SPR - Earnings call 3 2023 | Spirit AeroSystems Holdings, Inc.

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Operator

Good morning, everyone, and welcome to the Spirit AeroSystems Holdings, Inc.

Third Quarter 2023 Earnings Conference Call. My name is Seb, and I'll be the coordinator today. [Operator Instructions] I would now like to turn the presentation over to Ryan Avey, Senior Director of Investor Relations and FP&A. Please proceed.

Ryan Avey

good and Seb, you, morning, everyone. Thank Avey. Ryan I'm Chief With Shanahan; Pat Officer, Suchinski. and and me are Spirit's Mark today Executive and Financial Officer, Chief President Senior President Vice

projections need discussion and our are in SEC at our likely including statement you Before earnings include risks, today to the involve the this detailed begin, we may forward-looking I that we web end filings any those or to release, goals in our presentation. remind of in in

release earnings when our presentation to you refer we non-GAAP use addition, and disclosures we of discussing and reconciliation In for results. measures our

I'd call Executive Chief to that, With like turn over to Shanahan. Pat the our Officer,

Patrick Shanahan

you good a entire team. entrusting Quarter Thank It we to me thank is want Ryan, and to with AeroSystems search while for Welcome privilege to On for of Earnings representing our and CEO. morning, today Great. I the Spirit global Call. with Third Spirit's Board the a responsibility behalf you, here permanent this everyone. be we to very familiar we for Board, past My Wichita Spirit. I'm my and for operations its as Board service Spirit new time production back where member trips X dedication increases from and and together. years. a thank go rate the years Boeing with the with and of 'XXs, X Gentile at tackled to Tom programs

dynamics same. the are am I the the supplier, the but Now customer, not

defense several past businesses. and the years, Over commercial its Spirit expanded of has portfolio

business, designing the building of not core the aerostructures, However, and large-scale has changed.

TACOMO: tremendous rate and and all are out, plans, for but customers. at performance the and since our first better capabilities, plans initial borrow military and we the a have our all production with right impressions approach a deep major strong better need in in charge with team and precision program that we My engaging Spirit schedule. the the To move into role been has levels, acronym, I've XX about I'm team now. days been meaning day my Take

are rates of in produced to quantity large high concurrently the a We commercial throes ramping production. manufacturing complex while opposed at as in before, development product we've being up

simultaneously I'm customer Spirit is most building stabilizing every working customers. XXX% financially. commercial defense driving focus and view My cohesive delivering and teams perform on And way alignment performance effective as commitments win. with I and importantly, together day. the that strengthening operations, our want to our most

of with was the Boeing The production the right will important partnership increasing execute to our to devoting agreement in major attention Also, partnership. strengthened rates. recent OEM goals commercial direction. increased step both an support other our The companies shared I'm

strategy. replacement Let briefly intend me our touch on to wait I forward. moving my do not before for

diversification, I will I Spirit have narrow next and build square an aftermarket We defense success. will don't aperture. adjacencies. on the as core for our appetite Regarding

positive on cash achieve that is to My as increasing crucial is the most possible. programs, flow goal. be Executing principal goal deliveries soon as lever to

other have new of we to cash previously we levers day. ones accelerate However, are every to along with the many uncovering developed, activities pull

difference what to years couple of demand. discussion the Shifting make. incredible a market It's a

unbelievable the part less encouraged core world new a growth unprecedented with of organic we with The are witnessing is $XX that backlog. our as comes mitigate by a We challenges demand. stable. must that I'm segment billion in demand

I'm this call, to this I'd provide next where welcoming. quite been stakeholders. our have the practices. warm give our My all about we to of previous guidance earnings We frankly, to because prepared XXXX, customers on this is days like Kansas I but you passionate for time. not operations with is at I'm and I'm our restore The is. at here industry, and, recognize in our have consistent guidance disappointed the in most action Spirit. to confidence company. most people want and plan

to over to call results. Mark our I'll with now quarter you review the financial third turn

Mark Suchinski

you, and good Thank Pat, everyone. morning,

now, the have on that look we you are of can Board many Pat our forward. member a as with tell while priorities for aligned him the a path of our we As as known I trajectory forward know, navigate to you I and of I working closely and Spirit.

to turning Now recent events.

our in pleased to several to the are of the cash agreement with beginning have fourth will agreement, of a memorandum highlight quarter. We financial reached which I will the improved flow impacts which in over reflected want financial result we expect be the Boeing next October, in in results years.

First, the XXX XXXX. program immediate the program, the to MOA on price higher on an pricing established in beginning XXX with reductions

a ] beginning to million this, record in a material reversed, will right first as XXXX anticipate the With XXX to increase. result a majority the forward price as production margins of X on obligations rates expect existing the a reversal the loss liability $XXX loss be program million $XXX and XXX of [ positive we and of We increase. of half of

broad issue. include for provided claims will to million a fan and related fitting reversal $XX MOA recorded which liabilities, the previously of anticipated XXX vertical claims attach of of existing the release the Next,

for addition, XXX programs. through tooling In funding capital XXX receive certain and and will we the XXXX on

the statement between the will capital be repay of $XXX funded now funds In total Between expected cash and of will be related receipt to will XXXX. CapEx the and in of there the of we differences the flows. an October, timing program received spending, beginning majority million. the CapEx some advance on reflected the We XXX XXXX, on funding which

million were on customer dates extended quarter repayment -- second received the financing million finally, $XXX the $XXX this in the of advance disclosed previously And of year.

agreement repayments of of and the years, across support programs. increased relationships million MOA aligns December for strengthens The XXXX success. speaking, the over next $XX provides XXXX. ramps future Boeing of XXXX help with customer the December repayments largest parties our in further Broadly the different make now equal and and will million will several of production $XX rate We cash the which in

recent financial third results, of which impacts reflect I let you through our of take MOA. quarter the you remind not does Now me Boeing the details any

X. primarily production higher on start quarter as the Overall Defense up on Slide Year-over-year year-over-year. as of quarter almost Aftermarket $X.X let's Space Revenue all from to programs for XX% X% third billion, increased revenues. the for deliveries due well was improvement our increased and the now commercial of XXXX. quarter So and was

program. to impacted near-term units. and XXX quarter full XXX by from XXXX early issue revenue now work third and year on in resulted the less challenges, deliveries, The deliveries IAM the bulkhead the on was pressure chain XXX which expect approximately XXX program and disruption stoppage continued in supply of specifically the XXX We July labor

We negative $X.XX of $X.XX to in turning earnings EPS. attention Now third quarter to the negative reported our share XXXX. per of compared

EPS same $X.XX items, negative changes margin was current adjusted period. higher certain of during driven estimates by to compared compared excess Excluding in the Operating prior the $X.XX year. was breakeven and capacity recognized XXXX, period X% negative in to in costs the negative

cumulative the unfavorable and $X costs XXX costs adjustments forward and of bulkhead. million driven related by adjustments adjustments programs million XXX million. XXXX. pressure primarily factory other higher to XXX forward rework the and to unfavorable cumulative compared and quarter totaled primarily catch-up of relate costs. chain labor losses to unfavorable issue supply cumulative programs, estimates $XX losses AXXX on were and AXXX Third $XXX This quality related The relate in quarter The million reflecting the higher the quarter third the catch-up losses $XX of catch-up to were forward and of current and

primarily million, Additionally, the $X third cost from this Other due as were current was quarter the was lower the excess as in expense compared year $XX of capacity $XX our noncash year. pension million third during million during income the XXXX. of to up the XXXX $XX charges value period of Plan $XX pension of of driven other of by quarter income variance well the million in prior third recorded quarter of The in million same A in the period. to pretax XXXX, termination

stoppage free now largely capital pressure cash associated of disruption to flow usage and production Free by of negative issue $XXX at million. well the with program. beginning driven costs XXX as XXXX, the and capital on disruption rates by higher IAM to with ramping cash was impacted the of turn associated factory for bulkhead to rework quarter the was increased and the compared costs Cash the as Working related working XXX work disruption. the same third period quarter, the Let's usage strike impacts the to flow.

cash quarter of included payment Third from XXXX $XX advance ratification the the that IAM operations million to and disclosed $XX customer also was million. related the contract of bonus previously

XXX negative cash free cash million. year Boeing We to expect to have and lower flow million the $XXX negative expected year of full flow of range the year the for the free in our full impacts $XXX now MOA, the deliveries and be our to reflect updated

cash of cash Addressing options the balances to with We evaluate turn well is liquidity. of $X.X and quarter and debt. and million address maturities our as XXXX million debt now $XXX to priority, overall that, With Slide all billion $X.X debt X. refinancing to let's we near-term continue of a on as ended debt the

estimates in included the in $XX unfavorable due by on with million catch-up the capacity costs operating catch-up revenue discuss quarter, to the the and during volumes XXXX, of negative third positive discussed, changes excess in of XXXX margin previously production on unfavorable adjustments losses almost which million period. segment driven In starting In the segment commercial adjustments. XXXX, of changes cumulative third The same quarter our Quarterly prior Next, compared $XX quarter comparison, to X% forward cumulative in during higher of X. favorable X% third the forward performance, let's $XX segment to programs. and $X of year, estimates losses Commercial of the of charges our the period of recorded all I of million and increased recorded Slide over decreased XX% current higher million.

Sikorsky revenue increased XXXX, and quarter Defense adjustments driven last Next, Space let's KC-XX The CH-XXK development to cumulative $X estimates estimates the third cumulative margin decreased to and the primarily in and and segment quarter Operating cost loss XX% in $X higher than the of million adjustments of current were program in of Space program. third cash of to unfavorable changes X. XXXX. tanker by $XXX favorable in compared quarter on program the recorded due to the to period. by adjustments activity due unfavorable losses catch-up or compared P-X for million X% of turn forward catch-up higher the recorded production primarily that primarily million and $XX higher to production. million grew the forward on XX% Defense driven The of year higher to were and forward losses $X Slide segment million

continues turn third due the to grow global XX% compared XXXX, model up results, million, were XXXX, our same air let's the plan to Slide Operating For Aftermarket segment by on primarily traffic for the parts during to higher to spare quarter $XX of Aftermarket for with revenues along recovery Aftermarket to period track sales. X. is was driven mix. year. to sales of margin and XX% meet compared the the and quarter the XX%

happy that, take to With your we'll questions. be

Operator

Seth today JPMorgan. Our question Thank Instructions] first comes you. [Operator from Seifman from

Seth Seifman

here, Thanks levers to think about adequate ask you very A of about to here. much. are most negative to the or I'll expand about One welcome, you that to you talked we also adjustments? opening your schedule. mean? but wonder questions, the does questions up. more that XXX you I of XXX things about the maybe accelerate. not other of really bunch specifically, Pat. cume X if and and having these is could cash what you right to Pat, right everyone, things Good wanted -- important upon getting what's just having bunch talked X you what And And that. from schedule jump said morning, pull X profitability are in when remarks. production A wonder And think I I

Patrick Shanahan

Seth. Wednesday. Happy Sure,

suppliers the pass Let's flow the I the our biggest, after that's those to in The to of indirect with positive go terms biggest get might the one. not address of structure at to free first the to rest team is And for take of program a from organization looking a you tightening. enforcement maybe other number or to mentioned, belt things as But traditional inefficiencies costs. cash range lever contracts of performance.

doing. that, just to In stop addition have things to they are we

we've let's other to So and matters, accelerated more our in on parallel activity, the every the improvement to line dollar bring bottom quickly. it focus really

important And learned performance. most you you'll results. else everything schedule, and I right question, dealing works. financial schedule business, a right get really barometer other the we're that costs. Your think, the if the costs, And is you're you on with is XX the right the over And almost years going issue schedule. for what right if get the if that my you're this get realize in now, is to right The schedule, appropriate I've

with at let's look of nonworking adjust we provided the we math is, days. the I did When end schedule of terms in quarter the for the and math. and holidays hopefully, deliveries, guidance And

Our to deliveries in effective look Boeing. at to at rate, you delivering the we're fourth XX is when month a XX about quarter,

We the to in I And a the have XXs path 'XX. reason we XXs there the is to have been a path we've say before.

how fuselages today, not our new. without cost we can Boeing that internal we're do produce that something with it's the in of we operations So desperately so stabilize a using It's question high-quality needs. the effectively effort so

own us the productivity. biggest producing that XX,XXX fuselages XXX levers X go our is supply it's you at When path a look roughly just The month, parts and The rate at internal into one. through for chain increases. are XX

at And we XX, you put a the that at amount need parts in, something per month. And on so million order that's of of X million we XX when look it's the month. fasteners

produce, to schedule we're that XXXX. Boeing's we'll you detail just being stabilize here really stable. like into goes achieving lot in us on. synchronized for that that. I meet And and about it's of that to walk I'd detailed so working there's and believe a able to through the demands be And

train time, in didn't looking pull, We're that things the supplier. we day, just XXXX. readiness doing a I've of the is period will the is only the see would short you that not down in the tell I by but to here the things this, by you readiness by we're parametrically. been past at have not

Operator

comes question Jefferies. next from from Our Sheila Kahyaoglu

Sheila Kahyaoglu

Good Pat. you, to morning, guys. And happy too, Wednesday

or usage. guys just is prior guide? to cash are about the about in tied in immediate an And days was really million XXX? what on job, How you about the $XXX much How revision. the it the of you so that there $XXX So to wondering be changes free of step-up if could we think I as you the the talk improvement? have change thinking flow million seen XX QX, what from could first

Mark Suchinski

parts we And Well, previous our color. Sheila, when standpoint I is XXX free month. I me take deliveries. month. challenge were of some a that airplanes and The think support biggest to system. that XXX to XX then we is per on have just staffed the impact per to deliveries into is of a Pat let walk to here the And flow the help to provide to airplanes tailwinds. cash headwinds XXX we additional think cost from the headwind the lot And our drop We've been XXX can embedded bringing from when in XX XXX, forecast fewer

on the And so by collecting we're not the delivering cash not delivery. the aircraft,

add relates cume The to additional we X that So as it and in a negative put note fourth then some I lower deliveries catch-up the schedule. bigger think took change we're missing additional adjustments the the fourth cash by you've in the losses and impact driven that's AXXX seeing than And quarter, is little is in pressure customer primarily your to bit a deliveries. in going the their to quarter.

the the positiveness and Boeing On CapEx funding. MOA, side, the from flip XXX price increase the

things XXX would to impact, and those the cash. all staffed deliveries place, think just if that collect I factor in, in having going release So the being is working say, and not we're the inventory you and capital lower I the us biggest and

Operator

comes Wolfe next question Our at Walton Research. from Myles

Myles Walton

you, clarification Pat. question quick for One X then and

I of fix the conforming you're fuselages recognize currently the revenue update realize Boeing, you on can you if to But this that then at on point? able and if shipping to earnings and are nonconforming were sort conforming. now you clarification, So fact. us after

years, a been Spirit for for Boeing nicely, the is were a years And time. and earnings a and remarks. obviously, It a very period to did Pat, about Board just actually you XX% then, in revenue But on the diversification on stock of ago. few you've and to made just necessary concentration short diversification make only the good. had job know opening the your few rep quite been of company? great pretty And I you've comments And curious,

So is diversification required?

Patrick Shanahan

I'll degree being you demand, kind we've demand the engineering able diversification our look Maybe of first. here, X Sure. airplanes, when think and we the the future defense at down, having command it's business world maybe To that think doesn't the dangerous to world, would you not X when full capability. in just more customers of the large-scale should attention. On satisfy tremendous commercial advanced take would I for in the has level is the approached And say, that materials. and this Spirit no, have of And past, that time. it's from about sense I the biggest diversification great of at a the take some a it built what away next aerostructures, and you make the

So answer diversification back makes see sure your that volume to in we'll earlier capability the -- I broader to there. advanced the the on other extent, a materials conforming, make and isn't to in they're of get businesses. And believe sense. just you question, lot to Aftermarket we of developing probably that full our is

Mark Suchinski

reworked point We've Yes, The conforming. Myles. to shipping put Boeing is in place. that time the we're product at being in is and this fixes

good in we're shape So there.

Operator

Bank. comes from question from next Deutsche Our Deuschle Scott

Scott Deuschle

But rather suppliers. with than is often from economics X address need Pat, another, structural they to the around to you year Airbus unit seems underlying involve a like supplier money fix negotiations a long-term it but here moving band-aid. for real that fail that my price often understanding these days

that not, describe if you And might structural it's a remedy you Airbus. be. So I'm from maybe alternatives possible if curious what your get you think can

Patrick Shanahan

think spending will time and And leading, personally, and is describe I am are with more very Well, into can discussions. an utmost remedy. won't because my urgency not what more I me And alternatives counterparts. for and the a we this I these if I item get be, of Airbus deep conversations

would technical well. about when be standpoint, performing a as really those system AXXX. about Series, inherent mentioned should C about realizing production or a me we you minute, just performance have of Airbus, really have inherently at immature, a future. composites there, to advanced of And indulge And the the and before, cost when from I materials, manufacturing address there. The the to situation, we kind products maturity XXX between -- us And just If isn't resolution extremely a were come discontinuity. think From the the that just problem. the as but are and out those and for we talking system not are is designs near-term produced look there and I the financial were limitations. same And when the the of that was we think it's it certified time some AXXX to the I

to the urgency. I undertaking, get that the able to feel near-term I'm both counterparts action think to same a it sense at we'll Airbus of sense parties. and be place my is But that makes for committed

Operator

from Our next Bernstein. Doug question from is Harned

Douglas Harned

fittings, out? manufacturing that you that you. not you XXX quality operational changing has as about ] quality future? Good way to before there the come prevent so well like have approach How these the When bulkhead how still aft with in this the the from issue, you morning. -- -- this are can thinking happened the are [ escapes year, last issues you been year make sure nonconformities. do you at problems from standpoint that an over And dealing look Thank resulted tail Spirit new such more

Patrick Shanahan

build the it Well, top this change to really our that and pristine Doug, me of internally mind reading our mindset really can customer from I defects. my defects. of terms that teammates, focus is let and the frame in standpoint. that's what's Maybe is on-time, products product we be our can just is safety reputation X delivery. The give productivity. the greater the probably and Externally, that eliminate quality quality is the my customers reliable all have to we we I going is tone priority that customers. we the from of mean, to confidence The deliver quality

because But we organization there's a to whole And day, attention every quality time quite we be out have product. I implement. a see first or that shadow. see and as and think can the we put how area. foremost, where a It attention, put has We think I and gets long It's my in very to though time. on time people's is time have it will focused the that's robust a different in, a leadership management over you'll isn't And that. where being, that you you'll there silver system. bullet us procedure build bit your this improve And

Operator

Our next Please Barclays. question comes from go David Strauss ahead. at

David Strauss

of Mark, talked free before side as the the getting about flow the to anything first had just my MOA And update. second XXXX. cash that you an question. Is wouldn't that other there I Boeing positive to still be That's question, case? why think in on guys

the in about come X maybe phases. think at You previously, refinancing. talked you I doing of around terms timing mentioned the to it to What are market? in you urgency looking

So any update there?

Mark Suchinski

Well, good you. from to morning David, good hear

days previously. to getting at role robust the relates he's good, We're just I in focused business year, providing here. He's way on XXXX, and a you into XX what really looking business I'll guys think said said reiterate we February. But completing the the it his making his kind through. then As stabilized Pat and of update holistically

beyond. and Boeing definitely We to benefit to year. cash a is expect XXXX be positive flow a The MOA XXXX

at we'll it And leave in more give in point time. come so our plans. February, you and back And around at this I'll that specifics

in to we're priority in have time. point assess it's a thinking been Airbus, about, the to as of can goals goal that the some to markets business we've big in getting of us through little so think than The plans talked more And the options we As gone here it is my is focus me. on refinancing a our big successful obviously We've place through. I refinancing, the at all XXXX. for we the good big a got past. year out. of us this refinancing, We've in that's getting Pat relates X goal his as The is -- working behind with

so there's that, debt urgency priority. a And previously term. And a there. sense going we we're sure refinancing short be It's I through of stated, that make get the to working to as near-term had the becomes done before

Operator

Our next question Shapiro from comes Research. Shapiro from George

George Shapiro

Welcome, a see been good back there. but you It's Pat. in while, to

Patrick Shanahan

Yes. be Thank Good to here. Good George. you. morning,

George Shapiro

from the Mark, And at Airbus. if as $XXX another Airbus for million take the quarter, -- year's you got you as was at cash fourth And correct fourth year's mean, don't Boeing, better looking be And -- rate look this advance I $XX sure I'm out there I so I $XXX take that getting But good But quarter's cash implied year's I an million. if out wouldn't just can free was year a you're not don't be the million year's ought next at still did, -- least annualized next you're than whether lot I fourth like this me. to flow, Boeing. you free this payment for this there, why quarter? from which million, $XXX think at

Mark Suchinski

question, Good George.

it's get next of when to chat all you to We'll cash supporting week free of first provide with in we'll and we things. provide pull back positive we're and to relates an results. a it fact as a together David, plan, him. with We come with of we year. February. We'll that got here, the specifics want guys be again, addressed in more lot do and stick flow, Pat's when February our work around disclose I good here we'll ahead going to don't that the update as you think you I

George Shapiro

and color And of you, quick to what give excess Mark. Okay. thinking for that we might get you with than when costs, fourth kind some X the the then The be can X quarter? expected higher

Mark Suchinski

units, factory the would the July think quarter back the line quarter, XX starting of disrupted. work the and of back aft the third highly or number gearing it, in call -- bulkhead When until you about I Sure, George. stoppage just because this, say up our then position production, was production issue. the around, IAM the our not

strike, for issue was say, part, just IAM So ultimately our to then the factory own quality the it's I some most performance excess added a it it's -- the and would the of in that costs.

the it's into XXXX, expect And so And down excess that to would as that. go absorb a in because move I to rate we here. I and say little of we anomaly of bit costs an go us of as would what cost continue is fixed see more overhead those up

'XX. and then So 'XX see again, I think as quarter get better to fourth compared in we'll continue to things improve the in

Operator

Our Noah from Poponak is Sachs. Goldman next from question

Noah Poponak

morning, in everybody. you interim stay is scenario Pat, rather than it analysis the in the term solution? least that CEO at Good being long it an seat

Patrick Shanahan

the in and commitment, commitment operations and you, so no I up to the tell My a we Noah. put and I'll at this stand time. Well, the for could strong remains place, replacement would this do Board wife Adrian, year, was that a that change that my

Noah Poponak

clean, you Okay. that that. the just shipping which on behind Appreciate off completely? what's inventory then the new now MAX. And overall, just the frame that I bulkhead challenge line. in follow-up a you the time on what about I is And guess, conforming, heard aft rework? pressure as you're the

Patrick Shanahan

a specifically give answer. we've improve. you the time have If precise The now we another frame don't I I been analysis right could in work doing. that probably a had continues to week, this call

what there, sooner rather you the can't than I tell so really but And it's towards work is trending later. final scope

Operator

next Robert Stallard question Research. Our from Vertical from comes

Robert Stallard

much. actually. for you, Pat, is Thanks this so X

versus give some On with I differs quarter. this didn't us of Boeing? this take a with was the in the idea And you've discussions if Airbus having program been negotiations, you could wondering how AXXX charge conjunction the Airbus,

that's could So update if you on us an give how wondering I going. was

Patrick Shanahan

about talk the can talk Maybe I to first? Do that about negotiations. Mark take want you the and can charge,

Mark Suchinski

you're in the pretty right. no a -- Sure. was Rob, It quarter. program. loss good AXXX charge forward No

doing I commitments think team is delivery our the well. meeting to our We're customer.

on a so side. pretty the And AXXX quiet quarter

Patrick Shanahan

that agreement, higher and we airplane. here And committed and the AXXX. on maybe similarities or encouraged, say producing kind important concentrated the can it's that is come in similar. with It's AXXX. of and the the on the will end Airbus, for strong day, we they're Airbus. this the it's nature difficult. the we'll maturity at But to of outcome Spirit. really about -- think performance comment makes at get I not between aligned. just important of very important I'd us, the short the the to because There they're it's production -- about mean, and for the that to of And expectations I that my a earlier were term. And demand reasonable a based It's I'm comment Boeing like Yes, for until we're mean, important just more is think differences committed really it the I the on there Airbus airplane. rates for I for system it's Boeing the something negotiations. alignment, Airbus. get And

Robert Stallard

Do Okay. follow-up, before this. February? you to put Pat. on time frame just a get you'll done And quick a think Hard this

Patrick Shanahan

I think so.

Operator

Our from Research. Melius next Spingarn Robert comes question from

Unknown Analyst

or on want a any the potentially if could you Pat, [ Spirit AXXX or I reduced ] you, remedy [ if Airbus AXXX on did ask concern AXXX, financial to for rewings there those later on ] a role see that AXXXneo programs? is Scott Rob Mikus pursue Spingarn.

Patrick Shanahan

in critical wing here bet vital on with negotiating that solve we just I half time team with Airbus' do we near financial negotiating. as a things process. of long-term and -- my It's disconnect? The with that. the a time of mean, just I engineering much molding, how not of future. strategy critical we're Belfast strategy and the we're issue the in advanced I the composite is be But capability chain, the piece have half And part of on would we transfer the much to I a so our this I question supply tomorrow. on term, think Airbus' spend my the think part. resin It's Not do that

scale have just in I made time have overhang things that pre-COVID our earlier this as of And and back some go the commercially these the a are world greenfield is because basis replicate and be doing advanced single reps work the we We every really of way some we're on materials, defense a generation cost-prohibitive. of of about do that out we through. at the scale kind of that the agreements at there it to we to company day. can the next in assets to remark get long go product But going

think or somebody And So the I get I realizing. trapped to in place for just get we're should that sense actually better you that situations just these quarter-to-quarter of a managing than think both it's agreement, makes with parties. going performance like they're get Boeing to

Operator

Our next from question Cowen. von Rumohr comes TD Cai from

Cai Von Rumohr

Pat, welcome.

you you or any have real the liability to to -- a -- XXX your going basically, that so read there be relatively basically should could modest, point you a But that at to negotiation, breakeven looks what or XXX. mean, in get MOA that how it out And price higher where the basically I the MOA, back loss? XXXX, on change the you into a of then to of it the like revert goes around as price -- I Is get much of Boeing renegotiation I you near XX that take So close. get on lower term. on middle price that's the or as 'XX. have back the get the some concerned price read a as I've the out XXX the XXX or the is basically that read currently barring And

Mark Suchinski

Cai, it's Mark.

would in pricing came I me on there. order XXX that the essentially Let the a conclusion on good the to program, through appropriate out jump we say book.

beyond expectations program to our price We which long allows to that an the to and will what reasonable we that year X an parties X XXXX, a in delivery [ have ] conclusion, a margin here And on airplane That's be between negotiate appropriate term. just shortly. appropriate like date. fair came advance make of Spirit a commitment

Cai Von Rumohr

Does be to may, you on Okay. more difficult refi -- X it's to And if you. do unless do the feel going clearly, that Airbus I talks, behind is a kind that do pressure increased with puts of Or issue done to the having on to table how quickly? timing that before deal come you of more that you get to refi? that a

Patrick Shanahan

in think just there's get have situation, the pressured point think to on comment to but time wasting negotiate. I we're I we're don't it financial in no might where we Mark, right, but time. Cai, I position a you mean,

Mark Suchinski

Cai, No, front. I here have to the momentum think a some say Pat. with MOA over next here several provides just agree nice think years. that And on boost Boeing we I the liquidity this, I I'd

comes to said, our do for Airbus through work no refinancing, accordingly. in pressure And its as we're to on the company and so will going it shareholders. our -- and the what's for happen when us, best for that Pat And side. again, course. That And due

Operator

at question Gavin Our from next Parsons comes UBS.

Gavin Parsons

think, you suggested fourth delivering, I you'll the be quarter. to Good a Pat, around morning. XX in month XX

clarify, that is MAX starting us then and in still Or to update the at your plan delivering buffer? you'll And on inventory there spread? a is could current cycling be XX, Just XXXX? you

Patrick Shanahan

'XX. No guidance see. of buffer, don't the Let's terms I in in have... And

Mark Suchinski

Pat. that, I've got

Patrick Shanahan

We've there. in got, a mix know, as units of you

Mark Suchinski

Yes.

that then categorize So components. we units in are about XX and available ship. on to X we units -- that Gavin, hold have in them like We buffer. Units to are

the that ready Boeing XX there's to title whenever around owns units pull. -- -- buffer, have So to Boeing's and they're can them are those, pull in that Boeing in

was on up able as At production sync the for up work the But an been we've forward the bit. goal to quarter, a of said, that's move the our update degree. buffer. build we but as second as a stoppage to And schedules. it we Pat the end buffer increased to here that certain low buffers issue, So is prepared here

Operator

Our Baird. next Arment from Peter question from comes

Peter Arment

you've and equipment million tooling-related of I of nice infusion. kind But can the for for the there? XXX, more you're Pat $XXX obviously, as color said, higher at real been benefit is cash XXX see before. you what rates it's these The to getting you the give little mean, us a

you're actually So here? that benefit seeing the is what

Mark Suchinski

or environment, at Peter. sure, of couple And OEMs always Xs, on A derivatives, the Dash-Xs, Boeing model agreements. things. most the right? you own is tooling, more model if previous and current Number OEMs, production But so mix Yes, impact the selling this system. our have with one, that production the rate that's an or increases and has new we have unchanged XXs, -- more and when mixes in Xs the Xs, our XXs, look we the from the

investment. And some capital so therefore, it's to going to us make require

of the absorb so some to we of Spirit happen agreement would we'd that Boeing appreciate as this the is have would normally, And for pay benefits pay. profitability. is -- they're to we that what capital from and and -- And overhead those would help X built units, more normally going

fourth in and 'XX But result and funding adjustments the it's little us that to us models CapEx capital combination 'XX we of They've need for. bit pay system. production that's and the quarter reflect to the higher in a big to and is 'XX make in here a the some benefit given in and an going and in is to the 'XX, in going spending new tooling Boeing advance

and funds Boeing go Spirit. we a they're So out. our But when to to capital lumpy is little the receipts making customer, going the actual the benefit a there -- be It's investment they when come in themselves. think

appreciate that. And we so

It's it neutral, really, it's nutshell. a nice to benefit a benefit, in So is Spirit. although cash little a that's

Operator

Our from Truist. question from next comes Michael Ciarmoli

Michael Ciarmoli

to the us give little or Mark, be a the just year. deliveries bit detail? maybe us kind on XXX this cotriangulate where more help Obviously, Pat or can out MOA, you you of are going

million mean, of maybe assume we that should per that's And pricing? unit all I $XX the revenue kind million got increase. was pricing? $X rough You

kind reversal said the be help XXX,XXX. looks think -- moving still some back can but existing guess the us not Can an additive, you positive the on 'XX. for pieces to XXX? of of to get then amortization to just going the bridge those better expectation MOU, so a paying margin you you're I I And from of be we

Mark Suchinski

price price. -- what specifically comment the not our should I'm to going unit. you was per forward Michael. higher Sure, on increase from what reversing the previously losses than I where is think our cost is we're the in take Yes. future, the agreement But

cost forecast you reduce when a it's forward -- the cost pricing is unchanged, loss, So right, a and benefit.

a the book that talk positive we when X we're to a would then reversing on X when those we're exist. And or longer margins losses at to because in month, those those those So future, cash that losses we get moving we program, X, no month. about

us So pricing benefits absorb take overhead that it's some little full to time agreement. to and going the get a of the of

we on And projections the we're about to positive so when be look an paid we our and part to XXXX, are be a being cost what that price based we a at right at we are, early unit talked the getting ongoing and benefit And per expect on margins, of higher now. than going rate we're basis.

big were how So don't loss now our We're where a about the in but point big, again, we Spirit. I to much paid, than higher get and here deal and got specifics into to be essentially want it's the it we at a revenue of since cost, us. cash be for inception will positive order, cash short program. the position a program will in And the our

a XX good XX for so up us to and go here right over And next that as thing starts the program months. to

Operator

comes Our Stanley. last from Kristine today question Morgan Liwag from

Kristine Liwag

with catch-ups, Pat in forward and mean losses that said, negative clearly strategic continue the to signaled equity the bondholders I importance worse even get operations cumulative to MOA the and Mark, defense. with Boeing to and Spirit your Boeing.

what support underwrite to the Boeing, with explicitly step does XXXX conversations refinancing financial your extend? from in to Boeing's of degree Boeing can help maturities? And So the

Mark Suchinski

have place, think our charity. we in customer for a -- do it Kristine. and agreement they it's I Good wouldn't win-win. An as big we it And thank interesting we view as question. morning, that the deemed

think great I customers. to a we our service perform

performing we on do their a think job programs. I great

overall, so they a And it's win-win. as it we a -- view And win-win. as describe it

we us have As Boeing I think markets. maturities. strategies said it underwrite at And relates before, kind access to We around as about would don't to to leave need our I've we refinancing it the just upcoming of strategies, capital that. as

Kristine Liwag

for point? come I XXX current the in we the costs, for to environment, could in would where higher a that the XXXX at the compare XXXX, inflation be step the if do the When should Great. And And XXX pricing around for what factor we the down levels? that labor follow-up. program how margins were

Mark Suchinski

XXXX. February us through about time. get Kristine, robust discussion a XXXX I'd before this, with have hey, to let you XXXX, and jump say in Hey in We'll discussions just have good Yes. we those good,

Operator

today's a Thank for much have day. concludes in, conference very and you wonderful all This call. dialing

Spirit AeroSystems (SPR) 1 Nov 232023 Q3 Earnings call transcript