01—Abstract
Summary
Summary of the 10-Q filed October 26, 2022. Cited figures are marked; the original filing is the authoritative source.
Boeing Company (BA) reported a net loss of $4.3 billiona 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 billionb 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 billionc, 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.
02—Key points
Key Highlights
- Net 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.
- Total revenues decreased slightly to $46.6 billion for the nine months ended September 30, 2022, from $47.5 billion in the prior year.
- Defense, 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.
- Commercial 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.
- Global Services (BGS) segment showed resilience with revenue growth and improved operating earnings, driven by commercial services.
- The 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.
- Significant charges related to fixed-price development programs (VC-25B, KC-46A, MQ-25, T-7A) continue to weigh on overall financial performance.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2022, Boeing Co lost $0.21.
- Revenue$15.96B100.0%
- Cost of revenue−$16.77B105.1%
- Gross profit−$815.0M5.1%
- Operating costs−$1.98B12.4%
- Operating income−$2.79B17.5%
- Interest, other & tax−$483.0M3.0%
- Net income−$3.27B20.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed October 26, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $15.96B$15.28B | +4.4% |
| Cost of Revenue | $16.77B$13.57B | +23.6% |
| Gross Profit | -$815.00M$1.71B | −147.6% |
| R&D Expenses | $727.00M$575.00M | +26.4% |
| Operating Income | -$2.79B$329.00M | −948.6% |
| Net Income | -$3.27B-$109.00M | −2904.6% |
| EPS (Basic) | $-5.49$-0.19 | −2789.5% |
| EPS (Diluted) | $-5.49$-0.19 | −2789.5% |
| Shares Outstanding (Basic) | 596.00M589.00M | +1.2% |
| Shares Outstanding (Diluted) | 596.00M588.60M | +1.3% |
05—Questions
Frequently Asked Questions
What is the primary reason for the significant net loss in the nine months ended September 30, 2022?
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.
How are the Commercial Airplanes (BCA) and Defense, Space & Security (BDS) segments performing relative to each other?
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.
What is the company's liquidity position, and are there concerns about its ability to meet its obligations?
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.
What are the ongoing challenges impacting Boeing's operations and financial results?
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.
06—Continue