Aircraft supplier and Wichita-area employer Triumph Group will consolidate nearly a quarter of its facilities’ footprint after reporting a $1 billion loss in fiscal year 2016.
The Pennsylvania-based holding company, with a fiscal year ending March 31, said in its earnings report Wednesday that it will consolidate 10 facilities in the next couple of years, which is expected to generate $55 million in annualized pre-tax savings. The consolidation will reduce its total facilities’ square footage by 3.5 million, or 24 percent, the company said in a news release.
It also is expected to result in the loss of 8 percent of its workforce, Triumph said, though it didn’t provide a specific number of jobs to be cut. The bulk of the facility consolidation will occur in its aerostructures business, Triumph said.
The company, which had $3.9 billion in revenue in fiscal 2016, operates Triumph Structures-Wichita at 3258 S. Hoover and Triumph Accessory Services in Wellington. The Wichita site has 175 employees while Wellington has 140.
The company said in a statement to The Eagle on Wednesday that it plans to close or consolidate five facilities in the next 11 months totaling 529,000 square feet. Five more consolidations or closings will follow beginning in fiscal year 2018, the company said.
“Each consolidation action will be communicated on a staggered basis following coordination with affected customers, employees, and other stakeholders,” the statement said. “It is premature for Triumph to comment on specific locations at this time.”
According to its website, Triumph Group operates more than 50 facilities in the U.S., Canada, Mexico, China, Thailand, Germany, France and the United Kingdom.
The consolidation is part of new CEO Dan Crowley’s “One Triumph” plan that includes realigning the company’s business units and reducing its number of operating companies from 47 to 22 businesses and optimizing its portfolio, including shedding debt.
Crowley’s “transformation plan” follows his actions in April by shaking up the leadership team he inherited and consolidating six business units into four.
“We are moving immediately to begin realizing the benefits of our transformation strategy,” Crowley said in the release. “We expect improved performance in fiscal year 2017 and follow through in fiscal years 2018 and 2019.”
More than one financial analyst on Wednesday referred to Triumph’s earnings report as the “kitchen sink quarter” and said the consolidation and cost-cutting plan was “long overdue.”
“We are encouraged by this aggressive cost action and have raised our adjusted EPS (earnings per share) estimates higher to reflect initial savings,” wrote Sterne Agee CRT analyst Peter Arment in a Wednesday afternoon note to investors.
Triumph’s $1 billion loss comes from writing off its development costs on Bombardier’s new Global 7000/8000 large business jet program as well as Boeing’s production rate reduction on the 747-800.
Triumph is also one of the 10 largest suppliers in the U.S. to Wichita-based Spirit AeroSystems.