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Spirit AeroSystems Holdings, Inc. (SPR)
Q4 2011 Earnings Call
February 09, 2012 11:00 am ET
Coleen Tabor – Director of Investor Relations
Jeffrey L. Turner – President and Chief Executive Officer
Philip D. Anderson – Senior Vice President and Chief Financial Officer
Howard Rubel – Jefferies & Company, Inc.,
Robert Spingarn – Credit Suisse
F Carter Leake – BB&T Capital Markets
David E. Strauss – UBS Investment Bank
George D. Shapiro – Access 3:42, LLC
Cai Von Rumohr – Cowen and Company
Sam Pearlstein – Wells Fargo Securities LLC
Douglas Harned – Sanford C. Bernstein & Co., Inc.
Robert Stallard – Royal Bank of Canada
Michael Callahan – Auriga Securities
Eric Hugel – Stephens Inc.
Richard Tobie Safran – Buckingham Research Group, Inc.
Kenneth Herbert – Wedbush Securities Inc.
Michael F. Ciarmoli – KeyBanc Capital Markets Inc.
Peter J. Arment – Sterne, Agee & Leach, Inc.
Previous Statements by SPR
» Spirit AeroSystems Holdings Inc's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Spirit AeroSystems Holdings Inc's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Spirit AeroSystems Holdings, Inc. 4Q09 Earnings Call Transcript
I would now turn the presentation over to Ms. Coleen Tabor, Director of Investor Relations. Please proceed.
Good morning. Welcome to Spirit’s fourth quarter and full year 2011 earnings call. I’m Coleen Tabor and with me today are Jeff Turner, Spirit’s President and Chief Executive Officer; and Phil Anderson, Spirit’s Senior Vice President and Chief Financial Officer. After brief comments by Jeff and Phil regarding our performance and outlook, we will be glad to take your questions.
In order to allow everyone to participate in the question-and-answer segment, we do ask that you limit yourself to one question. Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our news release, in our SEC filings, and in the forward-looking statement at the end of this web presentation. As a reminder, you can follow today's webcast and slide presentation on our website at spiritaero.com.
With that, I'd like to turn the call over to our Chief Executive Officer, Jeff Turner.
Jeffrey L. Turner
Thank you, Coleen, and good morning. First let me apologize for the condition of my voice. It is suffering the affects of a head cold. Fortunately, I feel better than I sound and hopefully my voice will hold out for the duration of this call.
With that said, let me welcome you to Spirit’s fourth quarter and full year earnings call. I’ll begin with a look at our business and related performance and then Phil will review the financial results. After that, we will be glad to answer your questions.
The core businesses remain the strong foundation for Spirit as we executed rate increases across the company delivering solid core operating performance in the fourth quarter. 2011 was an important year for Spirit, while we successfully transitioned to a higher production rates on our 737, 777, and A320 programs. We delivered over 1,000 core end items and a 11% increase over 2010.
When we entered 2011, we had 10 development programs, six of which were in flight and ground test and we exit the year with three successful transitions to early production. Along the way, the year marks several important milestones for these programs as the 787 and 747-8 Freighter programs achieve certification and delivery. The P-8A entered low rate initial production and we made progress on the development of the G280 and the G650.
We also reached several delivery milestones this year. As we ship two CH-53K helicopters to Sikorsky. In the first test, CSeries pile on to Bombardier. We also shipped the first A350 production composite panels from Kinston, North Carolina to our St. Nazaire, France facility. And the first Fixed Leading Edge was delivering to our customer.
Clearly, the unplanned concurrency of our new programs has been challenging for us, as we work our way through them. This quarter includes a net $0.25 per share of losses on the G280, 747-8 and A350 wing programs. While I am disappointed with these losses, I know the investment we are making in the development and manufacturing plants for these programs will position them to create long term value for our shareholders.
In the quarter, we also finalized a 9.5-year agreement with our technical and professional workers in Wichita, marking our fourth long-term contract. These agreements are focused on enhancing our partnerships and sharing the risk and reward of keeping our company healthy and our team for the future intact.
As the large commercial aircraft market continues to be positive, we remain watchful of global economic and political dynamics, while closely managing our capital spend to support increased demand for our products.
Now, let's talk about some of the specific accomplishments across the business during the quarter beginning on slide three. Our Fuselage Systems executed well with operating margins of 16.6% on $582 million in revenue during the fourth quarter, as volumes across core programs increased.
Fuselage segment 737 production line continues to perform well at high rates. The team delivered its 3,900 ship set of the Next Generation fuselage in the quarter. The 787 team delivered 4 fuselage number fifty-six, another 100% complete and fully powered on tested unit for a total of 7 fuselage sections in the quarter, and the joint Boeing and Spirit teams continued to make progress on cost improvements across the program.