Spirit AeroSystems(SPR) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights This section summarizes Spirit AeroSystems' Q2 2025 financial performance, including revenues, earnings, and cash flow Summary of Key Financial Metrics Spirit AeroSystems reported Q2 2025 revenues of $1.6 billion, an EPS of $(5.36), and cash used in operations of $144 million, with free cash flow usage of $190 million Key Financial Metrics - Q2 2025 | Metric | Q2 2025 | | :--- | :--- | | Revenues | $1.6 billion | | EPS | $(5.36) | | Adjusted EPS* | $(3.34) | | Cash used in operations | $144 million | | Free cash flow* usage | $190 million | Revenue Performance Spirit's Q2 2025 revenue increased year-over-year, primarily driven by higher production activity on most Boeing programs, especially the 737 and 787 - Q2 2025 revenue increased from Q2 2024 due to higher production activity on most Boeing programs, particularly the Boeing 737 and 787 programs[2] - Boeing 737 deliveries were significantly higher year-over-year, compensating for delays in H1 2024 caused by a joint product verification process[2] Earnings Performance Operating loss in Q2 2025 rose significantly, primarily from business dispositions and program-related losses - Operating loss in Q2 2025 increased compared to Q2 2024, primarily due to a $133 million loss on dispositions of businesses related to the planned transfer of certain assets and sites to Airbus[4] Impact of Losses and Adjustments on Earnings | Item | Q2 2025 Impact | Primary Drivers | | :--- | :--- | :--- | | Net forward losses | $219 million | Airbus A220 ($100M), Airbus A350 ($58M), Boeing 787 ($38M) due to foreign exchange, production performance, supply chain cost growth (including tariffs on B787) | | Unfavorable cumulative catch-up adjustments | $20 million | Increased production costs on Boeing 737 program (including tariffs) | | Excess capacity costs | $44 million | - | Earnings Per Share Comparison | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | EPS | $(5.36) | $(3.56) | (51%) | | Adjusted EPS* | $(3.34) | $(2.73) | (22%) | Cash and Liquidity Q2 2025 cash from operations and free cash flow improved, driven by working capital timing and higher Boeing 737 deliveries - Cash from operations and free cash flow improved in Q2 2025 compared to Q2 2024, largely due to the timing of working capital driven by higher Boeing 737 deliveries[8] Cash Flow and Free Cash Flow Comparison | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Cash used in operations | ($144) million | ($566) million | 75% improvement | | Free cash flow* usage | ($190) million | ($597) million | 68% improvement | - The Company's cash balance at the end of Q2 2025 was $370 million[8] Operational and Strategic Developments This section details Spirit AeroSystems' backlog, liquidity challenges, the pending Boeing acquisition, and recent subsequent events Backlog Spirit AeroSystems' backlog stood at approximately $51 billion at the end of Q2 2025, encompassing work packages across all commercial platforms - Spirit's backlog at the end of Q2 2025 was approximately $51 billion, including work packages on all commercial platforms in the Airbus and Boeing backlog[3] Liquidity Management and Going Concern Significant reductions in projected revenue and cash flows have created substantial doubt about the Company's ability to continue as a going concern - Significant reductions in projected revenue and cash flows over the next twelve months resulted from production and delivery process changes by Boeing, lower 737 production rates, and the lack of price increases on Airbus programs[9] - The Company expects to continue generating operating losses for the foreseeable future and will need to obtain additional funding to sustain operations[9] - Management's liquidity improvement plan depends on customer advances, forecasted 737 deliveries, divestiture proceeds, and the outcome of merger transactions, but there is no assurance these plans will sufficiently improve liquidity, leading to substantial doubt about the Company's ability to continue as a going concern[10][11] Pending Boeing Acquisition of Spirit AeroSystems Spirit AeroSystems entered a Merger Agreement with Boeing, expecting to close in Q4 2025, subject to divestitures and regulatory approvals - Spirit AeroSystems entered into a Merger Agreement with The Boeing Company on June 30, 2024, with the Company expected to become a wholly owned subsidiary of Boeing upon completion[12] - The closing of the transaction is anticipated in Q4 2025, subject to the divestiture of certain Airbus-related businesses and regulatory approvals[12] - Both Spirit and Boeing received a second request for additional information from the Federal Trade Commission as part of the regulatory review process[12] Subsequent Events This section outlines recent legislative, contractual, and legal developments impacting Spirit AeroSystems One Big Beautiful Bill Act (OBBBA) The OBBBA, signed into law on July 4, 2025, includes business tax reform provisions, but Spirit does not expect a material financial impact in 2025 - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, includes business tax reform provisions such as enhanced deductibility of bonus depreciation, domestic research costs, and interest expense[13] - Spirit does not expect the OBBBA to have a material impact on its financial statements or cash taxes in 2025[13] Airbus Memorandum of Agreement (MoA) Spirit entered an amended MoA with Airbus on July 11, 2025, securing an additional $94 million support package exclusively for Airbus programs - On July 11, 2025, Spirit entered into an amended MoA with Airbus S.A.S., securing an additional $94 million support package, bringing the total to $152 million, to be used solely for Airbus programs[14] - Assets purchased with this financial support will be directly or indirectly assumed by Airbus S.A.S. or its affiliates upon the close of the transactions contemplated by the April 27, 2025 Stock and Asset Purchase Agreement[14][15] Former CEO Litigation Spirit AeroSystems successfully concluded litigation with its former CEO, Larry Lawson, leading to the reversal of approximately $48 million in accrued liabilities - Spirit AeroSystems successfully concluded litigation with its former CEO, Larry Lawson, over a disputed restrictive covenant, with the Appellate Court affirming the District Court's judgment in Spirit's favor on April 25, 2025[16] - As a result of the litigation's conclusion, the Company will reverse accrued liabilities of approximately $48 million in Q3 2025[16] Segment Performance This section analyzes the financial performance of Spirit AeroSystems' Commercial, Defense & Space, and Aftermarket segments Commercial Segment The Commercial segment's Q2 2025 revenue increased due to higher production on Boeing and Airbus programs, with improved operating margin - Commercial segment revenue in Q2 2025 increased from the prior year, primarily due to higher production activity on most Boeing and Airbus programs[17] - Operating margin for the Commercial segment increased in Q2 2025 compared to Q2 2024, primarily driven by lower changes in estimate charges[17] Commercial Segment Financials | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,266.3 million | $1,166.4 million | 8.6% | | Operating Loss | ($234.3) million | ($270.5) million | 13.4% improvement | | Operating Loss as % of Revenues | (18.5%) | (23.2%) | 470 BPS improvement | | Net forward losses | $212 million | $212 million | 0% | | Unfavorable cumulative catch-up adjustments | $11 million | $49 million | 77.6% decrease | | Excess capacity costs | $35 million | $44 million | 20.5% decrease | [Defense & Space Segment](index=4&type=section&id=Defense%20%26%2