Triumph Group designs, engineers, manufactures, repairs, overhauls and distributes a portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. Co. has three operating segments: Triumph Aerostructures Group, which designs, manufactures, assembles and combines metallic and composite aerostructures and structural components; Triumph Aerospace Systems Group, which designs, engineers and manufactures a range of proprietary and build-to-print components, assemblies and systems; and Triumph Aftermarket Services Group, which serves aircraft fleets, through the maintenance, repair and overhaul of aircraft components and accessories manufactured by third parties.
We believe TGI has an economic moat due to strong relationships with end customers. End customers put a high emphasis on trust and reliability on manufacturers like TGI. These relationship become sticky and switching costs are high.
We look for modest sales advances at Triumph Group in fiscal 2015 (starts April 1st) and 2016. Triumph provides many high-end components for the current cycle of fuel-efficient jets being manufactured by Boeing and France-based Airbus. Triumph remained active on the acquisition front. Estimated free cash flow of over $300 million in fiscal 2015 should support the ongoing acquisition program and a modest level of share repurchases. TGI is poised for solid performance in the next 6 to 12 months.
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Strong presence across all the verticals creates an edge over competitors
Increasing operational performance leverages to seek more growth avenues in future
Overdependence on the US market negatively impacts the revenues
High dependence on single customer for majority of the sales impacts the cash flows and financial position
Intense competition impacts the operations and financial condition
Stringent government regulations increases the costs and impacts the profitability
Unfavorable trends in the aviation market could have negative effect on the top line
Strategic acquisitions strengthen the existing businesses
Increasing demand for commercial airplanes boosts the demand for the products
Growth in aircraft maintenance, repair and overhaul market enables steady revenue growth
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The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.