Boeing Reports Strong Q3 Results and Raises 2014 EPS Guidance
OREANDA-NEWS. The Boeing Company [NYSE: BA] reported third-quarter revenue increased 7 percent to USD 23.8 billion on higher deliveries (Table 1). Core earnings per share (non-GAAP) increased 19 percent* to USD 2.14, driven by strong performance across the company's businesses. Third-quarter core operating earnings (non-GAAP) increased 13 percent* to USD 2.4 billion from the same period of the prior year. GAAP earnings per share was USD 1.86 and GAAP earnings from operations was USD 2.1 billion.
Core earnings per share guidance for 2014 increased to between USD 8.10 and USD 8.30, from USD 7.90 to USD 8.10 on continued strong operating performance. GAAP earnings per share guidance for 2014 increased to between USD 6.90 and USD 7.10, from USD 6.85 to USD 7.05. Operating cash flow before pension contributions* guidance increased to greater than USD 7 billion. Commercial Airplanes operating margin guidance increased to approximately 10.5 percent.
"Continued strong operating performance across our production and services businesses drove significant growth in earnings-per-share, and enabled us to continue to capture new business, pushing our order backlog to a record USD 490 billion," said Boeing Chairman and CEO Jim McNerney. "We added net new orders for 501 commercial airplanes, launched the high-capacity 737 MAX 200, captured a NASA contract for the Commercial Crew program, and returned USD 1.5 billion to shareholders through dividends and share repurchases."
"With three solid quarters behind us and confidence in our ongoing performance, we are increasing our earnings per share outlook for 2014, as our team remains focused on providing value to our customers and shareholders, profitably ramping up airplane production, executing on our development programs, and driving productivity and affordability throughout the enterprise," McNerney said.
Operating cash flow before pension contributions* in the quarter was USD 1.7 billion, reflecting commercial airplane production rates, strong operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 8 million shares for USD 1 billion, leaving USD 5.8 billion remaining under the current repurchase authorization expected to be completed over approximately the next one to two years. The company also paid USD 0.5 billion in dividends in the quarter.
Cash and investments in marketable securities totaled USD 10.1 billion at quarter-end (Table 3), down from USD 11.3 billion at the beginning of the quarter. Debt was USD 8.9 billion, unchanged from the beginning of the quarter.
Total company backlog at quarter-end was a record USD 490 billion, up from USD 440 billion at the beginning of the quarter, and included net orders for the quarter of USD 73 billion.
Commercial Airplanes third-quarter revenue increased 15 percent to a record USD 16.1 billion on higher deliveries. Third-quarter operating margin was 11.2 percent, reflecting the dilutive impact of 787 and 747-8 deliveries and higher period costs partially offset by the delivery volume and continued strong operating performance (Table 4).
During the quarter, the company launched the 737 MAX 200 with a commitment from Ryanair for 100 airplanes. The 737 program has won nearly 2,300 firm orders for the 737 MAX since launch. Due to the continued strong demand for the 737 family of airplanes, the company intends to increase the 737 production rate from 42 to 47 per month in 2017, with recently announced plans to increase to 52 per month in 2018. Also during the quarter, the first GEnx-powered 787-9 Dreamliner was delivered.
Commercial Airplanes booked 501 net orders during the quarter. Backlog remains strong with over 5,500 airplanes valued at a record USD 430 billion.
Defense, Space & Security
Defense, Space & Security's third-quarter revenue was USD 7.9 billion with an operating margin of 10.8 percent (Table 5).
Boeing Military Aircraft (BMA) third-quarter revenue was USD 3.5 billion, reflecting higher P-8 deliveries. Operating margin increased to 12.4 percent, reflecting improved performance. During the quarter, BMA delivered the first U.S Army Multiyear II configured Chinook.
Network & Space Systems (N&SS) third-quarter revenue was USD 2.0 billion, reflecting timing on United Launch Alliance (ULA) launches and lower government satellite volume. Operating margin increased to 9.3 percent, reflecting strong performance. During the quarter, N&SS was awarded a contract for NASA's Commercial Crew program.
Global Services & Support (GS&S) third-quarter revenue was USD 2.3 billion on lower volume, and operating margin was 9.7 percent reflecting delivery mix. During the quarter, GS&S delivered the first upgraded French Airborne Warning and Control System (AWACS) aircraft.
Backlog at Defense, Space & Security was USD 60 billion, of which 37 percent represents orders with international customers.
Additional Financial Information
At quarter-end, Boeing Capital's net portfolio balance was USD 3.5 billion. Unallocated items, eliminations and other third-quarter revenue decreased from the same period in the prior year due to the elimination of intersegment revenue for two aircraft delivered under operating leases (Table 6). Total pension expense for the third quarter was USD 715 million, down from USD 775 million in the same period of the prior year.
Outlook
The company's 2014 financial guidance (Table 7) reflects continued strong performance in both businesses.
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