A Message from the CFO: 2022 Q4 Financial Results

Today, we released our Q4 2022 financial results as follows:

For the 2022, our year-over-year comparative performance was as follows:

• Revenue was $5.030 billion compared to $3.953 billion for 2021, an increase of 27%.
• Despite increase in revenue, we ended 2022 with a net loss of $546 million.
• We consumed $516 million of Free Cash Flow during the year, and over the last three years, we consumed a total of $1.6 billion

Commercial revenue increased 30% compared to 2021, primarily due to higher production volumes on the 737, A220 and A320 programs, partially offset by lower production on the 747 and 787 programs. Operating margin improved to negative 2% from 7% in 2021, driven by higher volumes on the 737 program.

Defense & Space revenue improved by 11% compared to 2021, due to higher development program activity and increased P-8 production. Operating margin for the year also increased to 11%, compared to 8% in 2021. Improvements were due to higher classified program profit, and the absence of non-recurring charges taken in 2021.

Aftermarket revenues were up 30% compared to 2021, primarily due to higher spare part sales as well as higher maintenance, repair and overhaul activity. Operating margin for the year decreased to 19%, compared to 21% in 2021, due to a one-time inventory adjustment charge as well as losses of $4.2 million related to Russia sanctions.

Looking to 2023, the largest driver of cash flow improvement will be increased units on the 737 and A320 programs. We must realize rate increases this year while maintaining a strong focus on workplace safety and improving quality.

In addition to increased production, we also have plans in place to reduce structural costs from the company in three work streams: Operations, Infrastructure and Supply Chain Management.

In relation to infrastructure focus, our target is to reduce our indirect headcount plan for 2023 by 1,000 positions through a combination of closing open hiring requisitions, attrition, and reductions. At the same time, it is important to note that as production rates continue to increase, we will continue to hire direct labor headcount – meaning those directly involved with building our products, as necessary. These hires reflect our need to be prepared to execute on the rate increases to fulfill our contractual obligations.

By taking these necessary actions to limit indirect, or overhead, growth during this recovery stage, we believe we are putting in place the groundwork for the future success of Spirit. Financial health is a critical path to realizing our third R, re-energizing our workforce.

In summary, we must remain focused on executing the Three R’s, and living the Spirit values.

We understand this news is a lot to absorb, and we know you will have questions about what this means for our future. We will do our best to answer your questions as plans are solidified and we have additional information to share. 

Mark Suchinski
Senior Vice President
Chief Financial Officer