- Third quarter 2009 Revenues grew 3 percent to $1.054 billion -
Operating Income grew 18 percent as Operating Margins expanded to
12.4 percent - Fully Diluted Earnings Per Share increased 17
percent to $0.62 per share - Cash and Cash Equivalents were $207
million - Total backlog of approximately $28.2 billion WICHITA,
Kan., Nov. 5 /PRNewswire-FirstCall/ -- Spirit AeroSystems Holdings,
Inc. (NYSE:SPR) reported third quarter 2009 financial results
reflecting revenue and earnings growth as ship set deliveries for
large commercial aircraft increased from the same period of 2008.
Spirit's third quarter 2009 revenues increased to $1.054 billion,
up 3 percent from the same period last year. Operating income
increased 18 percent to $131 million, up from $111 million in the
same period a year ago, as revenues increased, operating
efficiencies improved, and period expense declined. Net income was
$87 million, or $0.62 per fully diluted share, up 18 percent from
$74 million, or $0.53 per fully diluted share, in the same period
of 2008. (Table 1) Table 1. Summary Financial Results (Unaudited)
($ in Millions, 3rd Quarter Nine Months except per share
----------- ----------- data) 2009 2008 Change 2009 2008 Change
----------------- ---- ---- ------ ---- ---- ------ Revenues $1,054
$1,027 3% $3,001 $3,126 (4%) Operating Income $131 $111 18% $218
$378 (42%) Operating Income as a % of Revenues 12.4% 10.8% 160 BPS
7.3% 12.1% (480) BPS Net Income $87 $74 18% $142 $246 (42%) Net
Income as a % of Revenues 8.3% 7.2% 110 BPS 4.7% 7.9% (320) BPS
Earnings per Share (Fully Diluted) $0.62 $0.53 17% $1.01 $1.76
(43%) Fully Diluted Weighted Avg Share Count (Millions) 140.2 139.1
140.0 139.2 "We executed well across the company as we delivered
solid operating performance in the third quarter," said President
and Chief Executive Officer Jeff Turner. "Our results reflect
improving performance as revenues and profitability increased and
we recovered from the disrupted operations in the previous three
quarters caused by the Machinists' strike at Boeing and the new ERP
system implementation in the first half of 2009," Turner stated.
"We continue to support the 787 program and are preparing for
production restart and ramp-up. In addition, we continue to make
good progress on other development programs as we work to grow and
diversify our company," Turner added. "While we have seen some
stabilization in the global economic outlook, we remain cautious
regarding the outlook of the commercial aerospace market. Our
backlog remains strong and our strategy is on track to achieve
long-term value creation for our customers, shareholders, and
employees," Turner concluded. Spirit's backlog at the end of the
third quarter of 2009 was $28.2 billion, flat from the end of the
second quarter of 2009, as Airbus and Boeing third quarter backlog
reductions were offset by a follow-on contract at Spirit Europe for
777 wing components. Spirit calculates its backlog based on
contractual prices for products and volumes from the published firm
order backlogs of Airbus and Boeing, along with firm orders from
other customers. Spirit updated its contract profitability
estimates during the third quarter of 2009, resulting in a $2
million favorable cumulative catch-up adjustment, compared to a $13
million unfavorable cumulative catch-up adjustment for the third
quarter of 2008, which was largely the result of the Machinists'
strike at Boeing. Cash flow from operations was $5 million for the
third quarter of 2009, compared to $68 million for the third
quarter of 2008, primarily due to a decrease in cash advance
receipts from customers of $48 million compared to the same period
of 2008. (Table 2) Table 2. Cash Flow and Liquidity 3rd Quarter
Nine Months ----------- ----------- ($ in Millions) 2009 2008 2009
2008 --------------- ---- ---- ---- ---- Cash Flow from Operations
$5 $68 ($211) $147 Purchases of Property, Plant & Equipment
($51) ($56) ($158) ($175) October 1, December 31, Liquidity 2009
2008 ---- ---- Cash $207 $217 Total Debt $884 $588 During the third
quarter, Spirit issued $300 million in senior unsecured notes with
a coupon rate of 7.5% and a maturity in 2017. A portion of the
proceeds were used to pay down the outstanding revolver balance of
$200 million prior to the close of the third quarter. Cash balances
at the end of the third quarter of 2009 were $207 million and debt
balances were $884 million. During the third quarter of 2009, the
company utilized its credit-line as it continued to invest in
development programs. All credit-line borrowings were paid down
using a portion of the funds from the issuance of the senior
unsecured notes. At the end of the third quarter of 2009, the
company's $729 million revolving credit facility was undrawn.
Approximately $17 million of the credit facility is reserved for
financial letters of credit. The company's credit ratings remained
unchanged at the end of the third quarter of 2009 with a BB rating
at Standard & Poor's and a Ba3 rating at Moody's. 2009 Outlook
Spirit revenue guidance for the full-year 2009 has been updated to
reflect movement of certain forecasted non-recurring contract
settlements out of 2009. Revenues are now expected to be between
$4.1 and $4.2 billion based on Boeing's 2009 delivery guidance of
480-485 aircraft; anticipated B787 deliveries consistent with our
expectations following Boeing's announcement of the revised B787
schedule on August 27, 2009; 2009 expected Airbus deliveries of
approximately 483 aircraft; internal Spirit forecasts for non-OEM
production activity and non-Boeing and Airbus customers; and
foreign exchange rates consistent with fourth quarter 2008 levels.
Fully diluted earnings per share for 2009 remains unchanged and is
expected to be between $1.45 and $1.55 per share after the increase
in interest expense and fees associated with the recently issued
senior unsecured notes. Cash flow from operations less capital
expenditures, net of customer reimbursements, is now expected to be
no more than a ($150) million use of cash in the aggregate, with
capital expenditures of approximately $225 million. The effective
tax rate is now forecasted to be approximately 30 percent for 2009.
The guidance assumes the settlement and receipt of certain
outstanding non-recurring contract payments associated with our
development programs. To the extent these forecasted payments are
not received during the fourth quarter of 2009, they will represent
a shift in revenues, earnings and cash flows from 2009 to 2010.
(Table 3) Table 3. Financial Outlook 2008 Actual 2009 Guidance
Change ----------------- ----------- ------------- ------ Revenues
$3.8 billion $4.1 - $4.2 billion 8% - 11% Earnings Per Share (Fully
Diluted) $1.91 $1.45 - $1.55 (24%) - (19%) Effective Tax Rate (%
Pre-Tax Earnings) 30.9% ~30% Cash Flow From Operations $211
million* Capital Expenditures $236 million* Customer Reimbursement
$116 million* *($150M) with ~$225 million of Capital Expenditures
Cautionary Statement Regarding Forward-Looking Statements This
press release contains "forward-looking statements."
Forward-looking statements reflect our current expectations or
forecasts of future events. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as
"may," "will," "expect," "anticipate," "intend," "estimate,"
"believe," "project," "continue," "plan," "forecast," or other
similar words. These statements reflect management's current views
with respect to future events and are subject to risks and
uncertainties, both known and unknown. Our actual results may vary
materially from those anticipated in forward-looking statements. We
caution investors not to place undue reliance on any
forward-looking statements. Important factors that could cause
actual results to differ materially from forward-looking statements
include, but are not limited to: our ability to continue to grow
our business and execute our growth strategy, including the timing
and execution of new programs; our ability to perform our
obligations and manage cost related to our new commercial and
business aircraft development programs; reduction in the build
rates of certain Boeing aircraft including, but not limited to, the
B737 program, the B747 program, the B767 program and the B777
program, and build rates of the Airbus A320 and A380 programs,
which could be affected by the impact of a deep recession on
business and consumer confidence and the impact of continuing
turmoil in the global financial and credit markets; declining
business jet manufacturing rates and customer cancellations or
deferrals as a result of the weakened global economy; the success
and timely execution of key milestones such as first flight and
delivery of Boeing's new B787 and Airbus' new A350 aircraft
programs, including receipt of necessary regulatory approvals and
customer adherence to their announced schedules; our ability to
enter into supply arrangements with additional customers and the
ability of all parties to satisfy their performance requirements
under existing supply contracts with Boeing, Airbus, and other
customers and the risk of nonpayment by such customers; any adverse
impact on Boeing's and Airbus' production of aircraft resulting
from cancellations, deferrals or reduced orders by their customers
or labor disputes; any adverse impact on the demand for air travel
or our operations from the outbreak of diseases such as the
influenza outbreak caused by the H1N1 virus, avian influenza,
severe acute respiratory syndrome or other epidemic or pandemic
outbreaks; returns on pension plan assets and impact of future
discount rate changes on pension obligations; our ability to borrow
additional funds, or refinance debt; competition from original
equipment manufacturers and other aerostructures suppliers; the
effect of governmental laws, such as U.S. export control laws, the
Foreign Corrupt Practices Act, environmental laws and agency
regulations, both in the U.S. and abroad; the cost and availability
of raw materials and purchased components; our ability to
successfully extend or renegotiate our primary collective
bargaining contracts with our labor unions; our ability to recruit
and retain highly skilled employees and our relationships with the
unions representing many of our employees; spending by the U.S. and
other governments on defense; the possibility that our cash flows
and borrowing facilities may not be adequate for our additional
capital needs or for payment of interest on and principal of our
indebtedness; our exposure under our revolving credit facility to
higher interest payments should interest rates increase
substantially; the outcome or impact of ongoing or future
litigation and regulatory actions; and our exposure to potential
product liability claims. These factors are not exhaustive, and new
factors may emerge or changes to the foregoing factors may occur
that could impact our business. Except to the extent required by
law, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Appendix Segment Results Fuselage
Systems Fuselage Systems segment revenues for the third quarter of
2009 were $526 million, up 9 percent over the same period last
year, as deliveries in the prior year quarter were impacted by the
Machinists' strike at Boeing. Operating margin for the third
quarter of 2009 was 18.1 percent, up from 15.2 percent in the third
quarter of 2008, as a favorable cumulative catch-up of $4 million
was realized during the quarter. During the third quarter of 2008,
the segment realized an unfavorable $11 million cumulative catch-up
adjustment. Propulsion Systems Propulsion Systems segment revenues
for the third quarter of 2009 were $266 million, down 9 percent
over the same period last year due to fewer 747 deliveries and
lower aftermarket sales. Operating margin for the third quarter of
2009 was 13.3 percent, down from 16.2 percent in the third quarter
of 2008, primarily due to lower spares volumes. During the quarter,
an unfavorable cumulative catch-up of $1 million was realized. Wing
Systems Wing Systems segment revenues for the third quarter of 2009
were $257 million, up 4 percent over the same period last year as
increased deliveries to Airbus and Boeing more than offset fewer
Hawker 850XP deliveries. Operating margin for the third quarter of
2009 was 10.3 percent, down from 10.9 percent in the third quarter
of 2008, as an unfavorable cumulative catch-up of $1 million was
realized during the quarter. During the third quarter of 2008, the
segment realized an unfavorable $2 million cumulative catch-up
adjustment. Table 4. Segment Reporting (Unaudited) (Unaudited) ($
in Millions, 3rd Quarter Nine Months except margin -----------
----------- percent) 2009 2008 Change 2009 2008 Change
-------------- ---- ---- ------ ---- ---- ------ Segment Revenues
Fuselage Systems $525.9 $484.8 8.5% $1,497.6 $1,470.2 1.9%
Propulsion Systems $266.2 $291.5 (8.7%) $772.1 $863.1 (10.5%) Wing
Systems $257.3 $246.8 4.3% $712.9 $773.5 (7.8%) All Other $4.4 $4.1
7.3% $18.2 $18.9 (3.7%) ---- ---- --- ----- ----- ---- Total
Segment Revenues $1,053.8 $1,027.2 2.6% $3,000.8 $3,125.7 (4.0%)
Segment Earnings from Operations Fuselage Systems $95.2 $73.5 29.5%
$229.4 $255.0 (10.0%) Propulsion Systems $35.3 $47.1 (25.1%) $97.2
$140.9 (31.0%) Wing Systems $26.6 $26.9 (1.1%) ($12.7) $92.3
(113.8%) All Other $1.0 $0.0 NA ($1.0) $0.1 (1,100.0%) ---- ----
--- ----- ---- -------- Total Segment Operating Earnings $158.1
$147.5 7.2% $312.9 $488.3 (35.9%) Unallocated Corporate SG&A
Expense ($26.7) ($35.6) (25.0%) ($92.9) ($109.7) (15.3%)
Unallocated Research & Development Expense ($0.4) ($0.7)
(42.9%) ($1.6) ($1.1) 45.5% ----- ----- ----- ----- ----- ----
Total Earnings from Operations $131.0 $111.2 17.8% $218.4 $377.5
(42.1%) Segment Operating Earnings as % of Revenues Fuselage
Systems 18.1% 15.2% 290 BPS 15.3% 17.3% (200)BPS Propulsion Systems
13.3% 16.2% (290)BPS 12.6% 16.3% (370)BPS Wing Systems 10.3% 10.9%
(60)BPS (1.8%) 11.9% (1,370)BPS All Other 22.7% 0.0% 2,270 BPS
(5.5%) 0.5% (600)BPS ---- --- --------- ---- --- -------- Total
Segment Operating Earnings as % of Revenues 15.0% 14.4% 60 BPS
10.4% 15.6% (520)BPS Total Operating Earnings as % of Revenues
12.4% 10.8% 160 BPS 7.3% 12.1% (480)BPS Spirit Ship Set Deliveries
(One Ship Set equals One Aircraft) 2008 Spirit AeroSystems
Deliveries 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2008 -------
------- ------- ------- ---------- B737 93 95 87 42 317 B747 4 7 4
1 16 B767 3 3 3 1 10 B777 20 22 18 8 68 B787 1 1 1 0 3 --- --- ---
--- --- Total 121 128 113 52 414 A320 Family 95 95 90 87 367
A330/340 24 21 23 22 90 A380 4 2 4 6 16 --- --- --- --- --- Total
123 118 117 115 473 Hawker 850XP 15 24 24 28 91 --- --- --- --- ---
Total Spirit 259 270 254 195 978 === === === === === 2009 Spirit
AeroSystems Deliveries 1st Qtr 2nd Qtr 3rd Qtr YTD 2009 -------
------- ------- -------- B737 74 96 93 263 B747 3 1 3 7 B767 3 3 3
9 B777 21 21 21 63 B787 2 2 2 6 --- --- --- --- Total 103 123 122
348 A320 Family 105 101 94 300 A330/340 26 23 28 77 A380 0 2 5 7
--- --- --- --- Total 131 126 127 384 Hawker 850XP 18 13 6 37 ---
--- --- --- Total Spirit 252 262 255 769 === === === === Spirit
AeroSystems Holdings, Inc. Condensed Consolidated Statements of
Operations (unaudited) For the For the For the For the Three Months
Three Months Nine Months Nine Months Ended Ended Ended Ended
October 1, September 25, October 1, September 25, 2009 2008 2009
2008 ---------- ----------- ---------- ----------- ($ in millions,
except per share data) Net Revenues $1,053.8 $1,027.2 $3,000.8
$3,125.7 Operating costs and expenses: Cost of sales 878.3 864.3
2,637.2 2,596.1 Selling, general and administrative 30.5 39.0 103.6
119.0 Research and development 14.0 12.7 41.6 33.1 ---- ---- ----
---- Total Operating Costs and Expenses 922.8 916.0 2,782.4 2,748.2
Operating Income 131.0 111.2 218.4 377.5 Interest expense and
financing fee amortization (10.2) (9.9) (29.1) (29.5) Interest
income 1.6 4.4 6.2 15.1 Other income, net (0.5) (0.7) 5.2 0.9 ----
---- --- --- Income Before Income Taxes 121.9 105.0 200.7 364.0
Income tax provision (34.4) (31.0) (58.8) (118.4) ----- ----- -----
------ Income Before Equity in Net Loss of Affiliate 87.5 74.0
141.9 245.6 Equity in net loss of affiliate (0.2) - (0.2) - ----
--- ---- --- Net Income $87.3 $74.0 $141.7 $245.6 ===== =====
====== ====== Earnings per share Basic $0.63 $0.54 $1.03 $1.79
Shares 138.6 137.0 138.2 136.9 Diluted $0.62 $0.53 $1.01 $1.76
Shares 140.2 139.1 140.0 139.2 Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets (unaudited) October 1,
December 31, 2009 2008 ---------- ----------- ($ in millions)
Current assets Cash and cash equivalents $206.7 $216.5 Accounts
receivable, net 235.8 149.3 Current portion of long-term receivable
28.2 108.9 Inventory, net 2,204.6 1,882.0 Other current assets 85.8
76.6 ---- ---- Total current assets 2,761.1 2,433.3 Property, plant
and equipment, net 1,224.0 1,068.3 Pension assets 60.0 60.1 Other
assets 238.6 198.6 ----- ----- Total assets $4,283.7 $3,760.3
======== ======== Current liabilities Accounts payable $421.2
$316.9 Accrued expenses 164.1 161.8 Current portion of long-term
debt 6.7 7.1 Advance payments, short-term 194.3 138.9 Deferred
revenue, short-term 59.3 110.5 Other current liabilities 25.8 8.1
---- --- Total current liabilities 871.4 743.3 Long-term debt 583.5
580.9 Bonds payable, long-term 293.4 - Advance payments, long-term
806.5 923.5 Deferred revenue and other deferred credits 54.3 58.6
Pension/OPEB obligation 49.1 47.3 Other liabilities 169.6 109.2
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,
104,819,957 and 103,209,466 issued and outstanding, respectively
1.0 1.0 Common stock, Class B par value $0.01, 150,000,000 shares
authorized, 36,216,211 and 36,679,760 shares issued and
outstanding, respectively 0.4 0.4 Additional paid-in capital 946.3
939.7 Minority interest 0.5 0.5 Accumulated other comprehensive
loss (124.1) (134.2) Retained earnings 631.8 490.1 ----- -----
Total shareholders' equity 1,455.9 1,297.5 ------- ------- Total
liabilities and shareholders' equity $4,283.7 $3,760.3 ========
======== Spirit AeroSystems Holdings, Inc. Condensed Consolidated
Statements of Cash Flows (unaudited) For the For the Nine Months
Nine Months Ended Ended October 1, September 25, 2009 2008
---------- ------------- ($ in millions) Operating activities Net
Income $141.7 $245.6 Adjustments to reconcile net income to net
cash provided by (used in) operating activities Depreciation
expense 91.9 90.8 Amortization expense 7.7 7.1 Accretion of
long-term receivable (5.8) (13.0) Employee stock compensation
expense 6.7 11.6 Loss from the ineffectiveness of hedge contracts -
0.4 (Gain) loss from foreign currency transactions (3.9) 0.3 Gain
on disposition of assets - (0.2) Deferred taxes (20.5) 0.9 Pension
and other post-retirement benefits, net 1.6 (21.5) Grant income
(1.4) - Equity in net income of affiliate 0.2 - Changes in assets
and liabilities Accounts receivable (84.6) (28.4) Inventory, net
(319.5) (432.9) Accounts payable and accrued liabilities 104.9 30.5
Advance payments (61.6) 230.4 Deferred revenue and other deferred
credits (54.9) 16.9 Other (13.8) 8.1 ----- --- Net cash provided by
(used in) operating activities (211.3) 146.6 ------ ----- Investing
Activities Purchase of property, plant and equipment (158.0)
(175.2) Long-term receivable 86.5 87.1 Other 0.2 (0.7) --- ---- Net
cash (used in) investing activities (71.3) (88.8) ----- -----
Financing Activities Proceeds from revolving credit facility 300.0
75.0 Payments on revolving credit facility (300.0) (75.0) Proceeds
from issuance of debt - 8.8 Proceeds from issuance of bonds 293.4 -
Proceeds from government grants 0.7 1.6 Principal payments of debt
(5.8) (11.9) Debt issuance and financing costs (17.2) (6.8) -----
---- Net cash provided by (used in) financing activities 271.1
(8.3) ----- ---- Effect of exchange rate changes on cash and cash
equivalents 1.7 (5.2) --- ---- Net increase (decrease) in cash and
cash equivalents for the period (9.8) 44.3 Cash and cash
equivalents, beginning of the period 216.5 133.4 ----- ----- Cash
and cash equivalents, end of the period $206.7 $177.7 ====== ======
DATASOURCE: Spirit AeroSystems CONTACT: Investor Relations, Alan
Hermanson, +1-316-523-7040, or Media, Debbie Gann, +1-316-526-3910,
both of Spirit AeroSystems Web Site: http://www.spiritaero.com/
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