WICHITA, Kan., Nov. 3, 2020 /PRNewswire/ --
- Mutually terminated $420 million
acquisition of Asco in September
2020
- Repaid ~$430 million of term
loans in Q3 associated with the 2018 credit facility
- Raised $900 million of first lien
senior secured debt and terminated 2018 credit facility on
October 5, 2020
- Closed acquisition of select assets of Bombardier
aerostructures on October 30, 2020
for cash consideration to sellers of $275
million, down from $500
million
- Ended Q3 with a cash balance of $1.4
billion; Taking into account the $900
million capital raise less the payment of $275 million for the Bombardier acquisition, our
adjusted Q3 cash balance would have been $2.0 billion
Spirit AeroSystems Holdings, Inc. [NYSE: SPR] ("Spirit" or the
"Company") reported third quarter 2020 financial results.
Table 1.
Summary Financial Results (unaudited)
|
|
|
|
|
3rd
Quarter
|
|
Nine
Months
|
|
($ in millions,
except per share data)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Revenues
|
$806
|
$1,920
|
(58%)
|
$2,528
|
$5,904
|
(57%)
|
Operating (Loss)
Income
|
($177)
|
$206
|
**
|
($711)
|
$665
|
**
|
Operating (Loss)
Income as a % of Revenues
|
(21.9%)
|
10.7%
|
**
|
(28.1%)
|
11.3%
|
**
|
Net (Loss)
Income
|
($156)
|
$131
|
**
|
($574)
|
$462
|
**
|
Net (Loss) Income
as a % of Revenues
|
(19.3%)
|
6.8%
|
**
|
(22.7%)
|
7.8%
|
**
|
(Loss) Earnings
Per Share (Fully Diluted)
|
($1.50)
|
$1.26
|
**
|
($5.53)
|
$4.41
|
**
|
Adjusted (Loss)
Earnings Per Share (Fully Diluted)*
|
($1.34)
|
$1.38
|
**
|
($4.45)
|
$4.76
|
**
|
Fully Diluted
Weighted Avg Share Count
|
103.9
|
104.6
|
|
103.8
|
104.8
|
|
|
|
|
|
|
|
|
** Represents an amount
equal to or in excess of 100% or not meaningful.
|
"We have made substantial progress on stabilizing our liquidity
position and driving cost reduction actions to align with lower
levels of production resulting from the MAX grounding and COVID-19
pandemic," said Tom Gentile, Spirit
AeroSystems President and Chief Executive Officer. "Our recent
capital raise of $900 million, the
mutual termination of the Asco acquisition and the significant
purchase price reduction on the Bombardier acquisition improves our
cash position and enhances our ability to address future
challenges. The Bombardier acquisition also accelerates our
strategic transformation by securing a significant amount of Airbus
work, boosting our aftermarket business, and enhancing our
competitiveness with the addition of low-cost operations in
Morocco."
Bombardier Acquisition
On October 30, 2020, the Company closed the
acquisition of select Bombardier assets. Prior to the closing, on
October 26, 2020, Spirit, Bombardier,
Inc. and certain of their affiliates entered into an amendment to
the purchase agreement that reduced the net proceeds purchase price
payable to the sellers from $500
million to $275 million. As of
September 30, 2020, the net pension
liabilities of the Shorts Brothers plc pension scheme assumed were
approximately $300 million, which is
expected to be reduced after payment of a special contribution of
£100 million (approximately $130
million) upon the one year anniversary of closing.
Additionally, Spirit will assume liabilities under a repayable
investment agreement with the Department for Business, Energy and
Industrial Strategy of the Government of the United Kingdom of approximately $290 million, measured as of September 30, 2020. The total enterprise
valuation, including the cash purchase price and assumed
liabilities is $865 million, subject
to any required purchase accounting adjustments. Prior to the
amendment, the total enterprise valuation was $1,090 million.
Revenue
Spirit's third quarter of 2020 revenue was
$806 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 206 shipsets during
the third quarter of 2020 compared to 437 shipsets in the same
period of 2019, including Boeing 737 MAX deliveries of 15 shipsets
compared to 154 shipsets in the same period of the prior year.
Spirit's backlog at the end of the third quarter of 2020 was
approximately $40 billion, with work
packages on all commercial platforms in the Boeing and Airbus
backlog.
Earnings
Operating loss for the third quarter of 2020
was $(177) million, down compared to
operating income of $206 million in
the same period of 2019. Included in the 2020 operating loss were
excess capacity costs of $72.6
million, forward loss charges of $(128.4) million, primarily driven by the lower
production rates announced by Boeing and Airbus on the 787 and A350
programs, and restructuring expenses of $19.5 million for cost-alignment and headcount
reductions. In comparison, during the third quarter of 2019, Spirit
recorded $(28.8) million of net
forward loss charges.
Third quarter EPS was $(1.50),
compared to $1.26 in the same period
of 2019. Third quarter 2020 adjusted EPS* was $(1.34), excluding the impacts from the
Bombardier acquisition and now-terminated Asco acquisition,
restructuring costs and the voluntary retirement program ("VRP")
offered during the first quarter of 2020, compared to $1.38 in the same period of 2019, adjusted to
exclude the impact of the Asco acquisition and the VRP offered
during the second quarter of 2019. (Table 1)
Cash
Cash from operations in the third quarter of 2020
was $(53) million, down from
$255 million in the same quarter last
year, primarily due to negative impacts of working capital
requirements and significantly lower production deliveries,
partially offset by favorable cash tax. Additionally, cash from
operations in the third quarter of 2019 included a $123 million cash advance received as part of the
Memorandum of Agreement reached with Boeing in April 2019. Free cash flow* in the third quarter
of 2020 was $(72) million, down
compared to $214 million in the same
period of 2019. Cash balance at the end of the quarter was
$1.4 billion. (Table 2)
Cash from operations in the third quarter of 2020 improved
compared to $(228) million in
the second quarter of 2020. Additionally, free cash flow* in the
third quarter of 2020 improved compared to $(249) million in the second quarter of 2020.
These quarter-over-quarter improvements were due to the benefits of
the cost reduction actions taken throughout the year, decreases in
working capital requirements, and favorable cash tax.
On October 5, 2020 Spirit raised
$900 million of first lien senior
secured debt, including a $400
million senior secured term loan B credit facility and
$500 million of 5.500% senior secured
first lien notes due 2025. In connection with closing of the term
loan and notes offering, Spirit terminated its existing 2018
credit facility, including the revolver. Spirit plans to use the
net proceeds for general corporate purposes. The $900 million of senior secured debt is not
included in the third quarter 2020 ending cash or debt balances
because the funds were not received until after the quarter end
date. Repayment of the term loans under the
now-terminated 2018 credit facility was completed prior to the
end of the third quarter (however, the facility was not terminated
until October 5, 2020).
* Non-GAAP financial
measure, see Appendix for reconciliation
|
Table 2.
Cash Flow and Liquidity (unaudited)
|
|
|
|
|
|
|
3rd
Quarter
|
|
Nine
Months
|
|
($ in
millions)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Cash from
Operations
|
($53)
|
$255
|
**
|
($613)
|
$719
|
**
|
Purchases of
Property, Plant & Equipment
|
($19)
|
($41)
|
(53%)
|
($70)
|
($119)
|
(41%)
|
Free Cash
Flow*
|
($72)
|
$214
|
**
|
($683)
|
$600
|
**
|
|
|
|
|
|
|
|
|
|
|
|
October
1,
|
December
31,
|
|
Liquidity
|
|
|
|
2020
|
2019
|
|
Cash
|
|
|
|
$1,441
|
$2,351
|
|
Total
Debt
|
|
|
|
$2,995
|
$3,034
|
|
|
|
|
|
|
|
|
**
Represents an amount equal to or in excess of 100% or not
meaningful.
|
Segment Results
Fuselage Systems
Fuselage
Systems segment revenue in the third quarter of 2020 decreased 58
percent from the same period last year to $421 million, primarily due to lower production
volumes on the Boeing 737, 787 and Airbus A350 programs. Operating
margin for the third quarter of 2020 decreased to (23.0) percent,
compared to 10.5 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 $42.0 million with significantly
less deliveries, and restructuring expenses of $6.6 million for cost-alignment and headcount
reductions. In the third quarter of 2020, the segment recorded
pretax $8.8 million of favorable
cumulative catch-up adjustments and $(92.0)
million of net forward losses. In the third quarter of 2019,
the segment recorded pretax $(14.4)
million of unfavorable cumulative catch-up adjustments and
$(18.8) million of net forward
losses.
Propulsion Systems
Propulsion Systems segment revenue
in the third quarter of 2020 decreased 67 percent from the same
period last year to $171 million,
primarily due to lower production volumes on the Boeing 737
program. Operating margin for the third quarter of 2020 decreased
to (9.1) percent, compared to 21.4 percent during the same period
of 2019, primarily due to lower margin recognized on the Boeing 737
program due to excess capacity costs of $17.5 million with significantly less deliveries
and restructuring expenses of $3.8
million for cost-alignment and headcount reductions. In
the third quarter of 2020, the segment recorded pretax $(4.6) million of unfavorable cumulative catch-up
adjustments and $(14.9) million of
net forward losses. In the third quarter of 2019, the segment
recorded pretax $1.8 million of
favorable cumulative catch-up adjustments and $(4.0) million of net forward losses.
Wing Systems
Wing Systems segment revenue in the third
quarter of 2020 decreased 57 percent from the same period last year
to $168 million, primarily due to
lower production volumes on the Boeing 737 and Airbus A320 and A350
programs. Operating margin for the third quarter of 2020 decreased
to (13.8) percent, compared to 13.8 percent during the same period
of 2019, primarily due to forward losses recognized on the Boeing
787 and Airbus A350 programs as well as lower margin recognized on
the Boeing 737 program due to excess capacity costs of $13.1 million with significantly less deliveries
and restructuring expenses of $9.1
million for cost-alignment and headcount reductions. In the
third quarter of 2020, the segment recorded pretax $0.4 million of favorable cumulative catch-up
adjustments and $(21.5) million of
net forward losses. In the third quarter of 2019, the segment
recorded pretax $(0.4) million of
unfavorable cumulative catch-up adjustments and $(6.0) million of net forward losses.
Table 4.
Segment Reporting (unaudited)
|
|
|
|
3rd
Quarter
|
Nine
Months
|
($ in
millions)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Segment
Revenues
|
|
|
|
|
|
|
Fuselage
Systems
|
$421.1
|
$1,005.3
|
(58.1%)
|
$1,299.7
|
$3,171.7
|
(59.0%)
|
Propulsion Systems
|
170.8
|
520.9
|
(67.2%)
|
565.6
|
1,525.5
|
(62.9%)
|
Wing
Systems
|
168.3
|
391.0
|
(57.0%)
|
582.2
|
1,197.4
|
(51.4%)
|
All
Other
|
46.1
|
2.7
|
**
|
80.7
|
9.2
|
**
|
Total Segment
Revenues
|
$806.3
|
$1,919.9
|
(58.0%)
|
$2,528.2
|
$5,903.8
|
(57.2%)
|
|
|
|
|
|
|
|
Segment (Loss)
Earnings from Operations
|
|
|
|
|
|
|
Fuselage
Systems
|
($96.7)
|
$105.8
|
**
|
($434.6)
|
$380.5
|
**
|
Propulsion Systems
|
(15.6)
|
111.7
|
**
|
(38.2)
|
304.9
|
**
|
Wing
Systems
|
(23.2)
|
53.9
|
**
|
(52.1)
|
177.1
|
**
|
All
Other
|
19.1
|
1.3
|
**
|
28.9
|
2.5
|
**
|
Total Segment
Operating (Loss) Earnings
|
($116.4)
|
$272.7
|
**
|
($496.0)
|
$865.0
|
**
|
|
|
|
|
|
|
|
Unallocated
Expense
|
|
|
|
|
|
|
SG&A
|
($52.8)
|
($53.6)
|
1.5%
|
($179.2)
|
($173.6)
|
(3.2%)
|
Research &
Development
|
(7.5)
|
(12.6)
|
40.5%
|
(28.1)
|
(36.0)
|
21.9%
|
Cost of
Sales
|
(0.2)
|
(0.4)
|
50.0%
|
(8.1)
|
9.7
|
**
|
Total (Loss)
Earnings from Operations
|
($176.9)
|
$206.1
|
**
|
($711.4)
|
$665.1
|
**
|
|
|
|
|
|
|
|
Segment Operating
(Loss) Earnings as % of Revenues
|
|
|
|
|
|
|
Fuselage
Systems
|
(23.0%)
|
10.5%
|
**
|
(33.4%)
|
12.0%
|
**
|
Propulsion Systems
|
(9.1%)
|
21.4%
|
**
|
(6.8%)
|
20.0%
|
**
|
Wing
Systems
|
(13.8%)
|
13.8%
|
**
|
(8.9%)
|
14.8%
|
**
|
All
Other
|
41.4%
|
48.1%
|
**
|
35.8%
|
27.2%
|
**
|
Total Segment
Operating (Loss) Earnings as % of Revenues
|
(14.4%)
|
14.2%
|
**
|
(19.6%)
|
14.7%
|
**
|
|
|
|
|
|
|
|
Total Operating
(Loss) Earnings as % of Revenues
|
(21.9%)
|
10.7%
|
**
|
(28.1%)
|
11.3%
|
**
|
|
|
|
|
|
|
|
** 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:
- 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;
- our reliance on Boeing for a significant portion of our
revenues;
- 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;
- the business condition and liquidity of Boeing, Airbus and
other customers and their ability to satisfy their contractual
obligations to the Company;
- 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;
- 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;
- the certainty of our backlog, including the ability of
customers to cancel or delay orders prior to shipment;
- 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;
- our ability and our suppliers' ability to accommodate, and the
cost of accommodating, changes in the build rates of certain
aircraft;
- competitive conditions in the markets in which we operate,
including in-sourcing by commercial aerospace original equipment
manufacturers;
- our ability to successfully negotiate, or re-negotiate, future
pricing under our supply agreements with Boeing, Airbus and other
customers;
- our ability to effectively assess, manage, and integrate the
acquisition of select assets of Bombardier along with other
acquisitions 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;
- the possibility that our cash flows may not be adequate for our
additional capital needs;
- our ability to avoid or recover from cyber-based or other
security attacks and other operations disruptions;
- legislative or regulatory actions, both domestic and foreign,
impacting our operations;
- the effect of changes in tax laws and rates including as a
result of the 2020 U.S. presidential election and our ability to
accurately calculate and estimate the effect of such changes;
- any reduction in our credit ratings;
- our dependence on our suppliers, as well as the cost and
availability of raw materials and purchased components;
- our ability to recruit and retain a critical mass of highly
skilled employees;
- 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;
- spending by the U.S. and other governments on defense;
- pension plan assumptions and future contributions;
- 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 the year ended December 31, 2019;
- the outcome or impact of ongoing or future litigation, claims,
and regulatory actions, including our exposure to potential product
liability and warranty claims;
- our ability to continue selling certain receivables through our
supplier financing programs;
- our ability to access the capital markets to fund our liquidity
needs, and the costs and terms of any additional financing;
- any regulatory or legal action arising from the review of our
accounting processes;
- potential impacts on the Company and the jurisdictions it
operates relating to the 2020 U.S. presidential election, including
potential changes to the Department of Defense budgets and
spending; and
- the risks of doing business internationally, including
fluctuations in foreign currency exchange rates, impositions of
tariffs or embargoes (including recent contemplated actions by the
World Trade Organization and any retaliatory actions from other
jurisdictions), 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3rd
Quarter
|
|
Nine
Months
|
|
|
2020
|
2019
|
|
2020
|
2019
|
B737
|
|
15
|
154
|
|
52
|
453
|
B747
|
|
1
|
2
|
|
4
|
5
|
B767
|
|
9
|
9
|
|
20
|
25
|
B777
|
|
14
|
15
|
|
30
|
44
|
B787
|
|
30
|
40
|
|
92
|
124
|
Total
Boeing
|
|
69
|
220
|
|
198
|
651
|
|
|
|
|
|
|
|
A220
|
|
9
|
8
|
|
32
|
26
|
A320
Family
|
|
108
|
160
|
|
365
|
510
|
A330
|
|
4
|
9
|
|
17
|
27
|
A350
|
|
12
|
23
|
|
51
|
81
|
A380
|
|
-
|
-
|
|
-
|
1
|
Total
Airbus
|
|
133
|
200
|
|
465
|
645
|
|
|
|
|
|
|
|
Business/Regional
Jet
|
|
4
|
17
|
|
26
|
43
|
|
|
|
|
|
|
|
Total
|
|
206
|
437
|
|
689
|
1,339
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Operations
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
|
October 1,
2020
|
|
September 26,
2019
|
|
October 1,
2020
|
|
September 26,
2019
|
|
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$806.3
|
|
$1,919.9
|
|
$2,528.2
|
|
$5,903.8
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
903.4
|
|
1,647.6
|
|
2,941.0
|
|
5,029.1
|
Selling, general and
administrative
|
|
52.8
|
|
53.6
|
|
179.2
|
|
173.6
|
Restructuring
costs
|
|
19.5
|
|
-
|
|
68.4
|
|
-
|
Research and
development
|
|
7.5
|
|
12.6
|
|
28.1
|
|
36.0
|
Loss on disposal of
assets
|
|
-
|
|
|
|
22.9
|
|
|
|
Total operating
costs and expenses
|
|
983.2
|
|
1,713.8
|
|
3,239.6
|
|
5,238.7
|
|
Operating (loss)
income
|
|
(176.9)
|
|
206.1
|
|
(711.4)
|
|
665.1
|
Interest expense and
financing fee amortization
|
|
(53.0)
|
|
(23.6)
|
|
(133.8)
|
|
(66.1)
|
Other (expense)
income, net
|
|
(10.0)
|
|
(9.5)
|
|
(65.4)
|
|
(11.9)
|
|
(Loss) income
before income taxes and
equity in net (loss) income of affiliate
|
|
(239.9)
|
|
173.0
|
|
(910.6)
|
|
587.1
|
Income tax benefit
(provision)
|
|
85.2
|
|
(41.7)
|
|
340.0
|
|
(124.7)
|
|
(Loss) income
before equity in net (loss) income of affiliate
|
|
(154.7)
|
|
131.3
|
|
(570.6)
|
|
462.4
|
Equity in net loss of
affiliate
|
|
(0.8)
|
|
-
|
|
(3.8)
|
|
-
|
|
Net (loss)
income
|
|
($155.5)
|
|
$131.3
|
|
($574.4)
|
|
$462.4
|
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
share
|
|
|
|
|
|
|
|
|
Basic
|
|
($1.50)
|
|
$1.27
|
|
($5.53)
|
|
$4.46
|
Shares
|
|
103.9
|
|
103.5
|
|
103.8
|
|
103.6
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
($1.50)
|
|
$1.26
|
|
($5.53)
|
|
$4.41
|
Shares
|
|
103.9
|
|
104.6
|
|
103.8
|
|
104.8
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$0.01
|
|
$0.12
|
|
$0.03
|
|
$0.36
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(unaudited)
|
|
|
October 1,
2020
|
|
December 31,
2019
|
|
|
($ in
millions)
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$1,441.3
|
|
$2,350.5
|
Restricted
cash
|
|
1.3
|
|
0.3
|
Accounts receivable,
net
|
|
388.8
|
|
546.4
|
Contract assets,
short-term
|
|
333.6
|
|
528.3
|
Inventory,
net
|
|
1,183.3
|
|
1,118.8
|
Other current
assets
|
|
259.6
|
|
98.7
|
Total current assets
|
|
3,607.9
|
|
4,643.0
|
Property, plant and
equipment, net
|
|
2,147.4
|
|
2,271.7
|
Intangible assets,
net
|
|
29.5
|
|
1.2
|
Goodwill
|
|
78.4
|
|
2.4
|
Right of use
assets
|
|
44.4
|
|
48.9
|
Contract assets,
long-term
|
|
4.1
|
|
6.4
|
Pension
assets
|
|
404.2
|
|
449.1
|
Deferred income
taxes
|
|
136.7
|
|
106.5
|
Other
assets
|
|
151.8
|
|
76.8
|
Total assets
|
|
$6,604.4
|
|
$7,606.0
|
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$483.1
|
|
$1,058.3
|
Accrued
expenses
|
|
289.8
|
|
240.2
|
Profit
sharing
|
|
38.1
|
|
84.5
|
Current portion of
long-term debt
|
|
335.5
|
|
50.2
|
Operating lease
liabilities, short-term
|
|
5.5
|
|
6.0
|
Advance payments,
short-term
|
|
20.1
|
|
21.6
|
Contract liabilities,
short-term
|
|
100.9
|
|
158.3
|
Forward loss
provision, short-term
|
|
169.9
|
|
83.9
|
Deferred revenue and
other deferred credits, short-term
|
|
15.7
|
|
14.8
|
Other current
liabilities
|
|
37.7
|
|
42.9
|
Total current liabilities
|
|
1,496.3
|
|
1,760.7
|
Long-term
debt
|
|
2,659.0
|
|
2,984.1
|
Operating lease
liabilities, long-term
|
|
39.1
|
|
43.0
|
Advance payments,
long-term
|
|
325.0
|
|
333.3
|
Pension/OPEB
obligation
|
|
47.0
|
|
35.7
|
Contract liabilities,
long-term
|
|
371.7
|
|
356.3
|
Forward loss
provision, long-term
|
|
303.8
|
|
163.5
|
Deferred revenue and
other deferred credits, long-term
|
|
33.6
|
|
34.4
|
Deferred grant income
liability - non-current
|
|
27.4
|
|
29.0
|
Deferred income
taxes
|
|
10.0
|
|
8.3
|
Other non-current
liabilities
|
|
119.5
|
|
95.8
|
Stockholders'
Equity
|
|
|
|
|
Common stock,
Class A par value $0.01, 200,000,000 shares
authorized,
105,660,882 and 104,882,379 shares issued and outstanding,
respectively
|
|
1.1
|
|
1.1
|
Additional paid-in
capital
|
|
1,133.2
|
|
1,125.0
|
Accumulated other
comprehensive loss
|
|
(129.6)
|
|
(109.2)
|
Retained
earnings
|
|
2,623.5
|
|
3,201.3
|
Treasury stock, at
cost (41,523,470 shares each period, respectively)
|
|
(2,456.7)
|
|
(2,456.8)
|
Total stockholders' equity
|
|
1,171.5
|
|
1,761.4
|
Noncontrolling
interest
|
|
0.5
|
|
0.5
|
Total equity
|
|
1,172.0
|
|
1,761.9
|
Total liabilities and equity
|
|
$6,604.4
|
|
$7,606.0
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(unaudited)
|
|
|
|
|
|
|
|
For the Nine
Months Ended
|
|
|
October 1,
2020
|
|
September 26,
2019
|
|
|
($ in
millions)
|
Operating
activities
|
|
|
|
|
Net (loss)
income
|
|
($574.4)
|
|
$462.4
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities
|
|
|
|
|
Depreciation and
amortization expense
|
|
202.5
|
|
187.0
|
Amortization of deferred
financing fees
|
|
12.6
|
|
2.6
|
Accretion of customer supply
agreement
|
|
1.6
|
|
3.3
|
Employee stock compensation
expense
|
|
17.1
|
|
22.6
|
Loss from derivative
instruments
|
|
-
|
|
8.1
|
(Gain) loss from foreign
currency transactions
|
|
(1.1)
|
|
17.2
|
Loss on disposition of
assets
|
|
24.9
|
|
0.7
|
Deferred
taxes
|
|
(34.3)
|
|
29.4
|
Pension and other
post-retirement benefits, net
|
|
57.2
|
|
(9.7)
|
Grant income
|
|
(3.2)
|
|
(13.8)
|
Equity in net loss of
affiliate
|
|
3.8
|
|
-
|
Forward loss
provision
|
|
226.3
|
|
(7.5)
|
Changes in assets and
liabilities
|
|
|
|
|
Accounts receivable,
net
|
|
169.3
|
|
(167.8)
|
Contract assets
|
|
200.4
|
|
(67.5)
|
Inventory, net
|
|
(66.1)
|
|
(3.3)
|
Accounts payable and accrued
liabilities
|
|
(530.6)
|
|
149.3
|
Profit sharing/deferred
compensation
|
|
(46.2)
|
|
(12.2)
|
Advance payments
|
|
(19.9)
|
|
120.8
|
Income taxes
receivable/payable
|
|
(252.6)
|
|
4.9
|
Contract
liabilities
|
|
(44.1)
|
|
(16.7)
|
Deferred revenue and other
deferred credits
|
|
2.0
|
|
6.2
|
Other
|
|
42.0
|
|
2.6
|
Net
cash (used in) provided by operating activities
|
|
($612.8)
|
|
$718.6
|
Investing
activities
|
|
|
|
|
Purchase of property, plant
and equipment
|
|
(70.4)
|
|
(118.8)
|
Other
|
|
4.9
|
|
0.1
|
Acquisition, net of cash
acquired
|
|
(117.9)
|
|
-
|
Net
cash used in investing activities
|
|
($183.4)
|
|
($118.7)
|
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
|
|
(22.7)
|
|
(8.5)
|
Payments on term
loans
|
|
(439.7)
|
|
(5.2)
|
Taxes paid related to net
share settlement awards
|
|
(14.0)
|
|
(12.1)
|
Proceeds from issuance of
ESPP stock
|
|
2.6
|
|
1.3
|
Debt issuance and financing
costs
|
|
(27.6)
|
|
-
|
Executive stock
investments
|
|
0.1
|
|
-
|
Purchase of treasury
stock
|
|
0.1
|
|
(75.0)
|
Dividends paid
|
|
(14.4)
|
|
(37.8)
|
Other
|
|
-
|
|
0.8
|
Net
cash (used in) provided by financing activities
|
|
($105.6)
|
|
$113.5
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
|
(3.3)
|
|
(13.5)
|
Net
(decrease) increase in cash, cash equivalents, and restricted
cash
|
|
($905.1)
|
|
$699.9
|
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
|
|
$1,462.1
|
|
$1,494.0
|
|
|
|
|
|
Reconciliation of
Cash and Cash Equivalents and Restricted Cash:
|
|
October 1,
2020
|
|
September 26,
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
|
|
$1,441.3
|
|
$1,477.3
|
Restricted cash,
short-term, end of the period
|
|
$1.3
|
|
$0.3
|
Restricted cash,
long-term, end of the period
|
|
19.5
|
|
16.4
|
Cash, cash
equivalents, and restricted cash, end of the period
|
|
$1,462.1
|
|
$1,494.0
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3rd
Quarter
|
|
Nine
Months
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted (Loss)
Earnings Per Share
|
|
($1.50)
|
|
$1.26
|
|
($5.53)
|
|
$4.41
|
|
Costs Related to
Planned Acquisitions
|
|
0.02
|
a
|
0.16
|
b
|
0.15
|
a
|
0.28
|
c
|
Restructuring
Costs
|
|
0.12
|
d
|
-
|
|
0.41
|
d
|
-
|
|
Voluntary Retirement
Program
|
|
0.02
|
e
|
(0.04)
|
f
|
0.52
|
e
|
0.07
|
f
|
Adjusted Diluted
(Loss) Earnings Per Share
|
|
($1.34)
|
|
$1.38
|
|
($4.45)
|
|
$4.76
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares (in
millions)
|
|
103.9
|
|
104.6
|
|
103.8
|
|
104.8
|
|
|
|
a
|
Represents the three
and nine months ended Q3 2020 transaction costs (included in
SG&A)
|
|
|
b
|
Represents the three
months ended Q3 2019 Asco acquisition impact of $0.16 per
share:
|
|
- Loss
related to foreign currency fluctuation on Euro account of $0.14
(included in Other expense)
- Transaction costs of $0.02 (included in SG&A)
|
|
|
c
|
Represents the nine
months ended Q3 2019 Asco acquisition impact of $0.28 per
share:
|
|
- Loss
related to foreign currency forward contract of $0.13 (included in
Other expense)
- Loss related to foreign currency fluctuation on Euro account of
$0.09 (included in Other expense)
- Transaction costs of $0.06 (included in SG&A)
|
|
|
d
|
Represents the three
and nine months ended Q3 2020 restructuring expenses for
cost-alignment and headcount reductions (included in
Restructuring costs)
|
|
|
e
|
Represents the three
and nine months ended Q3 2020 retirement incentive expenses
resulting from the VRP offered during the first quarter of 2020
(included in Other expense)
|
|
|
f
|
Represents the
three and nine months ended Q3 2019 retirement incentive expenses
resulting from the VRP offered during the second quarter of 2019
(included in Other expense)
|
Free Cash
Flow
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
Nine
Months
|
|
2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Cash from
Operations
|
($228)
|
|
($53)
|
|
$255
|
|
($613)
|
|
$719
|
Capital
Expenditures
|
(20)
|
|
(19)
|
|
(41)
|
|
(70)
|
|
(119)
|
Free Cash
Flow
|
($249)
|
|
($72)
|
|
$214
|
|
($683)
|
|
$600
|
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SOURCE Spirit AeroSystems Holdings, Inc.