Boeing Reports Third-Quarter Results; Raises Cash Flow and EPS Guidance

25/10/2017 05:30

Source: PR News

CHICAGO, Oct. 25, 2017 /PRNewswire/ --

  • Revenue of $24.3 billion, including a record 202 commercial aircraft deliveries
  • GAAP EPS of $3.06 and core EPS (non-GAAP)* of $2.72 on solid execution
  • Strong operating cash flow of $3.4 billion; repurchased 11 million shares for $2.5 billion
  • Backlog remains robust at $474 billion, including nearly 5,700 aircraft in commercial airplane orders
  • Cash flow and EPS guidance raised; segment guidance updated



















Table 1. Summary Financial Results


Third Quarter



Nine Months


(Dollars in Millions, except per share data)


2017

2016

Change

2017

2016

Change









Revenues



$24,309



$23,898


2%



$68,024



$71,285


(5)%










GAAP








Earnings From Operations



$2,689



$2,282


18%



$7,248



$3,651


99%


Operating Margin


11.1%


9.5%


1.6 Pts


10.7%


5.1%


5.6 Pts


Net Earnings



$1,853



$2,279


(19)%



$5,065



$3,264


55%


Earnings Per Share



$3.06



$3.60


(15)%



$8.27



$5.04


64%


Operating Cash Flow



$3,396



$3,202


6%



$10,440



$7,667


36%


Non-GAAP*








Core Operating Earnings



$2,373



$2,194


8%



$6,294



$3,400


85%


Core Operating Margin


9.8%


9.2%


0.6 Pts


9.3%


4.8%


4.5 Pts


Core Earnings Per Share



$2.72



$3.51


(23)%



$7.26



$4.79


52%



* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures Disclosures."     

The Boeing Company [NYSE: BA] reported third-quarter revenue of $24.3 billion with GAAP earnings per share of $3.06 and core earnings per share (non-GAAP)* of $2.72 reflecting strong deliveries, services and delivery mix, and overall solid execution (Table 1).

The company's cash flow guidance is increased to $12.5 billion from $12.25 billion, driven by improved performance. Full year EPS guidance is increased to between $11.20 and $11.40 from $11.10 and $11.30 and core earnings per share (non-GAAP)* guidance is increased to between $9.90 and $10.10 from $9.80 and $10.00 driven by a lower-than-expected tax rate. Full year segment guidance is updated, reflecting the realignment of the company's services businesses into Boeing Global Services (BGS).

"Our teams across all three business segments are driving execution with a focus on both productivity and growth, which has enabled Boeing to deliver solid third quarter financial results, grow cash flow, and raise our 2017 outlook," said Chairman, President and Chief Executive Officer Dennis Muilenburg.

"In the third quarter we successfully launched our newest business segment, Boeing Global Services, leveraging our unique One Boeing advantages to offer complete lifecycle support across the commercial, defense and space sectors. We achieved a number of key milestones in the quarter with the delivery of a record 202 commercial airplanes, including 24 737 MAXs as we continue the smooth introduction of that airplane. On the defense side, we booked $6 billion in new orders, including an initial contract award for the Ground Based Strategic Deterrent program and an award from the U.S. Navy for 14 F/A-18 Super Hornet aircraft."

"We remain focused on accelerating productivity, quality and safety improvements across the company, executing on our future development programs, and capturing new business to ensure our continued growth."



Table 2. Cash Flow


Third Quarter


Nine Months

(Millions)


2017

2016

2017

2016

Operating Cash Flow



$3,396



$3,202



$10,440



$7,667


Less Additions to Property, Plant & Equipment



($399)



($595)



($1,304)



($2,014)


Free Cash Flow*



$2,997



$2,607



$9,136



$5,653



* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures Disclosures."     

Operating cash flow in the quarter of $3.4 billion was driven by solid operating performance and favorable timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 11 million shares for $2.5 billion, leaving $6.5 billion remaining under the current repurchase authorization. The company also paid $0.9 billion in dividends in the quarter, reflecting a 30 percent increase in dividends per share compared to the same period of the prior year.









Table 3. Cash, Marketable Securities and Debt Balances


Quarter-End

(Billions)


Q3 17

Q2 17

Cash



$8.6



$8.7


Marketable Securities1



$1.4



$1.6


Total



$10.0



$10.3


Debt Balances:




The Boeing Company, net of intercompany loans to BCC



$7.8



$7.8


Boeing Capital, including intercompany loans



$3.0



$3.0


Total Consolidated Debt



$10.8



$10.8



1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $10.0 billion, down slightly from $10.3 billion at the beginning of the quarter (Table 3). Debt was $10.8 billion, unchanged from the beginning of the quarter.

Total company backlog at quarter-end was $474 billion, down from $482 billion at the beginning of the quarter, and included net orders for the quarter of $16 billion.

Segment Results

Commercial Airplanes



















Table 4. Commercial Airplanes


Third Quarter



Nine Months



(Dollars in Millions)


2017

2016

Change

2017

2016

Change









Commercial Airplanes Deliveries


202


188


7%


554


563


(2)%










Revenues1



$14,982



$15,200


(1)%



$41,263



$43,630


(5)%


Earnings from Operations1



$1,483



$1,293


15%



$3,648



$804


354%


Operating Margin1


9.9%


8.5%


1.4 Pts


8.8%


1.8%


7.0 Pts



1 Prior year results have been adjusted to reflect the realignment of the services business

Commercial Airplanes third-quarter revenue was $15.0 billion on planned production rates and delivery mix (Table 4). Third-quarter operating margin increased to 9.9 percent, reflecting higher 787 margins and strong operating performance on production programs, partially offset by additional cost growth of $256 million on the KC-46 Tanker program due to incorporating changes into initial production aircraft as we progress through late-stage testing and the certification process.

During the quarter, Commercial Airplanes delivered a record 202 airplanes, including 24 737 MAX 8 airplanes. The production rate increased to 47 per month on the 737 program, and we confirmed plans to increase the 787 production rate to 14 per month in 2019. Development on 777X is on track as production began on the first complete wing for structural test.

Commercial Airplanes booked 117 net orders during the quarter. Backlog remains robust with nearly 5,700 airplanes valued at $412 billion.

Defense, Space & Security



















Table 5. Defense, Space & Security


Third Quarter



Nine Months



(Dollars in Millions)


2017

2016

Change

2017

2016

Change









Revenues1



$5,470



$5,751


(5)%



$15,520



$17,281


(10)%


Earnings from Operations1



$559



$564


(1)%



$1,670



$1,443


16%


Operating Margin1


10.2%


9.8%


0.4Pts


10.8%


8.4%


2.4 Pts



1 Prior year results have been adjusted to reflect the realignment of the services business

Defense, Space & Security (BDS) third-quarter revenue was $5.5 billion on lower planned deliveries and mix (Table 5). Third-quarter operating margin increased to 10.2 percent, reflecting solid performance and mix, partially offset by KC-46 Tanker cost growth of $73 million.

During the quarter, BDS was awarded contracts from the U.S. Air Force for design of the new Ground-Based Strategic Deterrent defense system and preliminary design of the next presidential aircraft. The U.S. Navy awarded BDS a contract for 14 F/A-18 Super Hornets during the third quarter. Additionally, BDS was selected to design and build seven medium earth orbit satellites for SES.

Backlog at Defense, Space & Security was $46 billion, of which 35 percent represents orders from international customers.

Global Services



















Table 6. Global Services


Third Quarter



Nine Months



(Dollars in Millions)


2017

2016

Change

2017

2016

Change









Revenues



$3,568



$3,506


2%



$10,638



$10,508


1%


Earnings from Operations



$506



$524


(3)%



$1,639



$1,609


2%


Operating Margin


14.2%


14.9%


(0.7) Pts


15.4%


15.3%


0.1 Pts


Global Services third-quarter revenue increased to $3.6 billion, primarily driven by higher commercial parts revenue, partially offset by timing of government services (Table 6). Third-quarter operating margin was 14.2 percent reflecting product and services mix.

During the quarter, Global Services was awarded a contract from the Defense Logistics Agency to supply F/A-18 E/F spare parts, and a contract from the Italian Air Force to provide performance-based logistics services to support the KC-767A tanker aircraft. More than 40 commercial airline customers signed up for our digital navigation applications in the quarter. Additionally, Global Services continues to capture new commercial and government customers through expanded offerings, including those powered by Boeing AnalytX.

Additional Financial Information



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Table 7. Additional Financial Information


Third Quarter


Nine Months

(Dollars in Millions)


2017

2016

2017

2016

Revenues






Boeing Capital



$70



$63



$234



$211


Unallocated items, eliminations and other



$219



($622)



$369



($345)


Earnings from Operations






Boeing Capital



$23



$13



$87



$36


Unallocated pension/postretirement



$316



$88



$954



$251


Other unallocated items and eliminations



($198)



($200)



($750)



($492)


Other income, net



$45



$2