Boeing reports a third quarter net loss of $3.3 billion

Boeing issued this financial report:

Third Quarter 2022

  • Operating cash flow of $3.2 billion; continue to expect positive free cash flow for 2022
  • Resumed 787 deliveries and delivered 9 airplanes
  • Recorded losses on fixed-price defense development programs
  • Revenue of $16.0 billion; GAAP loss per share of ($5.49) and core (non-GAAP)* loss per share of ($6.18)
  • Total backlog of $381 billion; including over 4,300 commercial airplanes

Table 1. Summary Financial Results

Third Quarter

Nine Months

(Dollars in Millions, except per share data)

2022

2021

Change

2022

2021

Change

Revenues

$15,956

$15,278

4 %

$46,628

$47,493

(2) %

GAAP

(Loss)/Earnings From Operations

($2,799)

$329

NM

($3,194)

$1,269

NM

Operating Margin

(17.5)

%

2.2

%

NM

(6.8)

%

2.7

%

NM

Net Loss

($3,308)

($132)

NM

($4,390)

($126)

NM

Loss Per Share

($5.49)

($0.19)

NM

($7.24)

($0.10)

NM

Operating Cash Flow

$3,190

($262)

NM

$55

($4,132)

NM

Non-GAAP*

Core Operating (Loss)/Earnings

($3,078)

$59

NM

($4,040)

$461

NM

Core Operating Margin

(19.3)

%

0.4

%

NM

(8.7)

%

1.0

%

NM

Core Loss Per Share

($6.18)

($0.60)

NM

($9.31)

($1.72)

NM

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

The Boeing Company reported third-quarter revenue of $16.0 billion, GAAP loss per share of ($5.49) and core loss per share (non-GAAP)* of ($6.18). Third-quarter results reflect higher commercial volume and losses on fixed-price defense development programs (Table 1). Boeing generated operating cash flow of $3.2 billion.

“We continue to make important strides in our turnaround and remain focused on our performance,” said Dave Calhoun, Boeing President and Chief Executive Officer. “We generated strong cash in the quarter and are on a solid path to achieving positive free cash flow for 2022. At the same time, revenue and earnings were significantly impacted by losses on our fixed-price defense development programs. We’re squarely focused on maturing these programs, mitigating risks and delivering for our customers and their important missions. We remain in a challenging environment and have more work ahead to drive stability, improve our performance and ensure we’re consistently delivering on our commitments. Despite the challenges, I’m proud of our team and the progress we’ve made to strengthen our company.”

Table 2. Cash Flow

Third Quarter

Nine Months

(Millions)

2022

2021

2022

2021

Operating Cash Flow

$3,190

($262)

$55

($4,132)

Less Additions to Property, Plant & Equipment

($284)

($245)

($896)

($758)

Free Cash Flow*

$2,906

($507)

($841)

($4,890)

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

Operating cash flow improved to $3.2 billion in the quarter, reflecting higher commercial deliveries, favorable receipt timing, and a tax refund (Table 2).

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q3 22

Q2 22

Cash

$13.5

$10.0

Marketable Securities1

$0.8

$1.4

Total

$14.3

$11.4

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$55.7

$55.7

Boeing Capital, including intercompany loans

$1.5

$1.5

Total Consolidated Debt

$57.2

$57.2

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

Cash and investments in marketable securities increased to $14.3 billion, compared to $11.4 billion at the beginning of the quarter, primarily driven by cash from operations (Table 3). The company has access to credit facilities of $12.0 billion, which remain undrawn.

Total company backlog at quarter-end was $381 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

Third Quarter

Nine Months

(Dollars in Millions)

2022

2021

Change

2022

2021

Change

Commercial Airplanes Deliveries

112

85

32 %

328

241

36 %

Revenues

$6,263

$4,459

40 %

$16,643

$14,743

13 %

Loss from Operations

($643)

($693)

NM

($1,744)

($2,021)

NM

Operating Margin

(10.3)

%

(15.5)

%

NM

(10.5)

%

(13.7)

%

NM

Commercial Airplanes third-quarter revenue increased to $6.3 billion, driven by the resumption of 787 deliveries and higher 737 deliveries (Table 4). Operating margin of (10.3) percent also reflects lower abnormal costs as compared to the third quarter of 2021, partially offset by higher period expenses, including R&D expense.

The company also resumed 787 deliveries in late August, following comprehensive reviews to ensure each airplane meets the company’s highest standards. The program is producing at a low rate with an expected gradual return to five per month over time.

Since late 2020, the 737 MAX fleet has completed nearly 1 million revenue flights. During the quarter, the company secured net orders for 227 aircraft, including 167 737 airplanes, 27 767 airplanes, 18 777 airplanes, and 15 787 airplanes. Commercial Airplanes delivered 112 airplanes during the quarter and backlog included over 4,300 airplanes valued at $307 billion.

Defense, Space & Security

Table 5. Defense, Space & Security

Third Quarter

Nine Months

(Dollars in Millions)

2022

2021

Change

2022

2021

Change

Revenues

$5,307

$6,617

(20) %

$16,981

$20,678

(18) %

(Loss)/earnings from Operations

($2,798)

$436

NM

($3,656)

$1,799

NM

Operating Margin

(52.7)

%

6.6

%

NM

(21.5)

%

8.7

%

NM

Defense, Space & Security third-quarter revenue decreased to $5.3 billion and third-quarter operating margin decreased to (52.7) percent, primarily due to $2.8 billionof losses on certain fixed-price development programs, driven by higher estimated manufacturing and supply chain costs, as well as technical challenges. These losses were recorded on the KC-46A, VC-25B, MQ-25, T-7A and Commercial Crew programs. Results were also impacted by unfavorable performance on other programs.

During the quarter, Defense, Space & Security captured KC-46A Tanker awards from the U.S. Air Force for 15 aircraft and the Israeli Air Force for four aircraft, and Poland selected the AH-64E Apache as its future attack helicopter. Defense, Space & Security delivered 34 aircraft and two satellites, including the first four MH-139A Grey Wolf helicopters to the U.S. Air Force. Also during the quarter, Defense, Space and Security opened the Advanced Composite Fabrication Center in Mesa, Arizona.

Backlog at Defense, Space & Security was $55 billion, of which 31 percent represents orders from customers outside the U.S.

Global Services

Table 6. Global Services

Third Quarter

Nine Months

(Dollars in Millions)

2022

2021

Change

2022

2021

Change

Revenues

$4,432

$4,221

5 %

$13,044

$12,037

8 %

Earnings from Operations

$733

$644

14 %

$2,093

$1,616

30 %

Operating Margin

16.5

%

15.3

%

8 %

16.0

%

13.4

%

19 %

Global Services third-quarter revenue increased to $4.4 billion and third-quarter operating margin increased to 16.5 percent primarily driven by higher commercial services volume and favorable mix, partially offset by lower government services volume.

During the quarter, Global Services was awarded a follow-on KC-767A Performance Based Logistics support contract for the Italian Air Force and received an F/A-18 depot support order for the U.S. Navy. Global Services also signed a Landing Gear Exchange and Airplane Health Management agreement with Ethiopian Airlines. Also in the quarter, Global Services delivered the 100th contracted 737-800BCF to AerCap.

Additional Financial Information

Table 7. Additional Financial Information

Third Quarter

Nine Months

(Dollars in Millions)

2022

2021

2022

2021

Revenues

Boeing Capital

$52

$71

$150

$209

Unallocated items, eliminations and other

($98)

($90)

($190)

($174)

(Loss)/Earnings from Operations

Boeing Capital

$23

$42

$14

$99

FAS/CAS service cost adjustment

$279

$270

$846

$808

Other unallocated items and eliminations

($393)

($370)

($747)

($1,032)

Other income, net

$288

$30

$722

$419

Interest and debt expense

($621)

($669)

($1,901)

($2,021)

Effective tax rate

(5.6)

%

57.4

%

(0.4)

%

62.2

%

At quarter-end, Boeing Capital’s net portfolio balance was $1.6 billion. The change in other income was driven by the absence of a pension settlement charge recorded in the third quarter of 2021. Interest and debt expense decreased due to lower debt balance. The third quarter effective tax rate primarily reflects tax expense due to an increase in the valuation allowance.

Top Copyright Photo: Boeing 737-10 MAX 10 SSWL N27751 (msn 66122) BFI (Joe G. Walker). Image: 954396.