01—Abstract
Summary
Summary of the 10-Q filed April 26, 2017. Cited figures are marked; the original filing is the authoritative source.
Boeing Company's first quarter 2017 report shows a decrease in total revenues to $20.98 billiona from $22.63 billion in the prior year period, primarily driven by a decline in the Defense, Space & Security segment.
Despite lower revenues, earnings from operations increased to $2.02 billionb from $1.79 billion, benefiting from improved performance in the Commercial Airplanes segment and lower reach-forward losses compared to the previous year. Net earnings rose to $1.45 billion, or $2.34 per diluted share, from $1.22 billion, or $1.83 per diluted share, reflecting better operational efficiency and cost management.
The company maintained a strong backlog of $461.5 billionc, indicating robust future demand. Boeing continued its capital return program, repurchasing $2.5 billion in stock during the quarter.
02—Key points
Key Highlights
- Total revenues decreased by 7.3% to $20.98 billion, largely due to a $1.4 billion decline in the Defense, Space & Security segment.
- Earnings from operations increased by 13.2% to $2.02 billion, driven by strong performance in Commercial Airplanes and reduced reach-forward losses.
- Net earnings grew by 19.0% to $1.45 billion, resulting in diluted earnings per share of $2.34, up from $1.83 in the prior year period.
- Commercial Airplanes segment revenue saw a slight decrease of 0.7% to $14.31 billion, but earnings from operations increased by 17.6% to $1.22 billion.
- Defense, Space & Security segment revenue declined by 17.8% to $6.53 billion, and its earnings from operations decreased by 10.3% to $737 million.
- Boeing returned significant capital to shareholders, repurchasing $2.5 billion of its stock during the quarter.
- The company maintained a substantial total contractual backlog of $461.5 billion as of March 31, 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2017, Boeing Co kept $0.07.
- Revenue$21.96B100.0%
- Cost of revenue−$18.07B82.3%
- Gross profit$3.89B17.7%
- Operating costs−$1.68B7.7%
- Operating income$2.21B10.0%
- Interest, other & tax−$627.0M2.9%
- Net income$1.58B7.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2017filed April 26, 2017Financial Statements
Q1 FY2017 against Q1 FY2016
| Line item | Q1 FY2017Q1 FY2016 | Change |
|---|---|---|
| Revenue | $21.96B$22.63B | −3.0% |
| Cost of Revenue | $18.07B$19.10B | −5.4% |
| Gross Profit | $3.89B$3.54B | +10.0% |
| R&D Expenses | $836.00M$917.00M | −8.8% |
| Operating Income | $2.21B$1.79B | +23.4% |
| Net Income | $1.58B$1.22B | +29.5% |
| EPS (Basic) | $2.57$1.85 | +38.9% |
| EPS (Diluted) | $2.54$1.83 | +38.8% |
| Shares Outstanding (Basic) | 614.40M659.60M | −6.9% |
| Shares Outstanding (Diluted) | 620.40M664.80M | −6.7% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in total revenues?
The primary driver for the decrease in total revenues was a significant decline in the Defense, Space & Security segment, which experienced an $1.42 billion reduction compared to the prior year period, primarily due to lower revenues across all its sub-segments.
How did Boeing's earnings performance change compared to the previous year?
Despite lower revenues, Boeing's earnings from operations increased by 13.2% to $2.02 billion. This improvement was mainly due to better cost performance and reduced reach-forward losses in the Commercial Airplanes segment, along with higher unallocated pension income, which more than offset declines in the Defense segment.
What is the outlook for Boeing's Commercial Airplanes segment?
The Commercial Airplanes segment saw a slight revenue dip but a significant increase in earnings from operations. The company is managing production rates, with plans to increase the 737 program rate and decrease the 777 rate. The 787 program continues to face profitability pressures, and the 747 program's future production is uncertain due to lower demand.
What are the key risks and uncertainties highlighted in the report?
Key risks include continued budget uncertainty for the U.S. government impacting defense spending, potential disruptions from geopolitical events (Russia/Ukraine), program execution risks on fixed-price development contracts (like the KC-46A Tanker), and challenges in managing production and supply chains for commercial aircraft programs. The report also notes the potential impact of the Export-Import Bank's quorum issues on international sales financing.
06—Continue