WICHITA, Kan., Aug. 2, 2017 /PRNewswire/ -- Spirit
AeroSystems Holdings, Inc. [NYSE: SPR] reported second quarter 2017
financial results driven by strong operating performance.
Table 1.
Summary Financial Results (unaudited)
|
|
|
|
2nd
Quarter
|
|
Six
Months
|
|
($ in millions,
except per share data)
|
2017
|
2016
|
Change
|
2017
|
2016
|
Change
|
|
|
|
|
|
|
|
Revenues
|
$1,826
|
$1,830
|
0%
|
$3,520
|
$3,512
|
0%
|
Operating
(Loss)
Income
|
($83)
|
$83
|
(199%)
|
$131
|
$350
|
(63%)
|
Operating
(Loss) Income
as a % of Revenues
|
(4.5%)
|
4.6%
|
(910) BPS
|
3.7%
|
10.0%
|
(630) BPS
|
Net (Loss)
Income
|
($57)
|
$45
|
(227%)
|
$85
|
$216
|
(61%)
|
Net (Loss) Income as a % of
Revenues
|
(3.1%)
|
2.4%
|
(550) BPS
|
2.4%
|
6.2%
|
(380) BPS
|
Earnings Per Share
(Fully Diluted)
|
($0.48)
|
$0.35
|
(237%)
|
$0.71
|
$1.65
|
(57%)
|
Adjusted Earnings
Per Share (Fully Diluted)*
|
$1.57
|
$1.21
|
30%
|
$2.76
|
$2.51
|
10%
|
Fully Diluted
Weighted Avg Share Count
|
118.2
|
129.3
|
|
119.8
|
130.9
|
|
|
|
|
|
|
|
|
"We delivered a record 424 shipsets compared to 408 shipsets in
the same period last year, primarily driven by the ramp-up in
production rates on the 737, the A320, and the A350 programs; our supply chain cost
reduction initiatives are gaining traction; and we are finally
fully-recovered in Kinston and back to our normal mode of sea
transportation, following Hurricane Matthew last October," Spirit
President and CEO Tom Gentile
said.
"In addition, Spirit recently made several announcements
regarding the growth of our global fabrication business. We
announced the creation of a new five-axis fabrication center of
excellence and the expansion of our chemical processing
capabilities on our Wichita,
Kansas, campus. We also announced the creation of a new
three- and four-axis fabrication center of excellence in
McAlester, Oklahoma, and the
expansion of our manufacturing facilities in Malaysia," Gentile added. "All of these
initiatives solidify Spirit as a world leader in the fabrication of
detailed parts for the commercial and military aerospace
industry."
"Importantly, we are pleased to announce the exciting news that
we have reached an agreement with our largest customer, Boeing,
into 2022 on open commercial issues related to a range of programs,
including the 737 MAX and the 787. We have signed an MOU reflecting
our agreement and will now be working on formal amendments to the
program agreements," Gentile said. "Overall, by addressing a
range of programs and not just 787 pricing, the MOU reduces much
uncertainty that has long existed in the relationship with our
largest customer and preserves our ability to meet our long-term
cash flow goals," Gentile said.
The MOU requires that the parties negotiate and execute
Definitive Documentation, as defined in the MOU, in the third
quarter of 2017. Spirit management believes the agreement will be
completed and executed in the third quarter; however, there can be
no assurance that Definitive Documentation will ultimately be
executed and that Spirit's dispute with Boeing will be resolved
pursuant to the MOU.
"One of the biggest challenges in our discussions with Boeing
has been 787 pricing. As part of this new MOU with Boeing, we
are extending the block from 1003 units to 1300 units and
establishing a planning block through line unit 1405. Although the
787 contract had agreed price step-downs for the 787-8, we had
never agreed with Boeing on pricing for the 787-9 and -10. We have
now agreed on modified step-down pricing for the 787-9 and -10
through line unit 1405. As a result of the MOU, we have recognized
a reach-forward loss of $353 million
on the 787 program," Gentile remarked. "The agreement also includes
a commitment from both organizations to work together on joint cost
reduction efforts with financial incentives for both
parties," Gentile added.
"In addition to addressing open commercial issues, Spirit has
also agreed with Boeing that we will jointly study advanced
aerostructures and manufacturing processes," Gentile said.
Revenue
Spirit's second quarter 2017 revenue was $1.8 billion, consistent with the same period of
2016, primarily driven by higher production deliveries on the
Boeing 737 and Airbus A350 XWB programs, offset by lower production
deliveries on the Boeing 777 program and decreased Global Customer
Support & Services (GCS&S) activity. (Table 1)
Spirit's backlog at the end of the second quarter of 2017 was
approximately $46 billion, with work
packages on all commercial platforms in the Boeing and Airbus
backlog.
Earnings
Operating income for the second quarter of 2017 was $(82.8) million, down compared to $83.3 million in the same period of 2016,
reflecting the impact of the MOU with Boeing, partially offset by
increased sales on higher-profit programs and the reversal of a
litigation reserve, as well as the absence of the charges
recognized during the second quarter of 2016 associated with the
Airbus settlement. Second quarter reported EPS was
$(0.48), or $1.57* per share adjusted to exclude the impact
of the MOU with Boeing, compared to $0.35 EPS (or $1.21* adjusted) in the same period of 2016.
(Table 1)
"Given the strong performance in the first half of 2017, we are
raising our full-year adjusted earnings per share* guidance by
$0.40 to a new range of $5.00 - $5.25 per
share from the previous guidance range of $4.60 - $4.85," Gentile said.
Cash
Free cash flow* in the second quarter of 2017 was $175 million, up 9 percent compared to free cash
flow of $161 million in the same
quarter last year. (Table 2)
"Additionally, we are raising our free cash flow* guidance to
$500-$550 from the previous range of
$450-$500," Gentile added.
Cash balance at the end of the quarter was $697 million. The company's $650 million revolving credit facility remained
undrawn at the end of the quarter.
"In the second quarter, we repurchased 2.2 million shares for $126
million. Year-to-date we have deployed a total of
$208 million and repurchased 3.6
million shares under the existing authorization of up to
$600 million," Gentile concluded.
"The Board has authorized an increase in our share repurchase
program of $400 million, resulting in
a total program authorization of $1
billion. With the shares repurchased in the first half of
2017, we have approximately $800
million of this authorization remaining."
Table 2.
Cash Flow and Liquidity (unaudited)
|
|
|
|
|
2nd
Quarter
|
Six
Months
|
($ in
millions)
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Cash from
Operations
|
$222
|
$215
|
$334
|
$309
|
Purchases of
Property, Plant & Equipment
|
($47)
|
($54)
|
($88)
|
($105)
|
Free Cash
Flow*
|
$175
|
$161
|
$246
|
$204
|
Adjusted Free Cash
Flow*
|
$175
|
$161
|
$246
|
$161
|
|
|
|
|
|
|
|
|
June
29,
|
December
31,
|
Liquidity
|
|
|
2017
|
2016
|
Cash
|
|
|
$697
|
$698
|
Total
Debt
|
|
|
$1,087
|
$1,087
|
|
|
|
|
|
Financial Outlook and Risk to Future Financial
Results
|
2017
Guidance
|
Table 3.
Financial Outlook Updated August 2, 2017
|
Prior
|
|
New
|
|
|
|
|
Revenues
|
$6.8 - $6.9
billion
|
|
$6.8 - $6.9
billion
|
|
|
|
|
Earnings Per Share (Fully
Diluted)
|
$4.60 -
$4.85
|
|
$2.95 -
$3.20
|
|
|
|
|
Adjusted Earnings Per Share
(Fully Diluted)*
|
$4.60 -
$4.85
|
|
$5.00 -
$5.25
|
|
|
|
|
Effective Tax
Rate
|
31 -
32%
|
|
~29%
|
|
|
|
|
Free Cash
Flow*
|
$450 - $500
million
|
|
$500 - $550
million
|
|
|
|
|
Risks applicable to our financial guidance are described more
fully in the Cautionary Statement Regarding Forward-Looking
Statements in this release.
Segment Results
Fuselage Systems
Fuselage Systems segment revenue in the second quarter of 2017
increased by 2 percent from the same period last year to
$938 million, primarily due to higher
production deliveries on the Boeing 737 and increased
defense-related activity, partially offset by lower production
deliveries on the Boeing 777 program and lower GCS&S activity.
Operating margin for the second quarter of 2017 decreased to (8.5)
percent, compared to 2.3 percent during the same period of 2016,
primarily due to the impact from the MOU with Boeing. Additionally,
the second quarter 2016 operating margin was impacted by the
forward loss charge recognized on the Airbus A350 XWB program
during the second quarter of 2016, which resulted from the Airbus
settlement. In the second quarter of 2017, the segment
recorded pretax $0.7 million of
favorable cumulative catch-up adjustments and net forward losses of
$(231.7) million.
Propulsion Systems
Propulsion Systems segment revenue in the second quarter of 2017
decreased 9 percent from the same period last year to $437 million, primarily driven by lower
production deliveries on the Boeing 777 program, lower revenue
recognized on the Boeing 787 program, and decreased GCS&S
activity, partially offset by higher production deliveries on the
Boeing 737. Operating margin for the second quarter of 2017 was 9.4
percent, compared to 15.4 percent during the same period of 2016,
primarily driven by the impact from the MOU with Boeing. In the
second quarter of 2017, the segment recorded pretax $6.1 million of favorable cumulative catch-up
adjustments on mature programs and net forward losses of
$(48.0) million.
Wing Systems
Wing Systems segment revenue in the second quarter of 2017
increased by 6 percent from the same period last year to
$451 million, primarily due to higher
production deliveries on the Airbus A350 XWB and A320, as well as
higher revenue recognized on the Boeing 787 program, partially
offset by the absence of one-time claim settlements with customers
that took place in the second quarter of 2016. Operating margin for
the second quarter of 2017 decreased to 6.8 percent, compared to
15.3 percent during the same period of 2016, primarily due to the
MOU with Boeing. In the second quarter of 2017, the segment
recorded pretax $17.5 million of
favorable cumulative catch-up adjustments primarily on mature
programs and net forward losses of $(73.8)
million.
Table 4.
Segment Reporting (unaudited)
|
|
|
|
2nd
Quarter
|
Six
Months
|
($ in
millions)
|
2017
|
2016
|
Change
|
2017
|
2016
|
Change
|
|
|
|
|
|
|
|
Segment
Revenues
|
|
|
|
|
|
|
Fuselage
Systems(1)
|
$938.2
|
$923.6
|
1.6%
|
$1,855.1
|
$1,799.4
|
3.1%
|
Propulsion Systems
|
436.5
|
481.7
|
(9.4%)
|
842.8
|
920.3
|
(8.4%)
|
Wing
Systems
|
450.5
|
424.2
|
6.2%
|
819.5
|
784.7
|
4.4%
|
All
Other(1)
|
0.9
|
0.4
|
**
|
2.8
|
7.1
|
**
|
Total Segment
Revenues
|
$1,826.1
|
$1,829.9
|
(0.2%)
|
$3,520.2
|
$3,511.5
|
0.2%
|
|
|
|
|
|
|
|
Segment Earnings
from Operations
|
|
|
|
|
|
|
Fuselage
Systems(1)
|
($80.2)
|
$21.0
|
**
|
$70.2
|
$198.7
|
(64.7%)
|
Propulsion Systems
|
41.0
|
74.3
|
(44.8%)
|
114.7
|
173.4
|
(33.9%)
|
Wing
Systems
|
30.8
|
64.8
|
(52.5%)
|
89.3
|
123.6
|
(27.8%)
|
All
Other(1)
|
(0.6)
|
(0.4)
|
(50.0%)
|
(0.7)
|
1.1
|
**
|
Total Segment
Operating Earnings
|
($9.0)
|
$159.7
|
**
|
$273.5
|
$496.8
|
(44.9%)
|
|
|
|
|
|
|
|
Unallocated
Expense
|
|
|
|
|
|
|
Corporate
SG&A
|
($46.1)
|
($70.2)
|
34.3%
|
($98.0)
|
($120.2)
|
18.5%
|
Impact of Severe
Weather Event
|
(9.1)
|
-
|
**
|
(19.9)
|
-
|
**
|
Research &
Development
|
(6.7)
|
(4.4)
|
(52.3%)
|
(11.7)
|
(10.5)
|
(11.4%)
|
Cost of
Sales
|
(11.9)
|
(1.8)
|
**
|
(13.1)
|
(16.3)
|
19.6%
|
Total Earnings
from Operations
|
($82.8)
|
$83.3
|
**
|
$130.8
|
$349.8
|
(62.6%)
|
|
|
|
|
|
|
|
Segment Operating
Earnings as % of Revenues
|
|
|
|
|
|
|
Fuselage
Systems
|
(8.5%)
|
2.3%
|
**
|
3.8%
|
11.0%
|
(720)
BPS
|
Propulsion Systems
|
9.4%
|
15.4%
|
(600)
BPS
|
13.6%
|
18.8%
|
(520)
BPS
|
Wing
Systems
|
6.8%
|
15.3%
|
(850)
BPS
|
10.9%
|
15.8%
|
(490)
BPS
|
All
Other
|
**
|
**
|
|
**
|
**
|
|
Total Segment
Operating Earnings as % of Revenues
|
(0.5%)
|
8.7%
|
(920)
BPS
|
7.8%
|
14.1%
|
(630)
BPS
|
|
|
|
|
|
|
|
Total Operating
Earnings as % of Revenues
|
(4.5%)
|
4.6%
|
(910)
BPS
|
3.7%
|
10.0%
|
(630)
BPS
|
|
|
|
|
|
|
|
**
|
Represents an amount
equal to or in excess of 100% or not meaningful.
|
|
|
(1)
|
Includes a
reclassification of $8.2 million of revenue and $1.7 million of
operating income from the Other segment to the Fuselage segment for
the three months ended June 30, 2016, and $10.2 million of revenue
and $2.1 million of operating income from the Other segment to the
Fuselage segment for the six months ended June 30, 2016.
|
* Non-GAAP financial measure, see Appendix for
reconciliation
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" that
may involve many risks and uncertainties. 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 "aim," "anticipate,"
"believe," "could," "continue," "estimate," "expect," "goal,"
"forecast," "intend," "may," "might," "objective," "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) our ability to continue to grow our business
and execute our growth strategy, including the timing, execution,
and profitability of new and maturing programs; 2) our ability to
perform our obligations under our new and maturing commercial,
business aircraft and military development programs, and the
related recurring production; 3) our ability to accurately estimate
and manage performance, cost and revenue under our contracts,
including our ability to achieve certain cost reductions with
respect to the 787 program; 4) margin pressures and the potential
for additional forward losses on new and maturing programs; 5) our
ability to accommodate, and the cost of accommodating, announced
increases in the build rates of certain aircraft; 6) the effect on
aircraft demand and build rates of changing customer preferences
for business aircraft, including the effect of global economic
conditions on the business aircraft market and expanding conflicts
or political unrest in the Middle
East or Asia; 7) customer
cancellations or deferrals as a result of global economic
uncertainty or otherwise; 8) the effect of economic conditions in
the industries and markets in which we operate in the U.S. and
globally and any changes therein, including fluctuations in foreign
currency exchange rates; 9) the success and timely execution of key
milestones such as the receipt of necessary regulatory approvals
and customer adherence to their announced schedules; 10) our
ability to successfully negotiate, or re-negotiate, future pricing
under our supply agreements with Boeing and our other customers;
11) our ability to enter into profitable supply arrangements with
additional customers; 12) the ability of all parties to satisfy
their performance requirements under existing supply contracts with
our two major customers, Boeing and Airbus, and other customers,
and the risk of nonpayment by such customers; 13) any adverse
impact on Boeing's and Airbus' production of aircraft resulting
from cancellations, deferrals, or reduced orders by their customers
or from labor disputes or acts of terrorism; 14) any adverse impact
on the demand for air travel or our operations from the outbreak of
diseases or epidemic or pandemic outbreaks; 15) our ability to
avoid or recover from cyber-based or other security attacks,
information technology failures, or other disruptions; 16) returns
on pension plan assets and the impact of future discount rate
changes on pension obligations; 17) our ability to borrow
additional funds or refinance debt; 18) competition from commercial
aerospace original equipment manufacturers and other aerostructures
suppliers; 19) the effect of governmental laws, such as U.S. export
control laws and U.S. and foreign anti-bribery laws such as the
Foreign Corrupt Practices Act and the United Kingdom Bribery Act,
and environmental laws and agency regulations, both in the U.S. and
abroad; 20) the effect of potential changes in tax law, such as
those outlined in recent proposals on U.S. tax reform; 21) any
reduction in our credit ratings; 22) our dependence on our
suppliers, as well as the cost and availability of raw materials
and purchased components; 23) our ability to recruit and retain
highly-skilled employees and our relationships with the unions
representing many of our employees; 24) spending by the U.S. and
other governments on defense; 25) the possibility that our cash
flows and borrowing facility may not be adequate for our additional
capital needs or for payment of interest on, and principal of, our
indebtedness; 26) our exposure under our existing senior revolving
credit facility to higher interest payments should interest rates
increase substantially; 27) the effectiveness of any interest rate
hedging programs; 28) the effectiveness of our internal control
over financial reporting; 29) the outcome or impact of ongoing or
future litigation, claims, and regulatory actions; and 30) exposure
to potential product liability and warranty claims; and (31) our
ability to successfully negotiate and execute with Boeing,
Definitive Documentation, as defined in the MOU, to implement
the MOU in the third quarter of 2017. 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. Additional information concerning these
and other factors can be found in our filings with the Securities
and Exchange Commission, including our most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q.
Spirit Shipset
Deliveries
|
(one shipset
equals one aircraft)
|
|
|
|
2nd
Quarter
|
|
Six Months
|
|
|
2017
|
2016
|
|
2017
|
2016
|
B737
|
|
136
|
128
|
|
262
|
258
|
B747
|
|
2
|
2
|
|
3
|
5
|
B767
|
|
7
|
7
|
|
13
|
13
|
B777
|
|
19
|
25
|
|
40
|
51
|
B787
|
|
36
|
36
|
|
68
|
69
|
Total
Boeing
|
|
200
|
198
|
|
386
|
396
|
|
|
|
|
|
|
|
A320
Family
|
|
152
|
145
|
|
306
|
292
|
A330/340
|
|
19
|
17
|
|
39
|
33
|
A350
|
|
23
|
20
|
|
47
|
34
|
A380
|
|
4
|
6
|
|
8
|
13
|
Total
Airbus
|
|
198
|
188
|
|
400
|
372
|
|
|
|
|
|
|
|
Business/Regional
Jets
|
|
26
|
22
|
|
48
|
37
|
|
|
|
|
|
|
|
Total
|
|
424
|
408
|
|
834
|
805
|
|
|
|
|
|
|
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Operations
|
(unaudited)
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
June 29,
2017
|
|
June 30,
2016
|
|
June 29,
2017
|
|
June 30,
2016
|
|
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$1,826.1
|
|
$1,829.9
|
|
$3,520.2
|
|
$3,511.5
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
1,847.0
|
|
1,672.0
|
|
3,259.8
|
|
3,031.0
|
Selling, general and
administrative
|
46.1
|
|
70.2
|
|
98.0
|
|
120.2
|
Impact of severe
weather event
|
9.1
|
|
-
|
|
19.9
|
|
-
|
Research and
development
|
6.7
|
|
4.4
|
|
11.7
|
|
10.5
|
|
Total operating
costs and expenses
|
1,908.9
|
|
1,746.6
|
|
3,389.4
|
|
3,161.7
|
|
Operating (loss)
income
|
(82.8)
|
|
83.3
|
|
130.8
|
|
349.8
|
Interest expense and
financing fee amortization
|
(10.2)
|
|
(23.9)
|
|
(19.7)
|
|
(35.3)
|
Other income
(expense), net
|
1.2
|
|
(6.2)
|
|
2.7
|
|
(8.4)
|
|
(Loss) income
before income taxes and equity in net income of
affiliate
|
(91.8)
|
|
53.2
|
|
113.8
|
|
306.1
|
Income tax benefit
(provision)
|
35.0
|
|
(8.6)
|
|
(29.0)
|
|
(90.5)
|
|
(Loss) income
before equity in net income of affiliate
|
(56.8)
|
|
44.6
|
|
84.8
|
|
215.6
|
Equity in net income
of affiliate
|
-
|
|
0.2
|
|
0.1
|
|
0.8
|
|
Net (loss)
income
|
($56.8)
|
|
$44.8
|
|
$84.9
|
|
$216.4
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share
|
|
|
|
|
|
|
|
Basic
|
($0.48)
|
|
$0.35
|
|
$0.71
|
|
$1.66
|
Shares
|
118.2
|
|
128.6
|
|
118.8
|
|
130.1
|
|
|
|
|
|
|
|
|
|
Diluted
|
($0.48)
|
|
$0.35
|
|
$0.71
|
|
$1.65
|
Shares
|
118.2
|
|
129.3
|
|
119.8
|
|
130.9
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.10
|
|
-
|
|
$0.20
|
|
-
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(unaudited)
|
|
June 29,
2017
|
|
December 31,
2016
|
|
($ in
millions)
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$696.9
|
|
$697.7
|
Restricted
cash
|
4.4
|
|
-
|
Accounts receivable,
net
|
824.3
|
|
660.5
|
Inventory,
net
|
1,325.7
|
|
1,515.3
|
Other current
assets
|
106.5
|
|
36.9
|
Total current assets
|
2,957.8
|
|
2,910.4
|
Property, plant and
equipment, net
|
1,991.4
|
|
1,991.6
|
Pension
assets
|
300.1
|
|
282.3
|
Other
assets
|
213.2
|
|
220.9
|
Total assets
|
$5,462.5
|
|
$5,405.2
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$726.0
|
|
$579.7
|
Accrued
expenses
|
246.5
|
|
216.2
|
Profit
sharing
|
41.3
|
|
101.4
|
Current portion of
long-term debt
|
26.6
|
|
26.7
|
Advance payments,
short-term
|
153.9
|
|
199.3
|
Deferred revenue,
short-term
|
73.9
|
|
312.1
|
Deferred grant income
liability - current
|
20.3
|
|
14.4
|
Other current
liabilities
|
549.2
|
|
94.4
|
Total current liabilities
|
1,837.7
|
|
1,544.2
|
Long-term
debt
|
1,060.6
|
|
1,060.0
|
Advance payments,
long-term
|
280.8
|
|
342.0
|
Pension/OPEB
obligation
|
41.6
|
|
43.9
|
Deferred revenue and
other deferred credits
|
114.6
|
|
146.8
|
Deferred grant income
liability - non-current
|
49.8
|
|
63.4
|
Other
liabilities
|
265.6
|
|
276.1
|
Equity
|
|
|
|
Preferred stock, par
value $0.01, 10,000,000 shares authorized, no shares
issued
|
-
|
|
-
|
Common stock,
Class A par value $0.01, 200,000,000 shares authorized,
118,346,113 and 121,642,556 shares issued and outstanding,
respectively
|
1.2
|
|
1.2
|
Additional paid-in
capital
|
1,076.8
|
|
1,078.9
|
Accumulated other
comprehensive loss
|
(167.1)
|
|
(186.9)
|
Retained
earnings
|
2,186.8
|
|
2,113.9
|
Treasury stock, at
cost (27,580,982 and 9,691,865 shares, respectively)
|
(1,286.4)
|
|
(1,078.8)
|
Total shareholders' equity
|
1,811.3
|
|
1,928.3
|
Noncontrolling
interest
|
0.5
|
|
0.5
|
Total equity
|
1,811.8
|
|
1,928.8
|
Total liabilities and equity
|
$5,462.5
|
|
$5,405.2
|
|
|
|
|
Spirit AeroSystems
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(unaudited)
|
|
|
|
|
|
For the Six Months
Ended
|
|
June 29,
2017
|
|
June 30,
2016
|
|
($ in
millions)
|
Operating
activities
|
|
|
|
Net income
|
$84.9
|
|
$216.4
|
Adjustments to
reconcile net income to net cash provided by operating
activities
|
|
|
|
Depreciation
expense
|
105.5
|
|
98.9
|
Amortization
expense
|
-
|
|
0.1
|
Amortization of deferred
financing fees
|
1.7
|
|
14.7
|
Accretion of customer supply
agreement
|
5.1
|
|
2.4
|
Employee stock compensation
expense
|
11.0
|
|
28.9
|
Loss from interest rate
swap
|
1.5
|
|
-
|
(Gain) loss from foreign
currency transactions
|
(3.4)
|
|
11.2
|
Loss on impairment and
disposition of assets
|
6.5
|
|
3.1
|
Deferred
taxes
|
3.0
|
|
25.4
|
Pension and other
post-retirement benefits, net
|
(21.7)
|
|
0.8
|
Grant liability
amortization
|
(8.8)
|
|
(5.4)
|
Equity in net income of
affiliate
|
(0.1)
|
|
(0.8)
|
Changes in assets and
liabilities
|
|
|
|
Accounts receivable,
net
|
(156.5)
|
|
(224.1)
|
Inventory, net
|
438.9
|
|
184.9
|
Accounts payable and accrued
liabilities
|
179.7
|
|
39.5
|
Profit sharing/deferred
compensation
|
(60.2)
|
|
(16.1)
|
Advance payments
|
(106.6)
|
|
(70.4)
|
Income taxes
receivable/payable
|
(60.6)
|
|
(29.9)
|
Deferred revenue and other
deferred credits
|
(269.3)
|
|
28.0
|
Other
|
183.4
|
|
1.2
|
Net
cash provided by operating activities
|
$334.0
|
|
$308.8
|
Investing
activities
|
|
|
|
Purchase of property, plant
and equipment
|
(88.1)
|
|
(104.7)
|
Proceeds from sale of
assets
|
0.2
|
|
-
|
Net
cash used in investing activities
|
($87.9)
|
|
($104.7)
|
Financing
activities
|
|
|
|
Proceeds from issuance of
bonds
|
-
|
|
299.8
|
Principal payments of
debt
|
(1.8)
|
|
(9.8)
|
Payments on term
loan
|
(6.3)
|
|
-
|
Payments on bonds
|
-
|
|
(213.6)
|
Taxes paid related to net share settlement
awards
|
(13.1)
|
|
(14.3)
|
Debt issuance and financing
costs
|
(0.9)
|
|
(13.7)
|
Proceeds from financing under the New Market
Tax Credit Program
|
7.6
|
|
-
|
Purchase of treasury
stock
|
(207.6)
|
|
(317.6)
|
Change in restricted
cash
|
(4.4)
|
|
(86.4)
|
Dividends paid
|
(24.0)
|
|
-
|
Net
cash used in financing activities
|
($250.5)
|
|
($355.6)
|
Effect of exchange
rate changes on cash and cash equivalents
|
3.6
|
|
(5.3)
|
Net
decrease in cash and cash equivalents for the period
|
($0.8)
|
|
($156.8)
|
Cash and cash
equivalents, beginning of the period
|
697.7
|
|
957.3
|
Cash and cash
equivalents, end of the period
|
$696.9
|
|
$800.5
|
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 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 the measures differently.
Free cash flow is defined as GAAP net cash provided by operating
activities (cash flow from operations), less capital expenditures
for property, plant and equipment additions. Management believes
free cash flow provides investors with an important perspective on
the cash available for shareholders, debt repayment, 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 such as repayment of maturing debt. Management uses
free cash flow as a measure to assess both business performance and
overall liquidity.
Management considers special items, which may include
termination charges, settlement charges and other items that arise
from time to time, to be outside the ordinary course of our
operations. Management believes that excluding these items provides
a better understanding of the underlying trends in the company's
operating performance and allows more accurate comparisons of the
company's operating results to historical performance. Accordingly,
Adjusted Free Cash Flow is defined as free cash flow less these
special items.
The table below provides reconciliations between the GAAP and
non-GAAP measures.
Adjusted
EPS
|
|
|
2nd
Quarter
|
|
Six Months
|
|
Guidance
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings
Per Share
|
($0.48)
|
|
$0.35
|
|
$0.71
|
|
$1.65
|
|
$2.95 - $3.20
|
|
Impact of Airbus
Agreement, CEO Retirement, and Debt
Refinancing1
|
-
|
|
0.86
|
|
-
|
|
0.86
|
|
|
|
Impact of MOU with
Boeing2
|
2.05
|
|
-
|
|
2.05
|
|
-
|
|
2.05
|
|
Adjusted Diluted
Earnings Per Share
|
$1.57
|
|
$1.21
|
|
$2.76
|
|
$2.51
|
|
$5.00 -
$5.25
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares (in
millions)
|
118.2
|
|
129.3
|
|
119.8
|
|
130.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Represents the net
earnings per share impact of the Airbus agreement of $0.68, CEO
retirement costs of $0.11 and debt refinancing charge of
$0.07.
|
|
|
2
|
Represents the net
earnings per share impact of the MOU with Boeing of
$2.05.
|
Free Cash
Flow
|
($ in
millions)
|
|
|
Second
Quarter
|
|
Six Months
|
|
Guidance
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
|
|
|
|
|
|
|
|
Cash Provided by
Operating Activities
|
$222
|
$215
|
|
$334
|
$309
|
|
$750 -
$850
|
Capital
Expenditures
|
(47)
|
(54)
|
|
(88)
|
(105)
|
|
(250 -
300)
|
Free Cash
Flow
|
$175
|
$161
|
|
$246
|
$204
|
|
$500 -
$550
|
Cash Received under
787 Interim Pricing Agreement
|
-
|
-
|
|
-
|
(43)
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow
|
$175
|
$161
|
|
$246
|
$161
|
|
$500 -
$550
|
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SOURCE Spirit AeroSystems Holdings, Inc.