Why Spirit AeroSystems Shares Are Flying Higher Today

Spirit AeroSystems Holdings, Inc. SPR reported third-quarter FY23 revenue growth of 13% year-over-year to $1.44 billion, missing the consensus of $1.462 billion. 

The revenue increase represents higher production deliveries on most Commercial programs and higher Defense and Space and Aftermarket revenue.

Overall deliveries increased to 332 shipsets during the quarter compared to 316 shipsets in the same period of 2022.

Q3 Adjusted EPS loss expanded to $(1.42) from $(0.15) a year ago, beating the consensus loss of $(1.54).

Spirit's backlog at the end of the quarter was ~$42.2 billion, which includes work packages on all commercial platforms.

Sales by segments: Commercial $1.1 billion (+9.8% Y/Y), Defense & Space $205.7 million (+27.2% Y/Y), and Aftermarket $96.8 million (+20.5% Y/Y).

Operating loss for Q3 was $(133.7) million, compared to operating income of $4.5 million last year. The change was primarily driven by higher changes in estimates and excess capacity costs recognized during the quarter.

SPR's cash used in operations year-to-date narrowed to $(340) million vs. $(367) million a year ago and free cash flow usage of $(416) million.

The cash balance at the end of the quarter was $374.1 million.

The company recently appointed Pat Shanahan as interim President and CEO.

On October 12, 2023, SPR executed a memorandum of agreement with Boeing Co BA; the company expects to reverse liabilities, including previously recorded forward losses and material right obligation on the 787 program of ~$350 to $370 million in 4Q23.

"Our priority is to strengthen Spirit financially. The signing of the memorandum of agreement with Boeing was an important step forward. In parallel, the Spirit team is focused on meeting our customer commitments, improving operational performance and commercial conversations with Airbus," commented Pat Shanahan.

FY23 Outlook: Spirit AeroSystems sees cash used in operations of $(150) million-$(200) million, and free cash flow to be a usage of $(275) million-$(325) million.

Price Action: SPR shares are trading higher by 6.17% at $24.00 on the last check Wednesday.