New Triumph Group [TGI] Chief Daniel Crowley will undertake a strategic review of the aerospace company to better target growth opportunities, including mergers and acquisitions, but his ultimate goal is to create long-term value for the company’s shareholders, he said in an interview last week.
Triumph on Dec. 29 announced the appointment of Crowley as its new president and CEO effective Jan. 1, after first leading Raytheon’s [RTN] Network Centric Systems and then its Integrated Defense Systems segments during the last five years. Crowley succeeds Richard Ill, who came out of retirement in April to lead the company while it searched for a long-term chief. Ill retired as president and CEO of Triumph in 2012, having served as CEO since the company’s founding in 1993 and as president since 2009.
Triumph supplies aerostructures, systems and components to all the major aircraft manufacturers and Tier one suppliers, with about 80 percent of its nearly $4 billion business serving commercial customers and the rest defense.
“One thing I intend to do is a sort of top to bottom review of the business and how attractive are each of these markets and how well positioned we are to compete, and then I’ll be going back to the board with my recommendations on portfolio and acquisitions so I don’t want to get to ahead of that process but what I will tell you is we’re going to be pursuing long-term shareholder value,” Crowley told Defense Daily on Dec. 29. “That’s what my track record has been in my prior companies; create franchises that last a long time and create value for shareholders and that’s going to be my focus.”
Before joining Raytheon, Crowley, 52, was with Lockheed Martin [LMT]. He said that he began his career working in manufacturing, supplying products in high volumes for commercial and military customers and working on a number of airplane programs.
“I’ve been a plant manager for making parts and mechanical structures similar to what our Aerostructures [segment] does so I’ve got fairly close familiarity with their business,” Crowley said. “And I know all the OEMs.”
While Crowley will be undertaking a review of the company, one operational focus for him will be “workforce mobility,” which he said involves sharing people and best practices across the enterprise. If some parts of the company are having difficulties, other parts of Triumph can help provide solutions, whether that is issues related to safety or on-time delivery, quality or cash flow management, you name it,” he said.
Since its founding in 1993, Triumph has grown at around a 25 percent compound annual growth rate, mainly through acquisitions. The outlook for its current fiscal year is for flat to slightly higher sales.
In the company’s second quarter earnings call in October, Ill said that the Aerostructures segment has been underperforming and has “had significant customer facing problems” to include on-time delivery, quality, and cost issues. The hiring of a vice president of business development is helping to solve and address these issues, he said.
Ill also said that some of Triumph’s recent acquisitions haven’t performed as well as expected, although the issues are known “internally” and are being addressed.
Crowley said he is just now “getting behind the firewall” to be able to understand the issues Triumph is having with some of its acquisitions. He said his approach to acquisitions is to buy companies with “a shared vision and culture,” adding that if these companies aren’t aligned with Triumph then they have to be “brought into alignment very quickly.”
Crowley also said that his concept of workforce mobility will help under performing businesses solve their problems.
As for acquisition candidates, while Crowley still wants to dive into his review to understand where gaps are with Triumph, he said the “trend” of recent acquisitions being targeted toward systems and components “that have a faster refresh cycle than what you see at the airframe level” will continue. He said there is a “huge backlog” and pent up demand for commercial aerospace products based on revenue per passenger mile and suppressed capacity awaiting solutions by the Federal Aviation Administration related to relieving air traffic congestion.
Crowley said that he is interested in acquisitions that bring both commercial and military capabilities to Triumph in the form of dual-use systems and components. Whether it’s landing gear, actuation systems or fuel systems, the processes for manufacturing work across the commercial and military domains, he said.
Crowley also said that early on he will be focused on executing on the programs that the company is also working on.
“My experience is past performance is the best calling card for growing” a business so “there is no path to growth that doesn’t lead through execution,” Crowley said. “So that’s our first and foremost, performing on the commitments we’ve already made to customers,” he said, adding that in parallel “I’ll be focused on how well the businesses are positioned strategically and where are the growth opportunities.”
Crowley’s appointment to lead Triumph was well received in the investment community. J.P. Morgan aerospace and defense analyst Seth Seifman said Crowley is a “good choice, with a successful track record leading programs and business units at two major defense companies known for solid execution and rewarding shareholders.”
Jefferies Group analysts said Crowley’s industry knowledge and operational and management skills “give us confidence that he can raise returns and improve operating execution.”