10-QPeriod: Q1 FY2018

BOEING CO Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 25, 2018For Securities:BABA-PA

Summary

Boeing Company reported strong financial results for the first quarter of 2018, with total revenues reaching $23.38 billion, an increase of approximately 6.5% compared to the prior year's $21.96 billion. This revenue growth was primarily driven by significant increases in both the Commercial Airplanes (BCA) and Defense, Space & Security (BDS) segments. Earnings from operations also saw a substantial boost, rising to $2.88 billion from $2.21 billion in Q1 2017, reflecting improved cost performance and higher deliveries. The company successfully adopted new accounting standards, including Topic 606 (Revenue from Contracts with Customers), which impacted revenue recognition timing for certain long-term contracts by accelerating it, though not the total amount recognized. This adoption, along with a reduced U.S. corporate tax rate due to the Tax Cuts and Jobs Act of 2017, contributed to a significant increase in net earnings, which grew to $2.48 billion from $1.58 billion in the same period last year. Diluted earnings per share rose to $4.15 from $2.54.

Financial Highlights

53 data points
Beta

Revenue

$23.38B

19.5% Gross Margin

Net Income

$2.48B

10.6% Net Margin

EPS (Diluted)

$4.15

Total Assets

$113.55B

Cash & Equivalents

$9.23B

Free Cash Flow

$2.74B

Financial Statements
Beta
Revenue$23.38B
Cost of Revenue$18.82B
Gross Profit$4.56B
R&D Expenses$764.00M
Operating Income$2.88B
Net Income$2.48B
EPS (Basic)$4.19
EPS (Diluted)$4.15
Shares Outstanding (Basic)590.80M
Shares Outstanding (Diluted)596.50M

Key Highlights

  • 1Total revenues increased by 6.5% to $23.38 billion in Q1 2018, driven by growth in Commercial Airplanes and Defense segments.
  • 2Earnings from operations surged by 30% to $2.88 billion, reflecting improved performance and cost management.
  • 3Net earnings more than doubled to $2.48 billion ($4.15 EPS) from $1.58 billion ($2.54 EPS) due to strong operational performance and the benefits of the Tax Cuts and Jobs Act.
  • 4Commercial Airplanes segment revenue increased by 5% to $13.65 billion, supported by higher deliveries and favorable mix.
  • 5Defense, Space & Security segment revenue grew by 13% to $5.76 billion, boosted by international contract awards and higher weapons revenue.
  • 6The company repurchased $3.0 billion of its stock in Q1 2018, demonstrating a commitment to returning capital to shareholders.
  • 7Boeing adopted new accounting standards, notably ASC 606 (Revenue from Contracts with Customers), which impacted revenue recognition on certain long-term contracts by accelerating it.

Frequently Asked Questions

The primary driver of the revenue increase was a combination of higher deliveries and a favorable mix in the Commercial Airplanes segment, along with significant growth in the Defense, Space & Security segment due to international contract awards and increased weapons revenue.

Boeing adopted new standards, including ASC 606 (Revenue from Contracts with Customers), which accelerated revenue recognition for certain long-term contracts without changing the total revenue recognized over the contract life. The company also adopted ASU 2018-02, allowing for the reclassification of certain tax effects from Accumulated Other Comprehensive Income to Retained Earnings due to the Tax Cuts and Jobs Act. These changes, along with the lower corporate tax rate, contributed to higher net earnings.

The report indicates positive momentum for both segments. The Commercial Airplanes segment saw increased deliveries and a strong backlog, with plans to increase production rates for the 737 and 787. The Defense, Space & Security segment benefited from new contract awards and robust demand, with a significant increase in backlog.

Boeing generated strong operating cash flow of $3.14 billion, an improvement from the prior year, primarily due to better working capital management, including lower inventory spending and increased advances. The company also used $2.85 billion in financing activities, largely for share repurchases and dividend payments.