TRIUMPH RECEIVES CREDIT RATING UPGRADES
Triumph Group (NYSE: TGI) announced that both Moody's and S&P Global Ratings have upgraded the company's credit ratings, with Moody's increasing the corporate family rating to B3 from Caa1 and S&P Global Ratings upgrading the issuer credit rating to B- from CCC+. The upgrades were attributed to Triumph's reduced leverage resulting from the full repayment of its 2025 notes and partial repayment of its 2028 notes, as well as favorable market conditions. Both agencies have given the company a stable outlook. Triumph has focused on strategic actions over the past year to streamline operations and fortify its balance sheet, aiming for long-term targets in debt reduction, EBITDAP margin expansion, and free cash flow generation.
- Credit rating upgrade by Moody's to B3 from Caa1.
- S&P Global Ratings upgraded issuer credit rating to B- from CCC+.
- Full repayment of 2025 notes and partial repayment of 2028 notes.
- Reduced leverage and stronger balance sheet.
- Commitment to debt reduction, EBITDAP margin expansion, and free cash flow generation.
- None.
Insights
The upgrade of Triumph Group, Inc.'s credit ratings by both Moody's and S&P Global Ratings is a significant positive development for the company. These upgrades reflect a reduction in the company's leverage, achieved through paying off debt and this reduction in debt enhances the company's financial stability. Improved credit ratings can lower borrowing costs, as lenders perceive less risk in extending credit to Triumph.
From a financial perspective, deleveraging is a prudent strategy, especially in the capital-intensive aerospace and defense industry. Lower interest expenses from reduced debt obligations directly contribute to improving EBITDAP margins (Earnings Before Interest, Taxes, Depreciation, Amortization and Pension expense). This can also positively impact free cash flow, providing additional resources for reinvestment or rewarding shareholders.
For a retail investor, this improvement in credit ratings suggests enhanced financial health and better risk management at Triumph, potentially leading to more stable and possibly improved returns in the long-term.
Upgraded credit ratings can also indicate that Triumph is better positioned to withstand market fluctuations and economic downturns. Aerospace and defense are highly competitive sectors and a firm with a stronger balance sheet and lower debt levels can invest more in R&D, capitalize on emerging opportunities and defend its market position against competitors.
Moreover, these upgrades might make Triumph more attractive to institutional investors who often have stringent criteria for investment, including creditworthiness. Greater institutional interest can lead to higher stock liquidity and potentially more favorable stock price movements.
From a retail investor's viewpoint, Triumph's ability to generate consistent cash flows and its strategic focus on debt reduction could offer a more secure investment relative to peers with higher leverage and weaker credit profiles.
Moody's Ratings upgrades to B3
S&P Global Ratings upgrades to B-
Moody's upgraded TRIUMPH's corporate family rating to B3 from Caa1 on June 28th citing materially reduced leverage from paying off the 2025 notes in their entirety and a portion of the 2028 notes. S&P upgraded TRIUMPH's issuer credit rating to B- from CCC+ on June 6th referencing lower debt and favorable market conditions. Both credit agencies rate TRIUMPH with a stable outlook.
"TRIUMPH took important strategic actions over the last year to create a more streamlined, value-added and IP-based business with a much stronger balance sheet," said Jim McCabe, TRIUMPH's senior vice president and chief financial officer. "These upgrades recognize our commitment to increasing shareholder value through the cycle of deleveraging benefits, supporting our multi-year targets for debt reduction, EBITDAP margin expansion, and free cash flow generation."
About TRIUMPH
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Forward Looking Statements
Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about guidance, financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies and organizational restructurings and our evaluation of potential adjustments to reported amounts, as described above. All forward-looking statements involve risks and uncertainties which could affect the Company's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
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SOURCE Triumph Group
FAQ
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