01—Abstract
Summary
Summary of the 10-Q filed October 26, 2011. Cited figures are marked; the original filing is the authoritative source.
Boeing Co. (BA) reported solid financial results for the nine months and third quarter ended September 30, 2011.
Total revenues increased year-over-year, driven by strong performance in the Commercial Airplanes segment. Earnings from operations also saw a significant rise, reflecting improved revenue generation and effective cost management across key segments, particularly in Commercial Airplanes and Boeing Defense, Space & Security (BDS). The company maintained a robust backlog, indicating continued demand for its products and services.
Despite some challenges in the global economic environment and specific program delays, Boeing demonstrated resilience. The company's liquidity position remained strong, with positive cash flow from operations and significant available borrowing capacity. Key areas of focus for investors include the ongoing development and production of the 787 and 747-8 programs, the KC-46A Tanker contract award, and the company's ability to navigate market uncertainties and manage operational complexities.
02—Key points
Key Highlights
- Total revenues increased by 3% to $49.18 billion for the first nine months of 2011 compared to the same period in 2010.
- Earnings from operations grew by 9.8% to $4.25 billion for the first nine months of 2011 compared to the prior year.
- The Commercial Airplanes segment showed strong revenue growth of 8% for the first nine months, driven by new airplane sales and services.
- Boeing Defense, Space & Security (BDS) reported an increase in earnings from operations of 11.4% for the first nine months.
- The company's contractual backlog remained strong, increasing to $316.86 billion as of September 30, 2011.
- Net earnings from continuing operations were $2.62 billion for the nine months ended September 30, 2011, an increase from $2.14 billion in the prior year.
- Cash flow from operating activities was $1.09 billion for the nine months ended September 30, 2011, demonstrating continued operational cash generation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Boeing Co kept $0.06.
- Revenue$17.73B100.0%
- Cost of revenue−$14.36B81.0%
- Gross profit$3.37B19.0%
- Operating costs−$1.66B9.3%
- Operating income$1.71B9.7%
- Interest, other & tax−$616.0M3.5%
- Net income$1.10B6.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed October 26, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $17.73B$16.97B | +4.5% |
| Cost of Revenue | $14.36B$13.75B | +4.4% |
| Gross Profit | $3.37B$3.22B | +4.6% |
| R&D Expenses | $901.00M$986.00M | −8.6% |
| Operating Income | $1.71B$1.39B | +23.6% |
| Net Income | $1.10B$837.00M | +31.2% |
| EPS (Basic) | $1.47$1.13 | +30.1% |
| EPS (Diluted) | $1.46$1.12 | +30.4% |
| Shares Outstanding (Basic) | 748.00M739.10M | +1.2% |
| Shares Outstanding (Diluted) | 753.90M744.60M | +1.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the third quarter of 2011?
Revenue growth in the third quarter of 2011 was primarily driven by higher new airplane sales and commercial aviation services within the Commercial Airplanes segment, which saw an 8% increase in revenues.
How is Boeing managing the financial risks associated with its major development programs like the 787 and 747-8?
Boeing acknowledges the significant financial risks associated with these programs due to their technical complexity, potential for schedule delays, and cost overruns. The company is implementing mitigation plans, cost-reduction efforts, and managing customer and supplier claims to improve program profitability and address program risks. The 787 program has faced challenges including rework and incorporation of design changes, impacting profitability on initial deliveries.
What is the current status of Boeing's backlog, and does it indicate future revenue potential?
Boeing's contractual backlog of unfilled orders stood at $316.86 billion as of September 30, 2011, an increase from the prior year. This robust backlog indicates strong future revenue potential, though it is subject to order cancellations and potential adjustments in value due to price and schedule changes agreed upon with customers.
What is Boeing's liquidity position and how does it plan to fund its operations and commitments?
Boeing maintained a strong liquidity position with $5.95 billion in cash and cash equivalents and $4.38 billion in unused borrowing capacity on revolving credit lines. The company expects to meet its funding requirements through its commercial paper program, term debt issuance, and existing credit facilities, believing its access to external capital is sufficient for current commitments and potential strategic opportunities.
06—Continue