Triumph Group, Inc. (NYSE:TGI) Q3 2018 Earnings Conference Call - Final Transcript
Feb 01, 2018 • 08:30 am ET
Ladies and gentlemen, thank you for standing by. Welcome to the Triumph Group Conference Call to discuss our Third Quarter Fiscal Year '18 Results. This call is being carried live on the Internet. There is also a slide presentation included with the audio portion of the webcast. Please ensure that your pop-up blocker is disabled, if you're having trouble viewing the slide presentation. You are currently in a listen-only mode. There will be a question-and-answer session following the introductory comments by management.
On behalf of the company, I would like to read the following statement. Certain statements on this call constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Triumph's actual results, performance or achievements to be materially different from any expected future results, performance or achievements expressed or implied in the forward-looking statements.
Please note that the company's reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the press release, which can be found on their website at www.triumphgroup.com. In addition, please note that this call is property of Triumph Group, Inc. It may not be recorded, transcribed or rebroadcast without explicit written approval.
At this time, I would now like to introduce Daniel J. Crowley, the company's President and Chief Executive Officer; and James F. McCabe, Jr., Senior Vice President and Chief Financial Officer of Triumph Group, Inc.
Please go ahead, Mr. Crowley.
Daniel J. Crowley
Thank you, Brian. Good morning. Welcome everyone to our conference call on Triumph's Third Quarter Results. We had a solid quarter in Q3 and are maintaining our fiscal year '18 full year guidance for revenue and earnings, while improving our cash forecast for the year. Our customers are seeing the benefits of Triumph's transformation and I'm confident about our ability to translate this progress into shareholder value creation.
Now before we get into the details of the quarter on page three, I'll recap the five imperatives we set for FY '18 towards our objectives of predictable profitability and positive cash flow. First, eliminate program cost overruns; Q3 was the second consecutive quarter of positive cume catch-ups reflecting net favorable program performance.
Two, ramp down development program spending; we are on track to complete the Bombardier Global 7000 engineering work in Q4 after six years of challenging, but ultimately successful design and development work. Three, fix Triumph's aerospace structure's backlog through improved execution, contract renegotiations, outsourcing of less profitable programs and new wins that carry higher margins. We made measurable progress in Q3.
Four, reverse the trend of increasing inventory. We set a goal of cutting $100 million in physical inventory in FY '18, and we are confident we can achieve this target. And then, fifth, increase our new business backlog to reverse our revenue contraction. Our backlog now stands at $4.36 billion year-to-date and backlog is up 9.5% year-to-date.
Now each of these initiatives required intensive effort and changes how we operate