10-QPeriod: Q3 FY2013

BOEING CO Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 23, 2013For Securities:BABA-PA

Summary

Boeing's third quarter 2013 report shows a solid increase in revenue, driven primarily by the Commercial Airplanes segment, which saw higher new airplane deliveries. This segment also contributed significantly to the rise in earnings from operations. While the Defense, Space & Security (BDS) segment experienced a slight revenue increase, its operating earnings saw a decrease, mainly due to lower performance in the Boeing Military Aircraft (BMA) division. The company's liquidity remains strong, with a substantial increase in net cash provided by operating activities, largely due to improved customer advance payments. Boeing also continued its share repurchase program and paid dividends, reflecting confidence in its financial position. However, ongoing uncertainties related to U.S. government defense budget sequestration and potential legal proceedings, particularly the A-12 litigation, warrant investor attention.

Financial Highlights

53 data points
Beta

Revenue

$22.13B

15.6% Gross Margin

Net Income

$1.16B

5.2% Net Margin

EPS (Diluted)

$1.51

Total Assets

$94.63B

Cash & Equivalents

$10.04B

Free Cash Flow

$2.32B

Financial Statements
Beta
Revenue$22.13B
Cost of Revenue$18.67B
Gross Profit$3.46B
R&D Expenses$755.00M
Operating Income$1.80B
Net Income$1.16B
EPS (Basic)$1.53
EPS (Diluted)$1.51
Shares Outstanding (Basic)759.40M
Shares Outstanding (Diluted)767.30M

Key Highlights

  • 1Total revenues increased by 6% to $62.8 billion for the first nine months of 2013 compared to the same period in 2012, driven by a 10% rise in Commercial Airplanes revenue.
  • 2Earnings from operations increased by 8.2% to $5.05 billion for the first nine months of 2013, with Commercial Airplanes showing a significant improvement.
  • 3Defense, Space & Security (BDS) segment revenues saw a modest increase, but operating earnings declined slightly due to performance in the Boeing Military Aircraft (BMA) division.
  • 4Net cash provided by operating activities more than doubled to $6.8 billion for the first nine months of 2013, primarily due to increased customer advance payments.
  • 5The company actively managed its capital structure, repurchasing $1.8 billion in shares and paying $1.1 billion in dividends during the first nine months of 2013.
  • 6Inventories increased significantly to $41.24 billion, with a substantial portion attributed to the 787 and 747 programs, reflecting ongoing production and development.
  • 7The company faces ongoing legal and contingent liabilities, notably the A-12 litigation, with potential for significant future charges, though management believes current provisions are adequate.

Frequently Asked Questions

The primary driver of revenue growth is the Commercial Airplanes segment, which experienced a 10% increase in revenue for the first nine months of 2013 compared to the prior year, attributed to higher new airplane deliveries.

Boeing reported a strong increase in net cash provided by operating activities, reaching $6.8 billion for the first nine months of 2013. This was largely driven by higher receipts of advances and progress billings from commercial airplane customers. The company also maintained a healthy cash position and had significant unused borrowing capacity.

Yes, investors should be aware of potential risks and contingent liabilities. These include ongoing legal proceedings, such as the A-12 litigation, which could result in significant charges. Additionally, uncertainties related to U.S. government defense budget sequestration and potential program cost overruns, particularly on the 747 and 787 programs, present risks.

The company is actively monitoring and implementing mitigation plans and cost-reduction efforts to manage risks associated with programs like the 747 and 787. For the 747, production rates have been reduced, and for the 787, efforts are focused on increasing production rates and managing the introduction of new derivatives. The company acknowledges the pressure on program profitability and the potential for reach-forward losses if risks cannot be mitigated.