Triumph Group, Inc.

Welcome to Triumph's fourth quarter and fiscal year 2022 results conference call. This call is being carried live on the internet. There is also a slide presentation included with the audio portion of the webcast. Please ensure that your pop-up blocker is disabled if you're having trouble viewing this slide presentation. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. In addition, please note that this call is the property of Triumph Group Incorporated and may not be recorded, transcribed, or rebroadcast without explicit written approval. I would now like to introduce Tom Quigley, Triumph's Vice President of Investor Relations and Controller, who will provide a brief opening statement.

Thank you. Good morning and welcome to our fourth quarter and fiscal 2022 earnings call. Today I'm joined by Dan Crowley, the company's chairman, president, and chief executive officer, and Jim McCabe, senior vice president and chief financial officer of Triumph. During our call, we'll be referring to the supplemental slides, which are posted on our website. Certain statements on this call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks. uncertainties, and other factors which may cause Triumph's actual results, performance, or achievements to be materially different from any expected future results, performance, or achievements expressed or implied in the forward-looking statements. Please note that Triumph's reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the press release, which can be found on our website at www.triumphgroup.com. The format of the call today will be slightly different. Dan will open with color on the quarter and operating environments. Then Jim will walk through the results for the quarter and year. Dan will then discuss actions we are taking to support revenue growth and deliver improved margin performance, with Jim returning to provide our outlook. Before opening up the Q&A, Dan, I'll turn it over to you.

Thanks, Tom. For the fourth quarter, Triumph delivered on our strategic commitments and generated positive free cash flow and strong margins for the second consecutive quarter in our core systems and support segment. And we did so in a challenging macro environment while positioning for increasing demand. Growth in our MRO and freighter end markets helped offset headwinds from Omicron and 787, along with timing delays in a small number of military and legacy structures programs that are expected to fully recover in early fiscal 2023. We have better clarity on near-term and multi-year OEM and MRO demands than we've had in the past two years. and we like what we see. All markets beyond wide-body commercial continue to improve and Triumph is positioned to realize the benefits of our diversification strategy. We are able to provide guidance for fiscal 23 that reflects increasing core revenue and improving profitability and cash flow. We will also provide color on our multi-year outlook that gives us confidence in a sustained aviation recovery. Triumph expands our profitability and cash flow year-over-year. We are maintaining our goal to double profitability over fiscal years 2022 to 2025, driven by improved OEM production rates, expanded MRO volumes, enhanced pricing from recent contract extensions, and lower cost structure as a result of our transformation. As we stabilize operations and our balance sheet, our focus is pivoting to growth. In the fiscal year, we secured over $2.2 billion in new orders across the company, which reinforces that our backlog has begun to grow. On slide three, I summarize the quarter's highlights. First, we generated free cash flow of $29 million, driven by our improving operations and reduced working capital. A more favorable sales mix yielded a 19% EBITDA margin in our systems and support segment, as the benefits of cost reductions and lean events flow to the bottom line. Like many of our peers, our organic sales declined slightly due to short-term order deferrals on commercial widebody and a few supply chain driven shipment delays, though partially offset by strong increases in MRO orders. We expect this temporary flat spot in the recovery to abate early in our fiscal 2023. That said, Our actions to mitigate supply chain constraints lessen the impact on Triumph as we partner with our customers and suppliers to ensure supply continuity and affordability. Despite the mentioned headwinds, sales in our Q4 in our OEM and MRO end markets are up 18% and 21% sequentially as compared to Q3. MRO part number inductions, a key measure of total volume coming into our shops, is up 34% quarter over quarter and 16% sequentially. Increased flight activity, especially in North America, is benefiting Triumph's commercial airline sales to operators, which are up 57% sequentially and 66% year over year. In our freighter segment, sales are up 60% sequentially and 9% year over year. Slide 4 depicts OEM and MRO sequential sales for both commercial and military segments. Notably, commercial OEM sales are stable, with increasing MRO sales driven by commercial transport and cargo, while military OEM sales are up on the strength of V-22 and CH-53K shipments, with similar increases in overall work on the C-17 and FAA-18 aircraft. Depending on the health of our supply chain, a vast majority of our 3,000 suppliers came through the pandemic and are now preparing for increased levels of production. While ongoing inflationary pressures impact fuel, freight, metallic products, and labor for both Triumph and our suppliers, whose purchase materials make up two-thirds of our cost of sales, we are focused on solutions, not excuses. We commenced senior-level discussions with our top 10 customers last year to get ahead of these challenges and held a supplier conference with over 240 suppliers in our Q4. Active communication, advanced forecasting, AI-based risk management, innovative staffing approaches, along with dual sourcing and disciplined price management will help us manage the current inflationary environment and coming ramp up. The war in Ukraine commenced during the quarter. Triumph suspended the small amount of business we do in Russia and Belarus, which totals less than one half of a percent in total sales. While the direct financial impact is not material to Triumph, we are closely monitoring the broader impacts across the global economy. The impacts of China lockdowns have been similarly small on Triumph revenue. So we are through the transitionary year that was fiscal 2022. and looking forward to a sustained recovery and the payoff for our transformation efforts. Before I share the actions Triumph is taking to drive revenue growth and improve margins over fiscal 23 to 25, let me turn the call over to Jim to cover our fourth quarter and fiscal year in more detail. Jim?