01—Abstract
Summary
Summary of the 10-Q filed October 25, 2017. Cited figures are marked; the original filing is the authoritative source.
Boeing Company (BA) reported a significant increase in earnings from operations for the nine months ended September 30, 2017, reaching $7.25 billion compared to $3.65 billiona in the prior year period.
This improvement was largely driven by a substantial recovery in the Commercial Airplanes segment, which saw earnings rise from $804 million to $3.65 billionb, benefiting from reduced reach-forward losses and favorable accounting adjustments related to the 787 program. Total revenues for the nine months decreased slightly to $68.02 billion from $71.29 billion, primarily due to lower deliveries in the Defense, Space & Security (BDS) segment.
However, the company's liquidity remains robust, with net cash provided by operating activities increasing to $10.44 billionc. Boeing also continued its commitment to shareholder returns through share repurchases and dividends, underscoring a strong financial position despite a minor dip in overall revenue.
02—Key points
Key Highlights
- Earnings from operations surged by 98.5% to $7.25 billion for the nine months ended September 30, 2017, compared to $3.65 billion in the prior year, driven by a strong recovery in the Commercial Airplanes segment.
- Commercial Airplanes segment earnings significantly improved, reaching $3.65 billion, a substantial increase from $804 million in the prior year, largely due to reduced reach-forward losses and favorable accounting treatments.
- Total revenues for the nine months ended September 30, 2017, saw a slight decrease of 4.5% to $68.02 billion, primarily due to lower revenue in the Defense, Space & Security segment.
- The company generated strong operating cash flow, with net cash provided by operating activities increasing by 36.2% to $10.44 billion for the nine months ended September 30, 2017.
- Boeing continued its robust capital return program, repurchasing $7.5 billion of common stock and paying $2.58 billion in dividends during the nine months ended September 30, 2017.
- Inventories remained largely stable, at $43.03 billion as of September 30, 2017, indicating effective inventory management amidst production levels.
- The company's backlog remained substantial, totaling $474.29 billion as of September 30, 2017, providing a strong foundation for future revenues.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Boeing Co kept $0.07.
- Revenue$24.22B100.0%
- Cost of revenue−$19.96B82.4%
- Gross profit$4.27B17.6%
- Operating costs−$1.64B6.8%
- Operating income$2.63B10.9%
- Interest, other & tax−$820.0M3.4%
- Net income$1.81B7.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed October 25, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $24.22B$23.90B | +1.4% |
| Cost of Revenue | $19.96B$19.90B | +0.3% |
| Gross Profit | $4.27B$3.99B | +6.8% |
| R&D Expenses | $768.00M$857.00M | −10.4% |
| Operating Income | $2.63B$2.28B | +15.2% |
| Net Income | $1.81B$2.28B | −20.6% |
| EPS (Basic) | $3.03$3.64 | −16.8% |
| EPS (Diluted) | $2.99$3.60 | −16.9% |
| Shares Outstanding (Basic) | 598.30M625.50M | −4.3% |
| Shares Outstanding (Diluted) | 605.60M631.80M | −4.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the significant increase in Boeing's earnings from operations for the nine months ended September 30, 2017?
The primary driver was the strong performance of the Commercial Airplanes (BCA) segment, which saw its earnings from operations increase dramatically. This improvement was largely due to a significant reduction in reach-forward losses, particularly from the KC-46A Tanker program, and favorable accounting adjustments related to the 787 program, including the reclassification of certain flight test aircraft costs from inventory to R&D expense.
How did the Defense, Space & Security (BDS) segment perform, and what factors influenced its results?
The BDS segment experienced a revenue decrease of approximately 9.6% to $15.52 billion for the nine months ended September 30, 2017, primarily due to fewer deliveries across several programs and a less favorable mix of deliveries. However, earnings from operations increased by 15.7% to $1.67 billion, benefiting from lower charges on development programs like the KC-46A Tanker and Commercial Crew, which more than offset the revenue decline.
What is the current state of Boeing's liquidity and cash flow?
Boeing maintained a strong liquidity position. Net cash provided by operating activities increased significantly by 36.2% to $10.44 billion for the nine months ended September 30, 2017. This robust cash generation, combined with available borrowing capacity and a substantial backlog, indicates a healthy financial position to meet its obligations and invest in future growth.
How is Boeing managing its inventory and backlog?
Inventories remained relatively stable at $43.03 billion as of September 30, 2017. The company's total backlog stood at a substantial $474.29 billion as of the same date, indicating strong future revenue potential. The increase in backlog during the period was primarily driven by orders and funding exceeding deliveries.
06—Continue