WICHITA, Kan., April 29 /PRNewswire-FirstCall/ -- Spirit AeroSystems
Holdings, Inc. (NYSE: SPR) reported first quarter 2008 financial results
reflecting solid revenue and earnings growth in its core businesses as volume
increased on the 737 program and operating efficiencies across the business
offset the impact of delays in the 787 program.
Spirit's first quarter 2008 revenues increased to $1.036 billion, up
9 percent from the same period last year. Operating income increased
25 percent to $130 million, up from $104 million in the same period a year
ago. Net income was $85 million, or $0.61 per fully diluted share, up from $70
million, or $0.50 per fully diluted share, in the same period of 2007 (Table
1).
Table 1. Summary Financial Results
1st Quarter
($'s in Millions, except per share data) 2008 2007 Change
Revenues $1,036 $954 9%
Operating Income $130 $104 25%
Operating Income as a % of Revenues 12.6% 10.9% 170 BPS
Net Income $85 $70 22%
Net Income as a % of Revenues 8.2% 7.3% 90 BPS
Earnings per Share (Fully diluted) $0.61 $0.50 22%
Fully Diluted Weighted Avg Share
Count (Millions) 139.6 139.0
"The first quarter results of our core businesses are in-line with my
expectations and I am pleased with the progress we are making towards
realizing our 2008 goals in spite of the challenges on the 787," said
President and Chief Executive Officer Jeff Turner. "Revenues increased, and
company-wide operating margins and net income expanded as we continued to
execute well across our core businesses," Turner added. "The additional delay
on the 787 schedule is unfortunate. Over the past four years we have made
significant investments in the program and our 787 team has worked tirelessly
to meet our customer commitments," Turner continued. "In the first quarter we
aggressively began taking steps to mitigate the impact from slowing 787
production. Today, we are continuing to implement the revised Boeing
production and delivery schedule, and we are reflecting the financial
implications of the revised schedule in our outlook," Turner added.
"During the quarter we made solid progress on our strategy to diversify.
We won major structures work on the new Cessna Citation Columbus business jet;
announced our participation on the new Gulfstream G650 business jet; secured
an aftermarket contract to provide overhaul, repair, and modification services
for Cathay Pacific Airways' fleet of 777 Trent 800 Thrust Reversers; and just
last week we announced a new maintenance joint venture with HAECO to establish
a regional service center to serve the Asia-Pacific region," Turner concluded.
Spirit's backlog during the quarter increased four percent from
$26.5 billion to $27.5 billion, as combined net orders for 683 aircraft at
Boeing and Airbus outpaced their combined deliveries of 238 aircraft.
Spirit's backlog is calculated based on contractual prices for products and
volumes from the published firm order backlogs of Boeing, Airbus, and other
customers.
Spirit updated its contract profitability estimates during the first
quarter of 2008, resulting in a $2 million favorable cumulative catch-up
adjustment, compared to a $6 million favorable cumulative catch-up adjustment
for the first quarter of 2007.
Table 2. Cash Flow and Select Balance Sheet Information
1st Quarter
($'s in Millions) 2008 2007
Cash Flow from Operations $70 $50
Purchases of Property, Plant & Equipment ($66) ($88)
Mar. 27, Dec. 31,
Cash and Debt Balances 2008 2007
Cash $203 $133
Current Portion of Long-term Debt plus
Long-term Debt $667 $595
Cash flow from operations was $70 million for the first quarter, compared
to $50 million for first quarter 2007, as the company continued to invest in
the 787 program and other development programs (Table 2). During the quarter
Spirit and Boeing reached an agreement to revise certain 787 contract payment
terms. The revised terms, among other things, alter the payment terms for 787
unit deliveries from Spirit to Boeing. The amendment also eliminated the
existing delayed payment schedule for ship sets delivered prior to aircraft
certification and ties all payments for ship sets not covered by the
additional advances to the date of delivery by Spirit to Boeing. The revised
terms will result in additional cash advance payments to Spirit from Boeing
during 2008. The initial payment of $124 million was received by Spirit in
the first quarter. The balance of the advance payments will be made to Spirit
over the remaining three quarters of 2008. The additional advances will be
applied against the purchase price of ship sets delivered until fully repaid.
On March 19, 2008, Spirit amended its credit agreements, to among other
things, increase the company's revolving credit facility from $400 million to
$650 million. Cash balances at the end of the first quarter were $203
million, up $46 million from a year ago, reflecting the $124 million advance
payment from Boeing; planned investment in Spirit's core business, primarily
for the 787 program; and $75 million of borrowings against the company's
$650 million credit facility. Debt balances at the end of the first quarter
were $667 million, up $72 million from year-end 2007, reflecting the
outstanding borrowing on the credit facility and planned debt principal
payments. The $75 million in outstanding borrowings against the company's
credit line was repaid in full on April 2, 2008.
During the quarter, Standard & Poor's revised the company's credit outlook
from negative to stable following Spirit's announcement of its increased
credit line. Standard & Poor's and Moody's confirmed their respective BB and
Ba3 corporate ratings for Spirit.
2008 Outlook
Spirit previously issued 2008 revenue guidance of approximately
$4.7 billion based on previously issued 2008 Boeing delivery guidance of 480-
490 aircraft and internal Spirit forecasts for Airbus and other products.
Spirit's revenue guidance assumed delivery of approximately forty-five 787
ship sets from Spirit to Boeing. On April 9, 2008, Boeing announced a revised
schedule that shifted first customer deliveries of the 787 to the third
quarter of 2009, with approximately twenty-five 787 aircraft now expected to
be delivered by the end of 2009.
Spirit now expects to achieve 2008 revenues of approximately $4.4 billion
based on the revised 787 schedule; 2008 Boeing delivery guidance of 480-490
aircraft; 2008 Airbus delivery guidance of greater than 470 aircraft; and
internal Spirit forecasts for other products.
Fully diluted earnings per share for 2008 is now expected to be between
$2.25 and $2.35 as improved operating efficiencies are expected to offset a
portion of the impact of delays in the 787 program (Table 3).
Table 3. Financial Outlook
2008 Guidance
Revenues ~$4.4 billion
Earnings Per Share (Fully Diluted) $2.25 - $2.35
Effective Tax Rate (% Pre-Tax Earnings) ~33%*
Cash Flow From Operations ~$400 million
Capital Expenditures ~$275 million
Capital Reimbursement ~$116 million
* Effective tax rate guidance among other factors, assumes the benefit of
an extension to the U.S. research tax credit.
For 2008, cash flow from operations is expected to be approximately $400
million as revised 787 payment terms shift cash receipts from 2009 and early
2010 into 2008. Capital expenditures are expected to be approximately $275
million in 2008.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements that reflect the
plans and expectations of Spirit AeroSystems Holdings, Inc. To the extent that
statements in this press release do not relate to historical or current facts,
they may constitute forward-looking statements. Forward-looking statements can
generally be identified by the use of forward-looking terminology such as
"may", "will", "expect", "intend", "estimate", "plan", "forecast",
"anticipate", "believe", "project", "continue", or other similar words. These
statements reflect Spirit AeroSystems Holdings, Inc.'s current view with
respect to future events and are subject to risks and uncertainties, both
known and unknown. Such risks and uncertainties may cause the actual results
of Spirit AeroSystems Holdings, Inc. to vary materially from those anticipated
in forward-looking statements, and therefore we caution investors not to place
undue reliance on them. Potential risks and uncertainties include, but are not
limited to: our customers' aircraft build rates; the ability to enter into
supply arrangements with additional customers and satisfy performance
requirements under existing contracts; any adverse impact on our customers'
production of aircraft; the success and timely progression of our customers'
new programs including, but not limited to The Boeing Company's 787 aircraft
program; future levels of business in the aerospace and commercial transport
industries; competition from original equipment manufacturers and other
aerostructures suppliers; the effect of governmental laws; the effect of new
commercial and business aircraft development programs; the cost and
availability of raw materials; the ability to recruit and retain highly
skilled employees and relationships with unions; spending by the United States
and other governments on defense; our continuing ability to operate
successfully as a stand-alone company; the outcome of ongoing or future
litigation and regulatory actions; and our exposure to potential product
liability claims. Additional information as to factors that may cause actual
results to differ materially from our forward-looking statements can be found
in Spirit AeroSystems Holdings, Inc.'s filings with the United States
Securities and Exchange Commission. Spirit AeroSystems Holdings, Inc.
undertakes no obligation and does not intend to update publicly any forward-
looking statements after the date of this press release, except as required by
law.
Appendix
Segment Results
Fuselage Systems
Fuselage Systems segment revenues for the first quarter of 2008 were
$492 million, up 11 percent over the same period last year, as deliveries to
Boeing increased 8 percent. Operating margin for the first quarter of 2008
was 18.1 percent, compared to 18.6 percent in the first quarter of 2007,
reflecting higher R&D expense.
Propulsion Systems
Propulsion Systems segment revenues for the first quarter of 2008 were
$275 million, up 6 percent over the same period last year as 737 deliveries
increased and fewer wide-body deliveries were made to Boeing during the first
quarter of 2008. Operating margin for the first quarter of 2008 was
16.2 percent compared to 15.5 percent in the first quarter of 2007, reflecting
improved operating efficiencies.
Wing Systems
Wing Systems segment revenues for the first quarter of 2008 were
$262 million, up 9 percent over the same period last year, as deliveries to
Boeing increased by 8 percent and deliveries to Airbus increased 7 percent.
Operating margin for the first quarter of 2008 was 12.4 percent compared to
9.6 percent in the first quarter of 2007, reflecting improved operating
efficiencies and lower R&D expenses. Wing Systems benefited from a favorable
cumulative catch-up adjustment of approximately $2 million in the first
quarter of 2008, compared to approximately $6 million favorable cumulative
catch-up adjustment for the first quarter of 2007.
Table 4. Segment Reporting
1st Quarter
($'s in Millions, except margin percent) 2008 2007 Change
Segment Revenues
Fuselage Systems $492.0 $445.2 10.5%
Propulsion Systems $274.7 $260.4 5.5%
Wing Systems $262.3 $241.2 8.7%
All Other $7.4 $7.3 1.4%
Total Segment Revenues $1,036.4 $954.1 8.6%
Segment Earnings from Operations
Fuselage Systems $89.1 $83.0 7.3%
Propulsion Systems $44.5 $40.3 10.4%
Wing Systems $32.5 $23.2 40.1%
All Other $0.4 $0.8 (50.0%)
Total Segment Operating Earnings $166.5 $147.3 13.0%
Unallocated Corporate SG&A Expense ($36.1) ($42.5) (15.1%)
Unallocated Research & Development Expense ($0.2) ($1.0) (80.0%)
Total Earnings from Operations $130.2 $103.8 25.4%
Segment Operating Earnings as % of Revenues
Fuselage Systems 18.1% 18.6% (50) BPS
Propulsion Systems 16.2% 15.5% 70 BPS
Wing Systems 12.4% 9.6% 280 BPS
All Other 5.4% 11.0% (560) BPS
Total Segment Operating Earnings as %
of Revenues 16.1% 15.4% 70 BPS
Total Operating Earnings as % of Revenues 12.6% 10.9% 170 BPS
Spirit Ship Set Deliveries
(BASED ON FUSELAGE DELIVERIES)
2007 Spirit AeroSystems Deliveries
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2007
B737 83 85 84 79 331
B747 5 4 5 4 18
B767 3 4 3 3 13
B777 21 21 21 20 83
B787* 0 1 0 0 1
Total 112 115 113 106 446
A320 93 84 91 91 359
A330/340 22 21 22 20 85
A380 0 0 2 3 5
Total 115 105 115 114 449
Hawker 850XP 16 15 17 20 68
Total Spirit 243 235 245 240 963
* Full-Revenue Units Only, Does not include Static and Fatigue test
units
2008 Spirit AeroSystems Deliveries
1st Qtr
B737 93
B747 4
B767 3
B777 20
B787* 1
Total 121
A320 95
A330/340 24
A380 4
Total 123
Hawker 850XP 15
Total Spirit 259
* Full-Revenue Units Only, Does not include Static and Fatigue test units
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Operations (unaudited)
For the Three Months Ended
March 27, 2008 March 29, 2007
($ in millions, except per share
data)
Net Revenues $1,036.4 $954.1
Operating costs and expenses:
Cost of sales 857.3 794.8
Selling, general and administrative 39.1 45.1
Research and development 9.8 10.4
Total Costs and Expenses 906.2 850.3
Operating Income 130.2 103.8
Interest expense and financing fee amortization (9.1) (8.9)
Interest income 5.7 7.7
Other income, net 1.4 2.0
Income From Continuing Operations
Before Income Taxes 128.2 104.6
Income tax provision (43.0) (34.8)
Net Income $85.2 $69.8
Earnings per share
Basic $0.62 $0.54
Shares 136.8 129.7
Diluted $0.61 $0.50
Shares 139.6 139.0
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets
March 27, December 31,
2008 2007
(unaudited)
($ in millions)
Current assets
Cash and cash equivalents $203.4 $133.4
Accounts receivable, net 266.5 159.9
Other receivable 112.1 109.5
Inventory, net 1,499.5 1,342.6
Prepaid expenses 12.1 14.2
Income tax receivable 1.1 9.6
Other current assets 72.7 73.6
Total current assets 2,167.4 1,842.8
Property, plant and equipment, net 1,001.4 963.8
Long-term receivable 101.6 123.0
Pension assets 331.9 318.7
Other assets 99.2 91.6
Total assets $3,701.5 $3,339.9
Current liabilities
Accounts payable $417.8 $362.6
Accrued expenses 184.4 182.6
Current portion of long-term debt 13.4 16.0
Advance payments short-term 189.5 109.9
Income tax payable 42.3 2.5
Other current liabilities 7.5 1.4
Total current liabilities 854.9 675.0
Revolving credit facility 75.0 -
Long-term debt 578.6 579.0
Advance payments 660.5 653.4
Other liabilities 180.3 165.9
Shareholders' equity
Preferred stock, par value $0.01, 10,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, Class A par value $0.01,
200,000,000 shares authorized, 102,776,848
and 102,693,058 issued and outstanding,
respectively 1.0 1.0
Common stock, Class B par value $0.01,
150,000,000 shares authorized, 36,827,426
and 36,826,434 shares issued and outstanding,
respectively 0.4 0.4
Additional paid-in capital 928.1 924.6
Accumulated other comprehensive income 112.7 117.7
Retained earnings 310.0 222.9
Total shareholders' equity 1,352.2 1,266.6
Total liabilities and shareholders'
equity $3,701.5 $3,339.9
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Cash Flow (unaudited)
For the Three Months For the Three
Ended March 27, Months Ended
2008 March 29, 2007
($ in millions)
Operating activities
Net Income $85.2 $69.8
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation expense 28.0 20.9
Amortization expense 2.1 1.9
Accretion of long-term receivable (4.9) (5.5)
Employee stock compensation expense 3.7 6.6
Excess tax liability/(benefit) from
share-based payment arrangements 0.2 (2.6)
Loss from the ineffectiveness of
hedge contracts 0.3 -
Loss on disposition of assets 0.7 0.1
Loss from foreign currency
transactions 0.6 -
Deferred taxes (2.1) 8.6
Pension income, net (7.2) (5.9)
Changes in assets and liabilities
Accounts receivable (66.4) (54.3)
Inventory, net (155.8) (63.6)
Other current assets 2.1 10.3
Accounts payable and accrued
liabilities 58.6 (10.2)
Customer advances 89.1 29.2
Income taxes payable 47.8 23.8
Deferred revenue and other
deferred credits (8.5) 19.5
Other (3.6) 1.5
Net cash provided by operating
activities 69.9 50.1
Investing Activities
Purchase of property, plant and
equipment (65.7) (87.5)
Long-term receivable - 11.4
Financial derivatives 0.4 1.1
Investment in joint venture (0.5) -
Net cash (used in) investing
activities (65.8) (75.0)
Financing Activities
Proceeds from revolving credit
facility 75.0 -
Principal payments of debt (1.6) (4.7)
Debt issuance costs (6.8) -
Excess tax (liability)/benefit from
share-based payment arrangements (0.2) 2.6
Net cash provided by (used
in) financing activities 66.4 (2.1)
Effect of exchange rate changes on
cash and cash equivalents (0.5) -
Net increase (decrease) in
cash and cash equivalents
for the period 70.0 (27.0)
Cash and cash equivalents, beginning
of the period 133.4 184.3
Cash and cash equivalents, end of the
period $203.4 $157.3
SOURCE Spirit AeroSystems Holdings, Inc.
Contact: investors, Phil Anderson, +1-316-523-1797, or media, Debbie Gann, +1-316-519-7340, both of Spirit AeroSystems Holdings, Inc.