10-QPeriod: Q2 FY2013

BOEING CO Quarterly Report for Q2 Ended Jun 30, 2013

Filed July 24, 2013For Securities:BABA-PA

Summary

Boeing Company (BA) reported a solid increase in revenue and net earnings for the six and three months ended June 30, 2013, compared to the prior year. Total revenues grew by 3% and 9% respectively, driven primarily by a strong performance in the Commercial Airplanes segment, which saw a 7% and 15% revenue increase due to higher aircraft deliveries. Net earnings also saw significant improvements, rising to $2.19 billion for the six-month period and $1.09 billion for the three-month period. The company maintained a robust backlog, indicating continued demand for its products. Despite the positive top-line and bottom-line growth, investors should note certain ongoing challenges. The Defense, Space & Security segment experienced a slight revenue dip, and the company highlighted risks associated with U.S. government defense budget sequestration. Additionally, significant inventory levels, particularly related to the 787 and 747 programs, and potential reach-forward losses remain areas of focus. The company also continues to manage potential impacts from legal proceedings and environmental remediation liabilities.

Financial Highlights

53 data points
Beta

Revenue

$21.82B

15.4% Gross Margin

Net Income

$1.09B

5.0% Net Margin

EPS (Diluted)

$1.41

Total Assets

$92.09B

Cash & Equivalents

$8.69B

Free Cash Flow

$3.01B

Financial Statements
Beta
Revenue$21.82B
Cost of Revenue$18.45B
Gross Profit$3.37B
R&D Expenses$763.00M
Operating Income$1.72B
Net Income$1.09B
EPS (Basic)$1.43
EPS (Diluted)$1.41
Shares Outstanding (Basic)763.30M
Shares Outstanding (Diluted)769.90M

Key Highlights

  • 1Total revenues increased by 3% to $40.7 billion for the six months and 9% to $21.8 billion for the three months ended June 30, 2013, compared to the prior year.
  • 2Net earnings rose to $2.19 billion ($2.85 diluted EPS) for the six months and $1.09 billion ($1.41 diluted EPS) for the three months ended June 30, 2013.
  • 3The Commercial Airplanes segment was the primary driver of revenue growth, with a 7% increase for the six months and 15% for the three months, driven by higher aircraft deliveries.
  • 4The company's total contractual backlog remained strong at $389.2 billion as of June 30, 2013.
  • 5Research and development expenses decreased by $224 million for the six months and $94 million for the three months, primarily due to lower spending on the 787 program.
  • 6Inventories increased significantly to $40.2 billion, with substantial amounts related to the 787 and 747 programs.
  • 7Boeing continued its share repurchase program, repurchasing 10.2 million shares during the quarter.

Frequently Asked Questions

Boeing demonstrated positive financial performance with increased revenues and net earnings for both the six-month and three-month periods ending June 30, 2013, compared to the prior year. This growth was primarily fueled by the Commercial Airplanes segment due to higher aircraft deliveries.

The primary driver of revenue growth is the Commercial Airplanes segment, which benefited from an increase in new airplane deliveries. Higher revenues were also seen in Network & Space Systems due to commercial satellite programs and the Space Launch System.

Yes, key risks include potential impacts from U.S. government defense budget sequestration, substantial inventory levels for the 787 and 747 programs with potential for reach-forward losses, ongoing legal proceedings (such as the A-12 litigation), and environmental remediation liabilities. The company also notes the complexity and financial risks associated with fixed-price development contracts in the Defense segment.

Boeing maintains substantial borrowing capacity and has access to revolving credit lines. The company issued $500 million in notes during the period to fund Boeing Capital. Overall, Boeing appears to have sufficient liquidity to meet its commitments, though it notes that future borrowing costs and availability are not guaranteed.