Aircraft parts maker Spirit on track to meet record demand
Spirit AeroSystems topped Wall Street estimates for third-quarter profit on Wednesday, and said it was back on track to meet surging demand for its aircraft parts from top customers Boeing and Airbus.
Spirit, which makes fuselage and aerodynamic structures for Boeing and Airbus planes, has been one of the highest profile parts suppliers struggling to deal with a boom in demand for commercial jets, including Boeing's best-selling 737 aircraft.
However, Boeing’s third-quarter deliveries announced last week suggested that Spirit’s backlog was easing and Wednesday’s results showed parts deliveries for the 737 rose to 160 shipsets in the third quarter from 137 a year earlier.
“We made great progress continuing to improve the consistency and efficiency of 737 deliveries during the quarter, and are now fully recovered to our delivery schedule,” Spirit CEO Tom Gentile said.
The rise in shipments did come at the cost of a trimming of operating margins in Spirit’s fuselage systems business, which fell to 13.6% from 15%.
“Although shipset deliveries have recovered, investors are likely to hone in on the operating profit miss at fuselage as evidence that Spirit is still under pressure,” Vertical Research Partners analyst Krishna Sinha said in a note.
Spirit reaffirmed its 2018 adjusted earnings per share forecast in a range of $6.10 and $6.35, aided by a lower tax rate.
“This may signal an implicit guide down on operating profits [for the full year],” Sinha said.
Spirit said it was prepared to increase production rate for parts as Boeing raises manufacturing targets for the 737 planes to 57 units per month, from 52 currently, and 14 wide-body 787 aircraft per month, from 12.
Excluding one-time items, the company earned $1.70 per share, above analysts’ average estimate of $1.65, according to Refinitiv data.
Total revenue rose about 4% to $1.81bn, but was below the estimate of $1.83bn.
Spirit’s shares were up about 1% at $83 in early trading. Up to Tuesday’s close, the stock had fallen 5.4% in 2018, compared with a 8.3% decline in the Dow Jones US Industrials index.