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Spirit AeroSystems(SPR) - 2021 Q2 - Earnings Call Transcript
2021-08-04 20:54
Financial Data and Key Metrics Changes - Revenue for Q2 2021 was $1 billion, up 55% from the same quarter last year and approximately 11% above Q1 2021, primarily due to production on the 737 and A320 programs [21][22] - Earnings per share (EPS) was negative $1.30 compared to negative $2.46 in Q2 2020, with adjusted EPS at negative $0.31 compared to $2.28 in the same period last year [23] - Operating margin improved to negative 10% from negative 57% in Q2 2020, driven by cost-reduction actions and increased production rates [24] Business Line Data and Key Metrics Changes - Fuselage segment revenues were $492 million, up 51% year-over-year, with an operating margin of negative 7% compared to negative 77% in the prior year [31] - Propulsion revenue improved to $242 million, up 43% year-over-year, with a positive operating margin of 12% compared to negative 10% in Q2 2020 [32] - Wing revenue increased to $259 million, with an operating margin of negative 6%, an improvement from negative 35% in the same quarter last year [33] Market Data and Key Metrics Changes - The U.S. air travel recovery has been strong, with TSA traveler throughput exceeding 2 million passengers on multiple days, indicating a rebound in demand for narrowbody aircraft [6][8] - Domestic passenger market demand is still down 22% compared to June 2019 levels, but the upward momentum is encouraging for the industry [6][7] Company Strategy and Development Direction - The company is focusing on revenue diversification in defense, expecting growth of roughly 20% in 2021, and is also exploring opportunities in urban air mobility (eVTOL) [16][19] - Recent acquisitions are expected to enhance the aftermarket and business jet businesses, with significant progress in integration and realization of synergies [13][15] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the impact of COVID-19 variants on air traffic recovery, particularly for international travel, which is expected to recover at a slower pace [20] - The company maintains its free cash flow guidance for the year at negative $200 million to $300 million, net of a $300 million cash tax benefit expected in the second half of the year [12][37] Other Important Information - The company recognized a $46 million forward loss on the 787 program due to fit and finish issues, but is working closely with Boeing to resolve these [11][19] - The company ended the formal consultation regarding the Belfast pension plan and plans to close it to future benefit accruals by the end of the year [15][88] Q&A Session Summary Question: Concerns about the 787 rework and supplier issues - Management is confident in addressing known issues and has identified necessary rework, with ongoing collaboration with Boeing [42][43] Question: Forward loss charges and cash implications - Majority of forward loss charges are expected to be cash expenditures this year, with some continuing into 2022 [49] Question: Production rate alignment with Airbus - The company is prepared to meet Airbus's production rate increases and has been working closely with suppliers to ensure readiness [59] Question: 787 program and fleet inspections - Current analysis shows no immediate safety issues, but inspections will continue as part of the rework process [67][70] Question: Future cash flow and operational improvements - The company aims for positive cash flow in 2022, driven by increased production rates and inventory destocking [54][56]
Spirit AeroSystems(SPR) - 2021 Q2 - Earnings Call Presentation
2021-08-04 15:55
Second Quarter 2021 Earnings Review Tom Gentile President and Chief Executive Officer Sam Marnick Executive Vice President and Chief Operating Officer Mark Suchinski Senior Vice President and Chief Financial Officer August 04, 2021 Summary of Recent Events Named exclusive nacelle provider for the Rolls-Royce Pearl 10X engine Published first sustainability report Collaboration with Albany Engineered Composites to expand hypersonic capabilities Completed ~90% of integration tasks for the Bombardier acquisitio ...
Spirit AeroSystems(SPR) - 2021 Q1 - Earnings Call Transcript
2021-05-05 18:43
Financial Data and Key Metrics Changes - Revenue for Q1 2021 was $901 million, down 16% from the same quarter last year, primarily due to lower production rates and reduced international air traffic caused by COVID-19 [32][33] - Earnings per share (EPS) was negative $1.65 compared to negative $1.57 in Q1 2020, with adjusted EPS at negative $1.22 compared to negative $0.79 in the same period last year [35] - Free cash flow usage for the quarter was $198 million, an improvement from $362 million in Q1 2020, primarily due to better working capital management [39][40] Business Line Data and Key Metrics Changes - Fuselage segment revenues were $437 million, down approximately $115 million compared to 2020, mainly due to lower production volumes on wide-body programs [43] - Propulsion revenue improved to $227 million, primarily due to higher revenue from the 737 MAX program and aftermarket revenues, with an operating margin of positive 7% compared to negative 2% in Q1 2020 [45] - Wing revenue decreased to $224 million, with an operating margin of negative 8%, primarily due to forward losses on the 787 and A350 programs [47] Market Data and Key Metrics Changes - Domestic air travel in the U.S. has shown recovery, with TSA checkpoint travel numbers consistently above 1 million since early March, indicating a positive trend for narrow-body aircraft [10][12] - International air traffic demand remains low compared to pre-pandemic levels and is expected to take longer to recover, impacting wide-body programs [13] Company Strategy and Development Direction - The company plans to produce about 160 737 MAX aircraft in 2021 to reduce inventory and support recovery in narrow-body demand [11][52] - Efforts are being made to diversify into defense programs, with expectations of 15% growth in defense business revenue for 2021 [26][54] - The integration of recently acquired sites is progressing, with projected synergies estimated at $42 million based on 2021 revenues [20] Management's Comments on Operating Environment and Future Outlook - Management expects the first half of 2021 to be challenging, with improvements anticipated in the latter half as narrow-body production rates increase [31][52] - The company is focused on deleveraging and aims to repay $1 billion in debt over the next three years as production rates recover [28][42] Other Important Information - The company recognized forward loss charges of $72 million in Q1 2021, primarily related to the 787 and A350 programs [38] - Cash and debt balances at the end of Q1 were approximately $1.4 billion and $3.6 billion, respectively [41] Q&A Session Summary Question: Clarification on 787 forward loss and fit-and-finish issues - Management clarified that the issues are related to their section of the aircraft, and there is no recourse for these specific issues [59][60] Question: A350 charge and production rate signals - Management indicated that about half of the forward loss on the A350 was related to schedule changes, with fewer aircraft requested despite the stated rate remaining the same [65][66] Question: Free cash flow breakeven point - Management stated that breakeven for the 737 program is in the high upper 20s to low 30s in terms of production per month, which would significantly help earnings and cash flow [76] Question: Production rates and inventory burn down - Management confirmed that they plan to produce 160 units this year while burning down existing inventory, which will provide a cushion for production [84][85] Question: Defense program revenue generation timeline - Management expects defense programs to start generating revenue within about two years as they move into low-rate initial production [110]
Spirit AeroSystems(SPR) - 2021 Q1 - Earnings Call Presentation
2021-05-05 16:23
May 05, 2021 | --- | --- | |------------------------------------------------------|-------| | | | | First Quarter 2021 | | | | | | Earnings Review | | | | | | Tom Gentile | | | President and Chief Executive Officer | | | Sam Marnick | | | Executive Vice President and Chief Operating Officer | | | Mark Suchinski | | | Senior Vice President and Chief Financial Officer | | Summary of Recent Events Conducted extensive review and engineering analysis on 787 to help Boeing resume deliveries Completed 80% of integ ...
Spirit AeroSystems(SPR) - 2020 Q4 - Annual Report
2021-02-25 21:43
Financial Performance - For the year ended December 31, 2020, net revenues were $3,404.8 million, a decrease of 56.7% compared to $7,863.1 million in 2019[243] - The company reported a net loss of $870.3 million for 2020, compared to a net income of $530.1 million in 2019, resulting in a basic loss per share of $8.38[243] - Operating loss for 2020 was $812.8 million, a significant decline from an operating income of $760.8 million in 2019[243] - Gross (loss) profit for the twelve months ended December 31, 2020 was $(440.7) million, a decrease of $1,517.4 million from $1,076.7 million in the prior year[294] - Operating (loss) income for the twelve months ended December 31, 2020 was $(812.8) million, which was $1,573.6 million lower than operating income of $760.8 million for the prior year[297] - The income tax provision for the twelve months ended December 31, 2020 was $220.2 million compared to $(132.8) million for the prior year, with an effective tax rate of 20.3%[300] - The company experienced a net cash outflow of $744.9 million from operating activities for the twelve months ended December 31, 2020, a decrease of $1,667.6 million compared to a net cash inflow of $922.7 million in the prior year[362] - The net cash outflow from investing activities for the twelve months ended December 31, 2020, was $502.0 million, compared to $239.9 million in the prior year, primarily due to the FMI and Bombardier acquisitions[363] - The company had a net cash inflow of $769.5 million from financing activities for the twelve months ended December 31, 2020, a decrease of $114.9 million compared to $884.4 million in the prior year[364] Debt and Liquidity - Total debt increased to $3,873.6 million in 2020, up from $3,034.3 million in 2019, indicating a rise in leverage[245] - Cash and cash equivalents decreased to $1,873.3 million in 2020 from $2,350.5 million in 2019, reflecting liquidity challenges[245] - The Company anticipates sufficient liquidity for the next 12 months, but may need additional financing if the COVID-19 pandemic recovery is worse than forecasted[324] - As of December 31, 2020, the Company has total contractual cash obligations of approximately $5,260.1 million, including principal payments under the Credit Agreement of $400.0 million and long-term bonds totaling $3,300.0 million[376] - Interest on debt obligations is projected to total approximately $96.6 million over the next several years, with significant payments due in 2021 and 2022[376] Operational Changes - The company incurred restructuring costs of $73.0 million in 2020, as part of its cost reduction strategy[243] - The company reduced its workforce by approximately 6,800 employees globally and implemented a four-day work week for salaried employees at its Wichita facility[256] - The company suspended its share repurchase program and reduced quarterly dividends to $0.01 per share in response to the pandemic[251] - The company has paused its share repurchase program, with $925 million remaining in the Board-approved program due to the impacts of the B737 MAX grounding and the COVID-19 pandemic[373] - The Company reduced its quarterly dividend to $0.01 per share to preserve liquidity, with future dividend payments subject to Board discretion based on operational results and financial condition[374] Production and Deliveries - Approximately 19% of net revenues in 2020 were generated from sales of components to Boeing for the B737 aircraft, down from 53% in 2019[253] - Deliveries to Boeing decreased to 256 shipsets during 2020, compared to 867 shipsets delivered in the prior year[293] - Deliveries to Airbus decreased to 591 shipsets during 2020, compared to 869 shipsets delivered in the prior year[293] - Spirit delivered 71 B737 MAX shipsets in the year ended December 31, 2020, compared to 606 shipsets in the year ended December 31, 2019, reflecting a significant decline in production due to the B737 MAX grounding and COVID-19 pandemic[371] - The B787 production rate was reduced from 10 aircraft per month to 5 aircraft per month, resulting in a forward loss charge of $192.5 million for the year ended December 31, 2020[259] Market Conditions and Future Outlook - The company expects continued negative impacts from the COVID-19 pandemic and the B737 MAX grounding on its operations and financial performance[249] - Boeing resumed deliveries of the B737 MAX in Q4 2020 after the FAA lifted the grounding order, with ongoing demand challenges expected due to the COVID-19 pandemic[256] - The company expects domestic air travel demand to recover sooner than international demand, with B737 MAX production rates anticipated to return to pre-pandemic levels before widebody production rates[258] Segment Performance - Fuselage Systems segment net revenues for the twelve months ended December 31, 2020 were $1,725.9 million, a decrease of 59% compared to the prior year[304] - Propulsion Systems segment net revenues for the twelve months ended December 31, 2020 were $784.5 million, a decrease of 62% compared to the prior year[306] - Wing Systems segment net revenues for the twelve months ended December 31, 2020 were $798.6 million, a decrease of 50% compared to the prior year[307] - All Other segment net revenues were $95.8 million, an increase of 787% compared to $10.8 million in the prior year[308] - Fuselage Systems segment operating margins were (26%) for the twelve months ended December 31, 2020, compared to 11% for the same period in the prior year[305] - Propulsion Systems segment operating margins were (5%) for the twelve months ended December 31, 2020, compared to 20% for the same period in the prior year[306] - Wing Systems segment operating margins were (8%) for the twelve months ended December 31, 2020, compared to 14% for the same period in the prior year[307] Acquisitions and Investments - The Bombardier Acquisition on October 30, 2020, resulted in a total goodwill amount of $565.3 million, with preliminary purchase price allocation still pending[272] - The company deferred $32.9 million in employer payroll taxes under the CARES Act, with 50% due by December 2021 and the remaining 50% by December 2022[256] - The company recorded a deferral of $31.5 million in VAT payments until March 2022 under the UK deferral scheme, along with receiving approximately $5.4 million in Employee Retention Credit subsidies from the UK government[256] Risk Factors - The Company operates in various non-U.S. markets, with facilities in the U.K., France, Malaysia, and Morocco, which exposes it to foreign operational risks[379] - Inflationary pressures may impact the Company's long-term contracts, although some contracts include price adjustment provisions to mitigate these effects[384] - The Company has agreements to sell trade accounts receivable balances with Boeing and Airbus, which are dependent on the financial strength of these companies and could impact liquidity if disrupted[375] - The Company has long-term supply agreements for raw materials, expecting stable pricing in the near term, while also focusing on strategic cost reduction plans to mitigate potential cost increases[385] - The Company has not entered into any off-balance sheet arrangements as of December 31, 2020, indicating a focus on maintaining transparency in financial reporting[378]
Spirit AeroSystems(SPR) - 2020 Q4 - Earnings Call Transcript
2021-02-23 21:20
Financial Data and Key Metrics Changes - Revenue for 2020 was $3.4 billion, down 57% from 2019, primarily due to lower production rates on the 737 MAX and the impacts of COVID-19 [48] - Earnings per share were negative $8.38 compared to positive $5.06 in 2019, with adjusted EPS at negative $5.72 [49] - Free cash flow for the year was a use of $864 million, compared to a source of $691 million in 2019 [54] - The company ended the fourth quarter with $1.9 billion in cash and $3.9 billion in debt [60] Business Line Data and Key Metrics Changes - Fuselage segment revenue was $1.7 billion, down from 2019, with an operating margin of negative 26% compared to positive 11% in the prior year [63] - Propulsion revenue was $785 million, down from the previous year, with an operating margin of negative 5% compared to positive 20% in 2019 [65] - Wing revenue was $799 million, down from 2019, with an operating margin of negative 9% compared to positive 14% in 2019 [66] Market Data and Key Metrics Changes - The defense business grew by over 20% in 2020, contributing to overall diversification [48] - The company expects Boeing commercial to account for 44% of revenue in 2021, down from 74% in 2019, while Airbus is expected to account for 23% [40] Company Strategy and Development Direction - The company aims to be a diversified design and manufacturing champion, focusing on Boeing, Airbus, defense, aftermarket, business and regional jets, and non-aerospace manufacturing [25] - The acquisition of Bombardier assets is expected to generate approximately $700 million in revenue in 2021, growing at about 15% annually [76] - The company plans to pay down $1 billion in debt over the next three years, starting with a $300 million floating rate note redemption [41][62] Management's Comments on Operating Environment and Future Outlook - Management views 2021 as a bridge year for recovery from the 737 MAX grounding and COVID-19 impacts, with expectations for improved production rates [81] - The company anticipates that single-aisle aircraft will recover first, benefiting from a backlog that is 85% narrow-body [43] - Management remains committed to regaining an investment-grade credit rating in the future [62] Other Important Information - The company implemented significant cost reductions, totaling $1 billion annually, or about 40% from the 2019 non-material base [11] - The company has established a forward loss liability of $282 million primarily related to the A220 program due to production schedule changes [70] Q&A Session All Questions and Answers Question: Can you provide perspective on the margin performance in 4Q versus 3Q? - Management clarified that the target margin is 16.5% once MAX production rates reach the low 40s [87] Question: Will the A220 program generate profit in the future? - Management expects the A220 to be profitable after the three to five-year forward loss period [89] Question: Do you expect MAX deliveries to pick up in 2021? - Management expects higher MAX deliveries in 2021 compared to 2020, with Boeing prioritizing delivery of built but undelivered units [95] Question: How will excess capacity costs proceed through the year? - Management anticipates a 30% reduction in excess capacity costs in 2021 compared to 2020 [100] Question: Is the Bombardier pension contribution included in the cash flow walk? - Management confirmed that the Bombardier pension contribution will flow through operating cash flow and is included in the cash flow walk [113]
Spirit AeroSystems(SPR) - 2020 Q4 - Earnings Call Presentation
2021-02-23 18:15
| --- | --- | |---------------------------------------------------|-------| | | | | | | | Fourth Quarter and Full-Year 2020 | | | Earnings Review | | | | | | Tom Gentile | | | President and Chief Executive Officer | | | Mark Suchinski | | | Senior Vice President and Chief Financial Officer | | February 23, 2021 2020 Cost Reduction Actions Implemented cost reduction actions: Reduction of 8,000 commercial aviation employees Reduced executive pay by 20% Implemented 4-day work weeks for salaried workforce at Wi ...
Spirit AeroSystems(SPR) - 2020 Q3 - Earnings Call Transcript
2020-11-03 22:59
Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $806 million, down 58% from the same quarter last year, primarily due to lower production rates on the 737 Max and the impacts of COVID-19 [20][21] - Earnings per share (EPS) for the quarter was negative $1.50, compared to negative $1.26 in the same quarter last year; adjusted EPS was negative $1.34, down from positive EPS of $1.38 in Q3 2019 [22] - Free cash flow for the quarter was a use of $72 million, compared to a source of $214 million in the same period of 2019, reflecting negative impacts from working capital requirements and lower deliveries [29][30] Business Line Data and Key Metrics Changes - Fuselage segment revenue was $421 million, down from the previous year, with an operating margin of negative 23% compared to 11% in the same period last year [39] - Propulsion segment revenue was $171 million, down from the previous year, with an operating margin of negative 9% compared to 21% in the same quarter of 2019 [41] - Wing segment revenue was $168 million, down from the previous year, with an operating margin of negative 14% compared to positive 14% in the same quarter of 2019 [43] Market Data and Key Metrics Changes - The company expects Boeing commercial revenue to account for 45% of total revenue in 2021, with Airbus at 24%, defense at 15%, business and regional jets at 8%, and aftermarket at 8% [16] - The acquisition of Bombardier assets is expected to generate preliminary revenue between $700 million and $800 million in 2021 [16] Company Strategy and Development Direction - The company has implemented approximately $1 billion in annualized cost reduction actions, representing a 40% reduction in the non-material base [7][48] - The acquisition of Bombardier assets is aimed at accelerating strategic transformation, increasing Airbus content, and expanding the aftermarket and defense business [12][14] - The company plans to reduce the current buffer inventory of 128 737 shipsets to a permanent buffer of 20 to 25 units by lagging Boeing's production rates by about five units per month [9] Management's Comments on Operating Environment and Future Outlook - Management indicated that the aviation industry is in the early stages of a multi-year recovery, with expectations of continued near-term challenges [18] - The company anticipates free cash flow to be negative in 2021 but significantly improved from 2020, with expectations of positive free cash flow in 2022 [10][34] - Management expressed confidence in the recovery of domestic air travel, particularly for narrow-body aircraft, which constitutes 85% of the unit backlog [12] Other Important Information - The company successfully delivered 20,000 critical care ventilators to customers in over 20 countries, which was accretive to results [17] - The adjusted Q3 liquidity position was reported at $2 billion following various financial maneuvers, including the termination of the Asco acquisition and raising $900 million in new secured debt [11][36] Q&A Session Summary Question: Can you discuss underlying margins excluding forward losses? - Management noted substantial improvements in margins quarter-over-quarter, with normalized margins for the 737 program improving from negative 20% to negative 3% [52][53] Question: What should we expect from cash flow next year? - Management indicated that cash usage for the next year could be around low single-digit hundreds of millions, factoring in cash tax benefits and potential positive contributions from Bombardier [60][61] Question: What is the outlook for Bombardier's cash flow profile? - Management stated that the Bombardier business has been impacted by COVID-19, and they are currently working on establishing an annual operating plan for 2021 [76][79] Question: What is the expected production rate for the 737? - Management confirmed that they are planning to ramp up production to 10 aircraft per month by January, lagging Boeing's production rate by about five units [101] Question: How does the company plan to respond to Airbus's rate increase for the A220? - Management stated they are preparing to meet the potential increase in production rates as requested by Airbus, ensuring all necessary resources are in place [92][93]
Spirit AeroSystems(SPR) - 2020 Q3 - Earnings Call Presentation
2020-11-03 14:41
| --- | --- | |---------------------------------------------------|-------| | | | | | | | Third Quarter 2020 | | | Earnings Review | | | | | | Tom Gentile | | | President and Chief Executive Officer | | | Mark Suchinski | | | Senior Vice President and Chief Financial Officer | | November 3, 2020 Summary of Recent Events Continued actions on labor and non-labor cost reductions; reduction of 8,000 commercial employees and $1 billion of annualized cost savings Encouraged by progress on the 737 MAX return to se ...
Spirit AeroSystems(SPR) - 2020 Q2 - Earnings Call Presentation
2020-08-05 19:56
| --- | --- | |---------------------------------------------------|-------| | | | | Second Quarter 2020 | | | Earnings Review | | | | | | Tom Gentile | | | | | | President and Chief Executive Officer | | | Mark Suchinski | | | Senior Vice President and Chief Financial Officer | | August 4, 2020 Summary of Recent Actions 2 | --- | --- | --- | |-------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------| | | ...