2007'11.23.Fri
Spirit AeroSystems Holdings, Inc. Reports Third Quarter 2007 Revenue and Earnings Growth; Updates 2007 Guidance; Provides 2008 Guidance
November 01, 2007
* Third quarter revenues grew 17 percent to $968
million; Operating
earnings grew to $107 million
* Earnings Per Share increased 114 percent to $0.60 as
net income grew to
$84 million
* Selected to join the P-8A Poseidon industry team to
build the U.S.
Navy's next-generation surveillance and
reconnaissance aircraft
* Delivered 2,400th 737 Next Generation ship set and
1,400th 747 ship set
to Boeing
* Grew total backlog 8 percent to $23.5 billion
WICHITA, Kan., Nov. 1 /Xinhua-PRNewswire/ -- Spirit
AeroSystems Holdings, Inc. [NYSE: SPR] reported increases
in its third quarter financial results and updated its 2007
financial guidance and provided 2008 guidance, citing strong
global commercial aerospace markets and improved operational
efficiencies.
Table 1. Summary Financial Results
($'s in Millions, except per 3rd Quarter
Nine Months
share data) 2007 2006 Change
2007 2006 Change
Revenues $968 $830 17%
$2,880 $2,356 22%
Operating Income $107 $78 38%
$313 $184 70%
Operating Income as a %
of Revenues 11.0% 9.3% 170 BPS
10.8% 7.8% 300 BPS
Net Income $84 $34 146%
$221 $86 157%
Net Income as a % of
Revenues 8.6% 4.1% 450 BPS
7.7% 3.7% 400 BPS
Earnings per Share (Fully
diluted) $0.60 $0.28 114%
$1.59 $0.71 124%
Fully Diluted Weighted
Avg Share Count
(Million) 139.5 121.2
139.2 121.7
Spirit's third quarter net income rose 146 percent to
$84 million from $34 million a year ago, and fully diluted
earnings per share rose 114 percent to $0.60 per share from
$0.28 per share last year. (Table 1) The company benefited
from a lower effective tax rate during the third quarter
2007. The lower tax rate contributed $0.09 of diluted
earnings per share to the third quarter results. Revenue
for the quarter increased 17 percent to $968 million from
$830 million, and the company's operating margins rose to
11.0 percent from 9.3 percent last year.
"Strong operating performance continues across the
company while we execute our key development programs and
pursue new business opportunities," said President and
Chief Executive Officer Jeff Turner. "Executing our
backlog of over twenty-three billion dollars remains our
top near-term opportunity to grow profitability and expand
operating margins," Turner added. "The recent
delays on the 787 program, while disappointing, represent a
short-term challenge for an enormously successful product
that will deliver long-term value to customers and
shareholders," Turner continued. "Additionally,
we are pleased to be named to Boeing's P-8A Poseidon team
this quarter. The U.S. Navy's P-8A program is another
example of the value the 737 Next Generation aircraft
brings to customers and demonstrates, yet again, the
adaptability of the airframe for both commercial and
military applications. Looking forward, we will continue
to invest in key growth programs and diversification while
improving our financial performance."
Spirit's backlog during the quarter increased from
$21.8 billion to $23.5 billion, as combined net orders for
528 aircraft at Boeing and Airbus outpaced their combined
deliveries of 208 aircraft. Spirit's backlog is calculated
based on contractual prices for products and expected
delivery volumes from the published firm order backlogs of
both Boeing and Airbus.
Spirit updated its contract profitability estimates
during the third quarter of 2007, which resulted in no net
changes to contract estimates. Third quarter 2006 results
included a $17 million favorable cumulative catch-up
adjustment.
Cash flow from operations for the third quarter was $42
million, despite increases in inventory on the 787 program
and other development programs. Investments in capital
expenditures totaled $69 million in the quarter. Half of
the investment in property, plant and equipment supported
the start-up of the 787 program.
Cash balances at the end of the quarter were $105
million, down $22 million from the end of the second
quarter 2007, reflecting planned investment in Spirit's
core business, primarily for the 787 program. Debt
balances at the end of the third quarter were $605 million,
down slightly from second quarter levels. (Table 2)
Table 2. Cash Flow and Liquidity
3rd Quarter
Nine Months
($'s in Millions) 2007 2006
2007 2006
Cash Flow from Operations $42 $113
$107 $326
Purchases of Property, Plant &
Equipment ($69) ($53)
($228) ($233)
As of As of
Sept 27, Dec 31,
Liquidity
2007 2006
Cash
$105 $184
Current Portion of Long-term Debt
plus Long-term Debt
$605 $618
Financial Outlook
The company's financial guidance for 2007 is updated
and 2008 guidance is provided incorporating the benefit of
higher production volumes on large commercial aircraft
programs. The company is forecasting approximately 18 to
20 percent growth in revenues in 2008 and increasing
operating margins from year-to-year reflecting the
company's solid operating performance across business
segments. Guidance for 2007 reflects a lower effective tax
rate consistent with reported results as of nine months
ending September 27, 2007. Financial guidance for 2007 and
2008 incorporates 787 program schedule changes resulting
from the delay of aircraft certification and entry into
service announced by The Boeing Company on October 10,
2007. Table 3 summarizes the company's financial outlook.
Table 3. Financial Outlook
2007 Guidance
2008 Guidance
Revenues $3.9B - $4.0B
~$4.7B
Operating Income $415M - $425M
Operating Income as a % of Revenues 10.4% - 10.8%
Depreciation and Amortization $115M - $120M
Earnings Per Share (Fully Diluted) $2.10 - $2.15
$2.30 - $2.40
Effective Tax Rate + / - 29.5%
33% - 34%
Cash Flow from Operations* + / - $250M
Capital Expenditures + / - $300M
Customer Reimbursement of Capital
Expenditures ~$45M
Average Fully Diluted Shares Outstanding 139.5M -
140.0M
* Includes $40-$50 million of customer advances for
capital expenditures
2007 Outlook
Spirit's 2007 revenue expectations are now expected to
be between $3.9 and $4.0 billion, or approximately 23
percent higher than 2006. The new guidance is a change
from the previous guidance range of between $4.0 and $4.1
billion. The 2007 revenue projection is based on
previously issued 2007 Boeing and Airbus delivery guidance
of 440 and 440-450 aircraft, respectively, and includes
fewer initial deliveries of Spirit products to Boeing on
the 787 program.
Spirit's 2007 operating margins are now expected to be
in the range of 10.4 to 10.8 percent, and 2007 fully
diluted EPS guidance is increased to between $2.10 and
$2.15 per share as benefits from cost reductions,
productivity initiatives and a lower than expected
effective tax rate improve profitability.
2007 cash flow from operations is now expected to be
+/- $250 million which includes working capital spending
for the new 787 program. Fiscal 2007 capital expenditures
are unchanged and are expected to be +/- $300 million.
Approximately 50 percent of the capital expenditures will
be utilized for the installation of production capacity for
the new 787 program. Spirit anticipates approximately $45
million of customer reimbursement to partially offset these
capital expenditures.
2007 Depreciation and Amortization expenses are
unchanged and forecasted to be between $115 and $120
million, while 2007 Research and Development expense is
expected to be approximately $55 to $60 million. SG&A
expense for 2007 is now expected to be approximately $195
to $200 million.
2008 Outlook
Spirit's 2008 revenue is expected to be approximately
$4.7 billion, or 18 to 20 percent higher than 2007
revenues. The 2008 revenue projection is based on
previously issued 2008 Boeing delivery guidance of 480-490
aircraft and includes internal Spirit forecasts for Airbus
and other products. Spirit's revenue guidance for 2008
assumes delivery of approximately forty-five 787 ship sets
from Spirit to Boeing based on aircraft certification and
entry into service occurring during the fourth quarter
2008. A reduction in Spirit's 2008 787 ship set delivery
forecast would likely result in lower than forecasted
revenues and earnings for the year.
Earnings per share for 2008 is expected to be between
$2.30 and $2.40 per share as increased volumes on large
commercial aircraft programs and improved operating
efficiencies increase profitability.
Cash from Operations and Capital Expenditure guidance
will be provided when the company reports fourth quarter
and full-year 2007 results in early February 2008.
Cautionary Statement Regarding Forward-Looking
Statements
This press release includes forward-looking statements
that reflect the plans and expectations of Spirit
AeroSystems Holdings, Inc. To the extent that statements
in this press release do not relate to historical or
current facts, they constitute forward-looking statements.
Forward-looking statements can generally be identified by
the use of forward-looking terminology such as
"may," "will," "expect,"
"intend," "estimate,"
"anticipate," "believe,"
"project," "continue," or other similar
words. These statements reflect Spirit AeroSystems
Holdings, Inc.'s current view with respect to future events
and are subject to risks and uncertainties, both known and
unknown. Such risks and uncertainties may cause the actual
results of Spirit AeroSystems Holdings, Inc. to vary
materially from those anticipated in forward-looking
statements, and therefore we caution investors not to place
undue reliance on them. Potential risks and uncertainties
include, but are not limited to: our customers' aircraft
build rates; the ability to enter into supply arrangements
with additional customers and satisfy performance
requirements under existing contracts; any adverse impact
on our customers' production of aircraft; the success and
timely progression of our customers' new programs
including, but not limited to The Boeing Company's 787
aircraft program; future levels of business in the
aerospace and commercial transport industries; competition
from original equipment manufacturers and other
aerostructures suppliers; the effect of governmental laws;
the effect of new commercial and business aircraft
development programs; the cost and availability of raw
materials; the ability to recruit and retain highly skilled
employees and relationships with unions; spending by the
United States and other governments on defense; the
continuing ability to operate successfully as a stand alone
company; the outcome of ongoing or future litigation and
regulatory actions; and exposure to potential product
liability claims. Additional information as to factors that
may cause actual results to differ materially from our
forward-looking statements can be found in Spirit
AeroSystems Holdings, Inc.'s filings with the United States
Securities and Exchange Commission. Spirit AeroSystems
Holdings, Inc. undertakes no obligation and does not intend
to update publicly any forward-looking statements after the
date of this press release, except as required by law.
Appendix
Segment Results
Fuselage Systems
Fuselage Systems segment revenue for the third quarter
was $434 million, up 7 percent over the same period last
year as deliveries on the 747 and 777 programs increased.
Fuselage Systems posted segment operating margins of 18.0
percent during the third quarter 2007, down from 20.4
percent in the same period of 2006. A favorable cumulative
catch-up adjustment of $9 million was recognized in the
segment for the third quarter of 2006.
Propulsion Systems
Propulsion Systems segment revenue for the third
quarter was $279 million, up 23 percent over the same
period last year as deliveries increased in support of
primary customer production volume. Propulsion Systems
posted segment operating margins of 16.5 percent for the
third quarter 2007, down from 18.2 percent in the same
period of 2006. A favorable cumulative catch-up adjustment
of $7 million was recognized in the segment for the third
quarter of 2006.
Wing Systems
Wing Systems segment revenue for the third quarter was
$252 million, up 31 percent over the same period last year
as deliveries increased in support of primary customer
production volume. Wing Systems posted segment operating
margins of 9.3 percent for the third quarter 2007, up from
6.0 percent in the same period of 2006 as R&D expense
on the 787 program declined. A favorable cumulative
catch-up adjustment of $1 million was recognized in the
segment for the third quarter of 2006.
Table 4. Segment Reporting
3rd Quarter
Nine Months
($'s in Millions,
except margin
percent) 2007 2006 Change 2007
2006(1) Change
Segment Revenues
Fuselage Systems $434.3 $405.9 7.0% $1,329.2
$1,174.1 13.2%
Propulsion
Systems $278.9 $227.1 22.8% $798.5
$668.8 19.4%
Wing Systems $251.5 $192.2 30.9% $738.1
$491.3 50.2%
All Other $2.8 $4.5 (37.8%) $14.6
$21.7 (32.7%)
Total Segment
Revenues $967.5 $829.7 16.6% $2,880.4
$2,355.9 22.3%
Segment Earnings from
Operations
Fuselage Systems $78.1 $82.8 (5.7%) $243.2
$208.3 16.8%
Propulsion
Systems $45.9 $41.3 11.1% $130.2
$100.4 29.7%
Wing Systems $23.5 $11.6 102.6% $75.1
$30.6 145.4%
All Other $0.3 $1.2 (75.0%) $1.8
$3.3 (45.5%)
Total Segment
Operating Earnings $147.8 $136.9 8.0% $450.3
$342.6 31.4%
Unallocated
Corporate
SG&A Expense ($39.9) ($57.9) 31.1%
($134.3) ($154.6) 13.1%
Unallocated
Research &
Development Expense ($1.3) ($1.5) 13.3% ($3.5)
($3.9) 10.3%
Total Earnings from
Operations $106.6 $77.5 37.5% $312.5
$184.1 69.7%
Segment Operating
Earnings as % of
Revenues
Fuselage Systems 18.0% 20.4% (240) BPS 18.3%
17.7% 60 BPS
Propulsion
Systems 16.5% 18.2% (170) BPS 16.3%
15.0% 130 BPS
Wing Systems 9.3% 6.0% 330 BPS 10.2%
6.2% 390 BPS
All Other 10.7% 26.7% (1600) BPS 12.3%
15.2% (290) BPS
Total Segment
Operating Earnings
as % of Revenues 15.3% 16.5% (120) BPS 15.6%
14.5% 110 BPS
Total Operating
Earnings as % of
Revenues 11.0% 9.3% 170 BPS 10.8%
7.8% 300 BPS
(1) Includes Spirit Europe since acquisition on April
1, 2006
Spirit Ship Set Deliveries
(BASED ON FUSELAGE DELIVERIES)
2006 Spirit AeroSystems Deliveries
1st Qtr 2nd Qtr 3rd Qtr 4th
Qtr Total 06
B737 64 77 84
77 302
B747 3 3 3
4 13
B767 3 3 3
3 12
B777 14 16 16
19 65
Total 84 99 106
103 392
A320 0 81 74
86 241
A330/340 0 33 17
23 73
A380 0 4 0
0 4
Total(1) 0 118 91
109 318
Hawker 850XP(1) 0 12 15
24 51
Total Spirit 84 229 212
236 761
(1) Deliveries associated with Airbus and Hawker
products were acquired
with Spirit Europe on April 1, 2006.
2007 Spirit AeroSystems Deliveries
1st Qtr 2nd Qtr 3rd
Qtr
B737 83 85 84
B747 5 4 5
B767 3 4 3
B777 21 21 21
B787 0 1 0
Total 112 115 113
A320 93 84 91
A330/340 22 21 22
A380 0 0 2
Total 115 105 115
Hawker 850XP 16 15 17
Total Spirit 243 235 245
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
For the Three
For the Nine
Months Ended
Months Ended
September September
September September
27, 28,
27, 28,
2007 2006
2007 2006
($ in millions, except
per share data)
Net Revenues $967.5 $829.7
$2,880.4 $2,355.9
Operating costs and
expenses:
Cost of sales 804.7 677.7
2,388.2 1,926.7
Selling, general and
administrative 42.9 59.9
142.3 160.0
Research and development 13.3 14.6
37.4 85.1
Total Costs and Expenses 860.9 752.2
2,567.9 2,171.8
Operating Income 106.6 77.5
312.5 184.1
Interest expense and financing
fee amortization (9.7) (11.9)
(28.1) (34.8)
Interest income 8.0 6.9
22.8 20.9
Other income, net 1.3 0.7
5.1 3.6
Income From Continuing
Operations Before Income
Taxes 106.2 73.2
312.3 173.8
Income tax provision (22.6) (39.2)
(90.9) (87.6)
Net Income $83.6 $34.0
$221.4 $86.2
Earnings per share
Basic $0.61 $0.30
$1.65 $0.76
Shares 136.7 114.0
133.8 113.9
Diluted $0.60 $0.28
$1.59 $0.71
Shares 139.5 121.2
139.2 121.7
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets
September
27, December 31,
2007
2006
(unaudited)
($
in millions)
Current assets
Cash and cash equivalents $105.4
$184.3
Accounts receivable, net 247.2
200.2
Other receivable 92.3
43.0
Inventory, net 1,198.4
882.2
Prepaid expenses 14.8
20.8
Income tax receivable -
21.7
Other current assets 59.6
68.3
Total current assets 1,717.7
1,420.5
Property, plant and equipment, net 937.7
773.8
Long-term receivable 141.0
191.5
Pension assets 231.5
207.3
Other assets 138.1
129.1
Total assets $3,166.0
$2,722.2
Current liabilities
Accounts payable $374.9
$339.1
Accrued expenses 229.2
198.5
Current portion of long-term debt 22.8
23.9
Other current liabilities 19.8
8.2
Total current liabilities 646.7
569.7
Long-term debt 582.5
594.3
Advance payments 638.5
587.4
Pension obligation 56.6
53.7
Other liabilities 101.7
58.1
Shareholders' equity
Preferred stock, par value $0.01, 10,000,000
shares authorized, no shares issued and
outstanding -
-
Common stock, Class A par value $0.01,
200,000,000 shares authorized, 102,563,955
and 63,345,834 issued and outstanding,
respectively 1.0
0.6
Common stock, Class B par value $0.01,
150,000,000 shares authorized, 36,890,084
and 71,351,347 shares issued and
outstanding, respectively 0.4
0.7
Additional paid-in capital 917.2
858.7
Accumulated other comprehensive income 74.0
72.5
Retained earnings / (deficit) 147.4
(73.5)
Total shareholders' equity 1,140.0
859.0
Total liabilities and
shareholders' equity $3,166.0
$2,722.2
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Cash Flow
(unaudited)
For the Nine
For the Nine
Months Ended
Months Ended
September 27,
September 28,
2007
2006
($ in
millions)
Operating activities
Net income $221.4
$86.2
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation expense 67.1
30.3
Amortization expense 5.7
6.2
Accretion of long-term receivable (16.0)
(15.3)
Employee stock compensation expense 26.8
40.8
Excess tax benefits from share-
based payment arrangements (32.9)
-
Loss on disposition of assets 0.4
-
Deferred taxes 3.8
-
Changes in assets and liabilities,
net of acquisition
Accounts receivable (48.0)
(63.2)
Inventory, net (312.6)
(171.5)
Other current assets 6.1
(6.1)
Accounts payable and accrued
liabilities 18.7
142.0
Customer advances 93.6
300.0
Deferred revenue and other
deferred credits 36.4
-
Other 36.1
(23.7)
Net cash provided by
operating activities 106.6
325.7
Investing Activities
Purchase of property, plant and equipment (228.0)
(233.4)
Proceeds from sale of assets 0.2
-
Acquisition of business, net of cash
required -
(135.4)
Long-term receivable 22.8
-
Financial derivatives 3.1
3.1
Other (1.3)
-
Net cash (used in) investing
activities (203.2)
(365.7)
Financing Activities
Principal payments of debt (14.4)
(10.2)
Excess tax benefits from share-based
payment arrangements 32.9
-
Equity issuance costs -
(3.4)
Executive stock
investments/(repurchases) (1.0)
1.1
Net cash provided by (used
in) financing activities 17.5
(12.5)
Effect of exchange rate changes on
cash and cash equivalents 0.2
0.2
Net (decrease) in cash and
cash equivalents for the
period (78.9)
(52.3)
Cash and cash equivalents, beginning
of the period 184.3
241.3
Cash and cash equivalents, end of the
period $105.4
$189.0
For more information, please contact:
Spirit AeroSystems Holdings, Inc.
Investor Relations
Phil Anderson
Tel: +1-316-523-1797
Media
Debbie Gann
Tel: +1-316-519-7340
PR
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