If it's between nose and tail, Triumph Group's got it covered. Triumph's companies design, engineer, manufacture, repair, and overhaul a myriad of aerostructures, and aircraft components and systems for customers that include commercial, general, and military original and aftermarket equipment manufacturers. The company has three operating segments including Aerospace Systems; Aftermarket Services (maintenance, repair, and overhaul); and Aerostructures (makes metallic and composite aerostructures and structural components). It operates through nearly 65 facilities around the world.
Triumph operates through almost 45 specialized manufacturing companies serving under its three operating segments. Its Aerostructures segment is its most lucrative, accounting for 70% of the company's total sales each year. Other segments include Aerospace Systems (17%) and Aftermarket Services (8%).
Military and defense represents more than one-third of sales for this segment, putting it at the mercy of the US Department of Defense and its fickle annual budget. The US government's funding cuts on new equipment may necessitate repairing and maintaining existing mission aircraft for longer life. Triumph has shifted its sales mix to mitigate market fluctuations that affect commercial and business aviation, as well as government budget restraints that may affect military aviation.
Sales and Marketing
US customers account for the majority of sales; Boeing is at the top of the list, generating around 45% of Triumph's total sales.
Triumph has enjoyed impressive growth over the years. Revenues jumped 2% from $3.7 billion in 2013 to peak at a record-setting $3.76 billion in 2014. Profits fell 30% from $297 million in 2013 to $206 million in 2014 due to about $754 million it paid in acquisition-related costs.
The growth for 2014 was sparked by a 42% increase in Aerospace Systems driven by organic growth and additional revenue from an acquisition. The growth was partially offset by a 6% decline in its Aerostructures segment driven by lower organic sales due to production rate cuts. Triumph also experienced a 9% decline in its Aftermarket Services segment due to the divestment of Triumph Instruments business.
After enjoying two straight years of increased operating cash flow, the company's cash flow dropped from $321 million in 2013 to $135 million in 2014. The decline was primarily due to relocation costs and expenses related to the disruption of its business during its relocation throughout 2014.
Mergers and Acquisitions
The company has achieved unprecedented progress through organic growth and acquisitions. In 2014 Triumph acquired the hydraulic actuation business of GE Aviation for nearly $72 million. The deal gave Triumph three facilities located in Yakima, Washington; Cheltenham, England; and the Isle of Man.
In early 2013 Triumph bought the pump and engine control systems business of Goodrich (Goodrich Pump & Engine Control Systems or GPECS) from United Technologies. The strong move allowed Triumph to add about $195 million in revenue by entering a new market. Triumph also bought Canada-based General Donlee (maker of flight critical complex machined components) and Primus Composites (supplier of composite and metallic propulsion and structural composites and assemblies) that year.
Triumph created its Aerostructures business segment in mid-2010 through the acquisition of Vought Aircraft Industries, a global commercial and military aerostructures subcontractor. Triumph paid The Carlyle Group about $1.4 billion in cash and stock, and Carlyle received approximately 31% of Triumph's outstanding stock. Vought was renamed Triumph Aerostructures - Vought Aircraft Division. The deal gave Triumph access to the aerostructures market, in addition to strengthening its position in the commercial and military sectors.