Triumph Group: Triumph : TGI Sustainability and Annual Report 2024

2024 SUSTAINABILITY REPORT QUALITY GROWTH FINANCIAL HIGHLIGHTS (in millions, except per share data) Fiscal Year Ended March 31 2024 2023 2022 Net sales $ 1,192 $ 1,131 $ 1,263 Adjusted operating income 115 115 103 Adjusted net income (4) 36 47 Adjusted diluted earnings per share $ (0.06) $ 0.51 $ 0.73 Cash flow from operations 9 (52) (137) Total assets $ 1,686 $ 1,715 $ 1,761 Total debt 1,078 1,692 1,589 Total equity (104) (797) (787) Non- GAAP Reconciliation $ 86 Operating income - GAAP $ 196 $ 73 Loss (gain) on sale of assets and businesses 12 (102) 9 Restructuring 7 3 19 Impairments - - 2 Other 9 17 - Adjusted operating income* 115 115 103 Interest and other (123) (115) (113) Non-service defined benefit income 2 20 5 Less: Pension charges - 15 52 Less: Financing charges 9 5 - Adjusted (loss) income before income taxes* 3 40 47 Income taxes (7) (4) (5) Adjusted (loss) income from continuing operations (4) 36 42 (Loss) diluted earnings per share - GAAP $ (0.46) $ 0.96 $ (0.78) Per share impact of adjustments 0.40 (0.45) 1.46 Adjusted diluted earnings per share from continuing operations $ (0.06) $ 0.51 $ 0.65 Sales by End Market Non-Aviation 4% Commercial Aftermarket OEM 29% 45% 22% Military OEM Adjusted Operating Margin 10% 9.6% 10.0% 8 8.0% 6 4 2 0 4 3 22 Total Backlog (in millions) $2,000 $1,900 HEALTHY IN FISCAL 2024, TRIUMPH ENHANCED ITS HEALTH ON ALL FRONTS. STRATEGICALLY, WE SOLIDIFIED OUR POSITION AS A PURE-PLAY PROVIDER OF CRITICAL SUBSYSTEMS­ AND Weighted average diluted shares 74.1 71.7 64.5 *Differences due to rounding 1,500 1,000 500 0 $1,550 $1,380 COMPONENTS BASED LARGELY ON OUR OWN TECHNOLOGIES. FINANCIALLY, WE DELEVERAGED SIGNIFICANTLY AND IMPROVED OPERATING MARGINS AND BACKLOG. QUALITY AND SAFETY IMPROVED MARKEDLY. ADDITIVE MANUFACTURING AND SUSTAINABLE AVIATION INVESTMENTS About TRIUMPH TRIUMPH Group, Inc., headquartered in Radnor, Pennsylvania, designs, engineers, manufactures, repairs, and overhauls a broad portfolio of aerospace and defense systems and components. The Company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators. About This Report Our 2024 Sustainability Report references the Global Reporting Initiative ( GRI ) Standards. The disclosures in this Sustainability Report are also informed by the standards of the Sustainability Accounting Standards Board ( SASB ) for the aerospace and defense industry. SASB is an independent, private sector standards-setting organization dedicated to improving the effectiveness and comparability of corporate disclosures on environmental, social and governance ( ESG ) factors. Specifically, this report provides information on the following SASB sustainability disclosure topics, among others: Business Ethics • Product Safety • Data Security 4 3 22 GREW. ALMOST ALL OUR EMPLOYEES PARTICIPATED IN WELLNESS ACTIVITIES. AS A COMPANY, AS AN EMPLOYER, AS AN INVESTMENT, WE ARE HEALTHIER TODAY AS A DIRECT RESULT OF OUR TRANSFORMATION AND LOOK FORWARD TO AN EVEN BRIGHTER FUTURE. DEAR FELLOW STOCKHOLDERS: IN ITS FISCAL YEAR 2024, TRIUMPH CONTINUED TO DEMONSTRATE STRONG OPERATIONAL PERFOR- MANCE, STRENGTHENED THE HEALTH OF ITS BALANCE SHEET, AND ACCELERATED TOWARDS THE FINANCIAL TARGETS SET DURING ITS SEPTEMBER 2023 INVESTOR CONFERENCE. OUR CORE VALUES - INTEGRITY - CONTINUOUS IMPROVEMENT - TEAMWORK - INNOVATION - ACTING WITH VELOCITY - CONTINUED TO DEFINE OUR CULTURE AND PROMOTE OUR VISION TO ENABLE THE SAFETY AND Daniel J. Crowley Chairman, President, and Chief Executive Officer PROSPERITY OF THE WORLD AS ONE TEAM. TRIUMPH took another large step to solidify its position as a pure-play provider of critical subsystems and components with the sale of our third-party maintenance Product Support business. The company is now focused on growing its OEM and aftermarket capabilities leveraging our strong intellectual property portfolio. Consistent with investor feedback, this shift not only significantly reduced our debt and accelerated TRIUMPH 's de-leveraging plan by two years but helps drive predictable and sustainable revenue and margins in support of our path to value strategy. Financial Highlights TRIUMPH was successful in its fiscal year 2024, achieving or exceeding our strategic and financial objectives, while improving safety and quality across the business to all-time highs. The continuing business delivered approximately $1.2 billion of revenue, as organic sales increased by 13 percent over the prior year. TRIUMPH 's adjusted operating income was $115 million, with $144 million of EBITDAP resulting in a 12% increase in margins as previously negotiated price increases take effect. The sale of our Product Support third-party MRO business at 14.5 times EBITDAP allowed the company to retire over $675 million in debt. The interest savings from this significant delever- aging allowed the business to increase cash flow year over year and accelerate our debt repayment plan. Despite instability in OEM demand and the supply chain, our backlog grew 22% during FY24 from $1.55 billion to $1.9 billion, confirming the value our customers' place on TRIUMPH 's products and services. Note this only includes purchase orders with delivery dates in the next 24 months, with $1.15 billion of the backlog scheduled to ship in FY25 . When combined with our aggressive cost reductions, price increase cut-ins, reduced interest expense, and growing IP based aftermarket, TRIUMPH is well positioned for consistent and substantial free cash flow in the coming years. As commercial production rates remain below prior forecasts, carriers are experiencing a substantial increase in the average age in airline fleets which translated into growth in our high margin aftermarket and spares business, offsetting OEM demand softness. This improving mix can be clearly seen in our aftermar- ket growth in revenue by 19% over FY23 . This broad-based and profitable revenue stream will be sustained by the aging in-service fleets which require these spares and repairs. The realization of our accelerated debt reduction gives the company significant financial flexibility through our next debt maturity in 2028. Combined with higher OEM volumes and the incremental cut-in of negotiated price increases over the next several years, TRIUMPH to continue to reduce our leverage and deliver more upside to our shareholders. A Technology-Driven Growth Outlook As we partner with our customers to triumph over their hardest challenges, we are growing our engineering talent and generating new intellectual property that underpins a family of common products across all of our operating companies that is key to enhancing long-term shareholder value. Over the last several years we completely revitalized our new product lineup across fuel systems, hydraulics, thermal solutions, gearboxes, and electric controls product lines. Reflecting our shift to higher-value solutions, TRIUMPH 's electric controls are core to our customers' missions and platforms where we have developed a new modular controls solution called the Adaptable Cyber Enabled System ( ACES ). Employed across our product lines to control actuation, electric motor drives, FADEC engine controls, digital concentrators, thermal systems, and many other processes, ACES has been adopted by our increasing numbers of our customers as part of their next-gen architectures. TRIUMPH 's customer mix also changed in FY24 , as engine providers contributed heavily to our backlog and sales. Over the last five years, TRIUMPH expanded its position on GE Aerospace's new adaptive cycle military jet engine where we designed, assembled and tested the main engine fuel pump, the afterburner fuel pump, and many engine fueldraulic actua- tors. During this multi-year campaign, we upgraded our engineering tools, processes, and test cells to state-of-the-art levels. These high pressure pumps support GE 's mission to reduce engine fuel burn and extend the range of new military aircraft. GE Aerospace is now TRIUMPH 's second largest customer by sales. TRIUMPH is also one of only two U.S. corporations capable of providing complete landing gear system solutions spanning the product life cycle from structural design, analysis, testing, production and aftermarket for actuation, nose wheel steering, doors, and hydraulic power generation. Our landing gear actuation system on the Boeing 787 is performing well and is now beginning its 12 year overhaul cycle, which will generate substantial repairs orders over the life of the program. In addition to delivering landing gear for the Sierra Space Dreamchaser and BETA Alia e VTOL aircraft, we are developing new solutions for collaborative combat vehicles, electric vehicles, and space vehicles. Over the last few years, we also designed, developed and tested five gearboxes for new applications including the South Korean KF-21 fighter, Boeing's new T-7A trainer, the SAAB Grippen fighter, and several gearboxes on key classified pro- grams, all of which are transitioning to production in the near term. TRIUMPH is also at the forefront of developing digital additive manufactured gearbox housings which reduce complex- ity, weight, cost, and development cycle time, allowing Triumph to beat our competitors speed to market. We are also heavily engaged in designing gearboxes for multiple electric vehicle manufacturers, including a gearbox design for the new Airbus ZERO e program. With the support of the State of Connecticut, TRIUMPH recently opened a new Thermal Solutions Development Center at our West Hartford site, which serves as our center of excellence for the thermal solutions needed to cool increasingly dense electronics on modern aircraft. In August 2024, we tested new vapor cycle thermal compressor, our largest to date, in this facility. This new compressor can generate over 300 kilowatts of cooling for applications spanning high power electronics to directed energy wea