WICHITA,
Kan., Aug. 2, 2023 /PRNewswire/ --
Second Quarter 2023
- Revenues of $1.4 billion
- EPS of $(1.96); Adjusted EPS* of
$(1.46)
- Cash used in operations of $183
million; Free cash flow* usage of $211 million
- Completed rework related to the vertical fin attach fittings
issue on available units in Wichita
- Ratified new four-year contract with the International
Association of Machinists and Aerospace Workers (IAM)
Spirit AeroSystems Holdings, Inc. (NYSE: SPR) ("Spirit" or the
"Company") reported second quarter 2023 financial results.
Table 1. Summary Financial Results
(unaudited)
|
|
|
|
|
2nd Quarter
|
|
Six Months
|
|
($ in millions, except per share
data)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
|
|
|
|
|
|
|
Revenues
|
$1,365
|
$1,258
|
8 %
|
$2,796
|
$2,433
|
15 %
|
Operating Loss
|
($120)
|
($105)
|
(15 %)
|
($216)
|
($147)
|
(47 %)
|
Operating Loss as a % of
Revenues
|
(8.8 %)
|
(8.3 %)
|
(50) BPS
|
(7.7 %)
|
(6.0 %)
|
(170) BPS
|
Net Loss
|
($206)
|
($122)
|
(69 %)
|
($488)
|
($175)
|
**
|
Net Loss as a % of Revenues
|
(15.1 %)
|
(9.7 %)
|
(540) BPS
|
(17.4 %)
|
(7.2 %)
|
**
|
Loss Per Share (Fully Diluted)
|
($1.96)
|
($1.17)
|
(68 %)
|
($4.64)
|
($1.67)
|
**
|
Adjusted Loss Per Share (Fully
Diluted)*
|
($1.46)
|
($1.21)
|
(21 %)
|
($3.15)
|
($1.19)
|
**
|
Fully Diluted Weighted Avg Share
Count
|
105.2
|
104.6
|
|
105.1
|
104.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Represents an amount in
excess of 100% or not meaningful.
|
"We are very pleased to have in place a four-year contract with
our IAM-represented employees, which reflects the gratitude we have
for their contributions. While the first vote resulted in a work
stoppage, we quickly went back to the table with our union partners
and reached a resolution. However, the strike did impact our
production and deliveries, as reflected in earnings and cash flow,"
said Tom Gentile, President and
Chief Executive Officer, Spirit AeroSystems.
"Also, we have resolved all rework related to the vertical
attach fittings issue on available Boeing 737 units in Wichita. With the IAM contract negotiations
and our rework of the vertical fin attach fittings behind us, we
look forward to executing on our customer commitments for the rest
of the year."
Ratification of New Contract with the IAM
The collective bargaining agreement with the IAM, which
represents approximately 55% of Spirit's U.S. employees, had an
expiration date of June 24, 2023. On
June 21, 2023, IAM-represented
employees voted to reject the Company's first contract offer and to
strike. In response, the Company suspended its Wichita factory production on June 22, 2023. The Company and IAM
representatives engaged in further negotiations, which resulted in
a revised four-year contract offer, which was ratified by
IAM-represented employees on June 29,
2023. The Company began restoring operations on June 30, 2023, and fully resumed operations on
July 5, 2023.
The IAM negotiations impacted all programs at the Wichita, Kansas site, including the 737
program. Based on the current estimates of future production rates,
Spirit's labor costs will be higher than the previous IAM contract
by approximately $80 million
annually. Financial impacts in the second quarter of 2023 include
$28.3 million of changes in estimates
primarily related to higher wages and other employee benefits
resulting from the new contract and strike disruption charges of
$7.3 million recorded to other
operating expense on the Consolidated Statements of Operations. The
work stoppage from the IAM strike will reduce full-year 737
deliveries to the range of 370 to 390 units, which will negatively
impact expected revenue, earnings and cash flow for 2023.
Revenue
Spirit's revenue in the second quarter of 2023 was $1.4 billion, up 8 percent from the same period
of 2022. This increase was primarily due to higher production
deliveries on the Boeing 737 and 787 programs and increased Defense
and Space revenue, partially offset by lower revenue on the Airbus
A220 program.
Overall deliveries increased to 342 shipsets during the
second quarter of 2023 compared to 318 shipsets in the same period
of 2022. This includes Boeing 737 deliveries of 74 shipsets
compared to 71 shipsets in the same period of the prior year.
Spirit's backlog at the end of the second quarter of 2023 was
approximately $40.5 billion, which
includes work packages on all commercial platforms in the Airbus
and Boeing backlog.
Earnings
Operating loss for the second quarter of 2023 was $120.4 million, compared to operating loss of
$104.7 million in the same period of
2022. The change in operating loss was primarily driven by higher
changes in estimates as well as contra revenue recorded for a
potential customer claim, partially offset by the absence of losses
related to Russia sanctions
recognized during the second quarter of 2022 and increased
Aftermarket segment earnings.
Changes in estimates in the second quarter of 2023 included net
forward loss charges of $104.7
million and unfavorable cumulative catch-up adjustments for
periods prior to the second quarter of $21.6
million. The forward losses related primarily to the Boeing
787, Airbus A350 and Airbus A220 programs. The forward loss on the
Boeing 787 program of $37.5 million
was driven by the impacts of the new IAM union contract as well as
increased supply chain and other costs. The Airbus A350 program
forward loss of $27.5 million was
primarily due to increased costs related to production rate
recovery efforts, including freight, as well as unfavorable foreign
currency movements. The Airbus A220 program forward loss of
$27.4 million was driven by higher
estimates of supply chain costs and unfavorable foreign currency
movement. The unfavorable cumulative catch-up adjustments related
primarily to the Boeing 737 program, reflecting increased labor
costs resulting from the IAM union negotiations as well as higher
supply chain costs. Additionally, strike disruption charges of
$7.3 million were recorded to other
operating expense on the Consolidated Statements of Operations.
Excess capacity costs during the second quarter of 2023 were
$53.2 million. In comparison, during
the second quarter of 2022, Spirit recognized $63.7 million of net forward loss charges,
$8.0 million of unfavorable
cumulative catch-up adjustments and excess capacity costs of
$44.9 million. Additionally, in
second quarter of 2022, in relation to the sanctioned Russian
business activities, Spirit recorded net losses of $28.1 million.
Spirit estimates that Boeing has completed approximately half of
their required rework on the 737 vertical fin attach fittings
issue. The Company has recorded $23.0
million of contra revenue in the second quarter of 2023 to
account for a potential claim from Boeing for repair work to date
at their facility. This estimate represents what Spirit believes to
be the low end of the range of potential liability and the Company
cannot reasonably estimate the total potential claim it may receive
from Boeing to complete the required repairs.
Other expense for the second quarter of 2023 was $9.9 million, compared to other income of
$34.6 million in the same period of
2022. The variance was primarily due to a gain recorded in the
second quarter of 2022 of $20.7
million related to the settlement of the repayable
investment agreement with the U.K. Department of Business, Energy
and Industrial Strategy, as well as lower pension income and higher
foreign currency losses recognized during the second quarter of
2023.
Second quarter 2023 EPS was $(1.96), compared to $(1.17) in the same period of 2022. Second
quarter 2023 adjusted EPS* was $(1.46), which excludes the incremental deferred
tax asset valuation allowance. During the same period of 2022,
adjusted EPS* was $(1.21), which
excluded the incremental deferred tax asset valuation allowance, a
settlement gain and losses related to Russia sanctions. (Table 1)
Cash
Cash used in operations in the second quarter of 2023 was
$183 million, compared to cash used
in operations of $62 million in the
same quarter of 2022. Cash used in operations during the second
quarter of 2023 reflects the negative impacts to working capital
resulting from the rework and disruption related to the vertical
fin attach fittings issue, the work stoppage caused by the IAM
strike, and the preparation for increased production on the Boeing
737 program. Additionally, the second quarter 2023 cash used in
operations included customer advances of $50
million, as well as an excise tax payment of $36 million related to the termination of the
Pension Value Plan A (PVP A).
Free cash flow* in the second quarter of 2023 was a usage of
$211 million, as compared to a usage
of $79 million in the same period of
2022.
During the second quarter of 2023, the Company entered into
agreements with certain customers to provide cash advances totaling
$280.0 million. Spirit received
$230.0 million during the second
quarter, $180.0 million of which is
from Boeing and reflected in cash used in financing activities and
$50.0 million is reflected in cash
used in operations. The Company expects to receive the incremental
advance of $50.0 million in the
fourth quarter of 2023, which is expected to be reflected in the
operating activities section of the statement of cash flows. These
advances will require repayment of $90.0
million in 2024 and $190.0
million in 2025.
The cash balance at the end of the second quarter of 2023 was
$526 million. (Table 2)
Table 2. Cash Flow, Cash and Total Debt
(unaudited)
|
|
|
|
|
|
2nd Quarter
|
|
Six Months
|
|
($ in millions)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
|
|
|
|
|
|
|
Cash used in Operations
|
($183)
|
($62)
|
**
|
($229)
|
($332)
|
31 %
|
Purchases of Property, Plant &
Equipment
|
($28)
|
($18)
|
(62 %)
|
($51)
|
($45)
|
(13 %)
|
Free Cash Flow*
|
($211)
|
($79)
|
**
|
($280)
|
($377)
|
26 %
|
|
|
|
|
|
|
|
|
|
|
|
June 29,
|
December 31,
|
|
Cash and Total Debt
|
|
|
|
2023
|
2022
|
|
Cash
|
|
|
|
$526
|
$659
|
|
Total Debt
|
|
|
|
$3,871
|
$3,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Represents an amount in excess of 100% or
not meaningful.
|
Segment Results
Commercial
Commercial segment revenue in the second quarter of 2023
increased 5 percent from the same period of the prior year to
$1.1 billion, primarily due to
increased production revenues on the Boeing 737 and 787 programs,
partially offset by lower revenue recognized on the Airbus A220
program. Operating margin for the second quarter of 2023 decreased
to (7) percent compared to (4) percent the same period of 2022,
primarily due to higher changes in estimates recorded in the
current period and the contra revenue recognized for a potential
customer claim discussed above, partially offset by the absence of
losses related to Russia sanctions
recognized during the second quarter of 2022. In the second quarter
of 2023, changes in estimates for the segment included $101.9 million of net forward losses and
$15.7 million of unfavorable
cumulative catch-up adjustments. Additionally, during the second
quarter of 2023, the Commercial segment included excess capacity
costs of $51.8 million and strike
disruption charges of $7.1 million.
In comparison, during the second quarter of 2022, the segment
recognized $59.4 million of net
forward losses, $7.9 million of
unfavorable cumulative catch-up adjustments and excess capacity
costs of $43.1 million. In relation
to the sanctioned Russian business activities, the segment recorded
net losses of $23.9 million in the
second quarter of 2022.
Defense & Space
Defense & Space segment revenue in the second quarter of
2023 increased 30 percent from the same period of the prior year to
$189.6 million, primarily due to
increased activity on development programs and higher production on
the Boeing P-8 program in the current period. Operating margin for
the second quarter of 2023 decreased to 6 percent, compared to 9
percent during the same period of 2022, primarily due to increased
costs on the Boeing P-8 and KC-46 Tanker programs resulting from
the IAM union negotiations and higher supply chain cost estimates,
as well as one-time charges on the Sikorsky CH-53K program. The
segment recorded net forward losses of $2.8
million, unfavorable cumulative catch-up adjustments of
$5.9 million, and excess capacity
costs of $1.4 million in the second
quarter of 2023. In comparison, during the second quarter of 2022,
the segment recognized net forward losses of $4.3 million and excess capacity costs of
$1.8 million.
Aftermarket
Aftermarket segment revenue in the second quarter of 2023
increased by 15 percent compared to the same period of 2022 to
$92.1 million, primarily due to
higher spare part sales and maintenance, repair and overhaul (MRO)
activity, compared to the same period in the prior year. Operating
margin for the second quarter of 2023 increased to 26 percent,
compared to 15 percent during the same period of 2022, primarily
due to higher margins on increased activity as well as the absence
of losses related to Russia
sanctions recognized during the second quarter of 2022 of
$4.2 million.
Table 4. Segment Reporting
(unaudited)
|
|
|
|
2nd Quarter
|
Six Months
|
($ in millions)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
|
|
|
|
|
|
|
Segment Revenues
|
|
|
|
|
|
|
Commercial
|
$1,083.0
|
$1,031.1
|
5.0 %
|
$2,231.5
|
$1,969.5
|
13.3 %
|
Defense
& Space
|
189.6
|
146.4
|
29.5 %
|
378.0
|
304.9
|
24.0 %
|
Aftermarket
|
92.1
|
80.4
|
14.6 %
|
186.6
|
158.2
|
18.0 %
|
Total Segment Revenues
|
$1,364.7
|
$1,257.9
|
8.5 %
|
$2,796.1
|
$2,432.6
|
14.9 %
|
|
|
|
|
|
|
|
Segment (Loss) Earnings from
Operations
|
|
|
|
|
|
|
Commercial
|
($72.9)
|
($45.1)
|
(61.6 %)
|
($118.4)
|
($48.5)
|
**
|
Defense
& Space
|
12.0
|
13.7
|
(12.4 %)
|
31.2
|
33.7
|
(7.4 %)
|
Aftermarket
|
24.3
|
11.8
|
**
|
43.5
|
29.8
|
46.0 %
|
Total Segment Operating (Loss)
Earnings
|
($36.6)
|
($19.6)
|
(86.7 %)
|
($43.7)
|
$15.0
|
**
|
|
|
|
|
|
|
|
Segment Operating (Loss) Earnings as % of
Revenues
|
|
|
|
|
|
|
Commercial
|
(6.7 %)
|
(4.4 %)
|
(230) BPS
|
(5.3 %)
|
(2.5 %)
|
(280) BPS
|
Defense
& Space
|
6.3 %
|
9.4 %
|
(310) BPS
|
8.3 %
|
11.1 %
|
(280) BPS
|
Aftermarket
|
26.4 %
|
14.7 %
|
**
|
23.3 %
|
18.8 %
|
450 BPS
|
Total Segment Operating (Loss) Earnings as % of
Revenues
|
(2.7 %)
|
(1.6 %)
|
(110) BPS
|
(1.6 %)
|
0.6 %
|
(220) BPS
|
|
|
|
|
|
|
|
Unallocated Expense
|
|
|
|
|
|
|
SG&A
|
($70.6)
|
($70.2)
|
(0.6 %)
|
($148.0)
|
($134.7)
|
(9.9 %)
|
Research &
Development
|
(13.2)
|
(14.9)
|
11.4 %
|
(23.8)
|
(27.2)
|
12.5 %
|
Total Loss from Operations
|
($120.4)
|
($104.7)
|
(15.0 %)
|
($215.5)
|
($146.9)
|
(46.7 %)
|
|
|
|
|
|
|
|
Total Operating Loss as % of
Revenues
|
(8.8 %)
|
(8.3 %)
|
(50) BPS
|
(7.7 %)
|
(6.0 %)
|
(170) BPS
|
|
|
|
|
|
|
|
** Represents an amount in
excess of 100% or not meaningful.
|
On the web: http://www.spiritaero.com
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" that
involve many risks and uncertainties. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "aim," "anticipate," "believe," "could,"
"continue," "estimate," "expect," "forecast," "goal," "intend,"
"may," "might," "objective," "plan," "predict," "project,"
"should," "target," "will," "would," and other similar words, or
phrases, or the negative thereof, unless the context requires
otherwise. These statements reflect management's current views with
respect to future events and are subject to risks and
uncertainties, both known and unknown, including, but not limited
to, those described in the "Risk Factors" section of the 2022 Form
10-K. Our actual results may vary materially from those anticipated
in forward-looking statements. We caution investors not to place
undue reliance on any forward-looking statements.
Important factors that could cause actual results to differ
materially from those reflected in such forward-looking statements
and that should be considered in evaluating our outlook include,
but are not limited to, the following:
- the continued fragility of the global aerospace supply chain
including our dependence on our suppliers, as well as the cost and
availability of raw materials and purchased components, including
increases in energy, freight, and other raw material costs as a
result of inflation or continued global inflationary
pressures;
- our ability and our suppliers' ability to meet stringent
delivery (including quality and timeliness) standards and
accommodate changes in the build rates or model mix of aircraft,
including the ability to staff appropriately for current production
volumes and anticipated production volume increases;
- our ability to maintain continuing, uninterrupted production at
our manufacturing facilities and our suppliers' facilities;
- our ability, and our suppliers' ability, to attract and retain
the skilled work force necessary for production and development in
an extremely competitive market;
- the effect of economic conditions, including increases in
interest rates and inflation, on the demand for our and our
customers' products and services, on the industries and markets in
which we operate in the U.S. and globally, and on the global
aerospace supply chain;
- the general effect of geopolitical conditions, including
Russia's invasion of Ukraine and the resultant sanctions being
imposed in response to the conflict, including any trade and
transport restrictions;
- our relationships with the unions representing many of our
employees, including our ability to successfully negotiate new
agreements, and avoid labor disputes and work stoppages with
respect to our union employees;
- the impact of significant health events, such as pandemics,
contagions or other public health emergencies (including the
COVID-19 pandemic) or fear of such events, on the demand for our
and our customers' products and services, the industries and
markets in which we operate in the U.S. and globally;
- the timing and conditions surrounding the full worldwide return
to service (including receiving the remaining regulatory approvals)
of the B737 MAX, future demand for the aircraft, and any residual
impacts of the B737 MAX grounding on production rates for the
aircraft;
- our reliance on The Boeing Company ("Boeing") and Airbus Group
SE and its affiliates (collectively, "Airbus") for a significant
portion of our revenues;
- the business condition and liquidity of our customers and their
ability to satisfy their contractual obligations to the
Company;
- the certainty of our backlog, including the ability of
customers to cancel or delay orders prior to shipment on short
notice, and the potential impact of regulatory approvals of
existing and derivative models;
- our ability to accurately estimate and manage performance,
cost, margins, and revenue under our contracts, and the potential
for additional forward losses on new and maturing programs;
- our accounting estimates for revenue and costs for our
contracts and potential changes to those estimates;
- our ability to continue to grow and diversify our business,
execute our growth strategy, and secure replacement programs,
including our ability to enter into profitable supply arrangements
with additional customers;
- the outcome of product warranty or defective product claims and
the impact settlement of such claims may have on our accounting
assumptions;
- competitive conditions in the markets in which we operate,
including in-sourcing by commercial aerospace original equipment
manufacturers;
- our ability to successfully negotiate, or re-negotiate, future
pricing under our supply agreements with Boeing, Airbus and other
customers;
- the possibility that our cash flows may not be adequate for our
additional capital needs;
- any reduction in our credit ratings;
- our ability to access the capital or credit markets to fund our
liquidity needs, and the costs and terms of any additional
financing;
- our ability to avoid or recover from cyber or other security
attacks and other operations disruptions;
- legislative or regulatory actions, both domestic and foreign,
impacting our operations, including the effect of changes in tax
laws and rates and our ability to accurately calculate and estimate
the effect of such changes;
- spending by the U.S. and other governments on defense;
- pension plan assumptions and future contributions;
- the effectiveness of our internal control over financial
reporting;
- the outcome or impact of ongoing or future litigation,
arbitration, claims, and regulatory actions or investigations,
including our exposure to potential product liability and warranty
claims;
- adequacy of our insurance coverage;
- our ability to continue selling certain receivables through our
supplier financing programs; and
- our ability to effectively integrate recent acquisitions, along
with other acquisitions we pursue, and generate synergies and other
cost savings therefrom, while avoiding unexpected costs, charges,
expenses, and adverse changes to business relationships and
business disruptions;
- the risks of doing business internationally, including
fluctuations in foreign currency exchange rates, impositions of
tariffs or embargoes, trade restrictions, compliance with foreign
laws, and domestic and foreign government policies.
These factors are not exhaustive and it is not possible for us
to predict all factors that could cause actual results to differ
materially from those reflected in our forward-looking statements.
These factors speak only as of the date hereof, and new factors may
emerge or changes to the foregoing factors may occur that could
impact our business. As with any projection or forecast, these
statements are inherently susceptible to uncertainty and changes in
circumstances. Except to the extent required by law, we undertake
no obligation to, and expressly disclaim any obligation to,
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. You
should review carefully the section captioned "Risk Factors" in the
Company's Annual Report on Form 10-K and the Company's Quarterly
Reports on Form 10-Q for a more complete discussion of these and
other factors that may affect our business.
Spirit Shipset Deliveries
|
(one shipset equals one
aircraft)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Six Months
|
|
|
2023
|
2022
|
|
2023
|
|
2022
|
B737
|
|
74
|
71
|
|
169
|
|
131
|
B747
|
|
-
|
-
|
|
-
|
|
1
|
B767
|
|
9
|
8
|
|
17
|
|
16
|
B777
|
|
7
|
6
|
|
14
|
|
11
|
B787
|
|
10
|
4
|
|
16
|
|
7
|
Total
Boeing
|
|
100
|
89
|
|
216
|
|
166
|
|
|
|
|
|
|
|
|
A220
|
|
14
|
16
|
|
27
|
|
34
|
A320
Family
|
|
152
|
147
|
|
294
|
|
302
|
A330
|
|
9
|
6
|
|
18
|
|
12
|
A350
|
|
13
|
11
|
|
25
|
|
26
|
Total
Airbus
|
|
188
|
180
|
|
364
|
|
374
|
|
|
|
|
|
|
|
|
Business/Regional
Jet
|
|
54
|
49
|
|
108
|
|
99
|
|
|
|
|
|
|
|
|
Total
|
|
342
|
318
|
|
688
|
|
639
|
Spirit AeroSystems Holdings,
Inc.
|
Condensed Consolidated Statements of
Operations
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
June 29, 2023
|
|
June 30, 2022
|
|
June 29, 2023
|
|
June 30, 2022
|
|
|
($ in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$1,364.7
|
|
$1,257.9
|
|
$2,796.1
|
|
$2,432.6
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,395.5
|
|
1,277.5
|
|
2,827.7
|
|
2,417.4
|
Selling, general and
administrative
|
|
70.6
|
|
70.2
|
|
148.0
|
|
134.7
|
Restructuring
costs
|
|
0.9
|
|
-
|
|
7.2
|
|
0.2
|
Research and
development
|
|
13.2
|
|
14.9
|
|
23.8
|
|
27.2
|
Other operating
expense
|
|
4.9
|
|
-
|
|
4.9
|
|
-
|
|
Total operating costs and
expenses
|
|
1,485.1
|
|
1,362.6
|
|
3,011.6
|
|
2,579.5
|
|
Operating loss
|
|
(120.4)
|
|
(104.7)
|
|
(215.5)
|
|
(146.9)
|
Interest expense and
financing fee amortization
|
|
(73.6)
|
|
(55.1)
|
|
(146.0)
|
|
(114.0)
|
Other (expense) income,
net
|
|
(9.9)
|
|
34.6
|
|
(127.3)
|
|
72.3
|
|
Loss before income taxes and equity in net income
(loss) of affiliates
|
|
(203.9)
|
|
(125.2)
|
|
(488.8)
|
|
(188.6)
|
Income tax (provision)
benefit
|
|
(3.0)
|
|
3.5
|
|
1.3
|
|
14.5
|
|
Loss before equity in net income (loss) of
affiliates
|
|
(206.9)
|
|
(121.7)
|
|
(487.5)
|
|
(174.1)
|
Equity in net income
(loss) of affiliates
|
|
0.5
|
|
(0.5)
|
|
(0.2)
|
|
(0.9)
|
|
Net loss
|
|
(206.4)
|
|
(122.2)
|
|
(487.7)
|
|
(175.0)
|
Less noncontrolling
interest in earnings of subsidiary
|
|
0.1
|
|
-
|
|
0.2
|
|
-
|
|
Net loss attributable to common
shareholders
|
|
($206.3)
|
|
($122.2)
|
|
($487.5)
|
|
($175.0)
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(1.96)
|
|
($1.17)
|
|
$
(4.64)
|
|
($1.67)
|
Shares
|
|
105.2
|
|
104.6
|
|
105.1
|
|
104.5
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
(1.96)
|
|
($1.17)
|
|
$
(4.64)
|
|
($1.67)
|
Shares
|
|
105.2
|
|
104.6
|
|
105.1
|
|
104.5
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
|
$0.00
|
|
$0.01
|
|
$0.00
|
|
$0.02
|
Spirit AeroSystems Holdings,
Inc.
|
Condensed Consolidated Balance
Sheets
|
(unaudited)
|
|
|
June 29, 2023
|
|
December 31, 2022
|
|
|
($ in millions)
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$525.7
|
|
$658.6
|
Restricted
cash
|
|
0.2
|
|
0.2
|
Accounts receivable,
net
|
|
499.5
|
|
489.5
|
Contract assets,
short-term
|
|
580.8
|
|
501.0
|
Inventory,
net
|
|
1,636.3
|
|
1,470.7
|
Other current
assets
|
|
48.8
|
|
38.3
|
Total current assets
|
|
3,291.3
|
|
3,158.3
|
Property, plant and
equipment, net
|
|
2,124.8
|
|
2,205.9
|
Intangible assets,
net
|
|
203.8
|
|
211.4
|
Goodwill
|
|
631.2
|
|
630.5
|
Right of use
assets
|
|
90.5
|
|
94.3
|
Contract assets,
long-term
|
|
16.6
|
|
1.2
|
Pension
assets
|
|
27.3
|
|
196.9
|
Restricted plan
assets
|
|
60.9
|
|
71.1
|
Deferred income
taxes
|
|
0.3
|
|
4.8
|
Other
assets
|
|
98.5
|
|
91.8
|
Total assets
|
|
$6,545.2
|
|
$6,666.2
|
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$974.4
|
|
$919.8
|
Accrued
expenses
|
|
408.2
|
|
411.7
|
Profit
sharing
|
|
13.7
|
|
40.5
|
Current portion of
long-term debt
|
|
56.0
|
|
53.7
|
Operating lease
liabilities, short-term
|
|
8.3
|
|
8.3
|
Advance payments,
short-term
|
|
30.6
|
|
24.9
|
Contract liabilities,
short-term
|
|
132.7
|
|
111.1
|
Forward loss
provision, short-term
|
|
331.4
|
|
305.9
|
Deferred revenue and
other deferred credits, short-term
|
|
47.0
|
|
21.7
|
Other current
liabilities
|
|
183.5
|
|
54.9
|
Total current liabilities
|
|
2,185.8
|
|
1,952.5
|
Long-term
debt
|
|
3,814.9
|
|
3,814.9
|
Operating lease
liabilities, long-term
|
|
83.0
|
|
85.4
|
Advance payments,
long-term
|
|
236.4
|
|
199.9
|
Pension/OPEB
obligation
|
|
23.1
|
|
25.2
|
Contract liabilities,
long-term
|
|
216.7
|
|
245.3
|
Forward loss
provision, long-term
|
|
311.4
|
|
369.2
|
Deferred revenue and
other deferred credits, long-term
|
|
46.1
|
|
49.0
|
Deferred grant income
liability - non-current
|
|
26.4
|
|
25.7
|
Deferred income
taxes
|
|
3.8
|
|
1.3
|
Other non-current
liabilities
|
|
226.5
|
|
141.6
|
Stockholders' Equity
|
|
|
|
|
Common stock,
Class A par value $0.01, 200,000,000 shares
authorized,
105,288,894 and
105,252,421 shares issued and outstanding, respectively
|
|
1.1
|
|
1.1
|
Additional paid-in
capital
|
|
1,196.1
|
|
1,179.5
|
Accumulated other
comprehensive loss
|
|
(117.9)
|
|
(203.9)
|
Retained
earnings
|
|
745.0
|
|
1,232.5
|
Treasury stock, at
cost (41,587,480 shares each period)
|
|
(2,456.7)
|
|
(2,456.7)
|
Total stockholders' equity
|
|
(632.4)
|
|
(247.5)
|
Noncontrolling
interest
|
|
3.5
|
|
3.7
|
Total equity
|
|
(628.9)
|
|
(243.8)
|
Total liabilities and equity
|
|
$6,545.2
|
|
$6,666.2
|
Spirit AeroSystems Holdings,
Inc.
|
Condensed Consolidated Statements of Cash
Flows
|
(unaudited)
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
June 29, 2023
|
|
June 30, 2022
|
|
|
($ in millions)
|
Operating activities
|
|
|
|
|
Net loss
|
|
($487.7)
|
|
($175.0)
|
Adjustments to
reconcile net loss to net cash used in operating
activities
|
|
|
|
|
Depreciation and
amortization expense
|
|
157.7
|
|
169.0
|
Amortization of deferred
financing fees
|
|
3.5
|
|
3.7
|
Accretion of customer supply
agreement
|
|
1.2
|
|
1.3
|
Employee stock compensation
expense
|
|
19.8
|
|
18.3
|
Loss from derivative
instruments
|
|
2.1
|
|
4.0
|
Loss (gain) from foreign
currency transactions
|
|
8.5
|
|
(25.7)
|
Loss on disposition of
assets
|
|
0.3
|
|
1.6
|
Deferred taxes
|
|
(11.5)
|
|
(13.6)
|
Pension and other
post-retirement plans expense (income)
|
|
62.6
|
|
(39.7)
|
Grant liability
amortization
|
|
(0.6)
|
|
(0.7)
|
Equity in net loss of
affiliates
|
|
0.2
|
|
0.9
|
Forward loss
provision
|
|
(32.5)
|
|
(53.4)
|
Gain on settlement of
financial instrument
|
|
(0.9)
|
|
(21.0)
|
Change in fair value of
acquisition consideration and settlement
|
|
(2.4)
|
|
-
|
Changes in assets and
liabilities
|
|
|
|
|
Accounts receivable, net
|
|
(17.1)
|
|
(124.7)
|
Contract assets
|
|
(92.7)
|
|
(44.5)
|
Inventory, net
|
|
(161.4)
|
|
13.9
|
Accounts payable and accrued
liabilities
|
|
88.8
|
|
105.5
|
Profit sharing/deferred
compensation
|
|
(26.9)
|
|
(43.7)
|
Advance payments
|
|
41.1
|
|
(65.7)
|
Income taxes
receivable/payable
|
|
7.2
|
|
12.1
|
Contract
liabilities
|
|
(7.3)
|
|
(26.5)
|
Pension plans employer
contributions
|
|
178.4
|
|
23.0
|
Deferred revenue and other
deferred credits
|
|
21.7
|
|
(38.8)
|
Other
|
|
18.9
|
|
(12.0)
|
Net cash
used in operating activities
|
|
($229.0)
|
|
($331.7)
|
Investing activities
|
|
|
|
|
Purchase of property, plant
and equipment
|
|
(51.3)
|
|
(45.2)
|
Other
|
|
-
|
|
(2.2)
|
Net cash
used in investing activities
|
|
($51.3)
|
|
($47.4)
|
Financing activities
|
|
|
|
|
Borrowings under revolving
credit facility
|
|
1.6
|
|
-
|
Payment of principal -
settlement of financial instrument
|
|
-
|
|
(289.5)
|
Customer
financing
|
|
180.0
|
|
-
|
Principal payments of
debt
|
|
(31.2)
|
|
(22.5)
|
Payments on term
loan
|
|
(1.5)
|
|
(3.0)
|
Taxes paid related to net
share settlement awards
|
|
(5.9)
|
|
(6.5)
|
Proceeds from issuance of
ESPP stock
|
|
2.6
|
|
1.9
|
Debt issuance and financing
costs
|
|
(0.5)
|
|
-
|
Dividends paid
|
|
-
|
|
(2.2)
|
Net cash
provided by (used in) financing activities
|
|
$145.1
|
|
($321.8)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
4.8
|
|
(7.6)
|
Net
decrease in cash, cash equivalents and restricted cash for the
period
|
|
($130.4)
|
|
($708.5)
|
Cash, cash equivalents,
and restricted cash, beginning of the period
|
|
678.4
|
|
1,498.4
|
Cash, cash equivalents,
and restricted cash, end of the period
|
|
$548.0
|
|
$789.9
|
|
|
|
|
|
Reconciliation of Cash and Cash Equivalents and
Restricted Cash:
|
|
June 29, 2023
|
|
June 30, 2022
|
Cash and cash
equivalents, beginning of the period
|
|
$658.6
|
|
$1,478.6
|
Restricted cash,
short-term, beginning of the period
|
|
0.2
|
|
0.3
|
Restricted cash,
long-term, beginning of the period
|
|
19.6
|
|
19.5
|
Cash, cash equivalents,
and restricted cash, beginning of the period
|
|
$678.4
|
|
$1,498.4
|
|
|
|
|
|
Cash and cash
equivalents, end of the period
|
|
$525.7
|
|
$770.2
|
Restricted cash,
short-term, end of the period
|
|
0.2
|
|
0.2
|
Restricted cash,
long-term, end of the period
|
|
22.1
|
|
19.5
|
Cash, cash equivalents,
and restricted cash, end of the period
|
|
$548.0
|
|
$789.9
|
Appendix
In addition to reporting our financial
information using U.S. Generally Accepted Accounting Principles
(GAAP), management believes that certain non-GAAP measures (which
are indicated by * in this report) provide investors with important
perspectives into the company's ongoing business performance. The
non-GAAP measures we use in this report are (i) adjusted diluted
earnings (loss) per share and (ii) free cash flow, which are
described further below. The company does not intend for the
information to be considered in isolation or as a substitute for
the related GAAP measures. Other companies may define and calculate
the measures differently than we do, limiting the usefulness of the
measures for comparison with other companies.
Adjusted Diluted (Loss) Earnings Per Share. To provide
additional transparency, we have disclosed non-GAAP adjusted
diluted (loss) earnings per share (Adjusted EPS). This metric
excludes various items that are not considered to be directly
related to our operating performance. Management uses Adjusted EPS
as a measure of business performance, and we believe this
information is useful in providing period-to-period comparisons of
our results. The most comparable GAAP measure is diluted earnings
(loss) per share.
Free Cash Flow. Free Cash Flow is defined as GAAP cash provided
by (used in) operating activities (also referred to herein as "cash
from operations"), less capital expenditures for property, plant
and equipment. Management believes Free Cash Flow provides
investors with an important perspective on the cash available for
stockholders, debt repayments including capital leases, and
acquisitions after making the capital investments required to
support ongoing business operations and long-term value creation.
Free Cash Flow does not represent the residual cash flow available
for discretionary expenditures as it excludes certain mandatory
expenditures. The most comparable GAAP measure is cash provided by
(used in) operating activities. Management uses Free Cash Flow as a
measure to assess both business performance and overall
liquidity.
The tables below provide reconciliations between the GAAP and
non-GAAP measures.
Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
June 29,
2023
|
|
June 30,
2022
|
|
June 29,
2023
|
|
June 30,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Loss Per
Share
|
|
($1.96)
|
|
($1.17)
|
|
($4.64)
|
|
($1.67)
|
|
Deferred Tax Asset
Valuation Allowance
|
|
0.50
|
a
|
(0.11)
|
a
|
1.01
|
a
|
0.43
|
a
|
Investment Agreement
Settlement Gain
|
|
-
|
|
(0.18)
|
b
|
-
|
|
(0.13)
|
b
|
Losses related to
Russia Sanctions
|
|
-
|
|
0.25
|
c
|
-
|
|
0.18
|
c
|
Pension Termination
Charges
|
|
-
|
|
-
|
|
0.48
|
d
|
-
|
|
Adjusted Diluted (Loss)
Earnings Per Share
|
|
($1.46)
|
|
($1.21)
|
|
($3.15)
|
|
($1.19)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares (in
millions)
|
|
105.2
|
|
104.6
|
|
105.1
|
|
104.5
|
|
|
|
a
|
Represents the deferred
tax asset valuation allowance (included in Income tax
provision)
|
|
|
b
|
Represents the
settlement gain resulting from the settlement of the repayable
investment agreement with the U.K. Department of Business, Energy
and Industrial Strategy (included in Other expense)
|
|
|
|
|
|
|
|
|
|
|
c
|
Represents the
impairment charges and reserve adjustments related to the
suspension of all sales and service activities relating to
sanctioned Russian business activities. These losses are directly
attributable to the sanctions, incremental to similar costs (or
income) incurred for reasons other than the sanctions and are not
expected to recur, and therefore, are not indicative of Spirit's
ongoing operational performance (primarily included in Cost of
Sales)
|
|
|
|
|
|
|
|
|
|
|
d
|
Represents the non-cash
charges related to the termination of the U.S. Pension Value Plan A
(included in Other expense)
|
Free Cash Flow
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 29,
2023
|
|
June 30,
2022
|
|
June 29,
2023
|
|
June 30,
2022
|
|
|
|
|
|
|
|
|
Cash Used in
Operations
|
($183)
|
|
($62)
|
|
($229)
|
|
($332)
|
Capital
Expenditures
|
(28)
|
|
(18)
|
|
(51)
|
|
(45)
|
Free Cash Flow
|
($211)
|
|
($79)
|
|
($280)
|
|
($377)
|
* Non-GAAP financial
measure, see Appendix for reconciliation
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/spirit-aerosystems-reports-second-quarter-2023-results-301890745.html
SOURCE Spirit AeroSystems