Spirit AeroSystems Reports First Quarter 2025 Results

Published: 2025-05-01 16:21:05 ET SPR

Published on 05/01/2025 at 16:21

WICHITA, Kan., May 1, 2025 /PRNewswire/ --

First Quarter 2025

Spirit AeroSystems Holdings, Inc. (NYSE: SPR) ("Spirit," "Spirit AeroSystems" or the "Company") reported first quarter 2025 financial results.

Revenue

Spirit's revenue in the first quarter of 2025 decreased from the same period of 2024, primarily due to lower production activity on most Boeing programs, particularly the Boeing 737 program. For the Boeing 737 program, production activity during the first quarter of 2024 was higher due to preparation for expected rate increases which were subsequently delayed later in that same period. This decrease was partially offset by higher production activity on Airbus programs during the first quarter of 2025.

Overall deliveries increased during the first quarter of 2025 compared to the same period of 2024. Boeing 737 deliveries were significantly higher year-over-year due to the delay in deliveries caused by the initiation of the joint product verification process with Boeing during the first quarter of 2024.

Spirit's backlog at the end of the first quarter of 2025 was approximately $48 billion, which includes work packages on all commercial platforms in the Airbus and Boeing backlog.

Earnings

Operating loss in the first quarter of 2025 improved compared to the same period of 2024, primarily resulting from less total change in estimates as well as $80 million of gain driven by the sale of Fiber Materials, Inc. (FMI), partially offset by a warranty reserve of $116 million.

During the first quarter of 2025, the Company updated its estimates related to a specific warranty issue involving parts affected by the titanium records and certifications that are alleged to have been counterfeited and established a specific warranty reserve of $116 million for the matter. These costs are accrued and recorded to unallocated costs of goods sold in the Commercial segment. The Company believes it has certain contractual rights related to recovery from suppliers and plans to aggressively pursue these.

Total change in estimates in the first quarter of 2025 included net forward losses of $293 million and unfavorable cumulative catch-up adjustments of $8 million. Net forward losses were mainly driven by the Airbus A350, Airbus A220 and Boeing 787 programs of $90 million, $86 million and $38 million, respectively, resulting from schedule changes, production performance and supply chain cost growth. Excess capacity costs during the first quarter of 2025 were $47 million. In comparison, total changes in estimates in the first quarter of 2024 included net forward losses of $495 million and unfavorable cumulative catch-up adjustments of $39 million. Additionally, excess capacity costs were $26 million in the same period of 2024.

First quarter 2025 EPS was $(5.21), compared to $(5.31) in the same period of 2024. Adjusted to exclude the incremental deferred tax asset valuation allowance, first quarter 2025 adjusted EPS* was $(4.25), compared to $(3.93) in the first quarter of 2024.

Cash

Cash from operations and free cash flow* during the first quarter of 2025 decreased compared to the same period of 2024, largely resulting from the timing of working capital, partially offset by higher Boeing 737 deliveries. The Company's cash balance at the end of the first quarter of 2025 was $220 million.

Developments in 2024 resulted in significant reductions in projected revenue and cash flows over the next twelve months. These developments include production and delivery process changes implemented by Boeing, lower than planned 737 production rates and the lack of price increases on Airbus programs. Although the customer advances received in 2024 and 2025 have provided essential operational liquidity, there can be no assurance that Spirit will be able to obtain additional advances from customers, repay current advances on the specified due dates, renegotiate the due dates or otherwise obtain additional liquidity as needed under acceptable terms or at all. We will need to obtain additional funding to sustain operations, as we expect to continue generating operating losses for the foreseeable future.

Management has developed a plan designed to improve liquidity. These plans are dependent upon many factors, including, among other things, the outcomes of active discussions related to the timing or amounts of repayment for certain customer advances, achieving forecasted 737 deliveries, the timing and expected proceeds received from certain divestitures and the expected timing and outcome of the transactions contemplated by the merger agreement with Boeing and the stock and asset purchase agreement with Airbus. Management is also evaluating additional strategies intended to improve liquidity to support operations, including, but not limited to, additional customer advances and restructuring of operations in an effort to increase efficiency and decrease expenses. However, there can be no assurance that these plans or strategies will sufficiently improve our liquidity needs or that we will otherwise realize the anticipated benefits. Accordingly, substantial doubt about the Company's ability to continue as a going concern exists.

Pending Boeing Acquisition of Spirit AeroSystems Update

On June 30, 2024, the Company entered into an Agreement and Plan of Merger with The Boeing Company (the "Merger Agreement"). Upon completion of the merger, subject to the terms and conditions of the Merger Agreement, the Company would become a wholly owned subsidiary of Boeing. The closing of the transaction is expected to occur in the third quarter of 2025, subject to the completion of the divestiture of certain portions of Spirit's business related to the performance by Spirit and its subsidiaries of their obligations under their supply contracts with Airbus SE and other closing conditions, including receipt of regulatory approvals. In connection with the proposed merger, Spirit and Boeing have each received a request for additional information ("second request") from the Federal Trade Commission as part of the regulatory review process under the Hard-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The second request extends the waiting period imposed by the HSR Act until 30 days after Spirit and Boeing have substantially complied with the requests or the waiting period is terminated sooner by the Federal Trade Commission.

Subsequent Events

On April 28, 2025, the Company announced that it has entered into a definitive agreement with Airbus SE (the "Airbus Divestiture Agreement") to transfer ownership of certain assets and sites involved in the production of Airbus aerostructures to Airbus. Airbus SE would acquire these assets and sites, excluding any portions thereof to be acquired by third parties, and cash in the amount of $439.0 million, for nominal consideration of one U.S. dollar, subject to working capital and other purchase price adjustments and specified additional downward adjustments if specified assets are to be acquired by a third party instead of Airbus SE. The divestiture of assets to Airbus under the terms of the Airbus Divestiture Agreement is subject to regulatory approvals, among other closing conditions, and is expected to close in the third quarter of 2025, concurrently with the closing of the acquisition of Spirit by Boeing under the Merger Agreement

Additionally, on April 28, 2025, Spirit disclosed that it has entered into a memorandum of agreement with Airbus S.A.S. under which Airbus S.A.S. has agreed to, among other things, provide Spirit with non-interest-bearing lines of credit in an aggregate amount of $200 million, which will be used by Spirit to support Airbus programs. Under the terms of the memorandum of agreement, the repayment obligations relating to the lines of credit will be assumed by Airbus S.A.S. or one of its affiliates upon the closing under the Airbus Divestiture Agreement or, if earlier, repaid to Airbus S.A.S. on April 1, 2026.

Segment Results

Commercial

Commercial segment revenue in the first quarter of 2025 decreased from the same period of the prior year, primarily due to lower production activity on most Boeing programs, particularly the Boeing 737 program, as discussed above. Operating margin for the first quarter of 2025 decreased compared to the same period of 2024, primarily driven by lower production activity and margins on Boeing programs and the warranty reserve discussed above, partially offset by lower changes in estimate charges recorded in the current period compared to the same period of 2024. In the first quarter of 2025, change in estimates for the segment included $263 million of net forward losses and $17 million of unfavorable cumulative catch-up adjustments. Additionally, during the first quarter of 2025, the Commercial segment included excess capacity costs of $41 million. In comparison, during the first quarter of 2024, the segment recognized $494 million of net forward losses, $39 million of unfavorable cumulative catch-up adjustments, and excess capacity costs of $25 million.

Defense & Space

Defense & Space segment revenue in the first quarter of 2025 increased from the same period of the prior year. This increase was primarily due to higher activity on the Boeing P-8 and Sikorsky CH-53K, partially offset by the lack of revenue from FMI resulting from the site divestiture. Operating margin for the first quarter of 2025 decreased compared to the same period of 2024, primarily due to additional forward losses recorded on the KC-46 Tanker and KC-135 programs. The segment recorded net forward losses of $30 million and favorable cumulative catch-up adjustments of $9 million. In comparison, during the first quarter of 2024, the segment recorded net forward losses of $2 million and no cumulative catch-up adjustments.

Aftermarket

Aftermarket segment revenue in the first quarter of 2025 increased slightly from the same period of the prior year. Operating margin in the first quarter of 2025 decreased slightly compared to the first quarter of 2024, primarily due to sales mix.

2025 Financial Outlook

In light of the Merger Agreement, and consistent with customary practice during the pendency of such transactions, Spirit will not provide guidance.

Additionally, due to the Merger Agreement, no conference call will be held in conjunction with this release. Full details of the Company's financial results are available in the Company's Quarterly Report on Form 10-Q.

* Non-GAAP financial measure, see Appendix for definition and reconciliation

Cautionary Statement Regarding Forward-Looking Statements You should read the discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the notes to the unaudited condensed consolidated financial statements appearing in the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q. The press release may include "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," "designed," "ensure," "estimate," "expect," "forecast," "goal," "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 reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown, including, but not limited to, those described in the "Risk Factors" sections of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the "SEC") (the "2024 Form 10-K") and subsequent Quarterly Reports on Form 10-Q. 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 sections captioned "Risk Factors" in the 2024 Form 10-K and the Company's subsequent Quarterly Reports on Form 10-Q for a more complete discussion of these and other factors that may affect our business.

Table 1. Summary Financial Results (unaudited)

1st Quarter

($ in millions, except per share data)

2025

2024

Change

Net Revenues

$1,522

$1,703

(11 %)

Operating Loss

($487)

($528)

8 %

Operating Loss as a % of Revenues

(32.0 %)

(31.0 %)

(100) BPS

Net Loss

($613)

($617)

1 %

Net Loss as a % of Revenues

(40.3 %)

(36.2 %)

(410) BPS

Net Loss Per Share (Fully Diluted)

($5.21)

($5.31)

2 %

Adjusted Net Loss Per Share (Fully Diluted)*

($4.25)

($3.93)

(8 %)

Fully Diluted Weighted Avg Share Count

117.6

116.2

Table 2. Cash Flow, Cash and Total Debt (unaudited)

1st Quarter

($ in millions)

2025

2024

Change

Cash used in Operations

($420)

($416)

(1 %)

Purchases of Property, Plant & Equipment

($55)

($29)

(91 %)

Free Cash Flow*

($474)

($444)

(7 %)

April 3,

December 31,

Cash and Total Debt

2025

2024

Cash

$220

$537

Total Debt

$4,363

$4,394

Table 3. Segment Reporting (unaudited)

1st Quarter

($ in millions)

2025

2024

Change

Segment Revenues

Commercial

$1,161.6

$1,356.1

(14.3 %)

Defense & Space

261.0

250.8

4.1 %

Aftermarket

99.2

95.9

3.4 %

Total Segment Revenues

$1,521.8

$1,702.8

(10.6 %)

Segment (Loss) Earnings from Operations

Commercial

($464.9)

($484.9)

4.1 %

Defense & Space

(10.7)

32.2

Aftermarket

14.5

17.2

(15.7 %)

Total Segment Operating Loss

($461.1)

($435.5)

(5.9 %)

Segment Operating (Loss) Earnings as % of Revenues

Commercial

(40.0 %)

(35.8 %)

(420) BPS

Defense & Space

(4.1 %)

12.8 %

Aftermarket

14.6 %

17.9 %

(330) BPS

Total Segment Operating Loss as % of Revenues

(30.3 %)

(25.6 %)

(470) BPS

Unallocated Expense

SG&A

($91.8)

($81.5)

(12.6 %)

Research & Development

(14.5)

(10.6)

(36.8 %)

Gain on Dispositions of Businesses

80.4

Total Loss from Operations

($487.0)

($527.6)

7.7 %

Total Operating Loss as % of Revenues

(32.0 %)

(31.0 %)

(100) BPS

** Represents an amount in excess of 100% or not meaningful.

Spirit Shipset Deliveries

(one shipset equals one aircraft)

1st Quarter

2025

2024

B737

127

B767

B777

B787

Total Boeing

145

A220

A320 Family

186

153

A330

A350

Total Airbus

236

191

Business/Regional Jet

Total

429

307

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

For the Three Months Ended

April 3, 2025

March 28, 2024

($ in millions, except per share data)

Net revenues

$ 1,521.8

$ 1,702.8

Operating costs and expenses

Cost of sales

1,982.9

2,138.3

Selling, general and administrative

91.8

81.5

Research and development

14.5

10.6

(Gain) on dispositions of businesses

(80.4)

Total operating costs and expenses

2,008.8

2,230.4

Operating loss

(487.0)

(527.6)

Interest expense and financing fee amortization

(99.5)

(80.2)

Other (expense) income, net

(19.9)

2.3

Loss before income taxes and equity in net loss of affiliates

(606.4)

(605.5)

Income tax provision

(6.0)

(11.0)

Loss before equity in net loss of affiliates

(612.4)

(616.5)

Equity in net loss of affiliates

(0.3)

(0.1)

Net loss

(612.7)

(616.6)

Less noncontrolling interest in earnings of subsidiary

(0.2)

(0.1)

Net loss attributable to common shareholders

$ (612.9)

$ (616.7)

Loss per share

Basic

$ (5.21)

$ (5.31)

Diluted

$ (5.21)

$ (5.31)

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

April 3, 2025

December 31, 2024

($ in millions)

Assets

Cash and cash equivalents

$ 220.2

$ 537.0

Accounts receivable, net

527.6

395.3

Contract assets, short-term

646.1

777.9

Inventory, net

2,019.8

1,891.7

Assets of business held for sale

100.6

Other current assets

90.6

58.0

Total current assets

3,504.3

3,760.5

Property, plant and equipment

1,930.9

1,947.9

Right of use assets

82.6

79.0

Contract assets, long-term

7.8

Pension assets

52.5

49.4

Restricted plan assets

21.1

41.2

Deferred income taxes

0.2

0.1

Goodwill

630.2

630.0

Intangible assets, net

146.4

149.5

Other assets

101.5

105.2

Total assets

$ 6,477.5

$ 6,762.8

Liabilities

Accounts payable

$ 1,083.1

$ 1,041.1

Accrued expenses

505.5

453.3

Profit sharing

25.2

59.0

Current portion of long-term debt

400.6

424.5

Operating lease liabilities, short-term

10.1

10.0

Advance payments, short-term

159.9

158.1

Contract liabilities, short-term

230.2

270.3

Forward loss provision, short-term

585.3

471.5

Deferred revenue and other deferred credits, short-term

99.3

75.4

Customer financing, short-term

112.0

532.0

Liabilities of business held for sale

18.8

Other current liabilities

181.4

53.4

Total current liabilities

3,392.6

3,567.4

Long-term debt

3,962.0

3,969.7

Operating lease liabilities, long-term

74.7

69.8

Advance payments, long-term

177.2

181.0

Pension/OPEB obligation

24.0

24.9

Contract liabilities, long-term

173.0

177.4

Forward loss provision, long-term

834.9

799.8

Deferred revenue and other deferred credits, long-term

15.6

46.7

Deferred grant income liability - non-current

23.9

25.1

Deferred income taxes

10.5

7.8

Customer financing, long-term

831.2

372.0

Other non-current liabilities

151.3

137.2

Stockholders' Equity (Deficit)

Common stock, Class A par value $0.01, 200,000,000 shares authorized,

117,318,648 and 117,266,121 shares issued and outstanding, respectively

1.2

Additional paid-in capital

1,464.9

1,457.6

Accumulated other comprehensive loss

(72.1)

(100.1)

Retained earnings

(2,136.4)

(1,523.5)

Treasury stock, at cost (41,587,480 shares each period, respectively)

(2,456.7)

Total stockholders' equity (deficit)

(3,199.1)

(2,621.5)

Noncontrolling interest

5.7

5.5

Total equity (deficit)

(3,193.4)

(2,616.0)

Total liabilities and equity (deficit)

$ 6,477.5

$ 6,762.8

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

For the Three Months Ended

April 3, 2025

March 28, 2024

Operating activities

($ in millions)

Net loss

$ (612.7)

$ (616.6)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization expense

68.8

77.9

Amortization of deferred financing fees

5.0

1.7

Accretion of customer supply agreement

0.7

0.8

Employee stock compensation expense

8.3

10.8

Gain from derivative instruments

(0.9)

(1.2)

Loss (gain) from foreign currency transactions

25.3

(5.9)

Loss on disposition of assets

0.1

0.7

Deferred taxes

1.9

9.0

Pension and other post-retirement plans income

(1.1)

(2.8)

Grant liability amortization

(0.3)

Equity in net loss of affiliates

0.3

0.1

Forward loss provision

143.1

378.1

Gain on settlement of financial instrument

(0.3)

(0.5)

Asset impairment charges

5.4

Gain on dispositions of businesses

(80.4)

Changes in assets and liabilities

Accounts receivable, net

(136.8)

7.4

Inventory, net

(113.9)

(34.8)

Contract assets

125.6

(309.8)

Accounts payable and accrued liabilities

116.7

99.7

Profit sharing/deferred compensation

(34.1)

6.7

Advance payments

(2.0)

12.2

Income taxes receivable/payable

2.8

2.7

Contract liabilities

(45.6)

(48.0)

Pension plans employer contributions

(0.8)

(0.7)

Deferred revenue and other deferred credits

(8.9)

(0.5)

Warranty liabilities

114.4

(0.2)

Other

(0.1)

(2.1)

Net cash used in operating activities

(419.5)

(415.6)

Investing activities

Purchase of property, plant and equipment

(54.7)

(28.7)

Proceeds from dispositions of businesses

162.6

Net cash provided by (used in) investing activities

107.9

(28.7)

Financing activities

Receipts from customer financing

39.2

Payments on bonds

(20.8)

Principal payments of debt

(14.7)

(16.5)

Payments on term loans

(1.5)

Taxes paid related to net share settlement awards

(1.0)

(4.5)

Debt issuance and financing costs

(2.3)

(0.5)

Net cash used in financing activities

(1.1)

(21.5)

Effect of exchange rate changes on cash and cash equivalents

(0.5)

(0.3)

Net decrease in cash, cash equivalents, and restricted cash for the period

(313.2)

(466.1)

Cash, cash equivalents, and restricted cash, beginning of period

566.5

845.9

Cash, cash equivalents, and restricted cash, end of period

$ 253.3

$ 379.8

Reconciliation of Cash, Cash Equivalents, and Restricted Cash:

For the Three Months Ended

April 3, 2025

March 28, 2024

Cash and cash equivalents, beginning of the period

$ 537.0

$ 823.5

Restricted cash, short-term, beginning of the period

0.1

Restricted cash, long-term, beginning of the period

29.5

22.3

Cash, cash equivalents, and restricted cash, beginning of the period

$ 566.5

$ 845.9

Cash and cash equivalents, end of the period

$ 220.2

$ 352.0

Restricted cash, short-term, end of the period

0.1

Restricted cash, long-term, end of the period

33.1

27.7

Cash, cash equivalents, and restricted cash, end of the period

$ 253.3

$ 379.8

AppendixIn 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 press release) provide investors with important perspectives into the company's ongoing business performance. The non-GAAP measures we use in this press release 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 Earnings (Loss) Per Share. To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings (loss) 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

1st Quarter

2025

2024

GAAP Diluted (Loss) Earnings Per Share

($5.21)

($5.31)

Deferred Tax Asset Valuation Allowance (a)

0.96

1.38

Adjusted Diluted (Loss) Earnings Per Share

($4.25)

($3.93)

Diluted Shares (in millions)

117.6

116.2

(a) Represents the deferred tax asset valuation allowance (included in Income tax provision)

Free Cash Flow

1st Quarter

($ in millions)

2025

2024

Cash from Operations

($420)

($416)

Capital Expenditures

(55)

(29)

Free Cash Flow

($474)

($444)

View original content to download multimedia:https://www.prnewswire.com/news-releases/spirit-aerosystems-reports-first-quarter-2025-results-302444240.html

SOURCE Spirit Aerosystems