One year into what he calls a “three-year journey” to repair the balance sheet, reputation and fortunes of Triumph Group, chief executive Dan Crowley is “pleased with progress”. Crowley, brought in to head the aerostructures, aircraft systems and precision components specialist in 2015 after a period of untrammelled expansion led to disputes with aircraft manufacturers, financial losses and a plunging of the share price, says he is “excited about reinventing Triumph in the third decade of our existence”.
That restructuring – into what Crowley calls “One Triumph” – has been painful at times. The Pennsylvania-based company, founded in 1993, grew mostly by acquisition to become by the start of this decade a sprawling conglomerate of 47 companies, trading under a multiplicity of names and with revenues of almost $4 billion. However, rapid growth created problems, particularly within Triumph’s aerostructures business, which increased greatly in size when the company bought the troubled Vought Aircraft Industries in 2010.
Crowley has created a new reporting structure with business units consolidated into four operating groups, each headed by a president who, says Crowley, has “brought in new ideas”. A “right-sizing” drive has seen headcount fall by more than 1,000 with numbers of facilities reduced from 74 to “60 or fewer”. That together with savings on IT and in the supply chain, and the roll-out of a new operating system designed to create further efficiencies, has seen Triumph exceed a target of taking $44 million costs out of the business by $25 million.
In its latest full-year results – to end March – Triumph narrowed $1 billion-plus net losses the previous year to a deficit of $43 million, on revenue of just over $3.5 billion. “We are where we want to be and we are focused from April this year on accelerating cost savings,” says Crowley. In May, the company resolved a dispute with Bombardier over components supplied for the wing of the Global 7000 ultra-long-range business jet. Ongoing tussles with Boeing and Northrop Grumman have also been settled, helping prompt a bounce in Triumph’s share price from a recent low of under $20.
Crowley, who previously managed the F-35 programme at Lockheed Martin, says Triumph has been determined to “address problems on performance and work with our customers”, adding: “The reality is that we don’t ever want to abandon a customer and, even though we might have entered into a contract that is challenging, you do the right thing because if you don’t customers have a long memory and they watch your behaviour with other customers.” The settlements, he says, have not “imperiled” relationships with key airframers; rather, they have been “reset”.
Aerostructures represents about $1.3 billion of Triumph’s revenues. Crowley expects that figure to fall this year, but to begin rising again as key programmes such as the Global 7000 and Embraer E2 regional jet family ramp up. Aircraft systems – including hydraulic, actuation and gearboxes – represent roughly $1 billion, with Crowley noting that “some of our biggest opportunities” are in this segment. Components make up about another $1 billion of revenues with the remainder coming from aftermarket services.
Crowley sees military as another growth area. Triumph has traditionally been strong in large commercial programmes – such as the Boeing 747 and 767 – with military making up just over a fifth of sales. However, he sees defence activity rising, along with revenues from business and regional jets, thanks to the Global 7000 and E2. He is relaxed about commercial revenues reducing from their current 57% of turnover, because the company had become “too dependent” on a few programmes. “When this happens, you are exposed to cyclicality and it’s difficult to wring out costs,” he says.
Achieving a One Triumph philosophy has been essential to Crowley, who inherited an empire of standalone businesses, most of which operated autonomously and did not share best practice. But he admits that creating a single-company culture is about more than logos and job titles. “Customers have to see it. There has to be active collaboration, cross-selling, one company helping another to solve issues,” he says. “There is still work to do, and I expect to take the second year to reach that point, but the main thing is that we are known for quality, on-time delivery and innovation.”
For a firm that made its reputation through barnstorming acquisitions – snapping up two businesses a year for 20 years to take it to number 30 in the Flight International Top 100 aerospace companies – Triumph today has little left in its acquisition war chest. However, Crowley says the company is still in the market for smaller, tactical purchases: product lines rather than entire businesses. Eventually, “once we have tidied up the balance sheet”, he says he looks forward to returning to the acquisition trail. Next time, however, “we will do a better job of integrating it to strategy”.
Until then, it is a case of continuing to go “back to basics” by “focusing on integration, innovation and updating the portfolio of the company”, he says. Triumph may not be the acquisition-hungry beast it was, but the over-heated expansion that shot its stock price to beyond $80 has been tempered by Crowley’s determination to create a leaner and better-managed organisation. Multi-million dollar takeovers may make better headlines than cost-cutting programmes and steady hands on tillers, but Crowley is quite happy staying off the front pages for now.