01—Abstract
Summary
Summary of the 10-Q filed April 27, 2016. Cited figures are marked; the original filing is the authoritative source.
Boeing's first quarter 2016 results showed a decrease in net earnings to $1.22 billiona ($1.83 diluted EPS) from $1.34 billion ($1.87 diluted EPS) in the prior year period.
Total revenues increased slightly to $22.63 billionb from $22.15 billion, driven by a significant boost in the Defense, Space & Security (BDS) segment, which offset a decline in Commercial Airplanes revenue. Despite the revenue growth, a substantial increase in research and development expenses, particularly for the 777X program, and a significant reach-forward loss recorded on the KC-46A Tanker program impacted profitability.
The company also continued its aggressive share repurchase program, demonstrating a commitment to returning capital to shareholders, though this contributed to a notable decrease in cash and cash equivalents and an increase in net cash used by financing activities. Investors should monitor the impact of ongoing program-specific charges and R&D investments on future earnings.
02—Key points
Key Highlights
- Total revenues increased by 2% to $22.6 billion, primarily driven by a 19% rise in Defense, Space & Security (BDS) segment revenue, which offset a 6% decrease in Commercial Airplanes revenue.
- Net earnings decreased by 8.5% to $1.22 billion, resulting in diluted EPS of $1.83, down from $1.87 in the prior year period.
- Research and development expenses rose by $148 million, largely due to increased spending on the 777X program.
- The company recorded significant charges, including a $243 million reach-forward loss on the KC-46A Tanker program and an additional $70 million loss on the 747 program.
- Boeing continued its aggressive share repurchase activity, buying back $3.5 billion in stock during the quarter.
- Cash and cash equivalents decreased significantly by $3.4 billion, largely due to share repurchases and a reduction in proceeds from stock options exercised.
- The Commercial Airplanes segment saw a decline in earnings from operations by $584 million, impacted by delivery mix, R&D costs, and program charges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2016, Boeing Co kept $0.05.
- Revenue$22.63B100.0%
- Cost of revenue−$19.10B84.4%
- Gross profit$3.54B15.6%
- Operating costs−$1.75B7.7%
- Operating income$1.79B7.9%
- Interest, other & tax−$569.0M2.5%
- Net income$1.22B5.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed April 27, 2016Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $22.63B$22.15B | +2.2% |
| Cost of Revenue | $19.10B$18.50B | +3.2% |
| Gross Profit | $3.54B$3.65B | −3.2% |
| R&D Expenses | $917.00M$769.00M | +19.2% |
| Operating Income | $1.79B$2.02B | −11.4% |
| Net Income | $1.22B$1.34B | −8.8% |
| EPS (Basic) | $1.85$1.89 | −2.1% |
| EPS (Diluted) | $1.83$1.87 | −2.1% |
| Shares Outstanding (Basic) | 659.60M705.70M | −6.5% |
| Shares Outstanding (Diluted) | 664.80M713.10M | −6.8% |
05—Questions
Frequently Asked Questions
What was the primary driver for the revenue increase in the quarter?
The primary driver for the revenue increase was a substantial 19% rise in the Defense, Space & Security (BDS) segment, which more than compensated for a 6% decrease in revenue from the Commercial Airplanes segment.
What is impacting the profitability of the Commercial Airplanes segment?
Profitability in the Commercial Airplanes segment was negatively impacted by a combination of factors including a less favorable delivery mix, increased research and development expenses primarily related to the 777X program, and significant charges such as a reach-forward loss on the KC-46A Tanker program and an additional loss on the 747 program.
How did Boeing's cash position change during the quarter?
Boeing's cash and cash equivalents decreased significantly by $3.4 billion during the quarter. This was primarily due to substantial share repurchases totaling $3.5 billion and a reduction in proceeds from stock options exercised, despite an improvement in operating cash flow.
Are there any significant charges or impairments noted in the filing?
Yes, the company recorded significant charges including a $243 million reach-forward loss on the KC-46A Tanker program and an additional $70 million loss on the 747 program. Additionally, there were impairments on operating lease equipment totaling $8 million.
06—Continue