Triumph Group, Inc.

fiscal year 2023 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 are having trouble viewing the slide presentation. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist 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, Inc. 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, Mergers and Acquisitions, and Treasurer, who will provide a brief opening statement.

Thank you. Good morning and welcome to our second quarter fiscal 2023 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 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 the company's reconciliation of non-GAAP financial measures The comparable gap measures is included in the press release, which can be found on our website at triumphgroup.com. Dan, I'll turn it over to you.

Thanks, Tom. Earlier today, we reported our second quarter results for fiscal year 2023. Completing the first half of fiscal 2023 marks a long-anticipated inflection point for Triumph as we transition from years of cash use to positive cash flow in the second half of the year. In addition, we delivered solid organic growth driven by a backlog expanding at double digit rates as commercial volumes return. Supply chain constraints continue to be a headwind, leading to delays in sales in the quarter. This headwind was concentrated in our defense programs, but the active management of our supply chain has enabled us to mitigate the impact on Triumph. Our continued focus here, as well as our visibility in our backlog, and pipeline allows us to remain confident that we are able to achieve our current full-year guidance. Overall, our Q2 results were in line with our expectations, with pieces of our business exceeding them. More to come on that. On slide three, I summarized the quarter's highlights. First, we generated organic growth of 6 percent sequentially and 13 percent year-over-year driven by improving commercial OEM and MRO demand. Induction of parts for MRO stepped up 11% sequentially in Q2 as both narrow and wide-body flat hours recovered. As a result of supply chain shortages, Q2 margins were level with the prior year quarter and are expected to step up in our Q3 and Q4 sequentially with year-end shipments. We have a clear line of sight on parts availability, support, planned shipments, and maintain the high end of our revenue guidance. Backlog is up 11% as Triumph realizes the benefits of our diverse products and markets and customers. With a pipeline of over $11 billion in opportunities, strategic wins on new platforms, and increasing R&D expenditures on differentiating technologies, We anticipate strong revenue increases over our planning horizon of fiscal 24 to 28. We expect to be cash flow positive over the balance of fiscal 23 and beyond, with material reductions in past due backlog, inventory, and working capital anticipated in Q3 and Q4. Now, I'll provide my perspective on the industry and how it relates to Triumph, starting with the supply chain and then OEM rates. Triumph continues to proactively mitigate supply chain challenges, which has lessened the impact on Triumph relative to the market. Let me share what we're seeing and what we're doing. On build rates, Triumph has received firm purchase orders from the OEMs, which support our full-year outlook. We remain in close communications with the OEMs on out-year build rates to optimize our working capital levels. Supplier shortages resulted in deferred sales of approximately $22 million in Q2 and associated margins in cash. That said, our efforts to dual-source work from low-cost sources has softened but not fully mitigated shortages. We track supplier on-time and full, or OTIF, which is a measure of kit completeness so that top-level assemblies can be completed on time. OTIF was as low as 74% in April and has improved month over month to the mid-80s. We are focused on critical shortages, impeding deliveries, and anticipate achieving OTIF levels of greater than 90% by the end of the fiscal year, which supports our full-year guidance. Last year, we revised our policies to provide 24 months demand forecast to our primary suppliers as well as strategic order coverage beyond lead time to secure allocation to protect our most critical programs. While our suppliers are not yet achieving 100% on-time performance we expect, this incremental progress will enable Triumph to burn down approximately 40 million of past due backlog by the end of fiscal 23. Castings and foraging providers have been the largest sources of shortages. As such, we are expanding our additive manufacturing applications on items such as housings, actuators, and heat exchangers to reduce our long-term dependency on these long lead and capacity constrained sources. Our top supply chain priority remains to secure near-term delivery assurance to ensure we achieve our fiscal 23 revenue plan. We continue to partner with our customers and suppliers to ensure continuity and affordability. On the cost side, we continue to work with our suppliers to mitigate potential price increases while also sourcing from alternative suppliers with lower costs where possible. Along these lines, Triumph awarded contracts to new suppliers in India and Thailand in the quarter as these countries expand their investment in A&D. As a result, these increases have typically totaled less than 2% of sales and we expect any impact to be immaterial to our results. Prime's cost reduction plans go beyond our supply chain. We set a goal to generate $49 million in cost savings in fiscal 23, $42 million of which are related to internal costs. Year to date, we've generated $40 million in savings. Looking at OEM rates, the commercial aviation market continues to recover. although paced by the ability of suppliers to support desired ramp rates. Travel demand continues to strengthen. The global commercial fleet has returned to 91% of pre-COVID levels, with 96% of single-aisle aircraft and 74% of twin-aisle aircraft returned to active service. There were other encouraging signs in the quarter for the twin-aisle segment as Boeing booked orders for 60 twin-aisle aircraft including 16 787s from China Airlines. Further, Boeing resumed deliveries of the 787 in August, handing over nine in the quarter, while Airbus delivered 13 A350s in the quarter. We anticipate rate increases on the 787 to follow. This is welcome news given Triumph's substantial ship set content on these platforms, which includes the entire suite of hydraulics and actuation for the 787 landing gear system. We are currently delivering 787 at rate 2 to 2.5 per month, with a ramp to rate 4 anticipated early next year. Boeing forecasts a return to rate 5 in late calendar year 2023 and rate 10 in 2025. After large increases in OEM narrow body build rates from pandemic lows, the commercial OEMs recently delayed the next step up in production rates by six to nine months to let the supply chain catch up. Triumph had already lowered demand forecast for narrow body deliveries in our internal plants. Most of our plants are producing max components at 26 to 31 ship sets per month and 45 to 48 per month on the A320 family, which has been key to organic sales growth I mentioned. Engine delivery pushouts in Q2 on programs such as GE LEAP have already started to reverse as OEM supply chains catch up as a result of prudent slowdowns, which will benefit our second half of the year. Short-term increases in inventory are expected to burn off in our second half, benefiting free cash flow. While we look forward to even higher OEM rates, the recent rate stability and gradual supply chain recovery reinforce the bottom is in for our commercial and markets We look forward to providing our fiscal 24 revenue guidance with the latest OEM rate increase profiles. This macro backdrop, Triumph continues to see increasing demand across our markets as the aviation market recovers. Areas of strength include recovering OEM rates, strong MRO demand, and partnerships. Q2 saw our systems and support segment book to bill up 34% year over year, with Q2 bookings up 15%. This is primarily driven by increases in commercial OEM and MRO and markets, while military backlog was also up a more modest 4%. I'll touch on military more in a moment. Triumph's backlog growth is the best leading indicator of top and bottom line expansion. Across Triumph, backlog is up 10% year over year. with Boeing 737 backlog up 40%, F-35 up 60%, and the CH-53K backlog up in excess of 100%. MRO inductions are up as air transport and freight traffic expands, and we continue to progress to expand our market reach geographically, securing industry-leading aftermarket partnerships. We recently announced our partnership in the Middle East with Mubadala Senate, which will provide in-country access to the region's MRO markets and enable us to accelerate growth in engine accessory repairs. We expect this partnership to provide incremental sales starting early in fiscal 24. Beyond forecasted increases in demand, enhanced pricing from recent contract extensions are starting to cut in, especially where we are the design authority, which applies to about 70% of our products or where we are sole source, which is the case for 90% of our products, excluding our third-party MRO business. Taken together, our growing backlog and improving mix of OEM and aftermarket business support our goal of doubling profitability over fiscal years 2022 to 2025. Let me provide supporting facts on where we are on winning and how it affects our product mix. We set a goal in fiscal 21 to generate 25% of our revenue from new customers and solutions. Since that time, 40% of Triumph's awards are associated with new products and or new customers. Wins for the quarter totaling more than 200 million can be seen on slides four and five. These wins are driven by Triumph IP on a number of products, including airframe mounted gearboxes for the next gen military platforms, hydraulic control valves on future vertical lift helicopters, turboprop engine controls, thermal pump packs, and rotorcraft digital engine control upgrades. Priam's MRO businesses are growing, with new inductions up 26% year-over-year and recent awards across platforms in both military and commercial programs. New MRO customers added year-to-date include DHL Bahrain, Jetstar, BBAM aircraft leasing, Irish Air Corps, and Goodrich Foley, Alabama. The military market, which expanded during the COVID downturn, is stable with continued US government demand. While military sales were down in the quarter, backlog is up, bolstered by geopolitical events and subsequent FMS sales, including 96 AH-64s to Poland, 35 F-35s to Germany, and 24 F-35s to the Czech Republic. Additionally, we are experiencing resurgent orders for the M-777 Howitzer, a British vehicle towed artillery for which Triumph supplies magazine assembly components. Triumph is actively developing IP in support of new military platforms in the form of next generation gearboxes, valves, fuel pumps, actuators, landing gear systems, and vapor cycle cooling systems on multiple platforms currently under development. These upgrades are needed to address aircraft electrification, higher fuel efficiency demands, and the higher heat loads associated with electronic warfare. In the quarter, Triumph secured roles on the next-gen engines, the digital series fighters, and the Army's new helicopter platforms that will benefit our fiscal 24 to 28 planning horizon. Watch for triumph orders as OEM's prime awards for these new systems are announced. Fiscal 23 also marked an increase in the breadth of electric aircraft ventures beyond the eVTOL or air taxi space. We are actively engaged in five programs providing a mix of gearbox solutions, insulation, landing gear solutions, and actuation for freight, regional transport, and urban mobility segments. Landing gear, actuation, and gearbox components remain essential to electric aircraft, playing to Triumph's strengths. We'll share more information on these programs as they mature. Bottom line, despite short-term flat spots in commercial rates and timing issues caused by supply chain shortages, Triumph continues to deliver on our commitments to our customers and to meaningfully grow backlog. We remain on our path to value, through this dynamic A&D cycle. We kept our momentum going during the downturn and expanded our partnerships, products, and services, which are now forming the foundation for our future growth and margin expansion. Jim will now take us through results for the quarter in more detail. Jim?