01—Abstract
Summary
Summary of the 10-Q filed April 25, 2018. Cited figures are marked; the original filing is the authoritative source.
Boeing Company reported strong financial results for the first quarter of 2018, with total revenues reaching $23.38 billiona, 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 billionb 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 billionc from $1.58 billion in the same period last year. Diluted earnings per share rose to $4.15 from $2.54.
02—Key points
Key Highlights
- Total revenues increased by 6.5% to $23.38 billion in Q1 2018, driven by growth in Commercial Airplanes and Defense segments.
- Earnings from operations surged by 30% to $2.88 billion, reflecting improved performance and cost management.
- Net 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.
- Commercial Airplanes segment revenue increased by 5% to $13.65 billion, supported by higher deliveries and favorable mix.
- Defense, Space & Security segment revenue grew by 13% to $5.76 billion, boosted by international contract awards and higher weapons revenue.
- The company repurchased $3.0 billion of its stock in Q1 2018, demonstrating a commitment to returning capital to shareholders.
- Boeing adopted new accounting standards, notably ASC 606 (Revenue from Contracts with Customers), which impacted revenue recognition on certain long-term contracts by accelerating it.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2018, Boeing Co kept $0.11.
- Revenue$23.38B100.0%
- Cost of revenue−$18.82B80.5%
- Gross profit$4.56B19.5%
- Operating costs−$1.68B7.2%
- Operating income$2.88B12.3%
- Interest, other & tax−$398.0M1.7%
- Net income$2.48B10.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed April 25, 2018Financial Statements
Q1 FY2018 against Q1 FY2017
| Line item | Q1 FY2018Q1 FY2017 | Change |
|---|---|---|
| Revenue | $23.38B$21.96B | +6.5% |
| Cost of Revenue | $18.82B$18.07B | +4.2% |
| Gross Profit | $4.56B$3.89B | +17.2% |
| R&D Expenses | $764.00M$836.00M | −8.6% |
| Operating Income | $2.88B$2.21B | +30.3% |
| Net Income | $2.48B$1.58B | +56.9% |
| EPS (Basic) | $4.19$2.57 | +63.0% |
| EPS (Diluted) | $4.15$2.54 | +63.4% |
| Shares Outstanding (Basic) | 590.80M614.40M | −3.8% |
| Shares Outstanding (Diluted) | 596.50M620.40M | −3.9% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue increase in the first quarter of 2018?
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.
How did the adoption of new accounting standards affect Boeing's financial statements?
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.
What is the outlook for the Commercial Airplanes and Defense, Space & Security segments based on this report?
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.
How did Boeing manage its cash flow during the quarter?
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.
06—Continue