Trading to nearly eight-month highs, shares of aircraft component manufacturer Triumph Group (TGI 30.80, +6.55) trade about 27.0% higher as the Q4 report came in better than expected. Investors appear to be overlooking the light FY18 guidance as TGI also announced the company has come to a settlement agreement with Bombardier (BDRBF) related to the design, manufacture and supply of wing components for Bombardier's Global 7000 business aircraft.
Looking at the results, TGI reported Q4 earnings of $2.81 per share on revenues which fell about 13.0% compared to last year and ended at $919.9 million.
By segment, TGI’s Integrated Systems division reported slowing sales; the result ended Q4 6.9% lower than last year to about $282.00 million. Aerospace Structures saw net sales decline about 20.0% to $338.75 million. Precision Components also displayed slowing net sales, at a 11.7% decline to $247.57 million. The Support segment saw sales dip 4.4% to about $81.01 million.
On an organic basis, excluding the impact of divestitures, the aforementioned sales decline was due to production rate reductions by customers on the 747-8, C-17 and G450/550 programs, changes in model mix, decreased volume in military end market and foreign exchange rates. Said factors were partially offset by increased production rates on the 767/Tanker program and stronger organic sales in the Product Support segment resulting from key contract wins with regional and commercial operators for structures and interiors.
Going forward, based on anticipated aircraft production rates and divestitures completed in fiscal year 2017, TGI now forecasts revenue for fiscal year 2018 to be about $3.1-3.2 billion, and to increase in fiscal year 2019 as development programs enter into production and sales from new wins offset sun-setting programs. TGI highlighted that the company will provide additional fiscal year 2018 guidance when it has analyzed the impact of recently settled contracts and has greater visibility regarding the timing of ongoing customer negotiations.
Additionally, announced today Bombardier and TGI’s Triumph Aerostructures entered into a settlement agreement that resolves all outstanding commercial disputes between them, including all pending litigation, related to the design, manufacture and supply of wing components for Bombardier’s Global 7000 business aircraft. Financial and other terms of the deal were not disclosed.