Spirit AeroSystems Holdings, Inc. Reports Third Quarter 2012 Financial Results; Reports Revenues of $1.365 billion and EPS of ($0.94) Including Previously Announced New Program Charges and Insurance Settlement

- Third Quarter 2012 Revenues of $1.365 billion

- Operating Loss of ($211) million including previously announced pre-tax new program charges totaling approximately ($590) million

- Includes previously announced approximately $235 million insurance settlement

- Loss Per Share of ($0.94)

- Cash and Cash Equivalents were $222 million

- Total backlog of approximately $34 billion

- Full-Year 2012 Financial Guidance updated; Provides Full-Year 2013 Guidance

WICHITA, Kan., Nov. 1, 2012 /PRNewswire/ — Spirit AeroSystems Holdings, Inc. [NYSE: SPR] reported third quarter 2012 financial results reflecting continued strong demand for large commercial aircraft, solid core program operating performance, the impact of new program charges, and the final insurance settlement for claims relating to the April 14, 2012 severe weather event at its Wichita, Kan. facility. Spirit’s third quarter 2012 revenues were $1.365 billion, up 21% from $1.130 billion for the same period of 2011, driven by higher production volumes.

Operating loss was ($211) million, compared to operating income of $121 million for the same period in 2011, driven by previously announced new program charges, partially offset by the final insurance settlement relating to the severe weather event and a net pre-tax $18 million favorable cumulative catch-up adjustment driven by productivity and efficiency on core programs and other one-time expense reductions.

Net loss for the quarter was ($134) million, or ($0.94) per share, compared to net income of $67 million, or $0.47 per fully diluted share, in the same period of 2011. Additionally, the current quarter includes a $19 million (see Item A in Appendix), or $0.14 per share, positive tax impact related to net losses driven by new program charges.

As previously announced, the company reached a final settlement with insurers for all claims relating to the April 14, 2012 severe weather event at its Wichita, Kan. facility. The settlement amount of approximately $235 million reflects claims significantly lower than previously estimated and resolves all property damage, clean-up, recovery, and business interruption costs. The settlement amount less current quarter expenses was recognized as a gain in the third quarter 2012. The remaining cash settlement of $130 million ($235 million less the $105 million cash advance received in the second quarter 2012) is expected in the fourth quarter 2012.

“Strong market demand for our products continues as large commercial aircraft deliveries increased 7 percent and deliveries across all programs increased 12 percent over the third quarter of 2011,” said President and Chief Executive Officer Jeff Turner. “As demonstrated by the third quarter results, our core programs are performing well and we are financially healthy.”

“While new airplane programs are always challenging, I am extremely disappointed in our management of the complexity on these programs. We have struggled with the development and early production on certain programs as highlighted by the charges in the quarter. However, it is important to note that as these programs are now transitioning to full rate production and experiencing rate increases we are applying our lessons learned and focusing on driving operational performance and cost improvement into these programs,” Turner continued.

“Our backlog of approximately $34 billion reflects the strong global demand for commercial aircraft and positions us well to realize the long-term value and generate cash,” Turner concluded.

Spirit’s backlog at the end of the third quarter of 2012 was approximately $34 billion. Spirit calculates its backlog based on current contractual prices for products and volumes from the published firm order backlogs of Airbus and Boeing, along with firm orders from other customers.

Spirit updated its contract profitability estimates during the third quarter of 2012, resulting in the previously announced pre-tax charges of ($184) million on the 787 program related to the wing; ($163) million on the G650 Wing program; ($151) million on the BR725 (Engine Nacelle Package for the G650); ($88) million on the G280 Wing program; and ($4) million on other combined programs. Additionally, the company recorded a net pre-tax $18 million, or $0.09 per share, favorable cumulative catch-up adjustment driven by core program productivity and efficiency and other one-time expense reductions.

In comparison, the third quarter of 2011 operating income included a net pre-tax $4 million favorable cumulative catch-up adjustment, and a pre-tax ($10) million new program forward-loss.

Cash flow from operations was a $103 million source of cash for the third quarter of 2012, compared to a $66 million source of cash for the third quarter of 2011. The current quarter compared to the same period of 2011 includes an additional $50 million customer advance associated with a customer agreement on the A350 fuselage program, partially offset by the timing of accounts receivable and accounts payable. (Table 2)

Excluding the $50 million customer advance payment, cash flow from operations was a $53 million source of cash in the quarter.

Cash balances at the end of the quarter were $222 million and debt balances were $1,179 million. Approximately $19.9 million of the credit facility is reserved for financial letters of credit.

As also previously announced, to address the charges in the quarter, the company amended its senior secured loan and credit facility to adjust the senior secured leverage ratio through the first quarter of 2013 and the other financial covenant ratios through the second quarter of 2013, after which times the financial covenant ratios will revert back to pre-amended ratios. No event of default has occurred.

The company’s credit rating was affirmed at BB and placed on stable outlook by Standard and Poor’s, and was affirmed at Ba2 and placed on negative outlook by Moody Investor Services following the third quarter announcement regarding new program charges.

Financial Outlook

Spirit’s revenue guidance is updated for the full-year 2012 and is now expected to be between $5.2 and $5.3 billion based on Boeing’s 2012 delivery guidance of approximately 585 to 600 aircraft; expected B787 ship set deliveries; expected Airbus deliveries in 2012 of approximately 580 aircraft; internal Spirit forecasts for other customer production activities; expected non-production revenues; and foreign exchange rates consistent with those in the third quarter of 2012.

Fully diluted earnings per share guidance for 2012 is now expected to be approximately $0.19 – $0.24. Excluding the net insurance benefit, loss per share is now expected to be approximately ($0.43) – ($0.38) (See item B in Appendix).

Cash flow from operations, less capital expenditures of approximately $250 million for 2012, is now expected to be between $250 million and $350 million in the aggregate. Excluding the net insurance benefit of approximately $100 million, cash flow from operations, less capital expenditures of approximately $250 million, is now expected to be between $150 million and $250 million in the aggregate. The 2012 cash flow from operations guidance includes $250 million of customer cash advances related to the A350 fuselage.

Spirit’s revenue guidance for the full-year 2013 is expected to be between $5.8 and $6.0 billion.

Fully diluted earnings per share guidance for 2013 is expected to be between $1.90 – $2.10 per share. Excluding weather related expenses, fully diluted earnings per share guidance for 2013 is expected to be between $2.20 – $2.40 per share (See item B in Appendix).

Cash flow from operations, less capital expenditures of approximately $400 million for 2013 is expected to be between ($150) million and ($50) million in the aggregate (Table 3). Excluding weather related expenditures, cash flow from operations, less capital expenditures for 2013 is expected to be between ($50) million and $50 million in the aggregate. (Tables 4 and 5)

Risk to our financial guidance includes, among other factors: 787 delivery volumes; higher than forecast non-recurring and recurring costs on our development programs; commercial settlements with customers; mid-range business jet market risks; and our ability to achieve anticipated productivity and cost improvements. You should review carefully the sections captioned “Risk Factors” in our 2011 Form 10-K filed with the Securities and Exchange Commission on February 23, 2012 and our subsequently filed Form 10-Qs for a more complete discussion of these and other factors that may affect our business.