01—Abstract
Summary
Summary of the 10-Q filed April 24, 2019. Cited figures are marked; the original filing is the authoritative source.
Boeing's first quarter 2019 results, filed on April 23, 2019, show a decrease in total revenues to $22.9 billiona 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 billionb 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.
02—Key points
Key Highlights
- Total 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.
- Net 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.
- The 737 MAX grounding led to a reduction in the production rate from 52 to 42 aircraft per month and increased production costs.
- Defense, Space & Security (BDS) revenues increased by $130 million, driven by higher satellites and weapons revenue, and a contract award for early warning aircraft.
- Global Services (BGS) revenues saw a substantial increase of $669 million, largely due to the acquisition of KLX, Inc. and higher government services revenue.
- Operating cash flow decreased to $2.8 billion from $3.1 billion, partly due to higher inventory spending related to the 737 MAX suspension.
- Boeing 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, Boeing Co kept $0.09.
- Revenue$22.92B100.0%
- Cost of revenue−$18.64B81.4%
- Gross profit$4.27B18.6%
- Operating costs−$1.92B8.4%
- Operating income$2.35B10.3%
- Interest, other & tax−$201.0M0.9%
- Net income$2.15B9.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed April 24, 2019Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $22.92B$23.38B | −2.0% |
| Cost of Revenue | $18.64B$18.82B | −1.0% |
| Gross Profit | $4.27B$4.56B | −6.3% |
| R&D Expenses | $866.00M$764.00M | +13.4% |
| Operating Income | $2.35B$2.88B | −18.3% |
| Net Income | $2.15B$2.48B | −13.2% |
| EPS (Basic) | $3.79$4.19 | −9.5% |
| EPS (Diluted) | $3.75$4.15 | −9.6% |
| Shares Outstanding (Basic) | 567.70M590.80M | −3.9% |
| Shares Outstanding (Diluted) | 571.80M596.50M | −4.1% |
05—Questions
Frequently Asked Questions
What is the primary reason for the decrease in Boeing's revenue and net earnings in Q1 2019?
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.
How is Boeing managing the impact of the 737 MAX grounding on its operations?
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.
Which segments performed well despite the challenges in the Commercial Airplanes segment?
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.
What is the financial outlook given the 737 MAX grounding?
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.
06—Continue