01—Abstract
Summary
Summary of the 10-Q filed October 21, 2015. Cited figures are marked; the original filing is the authoritative source.
Boeing's third-quarter 2015 filing reveals a robust increase in revenue, driven primarily by strong performance in the Commercial Airplanes segment, which saw a 16%a year-over-year revenue increase due to higher deliveries and favorable mix.
Despite this top-line growth, earnings from operations saw a slight decrease compared to the prior year, largely impacted by increased charges related to the KC-46A Tanker program. The Defense, Space & Security (BDS) segment experienced a slight revenue dip for the nine-month period but showed improved earnings, supported by strong performance in its sub-segments. Overall, the company's financial health remains solid, with significant backlog and ongoing efforts to manage production costs and mitigate program risks.
Key financial indicators show total revenues rising by 9%b year-over-year for both the nine-month and three-month periods. Diluted earnings per share also saw an increase, reflecting the company's ability to generate profit. Boeing continued its capital return strategy, repurchasing a substantial amount of its stock and paying dividends.
The company maintains a strong liquidity position, with significant cash on hand and available credit facilities. Management highlights continued investment in R&D, particularly on the 777X program, and ongoing efforts to address program-specific challenges, such as those on the 787 and KC-46A programs.
02—Key points
Key Highlights
- Total revenues increased by 9% for both the nine-month and three-month periods ended September 30, 2015, compared to the prior year, reaching $72.5 billion and $25.8 billion, respectively.
- Commercial Airplanes segment revenue grew significantly by 16% for the nine-month period and 10% for the three-month period, driven by increased aircraft deliveries and a favorable mix.
- Despite revenue growth, Earnings from Operations saw a slight decrease of $258 million in the Commercial Airplanes segment for the nine-month period, primarily due to higher R&D expenses and reach-forward losses on the KC-46A Tanker program.
- Defense, Space & Security (BDS) segment revenues decreased by 3% for the nine-month period but showed improved earnings from operations due to strong performance in its sub-segments.
- Diluted Earnings Per Share increased to $5.92 for the nine-month period and $2.47 for the three-month period, up from $5.36 and $1.86 in the prior year, respectively.
- Boeing continued its capital return program, repurchasing approximately $6.0 billion in common stock during the nine-month period and paying dividends of $1.9 billion.
- The company maintained a strong backlog of $472.2 billion in contractual backlog as of September 30, 2015, though this represented a decrease from the prior year-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Boeing Co kept $0.07.
- Revenue$25.85B100.0%
- Cost of revenue−$21.60B83.6%
- Gross profit$4.25B16.4%
- Operating costs−$1.67B6.5%
- Operating income$2.58B10.0%
- Interest, other & tax−$876.0M3.4%
- Net income$1.70B6.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed October 21, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $25.85B$23.78B | +8.7% |
| Cost of Revenue | $21.60B$20.07B | +7.6% |
| Gross Profit | $4.25B$3.71B | +14.6% |
| R&D Expenses | $857.00M$750.00M | +14.3% |
| Operating Income | $2.58B$2.12B | +21.8% |
| Net Income | $1.70B$1.36B | +25.1% |
| EPS (Basic) | $2.50$1.88 | +33.0% |
| EPS (Diluted) | $2.47$1.86 | +32.8% |
| Shares Outstanding (Basic) | 681.30M722.80M | −5.7% |
| Shares Outstanding (Diluted) | 687.80M730.60M | −5.9% |
05—Questions
Frequently Asked Questions
What is the primary driver of Boeing's revenue growth in this period?
The primary driver of revenue growth is the Commercial Airplanes segment, which experienced a significant increase of 16% for the nine-month period and 10% for the three-month period due to higher aircraft deliveries and a more favorable mix of aircraft sold.
What factors are impacting Boeing's profitability, particularly in the Commercial Airplanes segment?
Profitability, specifically Earnings from Operations, in the Commercial Airplanes segment was impacted by increased charges related to the KC-46A Tanker program ($835 million in charges for the nine-month period) and higher research and development expenses, particularly on the 777X program. These factors offset the gains from increased deliveries.
How is Boeing managing its significant backlog and what are the implications of its defense segment performance?
Boeing's total contractual backlog stood at $472.2 billion as of September 30, 2015. While the Defense, Space & Security (BDS) segment saw a slight revenue decrease for the nine-month period, its earnings from operations improved. The company continues to navigate uncertainties in U.S. government defense spending and potential budget pressures, which could impact future performance.
What is Boeing's financial position and outlook regarding liquidity and capital allocation?
Boeing maintains a strong liquidity position with $9.4 billion in cash and cash equivalents at the end of the period. The company actively returned capital to shareholders through $6.0 billion in share repurchases and $1.9 billion in dividends during the nine-month period. Management anticipates sufficient financial flexibility to meet commitments and pursue strategic opportunities.
06—Continue