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Spirit AeroSystems Holdings, Inc. (SPR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 printed Revenues $1.52B and Adjusted EPS $(4.25), both materially below Street as Boeing program production remained depressed and forward-loss charges persisted; GAAP EPS was $(5.21) .
  • No guidance and no earnings call due to the pending Boeing acquisition; management reiterated “substantial doubt” about going concern absent additional funding/advances, highlighting liquidity risk as a key stock narrative catalyst .
  • Mix shift toward Airbus aided deliveries (429 shipsets vs 307 in Q1 2024), but margins were hit by $293M net forward losses, $116M warranty reserve tied to alleged counterfeit titanium certifications, and $47M excess capacity costs; partially offset by ~$80M gain on the FMI divestiture .
  • Strategic updates: definitive agreement to divest Airbus programs (with $200M Airbus credit lines) and shareholder approval of Boeing deal; management targets Q3 2025 close, subject to regulatory approvals and transaction conditions .

What Went Well and What Went Wrong

What Went Well

  • Airbus program momentum and overall deliveries improved YoY (Airbus shipsets 236 vs 191; total 429 vs 307), supporting revenue mix resilience despite Boeing rate headwinds .
  • Liquidity actions and portfolio optimization: ~$80.4M gain recognized from sale of Fiber Materials Inc. (FMI) completed Jan 13, 2025; management continues to pursue divestitures and advances to bridge to transaction close .
  • Strategic clarity: definitive Airbus divestiture agreement plus $200M non-interest-bearing credit lines to support Airbus programs; Boeing merger tracking for targeted Q3 2025 close pending approvals .

What Went Wrong

  • Material charges and weak margins: Q1 included $293M net forward losses (A350 $90M; A220 $86M; 787 $38M), $116M warranty reserve tied to titanium records issue, and $47M excess capacity costs, driving operating margin to (32.0%) .
  • Liquidity pressure intensified: Cash used in operations $(420)M; FCF $(474)M; quarter-end cash $220M; management disclosed “substantial doubt” about going concern absent further funding/advances and execution on divestitures/merger .
  • Commercial margins deteriorated: Commercial segment operating margin (40.0%) vs (35.8%) YoY; Defense swung to loss on KC‑46/KC‑135 forward losses; Aftermarket margin slipped on mix .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,470.6 $1,651.3 $1,521.8
GAAP Diluted EPS ($)$(4.07) $(5.38) $(5.21)
Adjusted Diluted EPS ($)$(3.03) $(4.22) $(4.25)
Operating Income (Loss) ($USD Millions)$(350.1) $(577.1) $(487.0)
Operating Margin (%)(23.8%) (34.9%) (32.0%)
Net Income (Loss) ($USD Millions)$(476.6) $(630.7) $(612.7)
Net Margin (%)(32.4%) (38.2%) (40.3%)

Q1 2025 Actuals vs Prior Year and Consensus

MetricQ1 2024Q1 2025 ActualQ1 2025 Consensus
Revenue ($USD Millions)$1,702.8 $1,521.8 $1,735.4*
GAAP Diluted EPS ($)$(5.31) $(5.21) N/A*
Adjusted Diluted EPS ($)$(3.93) $(4.25) $(1.56)*
EBITDA ($USD Millions)N/A$(476.2) $50.1*

Notes: Values retrieved from S&P Global.*
Result: Revenue and Adjusted EPS were significant misses vs consensus; EBITDA also below expectations. Bolded misses: Revenue miss; EPS miss; EBITDA miss.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentRevenue Q1 2024 ($MM)Revenue Q1 2025 ($MM)Op Income (Loss) Q1 2024 ($MM)Op Income (Loss) Q1 2025 ($MM)Margin Q1 2024Margin Q1 2025
Commercial$1,356.1 $1,161.6 $(484.9) $(464.9) (35.8%) (40.0%)
Defense & Space$250.8 $261.0 $32.2 $(10.7) 12.8% (4.1%)
Aftermarket$95.9 $99.2 $17.2 $14.5 17.9% 14.6%
Total$1,702.8 $1,521.8 $(435.5) $(461.1) (25.6%) (30.3%)

KPIs: Shipset Deliveries

ProgramQ1 2024Q1 2025
Boeing 73744 127
Boeing 78713 9
Total Boeing70 145
A22015 22
A320 Family153 186
A35016 18
Total Airbus191 236
Business/Regional Jet46 48
Total Shipsets307 429

Guidance Changes

Spirit suspended guidance during the merger process and did not hold a conference call.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company GuidanceFY2025No guidance (Q4 2024) No guidance (Q1 2025) Maintained

Earnings Call Themes & Trends

No earnings call was held due to the merger agreement . Themes below track narrative across Q3 2024, Q4 2024, and Q1 2025 press materials.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Liquidity/Going ConcernBridge loan $350M drawn; Boeing advances unpaid; significant cash usage; management implementing liquidity plan Substantial doubt exists; CFFO $(420)M; FCF $(474)M; cash $220M; pursuing advances/divestitures/merger timing Deteriorated risk disclosure; actions continue
Boeing Merger TimelineMid-2025 targeted, FTC “second request” extends waiting period Q3 2025 targeted; still subject to approvals; FTC “second request” persists Timeline refined; dependence on Airbus divestiture
Airbus DivestitureTerm sheet referenced Definitive agreement; $200M Airbus credit lines to support programs Execution progress
Program Performance (787/A220/A350)Forward losses and catch-ups elevated (Q3: $217M net forward; Q4: $440M) Net forward losses $293M; A350 $90M; A220 $86M; 787 $38M Persistent losses; magnitude reduced from Q4
Supply Chain/QualityStrike/furlough impacts; supply chain fragility noted Warranty reserve $116M for titanium certification issue; supply chain cost growth persists Quality/legal exposure surfaced
Excess Capacity Costs$70M (Q3); $54M (Q4) $47M (Q1) Improving sequentially
Deliveries/BacklogQ3 deliveries flat YoY; backlog ~$48B Deliveries up; backlog ~$48B Steady backlog; operational upswing in deliveries

Management Commentary

  • Liquidity and going concern: “Developments in 2024 resulted in significant reductions in projected revenue and cash flows… we will need to obtain additional funding… substantial doubt about the Company’s ability to continue as a going concern exists.” .
  • Strategic execution: “Definitive agreement with Airbus… $200 million non-interest-bearing lines of credit… expected to close in the third quarter of 2025, concurrently with the Boeing acquisition.” .
  • Cost/margin drivers: “Total change in estimates… net forward losses of $293M… driven by A350 ($90M), A220 ($86M), 787 ($38M)… warranty reserve of $116M… excess capacity costs $47M.” .
  • From prior quarter (leadership tone): “We’ve made significant strides to improve operations… meaningful increase in both the quality and number of deliveries.” – CEO Pat Shanahan; CFO Irene Esteves on delivery improvement .

Q&A Highlights

  • No conference call or Q&A was held due to the merger agreement .

Estimates Context

  • Q1 2025 results were well below S&P Global consensus: Revenue $1.522B vs $1.735B*, Adjusted/Primary EPS $(4.25) vs $(1.56); EBITDA $(476)M vs $50M .
  • Forward quarters embed a sharp recovery path in Street numbers; given continuing program losses and liquidity constraints, estimates likely need to be revised down or widened in dispersion.
MetricQ1 2025Q2 2025Q3 2025Q4 2025
Revenue Consensus Mean ($USD)1,735,418,300*1,812,180,200*1,886,702,940*1,983,177,000*
Primary EPS Consensus Mean ($)(1.56)*(1.25)*(0.71)*0.12*
EBITDA Consensus Mean ($USD)50,090,000*82,265,660*94,056,500*185,891,500*
Primary EPS – # of Estimates2*3*3*1*
Revenue – # of Estimates8*7*6*4*

Notes: Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Street misses were driven by program-level forward losses, warranty reserve, and excess capacity costs; while sequential losses narrowed vs Q4, margin recovery remains challenging absent pricing relief or rate normalization .
  • Liquidity is the central risk: negative CFFO/FCF, low cash, and explicit going-concern language; stock narrative hinges on customer advances, divestiture proceeds, and merger timing/regulatory outcomes .
  • Airbus divestiture agreement and $200M credit lines de-risk execution of the Boeing transaction and support Airbus programs near-term; monitor closing in Q3 2025 .
  • Deliveries improved sharply YoY (737 and Airbus families), but unit economics remain pressured; further mix and efficiency gains are required to offset forward-loss programs .
  • No guidance and no call constrain near-term visibility; expect heightened estimate dispersion and sensitivity to program updates, regulatory milestones (FTC second request), and rate plans from Boeing/Airbus .
  • Actionable: Focus on liquidity catalysts (advances renegotiation, divestiture proceeds), program loss trajectory (A220/A350/787), and merger/regulatory timeline; near-term trading likely driven by transaction headlines and any quality/warranty developments .

Additional Data Points

  • Cash used in ops $(420)M; FCF $(474)M; cash $220M; total debt $4.363B at quarter-end .
  • Segment level: Defense swung to loss on KC‑46/KC‑135 forward losses despite higher activity on P‑8 and CH‑53K; Aftermarket margin slipped on mix .