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Spirit AeroSystems Holdings (SPR)
Q3 2013 Earnings Call
November 01, 2013 11:00 am ET
Previous Statements by SPR
» Spirit AeroSystems Holdings Management Discusses Q2 2013 Results - Earnings Call Transcript
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» Spirit AeroSystems Holdings Management Discusses Q1 2013 Results - Earnings Call Transcript
Sanjay Kapoor - Chief Financial Officer and Senior Vice President
Carter Copeland - Barclays Capital, Research Division
Howard A. Rubel - Jefferies LLC, Research Division
Julie Yates - Crédit Suisse AG, Research Division
David E. Strauss - UBS Investment Bank, Research Division
Ronald J. Epstein - BofA Merrill Lynch, Research Division
Robert Stallard - RBC Capital Markets, LLC, Research Division
Amit Mehrotra - Deutsche Bank AG, Research Division
John D. Godyn - Morgan Stanley, Research Division
Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division
Seth M. Seifman - JP Morgan Chase & Co, Research Division
Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division
Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division
Kenneth Herbert - Canaccord Genuity, Research Division
Good day, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc. Third Quarter 2013 Earnings Conference Call. My name is Vanessa, and I will be your coordinator today. [Operator Instructions] I would now like to turn the presentation over to Mrs. Coleen Tabor, Director of Investor Relations. Please proceed.
Thank you, and good morning. Welcome to Spirit's third quarter 2013 earnings call. I'm Coleen Tabor, and in the room with me today are Spirit's President and Chief Executive Officer, Larry Lawson; and Spirit's Senior Vice President and Chief Financial Officer, Sanjay Kapoor.
After brief comments by Larry and Sanjay regarding our performance and outlook, we will take your questions. [Operator Instructions] 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. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. And as a reminder, you can follow today's broadcast and slide presentation on our website at spiritaero.com.
With that, I'd like to turn the call over to our Chief Executive Officer, Larry Lawson.
Larry A. Lawson
Thank you, Coleen, and good morning, everyone. Welcome to Spirit's third quarter earnings call. First, I want to thank our Spirit employees for their hard work and determination. This team is really concentrated on performance, which is essential. We're making good progress in the drive to reduce our cost and to deliver high-quality aerostructures to our customers and cash to our shareholders.
Obviously, there's more work to be done. I would like to take a moment to welcome the newest member of the executive leadership team, our Chief Financial Officer, Sanjay Kapoor. We're very pleased to have Sanjay on board. His experience across the commercial and defense programs, as both a CFO and as a P&L leader, give him the knowledge and perspective necessary to help us in our drive towards predictability in our financials.
He has a very strong track record, particularly in the areas of program and cost management. He is a true complement to the team. We're continuing to make additions to the team in alignment with our 4 key themes: disciplined decision-making and market focus; a focus on performance; a focus on cost and, of course, a focus on free cash flow. Welcome to Spirit, Sanjay.
Now let's turn to our results in the quarter. We reported $1.5 billion in revenues with $170 million of adjusted operating income and $51 million in operating income, including the charges. Operating cash flow was $185 million, and adjusted free cash flow was $141 million. We are pleased to see the improving results on cash flow.
The backlog continues to be on a record high of $38 billion. We have reported earnings per share of $0.65 after charges. On an adjusted basis, earnings per share were $0.77, which is up 18% year-over-year.
The quarter included a net $112 million forward loss on the recurring and nonrecurring contracts for the A350. We told you we would disclose information as we progressed through our assessments. There have been a number of actions on the A350 that we have taken and updated plans and settlements that are reflected in the quarter. On the recurring side, the cost of early development and production discovery, along with the concurrent production costs, are incorporated in the charge we took this quarter.
In addition, longer-term costs associated with the recurring transportation and material test costs were also included. The nonrecurring cost side reflects the scope of development work for the -1000 derivative. As we continue to work in the early phase of this program, we are closely monitoring costs and schedule performance, while working cost improvement initiatives with our customer.
Turning to our strategic and financial review. We continue to forge deeper into our cost structure and refining what we measure, so that we track and reward the right behavior that positions Spirit for long-term success. You saw us take action with additional overhead cost reductions; we are progressing on the Tulsa sale; we have announced the intended sale of our interest in Progresstech; and we announced a teaming agreement with Bell Helicopter on the V-280 Valor, the next generation tiltrotor designed to meet the army's future vertical lift requirements.
We've also decided to centralize our procurement function, consolidate other support functions. We continue to balance our capital needs and assess our material make-buy decisions.