Company: SPR
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001628280-25-021582
Chunk: 58

Company: Spirit AeroSystems Holdings, Inc.
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 58
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 cost are required, any changes from prior estimates for fully satisfied performance obligations are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors including production efficiencies, assumed rate of production, the rate of overhead absorption, changes to scope of work, and contract modifications. Cumulative catch-up adjustments are primarily related to changes in the estimated margin of contracts with performance obligations that are satisfied over time.Changes in estimates could materially adversely affect the Company’s future financial performance. While certain increases in raw material costs can generally be passed on to the Company’s customers, in most instances the Company must fully absorb cost overruns. Some of the factors that may cause the costs incurred in fulfilling contracts to vary substantially from current estimates are technical problems, production rate changes, production stoppages, materials shortages, supplier difficulties, realization targets, existence of and execution to recovery plans caused by these factors, and multiple other events, including those identified in Item 1A. “Risk Factors” of the 2024 Form 10-K. The risk particularly applies to products such as the B787, A220, and A350, which are in forward loss positions.During the first quarter ended April 3, 2025, the Company recognized unfavorable changes in estimates of $301.1, which included net forward loss charges of $293.4, and unfavorable cumulative catch-up adjustments related to periods prior to the first quarter of 2025 of $7.7. The forward losses in the first quarter were primarily driven by schedule changes, current production performance, and supply chain cost growth on the A350 and A220 programs, schedule changes, production cost and supply chain cost growth on the B787 program, increased costs related to factory performance on the B767 program, and supply chain cost estimates on the KC-135 program. The unfavorable cumulative catch-up adjustments primarily relate to increased production costs and schedule changes implemented by Boeing on the B737 program and schedule changes and increased production costs on the B777 program.   During the first quarter ended March 28, 2024, the Company recognized unfavorable changes in estimates of $534.6, which included net forward loss charges of $495.4, and unfavorable cumulative catch-up adjustments related to periods prior to the first quarter of 2024 of $39.2. The forward losses in the quarter ended March 28, 2024 were primarily driven by a change in strategic pricing conversations with our customer, Airbus, incremental orders Airbus