01—Abstract
Summary
Summary of the 10-K filed February 8, 2019. Cited figures are marked; the original filing is the authoritative source.
Boeing reported strong revenue growth of 8% to $101.1 billiona in 2018, driven by increased deliveries and favorable mix in its Commercial Airplanes (BCA) segment, along with significant contributions from Defense, Space & Security (BDS) and Global Services (BGS).
Net earnings rose to $10.5 billionb, or $17.85 per diluted share, a substantial increase from the prior year, reflecting improved operational performance across key segments. The company also saw a significant increase in its backlog, reaching $490.5 billion, indicating robust future demand for its products and services. However, investors should note potential headwinds.
The Defense, Space & Security segment experienced a decline in earnings from operations due to charges related to new contract wins (T-X Trainer and MQ-25 Stingray) and increased reach-forward losses on the KC-46A Tanker program. The company's ongoing reliance on U.S. government contracts also exposes it to risks related to defense spending fluctuations, potential government shutdowns, and regulatory changes. Additionally, Boeing's extensive supply chain and reliance on subcontractors present risks related to production disruptions and cost overruns, as seen with earlier supply chain issues affecting the 737 program.
02—Key points
Key Highlights
- Total revenues increased by 8% to $101.1 billion in 2018, driven by strong performance across key segments.
- Net earnings grew significantly to $10.5 billion ($17.85 per diluted share) from $8.5 billion ($13.85 per diluted share) in 2017.
- The company's backlog expanded to $490.5 billion, signaling continued demand for its aerospace products and services.
- The Commercial Airplanes (BCA) segment saw revenue growth of 5% driven by higher 737 and 787 deliveries and favorable model mix.
- Defense, Space & Security (BDS) segment faced headwinds with a $599 million decrease in earnings from operations due to charges on new programs and KC-46A Tanker losses.
- The acquisition of KLX Inc. bolstered the Global Services (BGS) segment, contributing to revenue growth.
- Boeing's dividend per share increased to $7.19 from $5.97 in the prior year, reflecting confidence in its financial performance.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Boeing Co kept $0.10.
- Revenue$101.13B100.0%
- Cost of revenue−$81.49B80.6%
- Gross profit$19.64B19.4%
- Operating costs−$7.65B7.6%
- Operating income$11.99B11.9%
- Interest, other & tax−$1.53B1.5%
- Net income$10.46B10.3%
Where FY2018 revenue went
$101.13B- Cost of revenue: $81.49B, 81% of revenue
- Net income: $10.46B, 10% of revenue
- R&D: $3.27B, 3.2% of revenue
- Other operating costs: $4.38B, 4.3% of revenue
- Interest, other & tax: $1.53B, 1.5% of revenue
Kept 10% as net incomeNet income $10.46B · 10%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 8, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $101.13B$94.00B | +7.6% |
| Cost of Revenue | $81.49B$76.61B | +6.4% |
| Gross Profit | $19.64B$17.39B | +12.9% |
| R&D Expenses | $3.27B$3.18B | +2.8% |
| Operating Income | $11.99B$10.34B | +15.9% |
| Net Income | $10.46B$8.46B | +23.7% |
| EPS (Basic) | $18.05$14.03 | +28.7% |
| EPS (Diluted) | $17.85$13.85 | +28.9% |
| Shares Outstanding (Basic) | 579.90M603.20M | −3.9% |
| Shares Outstanding (Diluted) | 585.50M610.00M | −4.0% |
05—Questions
Frequently Asked Questions
What were Boeing's key financial results for 2018?
Boeing reported a strong financial performance in 2018 with total revenues of $101.1 billion, an increase of 8% from 2017. Net earnings reached $10.5 billion, or $17.85 per diluted share, a significant improvement from the previous year. The company's backlog also grew to $490.5 billion, indicating a healthy pipeline of future business.
Which segments contributed most to Boeing's revenue and earnings?
The Commercial Airplanes (BCA) segment remained the largest revenue generator, with a 5% increase due to higher deliveries and a better model mix. The Defense, Space & Security (BDS) segment also saw revenue growth, but its earnings from operations declined due to specific charges and losses on certain programs. The Global Services (BGS) segment showed strong revenue growth, partly due to the acquisition of KLX Inc.
What are the main risks and challenges facing Boeing?
Boeing faces several risks, including dependence on U.S. government defense spending, which is subject to budget uncertainties and potential sequestration. The company also highlighted risks associated with complex development programs, potential production disruptions due to supply chain issues, and competition in both commercial and defense markets. The KC-46A Tanker program and new contract wins (T-X Trainer, MQ-25 Stingray) incurred significant charges, impacting segment profitability.
How is Boeing managing its financial resources and shareholder returns?
Boeing generated substantial cash flow from operations, exceeding $15.3 billion in 2018. The company continued to return value to shareholders through dividends, increasing its dividend per share to $7.19. Additionally, Boeing announced a new $20 billion share repurchase plan, underscoring its commitment to shareholder returns and financial flexibility.
06—Continue