10-QPeriod: Q1 FY2017

BOEING CO Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 26, 2017For Securities:BABA-PA

Summary

Boeing Company's first quarter 2017 report shows a decrease in total revenues to $20.98 billion 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 billion 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 billion, indicating robust future demand. Boeing continued its capital return program, repurchasing $2.5 billion in stock during the quarter.

Financial Highlights

52 data points
Beta

Revenue

$21.96B

17.7% Gross Margin

Net Income

$1.58B

7.2% Net Margin

EPS (Diluted)

$2.54

Total Assets

$89.67B

Cash & Equivalents

$8.19B

Free Cash Flow

$1.63B

Financial Statements
Beta
Revenue$21.96B
Cost of Revenue$18.07B
Gross Profit$3.89B
R&D Expenses$836.00M
Operating Income$2.21B
Net Income$1.58B
EPS (Basic)$2.57
EPS (Diluted)$2.54
Shares Outstanding (Basic)614.40M
Shares Outstanding (Diluted)620.40M

Key Highlights

  • 1Total revenues decreased by 7.3% to $20.98 billion, largely due to a $1.4 billion decline in the Defense, Space & Security segment.
  • 2Earnings from operations increased by 13.2% to $2.02 billion, driven by strong performance in Commercial Airplanes and reduced reach-forward losses.
  • 3Net 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.
  • 4Commercial 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.
  • 5Defense, Space & Security segment revenue declined by 17.8% to $6.53 billion, and its earnings from operations decreased by 10.3% to $737 million.
  • 6Boeing returned significant capital to shareholders, repurchasing $2.5 billion of its stock during the quarter.
  • 7The company maintained a substantial total contractual backlog of $461.5 billion as of March 31, 2017.

Frequently Asked Questions

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.

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.

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.

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.