10-KPeriod: FY2017

BOEING CO Annual Report, Year Ended Dec 31, 2017

Filed February 12, 2018For Securities:BABA-PA

Summary

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.

Financial Highlights

57 data points
Beta

Revenue

$94.00B

18.5% Gross Margin

Net Income

$8.46B

9.0% Net Margin

EPS (Diluted)

$13.85

Total Assets

$112.36B

Cash & Equivalents

$8.81B

Free Cash Flow

$11.61B

Financial Statements
Beta
Revenue$94.00B
Cost of Revenue$76.61B
Gross Profit$17.39B
R&D Expenses$3.18B
Operating Income$10.34B
Net Income$8.46B
EPS (Basic)$14.03
EPS (Diluted)$13.85
Shares Outstanding (Basic)603.20M
Shares Outstanding (Diluted)610.00M

Key Highlights

  • 1Net 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.
  • 2Diluted earnings per share (EPS) rose to $13.43 in 2017, up from $7.61 in 2016, showcasing enhanced profitability.
  • 3Total 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.
  • 4The 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.
  • 5The company repurchased approximately $9.2 billion of its common stock in 2017 and paid $3.5 billion in dividends, returning significant capital to shareholders.
  • 6Backlog remained robust, totaling $488.1 billion at the end of 2017, providing a strong base for future revenues across all segments.

Frequently Asked Questions

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.

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.

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.

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.