Boeing reports its first quarter financial results

The Boeing Company reported first-quarter revenue of $22.9 billion, GAAP earnings per share of $3.75 and core earnings per share (non-GAAP)* of $3.16, reflecting lower 737 deliveries partially offset by higher defense and services volume (Table 1). Boeing generated operating cash flow of $2.8 billion and paid $1.2 billion of dividends.

The previously issued 2019 financial guidance does not reflect 737 MAX impacts. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date. Boeing is making steady progress on the path to final certification for a software update for the 737 MAX, with over 135 test and production flights of the software update complete. The company continues to work closely with global regulators and our airline partners to comprehensively test the software and finalize a robust package of training and educational resources.

“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “As we work through this challenging time for our customers, stakeholders and the company, our attention remains on driving excellence in quality and performance and running a healthy sustained growth business built on strong, long-term fundamentals.”

The quarter’s operating performance was highlighted by key defense wins, strong commercial widebody performance and orders, continued robust services growth, and receiving Embraer shareholder approval for the proposed strategic partnership.

Table 2. Cash Flow

First Quarter

(Millions)

2019

2018

Operating Cash Flow

$2,788

$3,136

Less Additions to Property, Plant & Equipment

($501)

($394)

Free Cash Flow*

$2,287

$2,742

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”    

Operating cash flow was $2.8 billion in the quarter, primarily reflecting lower 737 deliveries as well as timing of receipts and expenditures (Table 2). During the quarter, the company paid $1.2 billion in dividends, reflecting a 20 percent increase in dividends per share compared to the same period of the prior year. The company repurchased 6.1 million shares for $2.3 billion in the quarter, all of which occurred prior to mid-March.

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q1 19

Q4 18

Cash

$6.8

$7.7

Marketable Securities1

$0.9

$0.9

Total

$7.7

$8.6

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$12.6

$11.3

Boeing Capital, including intercompany loans

$2.1

$2.5

Total Consolidated Debt

$14.7

$13.8

1 Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”

Cash and investments in marketable securities totaled $7.7 billion, compared to $8.6 billion at the beginning of the quarter (Table 3). Debt was $14.7 billion, up from $13.8 billion at the beginning of the quarter primarily due to the issuance of new debt.

Total company backlog at quarter-end remained robust at $487 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

First Quarter

(Dollars in Millions)

2019

2018

Change

Commercial Airplanes Deliveries

149

184

(19%)

Revenues

$11,822

$12,945

(9%)

Earnings from Operations

$1,173

$1,412

(17%)

Operating Margin

9.9%

10.9%

(1.0) Pts

Commercial Airplanes first-quarter revenue was $11.8 billion reflecting lower 737 deliveries partially offset by favorable mix (Table 4). First-quarter operating margin was 9.9 percent reflecting lower 737 deliveries partially offset by a higher margin on the 787 program. The reported margin also reflects increased costs associated with the recent 737 production rate adjustment.

During the quarter, Commercial Airplanes delivered 149 airplanes and the production rate for the 787 increased to 14 airplanes per month. Commercial Airplanes captured several widebody orders during the quarter, including orders for 18 777X airplanes for British Airways parent company IAG, 20 787 airplanes for Lufthansa, and 10 787 airplanes for Bamboo Airways. The first 777X flight test airplane rolled out of the factory, and the program remains on track for flight testing this year and first delivery in 2020.

Commercial Airplanes backlog remains healthy with over 5,600 airplanes valued at $399 billion.

At quarter-end, Boeing Capital’s net portfolio balance was $2.5 billion. Revenue in other unallocated items and eliminations decreased primarily due to the timing of eliminations for intercompany aircraft deliveries. The change in earnings from other unallocated items and eliminations is primarily due to a customer financing impairment, higher deferred compensation expense and increased enterprise research and development investment. The effective tax rate for the first quarter decreased from the same period in the prior year primarily due to a higher foreign-derived intangible income benefit and higher excess tax benefits related to share-based payments.

Outlook

The previously issued 2019 financial guidance does not reflect 737 MAX impacts. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date.

Advertisements