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
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Table 1. Summary Financial
Results |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions, except per share
data) |
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2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
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$25,146 |
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$24,223 |
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4% |
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$72,786 |
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$69,235 |
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5% |
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GAAP |
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Earnings From Operations |
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$2,227 |
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$2,630 |
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(15)% |
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$7,812 |
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$7,366 |
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6% |
Operating Margin |
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8.9% |
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10.9% |
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(2.0) Pts |
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10.7% |
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10.6% |
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0.1 Pts |
Net Earnings |
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$2,363 |
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$1,810 |
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31% |
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$7,036 |
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$5,138 |
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37% |
Earnings Per Share |
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$4.07 |
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$2.99 |
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36% |
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$11.95 |
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$8.39 |
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42% |
Operating Cash Flow |
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$4,559 |
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$3,396 |
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34% |
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$12,375 |
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$10,443 |
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19% |
Non-GAAP* |
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Core Operating Earnings |
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$1,890 |
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$2,284 |
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(17)% |
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$6,793 |
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$6,317 |
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8% |
Core Operating Margin |
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7.5% |
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9.4% |
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(1.9) Pts |
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9.3% |
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9.1% |
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0.2 Pts |
Core Earnings Per Share |
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$3.58 |
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$2.62 |
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37% |
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$10.55 |
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$7.28 |
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45% |
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*Non-GAAP measure; complete
definitions of Boeing's non-GAAP measures are on page 7, "Non-GAAP
Measures Disclosures." |
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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."
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Table 2. Cash Flow |
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Third
Quarter |
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Nine Months |
(Millions) |
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2018 |
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2017 |
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2018 |
2017 |
Operating Cash Flow |
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$4,559 |
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$3,396 |
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$12,375 |
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$10,443 |
Less Additions to Property, Plant &
Equipment |
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($457) |
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($399) |
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($1,227) |
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($1,304) |
Free Cash Flow* |
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$4,102 |
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$2,997 |
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$11,148 |
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$9,139 |
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*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.
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Table 3. Cash, Marketable Securities and Debt
Balances |
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Quarter-End |
(Billions) |
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Q3 18 |
Q2 18 |
Cash |
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$8.0 |
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$8.1 |
Marketable Securities1 |
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$2.0 |
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$1.7 |
Total |
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$10.0 |
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$9.8 |
Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
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$9.4 |
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$9.6 |
Boeing Capital, including intercompany loans |
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$2.5 |
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$2.5 |
Total Consolidated Debt |
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$11.9 |
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$12.1 |
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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
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Table 4. Commercial Airplanes |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
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2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Commercial Airplanes Deliveries |
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190 |
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202 |
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(6)% |
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568 |
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554 |
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3% |
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Revenues |
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$15,276 |
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$15,393 |
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(1)% |
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$43,409 |
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$42,626 |
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2% |
Earnings from Operations |
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$2,023 |
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$1,513 |
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34% |
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$5,175 |
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$3,665 |
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41% |
Operating Margin |
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13.2% |
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9.8% |
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3.4 Pts |
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11.9% |
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8.6% |
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3.3 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
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Table 5. Defense, Space &
Security |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
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2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
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$5,729 |
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$5,050 |
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13% |
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$17,084 |
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$15,304 |
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12% |
Earnings from Operations |
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($245) |
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$486 |
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NM |
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$925 |
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$1,649 |
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NM |
Operating Margin |
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(4.3)% |
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9.6% |
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(13.9) Pts |
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5.4% |
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10.8% |
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(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
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Table 6. Global Services |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
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2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
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$4,091 |
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$3,579 |
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14% |
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$12,124 |
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$10,784 |
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12% |
Earnings from Operations |
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$543 |
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$495 |
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10% |
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$1,790 |
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$1,687 |
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6% |
Operating Margin |
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13.3% |
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13.8% |
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(0.5) Pts |
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14.8% |
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15.6% |
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(0.8) 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
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Table 7. Additional Financial
Information |
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Third
Quarter |
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Nine Months |
(Dollars in Millions) |
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2018 |
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2017 |
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2018 |
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2017 |
Revenues |
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Boeing Capital |
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$77 |
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$70 |
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$214 |
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$234 |
Unallocated items, eliminations and other |
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($27) |
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$131 |
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($45) |
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$287 |
Earnings from Operations |
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Boeing Capital |
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$27 |
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$23 |
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$71 |
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$87 |
FAS/CAS service cost adjustment |
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$337 |
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$346 |
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$1,019 |
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$1,049 |
Other unallocated items and eliminations |
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($458) |
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($233) |
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($1,168) |
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($771) |
Other income, net |
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$12 |
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$40 |
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$63 |
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$91 |
Interest and debt expense |
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($106) |
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($87) |
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($317) |
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($267) |
Effective tax rate |
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(10.8)% |
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29.9% |
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6.9% |
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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).
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Table 8. 2018 Financial Outlook |
Current |
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Prior |
(Dollars in Billions, except per share
data) |
Guidance |
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Guidance |
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The Boeing Company |
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Revenue |
$98.0 - 100.0 |
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$97.0 - 99.0 |
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GAAP Earnings Per Share |
$16.90 - 17.10 |
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$16.40 - 16.60 |
Core Earnings Per Share* |
$14.90 - 15.10 |
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$14.30 - 14.50 |
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Operating Cash Flow |
$15.0 - 15.5 |
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$15.0 - 15.5 |
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Commercial Airplanes |
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Deliveries |
810 - 815 |
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810 - 815 |
Revenue |
$59.5 - 60.5 |
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$59.5 - 60.5 |
Operating Margin |
12.0 - 12.5% |
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>11.5% |
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Defense, Space & Security |
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Revenue |
$22.5 - 23.0 |
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$22.0 - 23.0 |
Operating Margin |
>6.5% |
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10.0 - 10.5% |
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Global Services |
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Revenue |
$16.0 - 16.5 |
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$15.5 - 16.0 |
Operating Margin |
~15.5% |
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~15.5% |
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Boeing Capital |
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Portfolio Size |
Stable |
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Stable |
Revenue |
~$0.2 |
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~$0.2 |
Pre-Tax Earnings |
~$0.08 |
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~$0.07 |
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Research & Development |
~$3.5 |
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~$3.7 |
Capital Expenditures |
~$2.0 |
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~$2.2 |
Pension Expense 1 |
~$0.2 |
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~$0.1 |
Effective Tax Rate |
~9.5% |
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~16.0% |
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*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: |
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Investor Relations: |
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Maurita Sutedja or Ben Hackman (312) 544-2140 |
Communications: |
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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
September 30 |
|
Three months
ended
September 30 |
|
|
|
|
(Dollars in millions, except per share
data) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
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
depreciation of $18,328 and $17,641 |
12,571 |
|
12,672 |
|
|
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
$466 and $482 |
1,852 |
|
2,027 |
|
|
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
debt |
1,389 |
|
1,335 |
|
|
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
shares authorized; 1,012,261,159 shares issued |
5,061 |
|
5,061 |
|
|
Additional paid-in capital |
6,714 |
|
6,804 |
|
|
Treasury stock, at cost - 443,262,126 and
421,222,326 shares |
(51,781) |
|
(43,454) |
|
|
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
equivalents, including restricted |
(37) |
|
73 |
|
|
Net decrease in cash & cash equivalents,
including restricted |
(725) |
|
(194) |
|
|
Cash & cash equivalents, including restricted,
at beginning of year |
8,887 |
|
8,869 |
|
|
Cash & cash equivalents, including
restricted, at end of period |
8,162 |
|
8,675 |
|
|
Less restricted cash & cash equivalents,
included in Investments |
128 |
|
106 |
|
|
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
ended
September 30 |
|
Three months
ended
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 other |
(45) |
|
287 |
|
(27) |
|
131 |
|
|
|
|
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 other |
(1,168) |
|
(771) |
|
(458) |
|
(233) |
|
|
|
|
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 expense,
net |
$2,417 |
|
$2,417 |
|
$826 |
|
$768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated items, eliminations and
other: |
|
|
|
|
|
|
|
|
|
|
|
Share-based plans |
($60) |
|
($67) |
|
($24) |
|
($21) |
|
|
|
|
Deferred compensation |
(112) |
|
(174) |
|
(56) |
|
(78) |
|
|
|
|
Amortization of previously capitalized
interest |
(67) |
|
(68) |
|
(19) |
|
(22) |
|
|
|
|
Eliminations and other unallocated items |
(929) |
|
(462) |
|
(359) |
|
(112) |
|
|
|
|
Sub-total (included in core operating
earnings) |
(1,168) |
|
(771) |
|
(458) |
|
(233) |
|
|
|
|
Pension FAS/CAS service cost adjustment |
780 |
|
811 |
|
260 |
|
271 |
|
|
|
|
Postretirement FAS/CAS service cost
adjustment |
239 |
|
238 |
|
77 |
|
75 |
|
|
|
|
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
ended
September 30 |
|
|
Three months
ended
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 (Remanufactured) |
|
12 |
|
43 |
|
|
6 |
|
15 |
|
|
|
|
|
|
|
|
|
|
|
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 Satellites |
|
1 |
|
3 |
|
|
1 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
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, except per share
data) |
2018
Guidance |
|
Third Quarter
2018 |
|
Third Quarter 2017 |
|
|
|
|
|
$ millions |
Per Share |
|
$ millions |
Per Share |
|
$ millions |
|
Per Share |
|
|
|
|
Revenues |
|
|
|
25,146 |
|
|
24,223 |
|
|
|
|
|
|
Earnings from operations (GAAP) |
|
|
|
2,227 |
|
|
2,630 |
|
|
|
|
|
|
Operating margins |
|
|
|
8.9% |
|
|
10.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
|
|
|
(260) |
|
|
(271) |
|
|
|
|
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
|
(77) |
|
|
(75) |
|
|
|
|
|
|
FAS/CAS service cost adjustment |
~($1,395) |
|
|
(337) |
|
|
(346) |
|
|
|
|
|
|
Core operating earnings (non-GAAP) |
|
|
|
$1,890 |
|
|
$2,284 |
|
|
|
|
|
|
Core operating margins (non-GAAP) |
|
|
|
7.5% |
|
|
9.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$16.90 -
17.10 |
|
|
$4.07 |
|
|
|
$2.99 |
|
|
|
|
Pension FAS/CAS service cost adjustment |
~($1,395) |
|
|
($260) |
(0.45) |
|
($271) |
|
(0.45) |
|
|
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
(77) |
(0.13) |
|
(75) |
|
(0.12) |
|
|
|
|
Non-operating pension expense |
~($90) |
|
|
(50) |
(0.09) |
|
(26) |
|
(0.05) |
|
|
|
|
Non-operating postretirement expense |
|
|
29 |
0.05 |
|
31 |
|
0.05 |
|
|
|
|
Provision for deferred income taxes on
adjustments 1 |
|
|
|
75 |
0.13 |
|
119 |
|
0.20 |
|
|
|
|
Subtotal of adjustments |
|
($2.00) |
|
($283) |
($0.49) |
|
($222) |
|
($0.37) |
|
|
|
|
Core earnings per share (non-GAAP) |
|
$14.90 -
15.10 |
|
|
$3.58 |
|
|
|
$2.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
585 - 590 |
|
|
|
580.8 |
|
|
|
606.3 |
|
|
|
|
|
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, except per share
data) |
2018
Guidance |
|
Nine Months
2018 |
|
Nine Months 2017 |
|
|
|
|
$ millions |
Per Share |
|
$ millions |
|
Per Share |
|
$ millions |
|
Per Share |
|
|
|
Revenues |
|
|
|
72,786 |
|
|
|
69,235 |
|
|
|
|
|
Earnings from operations (GAAP) |
|
|
|
7,812 |
|
|
|
7,366 |
|
|
|
|
|
Operating margins |
|
|
|
10.7% |
|
|
|
10.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
|
|
|
(780) |
|
|
|
(811) |
|
|
|
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
|
(239) |
|
|
|
(238) |
|
|
|
|
|
FAS/CAS service cost adjustment |
~($1,395) |
|
|
(1,019) |
|
|
|
(1,049) |
|
|
|
|
|
Core operating earnings (non-GAAP) |
|
|
|
$6,793 |
|
|
|
$6,317 |
|
|
|
|
|
Core operating margins (non-GAAP) |
|
|
|
9.3% |
|
|
|
9.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$16.90 -
17.10 |
|
|
|
$11.95 |
|
|
|
$8.39 |
|
|
|
Pension FAS/CAS service cost adjustment |
~($1,395) |
|
|
($780) |
|
(1.32) |
|
($811) |
|
(1.32) |
|
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
(239) |
|
(0.41) |
|
(238) |
|
(0.39) |
|
|
|
Non-operating pension expense |
~($90) |
|
|
(98) |
|
(0.17) |
|
(88) |
|
(0.15) |
|
|
|
Non-operating postretirement expense |
|
|
77 |
|
0.13 |
|
91 |
|
0.15 |
|
|
|
Provision for deferred income taxes on
adjustments 1 |
|
|
|
218 |
|
0.37 |
|
366 |
|
0.60 |
|
|
|
Subtotal of adjustments |
|
($2.00) |
|
($822) |
|
($1.40) |
|
($680) |
|
($1.11) |
|
|
|
Core earnings per share (non-GAAP) |
|
$14.90 -
15.10 |
|
|
|
$10.55 |
|
|
|
$7.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
585 - 590 |
|
|
|
|
588.9 |
|
|
|
612.8 |
|
|
|
|
1 The income tax
impact is calculated using the U.S. corporate statutory tax
rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|