Triumph : TGI Sustainability and Annual Report 2022

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TRIUMPH

2022 Sustainability and Annual Report

Financial Highlights

(in millions, except per share data)
Fiscal Year Ended March 31		2022		2021		2020
Net sales	$	1,460	$	1,870	$	2,900
Adjusted operating income		135		108		218
Adjusted net income		52		(2)		137
Adjusted diluted earnings per share	$	0.79	$	(0.03)	$	2.69
Cash flow from operations		(137)		(173)		97
Total assets	$	1,761	$	2,451	$	2,980
Total debt		1,589		1,958		1,808
Total equity		(787)		(819)		(781)
Non-GAAP reconciliation				(326)
Operating income (loss)- GAAP	$	104	$	$	58
Loss on sale of assets & businesses		9		105		57
Restructuring		19		53		25
Legal judgment gain, net		-		-		(9)
Impairments		2		276		66
Other		-		-		21
Adjusted operating income*		135		108		218
Interest & other		(136)		(171)		(122)
Non-service defined benefit income		5		50		41
Less: Pension charges		52		-		-
Less: Financing charges		-		15		3
Adjusted income before income taxes*		57		1		140
Income taxes		(5)		(3)		(6)
Tax effect of adjustments		-		-		3
Adjusted net income		52		(2)		137
Diluted earnings per share - GAAP	$	(0.66)	$	(8.55)	$	(0.58)
Per share impact of adjustments		1.45		8.52		3.27
Adjusted diluted earnings per share	$	0.79	$	(0.03)	$	2.69
Weighted average diluted shares		65.4		53.0		52.0

*Differences due to rounding

About TRIUMPH

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs, and overhauls a broad portfolio of aerospace and defense systems, components,

and structures. 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 2022 Sustainability and Annual Report references the Global Reporting Initiative (GRI) Standards. The disclosures in this Sustainability and Annual 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-settingorganization dedicated to improving the effectiveness and comparability of corporate disclosures on environmental, social and governance factors. Specifically, this report provides information on the following SASB sustainability disclosure topics, among others: Business Ethics • Product Safety • Data Security

Adjusted Operating Margin

10% 9.2%

87.5%

65.8%

4
2
0	2022	2021	2020

Sales by End Market

		3%
31%	45%
	21%
■ Commercial OEM		■ Aftermarket
■ Military OEM		■ Non-Aviation

Adjusted Segment Operating Income

15%

85%

• Systems & Support
• Aerospace Structures

Triumph

Diversity is powerful. Triumph serves global markets and customers with comprehensive products and services. Our international workforce is focused on strategic end markets and optimal long-termreturns on investment.

As we exit our restructuring and the pandemic, Triumph is more resilient, competitive, and powerful.

This is who we are...

1

To Our Valued Stockholders:

Fiscal year 2022 was a year of transition and positive momentum for our Company and industry. We continued to focus on the health and safety of our workforce as our #1 priority while managing through the later stages of the COVID-19 pandemic. Thankfully our COVID-19 case rate continued to decline as over 85% of employees received vaccinations and all plants remained operational. Our core values - Integrity - Continuous Improvement - Teamwork - Innovation - Acting with Velocity - served us well through the pandemic and form the foundation for our future growth.

Triumph solidified its position as a pure-play provider of high- performing systems and value-added aftermarket services. We launched a new brand identity "TRIUMPH" that reflects our transformation and embraces our "one company, many solutions" operating philosophy. We removed a layer of overhead and organized around our core operating companies to save money, improve internal alignment, and place our business leaders closer to our customers.

Powered By Diversity

The diversity of the end markets Triumph serves, the platforms we support, and the products and services we offer are

key sources of our competitive strength. The Company is well positioned to benefit from the industry recovery already underway in commercial, freighter, and defense markets where Triumph plays an important role as both an OEM and aftermarket provider.

Our success is made possible by a highly engaged and representative work force, over 20% of whom identify as Black/African American, Asian, or Latino. In the United States, women

now comprise 31% of our leadership positions and persons of color now comprise 17% of our leaders as we tap historically under-represented talent pools. Last year, we formed new partnerships with universities and minority-led organizations to support our STEM education and recruiting goals. We are committed to further increasing our diversity and representation through 2030 as we employ the best talent and draw upon

our employees' strengths, talents, and backgrounds to drive the Company's success.

After two years of commercial aviation disruption, the demand for narrow-body aircraft is growing at over 10% on a compound annual basis while US defense budgets and freight volume continue to expand given the threat environment and reliance on e-Commerce. We anticipate strong recovery in the commercial wide body market in fiscal 2024 and beyond. Together, the breadth and diversity of the markets Triumph supports reduces investor risk while expanding our business and workforce opportunities.

The New Deal: Empowering Our Teams

During the pandemic, our team members acted independently, locally, and heroically to keep each other safe and make critical decisions about the business and our customers. Under an initiative we call the "New Deal," Triumph embraced this demonstrated level of performance and accountability to renew the social contract between the Company and our employees as we strive for higher customer satisfaction and profitability.

To compete in the post-pandemic world, we are accelerating our transition from hierarchical and functional departments to high performance teams (HPT) which operate autonomously within broad policies towards stretch goals. Triumph has over 100 HPTs across our Company spanning the entire value stream, from initial customer contact to purchase order, through the factories, all the way to customer service after the sale. The teams have proven adept at rapidly solving problems and improving continuously as they demonstrated during the pandemic.

We are training all employees in lean tools as part of their HPT development to enhance quality and productivity and help Triumph become an employer and supplier of choice.

We are on a journey to help every team member maximize their potential through tailored career "flight plans." Local site teams are selecting the best work week structure and work rules to enhance retention and accountability to our customers and each other. In parallel, we help safeguard the health and well-being of our team members through a focus on wellness, fitness, and community involvement.

While overcoming the pandemic at work and at home and performing at higher levels within the Company, our employees are committed to helping others in need and made contributions of over $100K to philanthropic causes, and over 75% of our employees actively participated in philanthropic events all over the world. The Triumph Group Charitable Foundation made a further donation of $400K in charitable contributions in fiscal year 2022 as part of our annual giving campaign.

Financial Highlights

On $1.5 billion of net sales last year, Triumph's adjusted operating income increased by 25% to $135 million, improving adjusted operating margin by 300 basis points to 9%. Net debt reduced 2% to $1.4 billion, and liquidity was strong with $300 million of cash and availability at year end. Stockholders enjoyed strong returns as a result of management's actions coming out of the pandemic as Triumph's share price increased 37.5% over fiscal year 2022 from $18.38 to $25.28 per share.

Looking forward, we set financial targets	based on our multi-year
plans reflecting annual improvements in	profitability and free

cash flow. Realization of these targets will enable Triumph to reduce its financial leverage over our planning horizon.

Triumph is expanding our product and service offerings by leveraging our intellectual property and manufacturing knowhow across both military and commercial markets. Having largely exited our Structures business, our Systems & Support segment sales now make up over 70% of total revenue for the year which we expect to translate into higher earnings per share

on an adjusted basis.

Positioned For The Future
Triumph's restructuring efforts and transformation will complete
with the sale of our Stuart, Florida structures facility which is
anticipated to close in the first half of fiscal	2023. After complet-
ing 16 divestitures, this sale will mark the exit of our build-to-print
and contract manufacturing businesses, leaving only close-out
of residual Boeing 747 structures deliveries from inventory and
divested site transitions in fiscal year 2023.		2

Daniel J. Crowley

Chairman, President and

Chief Executive Officer

Triumph began our fiscal year 2023 by streamlining the organization to reduce costs and increase customer responsiveness. Our five operating companies have clear charters and experienced leaders committed to growing our OEM and aftermarket business with at least 25% of future sales coming from new customers, products, and services. Triumph is on a path to become market leaders in our core actuation, engine controls, gears, mechanical controls, interiors, and third-party aftermarket support operating companies.

To sustain our disciplined execution, we created a new senior leadership team position of Vice President, Execution Assurance to deploy best practices in Program Management and the Triumph Operating System (TOS). The Triumph Execution Assurance team conducted over 400 lean events last year across 24 sites in partnership with our factory general managers benefiting over 200 contracts.

In fiscal year 2022, we hosted a supplier conference with over 240 suppliers centered on "Ready for Rate Ramp" where we made plans for OEM production rate increases and jointly developed the actions and partnerships necessary for mutual success. Consistent with our core values, Triumph "acted with velocity" to mitigate the impact of supply chain constraints and price increases through engagement and low-cost country sourcing. Proactive communication, advanced forecasting, artificial intelligence-based risk management, innovative staffing approaches, along with dual sourcing and disciplined price management are all keys to successfully managing the current inflationary environment and upcoming production ramp-up

as well as ensuring supply continuity and affordability.

We are realizing the benefits of our portfolio risk reduction and our strengthening balance sheet allow us to invest in our core systems and aftermarket capabilities. Our commitment to operational excellence and financial predictability translates to our future state as a pure-play provider of high-performance systems and value-added aftermarket services.

Pivot To Growth

With strong relationships and a diverse portfolio, we are winning in a competitive marketplace. We won more than $2.2B of new orders in fiscal year 2022 - the highest in the last six years - demonstrating the strength of our platform incumbency, innovate engineering, and intellectual property. Excluding follow-on awards, the value of new orders is up more than 60% from fiscal year 2022 as our efforts to engage new and existing customers with our full portfolio of capabilities gain momentum.

Our wins are diverse, including both military and commercial awards and spanning helicopters, fighters, electric vertical take-off and landing aircraft, passenger to freighter cargo conversions, commercial transport, and business jets. We are finding new applications for our existing intellectual property across a wide variety of products and services and market segments.

Triumph's ability to win competitive and follow-on business is accelerating as our performance improves year over year. We ended fiscal 2022 with a two-year backlog of $2B. We are accelerating our growth through partnership with leading distributors Triman and VSE and formed a joint venture with Air France KLM to support the future fleet nacelle MRO demand. Looking ahead, we view Asia and the Middle East as attractive growth markets.

Sustainability For The Future

As we move into fiscal year 2023, we are pleased to provide our stakeholders with an update on our environmental, social, and governance ("ESG") program. In fiscal year 2022, we significantly advanced our ESG program by developing our data dashboard, including our 2020 baseline information as well as our 2021 data. That data is included in our Sustainability and Annual Report which can be found on our investor relations site through www.triumphgroup.com.

In fiscal year 2022, the company also considered the issues that are material to our long-term success and developed five and ten-year sustainability goals. Our Sustainability and Annual Report includes those goals for the first time. We look forward to solidifying our path to meet these targets, which are essential drivers for our sustainability program, in the year ahead. We are committed to creating value in a sustainable way - investing in our people and processes and improving our quality, produc- tivity, and agility.

Our customers value Triumph as a provider of quality and affordable systems and as a preferred maintenance and repair partner. Powered by Diversity, our company is poised to expand top and bottom lines year over year. Operating as One Team, we are focused on delivering on our commitments to all our stakeholders while leading by example on ESG. We measure success not only in the profits we make but also by enabling the safety and prosperity of the world and communities in which we live and work.

Daniel J. Crowley
3
Chairman, President and Chief Executive Officer