2010 | 2011 | ||||||
Price: | 91.00 | EPS | $6.83 | $8.56 | |||
Shares Out. (in M): | 25 | P/E | 13.4x | 10.7x | |||
Market Cap (in $M): | 2,284 | P/FCF | 15.3x | 11.1x | |||
Net Debt (in $M): | 1,238 | EBIT | 0 | 422 | |||
TEV (in $M): | 3,522 | TEV/EBIT | 0.0x | 8.3x |
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TGI Thesis ($90) - $125+ Price Target
Concept: Commercial OE Play Trading at a Defense Multiple
In March 2010, Triumph ("TGI") acquired Vought (owned by Carlyle) in a transaction that essentially doubled the size of the company from $1.3Bn in revenues to $3Bn+ in revenues. The deal was valued at 5.8x EV/EBITDA (low valuation vs most comm. aero transactions at 9-10x due to significant Vought pension liability). Pro forma for the transaction, Triumph's end market exposure will be 50% commercial, 36% military, and 14% business jet/non-aviation/regional jet. In addition, pro forma Triumph is 75-80% OE (original equipment) and 20-25% aftermarket. The deal was structured as 53% cash and 47% stock and Carlyle now owns 1/3 of the shares outstanding post the deal. The deal closed on 6/15/2010 and Carlyle has a one year lockup and has 3 of the 9 board seats.
TGI |
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Est PF |
Est |
Est |
FYE 3/31 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
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Revenues |
608 |
688 |
760 |
946 |
1,151 |
1,240 |
1,295 |
2,827 |
3,494 |
3,704 |
yoy growth % |
1.6% |
13.2% |
10.4% |
24.4% |
21.7% |
7.8% |
4.4% |
118.4% |
23.6% |
6.0% |
est organic % |
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6.0% |
10.4% |
15.0% |
19.0% |
5.0% |
4.4% |
1.2% |
6.2% |
6.0% |
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EBITDA |
77 |
79 |
88 |
129 |
170 |
201 |
210 |
428 |
529 |
579 |
mgn % |
12.7% |
11.5% |
11.6% |
13.6% |
14.7% |
16.2% |
16.2% |
15.1% |
15.2% |
15.6% |
yoy growth % |
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2.1% |
11.6% |
46.3% |
31.5% |
18.3% |
4.5% |
104.3% |
23.7% |
9.4% |
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EBIT |
49 |
48 |
56 |
92 |
126 |
152 |
155 |
332 |
422 |
472 |
mgn % |
8.1% |
7.0% |
7.4% |
9.7% |
11.0% |
12.2% |
12.0% |
11.8% |
12.1% |
12.7% |
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EPS |
$1.22 |
$1.80 |
$2.15 |
$2.95 |
$4.32 |
$5.90 |
$5.11 |
$6.83 |
$8.56 |
$10.41 |
yoy growth % |
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47.5% |
19.2% |
37.3% |
46.4% |
36.6% |
-13.3% |
33.6% |
25.3% |
21.6% |
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FCF/share |
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$6.09 |
$6.27 |
$5.95 |
$8.21 |
$8.77 |
yoy growth % |
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2.9% |
-5.0% |
37.9% |
6.9% |
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Thesis:
Price Target:
My 12 month price target is $125 which is a 12x multiple on my FY13 EPS of $10.41.
Investment Risks
Downside - $80
Upside - $125
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