TIDMBOE
Boeing Reports Solid Third Quarter; Reaffirms Cash and Raises Revenue and EPS
Guidance
CHICAGO, Oct. 24, 2018 /PRNewswire/ --
* Revenue increased to $25.1 billion driven by higher defense and services
volume
* GAAP EPS of $4.07 and core EPS (non-GAAP)* of $3.58 on solid execution
across the company
* Strong operating cash flow of $4.6 billion; repurchased 7.0 million shares
for $2.5 billion
* Total backlog grew to $491 billion, including more than 5,800 commercial
airplanes
* Cash and marketable securities of $10.0 billion provide strong liquidity
* Reaffirmed cash guidance; raised revenue and EPS guidance; updated segment
margin guidance
Table 1. Summary Financial Third Quarter Nine Months
Results
(Dollars in Millions, 2018 2017 Change 2018 2017 Change
except per share
data)
Revenues $25,146 $24,223 4% $72,786 $69,235 5%
GAAP
Earnings From Operations $2,227 $2,630 (15)% $7,812 $7,366 6%
Operating Margin 8.9% 10.9% (2.0) 10.7% 10.6% 0.1
Pts Pts
Net Earnings $2,363 $1,810 31% $7,036 $5,138 37%
Earnings Per Share $4.07 $2.99 36% $11.95 $8.39 42%
Operating Cash Flow $4,559 $3,396 34% $12,375 $10,443 19%
Non-GAAP*
Core Operating Earnings $1,890 $2,284 (17)% $6,793 $6,317 8%
Core Operating Margin 7.5% 9.4% (1.9) 9.3% 9.1% 0.2
Pts Pts
Core Earnings Per Share $3.58 $2.62 37% $10.55 $7.28 45%
*Non-GAAP measure; complete definitions of Boeing's non-GAAP measures
are on page 7, "Non-GAAP Measures Disclosures."
The Boeing Company [NYSE: BA] reported third-quarter revenue of $25.1 billion
driven by higher defense volume and services growth (Table 1). GAAP earnings
per share increased to $4.07 and core earnings per share (non-GAAP)* increased
to $3.58 primarily driven by strong operating performance at Commercial
Airplanes and a tax benefit related to a tax settlement ($0.71 per share).
Results also reflect charges related to planned investments in the newly
awarded T-X Trainer and MQ-25 programs ($0.93 per share). Boeing delivered
strong operating cash flow of $4.6 billion, repurchased $2.5 billion of shares,
and paid $1.0 billion of dividends.
The company's revenue guidance increased $1.0 billion to between $98.0 and
$100.0 billion, driven by defense volume and services growth, inclusive of the
KLX acquisition. Operating cash flow guidance is reaffirmed at $15.0 to $15.5
billion. Full year GAAP earnings per share guidance is increased to between
$16.90 and $17.10 from between $16.40 and $16.60 and core earnings per share
(non-GAAP)* guidance is increased to between $14.90 and $15.10 from between
$14.30 and $14.50 driven by a lower-than-expected tax rate and improved
performance at Commercial Airplanes.
"Our teams continued to perform at a high level during the quarter, driving
solid operating performance and robust cash generation, and continuing to
deliver on our One Boeing advantage by bringing the best of Boeing to our
customers," said Boeing Chairman, President and Chief Executive Officer Dennis
Muilenburg.
"During the quarter we captured important new defense business, winning and
investing in the MQ-25 and T-X programs and securing the MH-139 contract,
clearly demonstrating the value Boeing brings to customers while positioning us
well for future growth opportunities. Within the Commercial Airplanes business,
the 777X static test airplane was completed and moved into test setup and the
team's focus on execution across our production programs continued to drive
outstanding performance and strong operating margins. Our Global Services
business continues to deliver on total lifecycle value to our customers, with
key wins in the quarter including P-8 Poseidon training contracts for the U.S.
Navy and Royal Australian Air Force and an order from GECAS for 20 737-800
Boeing Converted Freighters. Additionally, we began integrating new data
analytics tools, powered by Boeing AnalytX, into all Boeing Defence Australia
support contracts, enhancing its position as a leading fleet services provider
in the region."
"This strong underlying performance, along with growth across our businesses
we've seen throughout the year, give us confidence to raise our 2018 revenue
and earnings guidance and reaffirm our operating cash flow guidance."
Table 2. Cash Flow Third Quarter Nine Months
(Millions) 2018 2017 2018 2017
Operating Cash Flow $4,559 $3,396 $12,375 $10,443
Less Additions to Property, Plant & ($457) ($399) ($1,227) ($1,304)
Equipment
Free Cash Flow* $4,102 $2,997 $11,148 $9,139
*Non-GAAP measure; complete definitions of Boeing's non-GAAP measures are on
page 7, "Non-GAAP Measures Disclosures."
Operating cash flow in the quarter increased to $4.6 billion, primarily driven
by timing of receipts and expenditures as well as planned higher commercial
airplane production rates and strong operating performance (Table 2). During
the quarter, the company repurchased 7.0 million shares for $2.5 billion,
leaving $9.6 billion remaining under the current repurchase authorization which
is expected to be completed over approximately the next 12 to 18 months. The
company also paid $1.0 billion in dividends in the quarter, reflecting a 20
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 18 Q2 18
Cash $8.0 $8.1
Marketable Securities1 $2.0 $1.7
Total $10.0 $9.8
Debt Balances:
The Boeing Company, net of intercompany loans to BCC $9.4 $9.6
Boeing Capital, including intercompany loans $2.5 $2.5
Total Consolidated Debt $11.9 $12.1
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, compared
to $9.8 billion at the beginning of the quarter (Table 3). Debt was relatively
stable at $11.9 billion.
Total company backlog at quarter-end was $491 billion, up from $488 billion at
the beginning of the quarter, and included net orders for the quarter of $28
billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Third Quarter Nine Months
Airplanes
(Dollars in Millions) 2018 2017 Change 2018 2017 Change
Commercial Airplanes 190 202 (6)% 568 554 3%
Deliveries
Revenues $15,276 $15,393 (1)% $43,409 $42,626 2%
Earnings from Operations $2,023 $1,513 34% $5,175 $3,665 41%
Operating Margin 13.2% 9.8% 3.4 11.9% 8.6% 3.3
Pts Pts
Commercial Airplanes third-quarter revenue of $15.3 billion was relatively
unchanged, reflecting lower deliveries largely offset by mix (Table 4).
Third-quarter operating margin increased to 13.2 percent, reflecting higher 787
margin and strong operating performance on production programs, partially
offset by $112 million of cost growth on the KC-46 Tanker program due to higher
than expected effort to meet customer requirements to support delivery of the
initial aircraft, as well as due to incremental delays in certification and
testing.
During the quarter, Commercial Airplanes delivered 190 airplanes, including 57
737 MAX airplanes. The 777X program remains on track for delivery in 2020 as
the static test airplane was completed and moved into test setup and the first
two flight test airplanes were in production.
Commercial Airplanes booked 171 net orders during the quarter, valued at $13
billion. The 787 program has captured more than 100 orders in 2018 and nearly
1,400 orders since its launch. Backlog remains robust with more than 5,800
airplanes valued at $413 billion. Commercial Airplanes revenue guidance is
reaffirmed at between $59.5 and $60.5 billion and margin guidance is increased
to between 12% and 12.5% from greater than 11.5% on strong performance.
Defense, Space & Security
Table 5. Defense, Space & Third Quarter Nine Months
Security
(Dollars in Millions) 2018 2017 Change 2018 2017 Change
Revenues $5,729 $5,050 13% $17,084 $15,304 12%
Earnings from Operations ($245) $486 NM $925 $1,649 NM
Operating Margin (4.3)% 9.6% (13.9) Pts 5.4% 10.8% (5.4) Pts
Defense, Space & Security third-quarter revenue increased to $5.7 billion
driven by increased volume across government satellites, KC-46 Tanker, F/A-18
and weapons (Table 5). Third-quarter operating margin was (4.3) percent,
primarily reflecting $691 million of charges related to planned investments in
the T-X and MQ-25 programs and $64 million related to cost growth on the KC-46
Tanker program.
During the quarter, Defense, Space & Security won key franchise program awards,
including the T-X Trainer and MH-139 helicopter for the U.S. Air Force, the
MQ-25 unmanned aircraft for the U.S. Navy, and the fourth KC-46 Tanker
production lot. Significant milestones during the quarter included first
flights of the Apache and Chinook for the Indian Air Force and receipt of
Supplemental Type Certification for the KC-46 Tanker program, signifying
completion of FAA certification. We also completed the acquisition of
Millennium Space Systems, which will provide customers with advanced
small-satellite technologies and flexible solutions.
Backlog at Defense, Space & Security was $58 billion, of which 31 percent
represents orders from customers outside the U.S. Defense, Space & Security
revenue guidance increased to between $22.5 and $23.0 billion from between
$22.0 and $23.0 billion driven by higher volume and margin guidance is adjusted
to greater than 6.5% from between 10% and 10.5% primarily to account for the
investments in the business.
Global Services
Table 6. Global Third Quarter Nine Months
Services
(Dollars in Millions) 2018 2017 Change 2018 2017 Change
Revenues $4,091 $3,579 14% $12,124 $10,784 12%
Earnings from $543 $495 10% $1,790 $1,687 6%
Operations
Operating Margin 13.3% 13.8% (0.5) 14.8% 15.6% (0.8)
Pts Pts
Global Services third-quarter revenue increased to $4.1 billion, primarily
driven by higher parts volume (Table 6). Third-quarter operating margin was
13.3 percent reflecting mix and higher period costs.
During the quarter, Global Services was awarded P-8 training contracts for the
U.S. Navy and Royal Australian Air Force, captured an order from GECAS for 20
737-800 converted freighters, and completed the first P-8A heavy maintenance
check for the U.S. Navy. Global Services also secured contracts for F/A-18
spares for the Defense Logistics Agency and KC-46 Tanker services for Lots 3
and 4. In early October, Global Services completed the acquisition of KLX,
which will enhance our services business and allow us to deliver greater value
to customers.
Global Services revenue guidance increased to between $16.0 and $16.5 billion
from between $15.5 and $16.0 billion driven by higher volume and margin
guidance is reaffirmed at approximately 15.5%.
Additional Financial Information
Table 7. Additional Financial Third Quarter Nine Months
Information
(Dollars in Millions) 2018 2017 2018 2017
Revenues
Boeing Capital $77 $70 $214 $234
Unallocated items, eliminations and ($27) $131 ($45) $287
other
Earnings from Operations
Boeing Capital $27 $23 $71 $87
FAS/CAS service cost adjustment $337 $346 $1,019 $1,049
Other unallocated items and eliminations ($458) ($233) ($1,168) ($771)
Other income, net $12 $40 $63 $91
Interest and debt expense ($106) ($87) ($317) ($267)
Effective tax rate (10.8)% 29.9% 6.9% 28.5%
At quarter-end, Boeing Capital's net portfolio balance was $3.1 billion.
Revenue in other unallocated items and eliminations decreased primarily due to
the 2017 sale of aircraft previously leased to customers. The change in
earnings from other unallocated items and eliminations is primarily due to
timing of expense allocations. The effective tax rate for the third quarter
decreased from the same period in the prior year primarily due to a $412
million benefit related to a 2013-2014 tax settlement and the reduction of the
federal tax rate to 21%.
Outlook
The Company's 2018 guidance is updated below (Table 8).
Table 8. 2018 Financial Outlook Current Prior
(Dollars in Billions, except per share data) Guidance Guidance
The Boeing Company
Revenue $98.0 - 100.0 $97.0 - 99.0
GAAP Earnings Per Share $16.90 - 17.10 $16.40 - 16.60
Core Earnings Per Share* $14.90 - 15.10 $14.30 - 14.50
Operating Cash Flow $15.0 - 15.5 $15.0 - 15.5
Commercial Airplanes
Deliveries 810 - 815 810 - 815
Revenue $59.5 - 60.5 $59.5 - 60.5
Operating Margin 12.0 - 12.5% >11.5%
Defense, Space & Security
Revenue $22.5 - 23.0 $22.0 - 23.0
Operating Margin >6.5% 10.0 - 10.5%
Global Services
Revenue $16.0 - 16.5 $15.5 - 16.0
Operating Margin 15.5% 15.5%
Boeing Capital
Portfolio Size Stable Stable
Revenue $0.2 $0.2
Pre-Tax Earnings $0.08 $0.07
Research & Development $3.5 $3.7
Capital Expenditures $2.0 $2.2
Pension Expense 1 $0.2 $0.1
Effective Tax Rate 9.5% 16.0%
*Non-GAAP measure; complete definitions of Boeing's non-GAAP measures are on
page 7, "Non-GAAP Measures Disclosures."
1 Approximately $1.4 billion of pension expense is expected to be allocated to
the business segments
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under
Generally Accepted Accounting Principles in the United States of America (GAAP)
with certain non-GAAP financial information. The non-GAAP financial information
presented excludes certain significant items that may not be indicative of, or
are unrelated to, results from our ongoing business operations. We believe that
these non-GAAP measures provide investors with additional insight into the
company's ongoing business performance. These non-GAAP measures should not be
considered in isolation or as a substitute for the related GAAP measures, and
other companies may define such measures differently. We encourage investors to
review our financial statements and publicly-filed reports in their entirety
and not to rely on any single financial measure. The following definitions are
provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding
the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment
represents the difference between the FAS pension and postretirement service
costs calculated under GAAP and costs allocated to the business segments. Core
operating margin is defined as core operating earnings expressed as a
percentage of revenue. Core earnings per share is defined as GAAP diluted
earnings per share excluding the net earnings per share impact of the FAS/CAS
service cost adjustment and Non-operating pension and postretirement expenses.
Non-operating pension and postretirement expenses represent the components of
net periodic benefit costs other than service cost. Pension costs, comprising
service and prior service costs computed in accordance with GAAP are allocated
to Commercial Airplanes and BGS businesses supporting commercial customers.
Pension costs allocated to BDS and BGS businesses supporting government
customers are computed in accordance with U.S. Government Cost Accounting
Standards (CAS), which employ different actuarial assumptions and accounting
conventions than GAAP. CAS costs are allocable to government contracts. Other
postretirement benefit costs are allocated to all business segments based on
CAS, which is generally based on benefits paid. Management uses core operating
earnings, core operating margin and core earnings/per share for purposes of
evaluating and forecasting underlying business performance. Management believes
these core earnings measures provide investors additional insights into
operational performance as they exclude non-service pension and post-retirement
costs, which primarily represent costs driven by market factors and costs not
allocable to government contracts. A reconciliation between the GAAP and
non-GAAP measures is provided on pages 14-15.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow without capital
expenditures for property, plant and equipment additions. Management believes
free cash flow provides investors with an important perspective on the cash
available for shareholders, debt repayment, and acquisitions after making the
capital investments required to support ongoing business operations and long
term value creation. Free cash flow does not represent the residual cash flow
available for discretionary expenditures as it excludes certain mandatory
expenditures such as repayment of maturing debt. Management uses free cash flow
as a measure to assess both business performance and overall liquidity. Table 2
provides a reconciliation between GAAP operating cash flow and free cash flow.
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "may,"
"should," "expects," "intends," "projects," "plans," "believes," "estimates,"
"targets," "anticipates," and similar expressions generally identify these
forward-looking statements. Examples of forward-looking statements include
statements relating to our future financial condition and operating results, as
well as any other statement that does not directly relate to any historical or
current fact. Forward-looking statements are based on expectations and
assumptions that we believe to be reasonable when made, but that may not prove
to be accurate. These statements are not guarantees and are subject to risks,
uncertainties, and changes in circumstances that are difficult to predict. Many
factors could cause actual results to differ materially and adversely from
these forward-looking statements. Among these factors are risks related to: (1)
general conditions in the economy and our industry, including those due to
regulatory changes; (2) our reliance on our commercial airline customers; (3)
the overall health of our aircraft production system, planned commercial
aircraft production rate changes, our commercial development and derivative
aircraft programs, and our aircraft being subject to stringent performance and
reliability standards; (4) changing budget and appropriation levels and
acquisition priorities of the U.S. government; (5) our dependence on U.S.
government contracts; (6) our reliance on fixed-price contracts; (7) our
reliance on cost-type contracts; (8) uncertainties concerning contracts that
include in-orbit incentive payments; (9) our dependence on our subcontractors
and suppliers, as well as the availability of raw materials; (10) changes in
accounting estimates; (11) changes in the competitive landscape in our markets;
(12) our non-U.S. operations, including sales to non-U.S. customers; (13)
threats to the security of our or our customers' information; (14) potential
adverse developments in new or pending litigation and/or government
investigations; (15) customer and aircraft concentration in our customer
financing portfolio; (16) changes in our ability to obtain debt on commercially
reasonable terms and at competitive rates; (17) realizing the anticipated
benefits of mergers, acquisitions, joint ventures/strategic alliances or
divestitures; (18) the adequacy of our insurance coverage to cover significant
risk exposures; (19) potential business disruptions, including those related to
physical security threats, information technology or cyber-attacks, epidemics,
sanctions or natural disasters; (20) work stoppages or other labor disruptions;
(21) substantial pension and other postretirement benefit obligations; (22)
potential environmental liabilities.
Additional information concerning these and other factors can be found in our
filings with the Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. Any forward-looking statement speaks only as of the date on which
it is made, and we assume no obligation to update or revise any forward-looking
statement, whether as a result of new information, future events, or otherwise,
except as required by law.
Contact:
Investor Relations: Maurita Sutedja or Ben Hackman (312) 544-2140
Communications: Allison Bone (312) 544-2002
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
In the first quarter of 2018, we adopted the following Accounting Standards
Updates (ASU), which are reflected in the unaudited Consolidated Financial
Statements on pages 9-15: ASU 2014-09, Revenue from Contracts with Customers
(Topic 606); ASU 2017-07, Compensation - Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost; ASU 2016-18 Statement of Cash Flows (Topic 230)
Restricted Cash; and ASU 2018-02, Income Statement-Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income.
Nine months ended Three months ended
September 30 September 30
(Dollars in millions, except per share 2018 2017 2018 2017
data)
Sales of products $64,848 $61,667 $22,463 $21,782
Sales of services 7,938 7,568 2,683 2,441
Total revenues 72,786 69,235 25,146 24,223
Cost of products (53,134) (50,936) (18,882) (18,050)
Cost of services (6,215) (5,742) (2,140) (1,879)
Boeing Capital interest expense (51) (53) (18) (27)
Total costs and expenses (59,400) (56,731) (21,040) (19,956)
13,386 12,504 4,106 4,267
Income from operating investments, net 112 169 32 49
General and administrative expense (3,345) (2,890) (1,154) (918)
Research and development expense, net (2,417) (2,417) (826) (768)
Gain on dispositions, net 76 69
Earnings from operations 7,812 7,366 2,227 2,630
Other income, net 63 91 12 40
Interest and debt expense (317) (267) (106) (87)
Earnings before income taxes 7,558 7,190 2,133 2,583
Income tax (expense)/benefit (522) (2,052) 230 (773)
Net earnings $7,036 $5,138 $2,363 $1,810
Basic earnings per share $12.08 $8.49 $4.11 $3.03
Diluted earnings per share $11.95 $8.39 $4.07 $2.99
Cash dividends paid per share $5.13 $4.26 $1.71 $1.42
Weighted average diluted shares (millions) 588.9 612.8 580.8 606.3
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions, except per share data) September 30 December 31
2018 2017
Assets
Cash and cash equivalents $8,034 $8,813
Short-term and other investments 1,956 1,179
Accounts receivable, net 2,893 2,894
Unbilled receivables, net 9,936 8,194
Current portion of customer financing, net 431 309
Inventories 62,038 61,388
Other current assets 2,398 2,417
Total current assets 87,686 85,194
Customer financing, net 2,785 2,756
Property, plant and equipment, net of accumulated 12,571 12,672
depreciation of $18,328 and $17,641
Goodwill 5,722 5,559
Acquired intangible assets, net 2,530 2,573
Deferred income taxes 323 321
Investments 1,190 1,260
Other assets, net of accumulated amortization of 1,852 2,027
$466 and $482
Total assets $114,659 $112,362
Liabilities and equity
Accounts payable $13,663 $12,202
Accrued liabilities 12,869 13,069
Advances and progress billings 51,496 48,042
Short-term debt and current portion of long-term 1,389 1,335
debt
Total current liabilities 79,417 74,648
Deferred income taxes 1,738 2,188
Accrued retiree health care 5,394 5,545
Accrued pension plan liability, net 15,927 16,471
Other long-term liabilities 2,905 2,015
Long-term debt 10,487 9,782
Shareholders' equity:
Common stock, par value $5.00 - 1,200,000,000 5,061 5,061
shares authorized; 1,012,261,159 shares issued
Additional paid-in capital 6,714 6,804
Treasury stock, at cost - 443,262,126 and (51,781) (43,454)
421,222,326 shares
Retained earnings 54,666 49,618
Accumulated other comprehensive loss (15,949) (16,373)
Total shareholders' equity (1,289) 1,656
Noncontrolling interests 80 57
Total equity (1,209) 1,713
Total liabilities and equity $114,659 $112,362
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
September 30
(Dollars in millions) 2018 2017
Cash flows - operating activities:
Net earnings $7,036 $5,138
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Non-cash items -
Share-based plans expense 150 151
Depreciation and amortization 1,531 1,470
Investment/asset impairment charges, net 63 75
Customer financing valuation (benefit)/expense (3) 4
Gain on dispositions, net (76)
Other charges and credits, net 158 196
Changes in assets and liabilities -
Accounts receivable 10 (558)
Unbilled receivables (1,732) (1,805)
Advances and progress billings 3,457 4,714
Inventories (173) (800)
Other current assets (5) (337)
Accounts payable 1,181 780
Accrued liabilities 890 (102)
Income taxes receivable, payable and deferred (252) 1,507
Other long-term liabilities 1 25
Pension and other postretirement plans (89) (550)
Customer financing, net (175) 634
Other 403 (99)
Net cash provided by operating activities 12,375 10,443
Cash flows - investing activities:
Property, plant and equipment additions (1,227) (1,304)
Property, plant and equipment reductions 117 30
Acquisitions, net of cash acquired (250)
Contributions to investments (2,145) (2,815)
Proceeds from investments 1,369 2,612
Purchase of distribution rights (56) (131)
Other (5) 7
Net cash used by investing activities (2,197) (1,601)
Cash flows - financing activities:
New borrowings 4,696 876
Debt repayments (4,029) (83)
Contributions from noncontrolling interests 35
Stock options exercised 70 291
Employee taxes on certain share-based payment arrangements (247) (118)
Common shares repurchased (8,415) (7,500)
Dividends paid (2,976) (2,575)
Net cash used by financing activities (10,866) (9,109)
Effect of exchange rate changes on cash and cash (37) 73
equivalents, including restricted
Net decrease in cash & cash equivalents, including (725) (194)
restricted
Cash & cash equivalents, including restricted, at beginning 8,887 8,869
of year
Cash & cash equivalents, including restricted, at end of 8,162 8,675
period
Less restricted cash & cash equivalents, included in 128 106
Investments
Cash and cash equivalents at end of period $8,034 $8,569
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Nine months Three months ended
ended September 30
September 30
(Dollars in millions) 2018 2017 2018 2017
Revenues:
Commercial Airplanes $43,409 $42,626 $15,276 $15,393
Defense, Space & Security 17,084 15,304 5,729 5,050
Global Services 12,124 10,784 4,091 3,579
Boeing Capital 214 234 77 70
Unallocated items, eliminations and (45) 287 (27) 131
other
Total revenues $72,786 $69,235 $25,146 $24,223
Earnings/(loss) from operations:
Commercial Airplanes $5,175 $3,665 $2,023 $1,513
Defense, Space & Security 925 1,649 (245) 486
Global Services 1,790 1,687 543 495
Boeing Capital 71 87 27 23
Segment operating profit 7,961 7,088 2,348 2,517
Unallocated items, eliminations and (1,168) (771) (458) (233)
other
FAS/CAS service cost adjustment 1,019 1,049 337 346
Earnings from operations 7,812 7,366 2,227 2,630
Other income, net 63 91 12 40
Interest and debt expense (317) (267) (106) (87)
Earnings before income taxes 7,558 7,190 2,133 2,583
Income tax (expense)/benefit (522) (2,052) 230 (773)
Net earnings $7,036 $5,138 $2,363 $1,810
Research and development expense,
net:
Commercial Airplanes $1,616 $1,755 $517 $538
Defense, Space & Security 613 599 211 207
Global Services 119 101 48 38
Other 69 (38) 50 (15)
Total research and development $2,417 $2,417 $826 $768
expense, net
Unallocated items, eliminations and
other:
Share-based plans ($60) ($67) ($24) ($21)
Deferred compensation (112) (174) (56) (78)
Amortization of previously (67) (68) (19) (22)
capitalized interest
Eliminations and other unallocated (929) (462) (359) (112)
items
Sub-total (included in core operating (1,168) (771) (458) (233)
earnings)
Pension FAS/CAS service cost 780 811 260 271
adjustment
Postretirement FAS/CAS service cost 239 238 77 75
adjustment
FAS/CAS service cost adjustment $1,019 $1,049 $337 $346
Total ($149) $278 ($121) $113
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Deliveries Nine months Three months ended
ended September 30
September 30
Commercial Airplanes 2018 2017 2018 2017
737 407 381 138 145
747 5 8 (1) 2 4
767 13 7 4 2
777 37 58 12 16
787 106 100 34 35
Total 568 554 190 202
Note: Aircraft accounted for as revenues by BCA and as a note
receivable in consolidation identified by parentheses
Defense, Space &
Security
AH-64 Apache (New) - 8 - 3
AH-64 Apache 12 43 6 15
(Remanufactured)
CH-47 Chinook (New) 11 6 2 2
CH-47 Chinook (Renewed) 14 28 6 9
F-15 Models 8 11 3 4
F/A-18 Models 10 18 5 6
P-8 Models 10 14 2 5
Commercial and Civil 1 3 1 -
Satellites
Military Satellites - - - -
Total backlog (Dollars in millions) September 30 December 31
2018 2017
Commercial Airplanes $413,064 $410,526
Defense, Space & Security 57,875 44,049
Global Services 20,240 19,605
Total backlog $491,179 $474,180
Contractual backlog $462,468 $456,524
Unobligated backlog 28,711 17,656
Total backlog $491,179 $474,180
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core
operating earnings, core operating margin, and core earnings per share with the
most directly comparable GAAP financial measures, earnings from operations,
operating margin, and diluted earnings per share. See page 7 of this release
for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, 2018 Guidance Third Quarter Third Quarter
except per share 2018 2017
data)
$ Per $ Per $ Per
millions Share millions Share millions Share
Revenues 25,146 24,223
Earnings from 2,227 2,630
operations (GAAP)
Operating margins 8.9% 10.9%
FAS/CAS service cost
adjustment:
Pension FAS/CAS (260) (271)
service cost
adjustment
Postretirement FAS/ (77) (75)
CAS service cost
adjustment
FAS/CAS service cost (337) (346)
adjustment ($1,395)
Core operating $1,890 $2,284
earnings (non-GAAP)
Core operating 7.5% 9.4%
margins (non-GAAP)
Diluted earnings per $16.90 $4.07 $2.99
share (GAAP) - 17.10
Pension FAS/CAS ($260) (0.45) ($271) (0.45)
service cost ($1,395)
adjustment
Postretirement FAS/ (77) (0.13) (75) (0.12)
CAS service cost
adjustment
Non-operating pension ($90) (50) (0.09) (26) (0.05)
expense
Non-operating 29 0.05 31 0.05
postretirement
expense
Provision for 75 0.13 119 0.20
deferred income taxes
on adjustments 1
Subtotal of ($2.00) ($283) ($0.49) ($222) ($0.37)
adjustments
Core earnings per $14.90 $3.58 $2.62
share (non-GAAP) - 15.10
Weighted average 585 - 580.8 606.3
diluted shares (in 590
millions)
1 The income tax impact is calculated using
the U.S. corporate statutory tax rate.
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core
operating earnings, core operating margin, and core earnings per share with the
most directly comparable GAAP financial measures, earnings from operations,
operating margin, and diluted earnings per share. See page 7 of this release
for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, 2018 Guidance Nine Months 2018 Nine Months 2017
except per share
data)
$ Per $ Per $ Per
millions Share millions Share millions Share
Revenues 72,786 69,235
Earnings from 7,812 7,366
operations (GAAP)
Operating margins 10.7% 10.6%
FAS/CAS service cost
adjustment:
Pension FAS/CAS (780) (811)
service cost
adjustment
Postretirement FAS/ (239) (238)
CAS service cost
adjustment
FAS/CAS service cost (1,019) (1,049)
adjustment ($1,395)
Core operating $6,793 $6,317
earnings (non-GAAP)
Core operating 9.3% 9.1%
margins (non-GAAP)
Diluted earnings per $16.90 $11.95 $8.39
share (GAAP) - 17.10
Pension FAS/CAS ($780) (1.32) ($811) (1.32)
service cost ($1,395)
adjustment
Postretirement FAS/ (239) (0.41) (238) (0.39)
CAS service cost
adjustment
Non-operating pension ($90) (98) (0.17) (88) (0.15)
expense
Non-operating 77 0.13 91 0.15
postretirement
expense
Provision for 218 0.37 366 0.60
deferred income taxes
on adjustments 1
Subtotal of ($2.00) ($822) ($1.40) ($680) ($1.11)
adjustments
Core earnings per $14.90 $10.55 $7.28
share (non-GAAP) - 15.10
Weighted average 585 - 588.9 612.8
diluted shares (in 590
millions)
1 The income tax impact is calculated using
the U.S. corporate statutory tax rate.
END
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