Long-struggling Triumph Group (TGI 1.70%) put out a full-year forecast that came in well short of analyst expectations. Investors are running for the exits as a result, with the shares down as much as 27% on Wednesday morning.
Triumph is a manufacturer of a range of components focused primarily on the commercial and military aerospace markets. The company is a longtime turnaround story, with its shares down more than 70% over the past decade. Triumph has spent the last few years trying to restructure or sell unprofitable businesses, but the pandemic and its impact on commercial aviation has stunted its progress.
On Wednesday morning, Triumph reported fiscal fourth-quarter earnings of $0.39 per share on revenue of $385.65 million, falling a little short of analyst expectations for $0.42 per share in earnings on sales of $405 million.
CEO Dan Crowley in a statement noted the company "continued to deliver improving operating margin and cash flow, both sequentially and year over year." In the now-finished fiscal 2022, Triumph completed several important milestones in its turnaround, including divesting its build-to-print metallic structures unit and streamlining the organization.
But investors were more focused on Triumph's anemic initial fiscal 2023 forecast. The company said it expects earnings of $0.40 to $0.60 per share in the new fiscal year, on revenue of $1.2 billion to $1.3 billion. Analysts had forecast earnings of $1.09 per share on revenue of $1.5 billion.
It should be noted that is unclear whether the guidance and analyst estimates are aligned on Triumph's recently announced deal to sell its Stuart Aerostructures business to Daher Aerospace, so it is hard to know what to make of the comparisons. It appears part of this dramatic move downward could be attributed to market confusion about the comparison.
But although Triumph's forecast might not be as bad as it first appears, there isn't a lot to get excited about either. Organic sales in the quarter continued a trend of negative growth, though the negative 2% figure this quarter is an improvement over the negative 5% in the fiscal third quarter.
Since the 2016 launch of Crawley's transformation plan, Triumph has sold off 16 noncore businesses, dramatically shrinking the overall company with the hope of turning it into a collection of assets more intriguing to investors. The restructuring is nearly completed, but given the company's difficult recent history investors are going to want to see proof the plan is showing results before going along for the ride.