Triumph Group, Inc.

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 one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Thomas A. Quigley III, Vice President of Investor Relations.

Please go ahead. Thank you. Good morning and welcome to our second quarter fiscal 2024 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. As we review the financial results for the quarter, please refer to the presentation posted on our website this morning. We will be discussing our adjusted results. Our adjustments and any reconciliation of non-GAAP financial measures to comparable GAAP measures are explained in the earnings press release and in the presentation. 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. Dan, I'll turn it over to you.

Hey, thanks, Tom. Triumph closed the first half of fiscal year 2024 with expanding backlog, sales, and margins as we focus on profitable growth and building on our success in the aftermarket. We are entering the second half of the year from a position of strength and raising our fiscal 2024 sales, earnings, and cash guidance. Our year-to-date performance, increasing commercial aircraft build rates, and growth in defense spending supports our updated outlook for the year. During the second quarter, we met or exceeded our expectations, delivering strong sales and our sixth consecutive quarter of year-over-year growth, as well as predictable profitability. Our deleveraging plan is on track, including over $60 million in debt reduction since the start of the fiscal year, which will yield approximately $5 million in annualized interest savings. As I reflect on the quarter, I'm pleased with our ability to execute on our short-term performance targets and remain very excited about the long-term financial and operational opportunities for Triumph. In particular, our performance serves as evidence that we continue to accelerate our future towards the targets we discussed at our September Investor Day. Turning to slide three, I'll summarize the highlights for the quarter. Year-over-year organic sales growth was 16%. driven by improving MRO demand, accelerated above Q1's 14% growth, and above our original guidance. Aftermarket sales increased year over year, accounting for a robust 43% of our Q2 sales, roughly double since the start of our restructuring. Recall our interiors business started the year slow, with slower ramps in sales, supply chain delays, inflationary pressures, and unfavorable foreign exchange headwinds. The team began executing on our recovery plans and exited September at breakeven on increasing volumes and growing backlog. And last, we grew our total company backlog by 15% above market growth rates as Triumph benefits from strong representation across a broad array of platforms, customers, and end markets. We continue to benefit from growing commercial travel demand, up 28% through August year-over-year, and increased MRO demand as aircraft return from peak summer use, commercial transport aircraft new orders more than 2,000 year-to-date, and planned OEM rate step-ups. Book to bill is 1.37 year-to-date, and $1.8 billion of reportable backlog is up 16% year-over-year, even as past due backlog has been driven down by 17 million or about 18% this fiscal year to date. In the military market, there is a robust U.S. defense budget in place and expectations for it to remain at similar levels for the next few years. Given multiple regional conflicts, budgets are likely to grow beyond current forecasts. Triumph is currently engaged in an unprecedented number of military OEM opportunities, including over 30 classified RFPs year-to-date. We are in discussions on hydraulic systems, fuel pumps, landing gear systems, thermal systems, gearboxes, door actuation, and more, all driven by expanding Triumph intellectual property. In Q2, Triumph's commercial OEM shipments were up 17% year-over-year, while commercial aftermarket revenues rose 48% year-over-year. Military OEM sales were consistent with prior year, while military MRO rose 24% year-over-year on the strength of many programs, led by V-22 pylon conversion actuators. As we shared at a recent Investor Day, Triumph enjoys significant content on Boeing 787 aircraft with just over $1 million in ship set value, benefiting both the OEM and MRO sales across six Triumph factories. This is a great aircraft with more than 1,800 orders since 2013 and a backlog of nearly 800 aircraft, 235 of which were ordered in 2023. So demand is robust and Boeing is working to increase rate as rapidly as possible. Orders in our portal support the move to rate 5.3 per month in our fiscal year, up nearly two times from the start of our year, and 787 shipments for the second quarter were up 142%. We also anticipate emerging sustainment requirements for the 787, as the oldest aircraft in this fleet are just beginning to exceed 10 years in service. As these aircraft enter their landing gear maintenance cycle, Triumph will begin overhauling increasing numbers of our landing gear actuation components, including extend and retract actuation, truck positioning, nose wheel steering, and door actuation. New wins for the quarter included CH-47 engine controls, a UH-60 gear package, and an accessory repair package for Atlas Air, as well as personal service units, crew seats, and starters for Delta Airlines. While only 10% of our sales performance at our interiors business remains the focus area, as an unfavorable sales mix driven by OEM delays and supplier shortages, along with margin impacts from inflationary pressures on materials and labor and foreign exchange changes, created headwinds to start the fiscal year. We're running additional Triumph operating system lean events to offset these external headwinds, and we're starting to see positive developments. These include events to drive down cycle time and improve efficiencies and productivity. As production demand increases, we are working closely with our customers to de-risk the supply chain by securing alternate sources where necessary to keep costs competitive and to insourcing more work as rates continue to ramp, which will provide added absorption benefits. Interiors is on a path to recover to mid to high single-digit margins this fiscal year and to enhance the confidence in their long-term earnings targets. Value pricing remains a key strategy that triumph is deploying towards our margin expansion goals. This includes the implementation of our expanded commercial playbook, expanding our commercial risk reviews, and implementing new processes. Given the evolving market environment, this has included exploring shorter duration supplier and customer contracts, incorporating inflation clauses tied to indices or specific material pass-through clauses and focusing on aftermarket premiums and market access. Previously, we highlighted that 80% of our contracts have terms of six years or less, providing a near constant flow of opportunities to optimize value based on our technical solutions, capabilities, and IP. And our recent wins include examples of these efforts. We remain on track with the pricing objectives laid out during the recent investor day. Jim will now take us through our second quarter results and updated outlook for fiscal 2024. Jim?