Triumph Group, Inc.
Q4 2008 Earnings Call Transcript

Published: 2 May 2008

[Operator:]

Welcome to the Triumph Group conference call to discuss our fiscal year 2008 fourth quarter and year-end results. (Operator instructions) On behalf of the company I would now like to read the following statements. Certain statements on this call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risk, uncertainties and other factors which may cause Triumph's actual results, performance or achievements to be materially different from any expected future results, performance or achievements expressed or implied in the forward-looking statements. Please note that the company's reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the press release, which can be found on their web site at www.triumphgroup.com. In addition, please note that this call is the property of Triumph Group, Inc. and may not be recorded, transcribed or re-broadcasted without explicit written approval. At this time, I would like to introduce Richard Ill, the company's President and Chief Executive Officer and David Kornblatt, Chief Financial Officer and Senior Vice President of Triumph Group, Inc. Go ahead Mr. Ill.

[Richard Ill:]

There is a slide presentation that you can follow and I’m going to start with the first slide which is a fiscal year 2008 end review. I’m not going to cover the specific numbers, I’m going to let Dave go over that, but suffice it to say we’re very pleased, we have record earnings this year, record earnings in the quarter. We exceeded $1 billion in revenue which is a significant milestone in the 15-year history of our company. Our backlog expanded to record levels, in excess of $1.3 billion. We have had improved margins in both of our operating segments. We completed the acquisition of Triumph Structures of Long Island which is expected to be immediately accretive. The annual sales for that company are approximately $45 million. And we had our fiscal 2009 in a very strong position with a healthy balance sheet and as I mentioned a robust backlog. I think the best way to characterize 2008 and our quarter is to read my quote in the press release

[David Kornblatt:]

I’d like to start off with a review of the financial results for both the fourth quarter and the full fiscal year. First, turning to the income statement, sales for the fourth quarter increased 24% to $321.2 million. Operating income increased 34% over the prior year to $35.5 million with an operating margin of 11.1%. Income from continuing operations was up 37% to $21.3 million resulting in earnings per share from continuing operations of $1.26 per diluted share versus $0.93 per diluted share for the prior year quarter. The loss from discontinued operations was $1.9 million or $0.11 per diluted share. Net income increased 36% to $19.4 million or $1.15 per diluted share versus $14.2 million or $0.86 per diluted share for the fourth quarter of the prior year. EBITDA grew 29% to $47 million resulting in a 14.6% EBITDA margin. Turning now to our full fiscal year results, sales increased 23% to $1 billion $151.1 million. Operating income increased 35% over the prior year to $126.3 million with an operating margin of 11%. Income from continuing operations was up 49% to $75.7 million resulting in earnings per share from continuing operations of $4.32 per diluted share versus $3.11 per diluted share for the prior year. The loss from discontinued operations was $8.5 million or $0.48 per diluted share. Net income increased 43% to $67.3 million or $3.84 per diluted share. EBITDA grew 31% to $169.5 million resulting in a 14.7% EBITDA margin. Looking now to our segment performance in the aerospace systems segment sales for the fourth quarter increased 25% to $256.6 million. Operating income increased 24% over the prior year quarter to $37.3 million with an operating margin of 14.5%. EBITDA for the segment was $45.2 million at an EBITDA margin of 17.6%. For the fiscal year, sales for the segment increased 22% to $907.4 million. Operating income increased 23% over the prior year to $124.8 million with an operating margin of 13.8%. EBITDA for the segment was $154.8 million at an EBITDA margin of 17.1%. The segment’s fiscal year results included $10.8 million of net legal expenses associated with a previously disclosed trade secret litigation. In our aftermarket services segment, sales for the fourth quarter increased 18% to $65.5 million. Fourth quarter operating income rose 117% from $3 million to $6.4 million at an operating margin of 9.8% as compared to 5.3% a year ago. EBITDA in the quarter was $9.8 million, a 68% increase over the prior year with an EBITDA margin of 15%. For the fiscal year, sales for the segment increased 26% to $246.6 million. Operating income increased 106% over the prior year to $23.5 million. As we committed to at the beginning of the year, operating margins improved significantly to 9.5% versus 5.8% in the prior year. EBITDA for the segment was $36.4 million at an EBITDA margin of 14.8%. Our order backlog continues to grow, increasing 13% over the prior year and 4% sequentially to $1.3 billion. I will remind you that our backlog takes into consideration only those firm orders that we’re going to deliver over the next 24 months and primarily reflects future sales within our aerospace systems group. The aftermarket services group does not have a substantial backlog. Our top ten programs listed on the next slide are ranked according to backlog. While the same programs remain in our top ten, some rankings have shifted due to the acquisition of Triumph Structures Long Island and particularly strong orders for military rotorcraft. Taking over first place is the Boeing 777, followed by the 737 next generation of second place. Third is the Boeing 787; fourth is the CH-47 Chinook helicopter, followed by the Blackhawk helicopter in fifth place. Sixth is the Osprey Combat helicopter followed by the A-320 family in seventh place. Eight is the C-17 freighter, the 747 program is ninth and in tenth place is the Airbus A-380. Looking at overall sales, Boeing remains our only customer which exceeded 10% of our revenue. Billings to Boeing commercial, military and space totaled 22.5% of our revenue. Looking at our sales mix among end markets, the next slide shows that compared to fiscal 2007, commercial aerospace decreased slightly to 44% and military remained at 33%. Regional and business jets remained unchanged at 5% and 9% respectively and non-aviation increased to 9% versus 8% last year. Finishing our sales analysis the next slide shows our sales trends for the fourth quarter and the fiscal year. Total organic growth for the quarter increased 22% over the prior year to $317.9 million. Breaking it up by segment, fourth quarter same store sales for aerospace systems segment were $252.4 million compared to $204 million in the prior year period, an increase of 23%. The aftermarket service segment had same store sales of $65.5 million, an increase of 18%. With respect to the fiscal year, total organic growth increased 19% over the prior year to $1 billion $93.1 million. Breaking that down by segment, fiscal year same store sales for aerospace systems segment was $879.6 million, an increase of 21%. The aftermarket service segment had same store sales of $213.5 million, an increase of 13%. Export sales for the fourth quarter were $65.5 million and $237 million for the year, an increase of 17%. Turning to the balance sheet on the next slide, we generated $25 million of cash flow from operations in the quarter and $51.1 million for the year. CapEx in the quarter was $24.1 million and $62.4 million for the year. Net debt at the end of the year was $406.1 million versus $308.9 million at the end of the prior year representing 37% of total capital. For the year the effective tax rate was 33% which reflects the fact that the R&D tax credit expired on 12/31/07. With that I’ll turn it back over to Rick.

[Richard Ill:]

On the fiscal 2009 outlook slide, a couple things I’d like to discuss. We clearly see strong conditions across all our aerospace markets at the present time. Orders from Boeing and Airbus are up and strong. We’ve mentioned two or three times now that our backlog has increased to $1.3 billion. We intend to spend approximately, our business plan shows that we will spend approximately $70 million in CapEx to continue to grow our business in line with our very consistent strategies. I will and we do this every year, I will warn you that the first quarter of fiscal 2009 may not be sequentially higher than the fourth quarter for at least from our perspective, what should be obvious reasons. Please don’t take the fourth quarter and multiply it by four. We’ve said that in the past. In addition to that, 2009 of course is not a leap year and would be a headwind going forward. Two other aspects before I get into talking about the guidance, we have two issues that we’ve discussed in the past

[Operator:]

(Operator instructions) Your first question comes from David Strauss – UBS.

[David Strauss:]

Looking at your sales growth guidance for next year, if you adjust for the acquired revenues that you’re going to get, it looks like the midpoint’s around 8% to 9% sales growth which looks relatively low, I know we have the 787 push out but can you just comment on give some color around the sales guidance?

[Richard Ill:]

What we’ve done, what we do just to give you an idea of what we do, we go to every one of our companies and we go through our business forecast and our sales forecast. To the extent that the sales number is conservative, number one, 9% to 10% area is I don’t think too bad, number one in our perspective. But number two, we could push the sales north in light of some of the things that, but we’ve chosen not to in light of some of the good things that have happened in 2008. And we’re not projecting that they’ll happen again in 2009. I think that we feel very comfortable within that sales increase, especially with the addition of Triumph Structures Long Island. We have backed out some of our 787 sales as you mentioned. And some of our other sales in the aftermarket area to some of the airlines, we’ve been very conservative because of the condition of some of the airlines. But other than that it’s, once again, we think it’s a realistic number.

[David Strauss:]

Could you just comment on what you’re seeing as far as trends in your aftermarket business and what growth you’re assuming in your sales guidance for next year in the aftermarket business.

[Richard Ill:]

You have to remember, in our aftermarket business, there are really two ends of our aftermarket business; number one is in our aftermarket systems group. And that is essentially third party repair and overhaul of components. In other words, we prepared overhaul of Honeywell APUs for the airlines and the cargo carriers etc. The growth in that is somewhat in the 5-6% area. And the other part of our aftermarket business is imbedded in our aerospace systems group where we repair and overhaul the products that we produce. And I think that in that area, once again, the repair and overhaul on that, we’re projecting a little lower than our overall sales percentage, again in the 5% to 6% to 7% range. So the aftermarket we’re not projecting to be quite as high as our new product sales.

[David Strauss:]

You talked about what you’re forecasting as far as your legal expenses for next year, can you just give us an update in terms of where you stand on things in terms of how that’s progressing?

[Richard Ill:]

I really can’t, it’s not that I don’t want to, there’s really been not a whole bunch of changes since the last quarter. We’re looking at, there’s a bunch of motions that we’ve had in Mississippi. If you’ve been reading in the newspapers, the things about the state of Mississippi and the judicial system and the people involved and the Scruggs cases etc., it’s a little bit up in the air at this present time. We, however, continue to feel very good about what our stance is, okay. We felt good from day one. [It’s something] our engineers have done or we have done that warrant what’s going on, so I think that, there’s really not been a whole bunch of changes. And the end of April, recently, the court dismissed seven of the 12 accounts against the indictment as to the engineers and the government hasn’t made their mind up what they’re going to do at this point in time. So we remain cautiously optimistic in that thing, you never know.

[Operator:]

Your next question comes from Ron Epstein – Merrill Lynch.

[Ron Epstein:]

What are you seeing in terms of raw material and raw material supply chain in terms of pricing pressure or pricing deflation, what are you seeing?

[Richard Ill:]

If anything we see that the raw materials and some of the things we’re buying, there’s clearly inflationary pressure on the upside, which in some cases, it’s a mixed bag within the company because in some of our contracts or LTAs, we get the ability to pass along some of the price increases. And in some of the LTAs and contracts, we have to eat some of the price increases if in fact we get them. On the other hand, some of our raw materials contracts, for example we buy either through a Boeing contract that they have with the supplier or we have our own fixed price contract with some of our suppliers. So it’s a very mixed bag. It’s in our forecast as far as what we project our cost increases to be there.

[David Kornblatt:]

I would say that when we traveled around to do our business reviews, I would say we got more comments on availability, predictability and consistent supply of raw material rather than price.

[Ron Epstein:]

Is there anywhere you’ve got a bottleneck in the raw materials supply chain or is it all pretty much available?

[Richard Ill:]

We don’t see any.

[David Kornblatt:]

It’s available but occasionally inconsistent as to just in time or when we need it. And then we’re a little bit under stress to get things done. But we do get the material.

[Richard Ill:]

And what that does is increases our stress to get the product to the end user.

[Ron Epstein:]

On the labor front, given the ramp up in the industry, are you having any shortage of skilled labor? If that is the case, how are you brining new folks on? Can you just give us some color on how the labor front looks?

[Richard Ill:]

I think the biggest problem that we have from a labor perspective is twofold

[Ron Epstein:]

What do you expect in interest expense to be for fiscal ‘09?

[David Kornblatt:]

It should be about $16 [b]illion.

[Ron Epstein:]

Okay and then corporate expense for ‘09?

[David Kornblatt:]

It should be about equal to the ‘08 levels, about $21 to $22 million.

[Operator:]

Your next question comes from Stephen Levenson – Stifel Nicolaus.

[Stephen Levenson:]

What’s the latest from Thailand and how’s that plant filling up?

[Richard Ill:]

The latest from Thailand is that we’re not where we want to be. We are in essentially break even, make a little bit of money type of view down there. We’re not in a position where we want to be. But the good news is that our revenue down there is excellent. The revenue is what we had projected it to be an I would be significantly worried if we had half the revenue and we weren’t able to fill the shop up with revenue. What we’re talking about here is a startup position that we have to do a better job of execution which we’re in the process of doing. So the positive side is we have very good revenue there and I look at that continuing to grow. The customer base down there is predominately as you would expect Asian airlines and Asian companies.

[Stephen Levenson:]

Does that include China as well?

[Richard Ill:]

Yes.

[Stephen Levenson:]

And do you think the margins there will be similar, not as good as or better than what you get in the shops you operate domestically?

[Richard Ill:]

I don’t see any reason why in the future that the margins there won’t be any different from what we get here.

[David Kornblatt:]

We have not seen any evidence that we need to be a lower price supplier when you look at what we do in the US versus Thailand so that hopefully the lower operating cost should enable us to hold or get better margins there, long term.

[Stephen Levenson:]

Can you give us a little update on the build rates on some of your top programs, both commercial aircraft and military? And an idea, the range of lead times for the things that you make.

[Richard Ill:]

Most of our backlog, it’s the next two years but I’d say the heavy part of that is in the next 18 months. But the only build rate that we see a little different than we did last quarter was clearly the 787. That’s pushed off the six-month period of time, which as an aside, if I may, we don’t look at as being a big deal and I’ve said this in the past. That aircraft is a winner, it’s going to go I think a six-month delay. I’m not particularly pleased with nor is anybody because we have incurred expenses in that regard without some of the shipments. However, that could help matters and extend the aerospace cycle if you will, that having been moved out. But I don’t see any differential in the build rates at Boeing or Airbus or for that matter at the business jets that we have with Cessna, Gulfstream etc. We’re looking at that as somewhat of a bell weather. If you’re looking at the economy going down, we have a great number of aircraft and we don’t see any cancellations, we see the build rates being the same. In regards to the military, Dave mentioned the helicopter and the Osprey and all these other aircraft, the military business that we have is excellent. I don’t see any changes there. I don’t know how to predict what’s going to happen politically but a lot of those rotorcraft aren’t going to come back from, even if the war is ended, from Afghanistan and Iraq and they’re going to have to be rebuilt. So the orders there are very strong. So we don’t see at this point in time any downturn if you will in the order rate.

[Stephen Levenson:]

On A-350, XWB, are you working with anybody or directly with Airbus there?

[Richard Ill:]

We are working with people in that regard and continue to do so. There’s nothing real changed from the last quarter on that. We continue to work and will have some content on that but nothing to report yet.

[Operator:]

Your next question comes from Myles Walton – Oppenheimer.

[Myles Walton:]

First on the 787, Rick you mentioned the push, would it have materially changed your top level guidance if you had stayed to the other production schedule for the deliveries that they had prior to the latest delay?

[Richard Ill:]

The answer to that, not really. Somewhere in the neighborhood of $15 to $20 million at least, because you’ve got to remember that those weren’t going to be delivered a lot this year anyway. I think that’s why I’m not particularly worried about this year on it. If it goes another two years then I start.

[David Kornblatt:]

As we’ve talked about, we have a variety of companies doing a variety of things on 787 and so we are not in the mode of this is a six month very clear concise delay, we have some businesses that have not stopped shipping at all and we have some businesses that believe they’ve been pushed out more than six months. So it might average six months for Triumph but we’re on so many different parts that it’s not as clear as maybe perhaps some companies would be.

[Myles Walton:]

And then the other question I had on weak dollar sourcing, obviously coming out of Airbus is pretty strong in terms of their desire to push the ForEx exposure away, have you seen any pickup in the potential sourcing from overseas, dollar denominating the work.

[Richard Ill:]

Yes definitely. We and others in the US have clearly become low cost producers now. So we’ve seen pickup in various programs.

[Myles Walton:]

And then it looks like on some of these non-operating expenses, you’re being pretty conservative and I just wanted to probe them a little bit. So the 18 million share count, Dave the implied average share price for the year in that is somewhere around $75-$80, is that about right?

[Richard Ill:]

We took what all you said. We went right down the list and we took the prices and we have 18 million shares.

[David Kornblatt:]

It implies a price slightly over $80 to get the 18 million shares and when we look at the target price of you and your colleagues it comes in just about there.

[Myles Walton:]

And remind, the R&D tax credit, the benefit there is it a full point?

[David Kornblatt:]

It’d be, if we had a full year it’d be closer to 1.5 to two, so we got three-quarters of that this year. That’s how you get back to what our guidance was.

[Myles Walton:]

And then with respect to past due backlog, have we seen a significant improvement there? And I know it’s not representative of you, the industry, but I know it was 5% to 6% of the backlog past due work, is that still about the right run rate?

[Richard Ill:]

It’s about the same run rate but that’s a tough question to answer because in some companies we’ve seen a significant decrease in past due backlog and in others it’s remained approximately the same.

[Myles Walton:]

And do you see that mostly the result of the customer unwilling to accept shipments or just capacity inputs to you?

[David Kornblatt:]

It’s a mixed bag, I would think some of it’s clearly us, some of it is not us. I would say that on balance we could improve there.

[Operator:]

Your next question comes from JB Groh – D.A. Davidson.

[JB Groh:]

You outlined the legal expense for the full year but what was it in the quarter?

[David Kornblatt:]

$1.9 million which was the same as the prior year quarter.

[JB Groh:]

Maybe you could talk about the repurchase activity that you engage in, in Q4, it looks like it was pretty robust and your appetite going forward given the stock still has rebounded a little bit but not probably where it should be.

[David Kornblatt:]

We bought a couple hundred thousand shares back. I think we wanted to do that as a signal to what we thought about our stock price, especially after the Q3, the reaction to our earnings, I think that given the acquisition pipeline we see and the credit markets what they are, I think that I wouldn’t see us being overly active right now but we did get a new authorization so I think you would view as being opportunistic in that regard going forward.

[JB Groh:]

Maybe you could talk a little bit about the acquisition pipeline, is it more full than it was last quarter or last year and Rick what do you think about multiples and the opportunities just in general.

[Richard Ill:]

I think it’s generally speaking a little more full than it was last year. I don’t think it’s too much different from what it was last quarter. What I think about multiples is, it’s a difficult world out there because one of the reasons it’s more robust is people who are going to sell their companies, they want to sell it at the top of the aerospace cycle. And I think at least from a production point of view, we have some time left in the production cycle, obviously. So I think that some of the companies that are being sold, the multiples are higher, clearly, not necessarily than they’ve been over the last six months but they’re value companies to multiples are in fact higher and the expectations of the sellers are in fact higher.

[JB Groh:]

Maybe you could go over on corporate bumped up in the fourth quarter, is that a result of the incentive plans or most of the legal shows up in the actual segments, correct?

[David Kornblatt:]

Yes, it’s primarily incentive compensation and then there are certain insurance and other types of costs that we incur in corporate that seem to spike a little bit in the fourth quarter. But over the course of the year, they may have been lighter in other quarters. So when we did our budget for 2009, I think we’re in that, the run rate for this year should be about what next year’s run rate is.

[JB Groh:]

But again legal shows up in aerospace systems, correct?

[David Kornblatt:]

Correct.

[Operator:]

Your next question comes from Peter Arment – American Technology Research.

[Peter Arment:]

Following up on JB’s questions, can you give us your overall sales mix for the year, where it ended from an international perspective if you have that.

[David Kornblatt:]

That was in the webcast and our export sales were $237 million for the year. And our sales outside the US of our foreign subsidiaries are pretty nominal. So that’s the biggest amount of business we do outside the US.

[Peter Arment:]

And how has that mix changed year over year?

[David Kornblatt:]

It’s up 17% so it’s growing slightly slower than the overall company. But its mix is probably I would say a little more commercial than military, but not drastically.

[Operator:]

Your next question comes from Eric Hugel – Stephens Inc.

[Eric Hugel:]

Question on the 787, I know in your guidance you talk about now it reflects the revised build schedule but your backlog is a two year backlog and if under the previous schedule it was to build, Boeing was supposed to deliver 109 of these aircraft by the end of ‘09 and now it’s 25 by the end of ‘09. Does your backlog still need to adjust or is that constantly reflected in that?

[David Kornblatt:]

We adjust the backlog each quarter, rolling 24, so I think that the big build rates were really in 10. And so actually 787 backlog is at an all time high. So certainly in the two-year frame we’ve seen no slippage for us.

[Eric Hugel:]

But just numerically, Boeing was going to deliver 109 aircraft by the end of ‘09 and now it’s going to be 25. That is already reflected and the slower step up in the build rates?

[David Kornblatt:]

Yes.

[Eric Hugel:]

Can you give us any guidance with regards to what you’re expecting in terms of free cash flow for ‘09 and maybe give us an update on some of your projects that you’re doing, improved working capital usage.

[David Kornblatt:]

Yes we would see an improvement in our free cash flow, as we would expect to make some progress, particularly on the inventory front. We have seen some slow, some progress already this year but certainly not where we want to be. In terms of the specific metrics, I think we gave you CapEx, D&A should be about $50 million for the year. And we would see accounts receivable staying in pretty good shape but being a minor use of cash given the sales growth that we would see. So we’re not prepared to give a specific target but as we’ve talked about, we are very focused on inventory and it will likely be a focus within our incentive metrics as well for the going forward.

[Richard Ill:]

Eric we clearly have to do, it’s a good question because we clearly have to do a better job in our working capital management, specifically as Dave mentions on our inventory and we are adding very specific metrics where they have to be added all the way across the company to address that issue.

[Eric Hugel:]

Is some of your CapEx spending in relation to that building out ERP systems or putting in systems to monitor that?

[Richard Ill:]

In some of the areas, yes it’s that. In some of the areas it’s equipment for the factory floor. Our CapEx, if you notice that our CapEx last year we said we would spend $70 million as well. And we didn’t quite spend that amount of money. So our CapEx is a very mixed bag, but yes, some of the expenditures are our systems, but other aspects of the inventory control are paying attention to the factors within each individual company and they can be given metrics to achieve that purpose.

[Eric Hugel:]

Can you update us, I know the 737 stepped up in it was toward the end of last quarter into this quarter, can you talk us through how smoothly that went or how that step up went?

[Richard Ill:]

There’s really nothing to report, we had no differential from one quarter to the next. Primarily because we knew it was coming.

[Eric Hugel:]

With regards to your ‘09 guidance range, can you walk us through, obviously we know legal, but can you walk us through the range, what are some of the key risks and opportunities, high end, low end.

[Richard Ill:]

Clearly as I mentioned in the legal costs, we’re making a projection based on talking to our legal teams and this, that and the other thing. That’s a very difficult thing to project only because we’re not in that business and I’ve never met a lawyer that hasn’t exceeded their budgets. So that I think is somewhat of a headwind. It’s very hard for me to comment on some of the other potential headwinds that have been mentioned by some of you and others that, well the economy is not in good shape, therefore, maybe some of the airlines will cancel some of the orders and things like that. We do not have that built into our plan at all because we don’t really believe that. The airlines, yes there are some airlines that are having trouble, but the airlines that have orders now, predominately aren’t a lot of the US airlines. They’re out of the country, they’re Asian, etc., plus the fact that if the airlines ever needed the efficient aircraft today in the newer aircraft then they need it now more than ever. The other thing we don’t have built into our plan is oil prices that go any higher than they are going and that clearly is going to cause more problems for the airlines. But we don’t have, we’re trying not to put into our budget anything that we can’t control in that regard. In regards to our corporate costs, they are essentially the same. We clearly have to if in fact we saw any downturn, we’d have to adjust that and our company overall SG&A. So I really can’t think of anything else that is a problem. We’ve tried to take all that into consideration.

[David Kornblatt:]

I would agree with Rick, I think if we execute our backlog I think we’ll be right in that range. It’s not that wide a range when you actually look at the dollars, $0.20 for us given what $0.01 is worth, so I think if we execute well we’ll be in that range.

[Eric Hugel:]

You talked about Thailand doing well on the top line. When you got in there you talked about that as more of a defensive play in terms of keeping the business that you had. Have you had any opportunities perhaps to sign up new customers and maybe take market share?

[Richard Ill:]

Absolutely, that’s why our top line performed very well and very quickly for that matter. And I think that the reason we’re in somewhat of a problem in regards to the proper profitability following very quickly is the fact that it’s a green field operation, we had to train all the people that are operating that plant. It’s very interesting in that plant, the turn time is not as fast as it should be but their quality, knock on wood, to date is excellent. And that’s a real positive. Now when we ramp it up and they do a better job of execution, I think that profitability will follow.

[Eric Hugel:]

Did you say the legal cost in aerospace margins was $1.9 for the quarter?

[David Kornblatt:]

The dollars were $1.9 million in the fourth quarter which was exactly the same as it was in the fourth quarter of the prior year, so that’s why we didn’t break out any year on year headwind.

[Eric Hugel:]

And do you have the percent, I know you disclosed it in the K, but I was wondering, the percentage of your backlog that delivers in the next 12 months? It’s typically been around 68% to 69%, is that consistent?

[David Kornblatt:]

It should be very consistent.

[Operator:]

Your final question comes from David Strauss – UBS.

[David Strauss:]

$1.9 million in the fourth quarter for legal expenses, I think it was $4 million in the third quarter and then what was in the first and second quarter of this year?

[David Kornblatt:]

It was $3.8 in the third quarter, so that’s about $5.7. I think it was evenly split between the other two quarters, I don’t have that exactly, how the other $5.1 million was made up. But we can get back to you on that.

[Operator:]

Since there are no further questions, this concludes the Triumph Groups fiscal 2008 fourth quarter and yearend earnings conference call.