Spirit Aerosystems Holdings, Inc. (SPR)

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Spirit AeroSystems Holdings, Inc. (SPR)

February 20, 2013 9:45 am ET

Executives

Coleen Tabor

Philip D. Anderson - Chief Financial Officer and Senior Vice President

Analysts

Carter Copeland - Barclays Capital, Research Division

Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division

Presentation

Carter Copeland - Barclays Capital, Research Division

All right. Welcome, everybody. I will start off, I'll kick off our aerospace coverage of the conference with Spirit AeroSystems, where we are happily joined by Phil Anderson, Chief Financial Officer; and Coleen Tabor, VP of Investor Relations. I think Coleen actually is, before we kick off, is going to read us the forward-looking statement.

Coleen Tabor

Thank you, Carter. Before we begin, I need to remind you that any projections or goals we may discuss today are likely to involve risks, which are detailed in our news releases and our SEC filings. And after our chat today, we'll also be posting a copy of our handout on our website that includes some of the concepts that we'll be discussing with you, Carter.

Carter Copeland - Barclays Capital, Research Division

Okay. Now we're legally sanitized. So we'll go ahead and get started. I want to take a second and kind of just gauge who we actually have in the room. Obviously, you've been using the audience response system this morning and I want to go to Question 1 just to figure out who we got in the room.

Question 1 is -- obviously, you'll hit 1, 2, 3, 4 after we read it. But basically, Question 1, do you currently own the stock? Yes; overweight, yes; equal weight, 3 is yes; underweight or no, not at all. Go ahead and key in your answers, and we'll see how many owners we get.

[Voting]

Carter Copeland - Barclays Capital, Research Division

All right. We've got a lot of non-owners. That's opportunity, a lot of people to sell.

So this will be a tough question then, I suppose, since we have a relatively low number of owners. But if you go to Question #2, what's your general bias towards the stock right now? 1, positive; 2, negative; and 3, neutral. Go ahead and answer.

[Voting]

Carter Copeland - Barclays Capital, Research Division

Wow. So we've got a pretty even split. So maybe there's some opportunity to win some hearts and minds. I'll start with that.

So, actually, just sort of ask a general question, I know you guys reported earnings very recently, but there may be some people in the room, obviously since we don't have a ton of ownership, who may not be familiar with all the company's gone through. You're obviously recovering from last year's tornado, there's a leadership change at the CEO position that is ongoing, you're engaged in that search at the [ph] sort of problem programs. I wonder if you might take a second, just update us on the kind of state of the union and where things stand with the company, where you've been, where you're going.

Philip D. Anderson

Sure. Thanks for having us, Carter.

I think a couple of thoughts. Number one, it's an exciting time to be in the commercial aerospace industry. The backlogs are at records if not close to records, yes, from 2006 to today. We had a $19 billion backlog in 2006; today, it's $35 billion. So backlogs have just been tremendously supportive to the industry. But it's a good question, right? The company has, certainly had some challenges as we've tried to diversify the company over the last 7 years. So I think it's appropriate to take a few moments to kind of do 3 things: One, reflect back when the company was formed, talk about what has transpired over the last 5 to 6 years from an environmental standpoint in the business and industry and then, really more important, think about the future, right? Because frankly, sitting here today, it's about positioning Spirit for the future and taking the lessons learned from the past and moving into the future, which frankly, looks very bright for commercial aerospace and our competitive position in it. So it's very exciting for me to be the finance guy there, even though it's been a really tough 3 years on my watch as the CFO, but it's still exciting. As I get out of bed every day, I think about the future, I think about how we position the company. So that's what I really want to talk about.

But let's reflect back. We were formed out of the Boeing Company in 2005, in an environment where the commercial aerospace industry was recovering in a post-9/11 world. So volumes were starting to recover after 9/11. The clean sheet designs, the new airplanes coming to market, whether it was in the large jets, biz jets, some military platforms, ton of opportunity in the clean sheet design. And in the OEMs themselves were leaning towards an outsourcing model. And that was the birth of Spirit, ultimately.

So a recovering marketplace, OEMs outsourcing and a lot of new product coming into the marketplace. And of course, Spirit was born as 100% Boeing 1 customer on Day 1. But there was a strong need to get some customer diversification into the mix and that was the Day 1 strategy, and that strategy actually worked quite well. The core business was increasing in line with past performance. 787 was on the drawing board, earlier days of course, and we were right in the middle of helping Boeing design that product. And then we went off and won 7 new programs, clean sheet designs, with 7 new customers in the 2005 to 2007 time frame. So all of which was the right strategy for the time.

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