Spirit AeroSystems(SPR) - 2020 Q4 - Annual Report

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]