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Spirit AeroSystems (SPR) Q2 Earnings Beat, Backlog Slips Q/Q

Zacks Equity Research

Spirit AeroSystems Holdings, Inc. SPR reported second-quarter 2019 adjusted earnings of $1.71 per share, which surpassed the Zacks Consensus Estimate of $1.64. On a year-over-year basis, the bottom line registered an improvement of 5% from $1.63 per share.

Barring one-time adjustments, the company reported GAAP earnings of $1.61 per share compared with $1.31 in the year-ago quarter.

Highlights of the Release

Total revenues of $2,016 million exceeded the Zacks Consensus Estimate of $1,983 million by 1.7%. Moreover, the top line rose 10% from $1,837 million on a year-over-year basis.

Backlog at the end of second-quarter 2019 was $46 billion, lower than $48 billion in the prior quarter.

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Spirit Aerosystems Holdings, Inc. Price, Consensus and EPS Surprise

Spirit Aerosystems Holdings, Inc. Price, Consensus and EPS Surprise
Spirit Aerosystems Holdings, Inc. Price, Consensus and EPS Surprise

 

Spirit Aerosystems Holdings, Inc. price-consensus-eps-surprise-chart | Spirit Aerosystems Holdings, Inc. Quote

Segment Performance
 
Fuselage Systems: Revenues at the segment grew 6.5% to $1,097 million from $1,030 million registered in second-quarter 2018. Higher production volumes of the Boeing 787 and Airbus A350 programs in addition to higher revenues generated from the Boeing 787 program activity drove the top line.
 
Propulsion Systems: The segment recorded revenues of $518.9 million in the reported quarter, up 22.8% from $422.7 million a year ago. The uptick can be attributed to favorable model mix on the Boeing 737 program, higher production volume on the Boeing 777 program and higher revenue recognized on the Boeing 787 program.

Wing Systems: Revenues at the segment rose 4% to $398.5 million from $383 million in the prior-year quarter. The upside was primarily driven by higher production volumes of the Boeing 777 and 787 programs.

Financial Position

As of Jun 27, 2019, Spirit AeroSystems had $1,301.4 million in cash and cash equivalents compared with $773.6 million as on Dec 31, 2018.

At the end of the first six months of 2019, long-term debt totaled $2,113.3 million compared with $1,864 million at the end of 2018.

Cash flow from operating activities increased to $471.7 million at the end of second-quarter 2019 from $397.2 million at the end of second-quarter 2018.

Capital expenditures summed $37 million during the second quarter, down from $61 million in the prior-year quarter.

Update on 737 MAX

Following the 737 MAX grounding and subsequent Memorandum of Agreement with Boeing in April 2019, Spirit AeroSystems implemented cost-reduction plans to mitigate the impact of the lower 737 production schedule. These actions include reduced levels of overtime and contractors, a voluntary retirement plan, shortened work weeks for certain employees, a hiring freeze, deferred capital spend, and working capital improvements. The company expects to realize the financial benefits from these strategic plans in the second half of 2019.

Zacks Rank

Spirit AeroSystems has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Textron Inc. TXT reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 9.4%.

Lockheed Martin Corp. LMT reported second-quarter 2019 earnings of $5 per share, which exceeded the Zacks Consensus Estimate of $4.74 by 5.5%.

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