Spirit AeroSystems' Stock Plummets After Q2 Results, Expects IAM Strike To Negatively Impact 2023 Performance

Spirit AeroSystems Holdings, Inc. SPR reported second-quarter FY23 revenue growth of 8% year-over-year to $1.36 billion, beating the consensus of $1.31 billion. 

The revenue increase represents higher production deliveries on the 737 and 787 programs and increased Defense and Space revenue.

Q2 Adjusted EPS loss expanded to $(1.46) from $(1.21) a year ago, missing the consensus of $(0.86).

Overall deliveries increased to 342 shipsets during the quarter compared to 318 shipsets in the same period of 2022.

Sales by segments: Commercial $1.08 billion (+5% Y/Y), Defense & Space $189.6 million (+29.5% Y/Y), and Aftermarket $92.1 million (+14.6% Y/Y).

Operating loss expanded to $(120) million from $(105) million a year ago. SPR stated that the change in operating loss was driven by higher changes in estimates as well as contra revenue recorded for a potential customer claim.

SPR cash used in operations year-to-date narrowed to $(229) million vs. $(331.7) million a year ago and free cash flow usage of $(280) million.

Spirit's backlog was ~$40.5 billion at the end of Q2. The cash balance at the end of the quarter was $526 million.

"We are very pleased to have in place a four-year contract with our IAM-represented employees, which reflects the gratitude we have for their contributions. While the first vote resulted in a work stoppage, we quickly went back to the table with our union partners and reached a resolution. However, the strike did impact our production and deliveries, as reflected in earnings and cash flow," stated Tom Gentile, President and Chief Executive Officer.

Related: Spirit AeroSystems Workers End Strike At Wichita Plant By Approving New Contract Proposal

The company mentioned that the work stoppage from the IAM strike will reduce full-year 737 deliveries to 370-390 units, negatively impacting expected revenue, earnings, and cash flow for 2023.

SPR stated that the company had resolved all rework related to the vertical attach fittings issue on available 737 units in Wichita.

Price Action: SPR shares are trading lower by 13.49% at $27.20 on the last check Wednesday.

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