Executive Summary

Q2 FY2025 delivered modest top-line growth with margin expansion and a guidance raise: net sales $287.5M (+1% YoY), operating income $32.4M (11% margin), adjusted operating income $36.0M (13% margin), adjusted EBITDAP $42.6M (15% margin), GAAP diluted EPS $0.15, adjusted EPS $0.20 .
Mix shift to aftermarket (commercial +34% YoY) and an Interiors pricing settlement with Boeing restored Interiors to profitability; management raised FY25 guidance across profits, cash flow, and EPS while maintaining sales at ~$1.2B .
Free cash flow use of ($44.7M) in Q2 reflected seasonality, working capital build, and a $42M semi-annual interest payment, but management expects accelerated FCF generation in H2 and positive Q3, underpinned by aftermarket strength and pricing actions; liquidity was $148M .
Backlog rose to $1.90B, with pushes on Boeing narrow-body OEM offset by growth elsewhere; Military and Commercial aftermarket demand plus negotiated price increases support H2 margin trajectory .
Estimates from S&P Global were unavailable for TGI this quarter; no consensus beat/miss can be assessed. Management indicated Q2 results exceeded internal expectations, and the guidance raise is a stock reaction catalyst .

What Went Well and What Went Wrong

What Went Well

Aftermarket strength: commercial aftermarket up $10.4M (+26.2%) YoY; total aftermarket revenue $93.9M; management cited 57% aftermarket gross margin and 787 landing gear spares/repairs ramp .
Interiors turnaround: favorable commercial resolution with Boeing and cost actions restored segment profitability in Q2 (segment EBITDAP $1.9M, margin 5%) with full-year EBITDAP margin expected in the 5–6% range; FY25 earnings and cash flow guidance raised .
Balance sheet progress: net debt $868M, leverage 5.5x (down from 8.3x YoY), liquidity $148M; semi-annual interest payment down $27M YoY due to debt reduction .

Management quote: “We restored our Interiors business to profitability in Q2 through a settlement with Boeing and deep cost reductions to rightsize the business.” .

What Went Wrong

OEM softness: commercial OEM down ($11.6M) (-8.9%) YoY on reduced 737/767/777 volumes; pushes on Boeing programs reduced backlog timing, although 787 improved and pricing helped profitability .
Working capital and cash usage: Q2 cash used in operations ($38.4M) and FCF ($44.7M) due to seasonality, interest timing, OEM rate deferrals, supply chain; Q2 included a $42M interest payment .
V-22 drag: temporary flight restrictions weighed on aftermarket and OEM volumes; Military aftermarket was flat YoY despite CH-47 strength and ~$5M IP sale .

Financial Results

Metric	Q2 FY2024 (Sep 2023)	Q4 FY2024 (Mar 2024)	Q1 FY2025 (Jun 2024)	Q2 FY2025 (Sep 2024)
Net Sales ($M)	$284.7	$358.6	$281.0	$287.5
Operating Income ($M)	$22.5	$44.8	$8.1	$32.4
Adjusted Operating Income ($M)	$25.4	$55.8	$17.2	$36.0
Adjusted EBITDAP ($M)	$33.9	$58.3	$25.4	$42.6
Adjusted EBITDAP Margin (%)	11.9%	16.3%	9.0%	14.9%
GAAP Diluted EPS – Continuing Ops ($)	($0.08)	$0.07	($0.24)	$0.15
Adjusted Diluted EPS ($)	($0.05)	$0.31	($0.06)	$0.20

End-Market Revenue Mix ($M)

Category	Q2 FY2024	Q4 FY2024	Q1 FY2025	Q2 FY2025
Commercial OEM	$130.6	$139.6	$118.7	$118.9
Military OEM	$61.1	$71.2	$61.8	$64.0
Total OEM	$191.6	$210.8	$180.5	$183.0
Commercial Aftermarket	$39.7	$56.4	$50.2	$50.2
Military Aftermarket	$43.6	$65.3	$41.1	$43.8
Total Aftermarket	$83.3	$121.6	$91.3	$93.9
Non-Aviation	$9.2	$25.4	$8.6	$10.0
Amortization of Acquired Contract Liabilities	$0.6	$0.8	$0.6	$0.6
Total Net Sales	$284.7	$358.6	$281.0	$287.5

Segment Performance

Segment	Metric	Q2 FY2024	Q4 FY2024	Q1 FY2025	Q2 FY2025
Systems & Support	Net Sales ($000)	$249,385	$310,116	$251,981	$249,954
Systems & Support	Segment EBITDAP ($000)	$48,487	$71,336	$47,397	$54,823
Systems & Support	Segment EBITDAP Margin (%)	19.5%	23.1%	18.9%	22.0%
Interiors	Net Sales ($000)	$35,293	$48,471	$29,035	$37,541
Interiors	Segment EBITDAP ($000)	($2,704)	$1,137	($7,277)	$1,891
Interiors	Segment EBITDAP Margin (%)	-7.7%	2.3%	-25.1%	5.0%

KPIs and Balance Sheet/Cash Flow

KPI	Q2 FY2024	Q4 FY2024	Q1 FY2025	Q2 FY2025
Backlog ($B)	—	$1.90	$1.87	$1.90
Cash from Operations ($M)	($32.2)	$77.7	($104.5)	($38.4)
Capital Expenditures ($M)	($4.6)	($5.6)	($8.2)	($6.3)
Free Cash Flow ($M)	($36.9)	$72.1	($112.7)	($44.7)
Net Debt ($M)	—	$702	$821	$868
Leverage (Net Debt/EBITDAP, x)	—	4.9x	—	5.5x
Liquidity ($M)	—	$437	$203	$148
Diluted Shares (M)	76.447	77.817	77.158	77.718

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($B)	FY2025	~$1.2	~$1.2	Maintained
Operating Income ($M)	FY2025	~$132.5 (reflects $7.5M legal contingency)	$140.5–$145.5	Raised
Adjusted EBITDAP ($M)	FY2025	~$182.0	$190.0–$195.0	Raised
GAAP Diluted EPS ($)	FY2025	~$0.33	$0.47–$0.53	Raised
Adjusted Diluted EPS ($)	FY2025	~$0.52	$0.70–$0.76	Raised
Cash Flow from Operations ($M)	FY2025	$30–$50	$40–$55	Raised
Free Cash Flow ($M)	FY2025	$10–$25	$20–$30	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2024, Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Aftermarket demand/mix	Aftermarket 34% of Q4 sales; strong MRO; multi-year growth; 787/A380 overhaul cycles starting	Aftermarket contributed ~61% of profit with 33% of sales; commercial aftermarket +34% YoY; 787 spares/repairs bow wave; 57% aftermarket gross margin	Improving
Boeing OEM rates/inventory	Adopted conservative FY25 rate assumptions; backlog pushes; expectation of step-up later	Narrow-body backlog pushouts; optimism as workers return; portal demand improving; impact ~5% of sales company-wide	Stabilizing/Recovering
Interiors profitability/cost actions	Margin weakness; cost reductions ($40M) and hedges; pursuit of additional scope	Favorable Boeing settlement; profitability restored; headcount reduction (~700); full-year EBITDAP margin ~5–6%	Improving
Pricing actions (LTAs)	~$75M FY25 price ups planned; majority contracted	Price actions exceeding plan; supports margin expansion and FY25 raise	Improving
Working capital/FCF seasonality	Q1 cash use; Q4 generation; expected H2 burn-off	Q2 cash use with $42M interest; expect positive Q3 and strong Q4 FCF	Seasonal/Improving H2
Debt/leverage/interest	>$670M debt retired; annual interest savings ~$55M; leverage 4.9x at FY24	Net debt $868M; leverage 5.5x; semi-annual interest $42M; upgrades from Moody’s & S&P	Improved vs PY; near-term stable
Military programs	CH-53K backlog growth; new gearbox programs; V-22 OEM declines	CH-47 FADEC upgrades (46 shipsets; 5-year IDIQ >$250M); V-22 restrictions temporarily weighed on MRO	Mixed (CH-47 strong; V-22 soft)
Technology/thermal solutions	Product innovation (gearboxes, digital controls); Investor Day roadmap	New West Hartford thermal solutions center; cyber-enabled systems; data center cooling opportunity	Building

Management Commentary

“We exceeded our cash guidance by $35 million in the quarter and derisked our full year free cash flow target.” – James McCabe .
“TRIUMPH achieved its tenth consecutive quarter of year-over-year sales growth…we turned around [Interiors] in Q2 through substantial cost reductions and a commercial resolution.” – Dan Crowley .
“Our aftermarket revenue…represents 33% of Triumph's sales…delivered 61% of our profit in the quarter.” – James McCabe .
“We shipped 46 shipsets of T-55 engine FADECs on the Chinook…approx. 200 units per year totaling more than $250 million for the entire upgrade program.” – Dan Crowley .
“Backlog…up 7% year-over-year to $1.9 billion…we reached a positive inflection point within our Interiors business.” – Dan Crowley .

Q&A Highlights

Profitability drivers behind guidance raise: Aftermarket strength is the core driver; Interiors settlement helps but mix and price are key; H2 margins imply ~20% adjusted EBITDA in second half due to mix/price .
Cash/working capital cadence: Positive Q3; strong Q4; backlog and parts on hand support execution without new wins needed; near-term cash use tied to interest timing and OEM rate delays .
Interiors settlement scope: This year’s equitable adjustment with Boeing; ongoing discussions with Airbus on inflation/directed source cost relief; full-year Interiors EBITDAP margin expected ~5–6% .
Boeing ramp outlook: Management expects step increases; supply chain has buffer inventories; impact across Triumph ~5% of sales; portal demand improving .
Strategic options rumor: No comment on rumors; focus remains on shareholder value with improved profitability, backlog growth, and balance sheet .

Estimates Context

S&P Global consensus estimates were unavailable for TGI this quarter due to mapping limitations; as a result, estimated revenue/EPS comparisons to consensus cannot be provided. Values retrieved from S&P Global would be cited here if available.
Management stated Q2 results exceeded internal expectations and raised FY25 profitability and cash flow guidance, suggesting positive estimate revisions may be warranted by the sell-side .

Key Takeaways for Investors

Aftermarket is structurally driving margins and cash: 787 overhaul cycle and legacy fleet extensions underpin multi-year growth; expect continued double-digit aftermarket revenue growth and strong contribution to profit .
Interiors risk reduced: Boeing settlement and deep cost actions restored profitability; management targets mid-teens segment margins in H2 and double-digit margins over FY26–FY29 as rates recover—positive for sentiment and multiple .
Guidance raise is a catalyst: FY25 Adjusted EBITDAP to $190–$195M and FCF to $20–$30M—watch for H2 execution and Q3 positive FCF as validation points .
Monitor Boeing ramp and working capital: OEM rate timing remains the swing factor; Triumph planning conservatively with inventory in place and diversified end markets (impact ~5% of sales), but cash conversion hinges on Q4 burn-off .
Pricing tailwinds: ~$75M FY25 price increases (majority contracted) plus cost reductions support margin expansion; track incremental pricing on 787 and military programs .
Balance sheet improving: Leverage down vs prior year; interest savings material; liquidity adequate—watch potential capital structure optimization post no-call period in ~4 months .
Near-term trading setup: Guidance raise + Interiors profitability + aftermarket bow wave vs. OEM uncertainty and seasonal working capital; H2 execution (Q3 FCF positive, Q4 strong) likely drives stock narrative .

Additional Relevant Press Releases (Q2 FY2025)

Triumph postponed earnings release to Nov 12, 2024 to reflect Interiors price agreement with Boeing, foreshadowing the Q2 guidance raise .
Q2 results and raised FY25 guidance press release mirrored 8-K exhibit figures (net sales, margins, EPS, Adjusted EBITDAP, cash use) .

TRIUMPH GROUP INC (TGI)·Q2 2025 Earnings Summary