Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Triumph Group Plunged 18% Today

By Daniel Miller – Jul 28, 2016 at 12:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Triumph Group posted disappointing Q1 fiscal 2017 results, as this year remains a transition year for the company.

Image source: Getty Images.

What: Shares of Triumph Group (TGI 0.25%), a global leader in manufacturing and overhauling aerospace structures, systems and components, plunged 18% Thursday morning after the company released its first quarterly results of fiscal 2017.

So what: By the numbers, it was a difficult quarter for Triumph Group, as 2017 will be a year of transition. Triumph's first-quarter sales declined 7% from the prior year to $893.3 million. Despite a mid-single-digit decline in the top line, its operating income took a large hit, declining by 57% over the same time period, from nearly $108 million down to $46.7 million.

The massive decline in operating income was in large part due to pre-tax charges of $46.1 million for multiple events. First, a $15.7 million charge was for strike costs related to the ratified IAM collective bargaining agreement in Spokane. Second, a $14.2 million charge was related to a memorandum of understanding with Northrop Grumman. Third, a $10.1 million charge was for restructuring costs. Lastly, a $6.1 million inventory writedown was associated with excess start-up costs.

Excluding those charges, Triumph's net income was $51.6 million, or $1.04 per diluted share -- still a significant decline from last year's $1.27 per diluted share.

Now what: There's no denying that the company's fiscal 2017 will be challenging amid facility consolidations, cost reduction and divestiture actions. However, on the bright side, the company noted growing partnerships with Lockheed Martin, Northrop Grumman and Spirit AeroSystems -- three important top-tier customers. Investors can hope that after this nearly 20% decline, the company's new four-business unit structure will create more sustainable, and more profitable, financial performances in the quarters ahead -- but expect a bumpy road. 

Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Triumph Group Stock Quote
Triumph Group
$11.84 (0.25%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.