Boeing Reports
Strong Second-Quarter; Generated Robust Cash; Raises Revenue
Guidance
CHICAGO, July 25, 2018
--
- Revenue increased to $24.3
billion reflecting 194 commercial
deliveries and higher
defense and services volume
- GAAP EPS of $3.73 and core EPS
(non-GAAP)* of $3.33 on solid
execution across the company
- Strong operating cash flow of $4.7
billion; repurchased 8.6 million shares for $3.0 billion
- Backlog grew to $488 billion,
including nearly 5,900 commercial airplanes
- Cash and marketable securities of $9.8 billion provide strong liquidity
- Raised revenue and updated segment margin guidance
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Table 1. Summary Financial Results |
|
Second
Quarter |
|
|
|
First Half |
|
|
(Dollars in Millions, except per share
data) |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$24,258 |
|
$23,051 |
|
5% |
|
$47,640 |
|
$45,012 |
|
6% |
|
|
|
|
|
|
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|
|
|
|
|
|
|
GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings From Operations |
|
$2,710 |
|
$2,530 |
|
7% |
|
$5,585 |
|
$4,736 |
|
18% |
|
Operating Margin |
|
11.2% |
|
11.0% |
|
0.2 Pts |
|
11.7% |
|
10.5% |
|
1.2 Pts |
|
Net Earnings |
|
$2,196 |
|
$1,749 |
|
26% |
|
$4,673 |
|
$3,328 |
|
40% |
|
Earnings Per Share |
|
$3.73 |
|
$2.87 |
|
30% |
|
$7.88 |
|
$5.41 |
|
46% |
|
Operating Cash Flow |
|
$4,680 |
|
$4,949 |
|
(5)% |
|
$7,816 |
|
$7,047 |
|
11% |
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Non-GAAP* |
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Core Operating Earnings |
|
$2,393 |
|
$2,173 |
|
10% |
|
$4,903 |
|
$4,033 |
|
22% |
|
Core Operating Margin |
|
9.9% |
|
9.4% |
|
0.5 Pts |
|
10.3% |
|
9.0% |
|
1.3 Pts |
|
Core Earnings Per Share |
|
$3.33 |
|
$2.49 |
|
34% |
|
$6.97 |
|
$4.67 |
|
49% |
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* Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
The Boeing Company [NYSE: BA] reported second-quarter revenue of
$24.3 billion reflecting higher
commercial deliveries and mix, defense volume and services growth
(Table 1). GAAP earnings per share increased to $3.73 and core earnings per share (non-GAAP)*
increased to $3.33
reflecting solid execution across the company. Results also reflect
a charge related to the previously announced Spirit litigation
outcome ($0.21 per share). Boeing
delivered strong operating cash flow of $4.7
billion, repurchased $3.0
billion of shares, and paid $1.0
billion of dividends.
The company's revenue guidance increased $1 billion to between $97.0 and $99.0
billion, driven by defense volume and services growth.
Commercial Airplanes margin guidance is increased to greater than
11.5% on strong performance and Defense, Space & Security
margin guidance was adjusted to reflect the impact of cost growth
on the KC-46 Tanker program.
"We are seeing the results of our One
Boeing approach as our teams work together across the Boeing
enterprise to deliver value to our customers and grow our
business. In the quarter, we generated improved revenue and
earnings, delivered strong cash and captured $27 billion in new orders," said Boeing Chairman,
President and Chief Executive Officer Dennis Muilenburg.
"We celebrated the first anniversary of the launch of Boeing
Global Services and the one-year revenue service anniversary of the
737 MAX. We booked 239 net commercial airplane orders in the
quarter, which included 59 787s - further demonstrating the value
this airplane family brings to our customers. Solid progress
continued on the 777X program with the first two test aircraft
currently being built in the factory. We finalized the production
contract for 28 F/A-18 Super Hornets for Kuwait, completed production of the 100th P-8
Poseidon, and conducted two successful tests for the U.S. Air
Force's Minuteman III. Our services business delivered the first
737 Boeing Converted Freighter and secured performance based
logistics contracts to support rotorcraft in the Netherlands. Additionally, customers
continued to recognize the value of our digital solutions with
Etihad Airways signing a contract to implement our crew management
solutions."
"Continued services growth, increasing defense volume and strong
performance of our commercial business, as well as our positive
market outlook, give us the confidence to raise our revenue and
Commercial Airplanes margin guidance for the year. We remain
focused on execution, driving innovation, continuing to develop and
maintain the best team and talent in the industry, and increasing
value for our customers, shareholders, employees and other
stakeholders."
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Table 2. Cash Flow |
|
Second
Quarter |
|
First Half |
(Millions) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Operating Cash Flow |
|
$4,680 |
|
$4,949 |
|
$7,816 |
|
$7,047 |
|
Less Additions to Property, Plant &
Equipment |
|
($376) |
|
($439) |
|
($770) |
|
($905) |
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Free Cash Flow* |
|
$4,304 |
|
$4,510 |
|
$7,046 |
|
$6,142 |
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* Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
Operating cash flow in the quarter of $4.7 billion reflects planned higher commercial
airplane production rates, strong operating performance, and timing
of receipts and expenditures (Table 2). During the quarter, the
company repurchased 8.6 million shares for $3.0 billion, leaving $12.0 billion remaining under the current
repurchase authorization which is expected to be completed over
approximately the next 18 to 24 months. The company also paid
$1.0 billion in dividends in the
quarter, reflecting a 20 percent increase in dividends per share
compared to the same period of the prior year.
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Table 3. Cash, Marketable Securities and Debt
Balances |
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Quarter-End |
(Billions) |
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Q2 18 |
|
Q1 18 |
Cash |
|
$8.1 |
|
$9.2 |
Marketable Securities1 |
|
$1.7 |
|
$0.7 |
Total |
|
$9.8 |
|
$9.9 |
Debt Balances: |
|
|
|
|
The Boeing Company, net of intercompany loans to
BCC |
|
$9.6 |
|
$10.0 |
Boeing Capital, including intercompany loans |
|
$2.5 |
|
$2.5 |
Total Consolidated Debt |
|
$12.1 |
|
$12.5 |
|
1 Marketable securities consists
primarily of time deposits due within one year classified as
"short-term investments." |
Cash and investments in marketable securities totaled
$9.8 billion, compared to
$9.9 billion at the beginning of the
quarter (Table 3). Debt was $12.1
billion, down from $12.5
billion at the beginning of the quarter due to repayment of
debt.
Total company backlog at quarter-end was $488 billion, up from $486
billion at the beginning of the quarter, and included net
orders for the quarter of $27
billion.
Segment Results
Commercial Airplanes
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Table 4. Commercial Airplanes |
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Second
Quarter |
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|
First Half |
|
|
(Dollars in Millions) |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
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Commercial Airplanes Deliveries |
|
194 |
|
183 |
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6% |
|
378 |
|
352 |
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7% |
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Revenues |
|
$14,481 |
|
$14,280 |
|
1% |
|
$28,133 |
|
$27,233 |
|
3% |
Earnings from Operations |
|
$1,644 |
|
$1,282 |
|
28% |
|
$3,152 |
|
$2,152 |
|
46% |
Operating Margin |
|
11.4% |
|
9.0% |
|
2.4 Pts |
|
11.2% |
|
7.9% |
|
3.3 Pts |
Commercial Airplanes second-quarter revenue was $14.5 billion reflecting higher deliveries and
mix (Table 4). Second-quarter operating margin increased to 11.4
percent, reflecting strong operating performance on production
programs, including a higher 787 margin, partially offset by a
charge of $307 million related to
cost growth on the KC-46 Tanker program. This cost growth was
primarily due to higher estimated costs of incorporating changes
into six flight test and two early build aircraft as well as
additional costs as we progress through late stage testing and the
certification process. We continue to make steady progress towards
final certification for KC-46 Tanker and recently completed all
flight tests required to deliver the first aircraft, which is
expected to be in October this year as now agreed upon with the
U.S. Air Force.
During the quarter, Commercial Airplanes delivered 194
airplanes, including delivery of the first 737 MAX airplanes to Jet
Airways, Ethiopian Airlines, and Xiamen Airlines. The 737 MAX
program celebrated the one year anniversary of entering revenue
flight service and continues to be well received in the market with
over 4,600 orders since its launch. The 777X program remains on
track for delivery in 2020 as the first two test airplanes moved
into the low-rate initial production line.
Commercial Airplanes booked 239 net orders during the quarter,
including 91 widebodies. Backlog remains robust with nearly 5,900
airplanes valued at $416 billion.
Defense, Space & Security
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Table 5. Defense, Space & Security |
|
Second
Quarter |
|
|
|
First Half |
|
|
(Dollars in Millions) |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
|
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|
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|
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Revenues |
|
$5,593 |
|
$5,142 |
|
9% |
|
$11,355 |
|
$10,254 |
|
11% |
Earnings from Operations |
|
$521 |
|
$614 |
|
(15)% |
|
$1,170 |
|
$1,163 |
|
1% |
Operating Margin |
|
9.3% |
|
11.9% |
|
(2.6) Pts |
|
10.3% |
|
11.3% |
|
(1.0) Pts |
Defense, Space & Security second-quarter revenue increased
to $5.6 billion driven by F/A-18 and
weapons volume (Table 5). Second-quarter operating margin was 9.3
percent, primarily reflecting KC-46 Tanker cost growth of
$111 million, partially offset by
solid execution and favorable mix.
During the quarter, Defense, Space & Security finalized a
production contract for 28 F/A-18 Super Hornets for Kuwait, received contracts for 18 additional
F/A-18 Super Hornets and 3 P-8 Poseidon aircraft for the U.S Navy,
and was awarded a multi-year contract for 58 V-22 Osprey aircraft.
Significant milestones during the quarter included induction of the
first F/A-18 aircraft into the Service Life Modification program,
two successful tests for the U.S. Air Force's Minuteman III, and
the completion of the 100th P-8 Poseidon aircraft. On the
commercial satellites side, we successfully completed O3b mPOWER
preliminary design review with SES.
Backlog at Defense, Space & Security was $52 billion, of which 35 percent represents
orders from international customers.
Global Services
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Table 6. Global Services |
|
Second
Quarter |
|
|
|
First Half |
|
|
(Dollars in Millions) |
|
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$4,090 |
|
$3,552 |
|
15% |
|
$8,033 |
|
$7,205 |
|
11% |
Earnings from Operations |
|
$603 |
|
$569 |
|
6% |
|
$1,247 |
|
$1,192 |
|
5% |
Operating Margin |
|
14.7% |
|
16.0% |
|
(1.3) Pts |
|
15.5% |
|
16.5% |
|
(1.0) Pts |
Global Services second-quarter revenue increased to $4.1 billion, reflecting growth across the
portfolio (Table 6). Second-quarter operating margin was 14.7
percent reflecting product and services mix.
During the quarter, Global Services was awarded an F/A-18 depot
maintenance contract for the U.S. Navy and Marine Corps and secured
rotorcraft performance based logistics contracts for the Netherlands. Global Services also
contracted to implement crew management solutions at Etihad Airways
and captured a Global Fleet Care contract for Primera Air's 737
fleet. Global Services also entered into an agreement to acquire
KLX Aerospace which will broaden our range of offerings and
increase customer value, and agreed to a strategic partnership with
Safran for auxiliary power units as we strengthen Boeing's vertical
capabilities and expand our services portfolio.
Additional Financial Information
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Table 7. Additional Financial
Information |
|
Second
Quarter |
|
First Half |
(Dollars in Millions) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
|
Boeing Capital |
|
$72 |
|
$72 |
|
$137 |
|
$164 |
|
Unallocated items, eliminations and other |
|
$22 |
|
$5 |
|
($18) |
|
$156 |
|
Earnings from Operations |
|
|
|
|
|
|
|
|
Boeing Capital |
|
$24 |
|
$25 |
|
$44 |
|
$64 |
|
FAS/CAS service cost adjustment |
|
$317 |
|
$357 |
|
$682 |
|
$703 |
|
Other unallocated items and eliminations |
|
($399) |
|
($317) |
|
($710) |
|
($538) |
|
Other (loss)/income, net |
|
($15) |
|
$25 |
|
$51 |
|
$51 |
|
Interest and debt expense |
|
($109) |
|
($93) |
|
($211) |
|
($180) |
|
Effective tax rate |
|
15.1% |
|
29.0% |
|
13.9% |
|
27.8% |
|
At quarter-end, Boeing Capital's net portfolio balance was
$3.0 billion. Total pension expense
for the second quarter was $70
million, down from $94 million
in the same period of the prior year. The change in earnings from
other unallocated items and eliminations is primarily due to the
previously announced litigation charge. The effective tax rate for
the second quarter decreased from the same period in the prior year
primarily due to the reduction of the federal tax rate to 21%.
Outlook
The Company's 2018 guidance is updated below (Table 8).
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Table 8. 2018 Financial Outlook |
Current |
|
Prior |
(Dollars in Billions, except per share
data) |
Guidance |
|
Guidance |
|
|
|
|
The Boeing Company |
|
|
|
Revenue |
$97.0 - 99.0 |
|
$96.0 - 98.0 |
|
|
|
|
GAAP Earnings Per Share |
$16.40 - 16.60 |
|
$16.40 - 16.60 |
Core Earnings Per Share* |
$14.30 - 14.50 |
|
$14.30 - 14.50 |
|
|
|
|
Operating Cash Flow |
$15.0 - 15.5 |
|
$15.0 - 15.5 |
|
|
|
|
Commercial Airplanes |
|
|
|
Deliveries |
810 - 815 |
|
810 - 815 |
Revenue |
$59.5 - 60.5 |
|
$59.5 - 60.5 |
Operating Margin |
>11.5% |
|
~11.5% |
|
|
|
|
Defense, Space & Security |
|
|
|
Revenue |
$22.0 - 23.0 |
|
$21.5 - 22.5 |
Operating Margin |
10.0 - 10.5% |
|
~11.0% |
|
|
|
|
Global Services |
|
|
|
Revenue |
$15.5 - 16.0 |
|
$15.0 - 15.5 |
Operating
Margin |
~15.5% |
|
~15.5% |
|
|
|
|
Boeing Capital |
|
|
|
Portfolio Size |
Stable |
|
Stable |
Revenue |
~$0.2 |
|
~$0.2 |
Pre-Tax Earnings |
~$0.07 |
|
~$0.05 |
|
|
|
|
Research & Development |
~$3.7 |
|
~$3.7 |
Capital Expenditures |
~$2.2 |
|
~$2.2 |
Pension Expense 1 |
~$0.1 |
|
~$0.1 |
Effective Tax Rate |
~16.0% |
|
~16.0% |
|
* Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
1 Approximately $1.4 billion
of pension expense is expected to be allocated to the business
segments |
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 Earnings, Core Operating Margin and Core Earnings
Per Share
Core operating earnings 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 FAS pension and
postretirement service costs calculated under GAAP and costs
allocated to the business segments. Core operating margin is
defined as core operating earnings expressed as a percentage of
revenue. Core earnings 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, comprising
service and prior service costs computed in accordance with GAAP
are allocated to Commercial Airplanes and BGS businesses supporting
commercial customers. 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 earnings, core
operating margin and core earnings/per share for purposes of
evaluating and forecasting underlying business performance.
Management believes these core earnings 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 GAAP and
non-GAAP measures is provided on pages 14-15.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow
without capital expenditures for property, plant and equipment
additions. 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. Table 2
provides a reconciliation between GAAP operating cash flow and free
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
commercial development and derivative aircraft programs, and our
aircraft being subject to stringent performance and reliability
standards; (4) changing budget and appropriation levels and
acquisition priorities of the U.S. government; (5) our dependence
on U.S. government contracts; (6) our reliance on fixed-price
contracts; (7) our reliance on cost-type contracts; (8)
uncertainties concerning contracts that include in-orbit incentive
payments; (9) our dependence on our subcontractors and suppliers,
as well as the availability of raw materials; (10) changes in
accounting estimates; (11) changes in the competitive landscape in
our markets; (12) our non-U.S. operations, including sales to
non-U.S. customers; (13) threats to the security of our or our
customers' information; (14) potential adverse developments in new
or pending litigation and/or government investigations; (15)
customer and aircraft concentration in our customer financing
portfolio; (16) changes in our ability to obtain debt on
commercially reasonable terms and at competitive rates; (17)
realizing the anticipated benefits of mergers, acquisitions, joint
ventures/strategic alliances or divestitures; (18) the adequacy of
our insurance coverage to cover significant risk exposures; (19)
potential business disruptions, including those related to physical
security threats, information technology or cyber-attacks,
epidemics, sanctions or natural disasters; (20) work stoppages or
other labor disruptions; (21) substantial pension and other
postretirement benefit obligations; (22) potential environmental
liabilities.
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: |
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Investor Relations: |
|
Maurita Sutedja or Ben Hackman (312) 544-2140 |
Communications: |
|
Allison Bone (312) 544-2002 |
The Boeing Company and
Subsidiaries
Consolidated Statements of Operations
(Unaudited)
In the first quarter of 2018, we adopted the following
Accounting Standards Updates (ASU), which are reflected in the
unaudited Consolidated Financial Statements on pages 9-14: ASU
2014-09, Revenue from Contracts with Customers (Topic
606); ASU 2017-07, Compensation - Retirement Benefits
(Topic 715): Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement Benefit Cost; ASU 2016-18
Statement of Cash Flows (Topic 230) Restricted Cash; and ASU
2018-02, Income Statement—Reporting Comprehensive Income (Topic
220): Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income.
|
Six months ended
June 30 |
|
Three months
ended
June 30 |
(Dollars in millions, except per share
data) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Sales of products |
$42,385 |
|
$39,885 |
|
$21,565 |
|
$20,518 |
Sales of services |
5,255 |
|
5,127 |
|
2,693 |
|
2,533 |
Total revenues |
47,640 |
|
45,012 |
|
24,258 |
|
23,051 |
|
|
|
|
|
|
|
|
Cost of products |
(34,252) |
|
(32,886) |
|
(17,436) |
|
(16,824) |
Cost of services |
(4,075) |
|
(3,863) |
|
(2,083) |
|
(1,865) |
Boeing Capital interest expense |
(33) |
|
(26) |
|
(17) |
|
(13) |
Total costs and expenses |
(38,360) |
|
(36,775) |
|
(19,536) |
|
(18,702) |
|
9,280 |
|
8,237 |
|
4,722 |
|
4,349 |
Income from operating investments, net |
80 |
|
120 |
|
6 |
|
39 |
General and administrative expense |
(2,191) |
|
(1,972) |
|
(1,194) |
|
(1,043) |
Research and development expense, net |
(1,591) |
|
(1,649) |
|
(827) |
|
(813) |
Gain/(loss) on dispositions, net |
7 |
|
|
|
3 |
|
(2) |
Earnings from operations |
5,585 |
|
4,736 |
|
2,710 |
|
2,530 |
Other income/(loss), net |
51 |
|
51 |
|
(15) |
|
25 |
Interest and debt expense |
(211) |
|
(180) |
|
(109) |
|
(93) |
Earnings before income taxes |
5,425 |
|
4,607 |
|
2,586 |
|
2,462 |
Income tax expense |
(752) |
|
(1,279) |
|
(390) |
|
(713) |
Net earnings |
$4,673 |
|
$3,328 |
|
$2,196 |
|
$1,749 |
|
|
|
|
|
|
|
|
Basic earnings per share |
$7.97 |
|
$5.47 |
|
$3.77 |
|
$2.91 |
|
|
|
|
|
|
|
|
Diluted earnings per share |
$7.88 |
|
$5.41 |
|
$3.73 |
|
$2.87 |
|
|
|
|
|
|
|
|
Cash dividends paid per share |
$3.42 |
|
$2.84 |
|
$1.71 |
|
$1.42 |
|
|
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
592.9 |
|
615.3 |
|
588.7 |
|
609.6 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
June 30
2018 |
|
December 31
2017 |
Assets |
|
|
|
Cash and cash equivalents |
$8,121 |
|
$8,813 |
Short-term and other investments |
1,649 |
|
1,179 |
Accounts receivable, net |
2,823 |
|
2,894 |
Unbilled receivables, net |
9,868 |
|
8,194 |
Current portion of customer financing, net |
294 |
|
309 |
Inventories |
61,250 |
|
61,388 |
Other current assets |
2,396 |
|
2,417 |
Total current assets |
86,401 |
|
85,194 |
Customer financing, net |
2,817 |
|
2,756 |
Property, plant and equipment, net of accumulated
depreciation of $18,137 and $17,641 |
12,605 |
|
12,672 |
Goodwill |
5,550 |
|
5,559 |
Acquired intangible assets, net |
2,494 |
|
2,573 |
Deferred income taxes |
325 |
|
321 |
Investments |
1,203 |
|
1,260 |
Other assets, net of accumulated amortization of
$523 and $482 |
1,800 |
|
2,027 |
Total assets |
$113,195 |
|
$112,362 |
Liabilities and equity |
|
|
|
Accounts payable |
$12,904 |
|
$12,202 |
Accrued liabilities |
12,240 |
|
13,069 |
Advances and progress billings |
50,970 |
|
48,042 |
Short-term debt and current portion of long-term
debt |
1,611 |
|
1,335 |
Total current liabilities |
77,725 |
|
74,648 |
Deferred income taxes |
1,900 |
|
2,188 |
Accrued retiree health care |
5,444 |
|
5,545 |
Accrued pension plan liability, net |
16,118 |
|
16,471 |
Other long-term liabilities |
2,875 |
|
2,015 |
Long-term debt |
10,507 |
|
9,782 |
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 |
6,676 |
|
6,804 |
Treasury stock, at cost - 436,377,479 and
421,222,326 shares |
(49,342) |
|
(43,454) |
Retained earnings |
52,303 |
|
49,618 |
Accumulated other comprehensive loss |
(16,139) |
|
(16,373) |
Total shareholders' equity |
(1,441) |
|
1,656 |
Noncontrolling interests |
67 |
|
57 |
Total equity |
(1,374) |
|
1,713 |
Total liabilities and equity |
$113,195 |
|
$112,362 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
Six months ended
June 30 |
(Dollars in millions) |
2018 |
|
2017 |
Cash flows – operating
activities: |
|
|
|
Net earnings |
$4,673 |
|
$3,328 |
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
Non-cash items – |
|
|
|
Share-based plans expense |
98 |
|
98 |
Depreciation and amortization |
1,008 |
|
956 |
Investment/asset impairment charges, net |
44 |
|
46 |
Customer financing valuation
(benefit)/expense |
(2) |
|
5 |
Gain on dispositions, net |
(7) |
|
|
Other charges and credits, net |
112 |
|
135 |
Changes in assets and liabilities – |
|
|
|
Accounts receivable |
62 |
|
(163) |
Unbilled receivables |
(1,675) |
|
(950) |
Advances and progress billings |
2,931 |
|
3,916 |
Inventories |
408 |
|
(1,036) |
Other current assets |
2 |
|
(148) |
Accounts payable |
682 |
|
419 |
Accrued liabilities |
(922) |
|
(570) |
Income taxes receivable, payable and deferred |
269 |
|
774 |
Other long-term liabilities |
(65) |
|
(18) |
Pension and other postretirement plans |
(57) |
|
13 |
Customer financing, net |
(97) |
|
342 |
Other |
352 |
|
(100) |
Net cash provided by operating
activities |
7,816 |
|
7,047 |
Cash flows – investing activities: |
|
|
|
Property, plant and equipment additions |
(770) |
|
(905) |
Property, plant and equipment reductions |
41 |
|
25 |
Contributions to investments |
(1,537) |
|
(1,820) |
Proceeds from investments |
1,028 |
|
1,441 |
Purchase of distribution rights |
(56) |
|
(131) |
Other |
(1) |
|
7 |
Net cash used by investing
activities |
(1,295) |
|
(1,383) |
Cash flows – financing activities: |
|
|
|
New borrowings |
3,648 |
|
874 |
Debt repayments |
(2,708) |
|
(56) |
Contributions from noncontrolling interests |
20 |
|
|
Stock options exercised |
61 |
|
240 |
Employee taxes on certain share-based payment
arrangements |
(236) |
|
(112) |
Common shares repurchased |
(5,965) |
|
(5,000) |
Dividends paid |
(1,997) |
|
(1,720) |
Net cash used by financing
activities |
(7,177) |
|
(5,774) |
Effect of exchange rate changes on cash and cash
equivalents, including restricted |
(36) |
|
52 |
Net decrease in cash & cash equivalents,
including restricted |
(692) |
|
(58) |
Cash & cash equivalents, including restricted,
at beginning of year |
8,887 |
|
8,869 |
Cash & cash equivalents, including
restricted, at end of period |
8,195 |
|
8,811 |
Less restricted cash & cash equivalents,
included in Investments |
74 |
|
74 |
Cash and cash equivalents at end of
period |
$8,121 |
|
$8,737 |
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30 |
|
Three months
ended
June 30 |
(Dollars in millions) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Commercial Airplanes |
$28,133 |
|
$27,233 |
|
$14,481 |
|
$14,280 |
Defense, Space & Security |
11,355 |
|
10,254 |
|
5,593 |
|
5,142 |
Global Services |
8,033 |
|
7,205 |
|
4,090 |
|
3,552 |
Boeing Capital |
137 |
|
164 |
|
72 |
|
72 |
Unallocated items, eliminations and other |
(18) |
|
156 |
|
22 |
|
5 |
Total revenues |
$47,640 |
|
$45,012 |
|
$24,258 |
|
$23,051 |
Earnings from operations: |
|
|
|
|
|
|
|
Commercial Airplanes |
$3,152 |
|
$2,152 |
|
$1,644 |
|
$1,282 |
Defense, Space & Security |
1,170 |
|
1,163 |
|
521 |
|
614 |
Global Services |
1,247 |
|
1,192 |
|
603 |
|
569 |
Boeing Capital |
44 |
|
64 |
|
24 |
|
25 |
Segment operating profit |
5,613 |
|
4,571 |
|
2,792 |
|
2,490 |
Unallocated items, eliminations and other |
(710) |
|
(538) |
|
(399) |
|
(317) |
FAS/CAS service cost adjustment |
682 |
|
703 |
|
317 |
|
357 |
Earnings from operations |
5,585 |
|
4,736 |
|
2,710 |
|
2,530 |
Other income/(loss), net |
51 |
|
51 |
|
(15) |
|
25 |
Interest and debt expense |
(211) |
|
(180) |
|
(109) |
|
(93) |
Earnings before income taxes |
5,425 |
|
4,607 |
|
2,586 |
|
2,462 |
Income tax expense |
(752) |
|
(1,279) |
|
(390) |
|
(713) |
Net earnings |
$4,673 |
|
$3,328 |
|
$2,196 |
|
$1,749 |
|
|
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
|
|
|
Commercial Airplanes |
$1,099 |
|
$1,217 |
|
$550 |
|
$592 |
Defense, Space & Security |
402 |
|
392 |
|
219 |
|
196 |
Global Services |
71 |
|
63 |
|
37 |
|
35 |
Other |
19 |
|
(23) |
|
21 |
|
(10) |
Total research and development expense,
net |
$1,591 |
|
$1,649 |
|
$827 |
|
$813 |
|
|
|
|
|
|
|
|
Unallocated items, eliminations and
other: |
|
|
|
|
|
|
|
Share-based plans |
($36) |
|
($46) |
|
($18) |
|
($25) |
Deferred compensation |
(56) |
|
(96) |
|
(27) |
|
(46) |
Amortization of previously capitalized
interest |
(48) |
|
(46) |
|
(23) |
|
(22) |
Eliminations and other unallocated items |
(570) |
|
(350) |
|
(331) |
|
(224) |
Sub-total (included in core operating
earnings) |
(710) |
|
(538) |
|
(399) |
|
(317) |
Pension FAS/CAS service cost adjustment |
520 |
|
540 |
|
237 |
|
278 |
Postretirement FAS/CAS service cost
adjustment |
162 |
|
163 |
|
80 |
|
79 |
FAS/CAS service cost adjustment |
$682 |
|
$703 |
|
$317 |
|
$357 |
Total |
($28) |
|
$165 |
|
($82) |
|
$40 |
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Deliveries |
Six months ended
June 30 |
|
Three months
ended
June 30 |
Commercial Airplanes |
2018 |
|
2017 |
|
2018 |
|
|
|
2017 |
|
737 |
269 |
|
236 |
|
137 |
|
|
|
123 |
|
747 |
3 |
|
4 |
(1) |
1 |
|
|
|
3 |
|
767 |
9 |
|
5 |
|
5 |
|
|
|
3 |
|
777 |
25 |
|
42 |
|
13 |
|
|
|
21 |
|
787 |
72 |
|
65 |
|
38 |
|
|
|
33 |
|
Total |
378 |
|
352 |
|
194 |
|
|
|
183 |
|
Note: Aircraft accounted for as
revenues by BCA and as a note receivable in consolidation
identified by parentheses |
|
|
|
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
|
|
|
AH-64 Apache (New) |
— |
|
5 |
|
— |
|
|
|
2 |
|
AH-64 Apache (Remanufactured) |
6 |
|
28 |
|
— |
|
|
|
15 |
|
C-17 Globemaster III |
— |
|
— |
|
— |
|
|
|
— |
|
CH-47 Chinook (New) |
9 |
|
4 |
|
5 |
|
|
|
1 |
|
CH-47 Chinook (Renewed) |
8 |
|
19 |
|
4 |
|
|
|
10 |
|
F-15 Models |
5 |
|
7 |
|
3 |
|
|
|
4 |
|
F/A-18 Models |
5 |
|
12 |
|
— |
|
|
|
6 |
|
P-8 Models |
8 |
|
9 |
|
4 |
|
|
|
5 |
|
Commercial and Civil Satellites |
— |
|
3 |
|
— |
|
|
|
2 |
|
Military Satellites |
— |
|
— |
|
— |
|
|
|
— |
|
|
|
|
|
|
Total backlog (Dollars in
millions) |
June 30
2018 |
|
December 31
2017 |
Commercial Airplanes |
$415,723 |
|
$410,446 |
Defense, Space & Security |
51,925 |
|
44,049 |
Global Services |
20,388 |
|
19,605 |
Total backlog |
$488,036 |
|
$474,100 |
|
|
|
|
Contractual backlog |
$464,237 |
|
$456,444 |
Unobligated backlog |
23,799 |
|
17,656 |
Total backlog |
$488,036 |
|
$474,100 |
The Boeing Company and
Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial
measures core operating earnings, core operating margin, and core
earnings per share with the most directly comparable GAAP financial
measures, earnings from operations, operating margin, and diluted
earnings per share. See page 7 of this release for additional
information on the use of these non-GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
2018
Guidance |
|
Second Quarter
2018 |
|
Second Quarter
2017 |
|
$ millions |
Per Share |
|
$ millions |
|
Per Share |
|
$ millions |
|
Per Share |
Revenues |
|
|
|
24,258 |
|
|
|
23,051 |
|
|
Earnings from operations (GAAP) |
|
|
|
2,710 |
|
|
|
2,530 |
|
|
Operating margins |
|
|
|
11.2% |
|
|
|
11.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
|
|
|
(237) |
|
|
|
(278) |
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
|
(80) |
|
|
|
(79) |
|
|
FAS/CAS service cost adjustment |
~($1,395) |
|
|
(317) |
|
|
|
(357) |
|
|
Core operating earnings (non-GAAP) |
|
|
|
$2,393 |
|
|
|
$2,173 |
|
|
Core operating margins (non-GAAP) |
|
|
|
9.9% |
|
|
|
9.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$16.40 - 16.60 |
|
|
$3.73 |
|
|
$2.87 |
Pension FAS/CAS service cost adjustment |
~($1,395) |
|
|
($237) |
|
(0.40) |
|
($278) |
|
(0.46) |
Postretirement FAS/CAS service cost
adjustment |
|
|
(80) |
|
(0.14) |
|
(79) |
|
(0.13) |
Non-operating pension expense |
~($165) |
|
|
(6) |
|
(0.01) |
|
(28) |
|
(0.05) |
Non-operating postretirement expense |
|
|
24 |
|
0.04 |
|
30 |
|
0.05 |
Provision for deferred income taxes on
adjustments 1 |
|
|
|
63 |
|
0.11 |
|
125 |
|
0.21 |
Subtotal of adjustments |
|
($2.10) |
|
($236) |
|
($0.40) |
|
($230) |
|
($0.38) |
Core earnings per share (non-GAAP) |
|
$14.30 - 14.50 |
|
|
$3.33 |
|
|
$2.49 |
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
585 - 590 |
|
|
|
588.7 |
|
|
609.6 |
|
1 The income tax impact is
calculated using the U.S. corporate statutory tax rate in effect
for non-GAAP adjustments. |
The Boeing Company and
Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial
measures core operating earnings, core operating margin, and core
earnings per share with the most directly comparable GAAP financial
measures, earnings from operations, operating margin, and diluted
earnings per share. See page 7 of this release for additional
information on the use of these non-GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
2018
Guidance |
|
First Half
2018 |
|
First Half 2017 |
|
$ millions |
Per Share |
|
$ millions |
|
Per Share |
|
$ millions |
|
Per Share |
Revenues |
|
|
|
47,640 |
|
|
|
45,012 |
|
|
Earnings from operations (GAAP) |
|
|
|
5,585 |
|
|
|
4,736 |
|
|
Operating margins |
|
|
|
11.7% |
|
|
|
10.5% |
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
|
|
|
(520) |
|
|
|
(540) |
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
|
(162) |
|
|
|
(163) |
|
|
FAS/CAS service cost adjustment |
~($1,395) |
|
|
(682) |
|
|
|
(703) |
|
|
Core operating earnings (non-GAAP) |
|
|
|
$4,903 |
|
|
|
$4,033 |
|
|
Core operating margins (non-GAAP) |
|
|
|
10.3% |
|
|
|
9.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$16.40 - 16.60 |
|
|
|
$7.88 |
|
|
|
$5.41 |
Pension FAS/CAS service cost adjustment |
~($1,395) |
|
|
($520) |
|
(0.88) |
|
($540) |
|
(0.88) |
Postretirement FAS/CAS service cost
adjustment |
|
|
(162) |
|
(0.27) |
|
(163) |
|
(0.26) |
Non-operating pension expense |
~($165) |
|
|
(48) |
|
(0.08) |
|
(62) |
|
(0.10) |
Non-operating postretirement expense |
|
|
48 |
|
0.08 |
|
60 |
|
0.10 |
Provision for deferred income taxes on
adjustments 1 |
|
|
|
143 |
|
0.24 |
|
247 |
|
0.40 |
Subtotal of adjustments |
|
($2.10) |
|
($539) |
|
($0.91) |
|
($458) |
|
($0.74) |
Core earnings per share (non-GAAP) |
|
$14.30 - 14.50 |
|
|
|
$6.97 |
|
|
|
$4.67 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
585 - 590 |
|
|
|
|
592.9 |
|
|
|
615.3 |
|
1 The income tax impact is
calculated using the U.S. corporate statutory tax rate in effect
for non-GAAP adjustments. |