- First quarter 2009 Revenues of $887 million; Operating Margins of 11 percent
- First quarter 2009 Fully Diluted EPS of $0.45 per share; Includes ($0.18) per share of strike impact as a result of lower deliveries
- Cash and Cash Equivalents were $116 million
- Total backlog of approximately $29.6 billion
WICHITA, Kan., April 30 /PRNewswire-FirstCall/ -- Spirit AeroSystems Holdings, Inc. (NYSE: SPR) reported first quarter financial results reflecting solid operating performance as the company returned to full-rate production by the end of the quarter following the International Association of Machinists and Aerospace Workers (IAM) strike at The Boeing Company in the third and fourth quarters of 2008.
Spirit's first quarter 2009 revenues were $887 million and operating income was $98 million, as the impact from the Machinists' strike at Boeing carried over into the first quarter of 2009, resulting in reduced unit delivery volumes, revenues, and earnings compared to the first quarter of 2008. (Table 1)
Table 1. Summary Financial Results
1st Quarter
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($ in Millions, except per share data) 2009 2008 Change
--------------------------------------- ---- ---- ------
Revenues $887 $1,036 (14%)
Operating Income $98 $130 (25%)
Operating Income as a % of Revenues 11.0% 12.6% (160) BPS
Net Income $63 $85 (26%)
Net Income as a % of Revenues 7.1% 8.2% (110) BPS
Earnings per Share (Fully diluted) $0.45 $0.61 (26%)
Fully Diluted Weighted Avg Share Count
(Millions) 139.9 139.6
Net income for the first quarter of 2009 was $63 million, or $0.45 per fully diluted share, compared to $85 million, or $0.61 per fully diluted share, for the same period in 2008.
During the first quarter of 2009, Spirit gradually returned to full-rate production following a Machinists' strike at The Boeing Company. Spirit continued to utilize a reduced work week schedule early in the first quarter and returned to full work weeks as the quarter progressed. As a result, first quarter 2009 ship set deliveries to Boeing were 30 units below pre-strike delivery levels, resulting in a revenue reduction of $256 million and a reduction in earnings per share of $0.18.
'The first quarter results reflect solid operating performance as we managed through the residual impact of the Machinists' strike at Boeing,' said President and Chief Executive Officer Jeff Turner. 'Our team has done an outstanding job of adjusting to the challenges posed by the Machinists' strike. Those adjustments included balancing the requirements of our customers, shareholders, employees, and communities, while staying focused and maintaining the health of our business through a difficult period.'
'Looking forward, we are now in a period where the end-market for our core products is being impacted by the economic challenges facing communities and countries around the world. We will continue to manage resources prudently given these uncertain times, while focusing on meeting our commitments to our customers. Maintaining our customer focus and managing well through the cycle will enable Spirit to realize the long-term plan for value creation we have established over the past four years,' Turner concluded.
Spirit's backlog decreased by approximately 7 percent during the first quarter of 2009, as deliveries exceeded orders and new business wins for the first time since the company was formed in June of 2005. The company continues to pursue new business opportunities in commercial aerospace and defense markets. The company's backlog at the end of the first quarter was $29.6 billion. Spirit's backlog is calculated based on contractual prices for products and volumes from the published firm order backlogs of Boeing and Airbus, along with firm orders from other customers.
Spirit updated its contract profitability estimates during the first quarter of 2009, resulting in a $3 million unfavorable cumulative catch-up adjustment. Spirit recognized a $2 million favorable cumulative catch-up adjustment during the first quarter of 2008.
On April 29, 2009, Textron's Cessna Aircraft division announced the suspension of the Citation Columbus development program because of difficult conditions in the business jet market. Given the program suspension and at Cessna's direction, Spirit is suspending work immediately on its design and build efforts in support of the Columbus program. At the end of the first quarter of 2009, Spirit had approximately $20 million in inventory net of customer pre-payments associated with the Columbus development effort. The company is assessing the financial implications of the suspension, and expects to complete its analysis in connection with the preparation of its financial statements for the second quarter. Spirit remains confident in the viability of this program over the long-term and anticipates its restart at the appropriate time.
Cash flow from operations was ($149) million for the first quarter of 2009, compared to $71 million for the first quarter 2008. The company continues to invest in new programs, reflected largely as growth in inventory balances. The first quarter of 2009 cash flows were also negatively impacted by an abnormally large increase in accounts receivable, driven largely by the residual effects of the Machinists' strike at Boeing. (Table 2)
Table 2. Cash Flow and Liquidity
1st Quarter
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($ in Millions) 2009 2008
----------------- ---- ----
Cash Flow from Operations ($149) $71
Purchases of Property, Plant & Equipment ($54) ($66)
April 2, December 31,
Liquidity 2009 2008
---- ----
Cash $116 $217
Total Debt $663 $588
Cash balances at the end of the first quarter of 2009 were $116 million and debt balances were $663 million. During the first quarter of 2009, the company utilized its credit-line as it continued to manage through the impact of the Machinists' strike at Boeing while executing new development programs. Spirit ended the quarter with $75 million borrowed from its revolving credit facility, resulting in $575 million remaining unused. Approximately $17 million of the credit facility is reserved for financial letters of credit.
The company's credit ratings remained unchanged with a BB rating at Standard & Poor's and a Ba3 rating at Moody's.
2009 Outlook
Spirit revenue guidance for the full-year 2009 remains unchanged and is expected to be between $4.25 and $4.35 billion based on Boeing's 2009 delivery guidance of 480-485 aircraft; anticipated ramp-up of 787 deliveries; 2009 expected Airbus deliveries of up to 483 aircraft; internal Spirit forecasts for non-OEM production activity and non-Boeing and Airbus customers; and foreign exchange rates consistent with year-end 2008 levels.
Fully diluted earnings per share for 2009 also remains unchanged and is expected to be between $2.15 and $2.35, largely reflecting stable production of large commercial aircraft as compared to 2008, excluding the impact of the strike at Boeing, and a continued focus on expense management and improved operating efficiencies. Financial guidance for 2009 excludes potential financial impacts associated with the suspension of the Cessna Citation Columbus program.
Cash flow from operations less capital expenditures, net of customer reimbursements, is expected to be positive in the aggregate for the full-year 2009, with capital expenditures expected to be approximately $250 million. (Table 3)
Table 3.
