REG-Boeing Co: 1st Quarter Results
26/04/2023 12:45
Boeing Reports First-Quarter Results
ARLINGTON, Va., April 26, 2023 /PRNewswire/ --
First Quarter 2023
* Still expect to deliver 400-450 737 airplanes in 2023; plan to increase
production to 38 per month later this year
* Revenue increased to $17.9 billion primarily reflecting 130 commercial
deliveries
* Operating cash flow of ($0.3) billion and free cash flow of ($0.8) billion
(non-GAAP); cash and marketable securities of $14.8 billion
* Total company backlog of $411 billion, including over 4,500 commercial
airplanes
* Reaffirm guidance: $4.5-$6.5 billion of operating cash flow and $3.0-$5.0
billion of free cash flow (non-GAAP)
Table 1. Summary Financial Results First Quarter
(Dollars in Millions, except per share data) 2023 2022 Change
Revenues $17,921 $13,991 28 %
GAAP
Loss From Operations ($149) ($1,162) NM
Operating Margin (0.8) % (8.3) % NM
Net Loss ($425) ($1,242) NM
Loss Per Share ($0.69) ($2.06) NM
Operating Cash Flow ($318) ($3,216) NM
Non-GAAP*
Core Operating Loss ($440) ($1,445) NM
Core Operating Margin (2.5) % (10.3) % NM
Core Loss Per Share ($1.27) ($2.75) NM
*Non-GAAP measure; complete definitions of Boeing's non-GAAP measures are on page 5, "Non-GAAP Measures Disclosures."
The Boeing Company [NYSE: BA] recorded first-quarter revenue of $17.9 billion,
GAAP loss per share of ($0.69), and core loss per share (non-GAAP)* of ($1.27)
(Table 1). Boeing reported operating cash flow of ($0.3) billion and free cash
flow of ($0.8) billion (non-GAAP). Results improved on commercial volume and
performance.
"We delivered a solid first quarter and are focused on driving stability for
our customers," said Dave Calhoun, Boeing president and chief executive
officer. "We are progressing through recent supply chain disruptions but
remain confident in the goals we set for this year, as well as for the longer
term. Demand is strong across our key markets and we are growing investments
to advance our development programs and innovate strategic capabilities for
our customers and for our future."
Table 2. Cash Flow First Quarter
(Millions) 2023 2022
Operating Cash Flow ($318) ($3,216)
Less Additions to Property, Plant & Equipment ($468) ($349)
Free Cash Flow* ($786) ($3,565)
*Non-GAAP measure; complete definitions of Boeing's non-GAAP measures are on page 5, "Non-GAAP Measures Disclosures."
Operating cash flow was ($0.3) billion in the quarter reflecting higher
commercial deliveries and favorable receipt timing (Table 2).
Table 3. Cash, Marketable Securities and Debt Balances Quarter-End
(Billions) Q1 23 Q4 22
Cash $10.8 $14.6
Marketable Securities (1) $4.0 $2.6
Total $14.8 $17.2
Consolidated Debt $55.4 $57.0
(1) Marketable securities consist primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $14.8 billion, compared
to $17.2 billion at the beginning of the quarter (Table 3). Debt was
$55.4 billion, down from $57.0 billion at the beginning of the quarter due
to the pay down of debt maturities. The company has access to credit
facilities of $12.0 billion, which remain undrawn.
Total company backlog at quarter-end was $411 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes First Quarter
(Dollars in Millions) 2023 2022 Change
Commercial Airplanes Deliveries 130 95 37 %
Revenues $6,704 $4,194 60 %
Loss from Operations ($615) ($897) NM
Operating Margin (9.2) % (21.4) % NM
Commercial Airplanes first-quarter revenue increased to $6.7 billion driven
by higher 737 and 787 deliveries, partially offset by 787 customer
considerations (Table 4). Operating margin of (9.2) percent also reflects
abnormal costs and period expenses, including research and development.
On the 737 program, earlier this month the program's fuselage supplier
notified Boeing that a non-standard manufacturing process was used on two
fittings in the aft fuselage section of certain 737 airplanes. This is not an
immediate safety of flight issue and the in-service fleet can continue
operating safely. While near-term deliveries and production will be impacted
as the program performs necessary inspections and rework, the program still
expects to deliver 400-450 airplanes this year. On production, the supplier
master schedule remains unchanged including anticipated production rate
increases, which will result in higher inventory levels. The company expects
final assembly production to recover in the coming months with plans to
increase to 38 per month later this year and 50 per month in the 2025/2026
timeframe.
The 787 program is producing at three per month with plans to ramp production
to five per month in late 2023 and to 10 per month in the 2025/2026 timeframe.
During the quarter, Commercial Airplanes secured net orders of 107. Also
during the quarter the company secured commitments from Air India for 190 737
MAX, 20 787, and 10 777X airplanes and from Riyadh Air and Saudi Arabian
Airlines for up to 121 787 airplanes. Commercial Airplanes delivered 130
airplanes during the quarter and backlog included over 4,500 airplanes valued
at $334 billion.
Defense, Space & Security
Table 5. Defense, Space & Security First Quarter
(Dollars in Millions) 2023 2022 Change
Revenues $6,539 $5,483 19 %
Loss from Operations ($212) ($929) NM
Operating Margin (3.2) % (16.9) % NM
Defense, Space & Security first-quarter revenue was $6.5 billion.
First-quarter operating margin of (3.2) percent primarily reflects a $245
million pre-tax charge on the KC-46A Tanker program largely driven by the
previously shared supplier quality issue resulting in factory disruption and
rework. Results also include the continued operational impact of labor
instability and supply chain disruption on other programs.
During the quarter, Defense, Space & Security captured awards from the U.S.
Army for 184 Apaches and from the U.S. Air Force for 15 KC-46A Tankers and the
initial E-7 development contract. Backlog at Defense, Space & Security was $58
billion, of which 30 percent represents orders from customers outside the U.S.
Global Services
Table 6. Global Services First Quarter
(Dollars in Millions) 2023 2022 Change
Revenues $4,720 $4,314 9 %
Earnings from Operations $847 $632 34 %
Operating Margin 17.9 % 14.6 % 3.3 pts
Global Services first-quarter revenue of $4.7 billion and operating margin of
17.9 percent reflect higher commercial volume and favorable mix.
During the quarter, Global Services committed to set up the first Boeing
Converted Freighter line in India in collaboration with GMR Aero Technic,
delivered AerCap's 50th 737-800 Boeing Converted Freighter and broke ground on
a new component operations facility in Jacksonville, Florida.
Additional Financial Information
Table 7. Additional Financial Information First Quarter
(Dollars in Millions) 2023 2022
Revenues
Unallocated items, eliminations and other ($42) $—
Earnings/(loss) from Operations
FAS/CAS service cost adjustment $291 $283
Other unallocated items and eliminations ($460) ($251)
Other income, net $302 $181
Interest and debt expense ($649) ($637)
Effective tax rate 14.3 % 23.2 %
The increase in loss from Other unallocated items and eliminations was driven
by timing of allocations and deferred compensation expense. Other income
primarily reflects an increase in investment income due to higher interest
rates. The first-quarter effective tax rate primarily reflects the tax benefit
of pretax losses.
Segment results reflect the realignment of Boeing Capital into the Commercial
Airplanes segment during the first quarter of 2023. Prior period amounts have
also been reclassified to conform to the 2023 presentation.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under
Generally Accepted Accounting Principles in the United States of America
(GAAP) with certain non-GAAP financial information. The non-GAAP financial
information presented excludes certain significant items that may not be
indicative of, or are unrelated to, results from our ongoing business
operations. We believe that these non-GAAP measures provide investors with
additional insight into the company's ongoing business performance. These
non-GAAP measures should not be considered in isolation or as a substitute for
the related GAAP measures, and other companies may define such measures
differently. We encourage investors to review our financial statements and
publicly-filed reports in their entirety and not to rely on any single
financial measure. The following definitions are provided:
Core Operating Loss, Core Operating Margin and Core Loss Per Share
Core operating loss is defined as GAAP earnings from operations excluding
the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment
represents the difference between the Financial Accounting Standards (FAS)
pension and postretirement service costs calculated under GAAP and costs
allocated to the business segments. Core operating margin is defined as core
operating loss expressed as a percentage of revenue. Core loss per share is
defined as GAAP diluted earnings per share excluding the net earnings per
share impact of the FAS/CAS service cost adjustment and Non-operating
pension and postretirement expenses. Non-operating pension and postretirement
expenses represent the components of net periodic benefit costs other than
service cost. Pension costs allocated to BDS and BGS businesses supporting
government customers are computed in accordance with U.S. Government Cost
Accounting Standards (CAS), which employ different actuarial assumptions and
accounting conventions than GAAP. CAS costs are allocable to government
contracts. Other postretirement benefit costs are allocated to all business
segments based on CAS, which is generally based on benefits paid. Management
uses core operating loss, core operating margin and core loss per share for
purposes of evaluating and forecasting underlying business performance.
Management believes these core measures provide investors additional insights
into operational performance as they exclude non-service pension and
post-retirement costs, which primarily represent costs driven by market
factors and costs not allocable to government contracts. A reconciliation
between the non-GAAP and GAAP measures is provided on page 13.
Free Cash Flow
Free cash flow is GAAP operating cash flow reduced by capital expenditures
for property, plant and equipment. Management believes free cash flow
provides investors with an important perspective on the cash available for
shareholders, debt repayment, and acquisitions after making the capital
investments required to support ongoing business operations and long term
value creation. Free cash flow does not represent the residual cash flow
available for discretionary expenditures as it excludes certain mandatory
expenditures such as repayment of maturing debt. Management uses free cash
flow as a measure to assess both business performance and overall liquidity.
See Table 2 on page 2 and page 14 for reconciliations of free cash flow to
GAAP operating cash flow.
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "may,"
"should," "expects," "intends," "projects," "plans," "believes," "estimates,"
"targets," "anticipates," and similar expressions generally identify these
forward-looking statements. Examples of forward-looking statements include
statements relating to our future financial condition and operating results,
as well as any other statement that does not directly relate to any historical
or current fact. Forward-looking statements are based on expectations and
assumptions that we believe to be reasonable when made, but that may not prove
to be accurate. These statements are not guarantees and are subject to risks,
uncertainties, and changes in circumstances that are difficult to predict.
Many factors could cause actual results to differ materially and adversely
from these forward-looking statements. Among these factors are risks related
to: (1) general conditions in the economy and our industry, including those
due to regulatory changes; (2) our reliance on our commercial airline
customers; (3) the overall health of our aircraft production system, planned
commercial aircraft production rate changes, our ability to successfully
develop and certify new aircraft or new derivative aircraft, and the ability
of our aircraft to meet stringent performance and reliability standards; (4)
changing budget and appropriation levels and acquisition priorities of the
U.S. government, as well as the potential impact of a government shutdown; (5)
our dependence on our subcontractors and suppliers, as well as the
availability of highly skilled labor and raw materials; (6) competition within
our markets; (7) our non-U.S. operations and sales to non-U.S. customers; (8)
changes in accounting estimates; (9) realizing the anticipated benefits of
mergers, acquisitions, joint ventures/strategic alliances or divestitures;
(10) our dependence on U.S. government contracts; (11) our reliance on
fixed-price contracts; (12) our reliance on cost-type contracts; (13)
contracts that include in-orbit incentive payments; (14) unauthorized access
to our, our customers' and/or our suppliers' information and systems; (15)
potential business disruptions, including threats to physical security or our
information technology systems, extreme weather (including effects of climate
change) or other acts of nature, and pandemics or other public health crises;
(16) potential adverse developments in new or pending litigation and/or
government inquiries or investigations; (17) potential environmental
liabilities; (18) effects of climate change and legal, regulatory or market
responses to such change; (19) changes in our ability to obtain debt financing
on commercially reasonable terms, at competitive rates and in sufficient
amounts; (20) substantial pension and other postretirement benefit
obligations; (21) the adequacy of our insurance coverage; (22) customer and
aircraft concentration in our customer financing portfolio; and (23) work
stoppages or other labor disruptions.
Additional information concerning these and other factors can be found in our
filings with the Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. Any forward-looking statement speaks only as of the date on which
it is made, and we assume no obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events, or otherwise, except as required by law.
Contact:
Investor Relations: Matt Welch or David Dufault (312) 544-2140
Communications: Michael Friedman media@boeing.com
The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited)
Three months ended
March 31
(Dollars in millions, except per share data) 2023 2022
Sales of products $14,914 $11,427
Sales of services 3,007 2,564
Total revenues 17,921 13,991
Cost of products (13,553) (11,412)
Cost of services (2,445) (2,226)
Total costs and expenses (15,998) (13,638)
1,923 353
Loss from operating investments, net (27) (20)
General and administrative expense (1,304) (863)
Research and development expense, net (741) (633)
Gain on dispositions, net 1
Loss from operations (149) (1,162)
Other income, net 302 181
Interest and debt expense (649) (637)
Loss before income taxes (496) (1,618)
Income tax benefit 71 376
Net loss (425) (1,242)
Less: net loss attributable to noncontrolling interest (11) (23)
Net loss attributable to Boeing Shareholders ($414) ($1,219)
Basic loss per share ($0.69) ($2.06)
Diluted loss per share ($0.69) ($2.06)
Weighted average diluted shares (millions) 602.5 591.7
The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited)
(Dollars in millions, except per share data) March 31 December 31 2022
2023
Assets
Cash and cash equivalents $10,812 $14,614
Short-term and other investments 3,955 2,606
Accounts receivable, net 2,862 2,517
Unbilled receivables, net 9,689 8,634
Current portion of customer financing, net 133 154
Inventories 78,503 78,151
Other current assets, net 2,857 2,847
Total current assets 108,811 109,523
Customer financing, net 1,372 1,450
Property, plant and equipment, net of accumulated depreciation of $21,692 and $21,442 10,493 10,550
Goodwill 8,063 8,057
Acquired intangible assets, net 2,254 2,311
Deferred income taxes 65 63
Investments 969 983
Other assets, net of accumulated amortization of of $1,002 and $949 4,320 4,163
Total assets $136,347 $137,100
Liabilities and equity
Accounts payable $10,274 $10,200
Accrued liabilities 20,812 21,581
Advances and progress billings 54,498 53,081
Short-term debt and current portion of long-term debt 7,926 5,190
Total current liabilities 93,510 90,052
Deferred income taxes 194 230
Accrued retiree health care 2,466 2,503
Accrued pension plan liability, net 5,998 6,141
Other long-term liabilities 2,198 2,211
Long-term debt 47,465 51,811
Total liabilities 151,831 152,948
Shareholders' equity:
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued 5,061 5,061
Additional paid-in capital 10,298 9,947
Treasury stock, at cost - 410,984,640 and 414,671,383 shares (50,376) (50,814)
Retained earnings 29,059 29,473
Accumulated other comprehensive loss (9,550) (9,550)
Total shareholders' deficit (15,508) (15,883)
Noncontrolling interests 24 35
Total equity (15,484) (15,848)
Total liabilities and equity $136,347 $137,100
The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Three months ended
March 31
(Dollars in millions) 2023 2022
Cash flows – operating activities:
Net loss ($425) ($1,242)
Adjustments to reconcile net loss to net cash used by operating activities:
Non-cash items –
Share-based plans expense 222 203
Treasury shares issued for 401(k) contribution 553 329
Depreciation and amortization 457 486
Investment/asset impairment charges, net 11 72
Customer financing valuation adjustments (1) 48
Gain on dispositions, net (1)
Other charges and credits, net 34 175
Changes in assets and liabilities –
Accounts receivable (341) 237
Unbilled receivables (1,055) (356)
Advances and progress billings 1,417 (522)
Inventories (390) (1,203)
Other current assets 82 140
Accounts payable 231 (369)
Accrued liabilities (769) (594)
Income taxes receivable, payable and deferred (122) (403)
Other long-term liabilities (117) 96
Pension and other postretirement plans (244) (371)
Customer financing, net 101 18
Other 38 41
Net cash used by operating activities (318) (3,216)
Cash flows – investing activities:
Payments to acquire property, plant and equipment (468) (349)
Proceeds from disposals of property, plant and equipment 5 8
Contributions to investments (3,561) (1,732)
Proceeds from investments 2,203 5,037
Other (2) 1
Net cash (used)/provided by investing activities (1,823) 2,965
Cash flows – financing activities:
New borrowings 17 2
Debt repayments (1,699) (396)
Stock options exercised 44 30
Employee taxes on certain share-based payment arrangements (42) (32)
Net cash used by financing activities (1,680) (396)
Effect of exchange rate changes on cash and cash equivalents 10 (3)
Net decrease in cash & cash equivalents, including restricted (3,811) (650)
Cash & cash equivalents, including restricted, at beginning of year 14,647 8,104
Cash & cash equivalents, including restricted, at end of period 10,836 7,454
Less restricted cash & cash equivalents, included in Investments 24 45
Cash & cash equivalents at end of period $10,812 $7,409
The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited)
Three months ended
March 31
(Dollars in millions) 2023 2022
Revenues:
Commercial Airplanes $6,704 $4,194
Defense, Space & Security 6,539 5,483
Global Services 4,720 4,314
Unallocated items, eliminations and other (42)
Total revenues $17,921 $13,991
Loss from operations:
Commercial Airplanes ($615) ($897)
Defense, Space & Security (212) (929)
Global Services 847 632
Segment operating earnings/(loss) 20 (1,194)
Unallocated items, eliminations and other (460) (251)
FAS/CAS service cost adjustment 291 283
Loss from operations (149) (1,162)
Other income, net 302 181
Interest and debt expense (649) (637)
Loss before income taxes (496) (1,618)
Income tax benefit 71 376
Net loss (425) (1,242)
Less: net loss attributable to noncontrolling interest (11) (23)
Net loss attributable to Boeing Shareholders ($414) ($1,219)
Research and development expense, net:
Commercial Airplanes $444 $321
Defense, Space & Security 195 233
Global Services 26 27
Other 76 52
Total research and development expense, net $741 $633
Unallocated items, eliminations and other:
Share-based plans ($52) ($83)
Deferred compensation (54) 42
Amortization of previously capitalized interest (23) (23)
Research and development expense, net (76) (52)
Eliminations and other unallocated items (255) (135)
Sub-total (included in core operating loss) (460) (251)
Pension FAS/CAS service cost adjustment 223 208
Postretirement FAS/CAS service cost adjustment 68 75
FAS/CAS service cost adjustment 291 283
Total ($169) $32
The Boeing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)
Segment results reflect the realignment of Boeing Capital into the Commercial
Airplanes segment during the first quarter of 2023. Interest and debt expense
now includes interest and debt expense previously attributable to Boeing
Capital and classified as Cost of Sales. Revenues and costs related to the
Customer Financing portfolio and the costs of the Boeing Customer Finance team
are now included in the Commercial Airplanes segment. The prior period amounts
have been reclassified to conform to the current periods presentation as set
forth below.
Three months ended
(Dollars in millions) 12/31/2022 9/30/2022 6/30/2022 3/31/2022
Revenues:
Commercial Airplanes $9,271 $6,304 $6,258 $4,194
Defense, Space & Security 6,181 5,307 6,191 5,483
Global Services 4,567 4,432 4,298 4,314
Unallocated items, eliminations and other (39) (87) (66)
Total revenues $19,980 $15,956 $16,681 $13,991
(Loss)/earnings from operations:
Commercial Airplanes ($603) ($622) ($219) ($897)
Defense, Space & Security 112 (2,798) 71 (929)
Global Services 634 733 728 632
Segment operating earnings/(loss) 143 (2,687) 580 (1,194)
Unallocated items, eliminations and other (785) (384) (84) (251)
FAS/CAS service cost adjustment 297 279 284 283
(Loss)/earnings from operations (345) (2,792) 780 (1,162)
Other income, net 336 288 253 181
Interest and debt expense (640) (628) (656) (637)
(Loss)/earnings before income taxes (649) (3,132) 377 (1,618)
Income tax (expense)/benefit (14) (176) (217) 376
Net (loss)/earnings ($663) ($3,308) $160 ($1,242)
The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited)
Deliveries Three months ended
March 31
Commercial Airplanes 2023 2022
737 113 86
747 1 1
767 1 5
777 4 3
787 11
Total 130 95
Defense, Space & Security
AH-64 Apache (New) 7 7
AH-64 Apache (Remanufactured) 13 15
CH-47 Chinook (New) 5 4
CH-47 Chinook (Renewed) 1 3
F-15 Models 2 1
F/A-18 Models 7 4
KC-46 Tanker 1 4
P-8 Models 3 3
Commercial and Civil Satellites 3
Total backlog (Dollars in millions) March 31 December 31 2022
2023
Commercial Airplanes $333,656 $329,824
Defense, Space & Security 58,150 54,373
Global Services 18,835 19,338
Unallocated items, eliminations and other 805 846
Total backlog $411,446 $404,381
Contractual backlog $388,753 $381,977
Unobligated backlog 22,693 22,404
Total backlog $411,446 $404,381
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core
operating loss, core operating margin, and core loss per share with the most
directly comparable GAAP financial measures, loss from operations, operating
margin, and diluted loss per share. See page 5 of this release for additional
information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share data) First Quarter 2023 First Quarter 2022
$ millions Per Share $ millions Per Share
Revenues 17,921 13,991
Loss from operations (GAAP) (149) (1,162)
Operating margin (GAAP) (0.8) % (8.3) %
FAS/CAS service cost adjustment:
Pension FAS/CAS service cost adjustment (223) (208)
Postretirement FAS/CAS service cost adjustment (68) (75)
FAS/CAS service cost adjustment (291) (283)
Core operating loss (non-GAAP) ($440) ($1,445)
Core operating margin (non-GAAP) (2.5) % (10.3) %
Diluted loss per share (GAAP) ($0.69) ($2.06)
Pension FAS/CAS service cost adjustment ($223) (0.37) ($208) (0.35)
Postretirement FAS/CAS service cost adjustment (68) (0.11) (75) (0.13)
Non-operating pension expense (134) (0.23) (220) (0.37)
Non-operating postretirement expense (15) (0.02) (15) (0.02)
Provision for deferred income taxes on adjustments (1) 92 0.15 109 0.18
Subtotal of adjustments ($348) ($0.58) ($409) ($0.69)
Core loss per share (non-GAAP) ($1.27) ($2.75)
Weighted average diluted shares (in millions) 602.5 591.7
(1)The income tax impact is calculated using the U.S. corporate statutory tax rate.
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The table provided below reconciles the non-GAAP financial measure free cash
flow with the most directly comparable GAAP financial measure, operating cash
flow. See page 5 of this release for additional information on the use of this
non-GAAP financial measure.
Full Year 2023
(dollars in billions) Outlook
Operating Cash Flow $4.5 - $6.5
Less Additions to Property, Plant & Equipment ($1.5)
Free Cash Flow (non-GAAP) $3.0 - $5.0
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