10-QPeriod: Q1 FY2019

BOEING CO Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 24, 2019For Securities:BABA-PA

Summary

Boeing's first quarter 2019 results, filed on April 23, 2019, show a decrease in total revenues to $22.9 billion from $23.4 billion in the prior year's comparable period. This decline was primarily driven by a significant revenue decrease in the Commercial Airplanes (BCA) segment, largely attributable to the grounding of the 737 MAX aircraft following two fatal accidents. Despite the revenue dip, the company is actively managing production rates and developing software updates and training programs for the 737 MAX. Net earnings also saw a reduction, falling to $2.15 billion from $2.48 billion in Q1 2018, with diluted earnings per share at $3.75 compared to $4.15. The grounding of the 737 MAX is expected to continue to adversely affect revenues, operating earnings, and cash flows until deliveries resume. The company is working closely with regulatory authorities for investigations and for the aircraft's return to service, while also facing increased costs associated with production adjustments.

Financial Highlights

53 data points
Beta

Revenue

$22.92B

18.6% Gross Margin

Net Income

$2.15B

9.4% Net Margin

EPS (Diluted)

$3.75

Total Assets

$120.21B

Cash & Equivalents

$7.01B

Free Cash Flow

$2.29B

Financial Statements
Beta
Revenue$22.92B
Cost of Revenue$18.64B
Gross Profit$4.27B
R&D Expenses$866.00M
Operating Income$2.35B
Net Income$2.15B
EPS (Basic)$3.79
EPS (Diluted)$3.75
Shares Outstanding (Basic)567.70M
Shares Outstanding (Diluted)571.80M

Key Highlights

  • 1Total revenues decreased by $465 million to $22.9 billion, primarily due to lower deliveries in the Commercial Airplanes (BCA) segment, heavily impacted by the 737 MAX grounding.
  • 2Net earnings declined to $2.15 billion from $2.48 billion in the prior year's quarter, with diluted earnings per share falling to $3.75 from $4.15.
  • 3The 737 MAX grounding led to a reduction in the production rate from 52 to 42 aircraft per month and increased production costs.
  • 4Defense, Space & Security (BDS) revenues increased by $130 million, driven by higher satellites and weapons revenue, and a contract award for early warning aircraft.
  • 5Global Services (BGS) revenues saw a substantial increase of $669 million, largely due to the acquisition of KLX, Inc. and higher government services revenue.
  • 6Operating cash flow decreased to $2.8 billion from $3.1 billion, partly due to higher inventory spending related to the 737 MAX suspension.
  • 7Boeing announced plans to reduce the 737 production rate from 52 to 42 aircraft per month effective April 15, 2019, citing impacts from the 737 MAX grounding.

Frequently Asked Questions

The primary reason for the decrease in revenue and net earnings was the grounding of the 737 MAX aircraft following two fatal accidents. This led to a significant reduction in deliveries for the Commercial Airplanes segment, impacting overall company performance.

Boeing is actively working with regulatory authorities on investigations and the software updates and pilot training programs necessary for the 737 MAX's return to service. Operationally, the company announced a reduction in the 737 production rate from 52 to 42 aircraft per month starting April 15, 2019, to manage the impact of suspended deliveries.

The Defense, Space & Security (BDS) segment showed revenue growth driven by satellites, weapons, and contract awards. The Global Services (BGS) segment also experienced significant revenue growth, primarily due to the acquisition of KLX, Inc. and increased government services.

The company expects the grounding to continue to adversely affect revenues, operating earnings, and cash flows until deliveries resume and production rates can increase. The timing and conditions for the 737 MAX's return to service are critical factors for future performance, and the company acknowledges potential for additional costs and delays.