10-QPeriod: Q3 FY2022

BOEING CO Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 26, 2022For Securities:BABA-PA

Summary

Boeing Company (BA) reported a net loss of $4.3 billion for the nine months ended September 30, 2022, a significant increase from the $0.1 billion net loss in the same period of 2021. This widening loss is primarily attributable to substantial charges on Defense, Space & Security (BDS) fixed-price development programs, including the VC-25B Presidential Aircraft, KC-46A Tanker, and MQ-25 programs. Despite the overall net loss, total revenues saw a slight decrease to $46.6 billion from $47.5 billion in the prior year's comparable period, driven by lower revenues in BDS, partially offset by increases in Commercial Airplanes (BCA) and Global Services (BGS). Operational challenges persist, particularly within the BDS segment, which incurred significant charges impacting profitability. While BCA revenues improved due to higher 737 MAX and 787 deliveries, the segment still reported an operating loss. Global Services demonstrated strength with increased commercial services volume. The company's liquidity remains a focus, with cash and cash equivalents at $13.5 billion, and unused borrowing capacity of $12.0 billion. However, the company anticipates continued negative impacts on operating cash flows until commercial deliveries fully ramp up and production issues are resolved.

Financial Highlights

51 data points
Beta

Revenue

$15.96B

-5.1% Gross Margin

Net Income

-$3.27B

-20.5% Net Margin

EPS (Diluted)

$-5.49

Total Assets

$137.56B

Cash & Equivalents

$13.53B

Free Cash Flow

$2.91B

Financial Statements
Beta
Revenue$15.96B
Cost of Revenue$16.77B
Gross Profit-$815.00M
R&D Expenses$727.00M
Operating Income-$2.79B
Net Income-$3.27B
EPS (Basic)$-5.49
EPS (Diluted)$-5.49
Shares Outstanding (Basic)596.00M
Shares Outstanding (Diluted)596.00M

Key Highlights

  • 1Net loss attributable to Boeing Shareholders widened significantly to $4.3 billion for the nine months ended September 30, 2022, from $0.1 billion in the prior year.
  • 2Total revenues decreased slightly to $46.6 billion for the nine months ended September 30, 2022, from $47.5 billion in the prior year.
  • 3Defense, Space & Security (BDS) segment reported a substantial operating loss of $3.66 billion for the nine months ended September 30, 2022, heavily impacted by charges on fixed-price development programs.
  • 4Commercial Airplanes (BCA) segment revenues increased due to higher 737 MAX and 787 deliveries, but the segment still reported an operating loss of $1.74 billion.
  • 5Global Services (BGS) segment showed resilience with revenue growth and improved operating earnings, driven by commercial services.
  • 6The company maintained a cash and cash equivalents balance of $13.5 billion as of September 30, 2022, with $12.0 billion in unused borrowing capacity.
  • 7Significant charges related to fixed-price development programs (VC-25B, KC-46A, MQ-25, T-7A) continue to weigh on overall financial performance.

Frequently Asked Questions

The primary reason for the significant net loss is the substantial charges incurred on Defense, Space & Security (BDS) fixed-price development programs. These include issues and cost overruns on programs such as the VC-25B Presidential Aircraft, KC-46A Tanker, MQ-25, and T-7A Red Hawk, which have resulted in large earnings charges.

The Commercial Airplanes segment saw an increase in revenues due to higher deliveries of the 737 MAX and resumption of 787 deliveries, but it still reported an operating loss. In contrast, the Defense, Space & Security segment experienced a significant decline in revenues and a large operating loss, heavily impacted by program charges, making its performance a major drag on overall results.

Boeing's liquidity position appears stable in the short term, with $13.5 billion in cash and cash equivalents and $12.0 billion in unused borrowing capacity as of September 30, 2022. The company believes it is probable that it can fund its operations for the foreseeable future. However, the persistent negative impact on operating cash flows from lower commercial airplane deliveries and BDS charges remains a concern until these issues are resolved.

Key challenges include ongoing supply chain disruptions, labor shortages, inflationary pressures, the lingering effects of the COVID-19 pandemic on the commercial aviation industry, and production issues and associated rework on programs like the 787. Additionally, the 737 MAX's return to service in certain markets (like China) and the certification timelines for new variants (MAX 7 and MAX 10) present uncertainties.