Triumph Group, Inc. Annual Report 2014 Designed to be Different. Built to Perform. Positioned for Growth. TRIUMPH. ONE NAME. MANY SOLUTIONS. In fiscal 2014, Triumph continued to • Execution issues associated with Triumph’s leverage its successful entrepreneurial Boeing 747-8 program were addressed business model to set the stage for and production was stabilized. While the continued growth and expansion as a key impact was contained and non-recurring, player in the global aerospace market. it significantly affected fiscal 2014 financial results. • Revenues increased 2% to $3.8 billion in fiscal 2014. Net income was $206.3 million, and • Excluding the impact of the Red Oak initiative earnings per share were $3.91. and the 747-8 program, all of Triumph’s three business segments reported healthy operating • Triumph generated over $181.5 million in margins. cash flow from operations before pension contributions of $46.3 million. • The acquisition of General Donlee Canada, Inc., added new capabilities in engine and main • Triumph successfully completed the closure rotor shaft technology to Triumph’s Aerospace of the Triumph Aerostructures Jefferson Street Systems Group. About the Cover: facility in Dallas and start-up of a new state- The cover illustration featured of-the-art manufacturing center in nearby Red • A range of new contract awards has positioned on Triumph’s 2014 Annual Report Oak, Texas – resulting in annual cost savings of Triumph for continued growth, including new captures the scope and potential approximately $40 million. opportunities with Boeing, Airbus, Embraer, of today’s global aerospace and other aerospace manufacturers. marketplace in a single dramatic image. The visualization, created • In February, the Board of Directors increased by Geographic Information Triumph’s share repurchase authority to 5.5 Systems (GIS) Specialist million shares, and a 300,000 share buyback Michael Markieta, plots more than 58,000 flight paths was executed during the fourth quarter for connecting all airports across approximately $19.1 million. the globe. For more information, visit www.spatialanalysis.ca. Major Markets Aerostructures Aerospace Systems as of March 31, 2014 Top Ten Platforms Top Ten Platforms as of March 31, 2014 as of March 31, 2014 57% Commercial Aerospace 1. Boeing 747 1. Boeing 737 28% Military 2. Boeing 777 2. Boeing CH-47 11% Business 3. Gulfstream 3. Bell Helicopter 429 2% Non-Aviation 4. Boeing C-17 4. Boeing 777 2% Regional 5. Airbus A330, A340 5. Sikorsky UH-60 6. Boeing 737 6. Airbus A320, A321 7. Boeing 767, Tanker 7. Boeing V-22 8. Boeing 787 8. Lockheed Martin C-130 9. Boeing V-22 9. Boeing 787 10. Bombardier Global 7000/8000 10. Sikorsky CH-53K (Represents 88% of (Represents 48% of Aerospace Aerostructures backlog) Systems backlog) About Triumph Triumph Group, Inc., headquartered as well as commercial and regional components Triumph provides. To in Berwyn, Pennsylvania, designs, airlines and air cargo carriers. achieve its goals, Triumph protects engineers, manufactures, the integrity of the individual Triumph is comprised of 45 repairs, and overhauls a broad Triumph companies while providing highly specialized manufacturing portfolio of aerostructures, each company with the benefits of companies, operating at 64 aircraft components, accessories, being part of a large corporation. locations worldwide. The company subassemblies and systems – In return, each company is is organized into three groups: providing integrated solutions for accountable for superior operating Aerostructures, Aerospace Systems the global aerospace market. The and financial results and for All companies share the and Aftermarket Services. company serves a broad, worldwide contributing to the overall success Triumph name and a common spectrum of the aviation industry, Triumph’s mission is to be the of the enterprise. This operating dedication to the core values of including original equipment premier aerospace and defense philosophy provides flexibility to Integrity, Innovation, Quality manufacturers of commercial, company recognized by customers capitalize on the changing market and Service, Flawless Execution regional, business and military as their supplier of choice for environment while delivering and Commitment. aircraft and aircraft components, the aerostructures, aerospace superior customer satisfaction. assemblies, subassemblies and Financial Highlights (Dollars in thousands, except per share data) Results for Year March 14 March 13 March 12 Sales $ 3,763,254 $ 3,702,702 $ 3,407,929 Income from Continuing Operations $ 206,256 $ 297,347 $ 281,622 % of Sales 5% 8% 8% Income Tax Expense 105,977 165,710 155,955 Interest Expense & Other 87,771 68,156 77,138 Operating Income $ 400,0041 $ 531,2132 $ 514,7153 % of Sales 11% 14% 15% Amortization of Acquired Contract Liabilities (42,629) (25,644) (26,684) Depreciation & Amortization 164,277 129,506 119,724 Adjusted Earnings before Interest, Taxes, Depreciation & Amortization4 $ 522,818 $ 669,556 $ 567,355 % of Sales 14% 18% 17% Net Income $ 206,2561 $ 297,3472 $ 280,8573 % of Sales 5% 8% 8% Earnings per Share – Diluted: Income from Continuing Operations $ 3.911 $ 5.672 $ 5.433 Loss from Discontinued Operations — — (0.01) Net Income $ 3.91 $ 5.67 $ 5.41* Weighted Shares – Diluted (in thousands) 52,787 52,446 51,873 Capital Expenditures $ 206,414 $ 126,890 $ 93,969 Year-End Position Working Capital $ 1,142,144 $ 892,818 $ 741,105 Property & Equipment at cost $ 1,473,805 $ 1,296,024 $ 1,135,344 Property & Equipment, net $ 930,973 $ 815,084 $ 733,380 Debt $ 1,550,383 $ 1,329,863 $ 1,158,862 Cash 28,998 32,037 29,662 Net Debt $ 1,521,385 $ 1,297,826 $ 1,129,200 Stockholders’ Equity 2,283,911 2,045,158 1,793,369 Capital $ 3,805,296 $ 3,342,984 $ 2,922,569 Net Debt to Capital Ratio 40% 39% 39% Book Value per Common Share $ 43.79 $ 40.80 $ 36.21 Employees 13,828 13,900 12,602 Sales per Employee $ 272 $ 266 $ 270 1 Includes $2.1 million in net curtailments, settlements and early retirement incentives ($1.4 million after tax or $0.03 per diluted share) and $70.3 million of cost associated with the relocation from our largest facility ($45.6 million after tax of $0.86 per diluted share). 2 Includes $34.5 million in curtailment loss and early retirement incentives ($22.2 milion after tax or $0.42 per diluted share) and $2.7 million of integration expenses associated with the acquisition of Vought ($1.7 million after tax or $0.03 per diluted share). 3 Includes $40.4 million of net curtailment gain ($26.1 milion after tax or $0.50 per diluted share) and $6.3 million of acquisition and integration expenses associated with the Vought acquisition ($4.0 million after tax or $0.08 per diluted share). 4 Management believes that adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) provides useful information with respect to our overall operating performance, debt service capacity and ability to fund capital expenditures. * Difference due to rounding. Sales Cash Flow from Operations* Adjusted EBITDA Backlog 4,751 3,763 670 4,527 430 3,703 4,305 3,408 567 349 523 181 12 13 14 12 13 14 12 13 14 12 13 14 * Cash Flow from Operations in 2014, 2013 and 2012 was $181, $430 and $349 million before pension contributions of $46, $110 and $122 million, respectively. 1 Fellow Stockholders: Today, Triumph competes at every level of the aerospace supply chain. We are able to produce virtually any aircraft component – from a single part to a complex wing or rotorcraft assembly, and our services range from product development to testing to manufacturing to aftermarket services. In fiscal 2014, we continued to build on this solid foundation to position Triumph for growth in the next 20 years and beyond. Fiscal 2014 was a transition year for Triumph in which we made important investments in our future. Although our financial results did not achieve the highs of recent years, the fundamentals of our business remain solid. Revenues increased 2% to $3.8 billion, while both operating income and earnings per share were significantly lower than the results achieved in the previous fiscal year. Two key factors – both of them isolated and non-recurring – contributed to these results. Part of the shortfall was anticipated, as we closed an outdated and inefficient manufacturing facility in Dallas and started up operations in our new state-of-the-art manufacturing center in nearby Red Oak, Texas. The shutdown of the Jefferson Street facility – acquired in the 2010 Vought acquisition – was a major accomplishment, completed ahead of schedule. The move will result in significant cost savings and increased competitiveness for our Aerostructures Group for many years to come. Our financial results were also affected by execution issues associated with our Boeing 747-8 program. These issues were confined to this specific program and, by the end of the fiscal year, the program was stabilized and on schedule. The fundamentals of our business remain solid. Excluding In our first 20 years, Triumph created a strong and diverse these non-recurring issues, all three of our operating groups – organization comprised of the world’s finest aerospace Aerostructures, Aerospace Systems, and Aftermarket Services – manufacturers and suppliers. We established ourselves as a major maintained healthy margins. participant in the marketplace based on unique capabilities that set us apart from our competitors. We remain focused on creating shareholder value. In February, we increased our share repurchase authority to approximately Our growth is based on a simple business strategy which has 5.5 million shares and executed a 300,000 share buyback during guided Triumph since its inception: the fourth quarter to provide immediate returns to our stockholders. • To continually add products and services, We also believe that Triumph is well positioned to take advantage • To expand operating capacity, of significant growth opportunities in our core markets to increase • To acquire aggressively, future returns to our stockholders.