OREANDA-NEWS.

 

                                           

Table 1. Summary Financial Results

  

Third Quarter

      

Nine months

    

(Dollars in Millions, except per share data)

  

2015

  

2014

  

Change

  

2015

  

2014

  

Change
                         

Revenues

    

$25,849

    

$23,784

  

9%

    

$72,541

    

$66,294

  

9%
                         

Non-GAAP*

                        

Core Operating Earnings

    

$2,637

    

$2,430

  

9%

    

$6,482

    

$6,516

  

(1)%

Core Operating Margin

  

10.2%

  

10.2%

  

0.0 Pts

  

8.9%

  

9.8%

  

(0.9) Pts

Core Earnings Per Share

    

$2.52

    

$2.14

  

18%

    

$6.11

    

$6.30

  

(3)%

Operating Cash Flow Before Pension Contributions

    

$2,899

    

$1,689

  

72%

    

$6,284

    

$4,610

  

36%

GAAP

                        

Earnings From Operations

    

$2,580

    

$2,119

  

22%

    

$6,282

    

$5,448

  

15%

Operating Margin

  

10.0%

  

8.9%

  

1.1 Pts

  

8.7%

  

8.2%

  

0.5 Pts

Net Earnings

    

$1,704

    

$1,362

  

25%

    

$4,150

    

$3,980

  

4%

Earnings Per Share

    

$2.47

    

$1.86

  

33%

    

$5.92

    

$5.36

  

10%

Operating Cash Flow

    

$2,859

    

$939

  

204%

    

$6,244

    

$3,860

  

62%
 

* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures Disclosures."     

The Boeing Company [NYSE: BA] reported third-quarter revenue increased 9 percent to $25.8 billion on record commercial deliveries (Table 1). Core earnings per share (non-GAAP) for the quarter increased 18 percent* to $2.52, reflecting strong performance across the company, and GAAP earnings per share was $2.47.

Core earnings per share (non-GAAP)* guidance for 2015 increased to between $7.95 and $8.15, from $7.70 and $7.90 on continued strong operating performance. GAAP earnings per share guidance for 2015 increased to between $7.65 and $7.85, from $7.60 and $7.80. Operating cash flow guidance increased to approximately $9.5 billion. Revenue guidance increased $0.5 billion to between $95.0 billion and $97.0 billion on higher commercial airplane deliveries. Defense, Space & Security operating margin guidance increased to approximately 10 percent.

"By continuing to profitably deliver on our large and diverse backlog, we are driving strong growth in revenue, earnings and cash flow," said Boeing President and Chief Executive Officer Dennis Muilenburg. "Solid operating performance across our commercial and defense businesses during the quarter also supported our continued investment in innovation and our people, and our commitment to return cash to shareholders."

"Three quarters of solid results and confidence in our continued operating performance enabled us to raise our revenue, earnings per share and operating cash flow guidance for the year. Looking ahead, our teams remain focused on improving productivity and quality and delivering improved capabilities to meet our customers' expectations."

                                 

Table 2. Cash Flow

  

Third Quarter

  

Nine months

(Millions)

  

2015

  

2014

  

2015

  

2014

Operating Cash Flow Before Pension Contributions*

    

$2,899

      

$1,689

      

$6,284

      

$4,610

  

        Pension Contributions

    

($40)

      

($750)

      

($40)

      

($750)

  

Operating Cash Flow

    

$2,859

      

$939

      

$6,244

      

$3,860

  

Less Additions to Property, Plant & Equipment

    

($561)

      

($622)

      

($1,827)

      

($1,568)

  

Free Cash Flow*

    

$2,298

      

$317

      

$4,417

      

$2,292

  

Operating cash flow in the quarter was $2.9 billion, reflecting commercial airplane production rates and strong operating performance (Table 2). During the quarter, the company repurchased 11 million shares for $1.5 billion, leaving $6.0 billion remaining under the current repurchase authorization. Year to date, the company repurchased 41 million shares for $6.0 billion. The company also paid $0.6 billion in dividends in the quarter, reflecting an approximately 25 percent increase in dividends per share compared to the same period of the prior year.

                 

Table 3. Cash, Marketable Securities and Debt Balances

  

Quarter-End

(Billions)

  

Q3 15

  

Q2 15

Cash

    

$9.4

      

$9.1

  

Marketable Securities1

    

$0.5

      

$0.5

  

Total

    

$9.9

      

$9.6

  

Debt Balances:

        

The Boeing Company, net of intercompany loans to BCC

    

$6.6

      

$6.6

  

Boeing Capital, including intercompany loans

    

$2.4

      

$2.4

  

Total Consolidated Debt

    

$9.0

      

$9.0

  
   

1

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

Cash and investments in marketable securities totaled $9.9 billion, up from $9.6 billion at the beginning of the quarter. Debt was $9.0 billion, unchanged from the beginning of the quarter (Table 3).

Total company backlog at quarter-end was $485 billion, down from $489 billion at the beginning of the quarter, and included net orders for the quarter of $22 billion.

Segment Results

Commercial Airplanes

                                             

Table 4. Commercial Airplanes

  

Third Quarter

      

Nine months

    

(Dollars in Millions)

  

2015

  

2014

  

Change

  

2015

  

2014

  

Change
                         

Commercial Airplanes Deliveries

  

199

  

186

  

7%

  

580

  

528

  

10%
                         

Revenues

    

$17,692

    

$16,110

  

10%

    

$49,950

    

$43,151

  

16%

Earnings from Operations

    

$1,768

    

$1,797

  

(2)%

    

$4,591

    

$4,849

  

(5) %

Operating Margin

  

10.0%

  

11.2%

  

(1.2) Pts

  

9.2%

  

11.2%

  

(2.0) Pts

Commercial Airplanes third-quarter revenue increased 10 percent to $17.7 billion on higher delivery volume and mix (Table 4). Third-quarter operating margin was 10 percent, reflecting higher R&D and the dilutive impact of higher 787 deliveries partially offset by strong performance on production programs.

During the quarter, the company began final assembly and achieved power-on of the first 737 MAX airplane. In total, the 737 program has won nearly 2,900 firm orders for the 737 MAX since launch. Also during the quarter, the company completed firm configuration for the 777X. The 777X program is on schedule for first delivery in 2020.

Commercial Airplanes booked 166 net orders during the quarter. Backlog remains strong with nearly 5,700 airplanes valued at $426 billion.

Defense, Space & Security

                                             

Table 5. Defense, Space & Security

  

Third Quarter

      

Nine months

    

(Dollars in Millions)

  

2015

  

2014

  

Change

  

2015

  

2014

  

Change

Revenues1

                        

Boeing Military Aircraft

    

$4,051

    

$3,534

  

15%

    

$10,283

    

$10,509

  

(2)%

Network & Space Systems

    

$2,127

    

$2,027

  

5%

    

$5,797

    

$5,823

  

0%

Global Services & Support

    

$2,172

    

$2,352

  

(8)%

    

$6,523

    

$6,961

  

(6)%

Total BDS Revenues

    

$8,350

    

$7,913

  

6%

    

$22,603

    

$23,293

  

(3)%

Earnings from Operations1

                        

Boeing Military Aircraft

    

$496

    

$439

  

13%

    

$880

    

$935

  

(6)%

Network & Space Systems

    

$245

    

$189

  

30%

    

$563

    

$507

  

11%

Global Services & Support

    

$281

    

$228

  

23%

    

$868

    

$774

  

12%

Total BDS Earnings from Operations

    

$1,022

    

$856

  

19%

    

$2,311

    

$2,216

  

4%

Operating Margin

  

12.2%

  

10.8%

  

1.4 Pts

  

10.2%

  

9.5%

  

0.7 Pts
   

1

During the first quarter of 2015, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.

Defense, Space & Security's third-quarter revenue was $8.4 billion with an operating margin of 12.2 percent (Table 5).

Boeing Military Aircraft (BMA) third-quarter revenue increased 15 percent to $4.1 billion primarily as a result of F-15 contract negotiations and BMA operating margin was 12.2 percent. During the quarter, BMA was awarded contracts for 13 P-8A Poseidon aircraft, 22 Apache helicopters, and 15 Chinook helicopters. Also during the quarter, the company and the U.S. Air Force team completed the first flight of a KC-46A tanker aircraft.

Network & Space Systems (N&SS) third-quarter revenue was $2.1 billion, reflecting higher volume on the Commercial Crew program. Operating margin increased to 11.5 percent, reflecting favorable program mix. During the quarter, NASA extended Boeing's international space station contract.

Global Services & Support (GS&S) third-quarter revenue decreased to $2.2 billion, reflecting the timing of Airborne Early Warning and Control deliveries. Operating margin increased to 12.9 percent on strong performance. During the quarter, GS&S was awarded a contract to develop and provide the next-generation communications system for the Australian Defence Force.  

Backlog at Defense, Space & Security was $59 billion, of which 40 percent represents orders from international customers.

Additional Financial Information

                                 

Table 6. Additional Financial Information

  

Third Quarter

  

Nine months

(Dollars in Millions)

  

2015

  

2014

  

2015

  

2014

Revenues

                

Boeing Capital

    

$114

    

$91

    

$315

    

$263

Unallocated items, eliminations and other

    

($307)

    

($330)

    

($327)

    

($413)

Earnings from Operations

                

Boeing Capital

    

$10

    

($11)

    

$41

    

$66

Unallocated pension/postretirement

    

($57)

    

($311)

    

($200)

    

($1,068)

Other unallocated items and eliminations

    

($163)

    

($212)

    

($461)

    

($615)

Other (loss)/income, net

    

($26)

    

($9)

    

($23)

    

$11

Interest and debt expense

    

($67)

    

($79)

    

($203)

    

($252)

Effective tax rate

  

31.5%

  

32.9%

  

31.5%

  

23.6%

At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion, up from $3.3 billion at the beginning of the quarter. Total pension expense for the third quarter was $529 million, down from $715 million in the same period of the prior year.

Outlook

The company's updated 2015 financial and delivery guidance (Table 7) reflects continued strong performance across the company.

       

Table 7. 2015 Financial Outlook

Current

  

Prior

(Dollars in Billions, except per share data)

Guidance

  

Guidance
       

The Boeing Company

      

Revenue

$95.0 - 97.0

  

$94.5 - 96.5

Core Earnings Per Share*

$7.95 - 8.15

  

$7.70 - 7.90

GAAP Earnings Per Share

$7.65 - 7.85

  

$7.60 - 7.80

Operating Cash Flow

~$9.5

  

> $9
       

Commercial Airplanes

      

Deliveries

755 - 760

  

750 - 755

Revenue

$65.0 - 66.0

  

$64.5 - 65.5

Operating Margin

~9.0%

  

~9.0%
       

Defense, Space & Security

      

Revenue

      

Boeing Military Aircraft

~$13.0

  

~$12.5

Network & Space Systems

~$7.5

  

~$8.0

Global Services & Support

~$9.5

  

~$9.5
       

Total BDS Revenue

$29.5 - 30.5

  

$29.5 - 30.5
       

Operating Margin

      

Boeing Military Aircraft

~8.5%

  

~8%

Network & Space Systems

~9.5%

  

~9.0%

Global Services & Support

~12.0%

  

~11.5%
       

Total BDS Operating Margin

~10%

  

~9.5%
       

Boeing Capital

      

Portfolio Size

Stable

  

Stable

Revenue

~$0.3

  

~$0.3

Pre-Tax Earnings

~$0.05

  

~$0.05
       

Research & Development

~ $3.4

  

~ $3.5

Capital Expenditures

~ $2.8

  

~ $2.8

Pension Expense 1

~ $2.4

  

~ $2.1

Effective Tax Rate 2

~ 29.0%

  

~ 29.0%
   

1 

Approximately $0.5 billion is expected to be recorded in unallocated items and eliminations

2 

Assumes the extension of the research and development tax credit

*   

Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures Disclosures."