Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $1.3 billion, up 26% from the same quarter last year, primarily due to higher production on the 737 and increased Aftermarket revenue [21][38] - Earnings per share (EPS) was negative $1.17, an improvement from negative $1.30 in Q2 2021; adjusted EPS was negative $1.21 compared to negative $0.31 in the same period last year [24][25] - Operating margin was negative 8%, down from 10% in Q2 2021, impacted by supply chain challenges and losses related to Russian sanctions [27][28] Business Line Data and Key Metrics Changes - Commercial revenue increased 28% compared to 2021, driven by higher production volumes on the 737, 777, and A220 programs, partially offset by lower production on the 787 and 747 programs [38] - Defense & Space revenue improved 3% compared to Q2 2021, due to increased production and development program activity [42] - Aftermarket revenues were up 42% compared to the same period in 2021, primarily due to higher spare part sales and maintenance activities [44] Market Data and Key Metrics Changes - Domestic air traffic has recovered to close to 2019 levels, with air traffic exceeding 2019 levels during the July 4th holiday weekend [7][8] - Spirit's backlog stands at $34 billion, with 85% attributed to narrowbody aircraft [8] Company Strategy and Development Direction - The company is focused on managing supply chain challenges and inflationary pressures while aiming to stabilize 737 MAX production rates [48] - Diversification efforts in the Defense & Space segment are progressing well, with additional work secured [49] - The Aftermarket segment is expected to continue revenue growth as aircraft utilization recovers [49] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term pressures from supply chain issues, staffing shortages, and inflation but remains optimistic about the long-term recovery of the aerospace industry [19][20] - The company expects to deliver about 300 737 MAX units in 2022, down from previous expectations due to supply chain disruptions [11][93] Other Important Information - The company recorded a net charge of $28 million related to adjustments of certain assets and liabilities due to U.S. sanctions on Russia [14] - Free cash flow usage for Q2 2022 was $62 million, with expectations of $250 million to $300 million for the full year [33][35] Q&A Session Summary Question: Update on 787 program and FAA work - Management confirmed that all requested engineering analysis for the 787 has been submitted and they are working closely with Boeing to resolve outstanding issues [56][58] Question: Cash flow outlook for 2023 - Management indicated that cash flow generation in 2023 will depend on production rates, particularly for the 737 MAX, and they expect to be cash flow positive if production rates exceed breakeven levels [72][74] Question: Labor challenges and hiring process - Management noted that they have exhausted their recall list and are now hiring externally, with a solid staffing situation across various locations [81][83] Question: Clarification on MAX buffer and production rates - Management explained that the buffer has been reduced to 66 units and that they plan to maintain a permanent buffer of about 20 units while aligning production rates with Boeing [90][132] Question: Cash flow and working capital management - Management outlined five key levers for improving cash flow in the second half of the year, including stable 737 production rates and increased 787 deliveries [100][102]

Second Quarter 2022 Earnings Review Tom Gentile President and Chief Executive Officer Mark Suchinski Senior Vice President and Chief Financial Officer August 3, 2022 > spiritaero.com Recent Events ▪ Settled repayable investment agreement with the U.K. Department of Business, Energy and Industrial Strategy ▪ Participated in the Farnborough airshow, the first major airshow since 2019 ▪ Selected by Boeing to support the B-52 Commercial Engine Replacement Program ▪ Awarded Shooting Star Cargo Module by Sierra S ...

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q) This section provides key filing details for Spirit AeroSystems Holdings, Inc.'s Form 10-Q for the quarter ended June 30, 2022 [Registrant Information](index=1&type=section&id=Registrant%20Information) Spirit AeroSystems Holdings, Inc. filed its Form 10-Q, detailing its corporate structure, NYSE listing under SPR, and status as a large accelerated filer - Spirit AeroSystems Holdings, Inc. is a Delaware corporation with headquarters in Wichita, Kansas[2](index=2&type=chunk) Class A Common Stock Listing | Title of each class | Trading symbol | Name of each exchange on which registered | | :------------------ | :------------- | :-------------------------------------- | | Class A common stock, par value $0.01 per share | SPR | New York Stock Exchange | - The registrant is a large accelerated filer and not a shell company[3](index=3&type=chunk) - As of July 20, 2022, **105,137,748 shares of Class A common stock** were outstanding[3](index=3&type=chunk) [PART I — FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the company [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2022 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, operating costs, and net loss for the three and six months ended June 30, 2022 Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2022 ($ in millions) | Three Months Ended July 1, 2021 ($ in millions) | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | 1,257.9 | 1,002.1 | 2,432.6 | 1,902.9 | | Total operating costs and expenses | 1,362.6 | 1,099.8 | 2,579.5 | 2,126.5 | | Operating loss | (104.7) | (97.7) | (146.9) | (223.6) | | Net loss | (122.2) | (135.3) | (175.0) | (306.9) | | Basic Loss per share | (1.17) | (1.30) | (1.67) | (2.95) | | Diluted Loss per share | (1.17) | (1.30) | (1.67) | (2.95) | - Revenue increased by **$255.8 million (25.5%)** for the three months and **$529.7 million (27.8%)** for the six months ended June 30, 2022, year-over-year[10](index=10&type=chunk) - Net loss improved for both the three-month period (from **$135.3 million to $122.2 million**) and the six-month period (from **$306.9 million to $175.0 million**) year-over-year[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) This statement presents the net loss and other comprehensive income components, leading to total comprehensive loss Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) | Metric | Three Months Ended June 30, 2022 ($ in millions) | Three Months Ended July 1, 2021 ($ in millions) | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss | (122.2) | (135.3) | (175.0) | (306.9) | | Total other comprehensive (loss) gain | (41.7) | (2.1) | (59.3) | 2.0 | | Total comprehensive loss | (163.9) | (137.4) | (234.3) | (304.9) | - Total comprehensive loss for the six months ended June 30, 2022, was **$234.3 million**, an improvement from **$304.9 million** in the prior year, despite a larger 'Total other comprehensive loss' in the current period[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets (Unaudited) | Asset/Liability/Equity | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :-------------------------------- | :---------------------------- | :-------------------------------- | | Cash and cash equivalents | 770.2 | 1,478.6 | | Total current assets | 3,211.6 | 3,806.0 | | Total assets | 6,989.3 | 7,737.3 | | Total current liabilities | 2,179.9 | 1,876.0 | | Long-term debt | 3,424.8 | 3,742.7 | | Total stockholders' equity | 225.4 | 448.3 | | Total liabilities and equity | 6,989.3 | 7,737.3 | - Cash and cash equivalents decreased significantly from **$1,478.6 million** at December 31, 2021, to **$770.2 million** at June 30, 2022[15](index=15&type=chunk) - Total stockholders' equity decreased from **$448.3 million to $225.4 million**, while total current liabilities increased from **$1,876.0 million to $2,179.9 million**[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement details changes in stockholders' equity, including net losses, other comprehensive losses, and employee equity awards Changes in Stockholders' Equity (Unaudited) | Metric | Balance — December 31, 2021 ($ in millions) | Balance — June 30, 2022 ($ in millions) | | :-------------------------------- | :---------------------------------------- | :------------------------------------ | | Total Stockholders' Equity | 448.3 | 225.4 | | Net loss (Q1 2022) | (52.8) | (52.8) | | Net loss (Q2 2022) | (122.2) | (122.2) | | Other comprehensive loss (Q1 2022) | (17.6) | (17.6) | | Other comprehensive loss (Q2 2022) | (41.7) | (41.7) | | Employee equity awards (total) | 18.2 | 18.2 | | Dividends declared (total) | (2.2) | (2.2) | - Total stockholders' equity decreased from **$448.3 million** at December 31, 2021, to **$225.4 million** at June 30, 2022, primarily due to net losses and other comprehensive losses[17](index=17&type=chunk) - Cash dividends declared per common share were **$0.01** for the three months ended June 30, 2022 and July 1, 2021, and **$0.02** for the six months ended June 30, 2022 and July 1, 2021[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | (331.7) | (197.7) | | Net cash used in investing activities | (47.4) | (72.2) | | Net cash used in financing activities | (321.8) | (332.0) | | Net decrease in cash, cash equivalents, and restricted cash | (708.5) | (604.0) | | Cash, cash equivalents, and restricted cash, end of period | 789.9 | 1,289.1 | - Net cash used in operating activities increased to **$331.7 million** for the six months ended June 30, 2022, from **$197.7 million** in the prior year, primarily due to working capital growth associated with increased production[20](index=20&type=chunk)[256](index=256&type=chunk) - Net cash used in investing activities decreased to **$47.4 million** from **$72.2 million**, mainly due to the prior year acquisition of Applied Aerodynamics[20](index=20&type=chunk)[257](index=257&type=chunk) - Net cash used in financing activities slightly decreased to **$321.8 million** from **$332.0 million**, driven by differences in debt repayments[20](index=20&type=chunk)[258](index=258&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization, Basis of Interim Presentation and Recent Developments](index=9&type=section&id=1.%20Organization,%20Basis%20of%20Interim%20Presentation%20and%20Recent%20Developments) This note details the company's business, interim financial statement basis, and recent developments including COVID-19 impacts and Russia sanctions - The Company provides manufacturing and design expertise for fuselage, propulsion, and wing products for aircraft OEMs and operators[25](index=25&type=chunk) - COVID-19 pandemic continues to have a significant negative impact on the aviation industry and the Company's business, with uncertain duration and recovery[31](index=31&type=chunk) - B737 MAX deliveries resumed in Q4 2020, with most regulators ungrounding the aircraft; China issued an airworthiness directive in December 2021[33](index=33&type=chunk) - Suspension of sanctioned activities relating to Russia resulted in a pre-tax loss of **$28.1 million** related to asset and liability adjustments in Q2 2022[34](index=34&type=chunk) [2. Adoption of New Accounting Standards](index=10&type=section&id=2.%20Adoption%20of%20New%20Accounting%20Standards) The company adopted ASU 2019-12, Simplifying the Accounting for Income Taxes, with no material impact on its financial statements - Adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes, as of January 1, 2021, did not have a material impact on financial position or results of operations[35](index=35&type=chunk) [3. New Accounting Pronouncements](index=10&type=section&id=3.%20New%20Accounting%20Pronouncements) The company is evaluating ASU 2020-04 and preparing for ASU 2021-10, with no significant impact expected from the latter - The Company is evaluating ASU 2020-04, Reference Rate Reform, but has not yet applied its guidance to any contract modifications[36](index=36&type=chunk) - The Company is preparing for the initial application of ASU 2021-10, Government Assistance, for annual financial statements ending December 31, 2022, with no significant impact expected[37](index=37&type=chunk)[39](index=39&type=chunk) [4. Changes in Estimates](index=11&type=section&id=4.%20Changes%20in%20Estimates) Unfavorable changes in estimates totaled **$71.7 million** in Q2 2022, driven by forward loss charges and cumulative catch-up adjustments on key programs - Unfavorable changes in estimates totaled **$71.7 million** for Q2 2022, including **$63.7 million** in net forward loss charges and **$8.0 million** in unfavorable cumulative catch-up adjustments[41](index=41&type=chunk) - Forward losses in Q2 2022 were primarily due to increased cost estimates for B787 (production rate decreases, supply chain costs), A220 (supplier bankruptcy), and A350 (production schedule changes, labor, NRE/tooling costs)[42](index=42&type=chunk) - Unfavorable cumulative catch-up adjustments for Q2 2022 mainly related to B737 (production schedule changes, parts shortages, supply chain costs) and A320 (production cost overruns, material/freight/labor/overhead increases)[43](index=43&type=chunk) Changes in Estimates Summary | Changes in Estimates | For the Three Months Ended June 30, 2022 ($ in millions) | For the Three Months Ended July 1, 2021 ($ in millions) | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Total (Unfavorable) Favorable Cumulative Catch-up Adjustment | (8.0) | 9.9 | (24.4) | 0.1 | | Total Changes in Estimates (Forward Loss) on Loss Programs | (63.7) | (52.2) | (87.5) | (124.6) | | Total Change in Estimate | (71.7) | (42.3) | (111.9) | (124.5) | | EPS Impact (diluted per share) | (0.63) | (0.42) | (0.98) | (1.22) | [5. Accounts Receivable and Allowance for Credit Losses](index=12&type=section&id=5.%20Accounts%20Receivable%20and%20Allowance%20for%20Credit%20Losses) Accounts receivable, net, increased to **$581.3 million**, with **$1,309.6 million** monetized through sales arrangements with major customers Accounts Receivable, net | Metric | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :------------------------ | :---------------------------- | :-------------------------------- | | Trade receivables | 565.2 | 412.0 | | Other | 27.0 | 58.1 | | Less: allowance for credit losses | (10.9) | (8.5) | | Accounts receivable, net | 581.3 | 461.6 | - For the six months ended June 30, 2022, **$1,309.6 million** of accounts receivable were sold via arrangements with Boeing, Airbus, and Rolls-Royce, included in cash from operating activities[50](index=50&type=chunk) - The recorded net loss on sale of receivables was **$6.5 million** for the six months ended June 30, 2022[50](index=50&type=chunk) [6. Contract Assets and Contract Liabilities](index=13&type=section&id=6.%20Contract%20Assets%20and%20Contract%20Liabilities) Net contract assets increased to **$123.2 million**, reflecting higher over-time revenue recognition and decreased deferred revenues Net Contract Assets (Liabilities) | Metric | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | Change ($ in millions) | | :------------------------ | :---------------------------- | :-------------------------------- | :--------------------- | | Contract assets | 483.6 | 443.2 | 40.4 | | Contract liabilities | (360.4) | (387.0) | 26.6 | | Net contract assets (liabilities) | 123.2 | 56.2 | 67.0 | - The increase in contract assets reflects more over-time revenue recognition in relation to billed revenues[54](index=54&type=chunk) - The decrease in contract liabilities reflects less deferred revenues recorded in excess of revenue recognized[54](index=54&type=chunk) [7. Revenue Disaggregation and Outstanding Performance Obligations](index=14&type=section&id=7.%20Revenue%20Disaggregation%20and%20Outstanding%20Performance%20Obligations) Total revenue for the six months was **$2,432.6 million**, with significant unsatisfied performance obligations for 2022 and beyond Disaggregated Revenue by Satisfaction Method | Revenue Type | For the Three Months Ended June 30, 2022 ($ in millions) | For the Three Months Ended July 1, 2021 ($ in millions) | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Contracts with performance obligations satisfied over time | 933.0 | 763.2 | 1,762.7 | 1,412.4 | | Contracts with performance obligations satisfied at a point in time | 324.9 | 238.9 | 669.9 | 490.5 | | Total Revenue | 1,257.9 | 1,002.1 | 2,432.6 | 1,902.9 | Disaggregated Revenue by Major Customer | Customer | For the Three Months Ended June 30, 2022 ($ in millions) | For the Three Months Ended July 1, 2021 ($ in millions) | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :--------- | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Boeing | 762.2 | 561.8 | 1,409.4 | 1,029.7 | | Airbus | 281.1 | 244.6 | 585.0 | 476.2 | | Other | 214.6 | 195.7 | 438.2 | 397.0 | | Total Revenue | 1,257.9 | 1,002.1 | 2,432.6 | 1,902.9 | Unsatisfied Performance Obligations | Year | Unsatisfied performance obligations ($ in millions) | | :---------------- | :---------------------------------------- | | Remaining in 2022 | 2,119.3 | | 2023 | 4,237.6 | | 2024 | 4,062.5 | | 2025 and After | 708.8 | [8. Inventory](index=15&type=section&id=8.%20Inventory) Total inventory, net, decreased slightly to **$1,345.8 million**, with increased valuation reserves partly due to Russia sanctions Inventory, net | Inventory Component | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :------------------------ | :---------------------------- | :-------------------------------- | | Raw materials | 323.0 | 301.4 | | Work-in-process | 937.3 | 999.1 | | Finished goods | 60.9 | 56.9 | | Product inventory | 1,321.2 | 1,357.4 | | Capitalized pre-production | 24.6 | 25.2 | | Total inventory, net | 1,345.8 | 1,382.6 | - Product inventory is net of valuation reserves of **$87.2 million** at June 30, 2022, an increase from **$54.9 million** at December 31, 2021, partly due to impacts from the suspension of activities in Russia[63](index=63&type=chunk) - Cost of sales for the six months ended June 30, 2022, includes **$94.7 million** for excess capacity production costs and **$9.5 million** for abnormal costs related to temporary workforce adjustments[64](index=64&type=chunk) [9. Property, Plant and Equipment, net](index=16&type=section&id=9.%20Property,%20Plant%20and%20Equipment,%20net) Property, plant and equipment, net, decreased to **$2,260.9 million**, with **$71.3 million** in repair and maintenance costs incurred Property, Plant and Equipment, net | Asset Category | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :-------------------------- | :---------------------------- | :-------------------------------- | | Total | 5,061.2 | 5,040.4 | | Less: accumulated depreciation | (2,800.3) | (2,654.9) | | Property, plant and equipment, net | 2,260.9 | 2,385.5 | - Repair and maintenance costs were **$71.3 million** for the six months ended June 30, 2022[66](index=66&type=chunk) - Depreciation expense related to capitalized software was **$11.5 million** for the six months ended June 30, 2022[67](index=67&type=chunk) [10. Leases](index=16&type=section&id=10.%20Leases) The company reported total net lease cost of **$26.2 million**, with remaining lease liabilities of **$81.5 million** for operating and **$145.4 million** for finance leases Components of Lease Expense | Lease Cost Component | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :-------------------------- | :------------------------------------------------------- | :------------------------------------------------------ | | Operating lease cost | 6.6 | 5.0 | | Finance lease cost: Amortization of assets | 16.3 | 12.4 | | Finance lease cost: Interest on lease liabilities | 3.3 | 3.5 | | Total net lease cost | 26.2 | 20.9 | - Weighted average remaining lease term as of June 30, 2022, was **35.1 years** for operating leases and **4.6 years** for finance leases[77](index=77&type=chunk) Remaining Maturities of Lease Liabilities (as of June 30, 2022) | Lease Type | Total Lease Payments ($ in millions) | Less: Imputed Interest ($ in millions) | Total Lease Obligations ($ in millions) | | :--------------- | :----------------------------------- | :------------------------------------- | :------------------------------------ | | Operating Leases | 204.0 | (122.5) | 81.5 | | Financing Leases | 161.7 | (16.3) | 145.4 | [11. Other Assets, Goodwill, and Intangible Assets](index=18&type=section&id=11.%20Other%20Assets,%20Goodwill,%20and%20Intangible%20Assets) Other current assets decreased to **$31.4 million**, while goodwill remained stable and intangible assets, net, decreased to **$205.0 million** Other Current Assets | Asset Category | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :-------------------- | :---------------------------- | :-------------------------------- | | Prepaid expenses | 24.6 | 20.7 | | Income tax receivable | 1.0 | 14.0 | | Other assets - short-term | 5.8 | 5.0 | | Total other current assets | 31.4 | 39.7 | Goodwill by Segment (as of June 30, 2022) | Segment | Balance at December 31, 2021 ($ in millions) | Currency Exchange Adjustments/Other ($ in millions) | Balance at June 30, 2022 ($ in millions) | | :-------------- | :----------------------------------------- | :------------------------------------------------ | :--------------------------------------- | | Commercial | 296.8 | (0.3) | 296.5 | | Defense & Space | 5.5 | — | 5.5 | | Aftermarket | 321.4 | — | 321.4 | | Total | 623.7 | (0.3) | 623.4 | Intangible Assets, net | Intangible Asset | June 30, 2022 ($ in millions) | December 31, 2021 ($ in millions) | | :------------------------------------ | :---------------------------- | :-------------------------------- | | Total intangible assets | 232.0 | 232.0 | | Less: Accumulated amortization | (27.0) | (19.7) | | Intangible assets, net | 205.0 | 212.3 | - The weighted average amortization period for intangible assets is **14.8 years** as of June 30, 2022[83](index=83&type=chunk) [12. Advance Payments](index=20&type=section&id=12.%20Advance%20Payments) Outstanding advance payments from Boeing for B787 and B737 programs totaled **$211.2 million** and **$61.5 million**, respectively - Advance payments from Boeing for the B787 program not yet repaid totaled approximately **$211.2 million** as of June 30, 2022[86](index=86&type=chunk) - Advance payments from Boeing for the B737 program not yet repaid totaled **$61.5 million** as of June 30, 2022, after a **$61.5 million** repayment during the six-month period[87](index=87&type=chunk) - Advance payments, short-term, include **$18.9 million** related to an Aftermarket segment customer, impacted by sanctions on Russia[88](index=88&type=chunk) [13. Fair Value Measurements](index=20&type=section&id=13.%20Fair%20Value%20Measurements) Long-term debt had a carrying amount of **$3,571.7 million** and an estimated fair value of **$3,205.2 million** as of June 30, 2022 Carrying Amount and Estimated Fair Value of Long-Term Debt | Debt Type | June 30, 2022 Carrying Amount ($ in millions) | June 30, 2022 Fair Value ($ in millions) | December 31, 2021 Carrying Amount ($ in millions) | December 31, 2021 Fair Value ($ in millions) | | :------------------------------------ | :------------------------------------------ | :--------------------------------------- | :------------------------------------------ | :--------------------------------------- | | Senior secured term loan B | 592.8 | 578.0 | 595.2 | 595.2 | | Senior notes due 2023 | 299.5 | 281.1 | 299.3 | 303.6 | | Senior secured first lien notes due 2025 | 496.0 | 461.5 | 495.3 | 513.3 | | Senior secured second lien notes due 2025 | 1,189.2 | 1,110.2 | 1,187.5 | 1,252.4 | | Senior notes due 2026 | 298.6 | 255.7 | 298.4 | 307.5 | | Senior notes due 2028 | 695.6 | 518.7 | 695.2 | 697.4 | | Total | 3,571.7 | 3,205.2 | 3,570.9 | 3,669.4 | - Senior notes are classified as Level 1 Fair Value hierarchy, while the senior secured term loan B is Level 2[92](index=92&type=chunk) [14. Derivative and Hedging Activities](index=21&type=section&id=14.%20Derivative%20and%20Hedging%20Activities) The company uses foreign currency forward contracts as cash flow hedges, recognizing a **$17.0 million** loss in AOCI for the six months - The Company uses foreign currency forward contracts as cash flow hedges to reduce foreign currency exposure for forecasted British Pound Sterling disbursements through March 2023[96](index=96&type=chunk) Gain (Loss) Recognized in AOCI from Hedging Transactions | Metric | Three Months Ended June 30, 2022 ($ in millions) | Three Months Ended July 1, 2021 ($ in millions) | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Foreign currency exchange contracts | (13.1) | (0.5) | (17.0) | 0.7 | - Within the next 12 months, the Company expects to recognize a loss of **$13.3 million** in earnings related to foreign currency forward contracts[98](index=98&type=chunk) - For the six months ended June 30, 2022, the Company recorded a net gain of **$1.6 million** to other income from settled non-hedged foreign currency forward contracts[101](index=101&type=chunk) [15. Debt](index=23&type=section&id=15.%20Debt) Total debt was **$3,772.5 million** at June 30, 2022, including a senior secured term loan and various senior notes, with all debt covenants in compliance Total Debt (as of June 30, 2022) | Debt Type | Current ($ in millions) | Noncurrent ($ in millions) | | :-------------------------------- | :---------------------- | :------------------------- | | Senior secured term loan B | 5.9 | 586.9 | | Senior notes due 2023 | 299.5 | — | | Senior secured first lien notes due 2025 | — | 496.0 | | Senior secured second lien notes due 2025 | — | 1,189.2 | | Senior notes due 2026 | — | 298.6 | | Senior notes due 2028 | — | 695.6 | | Present value of finance lease obligations | 40.7 | 104.7 | | Other | 1.6 | 53.8 | | Total | 347.7 | 3,424.8 | - As of June 30, 2022, the outstanding balance of the Credit Agreement (Term Loan B) was **$595.5 million**, with a carrying value of **$592.8 million**[105](index=105&type=chunk) - The Company was in compliance with all covenants in the Credit Agreement and indentures governing its notes as of June 30, 2022[106](index=106&type=chunk)[116](index=116&type=chunk) [16. Pension and Other Post-Retirement Benefits](index=25&type=section&id=16.%20Pension%20and%20Other%20Post-Retirement%20Benefits) The company reported net periodic pension income of **$39.3 million**, with a **$70.3 million** pension reversion asset recorded after PVP B plan termination Components of Net Periodic Pension Expense (Income) | Metric | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------ | | Service cost | 1.2 | 21.7 | | Interest cost | 29.1 | 27.5 | | Expected return on plan assets | (70.3) | (79.0) | | Amortization of net loss | 2.1 | — | | Settlement loss | (1.4) | (0.1) | | Net periodic pension expense (income) | (39.3) | (29.9) | - A pension reversion asset of **$70.3 million** is recorded on the Restricted plan assets line item as of June 30, 2022, following the PVP B plan termination[119](index=119&type=chunk) - The Company withdrew **$34.0 million** cash from PVP B as an excess plan assets reversion, resulting in an excise tax of **$6.8 million** recorded in Other income (expense), net[120](index=120&type=chunk) [17. Stock Compensation](index=26&type=section&id=17.%20Stock%20Compensation) The company recognized **$18.3 million** in stock compensation expense for the six months, including various RSU grants - The Company recognized a net total of **$18.3 million** of stock compensation expense for the six months ended June 30, 2022[124](index=124&type=chunk) - During the six months ended June 30, 2022, **500,053 time or service-based RSUs** were granted with aggregate fair values of **$22.5 million**[125](index=125&type=chunk) - During the six months ended June 30, 2022, **284,653 performance-based RSUs (PBRSUs)** were granted with aggregate grant date fair value of **$22.0 million**[126](index=126&type=chunk) [18. Income Taxes](index=27&type=section&id=18.%20Income%20Taxes) An incremental valuation allowance of **$43.5 million** was recorded against U.S. deferred tax assets, resulting in a **7.67%** effective tax rate - An incremental valuation allowance of **$43.5 million** was recorded against U.S. deferred tax assets for the six months ended June 30, 2022, with the total net U.S. valuation allowance reaching **$339.7 million**[133](index=133&type=chunk) - Increases in valuation allowances against U.K. deferred tax assets totaled **$4.3 million** for the six months ended June 30, 2022[134](index=134&type=chunk) - The effective tax rate for the six months ended June 30, 2022, was **7.67%**, compared to **(2.44%)** for the same period in 2021, primarily due to the release of valuation allowance on U.K. deferred tax assets for projected U.K. group relief[137](index=137&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) [19. Equity](index=28&type=section&id=19.%20Equity) Basic and diluted loss per share improved to **$1.67**, while accumulated other comprehensive loss increased to **$83.0 million** Loss Per Share | Metric | For the Three Months Ended June 30, 2022 | For the Three Months Ended July 1, 2021 | For the Six Months Ended June 30, 2022 | For the Six Months Ended July 1, 2021 | | :-------------------------------- | :--------------------------------------- | :-------------------------------------- | :--------------------------------------- | :-------------------------------------- | | Basic Loss per share | (1.17) | (1.30) | (1.67) | (2.95) | | Diluted Loss per share | (1.17) | (1.30) | (1.67) | (2.95) | - The total authorization amount remaining under the current share repurchase program is approximately **$925.0 million**, but share repurchases are currently on hold due to Credit Agreement restrictions[144](index=144&type=chunk) Accumulated Other Comprehensive Loss | Component | As of June 30, 2022 ($ in millions) | As of December 31, 2021 ($ in millions) | | :------------------------------------ | :---------------------------------- | :------------------------------------ | | Pension | 30.0 | 26.6 | | SERP/Retiree medical | 11.3 | 12.1 | | Derivatives - foreign currency hedge | (13.3) | (2.0) | | Foreign currency impact on long-term intercompany loan | (16.2) | (12.2) | | Currency translation adjustment | (94.8) | (48.2) | | Total accumulated other comprehensive loss | (83.0) | (23.7) | [20. Commitments, Contingencies and Guarantees](index=29&type=section&id=20.%20Commitments,%20Contingencies%20and%20Guarantees) The company faces ongoing legal proceedings, including appeals of dismissed lawsuits and a **$44.8 million** liability for a former CEO's ruling - A consolidated securities class action lawsuit and shareholder derivative lawsuits were dismissed by the U.S. District Court on January 7, 2022, but the decision was appealed to the Tenth Circuit Court of Appeals on February 4, 2022[154](index=154&type=chunk) - A liability of **$44.8 million** plus accrued interest has been recognized for a court ruling in favor of a former Chief Executive Officer regarding withheld benefits, which is currently under appeal[155](index=155&type=chunk) - The Company cannot reasonably estimate the amount of potential claims related to B787 rework or a new product quality claim received on June 25, 2022, due to uncertainties[159](index=159&type=chunk)[160](index=160&type=chunk) Service Warranty and Extraordinary Rework Balance Roll Forward | Metric | Amount ($ in millions) | | :-------------------------- | :--------------------- | | Balance, December 31, 2021 | 71.3 | | Charges to costs and expenses | 0.8 | | Payouts | (1.7) | | Exchange rate | (0.6) | | Balance, June 30, 2022 | 69.8 | [21. Other Income (Expense), Net](index=32&type=section&id=21.%20Other%20Income%20(Expense),%20Net) Other income, net, increased to **$72.3 million**, driven by a **$20.7 million** gain on a repayable investment agreement and foreign currency gains Other Income (Expense), Net | Item | For the Three Months Ended June 30, 2022 ($ in millions) | For the Three Months Ended July 1, 2021 ($ in millions) | For the Six Months Ended June 30, 2022 ($ in millions) | For the Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Kansas Development Finance Authority bond | 0.7 | 0.7 | 1.3 | 1.6 | | Foreign currency (losses) gains | 12.3 | 1.4 | 27.2 | (7.5) | | Loss on foreign currency forward contract | (4.7) | — | (4.0) | — | | Loss on sale of accounts receivable | (4.1) | (1.4) | (6.5) | (3.0) | | Pension income | 17.9 | 26.4 | 41.3 | 52.5 | | Excise tax on pension assets reversion | (6.8) | — | (6.8) | — | | Other | 19.3 | 4.0 | 19.8 | 0.3 | | Total | 34.6 | 31.1 | 72.3 | 43.9 | - The six months ended June 30, 2022, includes a **$20.7 million** gain related to the full settlement of the repayable investment agreement with the U.K.'s Department for Business, Energy and Industrial Strategy[173](index=173&type=chunk) [22. Segment Information](index=32&type=section&id=22.%20Segment%20Information) Commercial segment revenues increased by **31%** to **$1,969.5 million**, with improved operating loss, while other segments maintained profitability - Approximately **82%** of net revenues for the six months ended June 30, 2022, came from Boeing and Airbus[174](index=174&type=chunk) Segment Revenues and Operating Income (Loss) | Segment | Three Months Ended June 30, 2022 ($ in millions) | Three Months Ended July 1, 2021 ($ in millions) | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :---------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | **Segment Revenues** | | | | | | Commercial | 1,031.1 | 803.6 | 1,969.5 | 1,499.7 | | Defense & Space | 146.4 | 141.8 | 304.9 | 295.2 | | Aftermarket | 80.4 | 56.7 | 158.2 | 108.0 | | **Segment Operating Income (Loss)** | | | | | | Commercial | (45.1) | (44.7) | (48.5) | (127.6) | | Defense & Space | 13.7 | 12.4 | 33.7 | 24.4 | | Aftermarket | 11.8 | 14.8 | 29.8 | 25.6 | | Total operating loss | (104.7) | (97.7) | (146.9) | (223.6) | - Commercial segment operating margins improved from **(9%) to (2%)** for the six months ended June 30, 2022, driven by lower excess capacity and restructuring costs, and increased B737 program sales[244](index=244&type=chunk) - Defense & Space segment operating margins increased from **8% to 11%** for the six months ended June 30, 2022, due to lower excess capacity, restructuring costs, and the AMJP grant[246](index=246&type=chunk) [23. Restructuring Costs](index=35&type=section&id=23.%20Restructuring%20Costs) Restructuring costs significantly decreased to **$0.2 million** for the six months, reflecting reduced cost-alignment activities - Total restructuring costs for the six months ended June 30, 2022, were **$0.2 million**, included in the Commercial Segment[189](index=189&type=chunk) - For the six months ended July 1, 2021, total restructuring costs were **$7.3 million**, primarily due to site closures[190](index=190&type=chunk) [24. Subsequent Events](index=35&type=section&id=24.%20Subsequent%20Events) The company plans to terminate Pension Value Plan A, expecting a **$74 million** non-cash charge and at least **$180 million** in settlement charges - In July 2022, the Company adopted a plan to terminate its Pension Value Plan A (PVP A)[191](index=191&type=chunk) - The Company expects to recognize a non-cash, pre-tax non-operating charge of approximately **$74 million** for increased periodic benefit costs in Q3 2022[191](index=191&type=chunk) - Non-cash pre-tax non-operating settlement charges of at least **$180 million** are expected due to accelerated recognition of actuarial losses, with finalization between Q3 2022 and Q1 2023[191](index=191&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses financial condition, results of operations, and impacts of COVID-19 and global events on key programs [COVID-19](index=36&type=section&id=COVID-19) The COVID-19 pandemic continues to significantly impact the aviation industry and the company's global business - The COVID-19 pandemic continues to significantly negatively impact the aviation industry, customers, and the Company's global business[194](index=194&type=chunk) - The Company cannot accurately predict the future impact of COVID-19, expecting business operations to improve only when customers produce aircraft at sufficient levels, dependent on public air travel willingness, OEM orders, and airline financial resources[194](index=194&type=chunk) [Global Economic Events](index=36&type=section&id=Global%20Economic%20Events) The Russian invasion of Ukraine and associated sanctions led to a **$28.1 million** pre-tax loss in Q2 2022 - The Russian invasion of Ukraine and associated U.S. sanctions led to the suspension of sanctioned activities relating to Russia, resulting in an aggregate pre-tax loss of **$28.1 million** in Q2 2022[195](index=195&type=chunk) - Prospective impacts to revenues, net income, net assets, and cash flow from operations are not material, but a significant expansion of economic disruption or conflict escalation could have a material adverse effect[195](index=195&type=chunk) [B737 Program](index=36&type=section&id=B737%20Program) The B737 MAX program is critical, generating approximately **35%** of net revenues in 2021, but faces ongoing demand challenges - The B737 MAX program is critical, generating approximately **35%** of net revenues in 2021[196](index=196&type=chunk) - Boeing's deliveries of the B737 MAX resumed in Q4 2020, with most international regulators ungrounding the aircraft; China issued an airworthiness directive in December 2021[197](index=197&type=chunk) - Ongoing demand challenges from the B737 MAX grounding are exacerbated by the COVID-19 pandemic, with narrowbody production rates expected to recover before widebody rates[198](index=198&type=chunk)[199](index=199&type=chunk) - Failure to achieve FAA certification for 737 MAX 7 and MAX 10 models or inconsistent entry into service could adversely impact future revenues, earnings, and cash flows[200](index=200&type=chunk) [B787 Program](index=37&type=section&id=B787%20Program) The B787 program incurred additional forward losses of **$30.9 million** and **$44.3 million** for the three and six months, respectively - For the three and six months ended June 30, 2022, the B787 program incurred additional forward losses of **$30.9 million** and **$44.3 million**, respectively, due to production rate decreases, build schedule changes, supply chain costs, and rework costs[201](index=201&type=chunk) - Changes to the scope of quality issues, rework, production rates, cost assessments, or claims could lead to further incremental forward loss charges[201](index=201&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, gross profit, operating loss, and net loss, along with comparative shipset deliveries Operating Data Summary | Metric | Three Months Ended June 30, 2022 ($ in millions) | Three Months Ended July 1, 2021 ($ in millions) | Six Months Ended June 30, 2022 ($ in millions) | Six Months Ended July 1, 2021 ($ in millions) | | :------------------------------------------ | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | 1,257.9 | 1,002.1 | 2,432.6 | 1,902.9 | | Gross profit (loss) | (19.6) | (12.3) | 15.2 | (70.3) | | Operating loss | (104.7) | (97.7) | (146.9) | (223.6) | | Net loss | (122.2) | (135.3) | (175.0) | (306.9) | Comparative Shipset Deliveries by Model | Model | Three Months Ended June 30, 2022 | Three Months Ended July 1, 2021 | Six Months Ended June 30, 2022 | Six Months Ended July 1, 2021 | | :------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | B737 | 71 | 35 | 131 | 64 | | Total Boeing | 89 | 63 | 166 | 123 | | A220 | 16 | 15 | 34 | 27 | | A320 Family | 147 | 96 | 302 | 226 | | Total Airbus | 180 | 126 | 374 | 285 | | Total Business and Regional Jets | 49 | 46 | 99 | 89 | | Total | 318 | 235 | 639 | 497 | - Net revenue for the three months ended June 30, 2022, increased by **$255.8 million (25.5%)** to **$1,257.9 million**, primarily due to increased B737 production[211](index=211&type=chunk) - Gross loss for the three months ended June 30, 2022, was **($19.6) million**, an increase in loss from **($12.3) million** in the prior year, impacted by a **$28.1 million** charge related to Russia sanctions and unfavorable cumulative catch-up adjustments and forward loss charges[213](index=213&type=chunk) - Operating loss for the six months ended June 30, 2022, improved by **$76.7 million** to **($146.9) million**, compared to **($223.6) million** in the prior year, reflecting increased gross profit and changes in operating expenses[235](index=235&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section reviews the company's debt, cash position, and significant cash flow activities, including asset sales and grants - As of June 30, 2022, total debt was **$3,772.5 million**, and cash and cash equivalents decreased by **$708.4 million** to **$770.2 million** from December 31, 2021[249](index=249&type=chunk) - The company settled a repayable investment agreement with the U.K.'s Department for Business, Energy and Industrial Strategy in April 2022 with a payment of **$292.8 million**[250](index=250&type=chunk) - The company received the full **$75.5 million** grant from the Aviation Manufacturing Jobs Protection Program as of June 30, 2022[251](index=251&type=chunk) - For the six months ended June 30, 2022, **$1,309.6 million** of accounts receivable were sold via factoring arrangements with Boeing, Airbus, and Rolls-Royce[253](index=253&type=chunk) - The balance of payables to suppliers participating in the supply chain financing program increased to **$95.7 million** as of June 30, 2022, from **$55.5 million** as of July 1, 2021[276](index=276&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily interest rate fluctuations, with no material changes since its 2021 Form 10-K - The Company is exposed to market risks, including fluctuations in interest rates on its variable rate debt[286](index=286&type=chunk) - There have been no material changes in the Company's market risk from the information provided in its 2021 Form 10-K[286](index=286&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting - The President and CEO and Senior VP and CFO concluded that disclosure controls and procedures were effective as of June 30, 2022[287](index=287&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[288](index=288&type=chunk) [PART II — OTHER INFORMATION](index=54&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings and exhibits [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 20 of the condensed consolidated financial statements - Information on legal proceedings is incorporated by reference from Note 20, Commitments, Contingencies and Guarantees, in the condensed consolidated financial statements[291](index=291&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors described in the company's 2021 Form 10-K - There have been no material changes from the risk factors described in the Company's 2021 Form 10-K[292](index=292&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No purchases were made under the share repurchase program, but **30,869 shares** were transferred for tax withholding Issuer Purchases of Equity Securities (Three Months Ended June 30, 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Repurchased Under the Plans or Programs ($ in millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | April 1, 2022 - May 5, 2022 | 19,549 | $48.69 | — | $925.0 | | May 6, 2022 - June 2, 2022 | 9,322 | $29.40 | — | $925.0 | | June 3, 2022 - June 30, 2022 | 1,998 | $29.09 | — | $925.0 | | Total | 30,869 | $43.69 | — | $925.0 | - **30,869 shares** were transferred from employees to satisfy tax withholding obligations associated with the vesting of restricted stock awards[296](index=296&type=chunk) - No purchases were made under the Board-approved share repurchase program, which has **$925.0 million** remaining authorization but is currently on hold due to Credit Agreement restrictions[296](index=296&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred[296](index=296&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[297](index=297&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) No other information to report under this item - No other information to report[297](index=297&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including bylaws, employment agreements, and certifications Key Exhibits Filed | Exhibit Number | Exhibit | Incorporated by Reference to the Following Documents | | :------------- | :------------------------------------------------ | :--------------------------------------------------- | | 3.1 | Ninth Amended and Restated Bylaws of Spirit AeroSystems Holdings, Inc. | Current Report on Form 8-K (File No. 001-33160), filed July 13, 2022, Exhibit 3.1 | | † 10.1 | Employment Agreement, dated September 12, 2013, between Spirit AeroSystems, Inc. and Kevin Matthies | * | | 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | * | | 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | * | | 32.1** | Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002. | ** | | 32.2** | Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002. | ** | | 101.INS* | Inline XBRL Instance Document | * | | 104 | Cover Page Interactive Data File | | [Signatures](index=57&type=section&id=Signatures) The report was signed by the Senior Vice President and CFO and Vice President, Corporate Controller on August 3, 2022 - The report was signed by Mark J. Suchinski, Senior Vice President and Chief Financial Officer, and Damon Ward, Vice President, Corporate Controller, on August 3, 2022[303](index=303&type=chunk)

First Quarter 2022 Earnings Review Tom Gentile President and Chief Executive Officer Sam Marnick Executive Vice President & Chief Operating Officer; President of Commercial Mark Suchinski Senior Vice President and Chief Financial Officer May 4, 2022 Recent Events U.S. Air Force photo by Senior Airman Tessa B. Corrick Reached agreement with U.K. Government to settle the repayable investment agreement Completed new pay agreements for more than 2,000 union employees in Belfast Launched engineering collaboratio ...

Spirit AeroSystems Holdings, Inc. (NYSE:SPR) Q1 2022 Earnings Conference Call May 4, 2022 11:00 AM ET Company Participants Aaron Hunt - Director of IR, Senior Leader of Sales & Marketing Tom Gentile - President and CEO Sam Marnick - President of Commercial Division & COO Mark Suchinski - SVP & CFO Conference Call Participants Robert Spingarn - Credit Suisse Seth Seifman - JPMorgan Ken Herbert - RBC Capital Markets David Strauss - Barclays Sheila Kahyaoglu - Jefferies Doug Harned - Bernstein George Shap ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33160 Spirit AeroSystems Holdings, Inc. (Exact name of registrant as specified in its charter) (State or other ...

Revenue Generation - For the year ended December 31, 2021, approximately 35% of the company's net revenues were generated from sales of components to Boeing for the B737 aircraft, compared to 19% in 2020 and 53% in 2019[246]. - Approximately 80% of the company's net revenues in 2021 came from its two largest customers, Boeing and Airbus[278]. - Net revenues from direct sales to non-U.S. customers were approximately $1,130.8 million in 2021, representing 29% of total net revenues, up from 23% in 2020[363]. - For the twelve months ended December 31, 2021, Spirit AeroSystems reported net revenues of $3,953.0 million, an increase of 16.1% compared to $3,404.8 million in 2020[397]. - Commercial segment net revenues for the twelve months ended December 31, 2021 were $3,128.1 million, an increase of $416.8 million or 15.4% compared to the prior year[291]. - Defense & Space segment net revenues for the twelve months ended December 31, 2021 were $585.0 million, an increase of $93.7 million or 19.1% compared to the prior year[292]. - Aftermarket segment net revenues for the twelve months ended December 31, 2021 were $239.9 million, an increase of $37.7 million or 18.6% compared to the prior year[293]. Financial Performance - The company’s net loss for the twelve months ended December 31, 2021, was $540.8 million, compared to a net loss of $870.3 million in the prior year[272]. - The company’s operating loss for the twelve months ended December 31, 2021, was $459.2 million, compared to an operating loss of $812.8 million in the prior year[272]. - Gross loss profit for the twelve months ended December 31, 2021 was ($117.8) million, an improvement of $322.9 million compared to ($440.7) million for the same period in the prior year[280]. - Total comprehensive loss income for 2021 was $410.4 million, compared to a comprehensive loss of $915.2 million in 2020, indicating a significant reduction in overall losses[399]. - Basic and diluted loss per share for 2021 was $5.19, an improvement from a loss of $8.38 per share in 2020[397]. Cash Flow and Liquidity - The net cash outflow from operating activities for 2021 was $63.2 million, a decrease of $681.7 million compared to a net cash outflow of $744.9 million in 2020, primarily due to improved cash flows from operating income and working capital[344]. - The company had a net cash outflow of $163.8 million from investing activities in 2021, significantly reduced from a net cash outflow of $502.0 million in 2020, mainly due to the prior year's Bombardier acquisition[345]. - Financing activities resulted in a net cash outflow of $163.5 million in 2021, a change of $933 million compared to a net cash inflow of $769.5 million in 2020, influenced by debt redemptions and refinancing[346]. - The company anticipates sufficient liquidity to meet operating and financing needs for at least the next 12 months[412]. - The company expects future cash needs to include working capital, R&D, capital expenditures, and potential M&A activities, with significant capital required for new programs and increased production rates[350]. Debt and Financing - As of December 31, 2021, the company had a debt balance of approximately $3,792.2 million, with more than 50% being secured debt, and a cash balance of $1,478.6 million[309]. - The Amended Credit Agreement as of December 31, 2021 had an outstanding balance of $598.5 million, with customary covenants restricting additional indebtedness and other financial activities[315]. - The company was in compliance with all covenants contained in the indentures governing its outstanding debt as of December 31, 2021[334]. - The company has agreements to sell certain trade accounts receivable balances with Boeing, Airbus, and Rolls-Royce, allowing for monetization of receivables prior to payment[336]. Operational Challenges - The company expects ongoing demand challenges from the B737 MAX grounding to continue to be exacerbated by the COVID-19 pandemic[247]. - The company delivered 162 B737 MAX shipsets in 2021, a decrease from 606 shipsets in 2019, indicating ongoing production challenges[354]. - The company has implemented mandatory vaccination rules for all U.S. employees to comply with federal requirements, which may impact labor availability[244]. Program-Specific Financials - The B787 program incurred incremental forward loss charges of $46.4 million in Q2 2021 and $45.5 million in Q3 2021 due to reduced production volumes[249][250]. - The A350 program recorded forward loss charges of $55.2 million for the year ended December 31, 2021, driven by customer-driven production rate changes and quality-related costs[253]. - The company recognized an unfavorable change in estimates of $246.5 million during the twelve months ended December 31, 2021, primarily due to reduced production volumes on the B787 and A350 programs[277]. Pension and Employee Benefits - The company made contributions of $154.7 million to improve the funded status of the Belfast defined benefit plans during 2021, including a one-time special contribution of $137.6 million to the Shorts Pension plan[263]. - The projected benefit obligation would decrease by $163.4 million or increase by $173.9 million if the discount rate changed by 25 basis points[265]. Organizational Changes - The new organizational structure, effective October 1, 2021, includes three primary segments: Commercial, Defense & Space, and Aftermarket[240]. - The Commercial, Defense & Space, and Aftermarket segments represented approximately 79%, 15%, and 6% of net revenues for the twelve months ended December 31, 2021, respectively[290]. Market Conditions - The company anticipates that domestic air travel demand will improve in the near term, while international air travel demand will continue to lag behind[247]. - The company’s financial results are heavily dependent on global commercial aviation demand, which has been impacted by COVID-19[411].

Financial Performance - Full-year 2021 revenue increased by 16% to $3953 million from $3405 million in 2020[7] - The company's GAAP diluted loss per share for 2021 was $(5.19), while the adjusted diluted loss per share was $(3.46)[11] - Free cash flow for 2021 was $(214) million, an improvement compared to $(864) million in 2020[15] - The company plans to repay a total of $1 billion of debt through 2023[18] Segment Performance - Commercial segment revenue increased by 15% to $3128 million in 2021 from $2711 million in 2020, but the operating margin was (7.1)% compared to (22.9)%[20, 21] - Defense & Space segment revenue increased by 19% to $585 million in 2021 from $491 million in 2020, with an operating margin of 7.6% compared to 9.6%[23, 24] - Aftermarket segment revenue increased by 19% to $240 million in 2021 from $202 million in 2020, with an improved operating margin of 21.0% compared to 18.3%[26, 27] Operational Highlights - Deliveries increased to 1028 shipsets in 2021 compared to 920 in 2020[8] - 737 shipset deliveries increased to 162 in 2021 compared to 71 in 2020[8] - 787 shipset deliveries decreased to 37 in 2021 compared to 112 in 2020[8] Strategic Priorities - The company's priorities for 2022 include diversification, de-leveraging, and driving margins[5] - The company aims for a revenue mix of 40% Commercial, 40% Defense & Space, and 20% Aftermarket[5]

Spirit AeroSystems Holdings, Inc. (NYSE:SPR) Q4 2021 Earnings Conference Call February 2, 2021 11:00 AM ET Company Participants Aaron Hunt - Director, IR Thomas Gentile - President & CEO Samantha Marnick - EVP, President, Commercial Division & COO Mark Suchinksi - SVP & CFO Conference Call Participants Myles Walton - UBS Doug Harned - Bernstein David Strauss - Barclays Robert Spingarn - Melius Research Sheila Kahyaoglu - Jefferies Peter Arment - Baird George Shapiro - Shapiro Research Ken Herbert - RBC Cai ...

Third Quarter 2021 Earnings Review Tom Gentile President and Chief Executive Officer Sam Marnick Executive Vice President and Chief Operating Officer; President of Commercial Division Mark Suchinski Senior Vice President and Chief Financial Officer November 3, 2021 Spirit's Strategy Values Vision Diversified Aerospace Design and Manufacturing Champion Strategic Priorities (Where to Compete) Execution Requirements (How to Compete) Safety Quality Customer Focus Delivery Diversify Aftermarket - Repairs - Geogr ...