01—Abstract
Summary
Summary of the 10-Q filed July 22, 2015. Cited figures are marked; the original filing is the authoritative source.
Boeing's Q2 2015 10-Q filing reveals a revenue increase driven by strong performance in the Commercial Airplanes segment, which saw higher deliveries and a favorable mix.
However, this growth was partially offset by a decline in the Defense, Space & Security (BDS) segment, impacted by lower revenues across its sub-segments. Net earnings for the quarter and year-to-date periods showed a decrease compared to the prior year, largely due to significant charges related to the KC-46A Tanker contract and higher tax expenses in the current year. The company continues to navigate a complex operating environment, including ongoing uncertainties in U.S. government defense spending and potential impacts from the expiration of the U.S. Export-Import Bank charter.
Despite these challenges, Boeing's backlog remains substantial, providing visibility into future revenue streams. The company also actively managed its capital through share repurchases and dividend payments.
02—Key points
Key Highlights
- Total revenues increased by 10% year-to-date and 11% for the quarter, primarily driven by the Commercial Airplanes segment's higher deliveries and mix.
- Net earnings for the six months ended June 30, 2015, decreased to $2.45 billion from $2.62 billion in the prior year, impacted by a significant $835 million reach-forward loss on the KC-46A Tanker contract.
- The Defense, Space & Security (BDS) segment experienced a revenue decrease of 7% for the year-to-date period, with declines in all three of its sub-segments.
- Boeing's cash position decreased by $2.58 billion year-to-date, ending at $9.16 billion, with significant share repurchases totaling $4.5 billion during the period.
- The company's backlog remained robust at $479.2 billion as of June 30, 2015, although it saw a decrease from the end of 2014 due to deliveries exceeding new orders.
- Deferred production costs for the 787 program amounted to $27.7 billion, with a significant portion expected to be recovered from future orders.
- The effective income tax rate for the six months ended June 30, 2015, increased to 31.5% from 17.6% in the prior year, mainly due to the absence of prior-year tax benefits related to federal tax audit settlements.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2015, Boeing Co kept $0.05.
- Revenue$24.54B100.0%
- Cost of revenue−$21.35B87.0%
- Gross profit$3.19B13.0%
- Operating costs−$1.51B6.2%
- Operating income$1.68B6.9%
- Interest, other & tax−$573.0M2.3%
- Net income$1.11B4.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2015filed July 22, 2015Financial Statements
Q2 FY2015 against Q2 FY2014
| Line item | Q2 FY2015Q2 FY2014 | Change |
|---|---|---|
| Revenue | $24.54B$22.05B | +11.3% |
| Cost of Revenue | $21.35B$18.67B | +14.4% |
| Gross Profit | $3.19B$3.38B | −5.4% |
| R&D Expenses | $800.00M$733.00M | +9.1% |
| Operating Income | $1.68B$1.79B | −5.8% |
| Net Income | $1.11B$1.65B | −32.8% |
| EPS (Basic) | $1.61$2.26 | −28.8% |
| EPS (Diluted) | $1.59$2.24 | −29.0% |
| Shares Outstanding (Basic) | 691.20M731.10M | −5.5% |
| Shares Outstanding (Diluted) | 697.80M738.80M | −5.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in this quarter?
The primary driver of revenue growth was the Commercial Airplanes segment, which benefited from higher airplane deliveries and a favorable product mix.
What are the main reasons for the decrease in net earnings compared to the prior year?
The decrease in net earnings was mainly due to a substantial reach-forward loss of $835 million recorded on the KC-46A Tanker contract and higher income tax expenses, including the absence of significant tax benefits realized in the prior year.
How is the company managing its capital and returning value to shareholders?
Boeing continued its share repurchase program, buying back $4.5 billion in stock during the first half of 2015. The company also paid dividends, indicating a focus on returning capital to shareholders.
What are the key risks or uncertainties facing the company mentioned in the report?
Key risks include uncertainties in U.S. government defense spending due to budget control acts and potential sequestration, the expiration of the U.S. Export-Import Bank charter impacting non-U.S. customer financing, and program-specific risks such as potential further charges on the KC-46A Tanker and profitability pressures on the 787 and 747 programs.
06—Continue