the years ended March
31, 2025, 2024, and 2023, respectively.
As of March 31, 2025, the fiscal year maturities of long-term debt are as follows: 2026 — $8,984; 2027 — $2,822; 2028 — $961,650; 2029 —
$2,989; 2030 — $2,955; and thereafter— $4,324 through 2032.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
66
11. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities are composed of the following items:
March 31,
2025
2024
Acquired contract liabilities, net
$
3,422
$
6,601
Accrued warranties
3,070
3,374
Accrued workers' compensation
10,355
11,043
Noncurrent contract liabilities
9,161
9,500
Operating lease liabilities
11,502
13,643
Environmental contingencies
3,917
7,580
Income tax reserves
300
300
Multiemployer pension plan withdrawal liability
12,302
12,273
All other
5,775
4,207
Total other noncurrent liabilities
$
59,804
$
68,521
12. INCOME TAXES
The components of income (loss) from continuing operations before income taxes are as follows:
Year ended March 31,
2025
2024
2023
Foreign
$
16,830 $
38,002 $
513
Domestic
24,615
(65,346)
75,264
$
41,445 $
(27,344) $
75,777
The components of income tax (benefit) expense are as follows:
Year ended March 31,
2025
2024
2023
Current:
Federal
$
(237) $
347 $
(538)
State
(15)
527
175
Foreign
5,841
6,249
3,709
5,589
7,123
3,346
Deferred:
Foreign
—
—
14
—
—
14
$
5,589 $
7,123 $
3,360
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
67
A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:
Year ended March 31,
2025
2024
2023
Statutory federal income tax rate
21.0%
21.0%
21.0%
State and local income taxes, net of federal tax benefit
(4.0)
10.0
10.6
Section 162(m)
3.7
(2.8)
2.7
Non-deductible transaction costs
4.9
0.0
0.0
Return to provision adjustment
(5.6)
30.2
(4.8)
Miscellaneous permanent items and nondeductible accruals
0.8
(1.0)
0.3
Research and development tax credit
(6.5)
9.0
(2.9)
Impact of foreign operations (including rate differential, rate change, and
settlement with tax authorities
2.5
8.6
3.1
Valuation allowance
(4.6)
(100.3)
(25.9)
Other (including FIN 48)
1.3
(0.7)
0.3
Effective income tax rate
13.5%
(26.0)%
4.4%
The components of deferred tax assets and liabilities are as follows:
March 31,
2025
2024
Deferred tax assets:
Net operating loss and other credit carryforwards
$
198,247 $
223,459
Inventory
13,878
17,328
Accruals and reserves
27,370
18,841
Interest carryforward
115,873
96,115
Pension and other postretirement benefits
66,717
69,828
Lease right-of-use assets
5,902
4,650
Research and development
14,345
9,283
Acquired contract liabilities, net
1,654
2,329
443,986
441,833
Valuation allowance
(399,670)
(399,179)
Net deferred tax assets
44,316
42,654
Deferred tax liabilities:
Deferred revenue
—
3,473
Property and equipment
13,674
10,632
Goodwill and other intangible assets
31,206
30,457
Lease liabilities
4,062
3,187
Prepaid expenses and other
2,642
2,173
51,584
49,922
Net deferred tax liabilities
$
7,268 $
7,268
The Company follows ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute criteria for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition,
classification, interest and penalties, disclosure and transition. The Company's policy is to release the tax effects from accumulated other
comprehensive loss when all of the related assets or liabilities that gave rise to the accumulated other comprehensive loss (income) have been
derecognized. The Company has elected to treat global intangible low-taxed income (“GILTI”) as a period expense.
A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net
deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This
evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of
ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and
negative evidence is commensurate with the extent the evidence may
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
68
be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing
taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses. Based upon our analysis of our
historical operating results, as well as projections of our future taxable income during the periods in which the temporary differences will be
recoverable, management believes the uncertainty regarding the realization of our net deferred tax assets requires a full valuation allowance
against such net assets as of March 31, 2025.
During fiscal year 2025, the Company adjusted the valuation allowance against the consolidated net deferred tax asset by $491 primarily due to
utilization of net operating loss carryforwards, disallowed interest expense deductions, research and development cost amortization, and pension
and other postretirement benefit plans. As of March 31, 2025, management determined that it was necessary to maintain a valuation allowance
against principally all of its net deferred tax assets.
As of March 31, 2025, the Company has net operating loss carryforwards of $65,751, $1,279,655, and $182,853 for U.S. federal, state, and
foreign jurisdictions, respectively. All Federal net operating losses have an indefinite carryforward period. State net operating losses began to
expire in 2025, with a portion classified as indefinite. Approximately $6,357 of foreign net operating losses begin to expire in 2027, and $176,496
have an indefinite carryforward period.
At March 31, 2025, cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been
recorded is $119,926. As the Company currently intends to indefinitely reinvest all such earnings, no provision has been made for income taxes
that may become payable upon distribution of such earnings, and it is not practicable to determine the amount of the related unrecognized
deferred income tax liability.
The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year.
As of March 31, 2025 and 2024, the total amount of unrecognized tax benefits was $12,268 and $12,281, respectively, all of which would impact
the effective rate, if recognized. The Company anticipates that total unrecognized tax benefits may be reduced by zero in the next 12 months.
With a few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations, or foreign income tax
examinations by tax authorities, for fiscal years ended before March 31, 2014.
As of March 31, 2025, the Company is not subject to any income tax examinations. The Company believes appropriate provisions for all
outstanding issues have been made for all jurisdictions and all open years. There are no material interest and penalties accrued as of the year
ended March 31, 2025.
A reconciliation of the liability for uncertain tax positions, which are included in deferred taxes for the fiscal years ended March 31, 2025, 2024,
and 2023 follows:
Year ended March 31,
2025
2024
2023
Beginning balance
$
12,216 $
12,193 $
11,978
Adjustments for tax positions related to the current year
271
371
223
Adjustments for tax positions of prior years
(11)
(348)
(8)
Ending balance
$
12,476 $
12,216 $
12,193
13. STOCKHOLDERS' DEFICIT
In March 2022, the Company adopted a tax benefits preservation plan (the "Plan") designed to preserve Triumph’s ability to utilize its net
operating loss carryforwards and other tax attributes (collectively, "Tax Benefits").
Under the Plan, Triumph declared a dividend distribution of one right (a “Right”) for each share of its common stock outstanding at the close of
business on March 21, 2022.
In March 2025, the Company amended the Plan to, among other things, (i) extend the expiration date from March 13, 2025 to March 13, 2028,
subject to other earlier termination events, including if stockholder approval of the amendment has not been obtained by March 13, 2026, and (ii)
take into account the pending Merger. The Rights also will expire: (i) if the Rights are redeemed or exchanged as provided in the Plan; (ii) if the
Board determines that the Plan is no longer necessary or desirable for the preservation of the Tax Benefits; (iii) if the Board determines that no
Tax Benefits, once realized, as applicable, may be carried forward (in which case, the Rights will expire on the first date of the relevant taxable
year for which such determination is made) or (iv) automatically immediately prior to the effective time of the Merger.
Pursuant to the Plan, if a stockholder (or group) becomes a 4.9% stockholder without meeting certain customary exceptions, the Rights become
exercisable and entitle stockholders (other than the 4.9% stockholder or group causing the rights to become exercisable) to purchase additional
shares of Triumph at a significant discount, resulting in significant dilution in the economic
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
69
interest and voting power of the 4.9% stockholder or group causing the Rights to become exercisable. Stockholders owning 4.9% or more of
Triumph’s outstanding shares at the time the Plan was adopted were grandfathered and will only cause the Rights to distribute and become
exercisable if they acquire an additional one percent or more of Triumph’s outstanding shares. Under the Plan, the Board has the ability to
determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights shall not become
exercisable if such person becomes a 4.9% stockholder. In connection with the Merger Agreement, the Board exempted Parent and Merger Sub
from the definition of an acquiring person, conditioned upon the consummation of the Merger. The adoption of the Plan and the dividend
distribution did not have an impact on the Company’s consolidated financial statements.
In 2014, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to 5,000,000
shares of its common stock in addition to the 500,800 shares authorized under prior authorizations. As of March 31, 2025, the Company remains
able to purchase an additional 2,277,789 shares. Repurchases may be made from time to time in open market transactions, block purchases,
privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program.
The holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders of Triumph.
The Company has preferred stock of $0.01 par value, 250,000 shares authorized. At March 31, 2025 and 2024, zero shares of preferred stock
were outstanding.
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss ("AOCI") by component for the years ended March 31, 2025 and 2024, were as follows:
Currency
Translation
Adjustment
Unrealized Gains
and Losses on
Derivative
Instruments
Defined Benefit
Pension Plans
and Other
Postretirement
Benefits
Total
March 31, 2022
$
(47,933) $
(270) $
(415,151) $
(463,354)
AOCI before reclassifications
(1,273)
2,265
(113,232)
(112,240)
Amounts reclassified from AOCI
—
(778)
21,726
20,948
Net current period OCI
(1,273)
1,487
(91,506)
(91,292)
March 31, 2023
(49,206)
1,217
(506,657)
(554,646)
AOCI before reclassifications
5,057
796
12,511
18,364
Amounts reclassified from AOCI
—
(1,944)
21,157
19,213
Net current period OCI
5,057
(1,148)
33,668
37,577
March 31, 2024
(44,149)
69
(472,989)
(517,069)
AOCI before reclassifications
(9,618)
(2,888)
(37,921)
(50,427)
Amounts reclassified from AOCI
—
2,550
24,111
26,661
Net current period OCI
(9,618)
(338)
(13,810)
(23,766)
March 31, 2025
$
(53,767) $
(269) $
(486,799)
$
(540,835)
(1)
Net of tax.
(2)
Includes amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic benefit expense (income).
14. EARNINGS (LOSS) PER SHARE
The calculation of basic earnings per share is based on income (loss) from continuing operations, income from discontinued operations, or net
income (loss) divided by the weighted average number of common shares considered outstanding during the periods. The calculation of diluted
earnings per share reflects the effect of all potentially dilutive securities (principally outstanding warrants and outstanding restricted stock units)
and is based on income (loss) from continuing operations, income from discontinued operations, or net income (loss) divided by the diluted
weighted average number of common shares considered outstanding during the periods. As disclosed in Note 2, the Warrants permitted the
tendering of Designated Notes in payment of the exercise price. In computing diluted earnings per share, the Company applies the if-converted
method to the warrants and such warrants are assumed to be exercised and the Designated Notes are assumed to be tendered unless tendering
cash would be more advantageous to the warrant holder. Interest (net of tax) on any Designated Notes assumed to be tendered is added
(1)
(2)
(2)
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
70
back as an adjustment to the income (loss) from continuing operations numerator as the warrants are transactions related to continuing
operations. The income (loss) from continuing operations numerator is also adjusted for any nondiscretionary adjustments based on income (net
of tax) including, for example, warrant remeasurement gains and losses recognized in the period. If cash exercise is more advantageous, the
Company applies the treasury stock method to the warrants when calculating diluted earnings per share.
The following is a reconciliation between the weighted average outstanding shares used in the calculation of basic and diluted earnings per share:
Year ended March 31,
(in thousands)
2025
2024
2023
Numerator:
Numerator for basic earnings per share:
Income (loss) from continuing operations
$
35,856 $
(34,467) $
72,417
Effect of Dilutive Securities:
Warrants
—
—
(3,626)
Numerators for diluted earnings (loss) per share:
Income (loss) from continuing operations available to common stockholders after assumed conversions
$
35,856 $
(34,467) $
68,791
Income from discontinued operations, net of tax expense
5,018
546,851
17,176
Net income available to common stockholders after assumed conversions
$
40,874 $
512,384
$
85,967
Denominator:
Denominator for basic earnings per share
Weighted average common shares outstanding - basic
77,325
74,149
65,021
Effect of Dilutive Securities:
Warrants
—
—
6,371
Restricted stock units
532
—
329
Dilutive potential common shares
532
—
6,700
Denominator for basic earnings (loss) per share
Weighted average common shares outstanding - diluted
77,857
74,149
71,721
Earnings (loss) per share:
Basic earnings (loss) per share - continuing operations
$
0.46 $
(0.46) $
1.12
Basic earnings per share - discontinued operations
0.06
7.38
0.26
Basic earnings (loss) per share
$
0.52 $
6.92 $
1.38
Diluted earnings (loss) per share - continuing operations
$
0.46 $
(0.46) $
0.96
Diluted earnings per share - discontinued operations
0.06
7.38
0.24
Diluted earnings (loss) per share
$
0.52 $
6.92 $
1.20
For the fiscal years ended March 31, 2025, 2024, and 2023, the shares that could potentially dilute earnings per share in the future but were not included in diluted weighted average
common shares outstanding because to do so would have been anti-dilutive were immaterial.
15. EMPLOYEE BENEFIT PLANS
Defined Contribution Pension Plan
The Company sponsors a defined contribution 401(k) plan, under which salaried and certain hourly employees may defer a portion of their
compensation. Eligible participants may contribute to the plan up to the allowable amount as determined by the plan of their regular compensation
before taxes. The Company generally matches contributions at a rate of 75% of the first 6% of compensation contributed by the participant. All
contributions and Company matched contributions are invested at the direction of the employee in one or more investment options offered under
the plan. Company matching contributions vest immediately and aggregated to $8,057, $9,143, and $9,329 for the fiscal years ended March 31,
2025, 2024, and 2023, respectively.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
71
Defined Benefit Pension and Other Postretirement Benefit Plans
The Company sponsors several defined benefit pension plans covering some of its employees. Most employees are ineligible to participate in the
plans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under
the defined benefit pension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented
employees, on average compensation for certain years. It is the Company's policy to fund at least the minimum amount required for all qualified
plans, using actuarial cost methods and assumptions acceptable under applicable government regulations, by making payments into a separate
trust. The Company has in the past contributed and may in the future contribute shares of its common stock to this separate trust which would
reduce cash contributions required by the Company.
In addition to the defined benefit pension plans, the Company provides other postretirement benefits ("OPEB") in the form of certain healthcare
benefits for eligible retired employees. Such benefits are unfunded as of March 31, 2025. No active employees are eligible for these benefits. The
vast majority of eligible retirees receive a fixed-dollar benefit they can use to purchase healthcare services. A small number of eligible retirees
receive traditional retiree medical benefits for which the Company pays all premiums. All retirees who are eligible for these traditional benefits are
Medicare-eligible. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective
bargaining requirements for represented employees.
In accordance with the Compensation – Retirement Benefits topic of ASC 715, the Company has recognized the funded status of the benefit
obligation as of March 31, 2025 and 2024, on the accompanying consolidated balance sheets. The funded status is measured as the difference
between the fair value of the plans' assets and the pension benefit obligation or accumulated postretirement benefit obligation of the plan. The
majority of the plan assets are publicly traded investments, which were valued based on the market price as of the measurement date.
Investments that are not publicly traded were valued based on the estimated fair value of those investments based on the Company’s evaluation
of data from fund managers and comparable market data or using the net asset value as a practical expedient.
The following tables set forth the Company's consolidated defined benefit pension plans for its union and non-union employees as of March 31,
2025 and 2024, and the amounts recorded on the consolidated balance sheets at March 31, 2025 and 2024. Company contributions include
amounts contributed directly to plan assets and indirectly as benefits paid from the Company's assets. Benefit payments reflect the total benefits
paid from the plans and the Company's assets. Information on the plans includes both the domestic qualified and nonqualified plans and the
foreign qualified plans.
Pension Benefits
Year ended March 31,
2025
2024
Change in projected benefit obligations
Projected benefit obligation at beginning of year
$
1,557,780
$
1,660,423
Service cost
172
408
Interest cost
78,764
80,492
Actuarial gain
(13,480)
(34,360)
Plan amendments
(3,126)
—
Participant contributions
138
117
Settlements
(55,167)
—
Benefits paid
(142,606)
(149,891)
Currency translation adjustment
629
591
Projected benefit obligation at end of year
$
1,423,104
$
1,557,780
Accumulated benefit obligation at end of year
$
1,422,884
$
1,557,533
Assumptions used to determine benefit
obligations at end of year
Discount rate
5.30 - 5.93%
5.09 - 5.38%
Rate of compensation increase
3.91%
3.93%
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
72
Pension Benefits
Year ended March 31,
2025
2024
Change in fair value of plan assets
Fair value of plan assets at beginning of year
$
1,280,191
$
1,306,456
Actual return on plan assets
44,076
82,565
Settlements
(55,167)
—
Participant contributions
138
117
Company contributions
23,829
40,239
Benefits paid
(142,606)
(149,890)
Currency translation adjustment
772
704
Fair value of plan assets at end of year
$
1,151,233
$
1,280,191
Funded status (underfunded)
Funded status
$
(271,871)
$
(277,589)
Reconciliation of amounts recognized on the
consolidated balance sheets
Pension asset—noncurrent
$
5,604
$
5,953
Accrued benefit liability—current
(732)
(757)
Accrued benefit liability—noncurrent
(276,743)
(282,785)
Net amount recognized
$
(271,871)
$
(277,589)
Pension Benefits
Other Postretirement Benefits
Year ended March 31,
Year ended March 31,
2025
2024
2025
2024
Reconciliation of amounts recognized in
accumulated other comprehensive income
Prior service costs (credits)
$
(1,975) $
1,254 $
(33,691) $
(38,795)
Actuarial losses (gains)
723,196
714,855
(38,085)
(41,678)
Income tax (benefits) expenses related to above items
(204,132)
(204,132)
42,016
42,016
Unamortized benefit plan costs (gains)
$
517,089 $
511,977 $
(29,760) $
(38,457)
The components of net periodic benefit cost for fiscal years ended March 31, 2025, 2024, and 2023, are as follows:
Pension Benefits
Year Ended March 31,
2025
2024
2023
Components of net periodic pension
cost
Service cost
$
172 $
408 $
638
Interest cost
78,764
80,492
65,069
Expected return on plan assets
(98,845)
(105,039)
(121,195)
Amortization of prior service cost
102
102
102
Amortization of net loss
33,154
30,099
30,859
Total net periodic benefit expense (income)
$
13,347 $
6,062 $
(24,527)
Assumptions used to determine net
periodic pension cost
Discount rate
5.03 - 5.38%
5.09 - 5.19%
2.66% - 3.93%
Expected long-term rate of return on plan assets
5.50 - 8.00%
5.75 - 8.00%
5.75 - 8.00%
Rate of compensation increase
3.93%
3.92%
3.50 - 4.22%
The Company recognized net periodic benefit income from its OPEB plan of approximately $9,045, $8,934, and $9,163 for the fiscal years ended
March 31, 2025, 2024, and 2023, respectively.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
73
The discount rate is determined annually as of each measurement date, based on a review of yield rates associated with long-term, high-quality
corporate bonds. At the end of each year, the discount rate is primarily determined using the results of bond yield curve models based on a
portfolio of high-quality bonds matching notional cash inflows with the expected benefit payments for each significant benefit plan.
The expected return on plan assets is determined based on a market-related value of assets ("MRVA"), which is a smoothed asset value. For
fixed income securities, the MRVA is determined using the fair value of the fixed income assets. For all other classes of pension assets, the
MRVA is calculated by recognizing investment performance that is different from that expected on a straight-line basis over five years. Actuarial
gains and losses are amortized over the average remaining life expectancy of inactive participants for plans that are predominantly inactive and
over the expected future service for active participants for other plans, but only to the extent unrecognized gains or losses exceed a corridor equal
to 10% of the greater of the projected benefit obligation or market-related value of assets.
The Company estimates the service and interest cost of its pension and OPEB plans by using the specific spot rates derived from the yield curve
used to discount the cash flows reflected in the measurement of the benefit obligation. The Company believes this approach provides a precise
measurement of service and interest costs due to the correlation between projected benefit cash flows to the corresponding spot yield curve
rates.
During the fiscal year ended March 31, 2025, the Society of Actuaries (SOA) did not release a new mortality projection scale due to the continued
uncertainty of the impact of the COVID-19 pandemic on the long-term mortality rate; however, the SOA did provide observations on recent U.S.
population mortality experience, with a comparison relative to the most recent projection scale (MP-2021). The Company elected to adjust Scale
MP-2021 based on the SOA’s recent observations of broad mortality experience. In addition, the Company elected to change the base mortality
table to incorporate two additional years of actual plan experience for non-represented participants through September 30, 2024, and adjusted
experience to reflect the September 2024 annuity purchase described below.
The projected benefit obligation assumptions impacting net actuarial gain consist of changes in discount and prescribed lump sum mortality rates.
As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs
that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of
events and circumstances impacting the pension costs.
The following summarizes the key events whose effects on net periodic benefit cost and obligations are included in the tables above:
•
In the year ended March 31, 2025, the Company elected to purchase annuities and settle the pension obligations for approximately
1,200 retired participants in its qualified U.S. pension plan. As a result of this transaction approximately $51,132 of plan assets and plan
liabilities were transferred to the Pacific Life Insurance Company. The settlement did not result in the recognition of gains or losses
under the Company's accounting policy for settlement accounting. The settlement's impact on the accompanying consolidated balance
sheets was insignificant as the plan's assets were materially consistent with the settled pension obligation.
•
In the year ended March 31, 2025, the Company amended its qualified U.S. pension plan to eliminate certain ancillary lump sum death
benefits for certain participants effective July 1, 2024, resulting in a reduction of the projected benefit obligation of approximately $3,126.
Additionally, the Company accrued a Withdrawal Liability (as defined below), and recognized in non-serviced defined benefit income, of $14,644
as a result of the exit of its Spokane, Washington, composites manufacturing operations in the year ended March 31, 2023. Refer to Note 17 for
further information.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
74
Expected Pension Benefit Payments
The total estimated future benefit payments for the pension plans are expected to be paid from the plan assets and company funds. Estimated
future benefit payments from plan assets and Company funds for the next ten fiscal years are as follows:
Year
Pension
Benefits
2026
$
144,152
2027
131,921
2028
128,616
2029
124,444
2030
120,757
2031 - 2035
545,223
Plan Assets, Investment Policy and Strategy
The table below sets forth the Company's target asset allocation for fiscal 2025 and the actual asset allocations at March 31, 2025 and 2024.
Actual Allocation
Target Allocation
March 31,
Asset Category
Fiscal 2025
2025
2024
Equity securities
50% - 60%
54%
58%
Fixed income securities
30% - 40%
33
31
Alternative investment funds
0% - 10%
11
10
Other
0% - 5%
2
1
Total
100%
100%
Pension plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return
over the long-term. The investment goals are to exceed the assumed actuarial rate of return over the long-term within reasonable and prudent
levels of risks and to meet future obligations.
Asset/liability studies are conducted on a regular basis to provide guidance in setting investment goals for the pension portfolio and its asset
allocation. The asset allocation aims to prudently achieve a strong, risk-adjusted return while seeking to minimize funding level volatility and
improve the funded status of the plans. The pension plans currently employ a liability-driven investment ("LDI") approach, where assets and
liabilities move in the same direction. The goal is to limit the volatility of the funding status and cover part, but not all, of the changes in liabilities.
Most of the liabilities' changes are due to interest rate movements.
To balance expected risk and return, allocation targets are established and monitored against acceptable ranges. All investment policies and
procedures are designed to ensure that the plans' investments are in compliance with the Employee Retirement Income Security Act of 1974
("ERISA"). Guidelines are established defining permitted investments within each asset class. Each investment manager has contractual
guidelines to ensure that investments are made within the parameters of their asset class or in the case of multi-asset class managers, the
parameters of their multi-asset class strategy. Certain investments are not permitted at any time, including investment directly in employer
securities and uncovered short sales.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
75
The tables below provide the fair values of the Company's plan assets at March 31, 2025 and 2024, by asset category. The table also identifies
the level of inputs used to determine the fair value of assets in each category (refer to Note 2 for definition of levels).
March 31, 2025
Level 1
Level 2
Level 3
Total
Assets
Cash and cash equivalents
$
16,366 $
— $
— $
16,366
Equity securities
International
93,384
—
—
93,384
U.S. equity
965
—
—
965
U.S. commingled fund
367,337
—
—
367,337
International commingled fund
28,245
—
—
28,245
Fixed income securities
Corporate bonds
—
11,600
—
11,600
Government securities
—
325,967
—
325,967
Other
Insurance contracts
—
—
558
558
Total investment in securities—assets
$
506,297 $
337,567 $
558 $
844,422
U.S. equity commingled fund
12,746
International equity commingled fund
122,371
U.S. fixed income commingled fund
29,595
International fixed income commingled fund
8,968
Government securities commingled fund
4,871
Private equity and infrastructure
126,275
Other
228
Total investment measured at NAV as a
practical expedient
$
305,054
Receivables
2,071
Payables
(314)
Total plan assets
$
1,151,233
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
76
March 31, 2024
Level 1
Level 2
Level 3
Total
Assets
Cash and cash equivalents
$
18,974 $
— $
— $
18,974
Equity securities
International
107,551
—
—
107,551
U.S. equity
10,012
—
—
10,012
U.S. commingled fund
438,146
—
—
438,146
International commingled fund
30,618
—
—
30,618
Fixed income securities
Corporate bonds
—
13,025
—
13,025
Government securities
—
336,706
—
336,706
Other
Insurance contracts
—
—
613
613
Total investment in securities—assets
$
605,301 $
349,731 $
613 $
955,645
U.S. equity commingled fund
17,729
International equity commingled fund
133,851
U.S. fixed income commingled fund
34,098
International fixed income commingled fund
2,070
Government securities commingled fund
8,760
Private equity and infrastructure
126,351
Other
60
Total investment measured at NAV as a
practical expedient
$
322,919
Receivables
2,462
Payables
(835)
Total plan assets
$
1,280,191
Cash equivalents and other short-term investments are primarily held in registered short-term investment vehicles which are valued using a
market approach based on quoted market prices of similar instruments.
Public equity securities, including common stock, are primarily valued using a market approach based on the closing fair market prices of identical
instruments in the principal market on which they are traded. Commingled funds that are open-ended mutual funds for which the fair value per
share is determined and published by the respective mutual fund sponsor and is the basis for current observable transactions are categorized as
Level 1 fair value measures.
Investments in commingled funds and private equity and infrastructure funds are carried at net asset value ("NAV") as a practical expedient to
estimate fair value. The NAV is the total value of the fund divided by the number of shares outstanding. Adjustments to NAV, if any, are
determined based on evaluation of data provided by fund managers, including valuation of the underlying investments derived using inputs such
as cost, operating results, discounted future cash flows and market-based comparable data. In accordance with ASC 820-10, investments that
are measured at NAV practical expedient are not classified in the fair value hierarchy; however, their fair value amounts are presented in these
tables to permit reconciliation of the fair value hierarchy to the total plan assets disclosed in this footnote.
Corporate, government agency bonds and mortgage-backed securities are primarily valued using a market approach with inputs that include
broker quotes, benchmark yields, base spreads and reported observable trades for identical or comparable instruments.
Other investments include insurance contracts primarily valued based on estimates of the premium required to acquire similar insurance contracts
using market-based comparable data.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
77
Assumptions and Sensitivities
The discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate
bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.
The effect of a 25 basis-point change in discount rates as of March 31, 2025, is shown below:
Pension
Benefits
Increase of 25 basis points
Obligation
*$
(27,284)
Net periodic expense
193
Decrease of 25 basis points
Obligation
*$
28,281
Net periodic expense
(215)
* Excludes impact to plan assets due to the LDI investment approach discussed above under "Plan Assets, Investment Policy and Strategy."
The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide for the benefits
included in the benefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical
market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses and the potential to
outperform market index returns. For fiscal 2026, the expected long-term rate of return is 5.50 - 8.00%.
Anticipated Contributions to Defined Benefit
In the year ended March 31, 2025, the Company contributed approximately $23,829 in cash to the separate pension plan trust. In the year ended
March 31, 2024, the Company contributed 3,200,000 shares of common stock to the separate pension plan trust with an aggregate contribution
value of approximately $39,136 on the contribution date. The Company expects to contribute approximately $38,400 to its qualified U.S. defined
benefit pension plans during fiscal 2026. No plan assets are expected to be returned to the Company in fiscal 2026.
16. STOCK COMPENSATION PLANS
The Company has stock incentive plans under which employees and non-employee directors may be granted equity awards in the form of stock
options with an exercise price equal to the fair value of the Company’s stock on the grant date or in the form of restricted stock or restricted stock
units that vest pursuant to service conditions and, in some cases, performance and/or market conditions. The stock incentive and compensation
plans under which outstanding equity awards have been granted to employees, officers, and non-employee directors are the Triumph Group 2018
Equity Plan (the "2018 Plan"), the Triumph Group 2013 Equity and Cash Incentive Plan (the “2013 Plan”), and the 2016 Directors’ Equity
Compensation Plan, as amended (the “Directors’ Plan”). The current stock incentive and compensation plans used for future awards are the
2018 Plan and the Directors’ Plan. New grants under the 2013 Plan ceased upon the approval of the 2018 Plan in fiscal 2019, and the 2013 Plan
expired by its terms during fiscal 2024. The 2018 Plan and the Directors’ Plan are collectively referred to in this note as the plans.
Management and the compensation committee have utilized restricted stock units as its primary form of share-based incentive compensation.
Restricted stock units that vest solely pursuant to service conditions generally vest on a graded basis over a three year period and are subject to
forfeiture should the grantee’s employment be terminated prior to an applicable vesting date. Management and the compensation committee
have also granted restricted stock units, referred to herein as performance restricted stock units, that vest pursuant to a combination of service
conditions as well as market and performance conditions. Such awards generally vest, subject to specific market and/or performance conditions,
on a cliff vesting basis at the end of a three year performance period. The market and performance conditions may result in the awards vesting
below target, including zero vesting awards if certain threshold vesting conditions are not met, or up to 300% of the number of awards granted, if
certain vesting conditions are exceeded. The share-based payment expense arising from restricted stock unit expense is included in capital in
excess of par value. The fair value of restricted stock units awards subject only to service conditions or service and performance conditions is
determined by the product of the number of shares granted and the grant date market price of the Company's common stock, adjusted for
material non-public information that the Company may be aware of as of the grant date, if any. The fair value of restricted stock units awards that
contain market conditions is determined by the product of the number of shares granted and the grant date fair value of such an award value
using a Monte Carlo valuation methodology. The fair value of
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
78
share-based compensation granted to employees was $11,987, $11,775, and $13,728 during the fiscal years ended March 31, 2025, 2024, and
2023, respectively. The fair value of restricted stock unit awards is expensed on a straight-line basis over the requisite service period which is
typically the vesting period. The Company recognized $13,010, $9,445 and $8,913 of share-based compensation expense during the fiscal years
ended March 31, 2025, 2024, and 2023, respectively. The Company has classified share-based compensation within selling, general and
administrative expenses to correspond with the same line item as the majority of the cash compensation paid to the employees receiving share-
based compensation.
A summary of the status of the Company's non-vested restricted stock units as of March 31, 2025, and changes during the fiscal year ended
March 31, 2025, is presented below.
Shares
Weighted-
Average Grant
Date Fair Value
Non-vested restricted stock units at March 31, 2024
1,945,011
$
14.38
Granted
813,113
14.74
Vested
(663,748)
17.06
Forfeited
(153,952)
13.12
Non-vested restricted stock units at March 31, 2025
1,940,424
$
13.71
The fair value of employee restricted stock units which vested during fiscal 2025, 2024 and 2023 was $11,324, $6,718, and $9,247, respectively.
Expected future compensation expense on restricted stock units, net of expected forfeitures, is approximately $9,701, which is expected to be
recognized over the remaining weighted average vesting period of approximately 1.5 years. Under the terms of the Merger Agreement, at the time
the Merger becomes effective each, outstanding restricted stock unit and performance restricted stock unit, whether vested or unvested, shall be
canceled in exchange for an amount in cash equal to the product of (i) the total number of common stock underlying such unit and (ii) $26.00. In
the case of performance restricted stock units, the number of shares of common stock underlying such unit shall be based on the attainment of
the applicable performance metrics at a target level of performance.
17. COMMITMENTS AND CONTINGENCIES
Environmental Matters
Certain of the Company's current or former operations and facilities are subject to a number of federal, state, local and foreign environmental laws
and regulations. In July 2024, a panel of three arbitrators made a decision in an arbitration between Triumph Aerostructures, LLC (“TAS”), a
wholly owned subsidiary of the Company, and Northrop Grumman Systems Corporation (“Northrop”) related to responsibility for environmental
remediation costs at certain formerly occupied properties that had been previously operated by Northrop. The decision indicated that TAS would
be liable to reimburse Northrop for remediation costs incurred at the properties through September 2023 in the amount of approximately $11,500.
The decision also indicated that TAS would be responsible for reimbursing Northrop for remediation costs at two of the facilities incurred
subsequent to September 2023. Such incremental remediation costs for the period from September 2023 to June 30, 2024 are estimated to be
approximately $2,000. Accordingly, TAS accrued a total of approximately $13,464 following the decision, of which $7,464 was recognized in the
three months ended June 30, 2024, and is presented within legal contingencies loss on the Company’s condensed consolidated statement of
operations. Estimated incremental remediation costs reimbursable to Northrop pursuant to the arbitration decision incurred subsequent to June
30, 2024, are included within selling, general and administrative costs on the Company's condensed consolidated statement of operations and
were immaterial for the nine month period ended March 31, 2025. The Company estimates that total future remediation costs reimbursable to
Northrop could be up to approximately $38,000, and result in annual cash expenditures not likely to exceed $2,000 to $3,000 per year. In
addition, TAS is a party to the environmental remediation regulatory order at one of the properties. Therefore, in accordance with ASC 410-30,
Environmental obligations, the Company has accrued approximately $1,300 as management's best estimate of the total future remediation costs
at this property. In August 2024, TAS filed a motion to seek to set aside the adverse decision from the arbitration panel, but such motion was
denied by the trial court in November 2024. TAS filed a notice of appeal with the trial court in January 2025 and on March 26, 2025, TAS filed its
brief in support of the appeal. The court entered judgment on the arbitration award on February 7, 2025. TAS’s appeal remains pending before
the court.
Commercial Disputes and Litigation
Throughout the course of the Company’s programs, disputes with suppliers or customers have arisen and could arise in the future regarding
unique contractual requirements, quality, costs or impacts to production schedules. If the Company is unable to
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
79
successfully and equitably resolve such claims and assertions, its business, financial condition, results of operations, customer relationships and
related transactions could be materially adversely affected.
In the ordinary course of business, the Company is involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as
governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines,
penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future commercial dispute, litigation or proceeding
and no assurances can be given, the Company does not believe that any pending matter will have a material effect, individually or in the
aggregate, on its financial position or results of operations.
Divestitures, Disposals, Guarantees, and Indemnifications
As disclosed in Note 3, we have engaged in a number of divestitures. In connection with divestitures and related transactions, the Company from
time to time has indemnified and has been indemnified by third parties against certain liabilities that may arise in connection with, among other
things, business activities prior to the completion of the respective transactions. The term of these indemnifications, which typically pertain to
environmental, tax and product liabilities, is generally indefinite. As of March 31, 2025, no indemnification assets have been recorded, and
indemnification liabilities are immaterial.
As it relates to certain divestitures, disputes have arisen or may continue to arise between the Company and the acquirer subsequent to the
completion and closing of the divestiture transaction. Such disputes have included or may include amounts payable to or from the buyer for
closing working capital adjustments to the purchase price as well as claims regarding alleged violations of contractual terms, representations, and
warranties of the sale agreements, among other matters. The outcome of such disputes typically involve negotiations between the Company and
the acquirer, but could also lead to litigation between the parties, including as disclosed further below, and the ultimate claims made by the parties
against each other could be material.
The Company has received notification of claims which allege certain bases for indemnification and damages relating to certain divestitures. The
relevant agreements generally contain limits on certain damages that may be payable under the relevant agreements. For example, the
divestiture agreement relating to the sale of the Red Oak facility specified that representations and warranties insurance would be the sole and
exclusive remedy for breach of representations and warranties except in the case of fraud. By way of further example, the divestiture agreement
relating to the sale of the Stuart facility contains an $18,750 general cap on breaches of representations (other than certain specified
representations) and a $25,000 cap on breaches of certain specified representations related to contracts and product warranties, in each case
absent certain circumstances, including fraud or breaches of fundamental or tax representations. As disclosed in Note 3, on June 16, 2023, the
Company entered into a settlement agreement with the buyer of the Stuart facility resolving a working capital dispute with the buyer resulting in an
amount of $2,400 payable to the Company and resolving claims by the buyer related to the accounts payable representation and warranty under
the purchase agreement resulting in an amount of $9,200 payable to the buyer, with such amount applicable to the general cap referred to above.
The amounts were settled on a net basis by the Company paying $6,800 to the buyer. The purchaser of the Stuart facility also commenced
litigation against the Company on December 12, 2023, seeking additional indemnification for damages claimed to be approximately $130,000 for
losses allegedly arising from the knowing breach of certain representations and warranties regarding the financial condition of TAS and the
products manufactured by TAS and alleged failures to disclose known and widespread paint issues and certain supplier and production issues at
the facility prior to the closing. The Company intends to vigorously defend claims brought against it and does not believe that any pending matter
will have a material effect on its financial position or results of operations. If the Company is unable to successfully and equitably resolve such
claims and assertions, its business, financial condition, and results of operations could be materially adversely affected.
Additionally, in connection with certain divestitures, the Company has obtained customer consent to assign specified long-term contracts to the
acquirer of the divested business by entering into consent-to-assignment agreements among the customer, the acquirer, and the Company.
Pursuant to certain of these agreements, the Company remains a guarantor pursuant to guarantee agreements with the customer that predate
the divestiture transaction. The term of these obligations typically covers a period of 2 to 5 years from the date of divestiture. There is no
limitation to the maximum potential future liabilities under these contracts; however, the Company typically has a right to indemnification from
acquirers against such losses that may arise from the acquirers’ failure to perform under the assigned contracts. On June 13, 2024, Boeing
submitted correspondence to the Company asserting that under the terms of a guarantee agreement between Boeing and the Company (the
“Guarantee Agreement”), the Company would be responsible for damages that Boeing may suffer from any production disruption caused by
Qarbon Aerospace, LLC (“Qarbon”), the acquirer of the Company’s Red Oak facility, on the T7-A program, which is the subject of ongoing
litigation between the Company and Qarbon. On December 19, 2024, Boeing informed the Company that it had reached a settlement agreement
with Qarbon and has continued to reiterate its assertion that the Company would be responsible for higher production costs payable to Qarbon
under the settlement agreement. At this time, the Company has accrued $6,200 with respect to this matter. It is reasonably possible that the
Company may incur a material loss in excess of the amount accrued, but no such loss is
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
80
estimable at this time due to, among other things, the fact that this contractual dispute raises difficult legal and factual issues and is subject to
many uncertainties and complexities. Nonetheless, the Company intends to vigorously defend itself against any assertion that Boeing is entitled
to damages from the Company under the Guarantee Agreement. Separately, pursuant to the terms of the purchase agreement providing for
Qarbon’s acquisition of the Red Oak facility, the Company is entitled to indemnification from Qarbon, which would be recognized upon realization.
Also, in connection with certain divestitures, the Company has assigned lease facility agreements to the acquirers and entered into guarantee
agreements with respect to the lease agreement in the event of non-performance under the lease by the assignee. The Company typically has a
right to indemnification from the assignee or other third party to the transaction. On May 2, 2023, the Company received a letter from a lessor
associated with one such transaction to assert the lessor’s rights against the Company as guarantor. The lease payment associated with the
lease is approximately $130 per month over a lease term ending December 31, 2031, although the landlord may be barred from recovery due to
its acceptance of the lessee's surrender of the premises. The Company currently estimates that a reasonably possible loss, if any, would be
recoverable through indemnification and be immaterial.
In the year ended March 31, 2023, the Company withdrew from the IAM National Pension Fund (the “Fund), which is a multiemployer pension
plan to which the Company previously contributed on behalf of certain of its represented employees. Such withdrawal occurred as part of the
Company’s exit of its Spokane, Washington, composites manufacturing operations. In April 2023, the Company received a letter from the Fund
confirming the Company’s complete withdrawal from the Fund and indicating that the Company’s portion of the unfunded vested benefits (the
“Withdrawal Liability”) was estimated to be approximately $14,644, payable in quarterly installments of approximately $400 over a period of
approximately thirteen years. As of March 31, 2025, the Company's liability for this obligation is included on the accompanying condensed
consolidated balance sheet is approximately $13,132, representing its estimate of the remaining obligation before interest based on the letter
received from the Fund. The Company has issued a formal challenge through arbitration on the issue of the interest rate used by the Fund when
determining the Withdrawal Liability, and it is possible the Withdrawal Liability could be reduced during that process.
18. CUSTOMER CONCENTRATION
Trade and other receivables from The Boeing Company ("Boeing") represented approximately 15% and 14% of total trade and other receivables
as of March 31, 2025 and 2024, respectively. The Company had no other significant concentrations of credit risk.
Sales to Boeing for fiscal 2025 were $288,907, or 23% of net sales, of which $181,867 and $107,040 were from Systems & Support and Interiors,
respectively. Sales to Boeing for fiscal 2024 were $279,956, or 23% of net sales, of which $168,038 and $111,918 were from Systems & Support
and Interiors, respectively. Sales to Boeing for fiscal 2023 were $259,343, or 23% of net sales, of which $154,404 and $104,939 were from
Systems & Support and Interiors, respectively.
No other single customer accounted for more than 10% of the Company's net sales; however, the loss of any significant customer, including
Boeing, could have a material adverse effect on the Company and its operating subsidiaries.
The Company currently generates a majority of its revenue from clients in the commercial aerospace industry and the military. The Company's
growth and financial results are largely dependent on continued demand for its products and services from clients in these industries. When these
industries experience a downturn, it is possible that customers in these sectors may conduct less business with the Company.
19. COLLECTIVE BARGAINING AGREEMENTS
Approximately 13% of the Company's labor force is covered under collective bargaining agreements. As of March 31, 2025, none of the
Company's collectively bargained workforce is working under contracts that have expired, and none of the Company’s collectively bargained
workforce are working under contracts that are set to expire within one year.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
81
20. SEGMENTS
The Company reports financial performance based on the following two reportable segments: Systems & Support and Interiors. The Company’s
reportable segments are aligned with how the business is managed, and the Company's views of the markets it serves. The Chief Executive
Officer is the Company's Chief Operating Decision Maker (the "CODM") and evaluates performance and allocates resources based upon review
of segment information. The CODM utilizes earnings before interest, income taxes, consideration payable to customer related to divestiture,
depreciation and amortization, and pension (“Adjusted EBITDAP”) as a primary measure of segment profitability to evaluate the performance of
its segments and allocate resources.
Segment Adjusted EBITDAP is total segment revenue reduced by other segment items, as described below.
The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the
Company does not disclose net sales by product or service because to do so would be impracticable.
Selected financial information for each reportable segment is as follows:
Year Ended March 31, 2025
Segment profit (loss) disclosures
Systems &
Support
Interiors
Total
Net sales to external customers
$
1,118,397
$
143,565
$
1,261,962
Intersegment sales (eliminated in consolidation)
8
16
24
1,118,405
143,581
1,261,986
Reconciliation of revenue
Elimination of intersegment revenues
(24)
Total consolidated net sales
1,261,962
Less:
Other segment items (1)
867,575
135,758
1,003,333
Adjusted EBITDAP
250,830
7,823
258,653
Reconciliation of segment profit to loss before income taxes
Depreciation and amortization
(29,587)
Interest expense and other, net
(87,628)
Corporate expenses
(54,191)
Share-based compensation expense
(13,010)
Merger transaction costs
(11,909)
Amortization of acquired contract liabilities
3,133
Non-service defined benefit expense
(4,983)
Legal contingencies loss
(13,664)
Debt extinguishment loss
(5,369)
Income from continuing operations before income taxes
$
41,445
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
82
Year Ended March 31, 2024
Segment profit (loss) disclosures
Systems &
Support
Interiors
Total
Net sales to external customers
$
1,027,630
$
164,413
$
1,192,043
Intersegment sales (eliminated in consolidation)
795
27
822
1,028,425
164,440
1,192,865
Reconciliation of revenue
Elimination of intersegment revenues
(822)
Total consolidated net sales
1,192,043
Less:
Other segment items (1)
828,351
169,440
997,791
Adjusted EBITDAP
200,074
(5,000)
195,074
Reconciliation of segment profit to loss before income taxes
Depreciation and amortization
(29,625)
Interest expense and other, net
(123,021)
Corporate expenses
(52,725)
Share-based compensation expense
(9,445)
Loss on sale of assets and businesses
(12,208)
Amortization of acquired contract liabilities
2,721
Non-service defined benefit expense
2,372
Legal contingencies loss
(7,338)
Debt modification and extinguishment loss
(1,694)
Warrant remeasurement gain, net
8,545
Loss from continuing operations before income taxes
$
(27,344)
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
83
Year Ended March 31, 2023
Segment profit (loss) disclosures
Systems &
Support
Interiors
Total
Net sales to external customers
$
918,960
$
211,602
$
1,130,562
Intersegment sales (eliminated in consolidation)
391
45
436
919,351
211,647
1,130,998
Reconciliation of revenue
Elimination of intersegment revenues
(436)
Total consolidated net sales
1,130,562
Less:
Other segment items (1)
746,936
179,710
926,646
Adjusted EBITDAP
172,415
31,937
204,352
Reconciliation of segment profit to loss before income taxes
Depreciation and amortization
(32,259)
Interest expense and other, net
(115,211)
Corporate expenses
(54,333)
Share-based compensation expense
(8,913)
Loss on sale of assets and businesses
101,523
Amortization of acquired contract liabilities
2,500
Non-service defined benefit expense
19,664
Consideration payable to customer related to divestiture
(17,185)
Debt extinguishment loss
(33,044)
Warrant remeasurement gain, net
8,683
Income from continuing operations before income taxes
$
75,777
(1) Other segment items for both segments include certain operating expenses that are not regularly provided to the CODM and that are identifiable with that segment, including cost
of goods sold and selling, general and administrative expenses. Other segment items does not include depreciation and amortization expense, which is excluded from segment
Adjusted EBITDAP.
During fiscal years ended March 31, 2025, 2024, and 2023, the Company had foreign sales of $353,988, $284,069, and $251,695, respectively.
The Company reports as foreign sales those sales with delivery points outside of the United States. As of March 31, 2025 and 2024, the
Company's continuing operations had tangible long-lived assets of approximately $23,656 and $30,358, respectively, principally comprising
property, plant, and equipment.
The CODM also is regularly provided, and uses to manage each segment, an amount of selling, general, and administrative expense ("Segment
selling, general and administrative"). Each segment's single reported amount for Segment selling, general and administrative includes
depreciation and amortization expense, which is excluded from segment Adjusted EBITDAP. Therefore Segment selling, general and
administrative expense as regularly provided to the CODM is not an expense category that is included in the calculation of segment Adjusted
EBITDAP. The Company has disclosed Segment selling, general and administrative in the table below and has reconciled it to selling, general
and administrative expense included on the accompanying consolidated statements of operations.
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
84
Other segment disclosures - segment selling, general and administrative
Systems &
Support
Interiors
Total
Year Ended March 31, 2025
Segment selling, general and administrative (1)
$
126,826
$
12,105
$
138,931
Corporate expenses (2)
$
79,110
Other reconciling items to selling, general, and administrative (3)
(7,963)
Total selling, general, and administrative
$
210,078
Year Ended March 31, 2024
Segment selling, general and administrative (1)
$
120,011
$
9,210
$
129,221
Corporate expenses (2)
$
62,170
Other reconciling items to selling, general, and administrative (3)
(11,144)
Total selling, general, and administrative
$
180,247
Year Ended March 31, 2023
Segment selling, general and administrative (1)
$
126,231
$
8,385
$
134,616
Corporate expenses (2)
$
63,246
Other reconciling items to selling, general, and administrative (3)
(6,775)
Total selling, general, and administrative
$
191,087
(1) Segment selling, general, and administrative includes depreciation and amortization, which is not included in segment Adjusted EBITDAP
(2) Corporate expenses includes general corporate administrative costs and other costs not identifiable with one of the Company's segments, including share-based compensation
expense and merger transaction costs.
(3) Other reconciling items to selling, general, and administrative includes (i) amounts that are included within segment selling, general, and administrative but that are presented
separately on the accompanying consolidated statements of operations, including depreciation and amortization and restructuring and (ii) for Interiors, certain segment selling,
general, and administrative expenses that are not regularly provided to the CODM.
The CODM also reviews the aggregate value of each segment's inventory, net and contract assets to evaluate the working capital, operational
efficiency, and the cash conversion cycle of each segment.
Other segment disclosures - segment assets
Systems &
Support
Interiors
Total
March 31, 2025
Segment assets (1)
$
383,096
$
44,259
$
427,355
All other assets (2)
1,199,573
Total assets
$
1,626,928
March 31, 2024
Segment assets (1)
$
356,063
$
36,195
$
392,258
All other assets (2)
1,294,012
Total assets
$
1,686,270
(1) Segment assets comprised of segment inventory, net and contract assets.
(2) All other assets comprise all assets included on the accompanying consolidated balance sheets other than inventory, net and contract assets.
85
TRIUMPH GROUP, INC.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Balance at
beginning of
year
Additions
charged to
(income)
expense
Other (1)
Balance at
end of year
For year ended March 31, 2025:
Deferred tax assets valuation allowance
$
399,179
(2,508)
2,999 $
399,670
For year ended March 31, 2024:
Deferred tax assets valuation allowance
$
512,579
(121,056)
7,656 $
399,179
For year ended March 31, 2023:
Deferred tax assets valuation allowance
$
512,357
(21,279)
21,501 $
512,579
(1)
Adjustments relate to changes in defined benefit pension plan and other postretirement benefit plan obligations.
86
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.
As of March 31, 2025, we completed an evaluation, under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based
on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective
at the reasonable assurance level as of March 31, 2025.
87
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Triumph Group, Inc. ("Triumph") is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Triumph's internal control system over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with U.S. generally accepted accounting principles. The Company's internal control over financial reporting
includes those policies and procedures that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company;
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also,
projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in
condition, or that the degree of compliance with the policies or procedures may deteriorate.
Triumph's management assessed the effectiveness of Triumph's internal control over financial reporting as of March 31, 2025. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) ("COSO") in Internal Control—Integrated Framework. Based on management's assessment and those criteria, management believes
that Triumph maintained effective internal control over financial reporting as of March 31, 2025.
Triumph's independent registered public accounting firm, Ernst & Young LLP, has audited Triumph's effectiveness of internal control over financial
reporting. This report appears on the following page.
/s/ Daniel J. Crowley
Daniel J. Crowley
Chairman, President, and Chief Executive Officer
/s/ James F. McCabe, Jr.
James F. McCabe, Jr.
Senior Vice President and
Chief Financial Officer
/s/ Kai W. Kasiguran
Kai W. Kasiguran
Vice President and Controller
May 28, 2025
88
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Triumph Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Triumph Group, Inc.’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the
COSO criteria). In our opinion, Triumph Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial
reporting as of March 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated balance sheets of the Company as of March 31, 2025 and 2024, the related consolidated statements of operations, comprehensive
income (loss), stockholders’ deficit and cash flows for each of the three years in the period ended March 31, 2025, and the related notes and
financial statement schedule listed in the Index at Item 15(a)(2), and our report dated May 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 28, 2025
89
Changes in Internal Control Over Financial Reporting
In addition to management's evaluation of disclosure controls and procedures as discussed above, we continue to review and enhance our
policies and procedures for internal control over financial reporting.
We have developed and implemented a formal set of internal controls and procedures for financial reporting in accordance with the SEC's rules
regarding management's report on internal controls. As a result of continued review and testing by management and by our internal and
independent auditors, or as a result of newly adopted accounting standards, additional changes may be made to our internal controls and
procedures. However, we did not make any changes to our internal control over financial reporting in the fourth quarter of fiscal 2025 that has
materially affected or is reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
90
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required for directors and executive officers is incorporated herein by reference to our definitive 2025 Proxy Statement for our
2025 Annual Meeting of Stockholders.
Delinquent Section 16(a) Reports
The information required regarding delinquent Section 16(a) reports is incorporated herein by reference to the 2025 Proxy Statement.
Code of Business Conduct
The information required regarding our Code of Business Conduct is incorporated herein by reference to the 2025 Proxy Statement.
Stockholder Nominations
The information required with respect to any material changes to the procedures by which stockholders may recommend nominees to the
Company's board of directors is incorporated herein by reference to the 2025 Proxy Statement.
Audit Committee and Audit Committee Financial Expert
The information required with respect to the Audit Committee and Audit Committee financial experts is incorporated herein by reference to the
2025 Proxy Statement.
Item 11. Executive Compensation
The information required under this item is incorporated herein by reference to the 2025 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required under this item is incorporated herein by reference to the 2025 Proxy Statement.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required under this item is incorporated herein by reference to the 2025 Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required under this item is incorporated herein by reference to the 2025 Proxy Statement.
91
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Financial Statements
(1) The following consolidated financial statements are included in Item 8 of this report:
Triumph Group, Inc.
Page
Consolidated Balance Sheets as of March 31, 2025 and 2024
43
Consolidated Statements of Operations for the Fiscal Years Ended March 31, 2025, 2024, and 2023
44
Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended March 31, 2025, 2024, and 2023
45
Consolidated Statements of Stockholders' Deficit for the Fiscal Years Ended March 31, 2025, 2024, and 2023
46
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2025, 2024, and 2023
47
Notes to Consolidated Financial Statements
48
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm - PCAOB ID #42
88
(2) The following financial statement schedule is included in this report:
Page
Schedule II—Valuation and Qualifying Accounts
85
All other schedules have been omitted as not applicable or because the information is included elsewhere in the consolidated financial statements
or notes thereto.
(3) The following is a list of exhibits. Where so indicated, exhibits which were previously filed are incorporated by reference.
Exhibit
Number
Exhibit Description
Incorporated by Reference to
Form
File No.
Exhibit(s)
Filing Date
2.1
Securities and Asset Purchase Agreement, dated as of December
21, 2023, by and among Triumph Group, Inc., Triumph
Aftermarket Services Group, LLC, Triumph Group Acquisition
Corp., Triumph Group Acquisition Holdings, Inc., The Triumph
Group Operations, Inc. and AAR CORP^
8-K
001-12235
2.1
December 22, 2023
2.2
Agreement and Plan of Merger, dated as of February 2, 2025, by
and among Triumph Group, Inc., Titan BW Acquisition Holdco Inc.
and Titan BW Acquisition Merger Sub Inc.+
8-K
001-12235
2.1
February 3, 2025
3.1
Amended and Restated Certificate of Incorporation of Triumph
Group, Inc.
10-K
001-12235
3.1
May 22, 2009
3.2
Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Triumph Group, Inc.
8-K
001-12235
3.1
July 20, 2012
3.3
Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Triumph Group, Inc. dated July 21,
2023
8-K
001-12235
3.1
July 21, 2023
3.4
Form of Certificate of Designations, Preferences and Rights of
Series B Junior Participating Preferred Stock
8-K
001-12235
3.1
March 13, 2019
3.5
Certificate of Amendment to Amended and Restated Certificate of
Incorporation of Triumph Group, Inc.
8-K/A
001-12235
3.1
August 5, 2019
3.6
The Company's amended and Restated By-Laws, dated February
2, 2025.
8-K
001-12235
3.1
February 3, 2025
4.1
Form of Certificate evidencing Common Stock of Triumph Group,
Inc.
8-K
001-12235
4.2
March 13, 2019
4.2
Indenture, dated as of March 14, 2023, among Triumph Group,
Inc., the subsidiary guarantors signatory thereto and U.S. Bank
Trust Company, National Association, as trustee for the Notes.
8-K
001-12235
4.1
March 14, 2023
4.3
Form of 9.000% Senior Secured First Lien Notes due 2028
(included as Exhibit A to the Indenture filed as Exhibit 4.2).
8-K
001-12235
4.1
March 14, 2023
92
Exhibit
Number
Exhibit Description
Incorporated by Reference to
Form
File No.
Exhibit(s)
Filing Date
4.4
Tax Benefits Preservation Plan, dated as of March 13, 2019,
between Triumph Group, Inc. and Computershare Trust
Company, N.A.
8-K
001-12235
4.1
March 13, 2019
4.5
Description of Securities
10-K
001-12235
4.8
May 23, 2019
4.6
Amended and Restated Receivables Purchase Agreement, dated
as of September 29, 2020, among Triumph Receivables, LLC, as
seller, Triumph Group, Inc., as servicer, the various purchasers,
LC participants and purchaser agents from time to time party
thereto, PNC Bank, National Association, as administrator and as
LC bank and PNC Capital Markets LLC, as structuring agent.
8-K
001-12235
4.1
October 5, 2020
4.7
Amended and Restated Purchase and Sale Agreement, dated as
of September 29, 2020, among various entities listed therein, as
the originators, Triumph Group, Inc., individually and as servicer
and Triumph Receivables, LLC.
8-K
001-12235
4.2
October 5, 2020
4.8
Amendment No. 14 to Blocked Account Agreement, effective as of
November 5, 2021, between Triumph Receivables LLC, Triumph
Group, Inc., and PNC Bank, National Association.
10-Q
001-12235
10.1
February 8, 2022
4.9
Twelfth Amended and Restated Purchaser Group Fee Letter,
effective as of November 5, 2021, among Triumph Receivables,
LLC, Triumph Group, Inc., the various purchasers and purchaser
agents from time to time party thereto, PNC Capital Markets LLC,
and PNC Bank, National Association.
10-Q
001-12235
10.2
February 8, 2022
4.10
Second Amended and Restated Performance Guaranty, effective
as of November 5, 2021, by Triumph Group, Inc., in favor of PNC
Bank, National Association.
10-Q
001-12235
10.3
February 8, 2022
4.11
First Amendment to Amended and Restated Purchase and Sale
Agreement, effective as of November 5, 2021, among Triumph
Group, Inc., Triumph Receivables, LLC, and each of the entities
listed on the signature pages hereto as an Originator.
10-Q
001-12235
10.4
February 8, 2022
4.12
Second Amendment to Amended and Restated Receivables
Purchase Agreement, effective as of November 5, 2021, among
Triumph Group, Inc., Triumph Receivables, LLC, and PNC Bank,
National Association.
10-Q
001-12235
10.5
February 8, 2022
4.13
Tax Benefits Preservation Plan, dated March 11, 2022 to be
effective as of March 13, 2022, between Triumph Group, Inc. and
Computershare Trust Company, N.A.
8-K
001-12235
4.1
March 11, 2022
4.14
Fourth Amendment to Amended and Restated Receivables
Purchase Agreement, dated as of December 22, 2023, among
Triumph Receivables, LLC, as seller, Triumph Group, Inc., as
servicer, the various purchasers, LC participants and purchaser
agents from time to time party thereto, and PNC Bank, National
Association, as administrator and as LC bank.
8-K
001-12235
4.1
December 29, 2023
4.15
Second Amendment to Amended and Restated Purchase and
Sale Agreement, dated as of December 22, 2023, among the
various entities listed therein, as the originators, Triumph Group,
Inc., individually and as servicer, and Triumph Receivables, LLC.
8-K
001-12235
4.2
December 29, 2023
4.16
Amendment No. 1, dated as of March 13, 2025, to the Tax
Benefits Preservation Plan, dated March 11, 2022, effective as of
March 13, 2022, by and between Triumph
8-K
001-12235
4.1
March 13, 2025
93
Exhibit
Number
Exhibit Description
Incorporated by Reference to
Form
File No.
Exhibit(s)
Filing Date
Group, Inc. and Computershare Trust Company, N.A., as rights
agent.
10.1
Triumph Group, Inc. 2004 Stock Incentive Plan*
10-K
001-12235
10.3
May 30, 2013
10.2
Form of Stock Award Agreement under the 2004 Stock Incentive
Plan*
10-K
001-12235
10.7
May 22, 2009
10.3
Form of letter confirming Stock Award Agreement under the 2004
Stock Incentive Plan*
10-K
001-12235
10.8
May 22, 2009
10.4
Triumph Group, Inc. Supplemental Executive Retirement Plan
effective January 1, 2003*
10-K
001-12235
10.17
June 12, 2003
10.5
Compensation for the non-employee members of the Board of
Directors of Triumph Group, Inc.
8-K
001-12235
10.1
November 15, 2016
10.6
Triumph Group, Inc. Executive Incentive Plan, effective
September 28, 2010 *
10-Q
001-12235
10.1
November 5, 2010
10.7
Form of letter informing Triumph Group, Inc. executives they are
eligible to participate in the Company’s Long Term Incentive Plan
*
10-K
001-12235
10.22
May 18, 2011
10.8
Form of letter informing Triumph Group, Inc. executives they have
earned an award under the Company’s Long Term Incentive Plan
and the amount of the award *
10-K
001-12235
10.23
May 18, 2011
10.9
Triumph Group, Inc. 2013 Equity and Cash Incentive Plan, as
amended and restated as of June 7, 2017*
8-K
001-12235
99.1
June 12, 2017
10.10
Form of letter regarding eligibility to participate in the Triumph
Group, Inc. Restricted Stock Plan*
10-K
001-12235
10.24
May 19, 2014
10.11
The First Amendment of the Triumph Group, Inc. Supplemental
Executive Retirement Plan, effective as of May 1, 2015 *
8-K
001-12235
10.1
May 7, 2015
10.12
First Amendment to Triumph Group, Inc. 2013 Employee Stock
Purchase Plan *
10-Q
001-12235
10.1
August 4, 2015
10.13
Employment Agreement between Triumph Group, Inc. and Daniel
J. Crowley, dated as of April 1, 2016*
8-K
001-12235
10.1
April 7, 2016
10.14
Employment Agreement, by and between Triumph Group, Inc.
and James F. McCabe dated as of May 30, 2023.*
10-Q
001-12235
10.3
November 12, 2024
10.15
Triumph Group, Inc. Directors' Deferred Compensation Plan,
effective January 1, 2017
8-K
001-12235
10.2
November 15, 2016
10.16
Form of the 2016 Directors' Equity Compensation Plan, as
amended
10-K/A
001-12235
10.33
May 26, 2017
10.17
Form of Restricted Stock Unit Agreement under the 2016
Directors' Equity Compensation Plan, as amended
10-K/A
001-12235
10.34
May 26, 2017
10.18
Triumph Group, Inc. Directors' Deferred Compensation Plan,
effective January 1, 2017
8-K
001-12235
10.2
November 15, 2016
10.19
Twentieth Amendment to Receivables Purchase Agreement dated
as of November 3, 2017
8-K
001-12235
10.1
November 7, 2017
10.20
Triumph Group, Inc. Amended and Restated 2018 Equity
Incentive Plan, effective July 16, 2020*
8-K
001-12235
10.1
July 21, 2020
10.21
Form of Long-Term Incentive Award Letter under the 2018 Equity
Incentive Plan*
10-K
001-12235
10.32.2
May 23, 2019
10.22
Triumph Group, Inc. 2018 Executive Cash Incentive
Compensation Plan, effective April 1, 2018*
8-K
001-12235
10.2
June 4, 2018
10.23
Form of Short-Term Cash Incentive Award Letter under the 2018
Executive Cash Incentive Compensation Plan*
10-K
001-12235
10.33.1
May 23, 2019
10.24
Triumph Group, Inc. Executive General Severance Plan, effective
February 19, 2019*
10-K
001-12235
10.40
May 23, 2019
10.25
Triumph Group, Inc. Executive Change in Control Severance
Plan, effective February 19, 2019*
10-K
001-12235
10.41
May 23, 2019
10.26
Twenty-Fifth Amendment to the Receivables Purchase Agreement
dated as of December 6, 2019 (Incorporated by
8-K
001-12235
10.1
December 9, 2019
94
Exhibit
Number
Exhibit Description
Incorporated by Reference to
Form
File No.
Exhibit(s)
Filing Date
reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on December 9, 2019)
10.27
Employment Agreement between Triumph Group, Inc. and
Jennifer Allen, dated May 30, 2023*
10-Q
001-12235
10.1
November 12, 2024
10.28
Amendment No. 1 to Triumph Group, Inc. Executive Change In
Control Severance Plan.*
10-Q
001-12235
10.2
August 5, 2020
10.29
Amendment No. 2 to Triumph Group, Inc. Executive Change In
Control Severance Plan.*
10-Q
001-12235
10.3
August 5, 2020
10.30
Collateral Trust Agreement, dated August 17, 2020 among the
Company, the subsidiary guarantors signatory thereto, Wilmington
Trust, National Association, as collateral trustee, and U.S. Bank
National Association, as trustee for the Notes.
8-K
001-12235
10.2
August 18, 2020
10.31
Employment Agreement between Triumph Group, Inc. and Daniel
J. Crowley, dated as of November 17, 2020.*
8-K
001-12235
10.1
November 18, 2020
10.32
Equity Distribution Agreement, dated February 4, 2021, by and
between Triumph Group, Inc. and Citigroup Global Markets Inc.
8-K
001-12235
1.1
February 4, 2021
10.33
Employment Agreement between Triumph Group, Inc. and
Thomas Quigley dated as of May 30, 2023*
10-Q
001-12235
10.4
November 12, 2024
10.34
Employment Agreement between Triumph Group, Inc. and Kai
Kasiguran dated as of May 30, 2023*
10-Q
001-12235
10.2
November 12, 2024
10.35
Cooperation Agreement, dated as of May 30, 2023, between
Triumph Group, Inc. and Vision One Management Partners, LP^
8-K
001-12235
10.1
May 30, 2023
10.36
Amendment to Cooperation Agreement, dated as of May 1, 2024,
between Triumph Group, Inc. and Vision One Management
Partners, LP^
8-K
001-12235
10.1
May 1, 2024
10.37
Retention Agreement between Triumph Group, Inc. and James F.
McCabe dated as of November 25, 2024*
#
#
#
#
10.38
Retention Agreement between Triumph Group, Inc. and Jennifer
Allen dated as of November 25, 2024*
#
#
#
#
10.39
Retention Agreement between Triumph Group, Inc. and Thomas
Quigley dated as of November 25, 2024*
#
#
#
#
10.40
Retention Agreement between Triumph Group, Inc. and Kai
Kasiguran dated as of November 25, 2024*
#
#
#
#
18.1
Preferability Letter from Ernst & Young LLP, Independent
Registered Public Accounting Firm, Regarding Change in
Accounting Principle.
10-Q
001-12235
18.1
November 5, 2020
19.1
Insider Trading Policy
#
#
#
#
21.1
Subsidiaries of Triumph Group, Inc.
#
#
#
#
22.1
List of Subsidiary Guarantors and Issuers of Guaranteed
Securities.
#
#
#
#
23.1
Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm
#
#
#
#
31.1
Principal Executive Officer Certification Required by Rule 13a-
14(a) or Rule 15d-14(a) under the Securities Exchange Act of
1934, as amended.
#
#
#
#
31.2
Principal Financial Officer Certification Required by Rule 13a-
14(a) or Rule 15d-14(a) under the Securities Exchange Act of
1934, as amended.
#
#
#
#
32.1
Principal Executive Officer and Principal Financial Officer
Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under
the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350.
##
##
##
##
97.1
Clawback Policy.*
#
#
#
#
95
Exhibit
Number
Exhibit Description
Incorporated by Reference to
Form
File No.
Exhibit(s)
Filing Date
101
The following financial information from Triumph Group, Inc.’s
Annual Report on Form 10-K for the fiscal year ended March 31,
2025 formatted in iXBRL: (i) Consolidated Balance Sheets as of
March 31, 2025 and 2024; (ii) Consolidated Statements of
Operations for the fiscal years ended March 31, 2025, 2024, and
2023; (iii) Consolidated Statements of Stockholders’ Deficit for the
fiscal years ended March 31, 2025, 2024, and 2023; (iv)
Consolidated Statements of Cash Flows for the fiscal years ended
March 31, 2025, 2024, and 2023; (v) Consolidated Statements of
Comprehensive Income (Loss) for the fiscal years ended March
31, 2025, 2024, and 2023; and (vi) Notes to the Consolidated
Financial Statements
#
#
#
#
104
Cover Page Interactive Data File, formatted in iXBRL and
contained in Exhibit 101.
#
#
#
#
In accordance with Item 601(b)(4)(iii)(A) of Regulations S-K, copies of specific instruments defining the rights of holders of long-term debt of the
Company or its subsidiaries are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the
SEC upon request
* Indicates management contract or compensatory plan or arrangement
^ Schedules (and similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted
schedule will be furnished to the Securities and Exchange Commission upon request.
+ Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to the Merger Agreement (identified therein) have been omitted from this Report
and will be furnished supplementally to the SEC upon request.
# Filed herewith
## Furnished herewith
Item 16. Form 10-K Summary
The Registrant has elected not to include a summary.
96
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed by the undersigned, thereunto duly authorized.
TRIUMPH GROUP, INC.
/s/ Daniel J. Crowley
Dated:
May 28, 2025
By:
Daniel J. Crowley
Chairman, President, Chief Executive Officer and
Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Chairman, President, Chief Executive Officer and Director
May 28, 2025
/s/ Daniel J. Crowley
(Principal Executive Officer)
Daniel J. Crowley
Senior Vice President and Chief Financial Officer
May 28, 2025
/s/ James F. McCabe, Jr.
(Principal Financial Officer)
James F. McCabe, Jr.
Vice President, Controller
May 28, 2025
/s/ Kai W. Kasiguran
(Principal Accounting Officer)
Kai W. Kasiguran
/s/ Neal J. Keating
Lead Independent Director
May 28, 2025
Neal J. Keating
/s/ Patrick Allen
Director
May 28, 2025
Patrick Allen
/s/ Mark C. Cherry
Director
May 28, 2025
Mark C. Cherry
/s/ Cynthia M. Egnotovich
Director
May 28, 2025
Cynthia M. Egnotovich
/s/ Daniel P. Garton
Director
May 28, 2025
Daniel P. Garton
/s/ Barbara Humpton
Director
May 28, 2025
Barbara Humpton
/s/ Courtney Mather
Director
May 28, 2025
Courtney Mather
/s/ Colleen C. Repplier
Director
May 28, 2025
Colleen C. Repplier
Exhibit 10.37
CONFIDENTIAL
Triumph Group, Inc.
555 E. Lancaster Avenue
Suite 400
Radnor, PA 19087
November 25, 2024
James McCabe
1363 Worthington Court
Ambler, PA 19002
Jim:
In recognition of your contributions and dedication to the continued success of Triumph Group, Inc. and its affiliates (collectively, the
“Company”) during a period in which it is critical for the Company to meet its strategic and financial objectives, we are pleased to offer you a
special retention bonus in an amount equal to $569,250.00 (the “Retention Bonus”).
The Retention Bonus will vest in two installments: (i) 50% of the Retention Bonus will vest nine (9) months following the date hereof
and (ii) the remaining 50% of the Retention Bonus will vest eighteen (18) months following the date hereof (each such date, a “Retention Date”);
provided that, you remain employed by the Company through the applicable Retention Date (except as set forth below).
If earned, the Company will, in its sole discretion, either (A) pay the applicable portion of the Retention Bonus in cash or (B) settle the
applicable portion of the Retention Bonus in a number of shares of common stock of Triumph Group, Inc. (“Shares”), in each case, as soon as
reasonably practicable following the applicable Retention Date but no later than thirty (30) days following the applicable Retention Date, subject
to any and all applicable withholding taxes and all other authorized payroll deductions in a manner as described further below. If the Company
elects to settle the applicable portion of the Retention Bonus in Shares, then the number of Shares to be issued to you will be determined by
dividing (1) the earned portion of the Retention Bonus by (2) the Fair Market Value (as defined below) of a Share on the settlement date; provided
that, Shares may be withheld by the Company to satisfy the amount of all required withholding obligations, as described further below. Any
fractional shares resulting from the foregoing calculation will be paid in cash. For purposes of this letter agreement, the “Fair Market Value” of a
Share will be the closing price of a Share in New York Stock Exchange Composite Transaction on the relevant date, or if no sale is made on that
date, the closing price of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which there was a sale.
Notwithstanding the foregoing, you will be paid any unpaid portion of the Retention Bonus if your employment is terminated by the
Company without Cause (as defined below) or you terminate your employment due to Good Reason (as defined below) prior to the final
Retention Date; provided that, you sign and return a release of claims in a form provided by the Company (the “Release”), and do not thereafter
revoke such Release. Any such payment will be made to you within sixty (60) days following the date of such termination of employment,
subject to any and all applicable withholding taxes and all other authorized payroll deductions.
For purposes of this letter agreement, “Cause” means: (1) your willful and continued failure (other than any such failure resulting from
(A) your incapacity due to physical or mental illness or (B) any such actual or anticipated failure after the issuance of a notice of termination by
you for Good Reason) to perform substantially the duties and responsibilities of your position with the Company; provided, however, that a
termination of employment will not be deemed to be for Cause under this clause (1) unless: (i) the Company has delivered to you a written notice
specifically identifying the manner in which you have not substantially performed such duties or responsibilities and states an intent to terminate
your employment for Cause within
|||
ninety (90) days of the latest such underlying action (or failure to act); (ii) your failure to cure such Cause event or events within thirty (30) days
after your receipt of such written notice and (iii) the Company delivers to you a notice of termination of employment for Cause within thirty (30)
days after the expiration of the 30-day cure period; (2) you are convicted by a court of competent jurisdiction or a plea of nolo contendere for
felony criminal conduct or a crime involving moral turpitude or (3) you willfully engage in fraud or dishonesty which is injurious to the Company
or its reputation, monetarily or otherwise. No act, or failure to act, on your part will be deemed “willful” unless committed or omitted by you in
bad faith and without reasonable belief that your act or failure to act was in, or not opposed to, the best interest of the Company.
For purposes of this letter agreement, “Good Reason” means the occurrence (without your express written consent) of: (i) a significant
adverse change or diminution in your authority, duties, responsibilities or reporting requirements or the assignment to you of any duties or
responsibilities which are inconsistent with such role or position(s) (including status, offices, titles, public company status and reporting
requirements), or any removal of you from, or any failure to reappoint or reelect you to, such position(s); (ii) a reduction of more than ten percent
(10%) in your total annual target compensation, other than pursuant to an across-the-board reduction in total annual target compensation which
applies to all similarly situated employees of the Company and any acquirer (and defining total annual target compensation for purposes of this
definition as base salary and target annual cash incentive compensation (and not including equity or equity-based compensation)); (iii) a material
reduction in the aggregate level of employee benefits offered to you under any pension, life insurance, medical, health, accident and disability
plans, or any retirement plan for which you is eligible or (iv) the Company requiring you to be based at an office that is greater than 35 miles from
where your office is then-located; provided, however, that your termination of employment will not be deemed to be for Good Reason unless: (1)
you have delivered to the Company written notice of intent to terminate for Good Reason within ninety (90) days of such occurrence, (2) you fail
to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (3) you deliver to the Company a notice of
termination of employment for Good Reason within thirty (30) days after the expiration of the 30-day cure period.
Additional Provisions
Withholdings. You agree and acknowledge that you authorize the Company, in its sole discretion, to satisfy any and all applicable
withholding obligations and payroll deductions by any of the means it deems appropriate; provided, however, that, if you are subject to Section 16
of the Exchange Act, then you may elect, in advance of any tax withholding event, to satisfy the amount of all required withholding obligations by
having the Company withhold from Shares to be issued upon payment of the applicable portion of the Retention Bonus that number of Shares
with a Fair Market Value on the applicable settlement date equal to the taxes required to be withheld at the maximum tax withholding obligation
in compliance with applicable law.
Section 409A. The parties intend for the payments and benefits under this letter agreement to be exempt from Section 409A of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) or, if not so exempt, to be paid or provided in a manner which complies with the
requirements of such section, and intend that this letter agreement will be construed and administered in accordance with such intention. For
purposes of Section 409A, each installment payment provided under this letter agreement will be treated as a separate payment. Notwithstanding
anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, (i) no amounts that are payable on account of your termination of employment will be paid to you until you have incurred a “separation
from service” from the Company within the meaning of Section 409A of the Code, (ii) amounts that would otherwise be payable that would
otherwise be provided pursuant to this letter agreement during the six-month period immediately following your separation from service will
instead be paid on the first business day after the date that is six (6) months following your separation from service (or death, if earlier)
|||
and (iii) any payments that are due within the “short-term deferral period” as defined in Section 409A of the Code will not be treated as deferred
compensation unless applicable law requires otherwise.
Confidentiality. You specifically understand and agree that the existence and terms of this letter agreement are strictly confidential and that
such confidentiality is a material term of this letter agreement. Accordingly, except as required by law or unless authorized to do so by the
Company in writing, you agree that you will not communicate, display or otherwise reveal any of the contents of this letter agreement to anyone
other than your spouse, legal counsel or financial advisor; provided, however, that they are first advised of the confidential nature of this letter
agreement and you obtain their agreement to be bound by the same. If you breach this provision, then you will forfeit any Retention Bonus and
you are otherwise liable for any damages sustained by the Company by such breach.
Permitted Disclosures. Pursuant to Section 1833(b) of the Defend Trade Secrets Act of 2016, you acknowledge that you will not have
criminal or civil liability under any federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a
suspected violation of law; or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under
seal. Nothing in this letter agreement is intended to conflict with Section 1833(b) of the Defend Trade Secrets Act of 2016 or create liability for
disclosures of trade secrets that are expressly allowed by such Section. Notwithstanding anything set forth in this letter agreement to the contrary,
you will not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making
other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor are you required to notify the
Company regarding any such reporting, disclosure or cooperation with the government.
Other Rights and Agreements. This letter agreement does not create any employment rights not specifically set forth herein. Your
employment remains at-will and can be terminated by the Company at any time and for any reason, with or without Cause. This letter agreement
contains the entire understanding of the Company and you with respect to the subject matter hereof.
No Effect on Severance and Other Benefits. This letter agreement will not affect your eligibility or entitlement to receive any benefits
payable to you on or in connection with the termination of your employment under any existing agreement between you and the Company or any
severance plan, program or policy maintained by the Company.
Binding Effect. This letter agreement will be binding on you and your executor, administrator and heirs, but may not be assigned by you.
This letter agreement may be transferred or assigned by the Company and will be binding on the transferee or assignee. This letter agreement will
automatically be transferred or assigned to and be binding upon any successor in interest to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
Counterparts. This letter agreement may be executed in separate counterparts (including by electronic signature), each of which is deemed
to be an original and all of which taken together constitute one and the same agreement.
Amendment. This letter agreement may be amended or revised only by written agreement signed by an authorized officer of the Company
and you.
Governing Law. This letter agreement will be construed, interpreted and the rights of the parties determined in accordance with the laws of
the Commonwealth of Pennsylvania.
[signature page follows]
|||
Accordingly, the parties have executed this letter agreement as of the date first above written.
TRIUMPH GROUP, INC.
By: /s/ Danielle Garrett_________
Name: Danielle Garrett
Title: Sr. Director, HR People & Strategy
Agreed and Accepted:
_/s/ James McCabe_______________
James McCabe
Exhibit 10.38
CONFIDENTIAL
Triumph Group, Inc.
555 E. Lancaster Avenue
Suite 400
Radnor, PA 19087
November 25, 2024
Jennifer Allen
424 Gulph Creek Road
Wayne, PA 19087
Jenn:
In recognition of your contributions and dedication to the continued success of Triumph Group, Inc. and its affiliates (collectively, the
“Company”) during a period in which it is critical for the Company to meet its strategic and financial objectives, we are pleased to offer you a
special retention bonus in an amount equal to $509,250.00 (the “Retention Bonus”).
The Retention Bonus will vest in two installments: (i) 50% of the Retention Bonus will vest nine (9) months following the date hereof
and (ii) the remaining 50% of the Retention Bonus will vest eighteen (18) months following the date hereof (each such date, a “Retention Date”);
provided that, you remain employed by the Company through the applicable Retention Date (except as set forth below).
If earned, the Company will, in its sole discretion, either (A) pay the applicable portion of the Retention Bonus in cash or (B) settle the
applicable portion of the Retention Bonus in a number of shares of common stock of Triumph Group, Inc. (“Shares”), in each case, as soon as
reasonably practicable following the applicable Retention Date but no later than thirty (30) days following the applicable Retention Date, subject
to any and all applicable withholding taxes and all other authorized payroll deductions in a manner as described further below. If the Company
elects to settle the applicable portion of the Retention Bonus in Shares, then the number of Shares to be issued to you will be determined by
dividing (1) the earned portion of the Retention Bonus by (2) the Fair Market Value (as defined below) of a Share on the settlement date; provided
that, Shares may be withheld by the Company to satisfy the amount of all required withholding obligations, as described further below. Any
fractional shares resulting from the foregoing calculation will be paid in cash. For purposes of this letter agreement, the “Fair Market Value” of a
Share will be the closing price of a Share in New York Stock Exchange Composite Transaction on the relevant date, or if no sale is made on that
date, the closing price of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which there was a sale.
Notwithstanding the foregoing, you will be paid any unpaid portion of the Retention Bonus if your employment is terminated by the
Company without Cause (as defined below) or you terminate your employment due to Good Reason (as defined below) prior to the final
Retention Date; provided that, you sign and return a release of claims in a form provided by the Company (the “Release”), and do not thereafter
revoke such Release. Any such payment will be made to you within sixty (60) days following the date of such termination of employment,
subject to any and all applicable withholding taxes and all other authorized payroll deductions.
For purposes of this letter agreement, “Cause” means: (1) your willful and continued failure (other than any such failure resulting from
(A) your incapacity due to physical or mental illness or (B) any such actual or anticipated failure after the issuance of a notice of termination by
you for Good Reason) to perform substantially the duties and responsibilities of your position with the Company; provided, however, that a
termination of employment will not be deemed to be for Cause under this clause (1) unless: (i) the Company has delivered to you a written notice
specifically identifying the manner in which you have not substantially performed such duties or responsibilities and states an intent to terminate
your employment for Cause within
|||
ninety (90) days of the latest such underlying action (or failure to act); (ii) your failure to cure such Cause event or events within thirty (30) days
after your receipt of such written notice and (iii) the Company delivers to you a notice of termination of employment for Cause within thirty (30)
days after the expiration of the 30-day cure period; (2) you are convicted by a court of competent jurisdiction or a plea of nolo contendere for
felony criminal conduct or a crime involving moral turpitude or (3) you willfully engage in fraud or dishonesty which is injurious to the Company
or its reputation, monetarily or otherwise. No act, or failure to act, on your part will be deemed “willful” unless committed or omitted by you in
bad faith and without reasonable belief that your act or failure to act was in, or not opposed to, the best interest of the Company.
For purposes of this letter agreement, “Good Reason” means the occurrence (without your express written consent) of: (i) a significant
adverse change or diminution in your authority, duties, responsibilities or reporting requirements or the assignment to you of any duties or
responsibilities which are inconsistent with such role or position(s) (including status, offices, titles, public company status and reporting
requirements), or any removal of you from, or any failure to reappoint or reelect you to, such position(s); (ii) a reduction of more than ten percent
(10%) in your total annual target compensation, other than pursuant to an across-the-board reduction in total annual target compensation which
applies to all similarly situated employees of the Company and any acquirer (and defining total annual target compensation for purposes of this
definition as base salary and target annual cash incentive compensation (and not including equity or equity-based compensation)); (iii) a material
reduction in the aggregate level of employee benefits offered to you under any pension, life insurance, medical, health, accident and disability
plans, or any retirement plan for which you is eligible or (iv) the Company requiring you to be based at an office that is greater than 35 miles from
where your office is then-located; provided, however, that your termination of employment will not be deemed to be for Good Reason unless: (1)
you have delivered to the Company written notice of intent to terminate for Good Reason within ninety (90) days of such occurrence, (2) you fail
to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (3) you deliver to the Company a notice of
termination of employment for Good Reason within thirty (30) days after the expiration of the 30-day cure period.
Additional Provisions
Withholdings. You agree and acknowledge that you authorize the Company, in its sole discretion, to satisfy any and all applicable
withholding obligations and payroll deductions by any of the means it deems appropriate; provided, however, that, if you are subject to Section 16
of the Exchange Act, then you may elect, in advance of any tax withholding event, to satisfy the amount of all required withholding obligations by
having the Company withhold from Shares to be issued upon payment of the applicable portion of the Retention Bonus that number of Shares
with a Fair Market Value on the applicable settlement date equal to the taxes required to be withheld at the maximum tax withholding obligation
in compliance with applicable law.
Section 409A. The parties intend for the payments and benefits under this letter agreement to be exempt from Section 409A of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) or, if not so exempt, to be paid or provided in a manner which complies with the
requirements of such section, and intend that this letter agreement will be construed and administered in accordance with such intention. For
purposes of Section 409A, each installment payment provided under this letter agreement will be treated as a separate payment. Notwithstanding
anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, (i) no amounts that are payable on account of your termination of employment will be paid to you until you have incurred a “separation
from service” from the Company within the meaning of Section 409A of the Code, (ii) amounts that would otherwise be payable that would
otherwise be provided pursuant to this letter agreement during the six-month period immediately following your separation from service will
instead be paid on the first business day after the date that is six (6) months following your separation from service (or death, if earlier)
|||
and (iii) any payments that are due within the “short-term deferral period” as defined in Section 409A of the Code will not be treated as deferred
compensation unless applicable law requires otherwise.
Confidentiality. You specifically understand and agree that the existence and terms of this letter agreement are strictly confidential and that
such confidentiality is a material term of this letter agreement. Accordingly, except as required by law or unless authorized to do so by the
Company in writing, you agree that you will not communicate, display or otherwise reveal any of the contents of this letter agreement to anyone
other than your spouse, legal counsel or financial advisor; provided, however, that they are first advised of the confidential nature of this letter
agreement and you obtain their agreement to be bound by the same. If you breach this provision, then you will forfeit any Retention Bonus and
you are otherwise liable for any damages sustained by the Company by such breach.
Permitted Disclosures. Pursuant to Section 1833(b) of the Defend Trade Secrets Act of 2016, you acknowledge that you will not have
criminal or civil liability under any federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a
suspected violation of law; or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under
seal. Nothing in this letter agreement is intended to conflict with Section 1833(b) of the Defend Trade Secrets Act of 2016 or create liability for
disclosures of trade secrets that are expressly allowed by such Section. Notwithstanding anything set forth in this letter agreement to the contrary,
you will not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making
other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor are you required to notify the
Company regarding any such reporting, disclosure or cooperation with the government.
Other Rights and Agreements. This letter agreement does not create any employment rights not specifically set forth herein. Your
employment remains at-will and can be terminated by the Company at any time and for any reason, with or without Cause. This letter agreement
contains the entire understanding of the Company and you with respect to the subject matter hereof.
No Effect on Severance and Other Benefits. This letter agreement will not affect your eligibility or entitlement to receive any benefits
payable to you on or in connection with the termination of your employment under any existing agreement between you and the Company or any
severance plan, program or policy maintained by the Company.
Binding Effect. This letter agreement will be binding on you and your executor, administrator and heirs, but may not be assigned by you.
This letter agreement may be transferred or assigned by the Company and will be binding on the transferee or assignee. This letter agreement will
automatically be transferred or assigned to and be binding upon any successor in interest to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
Counterparts. This letter agreement may be executed in separate counterparts (including by electronic signature), each of which is deemed
to be an original and all of which taken together constitute one and the same agreement.
Amendment. This letter agreement may be amended or revised only by written agreement signed by an authorized officer of the Company
and you.
Governing Law. This letter agreement will be construed, interpreted and the rights of the parties determined in accordance with the laws of
the Commonwealth of Pennsylvania.
[signature page follows]
|||
Accordingly, the parties have executed this letter agreement as of the date first above written.
TRIUMPH GROUP, INC.
By: /s/ Danielle Garrett___________________
Name: Danielle Garrett
Title: Sr. Director, HR People & Strategy
Agreed and Accepted:
_/s/ Jennifer Allen__________
Jennifer Allen
Exhibit 10.39
CONFIDENTIAL
Triumph Group, Inc.
555 E. Lancaster Avenue
Suite 400
Radnor, PA 19087
November 25, 2024
Thomas Quigley
152 Applegate Drive
West Chester, PA 19382
Dear Tom:
In recognition of your contributions and dedication to the continued success of Triumph Group, Inc. and its affiliates (collectively, the
“Company”) during a period in which it is critical for the Company to meet its strategic and financial objectives, we are pleased to offer you a
special retention bonus in an amount equal to $338,000.00 (the “Retention Bonus”).
The Retention Bonus will vest in two installments: (i) 50% of the Retention Bonus will vest nine (9) months following the date hereof
and (ii) the remaining 50% of the Retention Bonus will vest eighteen (18) months following the date hereof (each such date, a “Retention Date”);
provided that, you remain employed by the Company through the applicable Retention Date (except as set forth below).
If earned, the Company will, in its sole discretion, either (A) pay the applicable portion of the Retention Bonus in cash or (B) settle the
applicable portion of the Retention Bonus in a number of shares of common stock of Triumph Group, Inc. (“Shares”), in each case, as soon as
reasonably practicable following the applicable Retention Date but no later than thirty (30) days following the applicable Retention Date, subject
to any and all applicable withholding taxes and all other authorized payroll deductions in a manner as described further below. If the Company
elects to settle the applicable portion of the Retention Bonus in Shares, then the number of Shares to be issued to you will be determined by
dividing (1) the earned portion of the Retention Bonus by (2) the Fair Market Value (as defined below) of a Share on the settlement date; provided
that, Shares may be withheld by the Company to satisfy the amount of all required withholding obligations, as described further below. Any
fractional shares resulting from the foregoing calculation will be paid in cash. For purposes of this letter agreement, the “Fair Market Value” of a
Share will be the closing price of a Share in New York Stock Exchange Composite Transaction on the relevant date, or if no sale is made on that
date, the closing price of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which there was a sale.
Notwithstanding the foregoing, you will be paid any unpaid portion of the Retention Bonus if your employment is terminated by the
Company without Cause (as defined below) or you terminate your employment due to Good Reason (as defined below) prior to the final
Retention Date; provided that, you sign and return a release of claims in a form provided by the Company (the “Release”), and do not thereafter
revoke such Release. Any such payment will be made to you within sixty (60) days following the date of such termination of employment,
subject to any and all applicable withholding taxes and all other authorized payroll deductions.
For purposes of this letter agreement, “Cause” means: (1) your willful and continued failure (other than any such failure resulting from
(A) your incapacity due to physical or mental illness or (B) any such actual or anticipated failure after the issuance of a notice of termination by
you for Good Reason) to perform substantially the duties and responsibilities of your position with the Company; provided, however, that a
termination of employment will not be deemed to be for Cause under this clause (1) unless: (i) the Company has delivered to you a written notice
specifically identifying the manner in which you have not substantially performed such duties or responsibilities and states an intent to terminate
your employment for Cause within
|||
ninety (90) days of the latest such underlying action (or failure to act); (ii) your failure to cure such Cause event or events within thirty (30) days
after your receipt of such written notice and (iii) the Company delivers to you a notice of termination of employment for Cause within thirty (30)
days after the expiration of the 30-day cure period; (2) you are convicted by a court of competent jurisdiction or a plea of nolo contendere for
felony criminal conduct or a crime involving moral turpitude or (3) you willfully engage in fraud or dishonesty which is injurious to the Company
or its reputation, monetarily or otherwise. No act, or failure to act, on your part will be deemed “willful” unless committed or omitted by you in
bad faith and without reasonable belief that your act or failure to act was in, or not opposed to, the best interest of the Company.
For purposes of this letter agreement, “Good Reason” means the occurrence (without your express written consent) of: (i) a significant
adverse change or diminution in your authority, duties, responsibilities or reporting requirements or the assignment to you of any duties or
responsibilities which are inconsistent with such role or position(s) (including status, offices, titles, public company status and reporting
requirements), or any removal of you from, or any failure to reappoint or reelect you to, such position(s); (ii) a reduction of more than ten percent
(10%) in your total annual target compensation, other than pursuant to an across-the-board reduction in total annual target compensation which
applies to all similarly situated employees of the Company and any acquirer (and defining total annual target compensation for purposes of this
definition as base salary and target annual cash incentive compensation (and not including equity or equity-based compensation)); (iii) a material
reduction in the aggregate level of employee benefits offered to you under any pension, life insurance, medical, health, accident and disability
plans, or any retirement plan for which you is eligible or (iv) the Company requiring you to be based at an office that is greater than 35 miles from
where your office is then-located; provided, however, that your termination of employment will not be deemed to be for Good Reason unless: (1)
you have delivered to the Company written notice of intent to terminate for Good Reason within ninety (90) days of such occurrence, (2) you fail
to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (3) you deliver to the Company a notice of
termination of employment for Good Reason within thirty (30) days after the expiration of the 30-day cure period.
Additional Provisions
Withholdings. You agree and acknowledge that you authorize the Company, in its sole discretion, to satisfy any and all applicable
withholding obligations and payroll deductions by any of the means it deems appropriate; provided, however, that, if you are subject to Section 16
of the Exchange Act, then you may elect, in advance of any tax withholding event, to satisfy the amount of all required withholding obligations by
having the Company withhold from Shares to be issued upon payment of the applicable portion of the Retention Bonus that number of Shares
with a Fair Market Value on the applicable settlement date equal to the taxes required to be withheld at the maximum tax withholding obligation
in compliance with applicable law.
Section 409A. The parties intend for the payments and benefits under this letter agreement to be exempt from Section 409A of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) or, if not so exempt, to be paid or provided in a manner which complies with the
requirements of such section, and intend that this letter agreement will be construed and administered in accordance with such intention. For
purposes of Section 409A, each installment payment provided under this letter agreement will be treated as a separate payment. Notwithstanding
anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, (i) no amounts that are payable on account of your termination of employment will be paid to you until you have incurred a “separation
from service” from the Company within the meaning of Section 409A of the Code, (ii) amounts that would otherwise be payable that would
otherwise be provided pursuant to this letter agreement during the six-month period immediately following your separation from service will
instead be paid on the first business day after the date that is six (6) months following your separation from service (or death, if earlier)
|||
and (iii) any payments that are due within the “short-term deferral period” as defined in Section 409A of the Code will not be treated as deferred
compensation unless applicable law requires otherwise.
Confidentiality. You specifically understand and agree that the existence and terms of this letter agreement are strictly confidential and that
such confidentiality is a material term of this letter agreement. Accordingly, except as required by law or unless authorized to do so by the
Company in writing, you agree that you will not communicate, display or otherwise reveal any of the contents of this letter agreement to anyone
other than your spouse, legal counsel or financial advisor; provided, however, that they are first advised of the confidential nature of this letter
agreement and you obtain their agreement to be bound by the same. If you breach this provision, then you will forfeit any Retention Bonus and
you are otherwise liable for any damages sustained by the Company by such breach.
Permitted Disclosures. Pursuant to Section 1833(b) of the Defend Trade Secrets Act of 2016, you acknowledge that you will not have
criminal or civil liability under any federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a
suspected violation of law; or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under
seal. Nothing in this letter agreement is intended to conflict with Section 1833(b) of the Defend Trade Secrets Act of 2016 or create liability for
disclosures of trade secrets that are expressly allowed by such Section. Notwithstanding anything set forth in this letter agreement to the contrary,
you will not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making
other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor are you required to notify the
Company regarding any such reporting, disclosure or cooperation with the government.
Other Rights and Agreements. This letter agreement does not create any employment rights not specifically set forth herein. Your
employment remains at-will and can be terminated by the Company at any time and for any reason, with or without Cause. This letter agreement
contains the entire understanding of the Company and you with respect to the subject matter hereof.
No Effect on Severance and Other Benefits. This letter agreement will not affect your eligibility or entitlement to receive any benefits
payable to you on or in connection with the termination of your employment under any existing agreement between you and the Company or any
severance plan, program or policy maintained by the Company.
Binding Effect. This letter agreement will be binding on you and your executor, administrator and heirs, but may not be assigned by you.
This letter agreement may be transferred or assigned by the Company and will be binding on the transferee or assignee. This letter agreement will
automatically be transferred or assigned to and be binding upon any successor in interest to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
Counterparts. This letter agreement may be executed in separate counterparts (including by electronic signature), each of which is deemed
to be an original and all of which taken together constitute one and the same agreement.
Amendment. This letter agreement may be amended or revised only by written agreement signed by an authorized officer of the Company
and you.
Governing Law. This letter agreement will be construed, interpreted and the rights of the parties determined in accordance with the laws of
the Commonwealth of Pennsylvania.
[signature page follows]
|||
Accordingly, the parties have executed this letter agreement as of the date first above written.
TRIUMPH GROUP, INC.
By: _/s/ Danielle Garrett__________________
Name: Danielle Garrett
Title: Sr. Director, HR People & Strategy
Agreed and Accepted:
/s/ Thomas A. Quigley, III_______________
Thomas Quigley
Exhibit 10.40
CONFIDENTIAL
Triumph Group, Inc.
555 E. Lancaster Avenue
Suite 400
Radnor, PA 19087
November 25, 2024
Kai Kasiguran
606 Cheswold Court
Chesterbrook, PA 19087
Dear Kai:
In recognition of your contributions and dedication to the continued success of Triumph Group, Inc. and its affiliates (collectively, the
“Company”) during a period in which it is critical for the Company to meet its strategic and financial objectives, we are pleased to offer you a
special retention bonus in an amount equal to $275,600.00 (the “Retention Bonus”).
The Retention Bonus will vest in two installments: (i) 50% of the Retention Bonus will vest nine (9) months following the date hereof
and (ii) the remaining 50% of the Retention Bonus will vest eighteen (18) months following the date hereof (each such date, a “Retention Date”);
provided that, you remain employed by the Company through the applicable Retention Date (except as set forth below).
If earned, the Company will, in its sole discretion, either (A) pay the applicable portion of the Retention Bonus in cash or (B) settle the
applicable portion of the Retention Bonus in a number of shares of common stock of Triumph Group, Inc. (“Shares”), in each case, as soon as
reasonably practicable following the applicable Retention Date but no later than thirty (30) days following the applicable Retention Date, subject
to any and all applicable withholding taxes and all other authorized payroll deductions in a manner as described further below. If the Company
elects to settle the applicable portion of the Retention Bonus in Shares, then the number of Shares to be issued to you will be determined by
dividing (1) the earned portion of the Retention Bonus by (2) the Fair Market Value (as defined below) of a Share on the settlement date; provided
that, Shares may be withheld by the Company to satisfy the amount of all required withholding obligations, as described further below. Any
fractional shares resulting from the foregoing calculation will be paid in cash. For purposes of this letter agreement, the “Fair Market Value” of a
Share will be the closing price of a Share in New York Stock Exchange Composite Transaction on the relevant date, or if no sale is made on that
date, the closing price of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which there was a sale.
Notwithstanding the foregoing, you will be paid any unpaid portion of the Retention Bonus if your employment is terminated by the
Company without Cause (as defined below) or you terminate your employment due to Good Reason (as defined below) prior to the final
Retention Date; provided that, you sign and return a release of claims in a form provided by the Company (the “Release”), and do not thereafter
revoke such Release. Any such payment will be made to you within sixty (60) days following the date of such termination of employment,
subject to any and all applicable withholding taxes and all other authorized payroll deductions.
For purposes of this letter agreement, “Cause” means: (1) your willful and continued failure (other than any such failure resulting from
(A) your incapacity due to physical or mental illness or (B) any such actual or anticipated failure after the issuance of a notice of termination by
you for Good Reason) to perform substantially the duties and responsibilities of your position with the Company; provided, however, that a
termination of employment will not be deemed to be for Cause under this clause (1) unless: (i) the Company has delivered to you a written notice
specifically identifying the manner in which you have not substantially performed such duties or responsibilities and states an intent to terminate
your employment for Cause within
|||
ninety (90) days of the latest such underlying action (or failure to act); (ii) your failure to cure such Cause event or events within thirty (30) days
after your receipt of such written notice and (iii) the Company delivers to you a notice of termination of employment for Cause within thirty (30)
days after the expiration of the 30-day cure period; (2) you are convicted by a court of competent jurisdiction or a plea of nolo contendere for
felony criminal conduct or a crime involving moral turpitude or (3) you willfully engage in fraud or dishonesty which is injurious to the Company
or its reputation, monetarily or otherwise. No act, or failure to act, on your part will be deemed “willful” unless committed or omitted by you in
bad faith and without reasonable belief that your act or failure to act was in, or not opposed to, the best interest of the Company.
For purposes of this letter agreement, “Good Reason” means the occurrence (without your express written consent) of: (i) a significant
adverse change or diminution in your authority, duties, responsibilities or reporting requirements or the assignment to you of any duties or
responsibilities which are inconsistent with such role or position(s) (including status, offices, titles, public company status and reporting
requirements), or any removal of you from, or any failure to reappoint or reelect you to, such position(s); (ii) a reduction of more than ten percent
(10%) in your total annual target compensation, other than pursuant to an across-the-board reduction in total annual target compensation which
applies to all similarly situated employees of the Company and any acquirer (and defining total annual target compensation for purposes of this
definition as base salary and target annual cash incentive compensation (and not including equity or equity-based compensation)); (iii) a material
reduction in the aggregate level of employee benefits offered to you under any pension, life insurance, medical, health, accident and disability
plans, or any retirement plan for which you is eligible or (iv) the Company requiring you to be based at an office that is greater than 35 miles from
where your office is then-located; provided, however, that your termination of employment will not be deemed to be for Good Reason unless: (1)
you have delivered to the Company written notice of intent to terminate for Good Reason within ninety (90) days of such occurrence, (2) you fail
to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (3) you deliver to the Company a notice of
termination of employment for Good Reason within thirty (30) days after the expiration of the 30-day cure period.
Additional Provisions
Withholdings. You agree and acknowledge that you authorize the Company, in its sole discretion, to satisfy any and all applicable
withholding obligations and payroll deductions by any of the means it deems appropriate; provided, however, that, if you are subject to Section 16
of the Exchange Act, then you may elect, in advance of any tax withholding event, to satisfy the amount of all required withholding obligations by
having the Company withhold from Shares to be issued upon payment of the applicable portion of the Retention Bonus that number of Shares
with a Fair Market Value on the applicable settlement date equal to the taxes required to be withheld at the maximum tax withholding obligation
in compliance with applicable law.
Section 409A. The parties intend for the payments and benefits under this letter agreement to be exempt from Section 409A of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) or, if not so exempt, to be paid or provided in a manner which complies with the
requirements of such section, and intend that this letter agreement will be construed and administered in accordance with such intention. For
purposes of Section 409A, each installment payment provided under this letter agreement will be treated as a separate payment. Notwithstanding
anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, (i) no amounts that are payable on account of your termination of employment will be paid to you until you have incurred a “separation
from service” from the Company within the meaning of Section 409A of the Code, (ii) amounts that would otherwise be payable that would
otherwise be provided pursuant to this letter agreement during the six-month period immediately following your separation from service will
instead be paid on the first business day after the date that is six (6) months following your separation from service (or death, if earlier)
|||
and (iii) any payments that are due within the “short-term deferral period” as defined in Section 409A of the Code will not be treated as deferred
compensation unless applicable law requires otherwise.
Confidentiality. You specifically understand and agree that the existence and terms of this letter agreement are strictly confidential and that
such confidentiality is a material term of this letter agreement. Accordingly, except as required by law or unless authorized to do so by the
Company in writing, you agree that you will not communicate, display or otherwise reveal any of the contents of this letter agreement to anyone
other than your spouse, legal counsel or financial advisor; provided, however, that they are first advised of the confidential nature of this letter
agreement and you obtain their agreement to be bound by the same. If you breach this provision, then you will forfeit any Retention Bonus and
you are otherwise liable for any damages sustained by the Company by such breach.
Permitted Disclosures. Pursuant to Section 1833(b) of the Defend Trade Secrets Act of 2016, you acknowledge that you will not have
criminal or civil liability under any federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a
suspected violation of law; or that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under
seal. Nothing in this letter agreement is intended to conflict with Section 1833(b) of the Defend Trade Secrets Act of 2016 or create liability for
disclosures of trade secrets that are expressly allowed by such Section. Notwithstanding anything set forth in this letter agreement to the contrary,
you will not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making
other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor are you required to notify the
Company regarding any such reporting, disclosure or cooperation with the government.
Other Rights and Agreements. This letter agreement does not create any employment rights not specifically set forth herein. Your
employment remains at-will and can be terminated by the Company at any time and for any reason, with or without Cause. This letter agreement
contains the entire understanding of the Company and you with respect to the subject matter hereof.
No Effect on Severance and Other Benefits. This letter agreement will not affect your eligibility or entitlement to receive any benefits
payable to you on or in connection with the termination of your employment under any existing agreement between you and the Company or any
severance plan, program or policy maintained by the Company.
Binding Effect. This letter agreement will be binding on you and your executor, administrator and heirs, but may not be assigned by you.
This letter agreement may be transferred or assigned by the Company and will be binding on the transferee or assignee. This letter agreement will
automatically be transferred or assigned to and be binding upon any successor in interest to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
Counterparts. This letter agreement may be executed in separate counterparts (including by electronic signature), each of which is deemed
to be an original and all of which taken together constitute one and the same agreement.
Amendment. This letter agreement may be amended or revised only by written agreement signed by an authorized officer of the Company
and you.
Governing Law. This letter agreement will be construed, interpreted and the rights of the parties determined in accordance with the laws of
the Commonwealth of Pennsylvania.
[signature page follows]
|||
Accordingly, the parties have executed this letter agreement as of the date first above written.
TRIUMPH GROUP, INC.
By: /s/ Danielle Garrett___________________
Name: Danielle Garrett
Title: Sr. Director, HR People & Strategy
Agreed and Accepted:
/s/ Kai Kasiguran______________________
Kai Kasiguran
Exhibit 19.1
TRIUMPH GROUP, INC.
December 22, 2022
TO:
All Employees, Officers, Directors and Consultants
FROM:
Jennifer Allen, Chief Administrative Officer, Senior Vice President,
General Counsel and Secretary
SUBJECT:
Insider Trading Policy
Background
To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside
information, Triumph Group, Inc. (the “Company”) has adopted this Insider Trading Policy for our directors, officers, employees and
consultants with respect to the trading of the Company’s securities, as well as the securities of publicly traded companies with whom
we have a business relationship.
Federal and state securities laws prohibit the purchase or sale of a company’s securities by persons who are aware of material
information about that company that is not generally known or available to the public (referenced in this policy as “material
nonpublic information,” as explained in greater detail below). These laws also prohibit persons who are aware of such material
nonpublic information from disclosing this information to others who may trade. Companies and their controlling persons are also
subject to liability if they fail to take reasonable steps to prevent insider trading by company personnel.
It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be
severe. Both the U.S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange investigate and are very
effective at detecting insider trading. The SEC, together with the U.S. Attorneys, pursue insider trading violations vigorously. Cases
have been successfully prosecuted against trading by employees through foreign accounts, trading by family members and friends,
and trading involving only a small number of shares.
This policy is designed to prevent insider trading or allegations of insider trading, and to protect the Company’s reputation for
integrity and ethical conduct. It is your obligation to understand and comply with this policy. Should you have any questions
regarding this policy, please contact the Legal Department at the Company’s headquarters at jhallen@triumphgroup.com or 610-727-
6747.
Penalties for Noncompliance
Civil and Criminal Penalties. Potential penalties for insider trading violations include (1) imprisonment for up to 20 years, (2)
criminal fines of up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided.
2
Controlling Person Liability. If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have
“controlling person” liability for a trading violation, with civil penalties of up to the greater of $2 million and three times the profit
gained or loss avoided, as well as a criminal penalty of up to $25 million. The civil penalties can extend personal liability to the
Company’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.
Company Sanctions. Failure to comply with this policy may also subject you to Company-imposed sanctions, including dismissal for
cause, whether or not your failure to comply with this policy results in a violation of law.
Scope of Policy
Persons Covered. As a director, officer, employee or consultant of the Company or its subsidiaries, this policy applies to you. The
same restrictions that apply to you also apply to your family members who reside with you, anyone else who lives in your household
and any family members who do not live in your household but whose transactions in Company securities are directed by you or are
subject to your influence or control (such as parents or children who consult with you before they trade in Company securities). You
are responsible for making sure that the purchase or sale of any security covered by this policy by any such person complies with this
policy.
Companies Covered. The prohibition on insider trading in this policy is not limited to trading in the Company’s securities. It includes
trading in the securities of other firms, such as customers or suppliers of the Company and those with which the Company may be
negotiating major transactions, such as an acquisition, investment or sale. Information that is not material to the company may
nevertheless be material to one of those other firms.
Transactions Covered. Trading includes purchases and sales of stock, derivative securities whether or not issued by the Company,
such as put or call options, convertible debentures or preferred stock, and debt securities (debentures, bonds and notes). Trading also
includes certain transactions as follows:
·
Stock Option and Warrant Exercises. This policy’s trading restrictions generally do not apply to the exercise of a stock
option or a warrant. The trading restrictions do apply, however, to any sale of the underlying stock or to a cashless exercise
of the option or the warrant through a broker, as this entails selling a portion of the underlying stock to cover the costs of
exercise.
·
Restricted Stock Units and Performance Share Awards. This policy’s trading restrictions do not apply to the settlement of
restricted stock units or the vesting of performance shares, or the exercise of a tax withholding right pursuant to which you
elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the settlement of any
restricted stock units or the vesting of any performance shares. The trading restrictions do apply, however, to any market sale
of Company common stock received upon the settlement of restricted stock units or the vesting of performance shares.
3
·
Employee Stock Purchase Plan. This policy’s trading restrictions do not apply to purchases of Company stock in the
employee stock purchase plan resulting from your periodic payroll contributions to the plan under an election you made at
the time of enrollment in the plan. The trading restrictions do apply to your election to participate in the plan and to your
sales of Company stock purchased under the plan.
·
Gifts of Company Securities. This policy’s trading restrictions do not apply to bona fide gifts of securities, unless you have
reason to believe that the recipient intends to sell the Company securities while you are aware of material nonpublic
information (or otherwise subject to a blackout period under the addendum), or you are subject to the trading restrictions
specified in the addendum (in which case pre-clearance is required). Gifts of securities may include gifts to trusts for estate
planning purposes, as well as donations to a charitable organization. Whether a gift is “bona fide” may depend on various
circumstances surrounding the gift. Accordingly, you are encouraged to consult the General Counsel when contemplating a
gift.
Statement of Policy
No Trading on Inside Information. You may not trade in the securities of the Company, directly or through family members or other
persons or entities, if you are aware of material nonpublic information relating to the Company. Similarly, you may not trade in the
securities of any other company if you are aware of material nonpublic information about that company which you obtained in the
course of your employment with the Company.
No Tipping. You may not pass material nonpublic information on to others or recommend to anyone the purchase or sale of any
securities when you are aware of such information. This practice, known as “tipping,” also violates the securities laws and can result
in the same civil and criminal penalties that apply to insider trading, even though you did not trade and did not gain any benefit from
another’s trading.
No Exception for Hardship. The existence of a personal financial emergency does not excuse you from compliance with this policy.
Blackout and Pre-Clearance Procedures. To help prevent inadvertent violations of the federal securities laws and to avoid even the
appearance of trading on the basis of inside information, the Company’s board of directors has adopted an Addendum to Insider
Trading Policy that applies to directors, executive officers subject to Section 16 of the Securities Exchange Act of 1934 (“Section 16
officers”), and certain designated employees and consultants of the Company and its subsidiaries who have access to material
nonpublic information about the Company. The Company will notify you if you are subject to the addendum.
The addendum generally prohibits persons covered by it from trading in the Company’s securities during quarterly blackout periods
(beginning two weeks before the end of a quarter and ending after the first full business day following the release of the Company’s
earnings for that quarter) and during certain event-specific blackouts. Directors and Section 16 officers also must pre-clear all
transactions in the Company’s securities.
4
Definition of Material Nonpublic Information
Note that inside information has two important elements – materiality and public availability.
Material Information. Information is material if there is a substantial likelihood that a reasonable investor would consider it important
in deciding whether to buy, hold or sell a security. Any information that could reasonably be expected to affect the price of the
security is material. Common examples of material information are:
·
Projections of future earnings or losses or other earnings guidance.
·
Earnings that are inconsistent with the consensus expectations of the investment community.
·
A pending or proposed merger, acquisition or tender offer or an acquisition or disposition of significant assets.
·
A change in management.
·
Major events regarding the Company’s securities, including the declaration of a stock split or the offering of additional
securities.
·
A significant cybersecurity incident.
·
Severe financial liquidity problems.
·
Actual or threatened major litigation, or the resolution of such litigation.
·
New major contracts, orders, suppliers, customers or finance sources, or the loss thereof.
Both positive and negative information can be material. Because trading that receives scrutiny will be evaluated after the fact with the
benefit of hindsight, questions concerning the materiality of particular information should be resolved in favor of materiality, and
trading should be avoided.
Nonpublic Information. Nonpublic information is information that is not generally known or available to the public. One common
misconception is that material information loses its “nonpublic” status as soon as a press release is issued disclosing the information.
In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by a
press release or an SEC filing) and the investing public has had time to absorb the information fully. As a general rule, information is
considered nonpublic until after the first full trading day after the information is released. For example, if the Company announces
financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company securities is the opening of the
market on Wednesday (assuming you are not aware of other material nonpublic information at that time). However, if the Company
announces earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of the
market on Thursday.
5
Additional Guidance
The Company considers it improper and inappropriate for those employed by or associated with the Company to engage in short-term
or speculative transactions in the Company’s securities or in other transactions in the Company’s securities that may lead to
inadvertent violations of the insider trading laws. Accordingly, your trading in Company securities is subject to the following
additional guidance.
Short Sales. You may not engage in short sales of the Company’s securities (sales of securities that are not then owned), including a
“sale against the box” (a sale with delayed delivery).
Publicly Traded Options. You may not engage in transactions in publicly traded options, such as puts, calls and other derivative
securities, on an exchange or in any other organized market.
Standing Orders. Standing orders should be used only for a very brief period of time. A standing order placed with a broker to sell or
purchase stock at a specified price leaves you with no control over the timing of the transaction. A standing order transaction
executed by the broker when you are aware of material nonpublic information may result in unlawful insider trading.
Margin Accounts and Pledges. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material
nonpublic information or otherwise is not permitted to trade in Company securities, you may not hold Company securities in a margin
account or otherwise pledge Company securities as collateral for a loan.
Hedging Transactions. Certain forms of hedging or monetization transactions, such as collars, equity swaps, exchange funds and
forward sale contracts, involve the establishment of a short position in the Company’s securities and limit or eliminate your ability to
profit from an increase in the value of the Company’s securities. Therefore, you are prohibited from engaging in any hedging or
monetization transactions involving Company securities.
Post-Termination Transactions
This policy continues to apply to your transactions in Company securities even after you have terminated employment or other
services to the Company or a subsidiary as follows: if you are aware of material nonpublic information when your employment or
service relationship terminates, you may not trade in Company securities until that information has become public or is no longer
material.
Unauthorized Disclosure
Maintaining the confidentiality of Company information is essential for competitive, security and other business reasons, as well as to
comply with securities laws. You should treat all information you learn about the Company or its business plans in connection with
your employment as confidential and proprietary to the Company. Inadvertent disclosure of confidential or inside information may
expose the Company and you to significant risk of investigation and litigation.
The timing and nature of the Company’s disclosure of material information to outsiders is subject to legal rules, the breach of which
could result in substantial liability to you, the
6
Company and its management. Accordingly, it is important that responses to inquiries about the Company by the press, investment
analysts or others in the financial community be made on the Company’s behalf only through authorized individuals.
Please consult the Company’s communications policy for more details regarding the Company’s policy on speaking to the media,
financial analysts and investors.
Personal Responsibility
You should remember that the ultimate responsibility for adhering to this policy and avoiding improper trading rests with you. If you
violate this policy, the Company may take disciplinary action, including dismissal for cause.
Company Assistance
Your compliance with this policy is of the utmost importance both for you and for the Company. If you have any questions about this
policy or its application to any proposed transaction, you may obtain additional guidance from the Company’s Legal Department. Do
not try to resolve uncertainties on your own, as the rules relating to insider trading are often complex, not always intuitive and carry
severe consequences.
This policy is dated December 22, 2022 and supersedes any previous policy of the Company concerning insider trading.
7
TRIUMPH GROUP, INC.
December 22, 2022
TO:
Directors, Executive Officers and Designated Employees and Consultants
FROM:
Jennifer Allen, Chief Administrative Officer, Senior Vice President, General Counsel and Secretary
SUBJECT:
Addendum to Insider Trading Policy—Pre-clearance and Blackout Procedures
To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside
information, Triumph Group, Inc. (the “Company”) has adopted this Addendum to Insider Trading Policy. This addendum applies to
directors, executive officers subject to Section 16 of the Securities Exchange Act of 1934 (“Section 16 officers”) and certain
designated employees and consultants of the Company and its subsidiaries (“covered persons”) who have access to material
nonpublic information about the Company. The positions of the covered persons subject to this addendum are listed on attached
Schedule I. The Company may from time to time designate other individuals who are subject to this addendum and will amend the
list from time to time as necessary to reflect such changes or the resignation or change of status of any individual.
This addendum is in addition to and supplements the Company’s Insider Trading Policy.
Directors and Section 16 officers are also subject to additional procedures designed to address the two-day Form 4 filing
requirement under Section 16. These procedures are covered in a separate memorandum.
Even if you obtain a pre-clearance to trade and a blackout period is not in effect, at no time may you trade in Company securities if
you are in possession of material nonpublic information about the Company.
Pre-Clearance Procedures
The Company’s directors and Section 16 officers are covered by the following pre-clearance procedures.
Directors and Section 16 officers, together with their family members and other members of their household, may not engage in any
transaction involving the Company’s securities (including a stock plan transaction such as an option exercise, or a gift, loan, pledge or
hedge, contribution to a trust or any other transfer) without first obtaining pre-clearance of the transaction from the Company’s
General Counsel (the “compliance officer”). A request for pre-clearance should be submitted to the compliance officer at least two
business days in advance of the proposed transaction. Clearance of a transaction must be re-requested if the transaction order is not
placed within two business days of obtaining pre-clearance. The compliance officer is under no
8
obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade. If clearance is denied, the fact
of such denial must be kept confidential by the person requesting such clearance. The compliance officer himself or herself may not
trade in Company securities unless the CEO has approved the trade(s) in accordance with the procedures set forth in this addendum.
Blackout Procedures
All directors, Section 16 officers and covered persons are subject to the following blackout procedures.
Quarterly Blackout Periods. The Company’s announcement of its quarterly financial results almost always has the potential to have a
material effect on the market for the Company’s securities. Therefore, to avoid even the appearance of trading on the basis of
material nonpublic information, you may not trade in the Company’s securities during the period beginning two weeks prior to the
end of the quarter and ending after the first full business day following the release of the Company’s earnings for that quarter.
Persons subject to these quarterly blackout periods include the persons currently listed on Schedule I attached to this addendum and
all other persons who are informed by the compliance officer that they are subject to the quarterly blackout periods.
Interim Earnings Guidance and Event-Specific Blackouts. The Company may on occasion issue interim earnings guidance or other
potentially material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread
dissemination of the information. You should anticipate that trading will be blacked out while the Company is in the process of
assembling the information to be released and until the information has been released and fully absorbed by the market.
From time to time, an event may occur that is material to the Company and is known by only a few directors or executives. So long
as the event remains material and nonpublic, the persons who are aware of the event, as well as other persons covered by the quarterly
earnings blackout procedures, may not trade in the Company’s securities, as follows. The existence of an event-specific blackout will
not be announced, other than to those who are aware of the event giving rise to the blackout. If, however, a person whose trades are
subject to pre-clearance requests permission to trade in the Company’s securities during an event-specific blackout, the compliance
officer will inform the requesting person of the existence of a blackout period, without disclosing the reason for the blackout. Any
person made aware of the existence of an event-specific blackout should not disclose the existence of the blackout to any other
person. The failure of the compliance officer to designate a person as being subject to an event-specific blackout will not relieve that
person of the obligation not to trade while aware of material nonpublic information.
Even if a blackout period is not in effect, at no time may you trade in Company securities if you are aware of material nonpublic
information about the Company.
9
Hardship Exceptions. A covered person who is subject to a quarterly earnings blackout period and who has an unexpected and urgent
need to sell Company stock to generate cash may, in appropriate circumstances, be permitted to sell Company stock even during the
quarterly blackout period. Hardship exceptions may be granted only by the compliance officer and must be requested at least two
business days in advance of the proposed trade. A hardship exception may be granted only if the compliance officer concludes that
the Company’s earnings information for the applicable quarter does not constitute material nonpublic information. Under no
circumstance will a hardship exception be granted during an event-specific blackout period or to a director or Section 16 officer.
Exception for Approved 10b5-1 Plans
Trades by covered persons in the Company’s securities that are executed pursuant to an approved 10b5-1 plan are not subject to the
prohibition on trading on the basis of material nonpublic information contained in the Insider Trading Policy or to the restrictions set
forth above relating to pre-clearance procedures and blackout periods.
Rule 10b5-1 provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet
certain requirements. In general, a 10b5-1 plan must be entered into before you are aware of material nonpublic information. Once
the plan is adopted, you must not exercise any influence over the amount of securities to be traded, the price at which they are to be
traded or the date of the trade. The plan must either specify (including by formula) the amount, pricing and timing of transactions in
advance or delegate discretion on those matters to an independent third party.
The Company requires that all 10b5-1 plans be approved in writing in advance by the compliance officer. 10b5-1 plans generally
may not be adopted during a blackout period and may only be adopted before the person adopting the plan is aware of material
nonpublic information.
Post-Termination Transactions
If you are aware of material nonpublic information when you terminate employment or services, you may not trade in the Company’s
securities until that information has become public or is no longer material. In all other respects, the procedures set forth in this
addendum will cease to apply to your transactions in Company securities upon the expiration of any “blackout period” that is
applicable to your transactions at the time of your termination of employment or services.
Company Assistance
Your compliance with this addendum and the Company’s Insider Trading Policy is of the utmost importance both for you and for the
Company. If you have any questions about this addendum, the Insider Trading Policy or their application to any proposed
transaction, you may obtain additional guidance from the compliance officer.
10
Updated as of December 22, 2022
Schedule I
Addendum to Insider Trading Policy—Pre-clearance and Blackout Procedures
Board of Directors
Chief Executive Officer
Chief Financial Officer
Chief Administrative Officer & General Counsel
Chief Commercial Officer
Vice President, Execution Assurance
Vice President, Human Resources
Vice President, Integrated Supply Chain & Operations
Vice President, Strategy & Business Development
Manager, Staff Executive
Vice President, Investor Relations, Mergers & Acquisitions & Treasurer
Vice President, Controller
Vice President, Financial Planning & Analysis
Vice President, Tax
Director, Financial Analysis
Operating Company Presidents
Operating Company Directors, Finance
Exhibit 21.1
Subsidiaries of Triumph Group, Inc.
HT Parts, L.L.C.
Nu-Tech Brands, Inc.
Placas Termodinamicas, S. de R.L. de C.V.
SBP Holdings Limited
The Mexmil Holding Company, LLC
The Triumph Group Operations, Inc.
Triumph Actuation Systems - Connecticut, LLC
Triumph Actuation Systems - Isle of Man, Ltd.
Triumph Actuation Systems - UK, Ltd.
Triumph Actuation Systems - Valencia, Inc.
Triumph Actuation Systems - Yakima, LLC
Triumph Actuation Systems, LLC
Triumph Aerospace Operations UK, Ltd.
Triumph Aerospace Systems Group - UK LTD
Triumph Aerospace Systems Group, LLC
Triumph Aerostructures - Tulsa, LLC
Triumph Aerostructures Holdings, LLC
Triumph Aerostructures Vought Aircraft Technical Services (Chengdu) Co., Ltd.
Triumph Aerostructures, LLC
Triumph Aftermarket Services Group, LLC
Triumph Asia Services Ltd.
Triumph Aviations Inc.
Triumph Brands, Inc.
Triumph Composite Systems, Inc.
Triumph Controls (Europe) SAS
Triumph Controls - Germany GmbH
Triumph Controls - UK Ltd.
Triumph Controls France SAS
Triumph Controls, LLC
Triumph Engine Control Holdings, Inc.
Triumph Engine Control Systems, LLC
Triumph Engineered Solutions, Inc.
Triumph Engineering Services, Inc.
Triumph Fabrications - Orangeburg, Inc.
Triumph Gear Systems - Macomb, Inc.
Triumph Gear Systems - Toronto ULC
Triumph Gear Systems, Inc.
Triumph Group - Mexico Inmobiliaria, S. de R.L. de C.V.
Triumph Group - Mexico, S. de R.L. de C.V.
Triumph Group Acquisition Corp.
Triumph Group Acquisition Holdings, Inc.
Triumph Group Charitable Foundation
Triumph Group Holdings - Mexico, LLC
Triumph Group Holdings - UK, Ltd.
Triumph Group Investment - Mexico, LLC
Triumph Group Investments LLC
Triumph Group Luxembourg Finance S.a.r.l.
Triumph Group Luxembourg Holding S.a.r.l.
Triumph Instruments - Burbank, Inc.
Triumph Instruments, Inc.
Triumph Insulation Systems - Germany GmbH
Triumph Insulation Systems, LLC
Triumph Integrated Aircraft Interiors Inmobiliaria, S. de R.L. de C.V.
Triumph Integrated Aircraft Interiors, Inc.
Triumph Investment Holdings, Inc.
Triumph Metals Company
Triumph Precision Castings Co.
Triumph Real Estate - Mexico, LLC
Triumph Receivables, LLC
Triumph Structures - Kansas City, Inc.
Triumph Structures - Wichita, Inc.
Triumph Structures International, Ltd
Triumph Thermal Systems - Maryland, Inc.
Triumph Thermal Systems, LLC
Triumph Turbine Services, Inc.
Exhibit 22.1
The following subsidiaries of Triumph Group, Inc. are Subsidiary Guarantors with respect to the Senior Notes:
Guarantor
Jurisdiction
HT PARTS, L.L.C.
Delaware
NU-TECH BRANDS, INC.
Delaware
THE TRIUMPH GROUP OPERATIONS, INC.
Delaware
TRIUMPH ACTUATION SYSTEMS - CONNECTICUT, LLC
Delaware
TRIUMPH ACTUATION SYSTEMS - VALENCIA, INC.
Delaware
TRIUMPH ACTUATION SYSTEMS - YAKIMA, LLC
Delaware
TRIUMPH ACTUATION SYSTEMS, LLC
Delaware
TRIUMPH AEROSPACE SYSTEMS GROUP, LLC
Delaware
TRIUMPH AEROSTRUCTURES - TULSA, LLC
Delaware
TRIUMPH AEROSTRUCTURES HOLDINGS, LLC
Delaware
TRIUMPH AEROSTRUCTURES, LLC
Delaware
TRIUMPH AFTERMARKET SERVICES GROUP, LLC
Delaware
TRIUMPH AVIATIONS INC.
Pennsylvania
TRIUMPH BRANDS, INC.
Delaware
TRIUMPH COMPOSITE SYSTEMS, INC.
Delaware
TRIUMPH CONTROLS, LLC
Delaware
TRIUMPH ENGINE CONTROL HOLDINGS, INC.
Delaware
TRIUMPH ENGINE CONTROL SYSTEMS, LLC
Delaware
TRIUMPH ENGINEERED SOLUTIONS, INC.
Delaware
TRIUMPH ENGINEERING SERVICES, INC.
Delaware
TRIUMPH FABRICATIONS - ORANGEBURG, INC.
Illinois
TRIUMPH GEAR SYSTEMS - MACOMB, INC.
Michigan
TRIUMPH GEAR SYSTEMS, INC.
Delaware
TRIUMPH GROUP ACQUISITION CORP.
Delaware
TRIUMPH GROUP ACQUISITION HOLDINGS, INC.
Delaware
TRIUMPH INSTRUMENTS – BURBANK, INC.
Delaware
TRIUMPH INSULATION SYSTEMS, LLC
Nevada
TRIUMPH INTEGRATED AIRCRAFT INTERIORS, INC.
Delaware
TRIUMPH INVESTMENT HOLDINGS, INC.
Nevada
TRIUMPH STRUCTURES - KANSAS CITY, INC.
Missouri
TRIUMPH STRUCTURES - WICHITA, INC.
Delaware
TRIUMPH THERMAL SYSTEMS - MARYLAND, INC.
Delaware
TRIUMPH THERMAL SYSTEMS, LLC
Delaware
TRIUMPH TURBINE SERVICES, INC.
Delaware
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statements (Form S-8 No. 333-81665 and Form S-8 No. 333-134861) pertaining to the Amended and
Restated Directors’ Stock Option Plan of Triumph Group, Inc.,
(2)
Registration Statement (Form S-8 No. 333-192537) pertaining to the 2013 Employee Stock Purchase Plan of Triumph
Group, Inc.,
(3)
Registration Statement (Form S-8 No. 333-192538) pertaining to the 2013 Equity and Cash Incentive Plan of Triumph
Group, Inc.,
(4)
Registration Statement (Form S-8 No. 333-211676) pertaining to the Time-Based Restricted Stock Award Agreement of
Triumph Group, Inc.,
(5)
Registration Statement (Form S-8 No. 333-219486) pertaining to the 2016 Directors’ Equity Compensation Plan of
Triumph Group, Inc.,
(6)
Registration Statement (Form S-8 No. 333-226640) pertaining to the 2018 Equity Incentive Plan,
(7)
Registration Statement (Form S-8 No. 333-249980) pertaining to the Amended and Restated 2018 Equity Incentive Plan,
(8)
Registration Statement (Form S-3 No. 333-235454) pertaining to the resale of certain shares of common stock by Vought
Industries Inc., Master Defined Benefit Trust,
(9)
Registration Statement (Form S-3 No. 333-239-098) pertaining to the offer and sale of securities up to a proposed
aggregate offering price of $600,000,000 of Triumph Group, Inc., and
(10) Registration Statement (Form S-8 No. 333-273426) pertaining to the Amended and Restated 2018 Equity Incentive Plan
and the 2016 Directors’ Equity Compensation Plan of Triumph Group, Inc.
(11) Registration Statement (Form S-3 No. 333-280695) pertaining to the offer and sale of an indeterminate aggregate amount
of securities of Triumph Group, Inc.
of our reports dated May 28, 2025, with respect to the consolidated financial statements of Triumph Group, Inc. and the effectiveness
of internal control over financial reporting of Triumph Group, Inc. included in this Annual Report (Form 10-K) of Triumph Group,
Inc. for the year ended March 31, 2025.
/s/ Ernst & Young, LLP
Philadelphia, Pennsylvania
May 28, 2025
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
I, Daniel J. Crowley, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Triumph Group, Inc. (this "Report");
2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
Report;
3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this Report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the period covered by this Report based on such evaluation; and
d)
disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Dated: May 28, 2025
/s/ Daniel J. Crowley
Daniel J. Crowley
Chairman, President and Chief Executive Officer (Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
I, James F. McCabe, Jr., certify that:
1.
I have reviewed this Annual Report on Form 10-K of Triumph Group, Inc. (this "Report");
2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
Report;
3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this Report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the period covered by this Report based on such evaluation; and
d)
disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Dated: May 28, 2025
/s/ James F. McCabe, Jr.
James F. McCabe, Jr.
Senior Vice President, Chief Financial Officer (Principal Financial Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Triumph Group, Inc. (the "Company") for the year ended March 31, 2025, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Daniel J. Crowley, Chairman, President and Chief Executive Officer of the Company, and I,
James F. McCabe, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, to the best of our knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By:
/s/ Daniel J. Crowley
By: /s/ James F. McCabe, Jr.
Daniel J. Crowley
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
James F. McCabe, Jr.
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)
May 28, 2025
May 28, 2025
1
Exhibit 97.1
TRIUMPH GROUP, INC.
SUPPLEMENTAL EXECUTIVE OFFICER CLAWBACK POLICY
The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Triumph Group, Inc. (the
“Company”) believes that it is appropriate for the Company to adopt this Supplemental Executive Officer Clawback Policy (the
“Policy”) to be applied to the Executive Officers of the Company and adopts this Policy, as of November 2, 2023, to be effective as of
the Effective Date.
1.
Definitions
For purposes of this Policy, the following definitions shall apply:
a)
“Company Group” means the Company and each of its Subsidiaries, as applicable.
b)
“Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a person who served as
an Executive Officer at any time during the performance period for the Incentive-Based Compensation and that was
Received (i) on or after the Effective Date, (ii) after the person became an Executive Officer and (iii) at a time that the
Company had a class of securities listed on a national securities exchange or a national securities association.
c)
“Effective Date” means October 2, 2023.
d)
“Erroneously Awarded Compensation” means the amount of Covered Compensation granted, vested or paid to a person
during the fiscal period when the applicable Financial Reporting Measure relating to such Covered Compensation was
attained that exceeds the amount of Covered Compensation that otherwise would have been granted, vested or paid to
the person had such amount been determined based on the applicable Restatement, computed without regard to any
taxes paid (i.e., on a pre-tax basis). For Covered Compensation based on stock price or total shareholder return, where
the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the
information in a Restatement, the Committee will determine the amount of such Covered Compensation that constitutes
Erroneously Awarded Compensation, if any, based on a reasonable estimate of the effect of the Restatement on the stock
price or total shareholder return upon which the Covered Compensation was granted, vested or paid and the Committee
shall maintain documentation of such determination and provide such documentation to the NYSE.
e)
“Exchange Act” means the U.S. Securities Exchange Act of 1934.
f)
“Executive Officer” means each “officer” of the Company as defined under Rule 16a-1(f) under Section 16 of the
Exchange Act, which shall be deemed to include any individuals identified by the Company as executive officers
pursuant to Item 401(b) of Regulation S-K under the Exchange Act. Both current and former Executive Officers are
subject to the Policy in accordance with its terms.
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g)
“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures derived wholly or in part
from such measures and may consist of GAAP or non-GAAP financial measures (as defined under Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the Exchange Act), (ii) stock price or (iii) total shareholder return.
Financial Reporting Measures may or may not be filed with the SEC and may be presented outside the Company’s
financial statements, such as in Managements’ Discussion and Analysis of Financial Conditions and Result of
Operations or in the performance graph required under Item 201(e) of Regulation S-K under the Exchange Act.
h)
“Home Country” means the Company’s jurisdiction of incorporation.
i)
“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part
upon the attainment of a Financial Reporting Measure.
j)
“Lookback Period” means the three completed fiscal years (plus any transition period of less than nine months that is
within or immediately following the three completed fiscal years and that results from a change in the Company’s fiscal
year) immediately preceding the date on which the Company is required to prepare a Restatement for a given reporting
period, with such date being the earlier of: (i) the date the Board, a committee of the Board, or the officer or officers of
the Company authorized to take such action if Board action is not required, concludes, or reasonably should have
concluded, that the Company is required to prepare a Restatement, or (ii) the date a court, regulator or other legally
authorized body directs the Company to prepare a Restatement. Recovery of any Erroneously Awarded Compensation
under the Policy is not dependent on if or when the Restatement is actually filed.
k)
“NYSE” means the New York Stock Exchange.
l)
“Received”: Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the
Financial Reporting Measure specified in or otherwise relating to the Incentive-Based Compensation award is attained,
even if the grant, vesting or payment of the Incentive-Based Compensation occurs after the end of that period.
m) “Restatement” means a required accounting restatement of any Company financial statement due to the material
noncompliance of the Company with any financial reporting requirement under the securities laws, including (i) to
correct an error in previously issued financial statements that is material to the previously issued financial statements
(commonly referred to as a “Big R” restatement) or (ii) to correct an error in previously issued financial statements that
is not material to the previously issued financial statements but that would result in a material misstatement if the error
were corrected in the current period or left uncorrected in the current period (commonly referred to as a “little r”
restatement). Changes to the Company’s financial statements that do not represent error corrections under the then-
current relevant accounting standards will not constitute Restatements. Recovery of any Erroneously Awarded
Compensation under the Policy is not dependent on fraud or misconduct by any person in connection with the
Restatement.
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n)
“SEC” means the U.S. Securities and Exchange Commission.
o)
“Subsidiary” means any domestic or foreign corporation, partnership, association, joint stock company, joint venture,
trust or unincorporated organization “affiliated” with the Company, that is, directly or indirectly, through one or more
intermediaries, “controlling”, “controlled by” or “under common control with”, the Company. “Control” for this purpose
means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities, contract or otherwise.
2.
Recoupment of Erroneously Awarded Compensation
In the event of a Restatement, any Erroneously Awarded Compensation Received during the Lookback Period prior to the
Restatement (a) that is then-outstanding but has not yet been paid shall be automatically and immediately forfeited and (b) that has
been paid to any person shall be subject to reasonably prompt repayment to the Company Group in accordance with Section 3 of this
Policy. The Committee must pursue (and shall not have the discretion to waive) the forfeiture and/or repayment of such Erroneously
Awarded Compensation in accordance with Section 3 of this Policy, except as provided below.
Notwithstanding the foregoing, the Committee (or, if the Committee is not a committee of the Board responsible for the
Company’s executive compensation decisions and composed entirely of independent directors, a majority of the independent
directors serving on the Board) may determine not to pursue the forfeiture and/or recovery of Erroneously Awarded Compensation
from any person if the Committee determines that such forfeiture and/or recovery would be impracticable due to any of the following
circumstances: (i) the direct expense paid to a third party (for example, reasonable legal expenses and consulting fees) to assist in
enforcing the Policy would exceed the amount to be recovered (following reasonable attempts by the Company Group to recover such
Erroneously Awarded Compensation, the documentation of such attempts, and the provision of such documentation to the NYSE),
(ii) pursuing such recovery would violate the Company’s Home Country laws adopted prior to November 28, 2022 (provided that the
Company obtains an opinion of Home Country counsel acceptable to the NYSE that recovery would result in such a violation and
provides such opinion to the NYSE), or (iii) recovery would likely cause any otherwise tax-qualified retirement plan, under which
benefits are broadly available to employees of Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C.
411(a) and regulations thereunder.
3.
Means of Repayment
In the event that the Committee determines that any person shall repay any Erroneously Awarded Compensation, the Committee
shall provide written notice to such person by email or certified mail to the physical address on file with the Company Group for such
person, and the person shall satisfy such repayment in a manner and on such terms as required by the Committee, and the Company
Group shall be entitled to set off the repayment amount against any amount owed to the person by the Company Group, to require the
forfeiture of any award granted by the Company Group to the person, or to take any and all necessary actions to reasonably promptly
recoup the repayment amount from the person, in each case, to the fullest extent permitted under applicable law, including without
limitation, Section
4
409A of the U.S. Internal Revenue Code and the regulations and guidance thereunder. If the Committee does not specify a repayment
timing in the written notice described above, the applicable person shall be required to repay the Erroneously Awarded Compensation
to the Company Group by wire, cash or cashier’s check no later than thirty (30) days after receipt of such notice.
4.
No Indemnification
No person shall be indemnified, insured or reimbursed by the Company Group in respect of any loss of compensation by such
person in accordance with this Policy, nor shall any person receive any advancement of expenses for disputes related to any loss of
compensation by such person in accordance with this Policy, and no person shall be paid or reimbursed by the Company Group for
any premiums paid by such person for any third-party insurance policy covering potential recovery obligations under this Policy. For
this purpose, “indemnification” includes any modification to current compensation arrangements or other means that would amount to
de facto indemnification (for example, providing the person a new cash award which would be cancelled to effect the recovery of any
Erroneously Awarded Compensation). In no event shall the Company Group be required to award any person an additional payment
if any Restatement would result in a higher incentive compensation payment.
5.
Miscellaneous
This Policy generally will be administered and interpreted by the Committee, provided that the Board may, from time to time,
exercise discretion to administer and interpret this Policy, in which case, all references herein to “Committee” shall be deemed to
refer to the Board. Any determination by the Committee with respect to this Policy shall be final, conclusive and binding on all
interested parties. Any discretionary determinations of the Committee under this Policy, if any, need not be uniform with respect to
all persons, and may be made selectively amongst persons, whether or not such persons are similarly situated.
This Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, as it may be amended from time to time, and any related rules or regulations promulgated by the SEC or the NYSE,
including any additional or new requirements that become effective after the Effective Date which upon effectiveness shall be
deemed to automatically amend this Policy to the extent necessary to comply with such additional or new requirements.
The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent that any provision of this
Policy is found to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent
permitted and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to
applicable law. The invalidity or unenforceability of any provision of this Policy shall not affect the validity or enforceability of any
other provision of this Policy. Recoupment of Erroneously Awarded Compensation under this Policy is not dependent upon the
Company Group satisfying any conditions in this Policy, including any requirements to provide applicable documentation to the
NYSE.
The rights of the Company Group under this Policy to seek forfeiture or reimbursement are in addition to, and not in lieu of, any
rights of recoupment, or remedies or rights other than recoupment, that may be available to the Company Group pursuant to the terms
of any law, government regulation or
5
stock exchange listing requirement or any other policy, code of conduct, employee handbook, employment agreement, equity award
agreement, or other plan or agreement of the Company Group.
6.
Amendment and Termination
To the extent permitted by, and in a manner consistent with applicable law, including SEC and NYSE rules, the Committee may
terminate, suspend or amend this Policy at any time in its discretion.
7.
Successors
This Policy shall be binding and enforceable against all persons and their respective beneficiaries, heirs, executors, administrators
or other legal representatives with respect to any Covered Compensation granted, vested or paid to or administered by such persons or
entities.
TRIUMPH GROUP, INC.
SUPPLEMENTAL EXECUTIVE OFFICER
CLAWBACK POLICY
ACKNOWLEDGMENT, CONSENT AND AGREEMENT
I acknowledge that I have received and reviewed a copy of the Triumph Group, Inc. Supplemental Executive Officer Clawback
Policy (as may be amended from time to time, the “Policy”) and I have been given an opportunity to ask questions about the Policy
and review it with my counsel. I knowingly, voluntarily and irrevocably consent to and agree to be bound by and subject to the
Policy’s terms and conditions, including that I will return any Erroneously Awarded Compensation that is required to be repaid in
accordance with the Policy. I further acknowledge, understand and agree that (i) the compensation that I receive, have received or
may become entitled to receive from the Company Group is subject to the Policy, and the Policy may affect such compensation and
(ii) I have no right to indemnification, insurance payments or other reimbursement by or from the Company Group for any
compensation that is subject to recoupment and/or forfeiture under the Policy. Capitalized terms used but not defined herein have the
meanings set forth in the Policy.
Signed:
_________________________________________
Print Name:
_________________________________________
Date:
_________________________________________