Triumph : TGI Sustainability and Annual Report 2024

Published: 2024-10-08 10:21:05 ET TGI

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

103

Adjusted net income

(4)

Adjusted diluted earnings per share

(0.06)

0.51

0.73

Cash flow from operations

(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

Operating income - GAAP

196

Loss (gain) on sale of assets and

businesses

(102)

Restructuring

Impairments

Other

Adjusted operating income*

115

103

Interest and other

(123)

(115)

(113)

Non-service defined benefit income

Less: Pension charges

Less: Financing charges

Adjusted (loss) income before

income taxes*

Income taxes

(7)

(4)

(5)

Adjusted (loss) income from continuing

operations

(4)

(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-Aviation4%

Commercial

AftermarketOEM

29%

45%

22%

Military OEM

Adjusted Operating Margin

10%

9.6% 10.0%

8.0%

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

$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-partyMRO 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 eVTOL 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 ZEROe 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 weapons.

We are excited about our new development efforts, but more importantly, our customers are incorporating these products into their platforms and funding our integration efforts. These new OEM products will also generate higher margin spares and repairs orders in the future. Engineering excellence is at the heart of everything we do as we partner with our customers.

People Philosophy

Creating and sustaining a culture of collaboration and inclusivity is foundational to everything we do, as well as imperatives

for attracting and retaining top talent. Our diverse workforce brings together unique perspectives and experiences that drive our innovation and year over year improvement. During FY24,

we continued to reinvent our partnership with our employees under our New Deal which is breaking new ground in workforce engagement and flexibility.

TRIUMPH strives to be an employer of choice and we are committed to the success of our employees and their families who put their trust in the company to ensure they have meaningful and rewarding work and competitive pay and benefits. We also continue to prioritize corporate citizenship through our community outreach programs. We partnered with local communities in which our facilities are located to help bring our employees together as one team serving our communities through over $345,000 in donations and over 27,500 volunteering hours.

In addition, through our High-Performance Teams (HPTs), we unite functions across the value stream, no longer working within their own silos, to meet our aggressive annual continuous improvement goals set under the TRIUMPH Operating System and Policy Deployment process, and to deliver on our commitments to customers. These HPTs are key to the improvements we saw in FY24 on safety, productivity, quality, cycle time reduction, environmental mitigation, and new business capture. We also made measurable progress in our Wellness and Flight Plan skill development initiatives last year to ensure our employees have mutually supportive work and personal lives.

In summary, TRIUMPH is a healthier company on all dimensions: operationally, financially, and most importantly, the wellness of our people upon whom all of our results depend. We continually strive to build a strong future for the company and all of its stakeholders, serving our customers, and enabling quality jobs for employees. As we begin a new "super cycle"

in aviation and defense, TRIUMPH looks forward to accelerating our future.

Daniel J. Crowley

Chairman, President, and Chief Executive Officer

OUR FUTURE ON FOUR FRONTS

CORE

QUALITY

QUALITY AND SAFETY ARE CRITICAL expectations in aerospace, and thus at the heart of everything TRIUMPH does as a premier aerospace company. There's never room for compromise. Quality and safety also

tie directly to our mission as a company: partnering to overcome our customers' most significant challenges. Defect free quality will always be our mandate as innovation drives change and continuous improvement.

To get to core quality, we are applying standardized processes and sharing our experiences to continually fortify our culture. We use continuous improvement tools to eliminate variability and quality "escapes," coupled with a cultural commitment to do things right the first time. We back that commitment with quality monitoring and audits of our suppliers, strict root-cause corrective processes, and a product safety management program that prioritizes safety alongside quality in all aspects of our operations.

Every investment we make in quality improvement pays off for all our stakeholders because safety, reliability, and repeat business are invariably the profitable outcomes.

<1.0%

EIGHT TRIUMPH SITES MAINTAINED A COST OF POOR QUALITY (COPQ) UNDER 1% OF SALES

IN FY24. COMPANYWIDE, YEAR-OVER-YEAR COPQ IN DOLLARS WAS DOWN 20%.

PROPRIETARY SUBSYSTEMS & COMPONENTS

OUR FUTURE GROWTH centers on manufacturing subsystems and components of our own design and engineering. For many of our customers, outsourcing complete subsystems is critical for aircraft systems integration, quality assurance, supply chain management, regulatory compliance, and their goal of modular aircraft design. For TRIUMPH, offering systems solutions driven by our own IP means longer contracts with major aerospace companies and thus greater value for our shareholders.

A substantial and growing portion of our business already includes proprietary thermal systems, hydraulic systems, landing gear systems, fuel systems, gear systems, and helicopter blade fold-and-damping systems.

For example, for a number of years we have been manufacturing the folding-and-damping system on the CH-53K King Stallion, a heavy-lift cargo helicopter designed and manufactured by Sikorsky Aircraft, a subsidiary of Lockheed Martin. Also with Lockheed Martin, we are engaged in developing a more efficient power thermal management system for the F-35 Lightning II Joint Strike Fighter.

Fuel systems are an important capability at Triumph, especially helicopter fuel systems, where we engineer everything from fuel pumps and hydraulic metering units to full authority digital engine control solutions. Another strong competency is military fighter fuel pumps, spanning main engine pumps, afterburner pumps, and "fueldraulic" engine actuation.

In the near future, our systems work will extend to electric solutions in response to electric aviation with more computer processing, cyber protection, control software, and electric actuation.

90%

TODAY, 90% OF TRIUMPH'S REVENUE IS GENERATED BY SYSTEMS AND COMPONENTS DESIGNED WITH PROPRIETARY IP, UP FROM 30% IN FY19.

SUSTAINABLE AVIATION

AIRCRAFT AND AEROSPACE MANUFACTURERS,

including TRIUMPH, are investing substantially in sustainable aviation, driven by environmental concerns, consumer demand, and the industry's commitment to achieving net-zero emissions by 2050.

We are working across a number of fronts: adapting our fuel systems for sustainable aviation fuels derived from renewable feedstocks that can reduce lifecycle emissions by up to 80% over conventional jet fuel; working with GE Aerospace to build high-pressure fuel pumps that burn fuel more efficiently; adapting our thermal compressors to environmentally friendlier refrigerants; and working with Airbus to design a gearbox for its ambitious ZEROe program. Through ZEROe, Airbus intends to develop and bring to market by 2035 the world's first zero-emission commercial aircraft.

Our geared systems business is also engaged with electric aircraft manufacturers to design and build gear systems between the electric motor and the rotor or propeller.

Eliminating toxins is another part of sustainable aviation. TRIUMPH is evaluating alternatives to chrome and copper plating to comply with the European Union's Registration, Evaluation, Authorisation and Restriction of Chemicals program.

SINCE THE FALL OF 2023, SEVEN NEW OEM CUSTOMERS HAVE ENGAGED TRIUMPH TO PROVIDE IP SYSTEM SOLUTIONS FOR THEIR ALTERNATIVE FUEL AIRCRAFT.

ADDITIVE MANUFACTURING

IN AVIATION, ADDITIVE MANUFACTURING,

as opposed to subtractive manufacturing (machining and drilling), involves the creation of parts through

3D printing using metal alloys. It is a major advancement in our industry, and TRIUMPH is an early mover in housings for gearboxes, pumps, and heat exchangers.

The majority of the manufacturing we do involves cutting pieces of metal apart and milling them down. Large amounts of scrap are produced, much of it contaminated with machining oil. 3D printing reduces scrap to nearly zero. The greater benefits for TRIUMPH are lightweighting and on-demand production.

Two customers are currently funding dual-path development with TRIUMPH, where 3D printing of gearbox housings are being tested and qualified concurrently with cast housings. In those programs, compared to conventional casting, there have been truly remarkable advantages in time and cost savings. New product development timelines can be reduced by a year or more, while weight and cost also improve significantly.

In the coming year, we will extend the testing to fuel pump and hydraulic pump housings. In the future, we anticipate using 3D printing to create components with fewer parts and enhanced functionality, such as optimized cooling and lubrication channels that improve heat dissipation and overall reliability and efficiency.

80%

TRIUMPH'S ADDITIVELY MANUFACTURED GEAR-

BOX HOUSINGS TAKE OVER 80% LESS TIME TO

FABRICATE AND REDUCE COSTS DRAMATICALLY.

TRIUMPH AT A GLANCE

FULL SPECTRUM MANUFACTURING

FULL LIFE-CYCLE SUPPORT

LIVING OUR VALUES THROUGH ESG

OUR APPROACH TO SUSTAINABILITY

TRIUMPH IS RECOGNIZED as an industry-leading solutions provider for systems and aftermarket services to the global aerospace market. We have assembled one of the most comprehensive groups of aerospace design, manufacturing, and service companies in the world. Categorized into four specialized operating companies each provides products and services that, when com- bined, cover the full spectrum of aircraft manufacturing, ranging from production of detailed components

to integrated systems and comprehensive aftermarket follow-through.

COMBINING OUR HIGHLY SKILLED TEAM of manufacturing and engineering professionals with our world class test labs and advanced tooling process, TRIUMPH brings a new level of excellence to the aerospace industry. We manufacture and finish sub-assembliesand components from nearly every material used in the industry, and produce complex integrated systems from both internal and external designs. TRIUMPH also has a unique ability to provide full life-cyclesupport at all levels of the aerospace supply chain.

THE COMPANY undertook an assessment to determine which environmental, social, and governance issues are material and important to our stakeholders and operations. In conducting our materiality assessment, we surveyed approximately 100 key stakeholders and held workshops with key management team members. The Company's materiality assessment concluded that the following issues are key to the Company's sustainability and should serve as the basis of our reporting to stakeholders:

Products

Research, Development & Innovation

Product Quality & Safety

Social

Occupational Safety

Health & Wellbeing

Environmental Stewardship

Energy Usage & Emissions

Water & Wastewater

Waste

Governance

Ethical Business Conduct

Risk Management

Compliance, Anti-Corruption & Trade Regulation Programs

Data Security & Privacy

Supply Chain Responsibility

THE COMPANY uses these issues to inform the collection of data. Data for 2021-2023 is included in the ESG Data Download attached to this report and separately on our investor webpage.

Commercial

Rotorcraft

Engagement & Involvement Diversity, Inclusion & Equity

ADDITIONALLY, the Company is vigorously pursuing its five and ten-year sustainability goals, with input from our stakehold- ers. We believe these goals are essential drivers to solidifying our path to meet these targets in the upcoming year.

OUR SUSTAINABILITY GOALS

Actuation, Products & Services

Provides design, manufacturing, and maintenance, repair and overhaul (MRO) services for products and systems that include hydraulic pumps and motors, actuators, fuses, accumulators, valves and manifolds, and carrier-launched aircraft holdback bars. We also provide design, manufacturing, and support solutions for highly engineered mechanical and electromechanical controls and components. We maintain a unique capability for systems engineering and integration, as well as hydromechanical and electronics in-house development, which serves as

the integration focal for TRIUMPH, specializing in motion, control, and power systems for commercial, military, and rotorcraft aircraft

Geared Solutions

Is the premier independent supplier for the design and manufacture of commercial and defense aerospace gearing components and integrated gearboxes for fixed wing, rotorcraft, aircraft engine, and ground vehicle applications. Additionally, we provide aftermarket spares and repair/overhaul support for these parts. We collaborate with customers to provide a full array of capabilities including design, engineering, and manufacturing of complex mechanical assemblies and build-to-print for highly specialized applications.

Interiors

TRIUMPH Interiors is a market leader in integrated design and manufacturing of thermo-acoustic insulation systems, air distribution system ducting, thermoplastic interior components, and other aircraft interior composite assemblies for major aerospace OEMs, with facilities located around the globe.

Systems, Electronics & Controls

Specializes in design, development, certification, manufacture, and repair of fuel pumps, fuel metering units, fuel controls, and electronic engine control systems, vapor cycle systems, and heat exchangers for helicopters and fixed-wing aircraft servicing military, commercial, regional, and business jet market sectors.

TRIUMPH CONTINUES TO ENHANCE our commitment to sustainability through targeted ESG goals. Our plans to achieve the goals we made for 2025 and 2030 guide our daily actions and will shape our future work.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE

EMPLOYEE

ENGAGEMENT

Helping Our People Grow

The growth of our company depends on the growth of our people. To attract, retain, and reward talent at TRIUMPH, we are continually enhancing the employee experience and upgrading our employee programs.

In F2024, we made excellent progress lifting participation in on-the-job development, safety and wellness, and voluntary support of community causes.

A cornerstone of employee development is our "flight plan" initiative. For every participating employee, opportunities for growth are identified, expectations agreed upon, and improvements tracked and recognized. We support mentor relationships, education, and special "stretch" assignments. There is a formal feedback loop for managers and employees to discuss advancement opportunities. In F2024, a remarkable 98% of TRIUMPH employees had personal flight plans, up from 77% the year before.

Community leadership is also a priority. In F2024, 85% of TRIUMPH employees took part in a community volunteering event. They painted houses, did yard work, cleaned streets, and took part in our Holiday Heroes program, donating time or resources to uplift their communities through acts of kindness.

Progress On All Fronts

HEALTH &

WELLBEING

Targeting 100%

TRIUMPH is committed to helping our people take care of themselves, both physically and emotionally. The investment we make is good for everyone. A healthy company has healthy employees. Healthy employees have better, longer lives and a greater chance for happier, private lives.

In F2024, we reached a major milestone with 95% of all TRIUMPH employees participating in wellness activities. This extremely high participation rate demonstrates a true employer/employee partnership. We can legitimately claim to have a culture of wellness at

TRIUMPH.

Our partnership with Health Advocate, a third-party provider of employee assistance and work-life programs, is paying off. Through the program, TRIUMPH employees and their families have access to specialist advisors and many programs, including smoking cessation, weight management, mental health, financial planning, and legal counseling.

This year, we held over 270 wellness events across our sites. We also increased and diversified activities, allowing employees to choose when and how to partici- pate. And we modernized our U.S. wellbeing platform to simplify access to resources such as articles, assessments, webinars, and challenges.

Our target for F2025 is 100% employee participation in wellness activities. We are also targeting 100% participation in individual development plans and succession planning. All employees will be able to direct their career aspirations while future-proofing our teams.

Productive Incentives

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (continued)

QUALITY &

SAFETY

A Culture of Quality

In a year when quality is the No. 1 concern in aircraft manufacturing, TRIUMPH continues to achieve major quality and safety improvements. Culturally, we have unified around zero defects and zero Notification of Escapes (NOE). Operationally, we have continued to invest in ongoing improvement tools and programs to help us get there. Our Quality Transformation Strategy has moved us from mere inspection to proactive prevention, embedding quality into every phase of our processes.

Higher quality and fewer errors have reduced costs, improved margins, and strengthened customer relation- ships. In F2024, eight of our sites maintained a Cost of Poor Quality (CoPQ) under 1.0%. We achieved a notable year-over-year cost reduction of $2M in CoPQ (a 20% drop), and a 27% decrease in Defects Per Million Opportunities. Four of our sites achieved the remarkable feat of zero NOEs.

The most impressive numbers in F2024 were achieved by our systems and electronics operating company site in Windsor, Connecticut. Our employees in Windsor averaged a 58% CoPQ reduction and a 48% reduction in NOEs. Continuous improvement has been driven

by methodical initiatives such as Kaizen workshops and standardized root cause corrective action (RCCA). Windsor is emblematic of TRIUMPH's company-wide focus on performance fundamentals such as lead-time reduction, defect reduction, and customer satisfaction.

Proactive Not Reactive

OCCUPATIONAL SAFETY

Safer for Nine Years Running

We want all our employees to leave work as healthy as they were upon arriving. To continue our drive toward that goal in F2024, we continued moving away from more reactionary measures of safety toward leading indicators.

Communication and collaboration were key. For the first time, injury statistics were presented to the senior leadership team on a monthly basis. At all our sites, safety conversations about best practices and our own experiences were formally shared. Additionally, a cross- site EHS council was formed, with representatives from every site meeting twice per month for an incident discussion and roundtable discussion on company efforts.

Those efforts paid off. In F2024, we reduced our Total Recordable Incident Rate (TRIR) by 27%, with a cumulative TRIR of 0.82 against a goal of 1.0 and industry average of 1.7. It was the ninth consecutive year of TRIR reductions at TRIUMPH.

Also, by year end, more than 90% of our sites had implemented a Serious Injury and Fatality Prevention Program. Each site's EHS personnel worked with area experts to identify significant risk areas for work-related injuries. They implemented a plan to mitigate these risks, as well as a program to check for such risks on a regular basis. We expect to have programs at 100% of our sites by November, 2024.

Further Improvements in F2025

The growth of our company depends on the growth of our people, as well as their safety and wellness. In F2024, 98% of TRIUMPH employees had "personal flight plans," 95% were participating in wellness initiatives, and we reduced our Total Recordable Incident Rate by 27%. Furthermore, 38% of our global workforce was female.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (continued)

DIVERSITY &

INCLUSION

Doubling Down on Diversity

At TRIUMPH, our teams are stronger when they include people from a diversity of backgrounds, cultures, genders, and experiences. In F2024, we reinforced our commitment to diversity and inclusion by offering training, employee resource groups (ERGs), and reinvigorating our mentoring programs.

We have formalized our policy at the committee level. The TRIUMPH Diversity & Inclusion Steering Committee oversees HR processes, provides educational tools, and analyzes the company's diversity and equal opportunity metrics. In F2024, 38% of our global workforce was female. Of employees based in the United States, 22% are multicultural, 10% are veterans, and 37% of our key leadership positions are represented by women and/or people from a mix of cultures.

ERGs are voluntary employee groups that help advance an organization's goals and initiatives. A good example is our Veterans ERG. In F2024, its members continued to recognize the contributions of the TRIUMPH men and women that currently serve or have served in the U.S. armed forces. Initiatives included Memorial Day Flower Program, events on Veterans Day, flags at our facilities honoring those that served, a Wreaths Across America Program, and various recruiting events, including "Workshop for Warriors."

A Promise Backed by Policy

ENVIRONMENT

Formalizing Improvement

We began tracking environmental data in 2020. For the past four years, we have measured the company's use of energy and water at each site, our output of waste, and our air emissions. While this program is still in its early stages, we are trending toward improvement in most areas.

With recycling and reuse, all TRIUMPH sites are now participating and we are ahead of our 2025 goal. By 2030, we intend to have a zero-waste-to-landfill program in place at all facilities.

We improved water reduction in 2023 by 12% across all sites, focusing on water-stressed regions. Our Thailand, Grand Prairie, Mexicali, Valencia, and Zacatecas sites all undertook reduction projects. Meters were installed to identify areas of higher consumption. Other efforts included reducing irrigation frequency, installing low-flow toilets, fixing leaks, and recycling cooling tower water.

Our Greenhouse Gas (GHG) intensity performance was not adequate. GHG intensity is a measure of impact relative to revenue - the monetary cost of the GHG emissions. Our goal is a 30% reduction by 2030. In 2023, GHG intensity rose by 7%. Nevertheless, 80% of TRIUMPH facilities have reduced GHG emissions from the 2020 base year.

Our West Hartford site activated its new wastewater pretreatment plant. The plant has a much smaller physical and carbon footprint. Fewer chemicals are needed to treat its wastewater. Compliance is improving significantly.

More of our sites have adopted Environmental Management Systems (EMS) and incorporated sustainability into their processes. The goal is to gradually replace all processes that don't meet the higher standards.

For example, at our Yakima site, we are bringing a passivation system in-house (which protects parts from corrosion). This will eliminate the emissions associated with transporting materials to and from outside vendors for the same process. The bonus: the new system uses fewer hazardous chemicals.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (continued)

GOVERNANCE

The company's Anti-Corruption Policy is reviewed and updated on a regular basis to ensure its efficacy and compliance with industry best practices. The Company maintains a business partner review process that incorporates data derived from GAN

Data Privacy

TRIUMPH has undertaken a comprehensive approach to data privacy to understand and remain in compliance with global, federal, state and local laws applicable to our business opera-

Ethical Conduct Methodically Upheld

TRIUMPH's board of directors and its committees perform critical roles, including working with management to set the company's strategic priorities; evaluating the performance and determining the compensation of our Chief Executive Officer and other executive officers; and overseeing our sustainability, risk management, and cybersecurity programs.

Our diverse Board brings a well-rounded perspective and is made up of nine directors. Three of nine are women. One of nine is multicultural.

Eight of our nine Board members are independent directors as defined by NYSE rules. Each of the Board's committees consists entirely of independent directors. Additional details on the Board, its committees and their functions can be found in TRIUMPH's Corporate Governance Guidelines, charters for the Board's committees, and in our annual proxy statement, each of which is available at TRIUMPH's investor relations webpage at https://www.triumphgroup.com/investor-relations.

A few additional highlights of TRIUMPH's corporate gover-

Employees may report an actual or potential violation or ethics concern anonymously at any time by calling the TRIUMPH Hotline at 1-800-535-5581 or by accessing our ethics portal, which can be accessed at https://secure.ethicspoint.com/domain/ media/en/gui/59231/index.html. The TRIUMPH Hotline is managed through Ethics Point, a third-party vendor, and all calls are handled in a strictly confidential manner. All callers can submit reports without fear of retribution and callers are able to maintain anonymity if they choose to do so. TRIUMPH's General Counsel directly or indirectly oversees investigations and follow- up on calls to the hotline, some of which are investigated by third parties when appropriate to ensure impartiality or confidentiality. The General Counsel reports data on all hotline calls to the Audit Committee of the Board of Directors on at least a quarterly basis and violations considered to be of particular risk may be reported to the full Board of Directors at the discretion of the General Counsel and/ or the Chair of the Audit Committee.

Risk Management

One of the primary roles of TRIUMPH's executive leadership team and the Board of Directors is to assess and mitigate the various risks associated with our business. To that end, TRIUMPH has designated an Enterprise Risk Management

(ERM) committee that meets quarterly with the goal of maximizing the company's ability to achieve its business objectives.

The ERM committee, made up of a cross-functional team including senior business leaders, helps achieve this vision by creating a comprehensive approach to anticipate, identify, prioritize and manage material risks to our organization. Enterprise risk includes any significant event or circumstance that could impact the achievement of our business objectives, including strategic, operational, reporting, compliance and reputational risks. The primary responsibility of the ERM committee is to ensure that sound policies, procedures and practices are in place for the enterprise-wide management of the company's material risks. The ERM committee reports results of these activities to the Audit Committee on a quarterly basis, although our entire Board plays an active role in risk management activities. Risk management focus areas include, but are not limited to cybersecurity, response to natural disasters, and product, supply chain, and technology risk.

Compliance, Anti-Corruption, And Trade Regulation Programs

TRIUMPH and our Board of Directors are committed to legal, regulatory, and environmental compliance. We have developed a robust set of internal policies and procedures to help monitor and manage compliance across our enterprise. All TRIUMPH employees receive training on an annual basis on compliance and other risk topics. In 2023, company-wide training addressed cyber data security, trade compliance, and anti-corruption.

In addition, TRIUMPH's Legal Department manages additional compliance initiatives, including assessments of employment practices. We strive to ensure that our employees are treated fairly and perform to the highest standard of ethics.

Integrity, a third-party due diligence solution. Our anticorruption

tions. We prioritize our global commitment to respect the personal information of our employees, customers and other stakeholders. We regularly look to enhance our privacy governance framework through training and awareness initiatives, effective access controls, compliant cross-border transfers of data and other risk mitigation measures.

Supply Chain Responsibility

TRIUMPH's supply chain is a diverse and global network that provides critical resources for the work TRIUMPH performs.

As our business has changed over the years, our supply chain has grown and transformed. We work with our suppliers to purchase everything from raw materials to custom electronics.

Changes in aerospace construction inherently take place over long periods of time, as our products are built to last 30-40 years and are subject to significant and strict quality management processes. Our relationships with our suppliers must also endure over the years. We understand the importance of ensuring supplier performance meets our expectations and the expectations of our customers. TRIUMPH suppliers commit to abide by TRIUMPH's Code of Conduct.

A key tool for managing the performance and compliance of our supply chain is our supplier audit program. This program consists of self-assessments and questionnaires for all suppliers, which address environmental and social factors as part of overall supplier performance. TRIUMPH analyzes this feedback and selects a number of suppliers for on-site verification audits.

The results of supplier self-assessments and audits are then used to help set targets for managing those supply chains. In addition, TRIUMPH sets annual goals for our suppliers around quality, cost and on time delivery. TRIUMPH works to ensure that we can meet our internal management goals and ultimately meet the needs of our customers.

TRIUMPH maintains a Conflict Minerals Policy and its annual Conflict Minerals Report can be found at TRIUMPH's investor relations webpage at https://www.triumphgroup.com/investor-relations.

ESG DATA DOWNLOAD

Financial Highlights

(in millions, except per share data)

Fiscal Year Ended March 31

FY2024

FY2023

FY2022

Net sales

1,192

1,131

1,263

Adjusted operating income

115

103

Adjusted (loss) income from continuing operations

(4)

Adjusted diluted earnings per share from continuing operations

(0.06)

0.51

0.73

Cash flow from operations

(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

Operating income - GAAP

196

Loss (gain) on sale of assets and businesses

(102)

Restructuring

Impairments

Other

Adjusted operating income*

115

103

Interest and other

(123)

(115)

(113)

Non-service defined benefit income

Less: Pension charges

Less: Financing charges

Adjusted (loss) income from continuing operations before income taxes*

Income taxes

(7)

(4)

(5)

Adjusted (loss) income from continuing operations

(4)

(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

Weighted average diluted shares

74.1

71.7

64.5

*Differences due to rounding

Production

CY2023

CY2022

CY2021

Total Number of Locations (#)*

*CY2021 includes Staverton, UK location.

Compliance

CY2023

CY2022

CY2021

Significant fines and non-monetary sanctions for non-compliance with environmental laws

and/or regulations in terms of:

i. total monetary value of significant fines ($)

ii. total number of non-monetary sanctions (#)

iii. cases brought through dispute resolution mechanisms (#)

Significant fines and non-monetary sanctions for non-compliance with laws and/or

regulations in the social and economic area in terms of:

i. total monetary value of significant fines ($)

ii. total number of non-monetary sanctions (#)

iii. cases brought through dispute resolution mechanisms (#)

ESG DATA DOWNLOAD (continued)

Environmental Stewardship 1, 2, 3

ISO 14001 EMS certification 4 (# facilities)

Energy Use and GHG Emissions 5

CY2023

CY2022

CY2021

Fuel: Natural Gas (non-renewable resource) (GJ)

93,921

121,791

160,320

Fuel: Other - Diesel, Propane, Gasoline, etc. (non-renewable resource) (GJ)

20,082

19,770

19,852

Total Fuel Consumption (GJ)

141,002

141,561

180,172

Fuel Combustion Emissions 6 (MT CO2e)

5,963

7,354

9,329

Process and Fugitive Emissions: HFCs (HFC-23/HFC-134a) (MT CO2e)

150

Process and Fugitive Emissions: PFCs (MT CO2e)

Process and Fugitive Emissions: SF6 (MT CO2e)

Total Direct (Scope 1) GHG Emissions (Fuel, Process, and Fugitive) 7 (MT CO2e)

5,975

7,435

9,479

Electricity Consumption 100% Grid (GJ)

251,681

252,963

352,067

Heating Consumption (GJ)

Cooling Consumption (GJ)

440

405

13,148

Total Purchased Energy Consumption (GJ)

252,121

258,856

365,215

Total Energy Consumption 8 (GJ)

366,123

400,417

545,387

Indirect Emissions from Electricity Consumption 100% Grid (Scope 2 Location-Based) (MT CO2e)

24,928

25,109

33,389

Indirect Emissions from Electricity Consumption 100% Grid (Scope 2 Market-Based) (MT CO2e)

24,956

25,135

34,270

Indirect Emissions from Heating Consumption (Scope 2 Location and Market-Based) (MT CO2e)

Indirect Emissions from Cooling Consumption (Scope 2 Location and Market-Based) (MT CO2e)

883

Total Indirect (Scope 2 Location-Based)GHG Emissions 9 (MT CO2e)

24,958

25,137

34,272

Total Indirect (Scope 2 Market-Based)GHG Emissions 10 (MT CO2e)

24,956

25,135

34,270

Total Direct (Scope 1) and Indirect (Scope 2 Market-Based)GHG Emissions (MT CO2e)

30,931

32,553

43,749

Water Withdrawal, Discharge, and Consumption (Megaliters)

CY2023

CY2022

CY2021

Surface Water Withdrawal from All Areas (Megaliters)

Groundwater Withdrawal from All Areas (Megaliters)

Stormwater Withdrawal from All Areas (Megaliters)

Wastewater Withdrawal from All Areas (Megaliters)

Third-Party (e.g., municipal) Water Withdrawal from All Areas (Megaliters)

161

183

232

Recycled Water Withdrawal from All Areas (Megaliters)

0.5

0.1

0.0

Total Water Withdrawal from All Areas (includes recycled water) 11 (Megaliters)

163

185

233

Total Water Discharged to All Areas (Megaliters) 12

4 In addition to the five sites that are ISO 14001 certified, one location is ISO 45001 certified.

5 The Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment (AR4) global warming potential factors are applied in all GHG emissions calculations.

6 Fuel specific emission factors are applied to the volume of fuel combusted at each facility.

ESG DATA DOWNLOAD (continued)

Air Emissions 13

CY2023

CY2022

CY2021

Volatile Organic Compounds (VOCs) (Metric tons)

NOx (Metric tons)

Particulate Matter (Total PM) (Metric tons)

7.8

8.0

7.9

Hazardous Air Pollutants (HAPs) (Metric tons)

3.6

5.3

4.2

Carbon Monoxide (CO) (Metric tons)

SOx (Metric tons)

0.4

Waste Management (Metric Tons)

CY2023

CY2022

CY2021

Total Waste Generated 14 (Metric tons)

5,906

5,820

8,460

Total Hazardous Regulated Waste (Metric tons)

613

536

580

Total Hazardous Regulated Waste 15 (%)

10%

Hazardous / Regulated Waste Disposed - Incineration 16 (Metric tons)

328

317

327

Incineration - Energy Recovery (Metric tons)

100

103

Incineration - Fuel Blending (Metric tons)

217

191

196

Incineration - Other (Metric tons)

Hazardous / Regulated Waste Disposed - Landfill (Metric tons)

224

158

Hazardous / Regulated Waste Recycled/Reuse (Metric tons)

160

Hazardous / Regulated Waste Sold to External (Metric tons)

3.0

0.1

0.2

Total Non-Hazardous/Non-Regulated Waste 17 (Metric tons)

5,293

5,283

7,879

Non-Hazardous /Non-Regulated Waste Disposed - Incineration 16 (Metric tons)

Incineration - Energy Recovery (Metric tons)

Incineration - Fuel Blending (Metric tons)

Incineration - Other (Metric tons)

Non-Hazardous /Non-Regulated Waste Disposed - Landfill (Metric tons)

3,342

3,258

3,968

Non-Hazardous / Regulated Waste Recycled/Reuse (Metric tons)

1,841

1,920

3,844

Non-Hazardous /Non-Regulated Waste Sold to External (Metric tons)

Non-Hazardous /Non-Regulated Waste Compost (Metric tons)

0.0

0.4

1.5

Total Waste Disposed - Landfill (Metric tons)

3,566

3,416

4,061

Total Waste Disposed - Incineration (Metric tons)

378

370

382

Incineration - Energy Recovery (Metric tons)

136

140

Incineration - Fuel Blending (Metric tons)

217

192

198

Incineration - Other (Metric Tons)

Total Waste Diverted from Disposal (Hazardous and Non-Hazardous)18 (%)

33%

35%

47%

Total Waste Recycled/Reuse (Metric tons)

1,898

1,982

4,004

Total Waste Sold to External (Metric tons)

Total Waste Compost (Metric tons)

0.0

0.4

1.5

Spills

CY2023

CY2022

CY2021

Reportable Spills 19 (#)

Total Volume of Spills (Cubic meters)

0.0

1.2

15 Regulated or hazardous waste is defined by national legislation at the point of generation.

16 The breakdown of incinerated waste in 2021 is estimated based on the breakdown of incinerated waste reported by sites in 2022.

17 Non-regulated or non-hazardous waste includes all other forms of solid or liquid waste not defined as regulated waste. This does not include wastewater.

ESG DATA DOWNLOAD (continued)

Workforce

CY2023

CY2022

CY2021

Total Global Employees (#)

5,126

4,924

4,894

New Hires and Turnover

CY2023

CY2022

CY2021

Employee Hires

Total Number and Rate of New Employee Hires (#)

1,615

2,186

893

By Age Group

Under 30 (#)(%)

814/50.4%

993/45.4%

402/45.0%

30-50 (#)(%)

623/38.6%

916/41.9%

362/40.5%

50+ (#)(%)

178/11.0%

277/12.7%

129/14.4%

By Gender

Male (#)(%)

816/50.5%

1,206/55.2%

605/67.7%

Female (#)(%)

799/49.5%

980/44.8%

288/32.3%

By Region

U.S. (#)(%)

429/26.6%

644/29.5%

471/52.7%

Other (#)(%)

1,186/73.4%

1,542/70.5%

422/47.3%

Employee Turnover

Total Number and Rate of Employee Turnover (#)

1,391

1,850

1,958

By Age Group

Under 30 (#)(%)

569/40.9%

664/35.9%

451/23.0%

30-50 (#)(%)

531/38.2%

778/42.1%

718/36.7%

50+ (#)(%)

291/20.9%

408/22.1%

789/40.3%

By Gender

Male (#)(%)

802/57.7%

1,093/59.1% 1,422/72.6%

Female (#)(%)

589/42.3%

757/40.9%

536/27.4%

By Region

U.S. (#)(%)

454/32.6%

719/38.9%

1,284/65.6%

Other (#)(%)

937/67.4%

1,131/61.1%

674/34.4%

Employee Engagement and Talent Management

CY2023

CY2022

CY2021

Active workforce covered under collective bargaining agreements (#)(%)

462/9.0%

425/8.6%

699/14.0%

Average hours of mandatory training that the organization's US employees have

undertaken during the reporting period

7.0

5.7

3.0

Employee participation in annual Individual Development Plans (%)

93%

76%

28%

Percentage of total employees who received a regular performance and career development

review during the reporting period (%)

~90%

~80%

Diversity, Inclusion, & Equity

Representation of Global Employees

CY2023

CY2022

CY2021

Region Representation

U.S. (#)(%)

2,682/52.3%

2,704/54.9% 3,091/63.2%

Other (#)(%)

2,444/47.7%

2,220/45.1% 1,803/36.8%

Age Group Representation

Under 30 (#)(%)

1,029/20.1%

17.9%

15.6%

30-50 (#)(%)

2,422/47.3%

47.3%

47.2%

50+ (#)(%)

1,675/32.7%

34.9%

37.2%

Gender Representation

Male (%)

64.8%

67.5%

71.9%

Female (%)

35.2%

32.5%

28.1%

Disclaimer

Triumph Group Inc. published this content on October 08, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on October 08, 2024 at 14:20:01.534.