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Start Time: 11:00
End Time: 12:01
Spirit AeroSystems Holdings, Inc. (SPR)
Q1 2014 Earnings Conference Call
May 02, 2014, 11:00 AM ET
Larry Lawson - President and CEO
Sanjay Kapoor - SVP and CFO
Coleen Tabor - Director of IR
Carter Copeland - Barclays Capital
Howard Rubel - Jefferies
Finbar Sheehy - Sanford C. Bernstein & Co.
Robert Spingarn - Crédit Suisse AG
Cai von Rumohr - Cowen & Company
Myles Walton - Deutsche Bank
George Shapiro - Shapiro Research
David Strauss - UBS Investment Bank
Jason Gursky - Citigroup
John Godyn - Morgan Stanley
Samuel Pearlstein - Wells Fargo Securities
Seth Seifman - JP Morgan Chase & Co.
Kenneth Herbert - Canaccord Genuity
Michael Ciarmoli - KeyBanc Capital Markets Inc.
Previous Statements by SPR
» Spirit AeroSystems Holdings Management Discusses Q4 2013 Results - Earnings Call Transcript
» Q4 2014 Spirit Aerosystems Earnings Conference call (Webcast)
» Spirit AeroSystems Holdings Management Discusses Q3 2013 Results - Earnings Call Transcript
I would now like to turn the presentation over to Mrs. Coleen Tabor, Director of Investor Relations. Please proceed.
Thank you, Shannon, and good morning. Welcome to Spirit's first quarter 2014 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. In order to allow everyone to participate in the question-and-answer segment, we 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.
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 would like to turn the call over to our Chief Executive Officer, Larry Lawson.
Thank you, Coleen, and good morning, everyone. Welcome to Spirit's first quarter earnings call. I want to begin by thanking our employees around the globe for your ongoing dedication to the transformation we are undertaking. Your commitment to quality and delivery with a disciplined cost management approach is exactly what we need as we support customers and deliver results to our shareholders and to our employees.
Today, I'm going to give you an update on our progress and review our quarterly results. Sanjay will walk you through the numbers in more detail and then we'll answer your questions.
2014 continues a transformation of Spirit as we made decisions that position us for longer term growth. Let me start by saying we're pleased to have completed the memorandum of agreement covering the pricing on our mature Boeing programs. This agreement balances the benefit of rate increases with the need to invest in our customer's success in the competitive new and replacement marketplace.
This is an equitable deal for both parties and exemplifies our constructive partnership with our biggest customer. As we look at the remaining decisions in front of us, we will continue to apply a disciplined approach whether it's in our supply chain negotiations, our make versus buy decisions, investments or the use of cash. We will be thoughtful about operational, financial and market returns on our investments.
We continue to add talent and challenge how we do business. We're driving every sector of the business to align the market reality and the natural opportunities in the commercial aerospace sub-cycle, as well as a longer term in the defense sector.
Now let's take a look at the first quarter. For the first quarter, we reported revenues of $1.7 billion which was up 20% year-over-year and operating income of 194 million, which was up 35% year-over-year. Operating margins were 11% compared to 10% in the prior year.
Operating cash flow was $45 million and free cash flow was a negative $8 million, an improvement of $117 million over a year ago. Our backlog continues to be strong with $41 billion. Further evidence of our disciplined decision making is a restructuring of our debt in the first quarter as we leveraged lower interest rates in the market to reduce our interest expense over time.
We also met our commitments to invest in Malaysia and to realize the tax benefit we negotiated for our operating location in Kuala Lumpur. As I said in our year-end call, 2014 is the first full year we put our plan into action. It's about making our commitments and this quarter is one step in the right direction.
I'll turn the call over to Sanjay and we can walk through the details. Sanjay?
Thank you, Larry. Good morning to everyone as well. I am looking forward to sharing our strong first quarter results with you today. But before I begin I want to reiterate Larry's thanks to our team for their commitment, to successfully serving our customers while at the same time staying focused and continually improving our performance across all parts of our business.
The performance that we have delivered in the first quarter is evidence of what we can achieve as a team and it strengthens our resolve to deliver on our commitments. Let's begin by taking a look at the consolidated results in the quarter. I will then review the quarterly segment results. And finally, we'll wrap up with the outlook for 2014.