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Spirit AeroSystems Holdings Inc's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: SPR

Now turning to the first quarter results. Our core program demonstrated solid operating performance, as we delivered 16% more commercial airplanes and recognized over 40% higher aftermarket sales for the same quarter in 2011. Our backlog, at over $33 billion, continues to illustrate the strong demand for our core products and our development programs transitioning to production.

As the large commercial aircraft market continues to be positive, we remain watchful of global economics and political dynamics while closely managing our capital spend to support increasing demand for our products.

Now let's talk about some of the specifics across the business during the quarter, beginning on Slide 3.

Fuselage Systems delivered solid operating margins of 14% on $623 million in revenue during the first quarter, as volumes across core programs increased. The Fuselage segments 737 high rate production line performed well as the team delivered its 4,000th shipset of the Next Generation fuselage. The 787 team made progress by delivering 8 airplane fuselage sections in the quarter, including the forward fuselage number 64.

While we are still early in our cost improvement efforts on the 787, the joint Boeing and Spirit teams continue to track per plan to identify and implement cost improvements across the program through value engineering, supply chain architecture and production flow.

The fuselage team also continued initial production on the 747-8 program this quarter by delivering the 45th fuselage. Additionally, in the quarter, the team shipped the first A350 XWB composite center fuselage to our Airbus customer in France.

On Slide 4, you can see the propulsion team delivered strong operating performance with margins of 16.7% on $344 million in revenue during the first quarter, as volumes across the core programs and aftermarket increased. The propulsion team's core business is strong at high rates. As we delivered the 4,000th Next Generation 737 Engine Pylon sets and Thrust Reversers in the quarter.

The segment's 787 team delivered Engine Pylons for unit number 65. Progress continues on the 747-8 engines truck production, as the propulsion team delivered the 41st shipset.

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