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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Spirit Aerosystems Holdings Inc | NYSE:SPR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.42 | -1.27% | 32.60 | 33.64 | 32.79 | 33.41 | 2,400,977 | 00:52:39 |
Fourth Quarter 2022
Full-Year 2022
Spirit AeroSystems Holdings, Inc. (NYSE: SPR) (“Spirit” or the “Company”) reported fourth quarter and full-year 2022 financial results.
Table 1. Summary Financial Results (unaudited)4th Quarter
Twelve Months
($ in millions, except per share data)
2022
2021
Change
2022
2021
Change
Revenues$1,320
$1,070
23
%
$5,030
$3,953
27
%
Operating Loss($139
)
($79
)
(76
%)
($281
)
($459
)
39
%
Operating Loss as a % of Revenues(10.5%
)
(7.4%
)
(310) BPS
(5.6%
)
(11.6%
)
600 BPS
Net Loss($243
)
($120
)
**
($546
)
($541
)
(1
%)
Net Loss as a % of Revenues(18.4%
)
(11.2%
)
(720) BPS
(10.8%
)
(13.7%
)
290 BPS
Loss Per Share (Fully Diluted)($2.32
)
($1.15
)
**
($5.21
)
($5.19
)
(0
%)
Adjusted Loss Per Share (Fully Diluted)*($1.46
)
($0.84
)
(74
%)
($2.81
)
($3.46
)
19
%
Fully Diluted Weighted Avg Share Count104.8
104.3
104.6
104.2
** Represents an amount in excess of 100% or not meaningful.
“2022 was a challenging year for the entire industry as we worked through supply chain part shortages and labor attrition, which impacted overall deliveries and profitability,” said Tom Gentile, President and Chief Executive Officer, Spirit AeroSystems.
“We learned a lot over the course of the year which we will apply to future production rate increases. Our free cash flow usage in the quarter was within the range we indicated on our third quarter earnings call. While we spent more in the fourth quarter to achieve those results, those investments should position us better for future rate increases. On the 737 program, we plan to produce approximately 420 shipsets in 2023.”
Revenue
Spirit’s revenue in the fourth quarter of 2022 was $1.3 billion, up 23 percent from the same period of 2021. This increase was primarily due to higher production deliveries on the Boeing 737 program as well as increased Defense and Space revenue. Overall deliveries increased to 343 shipsets during the fourth quarter of 2022 compared to 277 shipsets in the same period of 2021. This includes Boeing 737 deliveries of 81 shipsets compared to 51 shipsets in the same period of the prior year.
Spirit’s full-year 2022 revenue was $5.0 billion, up 27 percent from 2021. This increase was primarily due to higher production deliveries on the Boeing 737 and Airbus A320 and A220 programs, as well as increased Aftermarket and Defense and Space revenue, partially offset by lower production deliveries on the Boeing 747 and 787 programs. Overall deliveries increased to 1,297 shipsets during 2022 compared to 1,022 shipsets in 2021. This includes Boeing 737 deliveries of 281 shipsets compared to 162 shipsets in the prior year.
Spirit’s backlog at the end of the fourth quarter of 2022 was approximately $37 billion, which includes work packages on all commercial platforms in the Airbus and Boeing backlog.
Earnings
Operating loss for the fourth quarter of 2022 was $138.8 million, compared to operating loss of $79.0 million in the same period of 2021. The greater operating loss was primarily driven by higher changes in estimates during the fourth quarter of 2022 as well as the absence of income related to the Aviation Manufacturing Jobs Protection (AMJP) Program that was recognized in the fourth quarter of 2021, partially offset by higher production volumes on the Boeing 737 program.
Changes in estimates in the fourth quarter of 2022 included net forward loss charges of $113.7 million and unfavorable cumulative catch-up adjustments for the periods prior to the fourth quarter of $58.7 million. The forward losses related primarily to the Airbus A350 and Boeing 787 programs. The Airbus A350 program forward loss primarily reflects additional costs related to labor, freight and rework resulting from production and quality issues as well as parts shortages. The forward loss on the Boeing 787 program was driven by increased cost estimates related to production and rework requirements. The unfavorable cumulative catch-up adjustments relate primarily to the Boeing 737 and the Airbus A320 programs. The Boeing 737 unfavorable cumulative catch-up adjustment was primarily driven by supply chain disruptions and increased costs related to production rate recovery efforts, including costs related to increased headcount and training. The Airbus A320 program unfavorable cumulative catch-up adjustment was driven by operational and supply chain disruptions, and increased costs related to material, freight and labor. Excess capacity costs recorded during the fourth quarter of 2022 were $31.2 million. In comparison, during the fourth quarter of 2021, Spirit recorded $46.5 million of net forward loss charges and excess capacity costs of $45.3 million. Additionally, income related to the AMJP Program of $37.0 million was recognized as a reduction to costs of sales in the fourth quarter of 2021.
Operating loss for the full year of 2022 was $281.2 million, compared to operating loss of $459.2 million in 2021. This improvement was primarily driven by higher production on the Boeing 737 program and lower excess capacity costs in 2022 compared to the prior year.
Full-year 2022 earnings included net forward loss charges of $250.3 million and unfavorable cumulative catch-up adjustments for the periods prior to 2022 of $27.7 million. The forward losses were primarily driven by increased cost estimates resulting from production rate decreases and schedule changes, supply chain disruptions, costs of rework, and other costs on the Boeing 787 program, and additional labor, freight, and other costs driven by part shortages and production and quality issues on the Airbus A350 program. Full-year 2022 unfavorable cumulative catch-up adjustments were primarily recognized on the Boeing 737 program, reflecting increased costs for supply chain, raw material, labor and other costs. Excess capacity costs recorded during 2022 were $157.3 million. In comparison, during 2021, Spirit recorded $241.5 million of net forward loss charges, unfavorable cumulative catch-up adjustments of $5.0 million, and excess capacity costs of $217.5 million. Additionally, income related to the AMJP Program of $41.1 million was recognized as a reduction to costs of sales in 2021.
Other expense for the full year of 2022 was $14.1 million, compared to other income of $146.6 million in 2021. The increase in expense was primarily due to non-cash pre-tax charges of $108.2 million driven by the termination of the Pension Value Plan A (PVP A) in 2022, compared to a gain of $61.0 million in 2021 resulting from the closure of the defined benefit plans acquired as part of the Bombardier acquisition. In relation to the termination of the PVP A, additional non-cash settlement charges are expected in the first quarter of 2023. The Company also expects to receive an after-tax cash reversion in 2023 resulting from the PVP A termination in the range of $120 million to $140 million.
Fourth quarter 2022 EPS was $(2.32), compared to $(1.15) in the same period of 2021. Fourth quarter 2022 adjusted EPS* was $(1.46), which excludes the incremental deferred tax asset valuation allowance and the costs related to the pension termination. During the same period of 2021, adjusted EPS* was $(0.84), which excludes the incremental deferred tax asset valuation allowance and a pension settlement loss. (Table 1)
Full-year 2022 EPS was $(5.21), compared to $(5.19) in 2021. 2022 adjusted EPS* was $(2.81), which excludes the incremental deferred tax asset valuation allowance, an investment agreement settlement gain, losses related to Russia sanctions, and costs related to the pension termination. Full-year 2021 adjusted EPS* was $(3.46), which excludes the impacts from the acquisitions, restructuring costs, the incremental deferred tax asset valuation allowance, a pension curtailment gain and a pension settlement loss. (Table 1)
Cash
Cash used in operations in the fourth quarter of 2022 was $27 million, compared to cash used in operations of $77 million in the same quarter of 2021. The current period cash used in operations included the quarterly cash repayment of $31 million related to the Boeing 737 advance received in 2019. The fourth quarter of 2021 balance reflects the receipt of a $73 million tax refund resulting from the CARES Act as well as the payment of $154 million towards the Belfast pension plan. Free cash flow* in the fourth quarter was a usage of $66 million, as compared to a usage of $137 million in the same period of 2021.
Full-year cash used in operations in 2022 was $395 million, compared to $63 million of cash used in operations in 2021. The full-year 2022 cash used in operations reflects the repayment of $123 million related to the Boeing 737 advance received in 2019. The full-year 2021 balance reflects the receipt of $300 million tax refund as a result of carrybacks permitted by the CARES Act, partially offset by the payment of $154 million towards the Belfast pension plan. Free cash flow* in 2022 was a usage of $516 million, as compared to a usage of $214 million in 2021.
The cash balance at the end of the fourth quarter of 2022 was $659 million. (Table 2)
Table 2. Cash Flow, Cash and Total Debt (unaudited)4th Quarter
Twelve Months
($ in millions)
2022
2021
Change
2022
2021
Change
Cash used in Operations($27
)
($77
)
(64
%)
($395
)
($63
)
**
Purchases of Property, Plant & Equipment($39
)
($61
)
(36
%)
($122
)
($151
)
(19
%)
Free Cash Flow*($66
)
($137
)
(52
%)
($516
)
($214
)
**
December 31,
December 31,
Cash and Total Debt2022
2021
Cash$659
$1,479
Total Debt
$3,869
$3,792
** Represents an amount in excess of 100% or not meaningful.
Segment Results
Commercial
Commercial segment revenue in the fourth quarter of 2022 increased 26 percent from the same period of the prior year to $1.1 billion, primarily due to increased production revenues on the Boeing 737, 777 and Bombardier business jets programs. Operating margin for the fourth quarter of 2022 decreased to (8) percent, compared to (2) percent during the same period of 2021, primarily due to higher changes in estimates recorded in the current period as well as the absence of income related to the AMJP Program that was recognized in the fourth quarter of 2021, partially offset by higher production volumes on the Boeing 737 program. In the fourth quarter of 2022, changes in estimates for the segment included $111.3 million of net forward losses and $58.3 million of unfavorable cumulative catch-up adjustments. Additionally, during the fourth quarter of 2022, the Commercial segment included excess capacity costs of $29.7 million. In comparison, during the fourth quarter of 2021, the segment recognized $47.0 million of net forward losses, $1.9 million of unfavorable cumulative catch-up adjustments and excess capacity costs of $43.3 million. Income related to the AMJP Program of $32.3 million was recognized as a reduction to costs of sales in the fourth quarter of 2021.
Defense & Space
Defense & Space segment revenue in the fourth quarter of 2022 increased 21 percent from the same period of the prior year to $183.2 million, primarily due to higher activity on development programs in the current period. Operating margin for the fourth quarter of 2022 increased to 11 percent, compared to 8 percent during the same period of 2021, primarily due to the absence of a one-time charge recorded during the fourth quarter of 2021. The segment recorded excess capacity costs of $1.5 million and net forward losses of $2.4 million in the fourth quarter of 2022. In comparison, during the fourth quarter of 2021, the segment recognized excess capacity costs of $2.0 million, favorable changes in estimates on forward loss programs of $0.5 million and $1.6 million of unfavorable cumulative catch-up adjustments in the fourth quarter of 2021. Income related to the AMJP Program of $2.7 million was recognized as a reduction to costs of sales in the fourth quarter of 2021.
Aftermarket
Aftermarket segment revenue in the fourth quarter of 2022 slightly decreased by one percent compared to the same period of 2021 to $72.9 million. Operating margin for the fourth quarter of 2022 decreased to 13 percent, compared to 23 percent during the same period of 2021, primarily due to a one-time inventory adjustment charge as well as the absence of income related to the AMJP Program of $2.0 million that was recognized in the fourth quarter of 2021.
Table 4. Segment Reporting (unaudited)4th Quarter
Twelve Months
($ in millions)2022
2021
Change
2022
2021
Change
Segment Revenues Commercial$1,064.0
$844.3
26.0
%
$4,068.4
$3,128.1
30.1
%
Defense & Space183.2
152.0
20.5
%
649.8
585.0
11.1
%
Aftermarket72.9
73.8
(1.2
%)
311.4
239.9
29.8
%
Total Segment Revenues$1,320.1
$1,070.1
23.4
%
$5,029.6
$3,953.0
27.2
%
Segment (Loss) Earnings from Operations Commercial($79.4
)
($20.2
)
**
($82.9
)
($220.6
)
62.4
%
Defense & Space20.7
12.0
72.5
%
72.8
44.3
64.3
%
Aftermarket9.2
16.8
(45.2
%)
58.5
50.3
16.3
%
Total Segment Operating (Loss) Earnings($49.5
)
$8.6
**
$48.4
($126.0
)
**
Segment Operating (Loss) Earnings as % of Revenues Commercial(7.5
%)
(2.4
%)
(510) BPS
(2.0
%)
(7.1
%)
510 BPS
Defense & Space11.3
%
7.9
%
340 BPS
11.2
%
7.6
%
360 BPS
Aftermarket12.6
%
22.8
%
**
18.8
%
21.0
%
(220) BPS
Total Segment Operating (Loss) Earnings as % of Revenues(3.7
%)
0.8
%
(450) BPS
1.0
%
(3.2
%)
420 BPS
Unallocated Expense SG&A($75.4
)
($68.6
)
(9.9
%)
($279.2
)
($279.9
)
0.3
%
Research & Development(13.9
)
(19.0
)
26.8
%
(50.4
)
(53.3
)
5.4
%
Total Loss from Operations($138.8
)
($79.0
)
(75.7
%)
($281.2
)
($459.2
)
38.8
%
Total Operating Loss as % of Revenues(10.5
%)
(7.4
%)
(310) BPS
(5.6
%)
(11.6
%)
600 BPS
** Represents an amount in excess of 100% or not meaningful.*
Non-GAAP financial measure, see Appendix for reconciliation
Cautionary Statement Regarding Forward-Looking Statements
This press release contains “forward-looking statements” that 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,” “model,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and other similar words, or phrases, or the negative thereof, unless the context requires otherwise. These statements are based on circumstances as of the date on which the statements are made and they 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:
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)
4th Quarter
Twelve Months
2022
2021
2022
2021
B737
81
51
281
162
B747
-
2
1
6
B767
8
7
31
34
B777
7
5
26
23
B787
7
6
20
37
Total Boeing
103
71
359
262
A220 (1)
14
13
60
50
A320 Family
144
136
591
467
A330
8
5
27
20
A350
11
10
48
42
Total Airbus
177
164
726
579
Business/Regional Jet (2)
63
42
212
181
Total
343
277
1,297
1,022
(1)
Beginning in 2022, A220 deliveries reflect the number of wing end item deliveries instead of pylon end item deliveries, as previously reported. 2021 A220 deliveries have been updated to reflect wing units.
(2)
2021 Business/Regional Jet deliveries incorporate changes resulting from alignment of shipset reporting from acquired businesses.
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months Ended
For the Twelve Months Ended
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
($ in millions, except per share data)
Net revenues$1,320.1
$1,070.1
$5,029.6
$3,953.0
Operating costs and expenses: Cost of sales
1,369.6
1,061.4
4,981.0
4,070.8
Selling, general and administrative
75.4
68.6
279.2
279.9
Restructuring costs
-
0.1
0.2
8.2
Research and development
13.9
19.0
50.4
53.3
Total operating costs and expenses
1,458.9
1,149.1
5,310.8
4,412.2
Operating loss
(138.8
)
(79.0
)
(281.2
)
(459.2
)
Interest expense and financing fee amortization(73.3
)
(64.9
)
(244.1
)
(242.6
)
Other (expense) income, net(44.3
)
7.9
(14.1
)
146.6
Loss before income taxes and equity in net loss of affiliates
(256.4
)
(136.0
)
(539.4
)
(555.2
)
Income tax benefit (expense)13.2
16.6
(5.2
)
17.2
Loss before equity in net loss of affiliates
(243.2
)
(119.4
)
(544.6
)
(538.0
)
Equity in net loss of affiliates(0.4
)
(0.9
)
(1.6
)
(2.8
)
Net loss(243.6
)
(120.3
)
(546.2
)
(540.8
)
Less noncontrolling interest in earnings of subsidiary0.5
-
0.5
-
Net loss attributable to common shareholders
($243.1
)
($120.3
)
($545.7
)
($540.8
)
Loss per share Basic$ (2.32
)
($1.15
)
$ (5.21
)
($5.19
)
Shares104.8
104.3
104.6
104.2
Diluted
$ (2.32
)
($1.15
)
$ (5.21
)
($5.19
)
Shares104.8
104.3
104.6
104.2
Dividends declared per common share
$0.00
$0.01
$0.03
$0.04
Spirit AeroSystems Holdings, Inc. Condensed Consolidated Balance Sheets (unaudited) December 31,2022 December 31,2021 ($ in millions) Assets Cash and cash equivalents
$658.6
$1,478.6
Restricted cash
0.2
0.3
Accounts receivable, net
489.5
461.6
Contract assets, short-term
501.0
443.2
Inventory, net
1,470.7
1,382.6
Other current assets
38.3
39.7
Total current assets
3,158.3
3,806.0
Property, plant and equipment, net
2,205.9
2,385.5
Intangible assets, net
211.4
212.3
Goodwill
630.5
623.7
Right of use assets
94.3
85.3
Contract assets, long-term
1.2
-
Pension assets
196.9
532.5
Restricted plan assets
71.1
-
Deferred income taxes
4.8
0.4
Other assets
91.8
91.6
Total assets
$6,666.2
$7,737.3
Liabilities Accounts payable
$919.8
$720.3
Accrued expenses
411.7
376.1
Profit sharing
40.5
63.7
Current portion of long-term debt
53.7
49.5
Operating lease liabilities, short-term
8.3
8.2
Advance payments, short-term
24.9
137.8
Contract liabilities, short-term
111.1
97.9
Forward loss provision, short-term
305.9
244.6
Deferred revenue and other deferred credits, short-term
21.7
72.7
Other current liabilities
54.9
105.2
Total current liabilities
1,952.5
1,876.0
Long-term debt
3,814.9
3,742.7
Operating lease liabilities, long-term
85.4
78.8
Advance payments, long-term
199.9
201.3
Pension/OPEB obligation
25.2
74.8
Contract liabilities, long-term
245.3
289.1
Forward loss provision, long-term
369.2
521.6
Deferred revenue and other deferred credits, long-term
49.0
32.1
Deferred grant income liability - non-current
25.7
26.4
Deferred income taxes
1.3
21.8
Other non-current liabilities
141.6
423.9
Stockholders' Equity Common stock, Class A par value $0.01, 200,000,000 shares authorized, 105,252,421 and 105,037,845 shares issued and outstanding, respectively
1.1
1.1
Additional paid-in capital
1,179.5
1,146.2
Accumulated other comprehensive loss
(203.9
)
(23.7
)
Retained earnings1,232.5
1,781.4
Treasury stock, at cost (41,523,470 shares each period)
(2,456.7
)
(2,456.7
)
Total stockholders’ equity(247.5
)
448.3
Noncontrolling interest
3.7
0.5
Total equity
(243.8
)
448.8
Total liabilities and equity
$6,666.2
$7,737.3
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
For the Twelve Months Ended
December 31, 2022
December 31, 2021
($ in millions)
Operating activities Net loss($546.2
)
($540.8
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities Depreciation and amortization expense337.1
327.6
Amortization of deferred financing fees
11.9
15.1
Accretion of customer supply agreement
2.2
3.5
Employee stock compensation expense
36.6
25.8
Loss on extinguishment of debt
2.6
-
Loss (gain) from derivative instruments
17.1
(0.1
)
Gain from foreign currency transactions(18.9
)
(4.4
)
Loss on disposition of assets1.1
4.1
Deferred taxes
8.5
(4.5
)
Pension and other post-retirement plans income37.1
(109.1
)
Grant liability amortization(1.5
)
(1.5
)
Equity in net loss of affiliates1.6
2.8
Forward loss provision
(89.7
)
(10.4
)
Gain on settlement of financial instrument(21.9
)
-
Changes in assets and liabilities Accounts receivable, net
(37.1
)
51.5
Contract assets
(63.9
)
(70.9
)
Inventory, net(118.2
)
30.9
Accounts payable and accrued liabilities
220.7
160.2
Profit sharing/deferred compensation
(22.5
)
6.2
Advance payments
(133.2
)
2.7
Income taxes receivable/payable
9.5
302.4
Contract liabilities
(30.4
)
(82.4
)
Pension plans employer contributions19.5
(173.8
)
Other(14.3
)
1.9
Net cash used in operating activities
($394.6
)
($63.2
)
Investing activities Purchase of property, plant and equipment(121.6
)
(150.6
)
Acquisition, net of cash acquired(31.3
)
(21.1
)
Other(2.6
)
7.9
Net cash used in investing activities
($155.5
)
($163.8
)
Financing activities Proceeds from issuance of debt-
600.0
Proceeds from issuance of long-term bonds
900.0
-
Payment of principal - settlement of financial instrument
(289.5
)
-
Customer financing
-
(10.0
)
Principal payments of debt(47.6
)
(42.1
)
Payments on term loan(6.0
)
(401.5
)
Payments on bonds(779.2
)
(300.0
)
Taxes paid related to net share settlement awards(7.2
)
(5.2
)
Proceeds from issuance of ESPP stock3.9
3.0
Debt issuance and financing costs
(32.3
)
(3.4
)
Dividends paid(4.2
)
(4.3
)
Proceeds from noncontrolling interest3.7
-
Payment of debt extinguishment costs
(2.6
)
-
Net cash used in financing activities
($261.0
)
($163.5
)
Effect of exchange rate changes on cash and cash equivalents(8.9
)
(4.2
)
Net decrease in cash, cash equivalents and restricted cash for the period($820.0
)
($394.7
)
Cash, cash equivalents, and restricted cash, beginning of the period1,498.4
1,893.1
Cash, cash equivalents, and restricted cash, end of the period
$678.4
$1,498.4
Reconciliation of Cash and Cash Equivalents and Restricted Cash: December 31,2022 December 31,2021 Cash and cash equivalents, beginning of the period
$1,478.6
$1,873.3
Restricted cash, short-term, beginning of the period
0.3
0.3
Restricted cash, long-term, beginning of the period
19.5
19.5
Cash, cash equivalents, and restricted cash, beginning of the period
$1,498.4
$1,893.1
Cash and cash equivalents, end of the period
$658.6
$1,478.6
Restricted cash, short-term, end of the period
0.2
0.3
Restricted cash, long-term, end of the period
19.6
19.5
Cash, cash equivalents, and restricted cash, end of the period
$678.4
$1,498.4
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 (loss) 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 (Loss) Earnings Per Share. To provide additional transparency, we have disclosed non-GAAP adjusted diluted (loss) 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 (loss) per share.
Free Cash Flow. Free Cash Flow is defined as GAAP cash provided by (used in) operating activities (also 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 (used in) 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
Three months ended
Twelve months ended
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
GAAP Diluted Loss Per Share($2.32
)
($1.15
)
($5.21
)
($5.19
)
Costs Related to Acquisitions-
-
-
0.01
a
Restructuring Costs-
-
-
0.05
b
Deferred Tax Asset Valuation Allowance0.62
c
0.24
c
1.63
c
1.96
c
Curtailment Gain-
-
d
-
(0.35
)
d
Pension Spinoff Settlement Loss-
0.07
e
-
0.06
e
Investment Agreement Settlement Gain-
-
(0.14
)
f
-
Losses related to Russia Sanctions
-
-
0.19
g
-
Pension Termination Charges
0.24
h
-
0.72
h
-
Adjusted Diluted Loss Per Share
($1.46
)
($0.84
)
($2.81
)
($3.46
)
Diluted Shares (in millions)104.8
104.3
104.6
104.2
a
Represents the transaction costs associated with acquisitions (included in SG&A)
b
Represents the restructuring expenses for cost-alignment and headcount reductions (included in Restructuring costs)
c
Represents the deferred tax asset valuation allowance (included in Income tax benefit)
d
Represents the curtailment gain resulting from the closure of the defined benefit plans acquired as part of the Bombardier Acquisition (included in Other expense)
e
Represents the pension settlement loss resulting from pension plan spinoff (included in Other expense)
f
Represents the gain resulting from the settlement of the repayable investment agreement with the U.K. Department of Business, Energy and Industrial Strategy (included in Other expense)
g
Represents the impairment charges and reserve adjustments related to the suspension of all sales and service activities relating to sanctioned Russian business activities. These losses are directly attributable to the sanctions, incremental to similar costs (or income) incurred for reasons other than the sanctions and are not expected to recur, and therefore, are not indicative of Spirit's ongoing operational performance (primarily included in Cost of Sales)
h
Represents the non-cash charges related to the termination of the U.S. Pension Value Plan A (included in Other expense)
Free Cash Flow
($ in millions)
Three months ended
Twelve months ended
December 31, 2022
December 30, 2021
December 31, 2022
December 31, 2021
Cash Used in Operations($27
)
($77
)
($395
)
($63
)
Capital Expenditures(39
)
(61
)
(122
)
(151
)
Free Cash Flow($66
)
($137
)
($516
)
($214
)
View source version on businesswire.com: https://www.businesswire.com/news/home/20230207005096/en/
Investor Relations: Ryan Avey or Aaron Hunt, (316) 523-7040 Media: Chuck Cadena, (316) 526-3910 or Haley Beattie, +44 2895 680850 On the web: http://www.spiritaero.com
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