10-QPeriod: Q1 FY2023

BOEING CO Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 26, 2023For Securities:BABA-PA

Summary

Boeing reported a net loss of $414 million, or $0.69 per share, for the first quarter of 2023. This represents an improvement from the $1.219 billion net loss in the same period last year, driven by higher revenues across all segments and reduced charges on development programs. Total revenues increased significantly to $17.921 billion from $13.991 billion year-over-year, with Commercial Airplanes (BCA) showing the largest jump due to increased 737 and 787 deliveries. Despite the revenue growth and reduced overall losses, the company continues to face significant challenges, including ongoing supply chain disruptions and labor instability, which impact production rates and inventory levels, particularly for the 737 and 787 programs. Several large development programs, such as the KC-46A Tanker and the T-7A Red Hawk, continue to incur substantial losses, though the overall impact of these losses has decreased compared to the prior year.

Financial Highlights

51 data points
Beta

Revenue

$17.92B

10.7% Gross Margin

Net Income

-$414.00M

-2.3% Net Margin

EPS (Diluted)

$-0.69

Total Assets

$136.35B

Cash & Equivalents

$10.81B

Free Cash Flow

-$786.00M

Financial Statements
Beta
Revenue$17.92B
Cost of Revenue$16.00B
Gross Profit$1.92B
R&D Expenses$741.00M
Operating Income-$149.00M
Net Income-$414.00M
EPS (Basic)$-0.69
EPS (Diluted)$-0.69
Shares Outstanding (Basic)602.20M
Shares Outstanding (Diluted)602.20M

Key Highlights

  • 1Total revenues surged by 28% to $17.9 billion, primarily driven by increased deliveries in the Commercial Airplanes segment.
  • 2Net loss attributable to shareholders narrowed significantly to $414 million ($0.69/share) from $1.219 billion ($2.06/share) in the prior year's quarter.
  • 3Defense, Space & Security (BDS) segment saw a significant decrease in its operating loss due to reduced charges on development programs, despite ongoing program challenges.
  • 4Global Services (BGS) segment demonstrated strong performance with an increase in earnings from operations, benefiting from market recovery in commercial services.
  • 5Inventories remain substantial at $78.5 billion, with significant portions tied to the 737 and 787 programs, though there's a slight decrease from year-end 2022.
  • 6The company reported a healthy backlog of $411.4 billion, indicating substantial future revenue potential, but notes uncertainty in the timing of revenue conversion due to delivery schedules and program entry into service.
  • 7Cash used by operating activities improved significantly to $318 million from $3.2 billion in the prior year, reflecting improved net loss and working capital management.

Frequently Asked Questions

The primary drivers of the revenue increase were higher deliveries in the Commercial Airplanes (BCA) segment, specifically for the 737 and 787 aircraft. Additionally, the Defense, Space & Security (BDS) segment benefited from lower charges on development programs and the USAF KC-46A Lot 9 Tanker award, while the Global Services (BGS) segment saw growth from increased commercial services revenue due to market recovery.

Deliveries of the 737 MAX are progressing, with a notable step towards resuming deliveries in China after the first passenger flight in January 2023. However, there are still around 225 aircraft in inventory, including about 140 configured for Chinese customers, which are being remarketed. Production rates are increasing, but the company is working through some rework on certain 737 models due to a manufacturing process issue, which will impact near-term delivery timing. The FAA certification for the 737-7 and 737-10 models is ongoing.

Yes, several large development programs continue to incur significant losses. The KC-46A Tanker program's reach-forward loss increased by $245 million due to supplier quality issues. The T-7A Red Hawk program also has a reach-forward loss. The 777X program is experiencing abnormal production costs due to a pause in production, which are being expensed as incurred. While these programs are challenging, the overall impact of these charges on the company's results has decreased compared to the prior year.

Boeing's liquidity remains solid, with $10.8 billion in cash and $4.0 billion in short-term investments, along with $12.0 billion in unused borrowing capacity. Net cash used by operating activities improved significantly year-over-year. Debt levels decreased to $55.4 billion, and the company is in compliance with its debt covenants. Moody's upgraded its outlook on Boeing's credit rating from negative to stable, citing improved operating cash flow and reduced aircraft inventory.