01—Abstract
Summary
Summary of the 10-K filed February 12, 2018. Cited figures are marked; the original filing is the authoritative source.
The Boeing Company's 2017 10-K filing reveals a year of significant financial recovery and strategic adjustments.
While overall revenues saw a slight decrease compared to 2016, the company demonstrated substantial improvement in profitability, driven by a strong rebound in the Commercial Airplanes segment, which benefited from lower reach-forward losses and improved cost performance. The Defense, Space & Security segment also saw increased earnings, bolstered by reduced charges on key programs. The company continued to invest in future growth, evidenced by ongoing R&D and significant backlog figures.
Key financial highlights include a notable increase in net earnings and diluted EPS, demonstrating operational efficiency gains. Boeing also returned substantial capital to shareholders through share repurchases and dividends, underscoring its commitment to shareholder value.
The company's strategic focus on core businesses (BCA, BDS, BGS) and supported by Boeing Capital (BCC) positions it to navigate the cyclical nature of the aerospace and defense markets. However, investors should remain aware of the inherent risks associated with government contract reliance, production complexities, and global economic sensitivities impacting commercial airline demand.
02—Key points
Key Highlights
- Net earnings increased significantly in 2017 to $8.2 billion, a substantial improvement from $4.9 billion in 2016, reflecting improved operational performance and reduced charges.
- Diluted earnings per share (EPS) rose to $13.43 in 2017, up from $7.61 in 2016, showcasing enhanced profitability.
- Total revenues saw a slight decline to $93.4 billion in 2017 from $94.6 billion in 2016, primarily due to delivery mix in Commercial Airplanes and lower milestone revenue in Defense, Space & Security.
- The Commercial Airplanes (BCA) segment's earnings from operations more than tripled year-over-year, reaching $5.4 billion in 2017, driven by lower reach-forward losses and improved cost performance.
- The company repurchased approximately $9.2 billion of its common stock in 2017 and paid $3.5 billion in dividends, returning significant capital to shareholders.
- Backlog remained robust, totaling $488.1 billion at the end of 2017, providing a strong base for future revenues across all segments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Boeing Co kept $0.09.
- Revenue$94.00B100.0%
- Cost of revenue−$76.61B81.5%
- Gross profit$17.39B18.5%
- Operating costs−$7.05B7.5%
- Operating income$10.34B11.0%
- Interest, other & tax−$1.89B2.0%
- Net income$8.46B9.0%
Where FY2017 revenue went
$94.00B- Cost of revenue: $76.61B, 81% of revenue
- Net income: $8.46B, 9.0% of revenue
- R&D: $3.18B, 3.4% of revenue
- Other operating costs: $3.87B, 4.1% of revenue
- Interest, other & tax: $1.89B, 2.0% of revenue
Kept 9.0% as net incomeNet income $8.46B · 9.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 12, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $94.00B$93.50B | +0.5% |
| Cost of Revenue | $76.61B$79.03B | −3.1% |
| Gross Profit | $17.39B$14.47B | +20.2% |
| R&D Expenses | $3.18B$4.63B | −31.3% |
| Operating Income | $10.34B$6.53B | +58.5% |
| Net Income | $8.46B$5.03B | +68.0% |
| EPS (Basic) | $14.03$7.92 | +77.1% |
| EPS (Diluted) | $13.85$7.83 | +76.9% |
| Shares Outstanding (Basic) | 603.20M636.50M | −5.2% |
| Shares Outstanding (Diluted) | 610.00M642.80M | −5.1% |
05—Questions
Frequently Asked Questions
What was Boeing's financial performance in 2017?
Boeing reported a strong recovery in profitability in 2017. Net earnings increased to $8.2 billion from $4.9 billion in 2016, and diluted earnings per share rose to $13.43 from $7.61. While total revenues slightly decreased to $93.4 billion from $94.6 billion, this was largely due to delivery mix and program-specific factors, offset by improved segment earnings.
How did Boeing's business segments perform in 2017?
The Commercial Airplanes (BCA) segment saw a significant earnings increase, primarily due to reduced reach-forward losses and better cost performance. The Defense, Space & Security (BDS) segment also improved its earnings from operations, driven by lower charges on key programs like the KC-46A Tanker and Commercial Crew. The Global Services (BGS) segment experienced revenue growth and stable earnings, while Boeing Capital (BCC) reported increased earnings from operations due to lower impairment and depreciation expenses.
What are the key risks facing Boeing in 2017?
Boeing faces several risks, including dependence on commercial airline demand, which is sensitive to global economic conditions and fuel prices. The defense segment is subject to fluctuations in U.S. government spending and program-level appropriations. Operational risks include managing complex production systems, supplier performance, and the successful development and certification of new aircraft programs like the 787-10 and 777X. Additionally, geopolitical factors, foreign currency fluctuations, and regulatory changes can impact international sales.
How did Boeing manage its capital and shareholder returns in 2017?
Boeing actively managed its capital by repurchasing approximately $9.2 billion of its common stock and paying $3.5 billion in dividends to shareholders. The company also contributed $4 billion to its pension plans, including $3.5 billion in company stock. The robust backlog and operating cash flow provided the financial flexibility to support these activities and fund ongoing operations and investments.
06—Continue