Triumph Group Inc. (TGI) Tuesday announced the signing of a definitive agreement with Spirit AeroSystems Holdings, Inc. (SPR) for Triumph to take over production of the Gulfstream G650 and G280 wing programs located in Tulsa, Oklahoma. The transaction is targeted to close by calendar year end.
Triumph will receive $160 million in cash plus assets required to run the business from Spirit to cover the expected future cash flow needs of the programs. Triumph expects no additional capital contributions.
The company expects the programs to be initially cash flow negative, with operating cash requirements anticipated to decrease over the first three years and becoming cash flow positive in the fourth year.
The business will be included in the Aerostructures Group segment and is expected to add around $250 million in annual revenue and to be immediately accretive to Triumph's earnings per share upon closing.
After the close of the transaction, production will continue out of Spirit's Tulsa facility and Triumph will look to utilize its manufacturing experience, resources and wing design engineering capabilities to supplement the Tulsa operations.
The company will focus on optimizing the build process and cost structure of the programs, and has identified opportunities for engineering, supply chain and labor enhancements.
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