Triumph Group Announces Agreement with Spirit AeroSystems to Assume Production of Gulfstream G650 and G280 Wing Programs

BERWYN, Pa.--(BUSINESS WIRE)--

Triumph Group, Inc. TGI today announced the signing of a definitive agreement with Spirit AeroSystems Holdings, Inc. SPR (“Spirit”) under which Triumph will take over production of the Gulfstream G650 and G280 wing programs located in Tulsa, Oklahoma. The transaction is targeted to close by calendar year end, subject to customary closing conditions.

Under the terms of the agreement, Triumph will receive $160 million in cash plus assets required to run the business from Spirit to cover the anticipated future cash flow needs of the programs, with no additional capital contributions expected by Triumph. The company expects the programs to be initially cash flow negative, with operating cash requirements anticipated to decrease over the first three years and becoming cash flow positive in year four. The business will be included in the Aerostructures Group segment and is expected to add approximately $250 million in annual revenue and to be immediately accretive to Triumph's earnings per share upon closing, reflecting initial estimates of purchase accounting adjustments and excluding synergies resulting from the transaction and transaction related expenses.

The addition of these programs will position Triumph as a leader in fully integrated wing design, engineering and production and further its standing as a strategic Tier One Capable aerostructures supplier. Following completion of the transaction, Triumph will be a major provider of wings to Gulfstream, supplying four of Gulfstream's five in-production programs (G280, G450, G550 and G650). Triumph believes that it is also significant that both programs are past critical design and early production phases, with substantial investment and risk already experienced. As a result, the company believes it is assuming the G650 and G280 programs at an advantageous point.

“We conducted a thorough evaluation of the G650 and G280 programs and, given our experience and success on other Gulfstream wing production programs, we believe we have an opportunity to deliver value to Gulfstream, IAI and to our shareholders,” said Jeffry D. Frisby, Triumph's President and Chief Executive Officer. “These programs are a logical extension of Triumph's core capability in complex aerostructures, including completed wing production and assembly. We are confident in our strategy to drive long-term value from these programs and see additional upside opportunities, as the programs are in the early stages of their expected multi-decade production lives. We look forward to expanding our relationship with Gulfstream and IAI and working closely with them to make these programs productive.”

Larry Flynn, President, Gulfstream Aerospace Corporation, said, “We are pleased with this agreement, which is important to the successful development of our G650 and G280 business jet programs. We know Triumph well based on our experience with them on the G450 and G550 wings and have confidence that their knowledge and capabilities make them the right partner to take on these programs. We look forward to continuing our business relationship with Triumph into the future.”

Upon the close of the transaction, production will continue out of Spirit's Tulsa facility and Triumph will look to utilize its manufacturing experience, resources and wing design engineering capabilities as appropriate to supplement the Tulsa operations. The company will focus on optimizing the build process and cost structure of the programs, and has identified opportunities for engineering, supply chain and labor enhancements.

Triumph will hold a conference call today, Tuesday, December 9, 2014 at 11 a.m. (ET) to discuss this announcement. To participate in the call, please dial (866) 244-4630 (Domestic) or (703) 639-1177 (International). A slide presentation will be included with the audio portion of the webcast. An audio replay will be available from December 9, 2014 at 2:00 pm until December 16, 2014 by calling (703) 925-2533 (Domestic) or (888) 266-2081 (International), passcode #1649218.

RBC Capital Markets and Barclays are acting as financial advisors and Ballard Spahr LLP is acting as legal advisor to Triumph.

About Triumph Group

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.

More information about Triumph can be found on the company's website at www.triumphgroup.com.

Forward-Looking Statements

Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties which could affect the company's actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the company, including statements of expected revenues, cash utilization, synergies, accretion to earnings, profitability, program life or future business growth or development. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.