Spirit Aerosystems Holdings, Inc. (SPR)

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Spirit AeroSystems Holdings (SPR)

Q4 2013 Earnings Call

February 06, 2014 11:00 am ET


Coleen Tabor - Investor Relations Director

Larry A. Lawson - Chief Executive Officer, President, Director, Member of US Government Security Committee, Chief Executive Officer of Spirit Aerosystems Inc and President of Spirit Aerosystems Inc

Sanjay Kapoor - Chief Financial Officer and Senior Vice President


Robert Spingarn - Crédit Suisse AG, Research Division

Howard A. Rubel - Jefferies LLC, Research Division

Carter Copeland - Barclays Capital, Research Division

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

David E. Strauss - UBS Investment Bank, Research Division

Ronald J. Epstein - BofA Merrill Lynch, Research Division

George Shapiro

Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division

John D. Godyn - Morgan Stanley, Research Division



Good day, ladies and gentlemen, and welcome to the Spirit AeroSystem Holdings Inc. Fourth Quarter and Full Year 2013 Earnings Conference Call. My name is Tricia, and I'll be your coordinator for today. [Operator Instructions] Please note that this conference is being recorded. I would now like to turn the presentation over to Ms. Coleen Tabor, Director of Investor Relations. Please proceed.

Coleen Tabor

Thank you, and good morning. Welcome to Spirit's fourth quarter and full year 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 opening comments by Larry and Sanjay regarding our performance and outlook, we will take your questions, and then Larry will share some closing comments. [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. 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 fourth quarter and full year earnings call. First of all, I'd like to thank all our employees around the globe for your hard work this year. Your teamwork was instrumental in Spirit reaching all-time highs in aircraft production rates. As we increased rate, we also recognized an overall improvement in quality. We made great progress this year, but we've not yet reached our destination.

In addition, a tremendous effort went into concluding the strategic and financial review, and the management team has been instrumental in mapping our path forward. I also want to thank the investment community for your patience this year. It's been a year of change, you stayed with us when we announced the strategic and financial review and suspended guidance in May.

I will share with you some thoughts about the outcome of this review and give some color about the future, and then Sanjay will walk you through all the numbers in more detail, and then we will answer your questions.

2013 was a transformational year for Spirit and really the beginning of our efforts, as opposed to a conclusion. I first want to take a moment to summarize some of the key findings and actions from the strategic and financial review.

Transformation starts with people. The strategic review helped us to see where we needed to strengthen our team and a number of industry experts have joined us and are working and living in Wichita, Tulsa, Kinston and St. Nazaire. We had a new leadership at my staff level and the next staff level down, and we're now focused on the entire organization.

In the last 10 months, we've added 15 experienced executives, including our CFO; the Senior Vice President of Operations; and of course, the Senior Vice President of Strategy and Investor Relations. We've been very fortunate to be able to add new leaders in quality, procurement, new site leaders in Kinston and St. Nazaire, and 2 Senior Deputies in our aerostructures' P&L.

In addition, we've moved many of our talented internal team members around to better align their strengths with our business needs. We will continue to strengthen and align with a focus on promoting highly confident and motivated people that understand our customers' needs.

Next, in the areas of processes and decision-making. We have realigned and integrated our organization. We have a strong emphasis on markets, business management, program management and production. We are driving to a fully integrated management of the Spirit enterprise, and we've reinforced our planning, data and metrics to communicate among ourselves and with our customers.

In addition to the overhead reductions we made, we began to centralize a number of functions. We're balancing our made-by strategy, with the associated timelines against the production volume demands we have in 2014, and we also continue to make progress in our overall supply strategy.

With regard to the business we're in. We do believe in our value proposition. Spirit's value-added design and manufacturing capabilities in the commercial aerospace and defense markets are differentiated. We are a partner of choice when taking on challenging projects and programs. We put Tulsa up for sale to determine if there was a better fit in the industry, and we continue to work with potential buyers.

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