Boeing Reports Third-Quarter Results; Raises Cash Flow and EPS Guidance – iCrowdNewswire
 
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Oct 25, 2017 10:10 PM ET

Boeing Reports Third-Quarter Results; Raises Cash Flow and EPS Guidance

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iCrowdNewswire - Oct 25, 2017

CHICAGO, —

  • Revenue of $24.3 billion, including a record 202 commercial aircraft deliveries
  • GAAP EPS of $3.06 and core EPS (non-GAAP)* of $2.72 on solid execution
  • Strong operating cash flow of $3.4 billion; repurchased 11 million shares for $2.5 billion
  • Backlog remains robust at $474 billion, including nearly 5,700 aircraft in commercial airplane orders
  • Cash flow and EPS guidance raised; segment guidance updated
 

 

                  

Table 1. Summary Financial Results

 

Third Quarter

  

Nine Months

 

(Dollars in Millions, except per share data)

 

2017

2016

Change

2017

2016

Change

        

Revenues

  

$24,309

  

$23,898

 

2%

  

$68,024

  

$71,285

 

(5)%

 
        

GAAP

       

Earnings From Operations

  

$2,689

  

$2,282

 

18%

  

$7,248

  

$3,651

 

99%

 

Operating Margin

 

11.1%

 

9.5%

 

1.6 Pts

 

10.7%

 

5.1%

 

5.6 Pts

 

Net Earnings

  

$1,853

  

$2,279

 

(19)%

  

$5,065

  

$3,264

 

55%

 

Earnings Per Share

  

$3.06

  

$3.60

 

(15)%

  

$8.27

  

$5.04

 

64%

 

Operating Cash Flow

  

$3,396

  

$3,202

 

6%

  

$10,440

  

$7,667

 

36%

 

Non-GAAP*

       

Core Operating Earnings

  

$2,373

  

$2,194

 

8%

  

$6,294

  

$3,400

 

85%

 

Core Operating Margin

 

9.8%

 

9.2%

 

0.6 Pts

 

9.3%

 

4.8%

 

4.5 Pts

 

Core Earnings Per Share

  

$2.72

  

$3.51

 

(23)%

  

$7.26

  

$4.79

 

52%

 

 

 

* 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 of $24.3 billion with GAAP earnings per share of $3.06and core earnings per share (non-GAAP)* of $2.72 reflecting strong deliveries, services and delivery mix, and overall solid execution (Table 1).

The company’s cash flow guidance is increased to $12.5 billion from $12.25 billion, driven by improved performance. Full year EPS guidance is increased to between $11.20 and $11.40 from $11.10 and $11.30 and core earnings per share (non-GAAP)* guidance is increased to between $9.90 and $10.10 from $9.80 and $10.00 driven by a lower-than-expected tax rate. Full year segment guidance is updated, reflecting the realignment of the company’s services businesses into Boeing Global Services (BGS).

“Our teams across all three business segments are driving execution with a focus on both productivity and growth, which has enabled Boeing to deliver solid third quarter financial results, grow cash flow, and raise our 2017 outlook,” said Chairman, President and Chief Executive Officer Dennis Muilenburg.

“In the third quarter we successfully launched our newest business segment, Boeing Global Services, leveraging our unique One Boeing advantages to offer complete lifecycle support across the commercial, defense and space sectors. We achieved a number of key milestones in the quarter with the delivery of a record 202 commercial airplanes, including 24 737 MAXs as we continue the smooth introduction of that airplane. On the defense side, we booked $6 billion in new orders, including an initial contract award for the Ground Based Strategic Deterrent program and an award from the U.S. Navy for 14 F/A-18 Super Hornet aircraft.”

“We remain focused on accelerating productivity, quality and safety improvements across the company, executing on our future development programs, and capturing new business to ensure our continued growth.”

 

 

Table 2. Cash Flow

 

Third Quarter

 

Nine Months

(Millions)

 

2017

2016

2017

2016

Operating Cash Flow

  

$3,396

  

$3,202

  

$10,440

  

$7,667

 

Less Additions to Property, Plant & Equipment

  

($399)

  

($595)

  

($1,304)

  

($2,014)

 

Free Cash Flow*

  

$2,997

  

$2,607

  

$9,136

  

$5,653

 

 

 

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”     

Operating cash flow in the quarter of $3.4 billion was driven by solid operating performance and favorable timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 11 million shares for $2.5 billion, leaving $6.5 billion remaining under the current repurchase authorization. The company also paid $0.9 billion in dividends in the quarter, reflecting a 30 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 17

Q2 17

Cash

  

$8.6

  

$8.7

 

Marketable Securities1

  

$1.4

  

$1.6

 

Total

  

$10.0

  

$10.3

 

Debt Balances:

   

The Boeing Company, net of intercompany loans to BCC

  

$7.8

  

$7.8

 

Boeing Capital, including intercompany loans

  

$3.0

  

$3.0

 

Total Consolidated Debt

  

$10.8

  

$10.8

 

 

 

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

Cash and investments in marketable securities totaled $10.0 billion, down slightly from $10.3 billion at the beginning of the quarter (Table 3). Debt was $10.8 billion, unchanged from the beginning of the quarter.

Total company backlog at quarter-end was $474 billion, down from $482 billion at the beginning of the quarter, and included net orders for the quarter of $16 billion.

Segment Results

Commercial Airplanes

 

                  

Table 4. Commercial Airplanes

 

Third Quarter

  

Nine Months

  

(Dollars in Millions)

 

2017

2016

Change

2017

2016

Change

        

Commercial Airplanes Deliveries

 

202

 

188

 

7%

 

554

 

563

 

(2)%

 
        

Revenues1

  

$14,982

  

$15,200

 

(1)%

  

$41,263

  

$43,630

 

(5)%

 

Earnings from Operations1

  

$1,483

  

$1,293

 

15%

  

$3,648

  

$804

 

354%

 

Operating Margin1

 

9.9%

 

8.5%

 

1.4 Pts

 

8.8%

 

1.8%

 

7.0 Pts

 

 

 

1 Prior year results have been adjusted to reflect the realignment of the services business

Commercial Airplanes third-quarter revenue was $15.0 billion on planned production rates and delivery mix (Table 4). Third-quarter operating margin increased to 9.9 percent, reflecting higher 787 margins and strong operating performance on production programs, partially offset by additional cost growth of $256 million on the KC-46 Tanker program due to incorporating changes into initial production aircraft as we progress through late-stage testing and the certification process.

During the quarter, Commercial Airplanes delivered a record 202 airplanes, including 24 737 MAX 8 airplanes. The production rate increased to 47 per month on the 737 program, and we confirmed plans to increase the 787 production rate to 14 per month in 2019. Development on 777X is on track as production began on the first complete wing for structural test.

Commercial Airplanes booked 117 net orders during the quarter. Backlog remains robust with nearly 5,700 airplanes valued at $412 billion.

Defense, Space & Security

 

                  

Table 5. Defense, Space & Security

 

Third Quarter

  

Nine Months

  

(Dollars in Millions)

 

2017

2016

Change

2017

2016

Change

        

Revenues1

  

$5,470

  

$5,751

 

(5)%

  

$15,520

  

$17,281

 

(10)%

 

Earnings from Operations1

  

$559

  

$564

 

(1)%

  

$1,670

  

$1,443

 

16%

 

Operating Margin1

 

10.2%

 

9.8%

 

0.4Pts

 

10.8%

 

8.4%

 

2.4 Pts

 

 

 

1 Prior year results have been adjusted to reflect the realignment of the services business

Defense, Space & Security (BDS) third-quarter revenue was $5.5 billion on lower planned deliveries and mix (Table 5). Third-quarter operating margin increased to 10.2 percent, reflecting solid performance and mix, partially offset by KC-46 Tanker cost growth of $73 million.

During the quarter, BDS was awarded contracts from the U.S. Air Force for design of the new Ground-Based Strategic Deterrent defense system and preliminary design of the next presidential aircraft. The U.S. Navy awarded BDS a contract for 14 F/A-18 Super Hornets during the third quarter. Additionally, BDS was selected to design and build seven medium earth orbit satellites for SES.

Backlog at Defense, Space & Security was $46 billion, of which 35 percent represents orders from international customers.

Global Services

 

                  

Table 6. Global Services

 

Third Quarter

  

Nine Months

  

(Dollars in Millions)

 

2017

2016

Change

2017

2016

Change

        

Revenues

  

$3,568

  

$3,506

 

2%

  

$10,638

  

$10,508

 

1%

 

Earnings from Operations

  

$506

  

$524

 

(3)%

  

$1,639

  

$1,609

 

2%

 

Operating Margin

 

14.2%

 

14.9%

 

(0.7) Pts

 

15.4%

 

15.3%

 

0.1 Pts

 

Global Services third-quarter revenue increased to $3.6 billion, primarily driven by higher commercial parts revenue, partially offset by timing of government services (Table 6). Third-quarter operating margin was 14.2 percent reflecting product and services mix.

During the quarter, Global Services was awarded a contract from the Defense Logistics Agency to supply F/A-18 E/F spare parts, and a contract from the Italian Air Force to provide performance-based logistics services to support the KC-767A tanker aircraft. More than 40 commercial airline customers signed up for our digital navigation applications in the quarter. Additionally, Global Services continues to capture new commercial and government customers through expanded offerings, including those powered by Boeing AnalytX.

Additional Financial Information

 

              

Table 7. Additional Financial Information

 

Third Quarter

 

Nine Months

(Dollars in Millions)

 

2017

2016

2017

2016

Revenues

     

Boeing Capital

  

$70

  

$63

  

$234

  

$211

 

Unallocated items, eliminations and other

  

$219

  

($622)

  

$369

  

($345)

 

Earnings from Operations

     

Boeing Capital

  

$23

  

$13

  

$87

  

$36

 

Unallocated pension/postretirement

  

$316

  

$88

  

$954

  

$251

 

Other unallocated items and eliminations

  

($198)

  

($200)

  

($750)

  

($492)

 

Other income, net

  

$45

  

$2

  

$94

  

$41

 

Interest and debt expense

  

($87)

  

($81)

  

($267)

  

($227)

 

Effective tax rate

 

30.0%

 

(3.4)%

 

28.4%

 

5.8%

 

At quarter-end, Boeing Capital’s net portfolio balance was $3.4 billion. Total pension expense for the third quarter was $100 million, down from $453 million in the same period of the prior year. Revenue increased in other unallocated items and eliminations primarily due to timing of eliminations of intercompany aircraft deliveries, including those accounted for under operating lease. Other unallocated items and eliminations earnings decreased primarily due to timing of eliminations of intercompany aircraft deliveries, offset by higher deferred compensation. The effective tax rate for the third quarter increased to 30.0 percent primarily due to discrete tax benefits recorded in the prior year.

Outlook

The company’s 2017 guidance is updated below (Table 8).

 

    

Table 8. 2017 Financial Outlook

Current

 

Prior

(Dollars in Billions, except per share data)

Guidance

 

Guidance

    

The Boeing Company

   

Revenue

$90.5 – 92.5

 

$90.5 – 92.5

    

GAAP Earnings Per Share

$11.20 – 11.40

 

$11.10 – 11.30

Core Earnings Per Share*

$9.90 – 10.10

 

$9.80 – 10.00

    

Operating Cash Flow

~$12.5

 

~$12.25

    

Commercial Airplanes

   

Deliveries

760 – 765

 

760 – 765

Revenue

$55.5 – 56.5

 

N/A

Operating Margin

9.0% – 9.5

 

N/A

    

Defense, Space & Security

   

Revenue

$20.5 – 21.5

 

N/A

Operating Margin

>10.5%

 

N/A

    

Global Services

   

      Revenue

$14.0 – 14.5

 

N/A

      Operating Margin

15.0% – 15.5

 

N/A

    

Boeing Capital

   

Portfolio Size

Stable

 

Stable

Revenue

~$0.3

 

~$0.3

Pre-Tax Earnings

~$0.08

 

~$0.08

    

Research & Development

~ $3.4

 

~ $3.6

Capital Expenditures

~ $2.0

 

~ $2.0

Pension Expense 1

~ $0.6

 

~ $0.6

Effective Tax Rate

~ 28.5%

 

~ 29.0%

 

 

1 Approximately ($1.0) billion is expected to be recorded in unallocated items and eliminations

*    Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”

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 unallocated pension and other postretirement benefit expense. 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 unallocated pension and other postretirement benefit expenseUnallocated pension and other postretirement benefit expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. 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 unallocated 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 page 14.

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 production rate increases across multiple commercial airline programs, 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) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital’s customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.

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:

  
   

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)

 
             
 

Nine months ended
September 30

 

Three months ended
September 30

(Dollars in millions, except per share data)

2017

 

2016

 

2017

 

2016

 

Sales of products

 

$60,484

  

$63,563

  

$21,825

  

$21,494

 

Sales of services

7,540

 

7,722

 

2,484

 

2,404

 

Total revenues

68,024

 

71,285

 

24,309

 

23,898

 
     

Cost of products

(49,856)

 

(55,117)

 

(18,050)

 

(17,907)

 

Cost of services

(5,730)

 

(6,163)

 

(1,910)

 

(1,983)

 

Boeing Capital interest expense

(53)

 

(46)

 

(27)

 

(14)

 

Total costs and expenses

(55,639)

 

(61,326)

 

(19,987)

 

(19,904)

 
 

12,385

 

9,959

 

4,322

 

3,994

 

Income from operating investments, net

169

 

220

 

49

 

69

 

General and administrative expense

(2,888)

 

(2,617)

 

(915)

 

(923)

 

Research and development expense, net

(2,418)

 

(3,901)

 

(767)

 

(857)

 

Loss on dispositions, net

  

(10)

   

(1)

 

Earnings from operations

7,248

 

3,651

 

2,689

 

2,282

 

Other income, net

94

 

41

 

45

 

2

 

Interest and debt expense

(267)

 

(227)

 

(87)

 

(81)

 

Earnings before income taxes

7,075

 

3,465

 

2,647

 

2,203

 

Income tax (expense)/benefit

(2,010)

 

(201)

 

(794)

 

76

 

Net earnings

 

$5,065

  

$3,264

  

$1,853

  

$2,279

 
     

Basic earnings per share

 

$8.37

  

$5.09

  

$3.10

  

$3.64

 
     

Diluted earnings per share

 

$8.27

  

$5.04

  

$3.06

  

$3.60

 
     

Cash dividends paid per share

 

$4.26

  

$3.27

  

$1.42

  

$1.09

 
     

Weighted average diluted shares (millions)

612.8

 

647.9

 

606.3

 

632.7

 

 

The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited) 

 
       

(Dollars in millions, except per share data)

September 30 
2017

 

December 31 
2016

 

Assets

  

Cash and cash equivalents

 

$8,569

  

$8,801

 

Short-term and other investments

1,463

 

1,228

 

Accounts receivable, net

10,644

 

8,832

 

Current portion of customer financing, net

435

 

428

 

Inventories, net of advances and progress billings

43,031

 

43,199

 

Total current assets

64,142

 

62,488

 

Customer financing, net

3,039

 

3,773

 

Property, plant and equipment, net of accumulated depreciation of $17,401 and $16,883

12,712

 

12,807

 

Goodwill

5,344

 

5,324

 

Acquired intangible assets, net

2,523

 

2,540

 

Deferred income taxes

298

 

332

 

Investments

1,270

 

1,317

 

Other assets, net of accumulated amortization of $509 and $497

1,679

 

1,416

 

Total assets

 

$91,007

  

$89,997

 

Liabilities and equity

  

Accounts payable

 

$12,718

  

$11,190

 

Accrued liabilities

14,008

 

14,691

 

Advances and billings in excess of related costs

26,695

 

23,869

 

Short-term debt and current portion of long-term debt

988

 

384

 

Total current liabilities

54,409

 

50,134

 

Deferred income taxes

2,884

 

1,338

 

Accrued retiree health care

5,826

 

5,916

 

Accrued pension plan liability, net

15,514

 

19,943

 

Other long-term liabilities

1,449

 

2,221

 

Long-term debt

9,780

 

9,568

 

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

6,754

 

4,762

 

Treasury stock, at cost – 414,910,219 and 395,109,568 shares

(41,745)

 

(36,097)

 

Retained earnings

44,052

 

40,714

 

Accumulated other comprehensive loss

(13,036)

 

(13,623)

 

Total shareholders’ equity

1,086

 

817

 

Noncontrolling interests

59

 

60

 

Total equity

1,145

 

877

 

Total liabilities and equity

 

$91,007

  

$89,997

 

 

The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 
       
 

Nine months ended
September 30

(Dollars in millions)

2017

 

2016

 

Cash flows – operating activities:

  

Net earnings

 

$5,065

  

$3,264

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

  

Non-cash items – 

  

Share-based plans expense

151

 

144

 

Depreciation and amortization

1,487

 

1,364

 

Investment/asset impairment charges, net

75

 

61

 

Customer financing valuation expense/(benefit)

4

 

(5)

 

Loss on dispositions, net

  

10

 

Other charges and credits, net

190

 

219

 

Changes in assets and liabilities – 

  

Accounts receivable

(1,983)

 

(517)

 

Inventories, net of advances and progress billings

254

 

4,334

 

Accounts payable

778

 

1,366

 

Accrued liabilities

112

 

82

 

Advances and billings in excess of related costs

2,828

 

(1,717)

 

Income taxes receivable, payable and deferred

1,465

 

(725)

 

Other long-term liabilities

25

 

(67)

 

Pension and other postretirement plans

(550)

 

144

 

Customer financing, net

635

 

(195)

 

Other

(96)

 

(95)

 

   Net cash provided by operating activities

10,440

 

7,667

 

Cash flows – investing activities:

  

Property, plant and equipment additions

(1,304)

 

(2,014)

 

Property, plant and equipment reductions

30

 

14

 

Contributions to investments

(2,847)

 

(928)

 

Proceeds from investments

2,612

 

956

 

Purchase of distribution rights

(131)

  

Other

4

 

8

 

   Net cash used by investing activities

(1,636)

 

(1,964)

 

Cash flows – financing activities:

  

New borrowings

876

 

1,323

 

Debt repayments

(83)

 

(836)

 

Repayments of distribution rights and other asset financing

  

(24)

 

Stock options exercised

291

 

192

 

Employee taxes on certain share-based payment arrangements

(118)

 

(83)

 

Common shares repurchased

(7,500)

 

(6,501)

 

Dividends paid

(2,575)

 

(2,084)

 

   Net cash used by financing activities

(9,109)

 

(8,013)

 

Effect of exchange rate changes on cash and cash equivalents

73

 

(6)

 

Net decrease in cash and cash equivalents

(232)

 

(2,316)

 

Cash and cash equivalents at beginning of year

8,801

 

11,302

 

Cash and cash equivalents at end of period

 

$8,569

  

$8,986

 

 

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

 
             
 

Nine months ended
September 30

 

Three months ended
September 30

(Dollars in millions)

2017

 

2016

 

2017

 

2016

 

Revenues:

    

Commercial Airplanes

 

$41,263

  

$43,630

  

$14,982

  

$15,200

 

Defense, Space & Security

15,520

 

17,281

 

5,470

 

5,751

 

Global Services

10,638

 

10,508

 

3,568

 

3,506

 

Boeing Capital

234

 

211

 

70

 

63

 

Unallocated items, eliminations and other

369

 

(345)

 

219

 

(622)

 

Total revenues

 

$68,024

  

$71,285

  

$24,309

  

$23,898

 

Earnings from operations:

    

Commercial Airplanes

 

$3,648

  

$804

  

$1,483

  

$1,293

 

Defense, Space & Security

1,670

 

1,443

 

559

 

564

 

Global Services

1,639

 

1,609

 

506

 

524

 

Boeing Capital

87

 

36

 

23

 

13

 

Segment operating profit

7,044

 

3,892

 

2,571

 

2,394

 

Unallocated items, eliminations and other

204

 

(241)

 

118

 

(112)

 

Earnings from operations

7,248

 

3,651

 

2,689

 

2,282

 

Other income, net

94

 

41

 

45

 

2

 

Interest and debt expense

(267)

 

(227)

 

(87)

 

(81)

 

Earnings before income taxes

7,075

 

3,465

 

2,647

 

2,203

 

Income tax (expense)/benefit

(2,010)

 

(201)

 

(794)

 

76

 

Net earnings

 

$5,065

  

$3,264

  

$1,853

  

$2,279

 
     

Research and development expense, net:

    

Commercial Airplanes

 

$1,755

  

$3,152

  

$538

  

$633

 

Defense, Space & Security

599

 

666

 

207

 

201

 

Global Services

101

 

126

 

38

 

41

 

Other

(37)

 

(43)

 

(16)

 

(18)

 

Total research and development expense, net

 

$2,418

  

$3,901

  

$767

  

$857

 
     

Unallocated items, eliminations and other

    

Share-based plans

 

($67)

  

($50)

  

($21)

  

($9)

 

Deferred compensation

(174)

 

(38)

 

(78)

 

(33)

 

Amortization of previously capitalized interest

(72)

 

(71)

 

(21)

 

(23)

 

Eliminations and other unallocated items

(437)

 

(333)

 

(78)

 

(135)

 

Sub-total (included in core operating earnings)

(750)

 

(492)

 

(198)

 

(200)

 

Pension

808

 

129

 

275

 

50

 

Postretirement

146

 

122

 

41

 

38

 

Total unallocated items, eliminations and other

 

$204

  

($241)

  

$118

  

($112)

 

The Boeing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)

Effective July 1, 2017, we now operate in four principal segments: Commercial Airplanes; Defense, Space & Security, Global Services and Boeing Capital. The prior period amounts have been reclassified to conform to the current period’s presentation as set forth below.

 

                   
 

Three months ended

(Dollars in millions)

06/30/17

 

03/31/17

 

12/31/16

 

09/30/16

 

06/30/16

 

03/31/16

 

Revenues:

      

Commercial Airplanes

 

$13,817

  

$12,464

  

$14,382

  

$15,200

  

$15,643

  

$12,787

 

Defense, Space & Security

5,198

 

4,852

 

5,282

 

5,751

 

5,394

 

6,136

 

Global Services

3,564

 

3,506

 

3,417

 

3,506

 

3,581

 

3,421

 

Boeing Capital

72

 

92

 

87

 

63

 

84

 

64

 

Unallocated items, eliminations and other

88

 

62

 

118

 

(622)

 

53

 

224

 

Total revenues

 

$22,739

  

$20,976

  

$23,286

  

$23,898

  

$24,755

  

$22,632

 

Earnings from operations:

      

Commercial Airplanes

 

$1,274

  

$891

  

$1,191

  

$1,293

  

($1,281)

  

$792

 

Defense, Space & Security

619

 

492

 

523

 

564

 

362

 

517

 

Global Services

564

 

569

 

568

 

524

 

539

 

546

 

Boeing Capital

25

 

39

 

23

 

13

 

18

 

5

 

Segment operating profit/(loss)

2,482

 

1,991

 

2,305

 

2,394

 

(362)

 

1,860

 

Unallocated items, eliminations and other

53

 

33

 

(122)

 

(112)

 

(57)

 

(72)

 

Earnings/(loss) from operations

2,535

 

2,024

 

2,183

 

2,282

 

(419)

 

1,788

 

Other income/(loss), net

27

 

22

 

(1)

 

2

 

13

 

26

 

Interest and debt expense

(93)

 

(87)

 

(79)

 

(81)

 

(73)

 

(73)

 

Earnings/(loss) before income taxes

2,469

 

1,959

 

2,103

 

2,203

 

(479)

 

1,741

 

Income tax (expense)/benefit

(708)

 

(508)

 

(472)

 

76

 

245

 

(522)

 

Net earnings/(loss)

 

$1,761

  

$1,451

  

$1,631

  

$2,279

  

($234)

  

$1,219

 
       

Research and development expense, net:

      

Commercial Airplanes

 

$592

  

$625

  

$554

  

$633

  

$1,860

  

$659

 

Defense, Space & Security

196

 

196

 

149

 

201

 

233

 

232

 

Global Services

35

 

28

 

27

 

41

 

47

 

38

 

Other

(10)

 

(11)

 

(4)

 

(18)

 

(13)

 

(12)

 

Total research and development expense, net

 

$813

  

$838

  

$726

  

$857

  

$2,127

  

$917

 

 

The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)

 

Deliveries

 

Nine months ended
September 30

 

Three months ended
September 30

 

Commercial Airplanes

 

2017

 

2016

  

2017

 

2016

 

737

 

381

 

368

  

145

 

120

 

747

 

8

(1)

8

 

(3)

4

 

5

(3)

767

 

7

 

10

  

2

 

5

 

777

 

58

 

73

  

16

 

22

 

787

 

100

 

104

  

35

 

36

 

Total

 

554

 

563

  

202

 

188

 

Note: Deliveries under operating lease are identified by parentheses.

        

Defense, Space & Security

       

AH-64 Apache (New)

 

8

 

25

  

3

 

10

 

AH-64 Apache (Remanufactured)

 

43

 

27

  

15

 

9

 

C-17 Globemaster III

  

4

      

CH-47 Chinook (New)

 

6

 

17

  

2

 

7

 

CH-47 Chinook (Renewed)

 

28

 

23

  

9

 

7

 

F-15 Models

 

11

 

11

  

4

 

4

 

F/A-18 Models

 

18

 

20

  

6

 

6

 

P-8 Models

 

14

 

13

  

5

 

4

 

Commercial and Civil Satellites

 

3

 

3

    

2

 

Military Satellites

   

2

    

1

 
           
           

Total backlog (Dollars in millions)

     

September 30 
2017

 

December 31
 2016

Commercial Airplanes

      

$412,185

 

 

$413,036

Defense, Space & Security

     

45,852

 

44,825

Global Services

     

16,251

 

15,631

Total backlog

      

$474,288

 

 

$473,492

        

Contractual backlog

      

$459,871

 

 

$458,277

Unobligated backlog

      

$14,417

 

 

$15,215

Total backlog

      

$474,288

 

 

$473,492

Workforce

     

142,300

 

150,500

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 6 of this release for additional information on the use of these non-GAAP financial measures.

 

              

(Dollars in millions, except per share data)

Third Quarter

 

Nine Months

 

Guidance

 

2017

2016

2017

2016

2017

Revenues

 

$24,309

  

$23,898

  

$68,024

  

$71,285

  
      

GAAP Earnings From Operations

 

$2,689

  

$2,282

  

$7,248

  

$3,651

  
      

Unallocated Pension Income

 

($275)

  

($50)

  

($808)

  

($129)

  

Unallocated Other Postretirement Benefit Income

 

($41)

  

($38)

  

($146)

  

($122)

  

Unallocated Pension and Other Postretirement Benefit Income

 

($316)

  

($88)

  

($954)

  

($251)

 

~($1,220)

Core Operating Earnings (non-GAAP)

 

$2,373

  

$2,194

  

$6,294

  

$3,400

  
          

GAAP Diluted Earnings Per Share

 

$3.06

  

$3.60

  

$8.27

  

$5.04

 

$11.20 – 11.40

Unallocated Pension Income

 

($0.45)

  

($0.08)

  

($1.31)

  

($0.20)

  

Unallocated Postretirement Benefit Income

 

($0.07)

  

($0.06)

  

($0.24)

  

($0.19)

 

($1.30)

Provision for deferred income taxes on adjustments (1)

 

$0.18

  

$0.05

  

$0.54

  

$0.14

  

Core Earnings Per Share (non-GAAP)

 

$2.72

  

$3.51

  

$7.26

  

$4.79

 

$9.90 – 10.10

      

Weighted Average Diluted Shares (millions)

606.3

 

632.7

 

612.8

 

647.9

 

~ 610

      
      
      

 

(1) The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments.

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