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United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended December 31, 2024


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From _________ to ________

Commission File Number: 1-12235

TRIUMPH GROUP, INC.

(Exact name of registrant as specified in its charter)




Delaware		51-0347963
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)




555 E Lancaster Avenue, Suite 400, Radnor, Pennsylvania					19087
(Address of principal executive offices)					(Zip Code)

(610) 251-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:




Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	TGI	New York Stock Exchange
Purchase Rights		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one)




Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, on January 31, 2025, was 77,407,906.

Table of Contents

TRIUMPH GROUP, INC.

TABLE OF CONTENTS


		Page Number
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at December 31, 2024 and March 31, 2024	1
	Condensed Consolidated Statements of Operations - Three and nine months ended December 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and nine months ended December 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders' Deficit - Three and nine months ended December 31, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows - Nine months ended December 31, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements - December 31, 2024	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

Part II. Other Information		38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		40

TRIUMPH GROUP, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(Dollars in thousands, except per share data)


	December 31,			March 31,
	2024			2024
ASSETS
Current assets:
Cash and cash equivalents	$	133,487		$	392,511
Trade and other receivables, less allowance for credit losses of $4,450 and $4,773		139,977			138,272
Contract assets		85,113			74,289
Inventory, net		391,317			317,671
Prepaid expenses and other current assets		16,952			16,626
Total current assets		766,846			939,369
Property and equipment, net		151,880			144,287
Goodwill		509,950			510,687
Intangible assets, net		58,385			65,063
Other, net		24,725			26,864
Total assets	$	1,511,786		$	1,686,270
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt	$	8,549		$	3,200
Accounts payable		121,775			167,349
Contract liabilities		48,031			55,858
Accrued expenses		127,854			129,855
Total current liabilities		306,209			356,262
Long-term debt, less current portion		961,802			1,074,999
Accrued pension and other postretirement benefits		255,334			283,634
Deferred income taxes		7,267			7,268
Other noncurrent liabilities		63,494			68,521
Stockholders' deficit:
Common stock, $.001 par value, 200,000,000 shares authorized, 77,353,955 and 76,923,691 shares issued and outstanding		77			77
Capital in excess of par value		1,115,688			1,107,750
Accumulated other comprehensive loss		(515,294	)		(517,069	)
Accumulated deficit		(682,791	)		(695,172	)
Total stockholders' deficit		(82,320	)		(104,414	)
Total liabilities and stockholders' deficit	$	1,511,786		$	1,686,270

See accompanying notes to condensed consolidated financial statements.

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended December 31,					Nine Months Ended December 31,
	2024		2023			2024		2023
Net sales	$	315,556	$	284,955		$	884,067	$	833,456
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)		213,036		214,972			613,004		618,742
Selling, general and administrative		49,450		42,846			149,951		135,479
Depreciation and amortization		7,373		7,383			22,227		22,062
Legal contingencies loss		6,200		—			13,664		1,338
Restructuring		200		43			5,382		1,985
Loss on sale of assets and businesses		—		—			—		12,208
		276,259		265,244			804,228		791,814
Operating income		39,297		19,711			79,839		41,642
Non-service defined benefit expense (income)		1,246		(820	)		3,747		(2,460	)
Debt modification and extinguishment (gain) loss		—		(1,046	)		5,369		(5,125	)
Warrant remeasurement gain, net		—		—			—		(8,545	)
Interest expense and other, net		20,690		32,419			61,543		94,354
Income (loss) from continuing operations before income taxes		17,361		(10,842	)		9,180		(36,582	)
Income tax expense		2,756		1,069			1,479		3,348
Income (loss) from continuing operations		14,605		(11,911	)		7,701		(39,930	)
Income (loss) from discontinued operations, net of tax expense of $0, $2,246, $338 and $3,459, respectively		—		(3,991	)		4,680		4,569
Net Income (loss)	$	14,605	$	(15,902	)	$	12,381	$	(35,361	)
Earnings (loss) per share—basic:
Earnings (loss) per share - continuing operations	$	0.19	$	(0.15	)	$	0.10	$	(0.55	)
Earnings (loss) per share - discontinued operations		—		(0.05	)		0.06		0.06
Earnings (loss) per share	$	0.19	$	(0.20	)	$	0.16	$	(0.49	)
Weighted average common shares outstanding—basic		77,418		76,895			77,296		73,200
Earnings (loss) per share—diluted:
Earnings (loss) per share - continuing operations	$	0.19	$	(0.15	)	$	0.10	$	(0.55	)
Earnings (loss) per share - discontinued operations		—		(0.05	)		0.06		0.06
Earnings (loss) per share	$	0.19	$	(0.20	)	$	0.16	$	(0.49	)
Weighted average common shares outstanding—diluted		77,862		76,895			77,763		73,200

See accompanying notes to condensed consolidated financial statements.

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(Dollars in thousands)


	Three Months Ended December 31,						Nine Months Ended December 31,
	2024			2023			2024			2023
Net income (loss)	$	14,605		$	(15,902	)	$	12,381		$	(35,361	)
Other comprehensive (loss) income:
Foreign currency translation adjustment		(11,572	)		7,021			(14,639	)		5,565
Defined benefit pension plans and other postretirement benefits:
Reclassification to net income (loss) - net of tax expense
Amortization of net loss, net of taxes of $0, $0, $0 and $0, respectively		7,175			6,424			21,523			19,271
Recognized prior service credits, net of taxes of $0, $0, $0 and $0, respectively		(1,251	)		(1,251	)		(3,752	)		(3,752	)
Total defined benefit pension plans and other postretirement benefits income, net of taxes		5,924			5,173			17,771			15,519
Cash flow hedges:
Unrealized (loss) gain arising during the period, net of tax expense of $0, $0, $0 and $0, respectively		(680	)		161			(3,284	)		727
Reclassification of loss (gain) included in net earnings, net of tax expense of $0,$0, $0 and $0, respectively		1,021			(80	)		1,927			(1,841	)
Net unrealized gain (loss) on cash flow hedges, net of tax		341			81			(1,357	)		(1,114	)
Total other comprehensive (loss) income		(5,307	)		12,275			1,775			19,970
Total comprehensive income (loss)	$	9,298		$	(3,627	)	$	14,156		$	(15,391	)

See accompanying notes to condensed consolidated financial statements.

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Stockholders' Deficit

For the three and nine months ended December 31, 2024

(unaudited)

(Dollars in thousands)


	Outstanding Shares			Common Stock All Classes		Capital in Excess of Par Value			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
March 31, 2024		76,923,691		$	77	$	1,107,750		$	—		$	(517,069	)	$	(695,172	)	$	(104,414	)
Net loss		—			—		—			—			—			(14,091	)		(14,091	)
Foreign currency translation adjustment		—			—		—			—			(6,376	)		—			(6,376	)
Pension liability adjustment, net of income taxes of $0		—			—		—			—			5,923			—			5,923
Change in fair value of foreign currency hedges, net of income taxes of $0		—			—		—			—			(1,614	)		—			(1,614	)
Share-based compensation		473,076			—		3,015			—			—			—			3,015
Repurchase of restricted shares for minimum tax obligation		(158,885	)		—		—			(2,132	)		—			—			(2,132	)
Retirement of treasury shares		—			—		(2,132	)		2,132			—			—			—
Employee stock purchase plan		8,920			—		128			—			—			—			128
June 30, 2024		77,246,802		$	77	$	1,108,761		$	—		$	(519,136	)	$	(709,263	)	$	(119,561	)
Net income		—			—		—			—			—			11,867			11,867
Foreign currency translation adjustment		—			—		—			—			3,309			—			3,309
Pension liability adjustment, net of income taxes of $0		—			—		—			—			5,924			—			5,924
Change in fair value of foreign currency hedges, net of income taxes of $0		—			—		—			—			(84	)		—			(84	)
Share-based compensation		84,225			—		3,350			—			—			—			3,350
Repurchase of restricted shares for minimum tax obligation		(6,753	)		—		—			(141	)		—			—			(141	)
Retirement of treasury shares		—			—		(141	)		141			—			—			—
Employee stock purchase plan		10,213			—		150			—			—			—			150
September 30, 2024		77,334,487		$	77	$	1,112,120		$	—		$	(509,987	)	$	(697,396	)	$	(95,186	)
Net income		—			—		—			—			—			14,605			14,605
Foreign currency translation adjustment		—			—		—			—			(11,572	)		—			(11,572	)
Pension liability adjustment, net of income taxes of $0		—			—		—			—			5,924			—			5,924
Change in fair value of foreign currency hedges, net of income taxes of $0		—			—		—			—			341			—			341
Share-based compensation		11,979			—		3,486			—			—			—			3,486
Repurchase of restricted shares for minimum tax obligation		(3,190	)		—		—			(48	)		—			—			(48	)
Retirement of treasury shares		—			—		(48	)		48			—			—			—
Employee stock purchase plan		10,679			—		130			—			—			—			130
December 31, 2024		77,353,955		$	77	$	1,115,688		$	—		$	(515,294	)	$	(682,791	)	$	(82,320	)

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Stockholders' Deficit

For the three and nine months ended December 31, 2023

(unaudited)

(Dollars in thousands)


	Outstanding Shares	Common Stock All Classes	Capital in Excess of Par Value	Treasury Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
March 31, 2023	65,432,589	$65	$964,741	$—	$(554,646)	$(1,207,556)	$(797,396)
Net loss	—	—	—	—	—	(18,163)	(18,163)
Foreign currency translation adjustment	—	—	—	—	3,704	—	3,704
Pension liability adjustment, net of income taxes of $0	—	—	—	—	5,173	—	5,173
Change in fair value of foreign currency hedges, net of income taxes of $0	—	—	—	—	(337)	—	(337)
Share-based compensation	300,102	—	3,622	—	—	—	3,622
Repurchase of shares for share-based compensation minimum tax obligation	(103,996)	—	—	(1,235)	—	—	(1,235)
Retirement of treasury shares	—	—	(414)	414	—	—	—
Employee stock purchase plan	12,907	—	150	—	—	—	150
Warrant exercises, net of income taxes of $0	1,122,438	1	13,481	—	—	—	13,482
Issuance of shares on pension contribution	3,200,000	4	38,311	821	—	—	39,136
June 30, 2023	69,964,040	$70	$1,019,891	$—	$(546,106)	$(1,225,719)	$(751,864)
Net loss	—	—	—	—	—	(1,296)	(1,296)
Foreign currency translation adjustment	—	—	—	—	(5,160)	—	(5,160)
Pension liability adjustment, net of income taxes of $0	—	—	—	—	5,173	—	5,173
Change in fair value of foreign currency hedges, net of income taxes of $0	—	—	—	—	(858)	—	(858)
Share-based compensation	127,324	—	3,677	47	—	—	3,724
Repurchase of shares for share-based compensation minimum tax obligation	(4,944)	—	—	(47)	—	—	(47)
Employee stock purchase plan	13,443	—	166	—	—	—	166
Warrant exercises, net of income taxes of $0	6,735,798	7	81,939	—	—	—	81,946
September 30, 2023	76,835,661	$77	$1,105,673	$—	$(546,951)	$(1,227,015)	$(668,216)
Net loss	—	—	—	—	—	(15,902)	(15,902)
Foreign currency translation adjustment	—	—	—	—	7,021	—	7,021
Pension liability adjustment, net of income taxes of $0	—	—	—	—	5,173	—	5,173
Change in fair value of foreign currency hedges, net of income taxes of $0	—	—	—	—	81	—	81
Share-based compensation	2,174	—	1,442	—	—	—	1,442
Repurchase of shares for share-based compensation minimum tax obligation	(631)	—	—	(5)	—	—	(5)
Employee stock purchase plan	18,737	—	126	—	—	—	126
December 31, 2023	76,855,941	$77	$1,107,241	$(5)	$(534,676)	$(1,242,917)	$(670,280)

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)


	Nine Months Ended December 31,
	2024			2023
Operating Activities
Net income (loss)	$	12,381		$	(35,361	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		22,227			25,688
Amortization of acquired contract liability		(2,115	)		(1,951	)
(Gain) loss on sale of assets and businesses		(5,018	)		12,208
Loss (gain) on modification and extinguishment of debt		5,369			(5,125	)
Other amortization included in interest expense		3,045			4,458
Provision for credit losses		19			855
Warrants remeasurement gain		—			(8,545	)
Share-based compensation		9,851			8,788
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures:
Trade and other receivables		(2,870	)		16,926
Contract assets		(10,881	)		(4,144	)
Inventories		(73,872	)		(49,545	)
Prepaid expenses and other current assets		(186	)		(880	)
Accounts payable, accrued expenses, and contract liabilities		(48,672	)		(30,502	)
Accrued pension and other postretirement benefits		(11,352	)		(3,352	)
Other, net		(7,684	)		2,207
Net cash used in operating activities		(109,758	)		(68,275	)
Investing Activities
Capital expenditures		(15,390	)		(16,258	)
Payments on sale of assets and businesses		(2,310	)		(6,840	)
Investment in joint venture		—			(1,658	)
Net cash used in investing activities		(17,700	)		(24,756	)
Financing Activities
Proceeds from issuance of debt		40,000			2,000
Retirement of debt and finance lease obligations		(162,465	)		(50,585	)
Payment of deferred financing costs		—			(1,728	)
Proceeds on issuance of common stock, net of issuance costs		—			79,961
Premium on redemption of long-term debt		(3,600	)		—
Repurchase of shares for share-based compensation minimum tax obligation		(2,321	)		(1,287	)
Net cash (used in) provided by financing activities		(128,386	)		28,361
Effect of exchange rate changes on cash		(3,180	)		166
Net change in cash and cash equivalents		(259,024	)		(64,504	)
Cash and cash equivalents at beginning of period		392,511			227,403
Cash and cash equivalents at end of period	$	133,487		$	162,899

See accompanying notes to condensed consolidated financial statements.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

1. BACKGROUND AND BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Triumph Group, Inc. ("Triumph") have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, and cash flows. The results of operations for the three and nine months ended December 31, 2024 and 2023, are not necessarily indicative of results that may be expected for the year ending March 31, 2025. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the fiscal 2024 audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended March 31, 2024, filed with the Securities and Exchange Commission (the "SEC") on May 31, 2024.

Triumph Group, Inc. ("Triumph" or the "Company") is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures, and sells products for the global aerospace original equipment manufacturers ("OEMs") of aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier, and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the "Company") are organized based on the products and services that they provide. The Company has two reportable segments: Systems & Support and Interiors.

Systems & Support consists of the Company’s operations that provide integrated solutions, including design; development; and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include hydraulic, mechanical and electromechanical actuation, power, and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units, and Full Authority Digital Electronic Control fuel systems; and hydromechanical and electromechanical primary and secondary flight controls. As disclosed in Note 3, in December 2023 the Company entered into a definitive agreement with AAR Corp. (“AAR”), to sell Systems & Support's maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support”). As a result of this agreement, the Company has classified the Product Support results of operations for all periods presented as discontinued operations, and these operations are no longer reported as part of the Systems & Support reportable segment. This transaction closed in March 2024; refer to Note 3 for further disclosure.

Interiors consists of the Company’s operations that have historically supplied commercial, business, and regional manufacturers with large metallic structures and continues to supply aircraft interior systems, including air ducting and thermal acoustic insulations systems. Subsequent to the divestitures disclosed in Note 3, the remaining operations of Interiors are those that supply commercial and regional manufacturers with aircraft interior systems.

The accompanying condensed consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated from the accompanying condensed consolidated financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. Early adoption is permitted and the amendments in this ASU must be applied on a retrospective basis to all periods presented. The new guidance is applicable to the Company beginning with the fiscal 2025 annual report on Form 10-K, and the Company is currently evaluating the impact to its interim and annual report disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which improves income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The ASU indicates that all entities will apply its guidance prospectively with an

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

option for retroactive application to each period in the financial statements. ASU 2023-09 is applicable to the Company beginning with the fiscal 2026 Annual Report on Form 10-K and the Company is evaluating the impact to its annual report disclosures, and the Company is currently evaluating the impact to its interim and annual report disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures ("ASU 2024-03"). ASU 2024-03 requires the disclosure of certain cost and expense information included on the consolidated statements of operations on a disaggregated basis. The updated guidance is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 is applicable to the Company beginning with the fiscal 2028 Annual Report on Form 10-K and the Company is currently evaluating the impact to its interim and annual report disclosures

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition and Contract Balances

The Company's revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply agreements. Additionally, a majority of the Company’s agreements with customers include options for future purchases. Such options primarily reduce the administrative effort of issuing subsequent purchase orders and generally do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in substantially all current contracts.

The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.

Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs.

The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, claims (when a legal basis exists), cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent that the Company has determined that it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur when the uncertainty associated with the variable consideration is resolved, and any excess variable consideration above such included amount is considered constrained. Consideration paid or payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery.

The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company uses either the “Expected Cost Plus a Margin” or "Adjusted Market Assessment" approaches to estimate stand-alone selling price. Expected costs are typically derived from the available periodic forecast information.

Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or for work performed on a customer-owned asset.

With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends, and other economic projections. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions and asset utilization. Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required, and are included in contract liabilities on the accompanying condensed consolidated balance sheets. The Company believes that the accounting estimates and assumptions made by management are appropriate; however, actual results could differ materially from those estimates.

Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred.

The Company updates the estimated transaction price, including its assessment of whether an estimate of variable consideration is constrained, at the end of each reporting period to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. Any portion of the change in transaction price that is allocated to satisfied and partially satisfied (when control transfers over time) performance obligations is recognized as revenue in the period of the transaction price change as a cumulative catch-up adjustment.

Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition of contract assets and liabilities. Refer to Note 4 for further discussion.

Concentration of Credit Risk

The Company’s trade and other accounts receivable are exposed to credit risk. However, the risk is limited due to the diversity of the customer base and the customer base’s wide geographical area. Trade accounts receivable from The Boeing Company ("Boeing") (representing commercial, military, and space) represented approximately 16% and 14% of total trade accounts receivable as of December 31, 2024 and March 31, 2024, respectively, and trade accounts receivable from Airbus SE ("Airbus") represented approximately 12% and 5% of total trade accounts receivable as of December 31, 2024, and March 31, 2024, respectively.

Sales to Boeing for the nine months ended December 31, 2024 were $206,180, or 23% of net sales, of which $131,681 and $74,499 were from Systems & Support and Interiors, respectively. Sales to Boeing for the nine months ended December 31,

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

2023, were $200,577, or 24% of net sales, of which $123,323 and $77,254 were from Systems & Support and Interiors, respectively.

No other single customer accounted for more than 10% of the Company’s net sales. However, the loss of any significant customer, including Boeing, could have a material adverse effect on the Company and its operating subsidiaries.

Warrants

On December 1, 2022, the Company’s board of directors declared a distribution to holders of the Company’s shares of common stock in the form of warrants to purchase shares of common stock (the “Warrants”). Holders of common stock received three Warrants for every ten shares of common stock held as of December 12, 2022 (the "Record Date"). The Company issued approximately 19.5 million Warrants on December 19, 2022, to holders of record of common stock as of the close of business on the Record Date.

Each Warrant represented the right to purchase initially one share of common stock, at an exercise price of $12.35 per Warrant, subject to certain anti-dilution adjustments. Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain circumstances, certain of the Company's outstanding notes (the "Designated Notes").

The common stock warrants were accounted for as derivative liabilities in accordance with ASC 815-40 and included within accrued liabilities on the accompanying condensed consolidated balance sheets. The Company measured the Warrants at fair value as of the issuance date using a Monte Carlo pricing model, a Level 3 fair value measurement (as described below), due to the level of market activity. Inherent in the option pricing simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimated the volatility of the Warrants based on implied and historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Warrants. The expected life of the Warrants was based on the Company’s ability to redeem the Warrants, subject to a 20 calendar-day notice period, as well as the automatic acceleration of the Expiration Date following the Price Condition Date. During the three months ended December 31, 2022, due to increased trading volume, the Company began remeasuring outstanding Warrants using the Warrants trading price, a Level 1 fair value measurement (as described below). The Warrants were remeasured at each balance sheet date. Warrants remeasurement adjustments were recognized in warrant remeasurement gain, net on the accompanying condensed consolidated statements of operations.

At distribution, the fair value of the Warrants was $19,500. Approximately 7.7 million Warrants were exercised in the year ended March 31, 2024, resulting in total cash proceeds, net of transaction costs, of approximately $79,961 and $8,532 of warrants remeasurement gain was recognized in the nine months ended December 31, 2023. On July 6, 2023, the Company redeemed all of the approximately 11.4 million remaining outstanding Warrants for a total redemption price of approximately $11 pursuant to its June 16, 2023, notice of redemption.

Contingencies

Contingencies are existing conditions, situations or circumstances involving uncertainty as to possible gain or loss that will ultimately be resolved when future events occur or fail to occur. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory investigations and proceedings, product quality, and gains or losses resulting from other events and developments. Liabilities for loss contingencies are accrued in the amount of the Company's best estimate for the ultimate loss when a loss is considered probable of having been incurred and is reasonably estimable. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or the amount of a loss will exceed the recorded provision. The Company regularly reviews contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. Contingencies that might result in gains are generally not accrued until the contingencies are resolved and the gain is realized or realizable. Refer to Note 12 for further disclosure.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

value: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring the warrants (refer to the above disclosure), when disclosing the fair value of its long-term debt not recorded at fair value (see Note 6), and to its pension and postretirement plan assets (see Note 9).

Supplemental Cash Flow Information

For the nine months ended December 31, 2024 and 2023 the Company paid $12,278 and $4,962, respectively for income taxes, net of income tax refunds received.

3. DIVESTED OPERATIONS AND ASSETS HELD FOR SALE

Fiscal 2024 Divestiture and Discontinued Operations

In December 2023, the Company’s Board of Directors committed to a plan, and the Company entered into a definitive agreement with AAR, to sell Product Support for cash proceeds of $725,000 subject to adjustments related to the closing balance sheet and certain transaction expenses. This transaction closed on March 1, 2024, and the Company recognized a gain of approximately $548,250, net of transaction costs and certain other purchase price adjustments. In July 2024, the Company finalized certain purchase price adjustments principally related to the transferred working capital of the divested operations and recognized a gain of approximately $5,018 in the nine months ended December 31, 2024. The gain is included within discontinued operations on the accompanying condensed consolidated statement of operations.

Product Support companies provided aftermarket maintenance, repair, and overhaul solutions for commercial, regional and military aircraft. As a result of this transaction, effective in the third quarter of fiscal 2024, we classified our results of operations for all periods presented to reflect Product Support as discontinued operations. Under the terms of the purchase agreement, we will continue to guarantee the performance of certain of the divested legal entities pursuant to pre-existing performance guarantee agreements covering existing contracts with specific customers that are expected to be fully satisfied within the next twelve months. There is no limitation to the maximum potential future liabilities under these guarantee agreements; however, we are fully indemnified by the buyer, AAR, against such losses that may arise from their failure to perform under the related contracts. The Company has also indemnified the buyer for a period of three years from the date of the transaction on product liability or warranty claims related to Product Support products and operations prior to the transaction date to the extent such claims exceed an aggregate amount of $1,000. Other than these guarantees, a short-term transition services agreement, commercial purchases and sales which are not significant and are entered into in the ordinary course of business, and other customary short-term transitional activities, the Company will have no further continuing involvement with Product Support.

The following table shows the results of Product Support within discontinued operations for the three and nine months ended December 31, 2023. Income from discontinued operations in the nine months ended December 31, 2024 pertains to the purchase price adjustments described above.


	Three Months Ended			Nine months ended
	December 31,2023			December 31,2023
Major line items constituting pretax income of discontinued operations
Net sales	$	64,855		$	197,560
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)		49,703			148,058
Selling, general and administrative		8,749			19,247
Depreciation and amortization		2,144			3,625
		60,596			170,930
Operating income		4,259			26,630
Interest expense and other, net		6,004			18,602
(Loss) income from discontinued operations before income taxes		(1,745	)		8,028
Income tax expense		2,246			3,459
(Loss) income from discontinued operations	$	(3,991	)	$	4,569

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

The Company's accounting policy to allocate to discontinued operations other consolidated interest that is not directly attributable to or related to other operations of the entity based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the disposal transaction to the sum of total net assets of the consolidated group plus consolidated debt, adjusted for debt that will be assumed by the buyer; debt that is required to be paid as a result of the disposal transaction; and debt that can be directly attributed to other operations of the entity. In applying the above policy, the Company allocated interest expense to discontinued operations of approximately $5,945 and $16,428 in the three and nine months ended December 31, 2023, respectively.

The accompanying condensed consolidated statements of cash flows do not present cash flows from discontinued operations separately from cash flows from continuing operations. Capital expenditures and other operating and investing noncash items of the discontinued operations for the nine months ended December 31, 2023 were immaterial.

Fiscal 2023 Divestitures

In January 2022, the Company’s Board of Directors committed to a plan to sell its manufacturing operations located in Stuart, Florida. In February 2022, the Company entered into a definitive agreement with the buyer of these manufacturing operations. This transaction closed in July 2022. The Company recognized a gain of approximately $96,800, net of transaction costs in fiscal year 2023. In the year ended March 31, 2024, the Company paid $6,800 to the buyer of the Stuart manufacturing operations and recognized a loss of approximately $3,900 due to the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement and the finalization of certain purchase price adjustments related to the transferred working capital of the divested operations. Additionally, in the year ended March 31, 2024, the Company recognized a loss on sale of approximately $8,300 related to an adjustment that would have reduced the fiscal 2023 gain on sale. Other claims for indemnification with the Buyer of the Stuart facility (refer to Note 12) remain outstanding. The operating results of the Stuart, Florida, manufacturing operations are included within the Interiors reportable segment through the date of divestiture.

4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time. Additionally, the Company disaggregates revenue based on the end market where products and services are transferred to the customer. The Company’s principal operating segments and related revenue are discussed in Note 11.

The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the three and nine months ended December 31, 2024 and 2023:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2024		2023		2024		2023
Systems & Support
Satisfied over time	$	76,984	$	73,289	$	218,881	$	230,959
Satisfied at a point in time		199,920		166,786		558,743		484,590
Revenue from contracts with customers		276,904		240,075		777,624		715,549
Amortization of acquired contract liabilities		902		800		2,115		1,965
Total Systems & Support revenue		277,806		240,875		779,739		717,514

Interiors
Satisfied over time	$	30,386	$	37,067	$	83,595	$	97,712
Satisfied at a point in time		7,364		7,013		20,733		18,230
Revenue from contracts with customers		37,750		44,080		104,328		115,942
Total Interiors revenue		37,750		44,080		104,328		115,942
Total revenue	$	315,556	$	284,955	$	884,067	$	833,456

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table shows disaggregated net sales by end market (excluding intercompany sales) for the three and nine months ended December 31, 2024 and 2023:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2024		2023		2024		2023
Systems & Support
OEM Commercial	$	89,029	$	98,178	$	263,322	$	275,805
OEM Military		75,861		61,149		201,681		190,758
MRO Commercial		49,055		35,089		146,493		106,938
MRO Military		50,403		38,328		135,302		117,835
Non-aviation		12,556		7,331		30,826		24,213
Revenue from contracts with customers		276,904		240,075		777,624		715,549
Amortization of acquired contract liabilities		902		800		2,115		1,965
Total Systems & Support revenue	$	277,806	$	240,875	$	779,739	$	717,514

Interiors
OEM Commercial	$	36,377	$	44,078	$	99,714	$	114,819
MRO Commercial		861		—		3,750		704
Non-aviation		512		2		864		419
Revenue from contracts with customers		37,750		44,080		104,328		115,942
Total Interiors revenue		37,750		44,080		104,328		115,942
Total revenue	$	315,556	$	284,955	$	884,067	$	833,456

Contract Assets and Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific collectibility matters when they arise. Contract assets are presented net of this reserve on the condensed consolidated balance sheets. For the three and nine months ended December 31, 2024 and 2023, credit loss expense and write-offs related to contract assets were immaterial.

Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.

Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. When contract modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation and are recognized prospectively. Contract modifications that are for goods or services that are not distinct from the existing contract due to the significant integration with the original good or service provided are accounted for as if they were part of that existing contract. For such contracts, the effect of a contract modification on the transaction price and the Company's measure of progress for the performance obligations is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When contract modifications do not include additional performance obligations but the remaining goods and services are distinct from those already provided, the Company treats the modification as the termination of the existing contract and the creation of a new contract, and the total remaining transaction price is allocated to the remaining performance obligations using the relative stand-alone selling price as of the date of the modification and is recognized prospectively.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company's contract assets and liabilities balances:


	December 31, 2024			March 31, 2024			Change
Contract assets	$	85,113		$	74,289		$	10,824
Contract liabilities		(57,531	)		(65,358	)		7,827
Net contract asset	$	27,582		$	8,931		$	18,651

The change in contract assets is the result of revenue recognized in excess of amounts billed during the nine months ended December 31, 2024. The change in contract liabilities is the result of revenue recognized in excess of receipt of additional customer advances during the nine months ended December 31, 2024. For the nine months ended December 31, 2024, the Company recognized $24,408 of revenue that was included in the contract liability balance at the beginning of the period.

Performance Obligations

Customers generally contract with the Company for requirements in a segment relating to a specific program, and the Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs. A single contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements.

As of December 31, 2024, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below.


	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Unsatisfied performance obligations	$	1,723,020	$	1,068,407	$	623,310	$	30,099	$	1,204

5. INVENTORIES

Inventories are carried at the lower of cost (average-cost or specific-identification methods) or net realizable value. The Company expenses general and administrative costs related to products and services provided under commercial terms and conditions as incurred. The Company determines the cost of inventory sold by the first-in, first-out or average cost methods. The components of inventories are as follows:


	December 31,		March 31,
	2024		2024
Raw materials	$	40,582	$	25,224
Work-in-process, including manufactured and purchased components		332,165		277,471
Finished goods		18,570		14,976
Total inventories	$	391,317	$	317,671

6. LONG-TERM DEBT

Long-term debt consists of the following:


	December 31,			March 31,
	2024			2024
Finance leases	$	21,621		$	14,008
Senior secured first lien notes due 2028		958,890			1,078,890
Other notes		1,784			1,900
Less: debt issuance costs		(11,944	)		(16,599	)

TRIUMPH GROUP INC 10-Q