Investor Overview June 2020 Forward Looking Statements This - - PowerPoint PPT Presentation

Investor Overview June 2020

2 TRIUMPH GROUP / INVESTOR OVERVIEW

Forward Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “project”, “may”, “will”, “should”, “could”, or similar words suggesting future outcomes or outlooks. These forward-looking statements include, but are not limited to, statements of expectations of or assumptions about strategic actions, objectives, expectations, intentions, aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth and profitability and earnings results. These statements are based on the current projections, expectations and beliefs of Triumph’s management. These forward looking statements involve known and unknown risks, uncertainties and other factors which could cause actual results to differ materially from any expected future results, performance or achievements, including, but not limited to, competitive and cyclical factors relating to the aerospace industry, dependence on some of Triumph’s business from key customers, requirements of capital, uncertainties relating to the integration of acquired businesses, general economic conditions affecting Triumph’s business segments, product liabilities in excess of insurance, technological developments, limited availability of raw materials or skilled personnel, changes in governmental regulation and oversight and international hostilities and terrorism. Further information regarding the important factors that could cause actual results, performance or achievements to differ from those expressed in any forward looking statements can be found in Triumph’s reports filed with the SEC, including in the risk factors described in Triumph’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

3 TRIUMPH GROUP / INVESTOR OVERVIEW

Company Overview

Global leader in manufacturing aircraft systems and components, repair and

• verhaul, and aerospace structures.

Two operating segments:

• Systems & Support
• Aerospace Structures

Market cap as of 5/28/20: $0.410B Shares

• utstanding:

51.9M FY’20 revenues: $2.9B FY’20 adjusted EPS: $2.71 Backlog as of 3/31/20: $3.2B

Our wide variety of capabilities and products helps our customers triumph over the most complex challenges in response to evolving industry requirements.

NYSE:TGI Headquarters: Berwyn, PA Incorporated: 1993 Fiscal year ending: March 31

4 TRIUMPH GROUP / INVESTOR OVERVIEW

FY20 Revenue Consolidated Highlights

Systems & Support ~$1.4B Aerospace Structures ~$1.6B

Commercial, 57% Military, 20% Business, 17% Regional, 5% Non-Aviation, 1%

Sales by Market (FY20) $2.9B

Systems & Support, 77% Aerospace Structures, 23%

Adjusted Operating Income (FY20) $209M

Business Unit Summary

5 TRIUMPH GROUP / INVESTOR OVERVIEW

Investment Considerations

Portfolio transformation of Triumph is on track for completion at end of FY 21, and cost reductions position us to manage the current crisis and return to positive financial results Broad range of design and manufacturing capabilities across a diverse set of platforms for next generation commercial aircraft products and mission critical military applications Well positioned on large volume mature platforms, new build derivatives and high growth military development programs Sole source supplier on numerous aircraft platforms Poised for market share recovery in high margin Systems and Support MRO Stable balance sheet and liquidity provide financial flexibility to manage current crisis

6 TRIUMPH GROUP / INVESTOR OVERVIEW

Systems & Support

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

7 TRIUMPH GROUP / INVESTOR OVERVIEW

Systems & Support Profile

Recent Performance

$1.4B Sales – Production/MRO 60%/40% ~16% EBITDAP Margin –Production/MRO 45%/55% Solid Cash Generation

Near-Term Expectations

Commercial impacts: Production 30-35% lower MRO 45-55% lower

Hold margin % through cost reductions Cash Conservation

Longer-Term View

Recovery to FY20 levels Margin expansion to prior targets of ~19% Reinvestment in

• perations and

R&D Sales by End Market

Commercial Military Other

End Market EBITDAP consistent with Sales Profile Stable Military End Market Strategy to Recapture Aftermarket

Diversity of Offerings Across Various Platforms and End Markets

8 TRIUMPH GROUP / INVESTOR OVERVIEW

Systems & Support

Integrated solutions, including design, development, and support of components, systems and sub-systems

• Boeing
• Sikorsky
• Airbus
• Lockheed Martin

Products & Services Major Customers Business Overview

$1.4B Revenue (FY20) 17 Locations

Commercial, 56% Military, 33% Business, 5% Regional, 3% Non-Aviation, 3%

Sales by Market Overview Capabilities

Actuation & Controls Gear Systems Mechanical Solutions Electronics & Controls

Excludes Intercompany Sales and Contract Liability Amortization

Structural Component Repair Interior Refurbishment Accessory Component Repair

9 TRIUMPH GROUP / INVESTOR OVERVIEW

Aerospace Structures

Extensive capabilities to engineer complex composite aerostructures

10 TRIUMPH GROUP / INVESTOR OVERVIEW

Recent Performance

$1.6B Sales – declining with divestitures and sunsetting programs ~7% EBITDAP Margin – eliminated prior volatility Cash using programs & advance liquidations;

• ffset by stable core

Near-Term Expectations

Commercial impacts: Production 30-35% lower

Complete work transfers and exit of all loss making programs Hold margin % through cost reductions

Longer-Term View

Right-size operations for future state Margin expansion to prior targets of ~10% Complete Exit of Large Structures Operations

Sales by End Market

Commercial Business Jet Military

Aerospace Structures Profile

Reducing Cost Structure to Improve Efficiency and Accelerate Exits

Sunsetting programs complete in FY 21; including 30% stepdown from FY 20 levels

• Accelerated transfer of G280 (July)

Stable Military End Market Stable 767 program post transfer Transferring G650 Wing Kit back to GAC expected by end of Q1

11 TRIUMPH GROUP / INVESTOR OVERVIEW

Aerospace Structures

TAS provides fully integrated, turn-key composite and metallic major assemblies, and interior system solutions employing the latest product development and manufacturing tools, processes and software to its diverse portfolio of commercial and military customers.

• Boeing
• Gulfstream
• Airbus
• Northrup Grumman

Products & Services Major Customers Business Overview

$1.5B Revenue (FY’20) 15 Locations

Overview Capabilities

Fuselage Nacelle Products Empennage

Commercial, 58% Military, 8% Business, 28% Regional, 6%

Sales by Market

Fuselage Panels Insulation Blankets Ducting Composites Aircraft Wings

Excludes Intercompany Sales and Contract Liability Amortization

12 TRIUMPH GROUP / INVESTOR OVERVIEW

Top Programs in Backlog

Systems & Support Aerospace Structures

Airbus A320, A321 Boeing 737 Boeing 787 Boeing IDS V-22 Boeing AH-64 Sikorsky UH60 Boeing IDS CH-47 Lockheed Martin C-130 Boeing F-18 Sikorsky CH53

Represents 54% of Systems & Support backlog

Boeing 767 Gulfstream G650 Boeing 787 Boeing 737 Boeing 747 Boeing 777 Airbus A350 Boeing IDS V-22 NG RQ-4 Global Hawk Gulfstream G280

Represents 86% of Aerospace Structures backlog

13 TRIUMPH GROUP / INVESTOR OVERVIEW

Factors Supporting Aviation Recovery

Early Signs of Recovery Support Forecast Confidence

Up 8% since 4/12

• 1,800 since 4/24

Up 20% last 30d

Defense OEM Production US Airline Liquidity Daily Flights

Up 100% in US last 30d

Ticket Volume Parked Aircraft Load Factors Utilization

Improved payments +$40B Since Feb 26th Up 20% last 30d Confirmed OEM Rates

Analysis above through May 28, 2020

14 TRIUMPH GROUP / INVESTOR OVERVIEW

Triumph Platform Diversity

Stable Base, Positioned for Growth

Single Largest Program Strong Key Segment CTS-800

New Com. Platforms New Mil. Platforms Thermal Systems Next Gen Designs

Accelerating

KC-46 & 767 Stable Cargo Carriers MRO Military MRO Military Upgrades

777X and A321XLR 100% IP Driven Active Engagements T-7A, MQ-25 and FVL

• Mil. Fuel Pumps
• Mil. AMAD
• Mil. Thermal System
• Mil. Landing Gear
• Thermoplastics
• C-17 Nacelles, TR’s
• F18 AMAD’s
• T-700 Engine Control
• V-22 PCA’s
• CH-47 Fuel System
• AH-64 Thermal Sys.

15 TRIUMPH GROUP / INVESTOR OVERVIEW

Consolidated Quarterly Results

($ in millions) FY’20 Q4 FY’19 Q4 Net Sales $693 $869 Operating Profit/(Loss) (40) (189) Operating Margin (6)% (22)% Adjusted Operating Income* $44 $64 Adjusted Operating Margin 6% 7%

*See Appendix for Non-GAAP reconciliation

Ÿ Organic sales decrease of (6)%

− Decrease across both business units due to 737 MAX

Ÿ FY’20 Q4 Adjusted operating income excludes:

− $66M goodwill impairment − $2M loss on sale of assets and businesses − $11M restructuring costs

Ÿ FY’19 Q4 Adjusted operating income excludes:

− $217 loss on sale of assets and businesses − $23M forward loss charges − $13M restructuring costs

Stable Adjusted Margins Despite Market Headwinds

16 TRIUMPH GROUP / INVESTOR OVERVIEW

Free Cash Flow Walk

Full Year FY’20 Cash Drivers

FY 20 Free

• ($60M) of advance liquidation
• ($18M) in restructuring costs
• ($60M) funding on G280 program loss

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

Significant Year-Over-Year Improvement in Cash Flow; Cash Flow Positive

Consolidated ($ in millions) FY’20 Q4 FY’20 Full Year Net loss $ (72) $ (25) Non-cash items: Depreciation & Amortization 34 138 Goodwill Impairment 66 66 Interest Expense & Other 26 122 Amortization of Acquired Contracts (19) (75) Loss on divestitures 1 57 Pension Expense 17 20 OPEB Income (2) (59) Income Tax (benefit) Expense (9) 3 Cash uses: Working Capital Change 55 (37) Interest Payments (38) (99) Capital Expenditures (12) (40) OPEB Payments (2) (10) Tax Payments, net (4) Free Cash flow/(Use) $ 45 $ 57

17 TRIUMPH GROUP / INVESTOR OVERVIEW

Net Debt & Liquidity

($ in millions) FY’20 Q4

Solid Liquidity Secured through Strong Bank Support and Cash Flow Stabilization Actions

Cash $ (485) $600M Revolving Credit Facility 400 $75M Receivable Securitization Facility 75 Capital Leases 24 2014 Senior Notes Due 2022 300 2019 Senior Notes Due 2024 525 2017 Senior Notes Due 2025 500 Net Debt $ 1,339 Ÿ Cash and Availability ~ $568M Ÿ Senior Secured Leverage Ratio ~1.9x vs. 3.50x Ÿ First Lien Leverage Ratio ~0.3x vs. 2.50x Ÿ Interest Coverage Ratio ~3.2x vs. 2.75x

Sufficient liquidity through year end, even with no further contractual, divestiture or financing actions

18 TRIUMPH GROUP / INVESTOR OVERVIEW

Concluding Remarks

• Entered FY21 with positive YOY momentum
• FY20 results demonstrated benefits of multi-year transformation
• Focused on Protecting our People and Company during historic pandemic
• Rapidly right-sizing Triumph to reflect post-crisis reality
• OEM rates provide safety net with strong defense opportunities
• Actions from Structure Strategic Review on track to finish in FY21

19 TRIUMPH GROUP / INVESTOR OVERVIEW

Our Vision

As One Team, we enable the safety and prosperity of the world.

Our Mission

We partner with our customers to triumph over their hardest aerospace, defense and industrial challenges, to deliver value to our stakeholders.

Our Values

Integrity Continuous Improvement Teamwork Innovation Act with Velocity

20 TRIUMPH GROUP / INVESTOR OVERVIEW

Appendix

21 TRIUMPH GROUP / INVESTOR OVERVIEW

Supplemental Data

Pension/OPEB Analysis ($ in millions) FY’21 FY’20 Pension Expense (Income) ^ ≈ ($32) ≈ ($45) OPEB Expense (Income) ^ ≈ ($10) ≈ ($10) ^ Excludes impact from one-time adjustments such as curtailments, settlements or special termination benefits.

• Est. required contributions ($ in millions)

Pension OPEB Fiscal 2021 ≈ $2 ≈ $5 Fiscal 2022 ≈ $82 < $1 Fiscal 2023 ≈ $91 < $1 Fiscal 2024 ≈ $86 < $1 Fiscal 2025 ≈ $70 < $1

22 TRIUMPH GROUP / INVESTOR OVERVIEW

Non-GAAP Disclosure

Three Months Ended March 31, Year Ended March 31, 2020 2019 2020 2019

Operating (loss) income - GAAP $ (35,549 ) $ (189,197 ) $ 62,660 $ (274,679 ) Adjustments: Adoption of ASU 2017-07 — — — 87,241 Loss on sale of assets and businesses, net 1,726 217,464 56,916 235,301 Goodwill impairment 66,121 — 66,121 — Global 7500 forward loss charge — — — 60,424 E2 Jet program forward loss charge — (3,700 ) — 5,462 G280 program forward loss charge — 26,548 — 29,064 Reduction of prior Gulfstream forward loss — — — (7,624 ) Restructuring costs 11,850 12,892 25,340 31,098 Legal judgment gain, net of expenses — — (9,257 ) — Union incentives — — 7,071 — Adjusted operating income - non-GAAP $ 44,148 $ 64,007 $ 208,851 $ 166,287

Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring expenses, gains/losses on divestitures, defined benefit plan gains/losses from curtailments, settlements, etc; impairments of goodwill and other assets. Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation. The following table reconciles our Operating income to Adjusted Operating income as noted above.

23 TRIUMPH GROUP / INVESTOR OVERVIEW

Non-GAAP Disclosure

Non-GAAP Financial Measure Disclosures (continued) (dollars in thousands)

FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES

Three Months Ended March 31, Year Ended March 31, 2020 2019 2020 2019

Cash flow provided by (used in) operations $ 57,365 $ 4,063 $ 96,653 $ (158,254 ) Less: Capital expenditures (12,584 ) (12,276 ) (39,834 ) (47,099 ) Free cash flow (use) $ 44,781 $ (8,213 ) $ 56,819 $ (205,353 )

Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.

24 TRIUMPH GROUP / INVESTOR OVERVIEW

Non-GAAP Disclosure

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 earning releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our net loss before interest, income taxes, amortization of acquired contract liabilities, legal settlements, loss on divestitures, depreciation and amortization; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension expense or benefit, including the effects of curtailments, settlements, and other early retirement incentives. 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 net loss. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net loss the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under U.S. GAAP and should not be considered as a measure of liquidity, as an alternative to net loss, 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 net loss. In addition, we urge investors and potential investors in

• ur securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to net loss 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 net loss 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 non-cash charges, such as depreciation and amortization, and non-operating 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.

25 TRIUMPH GROUP / INVESTOR OVERVIEW

Non-GAAP Disclosure, continued

Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using these non-GAAP financial measures as compared with net loss from continuing 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
• f operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to
• ur operations.
• Legal judgments and settlements, when applicable, may be useful for investors to consider because it reflects gains or losses from

disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our

• perations.
• Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of the adoption of

ASU 2017-07 and certain pension related transactions such as curtailments, settlements, 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

• f returns on the plan's assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses)

necessarily reflect the current and ongoing cash earnings related to our operations.

• Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the

fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and

• ngoing cash earnings related to our operations.
• Amortization expense (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 tradenames, 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.

• 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

• perating cost structure.

26 TRIUMPH GROUP / INVESTOR OVERVIEW

Non-GAAP Disclosure, continued

• The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or
• utflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day
• perating 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

• ur business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day
• perating performance of our business.

Management compensates for the above-described limitations of using non-GAAP measures only to supplement our U.S. 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 net loss for the indicated periods (in thousands):

Fiscal year ended March 31, 2020 2019 2018

Net loss (U.S. GAAP measure) $ (25,379 ) $ (321,767 ) $ (425,391 ) Legal judgment gain, net of expenses (9,257 ) — — Loss on sale of assets and businesses, net 56,916 235,301 30,741 Adoption of ASU 2017-07 — 87,241 — Amortization of acquired contract liabilities (75,286 ) (67,314 ) (125,148 ) Depreciation and amortization* 204,289 149,904 693,595 Interest expense and other 122,129 114,619 99,442 Curtailments, settlements and early retirement incentives (14,293 ) 4,165 (25,722 ) Union represented employee incentives 7,071 — — Income tax expense (benefit) 3,051 (5,426 ) (36,457 ) Adjusted EBITDA (non-GAAP measure) $ 269,241 $ 196,723 $ 211,060 Non-service defined benefit income (excluding settlements) (27,601 ) (66,270 ) (77,512 ) Adjusted EBITDAP (non-GAAP measure) $ 241,640 $ 130,453 $ 133,548

* - Includes impairment charges related to intangible assets