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  • Triumph Group reported first quarter fiscal 2015 earnings, which misses analysts' estimates.
  • I anticipated that earnings will miss analysts' estimates.
  • This confirms my opinion that Triumph Group is overvalued.

Triumph Group (NYSE:TGI) reported its adjusted earnings from continuing operations of $1.19 per share for the fiscal first quarter 2015, missing analysts' estimates. Earnings decreased 22.7% from the adjusted profit of $1.54 per share a year ago and net sales decreased almost 5% year-over-year to $896.9 million due to a 6% decline in organic sales. The Aerostructures segment reported net sales of $611.9 million compared to $651.9 million in the prior year period. Cut in production rate of Boeing's (NYSE:BA) 747-8 and V-22 programs and lower revenue on 767 program resulted in TGI's lower organic sales.

TGI's operating income was $10.5 million, down from $11.2 million in the first quarter fiscal 2014. On top of that, interest expense remained an additional burden. In my original article I predicted that rising interest burden will continue to be a drag on the company's bottom line. TGI reported that in the first quarter fiscal 2015 ending June 30, its cash balance squeezed to $25.5 million from $29 million as of March 31, 2014. Total debt increased to $1,757.6 million from $1,550.4 million as of March 31, 2014. Clearly, debt-load continued to weigh heavily on the company's balance sheet.

I also opined that TGI's eroding defense business is a cause of worry. In the Aerospace Systems segment, the company's organic sales for the quarter decreased 5% year-over-year due to a cut in the V-22 program and lower military sales. Further, in the Aftermarket Services segment, organic sales declined 9% due to continued military weakness. In my original analysis, I advised investors to avoid the stock above $50 and I continue to hold the opinion.

Source: Update: Triumph Group Earnings