01—Abstract
Summary
Summary of the 10-Q filed July 24, 2013. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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.
02—Key points
Key Highlights
- Total 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.
- Net 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.
- The 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.
- The company's total contractual backlog remained strong at $389.2 billion as of June 30, 2013.
- Research 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.
- Inventories increased significantly to $40.2 billion, with substantial amounts related to the 787 and 747 programs.
- Boeing continued its share repurchase program, repurchasing 10.2 million shares during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Boeing Co kept $0.05.
- Revenue$21.82B100.0%
- Cost of revenue−$18.45B84.6%
- Gross profit$3.37B15.4%
- Operating costs−$1.65B7.6%
- Operating income$1.72B7.9%
- Interest, other & tax−$628.0M2.9%
- Net income$1.09B5.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed July 24, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $21.82B$20.00B | +9.0% |
| Cost of Revenue | $18.45B$16.75B | +10.2% |
| Gross Profit | $3.37B$3.26B | +3.3% |
| R&D Expenses | $763.00M$857.00M | −11.0% |
| Operating Income | $1.72B$1.54B | +11.3% |
| Net Income | $1.09B$967.00M | +12.5% |
| EPS (Basic) | $1.43$1.28 | +11.7% |
| EPS (Diluted) | $1.41$1.27 | +11.0% |
| Shares Outstanding (Basic) | 763.30M755.90M | +1.0% |
| Shares Outstanding (Diluted) | 769.90M759.60M | +1.4% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of Boeing in this quarter?
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.
What are the main drivers of revenue growth?
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.
Are there any significant risks or concerns highlighted in the report?
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.
How is the company managing its debt and liquidity?
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.
06—Continue