01—Abstract
Summary
Summary of the 10-Q filed April 24, 2013. Cited figures are marked; the original filing is the authoritative source.
Boeing Co. reported first-quarter 2013 results showing a slight decrease in total revenues to $18.89 billiona from $19.38 billion in the prior year, primarily driven by a decline in Commercial Airplanes revenue.
This was influenced by the suspension of 787 Dreamliner deliveries due to battery issues and lower commercial aviation services. Defense, Space & Security (BDS) revenues also saw a slight dip. Despite the revenue dip, net earnings increased to $1.11 billionb from $923 million in Q1 2012, and diluted earnings per share rose to $1.44 from $1.22.
This improvement was largely attributed to a lower effective income tax rate, significantly benefiting from the retroactive reinstatement of the U.S. research and development tax credit. Core operating earnings, a non-GAAP measure excluding certain pension and postretirement costs, also showed an increase, reflecting strong performance in Commercial Airplanes and BDS segments.
However, the company faces ongoing challenges, including the costly investigation and modification of the 787 battery system, potential impacts from U.S. government sequestration on defense spending, and continued pressures on the 747 program due to market conditions. The company's liquidity remains robust with significant borrowing capacity and a substantial backlog.
02—Key points
Key Highlights
- Total revenues decreased by 3% to $18.89 billion compared to $19.38 billion in Q1 2012, primarily due to a 2% decrease in Commercial Airplanes revenue.
- Net earnings increased by 20% to $1.11 billion from $923 million in the prior year, driven by a lower effective tax rate, notably due to the R&D tax credit.
- Diluted earnings per share (EPS) rose to $1.44 from $1.22 in Q1 2012.
- Core operating earnings (a non-GAAP measure) increased to $1.87 billion from $1.77 billion, reflecting operational improvements in key segments.
- The 787 Dreamliner program faced delivery suspensions due to battery incidents, leading to related investigation and modification costs, impacting Commercial Airplanes revenue.
- The company highlighted the impact of U.S. government sequestration on defense spending, creating uncertainty for the Defense, Space & Security segment.
- Boeing maintained a strong contractual backlog of $373.6 billion as of March 31, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2013, Boeing Co kept $0.06.
- Revenue$18.89B100.0%
- Cost of revenue−$15.76B83.4%
- Gross profit$3.14B16.6%
- Operating costs−$1.61B8.5%
- Operating income$1.53B8.1%
- Interest, other & tax−$422.0M2.2%
- Net income$1.11B5.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed April 24, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $18.89B$19.38B | −2.5% |
| Cost of Revenue | $15.76B$16.07B | −2.0% |
| Gross Profit | $3.14B$3.31B | −5.2% |
| R&D Expenses | $705.00M$835.00M | −15.6% |
| Operating Income | $1.53B$1.56B | −2.4% |
| Net Income | $1.11B$923.00M | +19.8% |
| EPS (Basic) | $1.45$1.23 | +17.9% |
| EPS (Diluted) | $1.44$1.22 | +18.0% |
| Shares Outstanding (Basic) | 763.30M752.50M | +1.4% |
| Shares Outstanding (Diluted) | 766.60M757.30M | +1.2% |
05—Questions
Frequently Asked Questions
What was the primary reason for the decrease in total revenues?
The decrease in total revenues was primarily driven by a 2% decline in Commercial Airplanes revenue, largely due to the suspension of 787 Dreamliner deliveries following battery incidents and lower commercial aviation services spares revenue. Defense, Space & Security revenues also saw a slight decrease.
How did the 787 battery issues impact Boeing's financial performance?
The 787 battery incidents led to a suspension of deliveries and incurred significant costs for investigation, testing, and modification of the delivered aircraft. This negatively impacted Commercial Airplanes revenue and increased engineering support costs.
What was the main factor contributing to the increase in net earnings despite lower revenues?
The increase in net earnings was significantly boosted by a lower effective income tax rate. This was largely due to the retroactive reinstatement of the U.S. research and development tax credit for 2012, which provided a substantial benefit in the first quarter of 2013.
What is the outlook for the Defense, Space & Security segment given the U.S. government's budget situation?
The company noted that U.S. government sequestration, implemented in March 2013, is expected to reduce defense spending. While specific program impacts are still being determined, reductions, cancellations, or delays could materially affect the segment's results. However, the segment's earnings from operations did increase year-over-year.
06—Continue