Triumph Group Inc. (TGI) announced the acquisition of Fabritech Inc., a leading component manufacturer and repair station for critical military rotary-wing platforms. The acquired business will operate as Triumph Fabrications-St. Louis and be part of Triumph Aftermarket Services Group.

Management expects the new business to add approximately $25 million of revenue for fiscal year 2011 and will be immediately accretive to earnings. According to management, the rotary-wing components that Fabritech manufactures and repairs are excellent additions to the aftermarket services group’s core competencies.

Triumph remains focused on growing its core businesses as well as growing through strategic acquisitions. The company has grown significantly over the past decade due to overall growth in the aerospace equipment and repair market, augmented by a string of over 30 acquisitions.

Triumph has set its sights on achieving $1 billion in annual sales and has been moving towards the goal through acquisitions. The company has witnessed sales increase by more than $200 million in the last three years through seven large acquisitions. We expect to see more such activity to facilitate the company reach the $1 billion sales goal.

However, acquisition involves risks that could adversely affect operating results. Moreover, we do not see any significant recovery in the delivery of new commercial aircraft in the medium term.

Huge dependence on government spending and on Boeing, the largest customer, is discouraging. Approximately 35% of sales were derived from the military and defense market, which includes, primarily, sales to the U.S. government. Boeing represents more than 20% of net sales.

Moreover, intense competition in aerospace is likely to have an adverse impact on the company. Nevertheless, the company focuses on growing its core businesses and maintains a strict cost control strategy, which would help survive the difficult economic circumstances.

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