WICHITA, Kan., Aug. 4, 2020 /PRNewswire/ --
- Directed by Boeing to produce 72 737 shipsets in 2020, an 88%
reduction from 606 delivered shipsets in 2019
- Delivered 159 shipsets compared to 449 shipsets in Q2 2019 and
324 shipsets in Q1 2020
- Recorded forward losses of $194
million, primarily on the 787 and A350 programs due to
greater customer production rate reductions than previously
assumed
- Implemented additional cost reduction actions to reduce cash
burn; aggregate cost reduction actions taken this year expected to
result in annualized $1 billion
savings
-
- Furloughed production workers and managers supporting the 737
program in Wichita, Kansas and
Oklahoma from June 15 to August 15
- Announced further reduction of commercial aerospace employees
by 1,100; bringing total commercial workforce reduction to ~8,000
YTD
- Decided to continue 20 percent executive pay reduction and
four-day work week for salaried workforce through the remainder of
the year
- Announced closure of facility in San
Antonio, Texas; Continuing to evaluate additional facility
closures
- Amended Credit Agreement to provide covenant relief through
2022
Spirit AeroSystems Holdings, Inc. [NYSE: SPR] reported second
quarter 2020 financial results.
Table 1.
Summary Financial Results (unaudited)
|
|
|
|
|
2nd
Quarter
|
|
Six
Months
|
|
($ in millions,
except per share data)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Revenues
|
$645
|
$2,016
|
(68%)
|
$1,722
|
$3,984
|
(57%)
|
Operating (Loss)
Income
|
($367)
|
$226
|
**
|
($535)
|
$459
|
**
|
Operating (Loss)
Income as a % of Revenues
|
(56.9%)
|
11.2%
|
**
|
(31.0%)
|
11.5%
|
**
|
Net (Loss)
Income
|
($256)
|
$168
|
**
|
($419)
|
$331
|
**
|
Net (Loss) Income
as a % of Revenues
|
(39.7%)
|
8.3%
|
**
|
(24.3%)
|
8.3%
|
**
|
(Loss) Earnings
Per Share (Fully Diluted)
|
($2.46)
|
$1.61
|
**
|
($4.04)
|
$3.16
|
**
|
Adjusted (Loss)
Earnings Per Share (Fully Diluted)*
|
($2.28)
|
$1.71
|
**
|
($3.12)
|
$3.39
|
**
|
Fully Diluted
Weighted Avg Share Count
|
103.9
|
104.5
|
|
103.8
|
104.8
|
|
|
|
|
|
|
|
|
** Represents an amount
equal to or in excess of 100% or not meaningful.
|
"The dual challenges of the MAX grounding and COVID-19 continue
to have a significant negative impact on the global aviation
industry," said Tom Gentile, Spirit
AeroSystems President and Chief Executive Officer. "Spirit
production levels in the quarter fell 65% from last year and 51%
from the first quarter. We continue to adjust our cost base to
align with the lower levels of production and to preserve
liquidity. While the production outlook remains volatile, our
current projections demonstrate that we will maintain sufficient
liquidity for operations over the next twelve months. During this
slow period, we continue to make productivity improvements
throughout our production system and continue to win new work in an
effort to diversify our business so that we can emerge as a
stronger company once production rates on commercial aircraft
return to higher levels."
Revenue
Spirit's second quarter of 2020 revenue was $644.6 million, down from the same period of
2019, primarily due to the significantly lower 737 MAX production
resulting from the grounding of the program and the impacts of
COVID-19. Deliveries decreased to 159 shipsets during the second
quarter of 2020 compared to 449 shipsets in the same period of
2019, including Boeing 737 MAX deliveries of 19 shipsets compared
to 147 shipsets in the same period of the prior year.
Spirit's backlog at the end of the second quarter of 2020 was
approximately $41 billion, with work
packages on all commercial platforms in the Boeing and Airbus
backlog.
Earnings
Operating loss for the second quarter of 2020 was $(367.0) million, down compared to operating
income of $226.0 million in the same
period of 2019. Included in operating loss was excess capacity
costs of $82.8 million and abnormal
costs related to COVID-19 of $19.3
million, as well as forward loss charges of $(194.1) million, primarily driven by the lower
production rates announced by Boeing and Airbus on the 787 and A350
programs, including updated assumptions related to the duration of
reduced production rates, and $(37.7)
million of unfavorable cumulative catch-up adjustments in
the second quarter of 2020. In addition to the expenses described
above, Spirit recognized restructuring expenses of $6.3 million for cost-alignment and headcount
reductions, a non-cash expense of $14.7
million during the second quarter as a result of the
voluntary retirement program (VRP) offered during the first quarter
of 2020, and loss on disposal charges of $22.9 million related to certain long-lived
assets on the Boeing 787 and Airbus A350 programs.
Second quarter EPS was $(2.46),
compared to $1.61 in the same period
of 2019. Second quarter 2020 adjusted EPS* was $(2.28), excluding the impacts of planned
acquisitions, restructuring costs and the VRP offered during the
first quarter of 2020, compared to $1.71 in the same period of 2019, adjusted to
exclude the impact of the planned Asco acquisition and the VRP
offered during the second quarter of 2019. (Table 1)
Cash
Cash from operations in the second quarter of 2020 was
$(228) million, down from
$230 million in the same quarter last
year, primarily due to negative impacts of working capital
requirements and significantly lower production deliveries. Free
cash flow* in the second quarter of 2020 was $(249) million, down compared to $192 million in the same period of 2019. Cash
balance at the end of the quarter was $1.9
billion. (Table 2)
On July 31, 2020, Spirit entered
into the sixth amendment to its Second Amended and Restated Credit
Agreement. The primary purpose of this amendment was to provide
relief from the prior financial covenants due to the lower
production rates on the Boeing 737 MAX program.
* Non-GAAP financial measure, see Appendix for
reconciliation
Table 2.
Cash Flow and Liquidity (unaudited)
|
|
|
|
|
|
|
2nd
Quarter
|
|
Six
Months
|
|
($ in
millions)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Cash from
Operations
|
($228)
|
$230
|
**
|
($560)
|
$472
|
**
|
Purchases of
Property, Plant & Equipment
|
($20)
|
($37)
|
(46%)
|
($51)
|
($78)
|
(34%)
|
Free Cash
Flow*
|
($249)
|
$192
|
**
|
($611)
|
$394
|
**
|
|
|
|
|
|
|
|
|
|
|
|
July
2,
|
December
31,
|
|
Liquidity
|
|
|
|
2020
|
2019
|
|
Cash
|
|
|
|
$1,947
|
$2,351
|
|
Total
Debt
|
|
|
|
$3,403
|
$3,034
|
|
|
|
|
|
|
|
|
**
Represents an amount equal to or in excess of 100% or not
meaningful.
|
Subsequent Events
The second quarter 2020 financial results do not contemplate the
anticipated impacts of lower production rates by Boeing and Airbus
that have developed after the end of the second quarter. The
Company is currently evaluating the potential impacts to the Boeing
787 and Airbus A350 programs. Based on preliminary assessments, the
Company expects to incur incremental forward losses in the third
quarter of 2020 of approximately $25
to $35 million on the Boeing 787
program and $13 to $20 million on the Airbus A350 program. As a
result of the uncertainty that exists regarding customers' specific
production rates and duration for such rates, and the actions the
Company may take to recalibrate its cost structure in response to
our customers' decisions, the amount of forward losses recognized
in the third quarter of 2020 may be materially different than the
ranges provided.
Segment Results
Fuselage Systems
Fuselage Systems segment revenue in the second quarter of 2020
decreased 70 percent from the same period last year to $327 million, primarily due to lower production
volumes on the Boeing 737, 787 and Airbus A350 programs. Operating
margin for the second quarter of 2020 decreased to (76.9) percent,
compared to 12.4 percent during the same period of 2019. This
decrease was primarily due to forward losses recognized on the
Boeing 787 and Airbus A350 programs as well as lower profit
recognized on the Boeing 737 program due to excess capacity costs
of $50.6 million with significantly
less deliveries, restructuring expenses of $2.4 million for cost-alignment and headcount
reductions, abnormal costs related to COVID-19 of $11.2 million, and loss on disposal charges of
$22.5 million related to certain
long-lived assets on the Boeing 787 and Airbus A350 programs. In
the second quarter of 2020, the segment recorded pretax
$(31.1) million of unfavorable
cumulative catch-up adjustments and $(155.1)
million of net forward losses. In the second quarter of
2019, the segment recorded pretax $(8.3)
million of unfavorable cumulative catch-up adjustments and
$1.3 million of favorable changes in
estimates on forward loss programs.
Propulsion Systems
Propulsion Systems segment revenue in the second quarter of 2020
decreased 67 percent from the same period last year to $170 million, primarily due to lower production
volumes on the Boeing 737 program. Operating margin for the second
quarter of 2020 decreased to (10.2) percent, compared to 18.8
percent during the same period of 2019, primarily due to forward
losses recognized on the Boeing 787 program as well as lower margin
recognized on the Boeing 737 program due to excess capacity costs
of $17.5 million with significantly
less deliveries, restructuring expenses of $1.6 million for cost-alignment and headcount
reductions, and abnormal costs related to COVID-19 of $4.0 million. In the second quarter of 2020, the
segment recorded pretax $(5.1)
million of unfavorable cumulative catch-up adjustments and
$(16.2) million of net forward
losses. In the second quarter of 2019, the segment recorded pretax
$(6.6) million of unfavorable
cumulative catch-up adjustments and $0.4
million of favorable changes in estimates on forward loss
programs.
Wing Systems
Wing Systems segment revenue in the second quarter of 2020
decreased 69 percent from the same period last year to $123 million, primarily due to lower production
volumes on the Boeing 737 and Airbus A320 and A350 programs.
Operating margin for the second quarter of 2020 decreased to (34.7)
percent, compared to 14.4 percent during the same period of 2019,
primarily due to forward losses recognized on the Boeing 787
program as well as lower margin recognized on the Boeing 737
program due to excess capacity costs of $14.7 million with significantly less deliveries,
restructuring expenses of $2.3
million for cost-alignment and headcount reductions,
abnormal costs related to COVID-19 of $4.1
million. In the second quarter of 2020, the segment recorded
pretax $(1.6) million of unfavorable
cumulative catch-up adjustments and $(22.8)
million of net forward losses. In the second quarter of
2019, the segment recorded pretax $1.7
million of favorable cumulative catch-up adjustments and
$0.6 million of favorable changes in
estimates on forward loss programs.
Table 4.
Segment Reporting (unaudited)
|
|
|
|
2nd
Quarter
|
Six
Months
|
($ in
millions)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Segment
Revenues
|
|
|
|
|
|
|
Fuselage
Systems
|
$327.1
|
$1,096.8
|
(70.2%)
|
$878.6
|
$2,166.4
|
(59.4%)
|
Propulsion Systems
|
169.6
|
518.9
|
(67.3%)
|
394.8
|
1,004.6
|
(60.7%)
|
Wing
Systems
|
122.5
|
398.5
|
(69.3%)
|
413.9
|
806.4
|
(48.7%)
|
All
Other
|
25.4
|
1.9
|
**
|
34.6
|
6.5
|
**
|
Total Segment
Revenues
|
$644.6
|
$2,016.1
|
(68.0%)
|
$1,721.9
|
$3,983.9
|
(56.8%)
|
|
|
|
|
|
|
|
Segment (Loss)
Earnings from Operations
|
|
|
|
|
|
|
Fuselage
Systems
|
($251.5)
|
$135.8
|
**
|
($337.9)
|
$274.7
|
**
|
Propulsion Systems
|
(17.3)
|
97.7
|
**
|
(22.6)
|
193.2
|
**
|
Wing
Systems
|
(42.5)
|
57.4
|
**
|
(28.9)
|
123.2
|
**
|
All
Other
|
8.0
|
-
|
**
|
9.8
|
1.2
|
**
|
Total Segment
Operating (Loss) Earnings
|
($303.3)
|
$290.9
|
**
|
($379.6)
|
$592.3
|
**
|
|
|
|
|
|
|
|
Unallocated
Expense
|
|
|
|
|
|
|
SG&A
|
($49.0)
|
($56.4)
|
13.1%
|
($126.4)
|
($120.0)
|
(5.3%)
|
Research &
Development
|
(8.3)
|
(10.5)
|
21.0%
|
(20.6)
|
(23.4)
|
12.0%
|
Cost of
Sales
|
(6.4)
|
2.0
|
**
|
(7.9)
|
10.1
|
**
|
Total (Loss)
Earnings from Operations
|
($367.0)
|
$226.0
|
**
|
($534.5)
|
$459.0
|
**
|
|
|
|
|
|
|
|
Segment Operating
(Loss) Earnings as % of Revenues
|
|
|
|
|
|
|
Fuselage
Systems
|
(76.9%)
|
12.4%
|
**
|
(38.5%)
|
12.7%
|
**
|
Propulsion Systems
|
(10.2%)
|
18.8%
|
**
|
(5.7%)
|
19.2%
|
**
|
Wing
Systems
|
(34.7%)
|
14.4%
|
**
|
(7.0%)
|
15.3%
|
**
|
All
Other
|
31.5%
|
0.0%
|
**
|
28.3%
|
18.5%
|
**
|
Total Segment
Operating (Loss) Earnings as % of Revenues
|
(47.1%)
|
14.4%
|
**
|
(22.0%)
|
14.9%
|
**
|
|
|
|
|
|
|
|
Total Operating
(Loss) Earnings as % of Revenues
|
(56.9%)
|
11.2%
|
**
|
(31.0%)
|
11.5%
|
**
|
|
|
|
|
|
|
|
** Represents an amount
equal to or in excess of 100% or not meaningful.
|
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" that
may involve many risks and uncertainties. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as "aim," "anticipate," "believe,"
"could," "continue," "estimate," "expect," "goal," "forecast,"
"intend," "may," "might," "objective," "outlook," "plan,"
"predict," "project," "should," "target," "will," "would," and
other similar words, or phrases, or the negative thereof, unless
the context requires otherwise. 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 those reflected in such forward-looking statements
and that should be considered in evaluating our outlook include,
but are not limited to, the following:
1)
|
the timing and
conditions surrounding the return to service of the B737 MAX,
future demand for the aircraft, and any residual impacts of the
grounding on production rates for the aircraft;
|
2)
|
our reliance on
Boeing for a significant portion of our revenues;
|
3)
|
our ability to
continue to grow our business and execute our growth strategy
including our ability to enter into profitable supply arrangements
with additional customers;
|
4)
|
the business
condition and liquidity of Boeing and Airbus and their ability to
satisfy their contractual obligations to the Company;
|
5)
|
demand for our
products and services and the effect of economic or geopolitical
conditions, or other events, such as pandemics, in the industries
and markets in which we operate in the U.S. and
globally;
|
6)
|
the impact of the
COVID-19 pandemic on our business and operations, including on the
demand for our and our customers' products and services, on trade
and transport restrictions, on the global aerospace supply chain,
on our ability to retain the skilled work force necessary for
production and development and generally on our ability to
effectively manage the impacts of the COVID-19 pandemic on our
business operations;
|
7)
|
the certainty of our
backlog, including the ability of customers to cancel or delay
orders prior to shipment;
|
8)
|
our ability to
accurately estimate and manage performance, cost, margins, and
revenue under our contracts, and the potential for additional
forward losses on new and maturing programs;
|
9)
|
our ability and our
suppliers' ability to accommodate, and the cost of accommodating,
increases in the build rates of certain aircraft;
|
10)
|
competitive
conditions in the markets in which we operate, including
in-sourcing by commercial aerospace original equipment
manufacturers;
|
11)
|
our ability to
successfully negotiate, or re-negotiate, future pricing under our
supply agreements with Boeing, Airbus and other
customers;
|
12)
|
the success and
timely execution of key milestones, such as the receipt of
necessary regulatory approvals and satisfaction of closing
conditions, in our announced acquisitions of Asco and select
Bombardier assets, and our ability to effectively assess, manage,
close, and integrate such acquisitions along with others that we
pursue, and generate synergies and other cost savings therefrom,
while avoiding unexpected costs, charges, expenses, and adverse
changes to business relationships and business
disruptions;
|
13)
|
the possibility that
our cash flows may not be adequate for our additional capital
needs;
|
14)
|
our ability to avoid
or recover from cyber-based or other security attacks and other
operations disruptions;
|
15)
|
legislative or
regulatory actions, both domestic and foreign, impacting our
operations;
|
16)
|
the effect of changes
in tax laws and the Company's ability to accurately calculate and
estimate the effect of such changes;
|
17)
|
any reduction in our
credit ratings;
|
18)
|
our dependence on our
suppliers, as well as the cost and availability of raw materials
and purchased components;
|
19)
|
our ability to
recruit and retain a critical mass of highly skilled
employees;
|
20)
|
our relationships
with the unions representing many of our employees, including our
ability to avoid labor disputes and work stoppages with respect to
our union employees;
|
21)
|
spending by the U.S.
and other governments on defense;
|
22)
|
pension plan
assumptions and future contributions;
|
23)
|
the effectiveness of
our internal control over financial reporting; and any difficulties
or delays that could affect the Company's ability to effectively
implement the remediation plan, in whole or in part, to address the
material weakness identified in the Company's internal control over
financial reporting, as described in Item 9A. "Controls and
Procedures" of the Annual Report on Form 10-K for 2019;
|
24)
|
the outcome or impact
of ongoing or future litigation, claims, and regulatory actions,
including our exposure to potential product liability and warranty
claims;
|
25)
|
our ability to
continue selling certain receivables through our supplier financing
programs;
|
26)
|
our ability to access
the capital markets to fund our liquidity needs, and the costs and
terms of any additional financing;
|
27)
|
any regulatory or
legal action arising from the review of our accounting processes;
and
|
28)
|
the risks of doing
business internationally, including fluctuations in foreign
currency exchange rates, impositions of tariffs or embargoes, trade
restrictions, compliance with foreign laws, and domestic and
foreign government policies.
|
These factors are not exhaustive and it is not possible for us
to predict all factors that could cause actual results to differ
materially from those reflected in our forward-looking statements.
These factors speak only as of the date hereof, and new factors may
emerge or changes to the foregoing factors may occur that could
impact our business. As with any projection or forecast, these
statements are inherently susceptible to uncertainty and changes in
circumstances. Except to the extent required by law, we undertake
no obligation to, and expressly disclaim any obligation to,
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. You
should review carefully the section captioned "Risk Factors" in the
Company's Annual Report on Form 10-K and the Company's Quarterly
Reports on Form 10-Q for a more complete discussion of these and
other factors that may affect our business.
Spirit Shipset
Deliveries
|
(one shipset
equals one aircraft)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Six Months
|
|
|
2020
|
2019
|
|
2020
|
2019
|
B737
|
|
19
|
147
|
|
37
|
299
|
B747
|
|
1
|
2
|
|
3
|
3
|
B767
|
|
5
|
8
|
|
11
|
16
|
B777
|
|
7
|
16
|
|
16
|
29
|
B787
|
|
22
|
42
|
|
62
|
84
|
Total
Boeing
|
|
54
|
215
|
|
129
|
431
|
|
|
|
|
|
|
|
A220
|
|
8
|
10
|
|
23
|
18
|
A320
Family
|
|
69
|
172
|
|
257
|
350
|
A330
|
|
5
|
9
|
|
13
|
18
|
A350
|
|
13
|
30
|
|
39
|
58
|
A380
|
|
-
|
-
|
|
-
|
1
|
Total
Airbus
|
|
95
|
221
|
|
332
|
445
|
|
|
|
|
|
|
|
Business/Regional
Jet
|
|
10
|
13
|
|
22
|
26
|
|
|
|
|
|
|
|
Total
|
|
159
|
449
|
|
483
|
902
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Operations
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
|
July 2,
2020
|
|
June 27,
2019
|
|
July 2,
2020
|
|
June 27,
2019
|
|
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$644.6
|
|
$2,016.1
|
|
$1,721.9
|
|
$3,983.9
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
925.1
|
|
1,723.2
|
|
2,037.6
|
|
3,381.5
|
Selling, general and
administrative
|
|
49.0
|
|
56.4
|
|
126.4
|
|
120.0
|
Restructuring
costs
|
|
6.3
|
|
-
|
|
48.9
|
|
-
|
Research and
development
|
|
8.3
|
|
10.5
|
|
20.6
|
|
23.4
|
Loss on disposal of
assets
|
|
22.9
|
|
|
|
22.9
|
|
|
|
Total operating
costs and expenses
|
|
1,011.6
|
|
1,790.1
|
|
2,256.4
|
|
3,524.9
|
|
Operating (loss)
income
|
|
(367.0)
|
|
226.0
|
|
(534.5)
|
|
459.0
|
Interest expense and
financing fee amortization
|
|
(48.6)
|
|
(23.7)
|
|
(80.8)
|
|
(42.5)
|
Other (expense)
income, net
|
|
(6.4)
|
|
8.6
|
|
(55.4)
|
|
(2.4)
|
|
(Loss) income
before income taxes and equity in net (loss) income of
affiliate
|
|
(422.0)
|
|
210.9
|
|
(670.7)
|
|
414.1
|
Income tax benefit
(provision)
|
|
167.6
|
|
(42.9)
|
|
254.8
|
|
(83.0)
|
|
(Loss) income
before equity in net (loss) income of affiliate
|
|
(254.4)
|
|
168.0
|
|
(415.9)
|
|
331.1
|
Equity in net loss of
affiliate
|
|
(1.5)
|
|
-
|
|
(3.0)
|
|
-
|
|
Net (loss)
income
|
|
($255.9)
|
|
$168.0
|
|
($418.9)
|
|
$331.1
|
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
share
|
|
|
|
|
|
|
|
|
Basic
|
|
($2.46)
|
|
$1.62
|
|
($4.04)
|
|
$3.19
|
Shares
|
|
103.9
|
|
103.5
|
|
103.8
|
|
103.7
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
($2.46)
|
|
$1.61
|
|
($4.04)
|
|
$3.16
|
Shares
|
|
103.9
|
|
104.5
|
|
103.8
|
|
104.8
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$0.01
|
|
$0.12
|
|
$0.02
|
|
$0.24
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(unaudited)
|
|
|
July 2,
2020
|
|
December 31,
2019
|
|
|
($ in
millions)
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$1,947.1
|
|
$2,350.5
|
Restricted
cash
|
|
0.3
|
|
0.3
|
Accounts receivable,
net
|
|
306.0
|
|
546.4
|
Contract assets,
short-term
|
|
321.6
|
|
528.3
|
Inventory,
net
|
|
1,225.9
|
|
1,118.8
|
Other current
assets
|
|
99.3
|
|
98.7
|
Total current assets
|
|
3,900.2
|
|
4,643.0
|
Property, plant and
equipment, net
|
|
2,180.7
|
|
2,271.7
|
Intangible assets,
net
|
|
30.1
|
|
1.2
|
Goodwill
|
|
78.3
|
|
2.4
|
Right of use
assets
|
|
45.9
|
|
48.9
|
Contract assets,
long-term
|
|
4.9
|
|
6.4
|
Pension
assets
|
|
362.6
|
|
449.1
|
Deferred income
taxes
|
|
162.2
|
|
106.5
|
Other
assets
|
|
278.4
|
|
76.8
|
Total assets
|
|
$7,043.3
|
|
$7,606.0
|
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$512.0
|
|
$1,058.3
|
Accrued
expenses
|
|
245.4
|
|
240.2
|
Profit
sharing
|
|
24.1
|
|
84.5
|
Current portion of
long-term debt
|
|
352.8
|
|
50.2
|
Operating lease
liabilities, short-term
|
|
5.6
|
|
6.0
|
Advance payments,
short-term
|
|
16.2
|
|
21.6
|
Contract liabilities,
short-term
|
|
121.8
|
|
158.3
|
Forward loss
provision, short-term
|
|
108.8
|
|
83.9
|
Deferred revenue and
other deferred credits, short-term
|
|
13.0
|
|
14.8
|
Other current
liabilities
|
|
41.0
|
|
42.9
|
Total current liabilities
|
|
1,440.7
|
|
1,760.7
|
Long-term
debt
|
|
3,050.6
|
|
2,984.1
|
Operating lease
liabilities, long-term
|
|
40.4
|
|
43.0
|
Advance payments,
long-term
|
|
328.8
|
|
333.3
|
Pension/OPEB
obligation
|
|
48.1
|
|
35.7
|
Contract liabilities,
long-term
|
|
389.4
|
|
356.3
|
Forward loss
provision, long-term
|
|
287.5
|
|
163.5
|
Deferred revenue and
other deferred credits, long-term
|
|
37.7
|
|
34.4
|
Deferred grant income
liability - non-current
|
|
27.1
|
|
29.0
|
Deferred income
taxes
|
|
7.6
|
|
8.3
|
Other non-current
liabilities
|
|
115.9
|
|
95.8
|
Stockholders'
Equity
|
|
|
|
|
Common stock,
Class A par value $0.01, 200,000,000 shares authorized,
105,624,828 and 104,882,379 shares issued and outstanding,
respectively
|
|
1.1
|
|
1.1
|
Additional paid-in
capital
|
|
1,125.9
|
|
1,125.0
|
Accumulated other
comprehensive loss
|
|
(181.3)
|
|
(109.2)
|
Retained
earnings
|
|
2,780.0
|
|
3,201.3
|
Treasury stock, at
cost (41,523,470 shares each period, respectively)
|
|
(2,456.7)
|
|
(2,456.8)
|
Total stockholders' equity
|
|
1,269.0
|
|
1,761.4
|
Noncontrolling
interest
|
|
0.5
|
|
0.5
|
Total equity
|
|
1,269.5
|
|
1,761.9
|
Total liabilities and equity
|
|
$7,043.3
|
|
$7,606.0
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(unaudited)
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
July 2,
2020
|
|
June 27,
2019
|
|
|
($ in
millions)
|
Operating
activities
|
|
|
|
|
Net (loss)
income
|
|
($418.9)
|
|
$331.1
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities
|
|
|
Depreciation and
amortization expense
|
|
135.4
|
|
123.5
|
Amortization of deferred
financing fees
|
|
5.5
|
|
1.7
|
Accretion of customer supply
agreement
|
|
1.2
|
|
2.3
|
Employee stock compensation
expense
|
|
10.8
|
|
15.1
|
Loss from derivative
instruments
|
|
0.1
|
|
7.8
|
Gain from foreign currency
transactions
|
|
(3.1)
|
|
(0.1)
|
Loss (gain) on disposition
of assets
|
|
23.6
|
|
(0.2)
|
Deferred
taxes
|
|
(51.3)
|
|
24.5
|
Pension and other
post-retirement benefits, net
|
|
65.9
|
|
2.2
|
Grant liability
amortization
|
|
(2.8)
|
|
(11.4)
|
Equity in net loss of
affiliate
|
|
3.0
|
|
-
|
Forward loss
provision
|
|
149.0
|
|
(25.3)
|
Changes in assets and
liabilities
|
|
|
|
|
Accounts receivable,
net
|
|
244.4
|
|
(50.1)
|
Contract assets
|
|
209.7
|
|
(101.4)
|
Inventory, net
|
|
(115.4)
|
|
39.0
|
Accounts payable and accrued
liabilities
|
|
(551.8)
|
|
157.2
|
Profit sharing/deferred
compensation
|
|
(60.1)
|
|
(30.4)
|
Advance payments
|
|
(19.8)
|
|
(2.2)
|
Income taxes
receivable/payable
|
|
(211.8)
|
|
(9.6)
|
Contract
liabilities
|
|
(5.5)
|
|
(5.5)
|
Deferred revenue and other
deferred credits
|
|
3.0
|
|
9.0
|
Other
|
|
29.2
|
|
(5.5)
|
Net
cash (used in) provided by operating activities
|
|
($559.7)
|
|
$471.7
|
Investing
activities
|
|
|
|
|
Purchase of property, plant
and equipment
|
|
(51.2)
|
|
(77.9)
|
Other
|
|
2.7
|
|
0.1
|
Acquisition, net of cash
acquired
|
|
(117.9)
|
|
-
|
Net
cash used in investing activities
|
|
($166.4)
|
|
($77.8)
|
Financing
activities
|
|
|
|
|
Proceeds from issuance of
debt
|
|
-
|
|
250.0
|
Proceeds from issuance of
bonds
|
|
1,200.0
|
|
-
|
Proceeds from revolving
credit facility
|
|
-
|
|
100.0
|
Payment on revolving credit
facility
|
|
(800.0)
|
|
(100.0)
|
Customer
financing
|
|
10.0
|
|
-
|
Principal payments of
debt
|
|
(14.8)
|
|
(4.9)
|
Payments on term
loan
|
|
(11.4)
|
|
(2.6)
|
Taxes paid related to net
share settlement awards
|
|
(13.8)
|
|
(11.8)
|
Proceeds from issuance of
ESPP stock
|
|
1.3
|
|
1.3
|
Debt issuance and financing
costs
|
|
(24.5)
|
|
-
|
Purchase of treasury
stock
|
|
0.1
|
|
(75.0)
|
Dividends paid
|
|
(13.4)
|
|
(25.4)
|
Net
cash provided by financing activities
|
|
$333.5
|
|
$131.6
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
|
(7.7)
|
|
(1.5)
|
Net
(decrease) increase in cash, cash equivalents, and restricted
cash
|
|
($400.3)
|
|
$524.0
|
Cash, cash
equivalents, and restricted cash, beginning of the
period
|
|
2,367.2
|
|
794.1
|
Cash, cash
equivalents, and restricted cash, end of the period
|
|
$1,966.9
|
|
$1,318.1
|
|
|
|
|
|
Reconciliation of
Cash and Cash Equivalents and Restricted Cash:
|
|
July 2,
2020
|
|
June 27,
2019
|
Cash and cash
equivalents, beginning of the period
|
|
$2,350.5
|
|
$773.6
|
Restricted cash,
short-term, beginning of the period
|
|
0.3
|
|
0.3
|
Restricted cash,
long-term, beginning of the period
|
|
16.4
|
|
20.2
|
Cash, cash
equivalents, and restricted cash, beginning of the
period
|
|
$2,367.2
|
|
$794.1
|
|
|
|
|
|
Cash and cash
equivalents, end of the period
|
|
$1,947.1
|
|
$1,301.4
|
Restricted cash,
short-term, end of the period
|
|
$0.3
|
|
$0.3
|
Restricted cash,
long-term, end of the period
|
|
19.5
|
|
16.4
|
Cash, cash
equivalents, and restricted cash, end of the period
|
|
$1,966.9
|
|
$1,318.1
|
Appendix
In addition to reporting our financial information using U.S.
Generally Accepted Accounting Principles (GAAP), management
believes that certain non-GAAP measures (which are indicated by *
in this report) provide investors with important perspectives into
the company's ongoing business performance. The non-GAAP measures
we use in this report are (i) adjusted diluted earnings per share
and (ii) free cash flow, which are described further below. The
company does not intend for the information to be considered in
isolation or as a substitute for the related GAAP measures. Other
companies may define and calculate the measures differently than we
do, limiting the usefulness of the measures for comparison with
other companies.
Adjusted Diluted Earnings Per Share. To provide additional
transparency, we have disclosed non-GAAP adjusted diluted earnings
per share (Adjusted EPS). This metric excludes various items that
are not considered to be directly related to our operating
performance. Management uses Adjusted EPS as a measure of business
performance and we believe this information is useful in providing
period-to-period comparisons of our results. The most comparable
GAAP measure is diluted earnings per share.
Free Cash Flow. Free Cash Flow is defined as GAAP cash from
operating activities (generally referred to herein as "cash from
operations"), less capital expenditures for property, plant and
equipment. Management believes Free Cash Flow provides investors
with an important perspective on the cash available for
stockholders, debt repayments including capital leases, and
acquisitions after making the capital investments required to
support ongoing business operations and long term value creation.
Free Cash Flow does not represent the residual cash flow available
for discretionary expenditures as it excludes certain mandatory
expenditures. The most comparable GAAP measure is cash provided by
operating activities. Management uses Free Cash Flow as a measure
to assess both business performance and overall liquidity.
The tables below provide reconciliations between the GAAP and
non-GAAP measures.
Adjusted
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Six Months
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted (Loss)
Earnings Per Share
|
|
($2.46)
|
|
$1.61
|
|
($4.04)
|
|
$3.16
|
|
Costs Related to
Planned Acquisitions
|
|
0.06
|
a
|
(0.02)
|
b
|
0.13
|
a
|
0.11
|
c
|
Restructuring
Costs
|
|
0.04
|
d
|
-
|
|
0.29
|
d
|
-
|
|
Voluntary Retirement
Program
|
|
0.08
|
e
|
0.12
|
f
|
0.50
|
e
|
0.12
|
f
|
Adjusted Diluted
(Loss) Earnings Per Share
|
|
($2.28)
|
|
$1.71
|
|
($3.12)
|
|
$3.39
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares (in
millions)
|
|
103.9
|
|
104.5
|
|
103.8
|
|
104.8
|
|
|
|
|
|
|
|
|
|
|
|
a
Represents the three and six months ended Q2 2020 transaction costs
(included in SG&A)
|
|
|
|
|
|
|
|
|
|
|
|
b
Represents the three months ended Q2 2019 Asco acquisition impact
of $(0.02) per share:
- Loss related to foreign currency forward contract of $0.01
(included in Other expense)
- Gain related to foreign currency fluctuation on Euro account of
$(0.05) (included in Other expense)
- Transaction costs of $0.02 (included in SG&A)
|
|
|
|
|
|
|
|
|
|
|
c
Represents the six months ended Q2 2019 Asco acquisition
impact of $0.11 per share:
- Loss related to foreign currency forward contract of $0.12
(included in Other income)
- Gain related to foreign currency fluctuation on Euro account of
$(0.05) (included in Other income)
- Transaction costs of $0.04 (included in SG&A)
|
|
|
|
|
|
|
|
|
|
|
d
Represents the three and six months ended Q2 2020 restructuring
expenses for cost-alignment and headcount reductions (included
in Restructuring costs)
|
|
|
|
|
|
|
|
|
|
|
e
Represents the three and six months ended Q2 2020 retirement
incentive expenses resulting from the VRP offered during
the first quarter of 2020 (included in Other
expense)
|
|
|
|
|
|
|
|
|
|
|
f
Represents the three and six months ended Q2 2019 retirement
incentive expenses resulting from the VRP offered during the second
quarter of 2019 (included in Other expense)
|
Free Cash
Flow
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Six Months
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Cash from
Operations
|
($228)
|
|
$230
|
|
($560)
|
|
$472
|
Capital
Expenditures
|
(20)
|
|
(37)
|
|
(51)
|
|
(78)
|
Free Cash
Flow
|
($249)
|
|
$192
|
|
($611)
|
|
$394
|
View original
content:http://www.prnewswire.com/news-releases/spirit-aerosystems-reports-second-quarter-2020-results-301105470.html
SOURCE Spirit AeroSystems Holdings, Inc.