Core EPS (non-GAAP)* rose 24 percent to $1.73 on strong operating performance; GAAP EPS of $1.44
- Revenue of $18.9 billion reflects higher deliveries on the 737 and 777 offset by lower 787 deliveries
- Backlog grew to a record $392 billion, including $20 billion of net orders during the quarter
- Cash and marketable securities of $11.8 billion provide strong liquidity
- 2013
financial and deliveries outlook reaffirmed
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 1.
Summary Financial Results |
|
First
Quarter
|
|
|
|||||||
|
(Dollars
in Millions, except per share data) |
|
2013
|
|
2012
|
|
Change
|
|||||
|
|
|
|
|
|
|
|
|||||
|
Revenues |
|
|
$18,893
|
|
|
|
$19,383
|
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-GAAP* |
|
|
|
|
|
|
|||||
|
Core
Operating Earnings |
|
|
$1,867
|
|
|
|
$1,773
|
|
|
5
%
|
|
|
Core
Operating Margin |
|
9.9%
|
|
|
9.1%
|
|
|
0.8 Pts |
|
||
|
Core
Earnings Per Share |
|
|
$1.73
|
|
|
|
$1.40
|
|
|
24
%
|
|
|
Operating
Cash Flow Before Pension Contributions |
|
|
$524
|
|
|
|
$837
|
|
|
(37)%
|
|
|
|
|
|
|
|
|
|
|||||
|
GAAP |
|
|
|
|
|
|
|||||
|
Earnings
From Operations |
|
|
$1,528
|
|
|
|
$1,565
|
|
|
(2)%
|
|
|
Operating
Margin |
|
8.1%
|
|
|
8.1%
|
|
|
0.0 Pts |
|
||
|
Net
Income |
|
|
$1,106
|
|
|
|
$923
|
|
|
20
%
|
|
|
Earnings
Per Share |
|
|
$1.44
|
|
|
|
$1.22
|
|
|
18
%
|
|
|
Operating
Cash Flow |
|
|
$524
|
|
|
|
$837
|
|
|
(37)%
|
|
|
* Non-GAAP
measures (core operating earnings, core operating margin and core
earnings per share) exclude certain components of pension and post
retirement benefit expense that the company believes are not
reflective of underlying business performance. Complete
definitions of Boeing's non-GAAP measures begin on page 6,
"Non-GAAP Measures Disclosures." |
The Boeing Company (NYSE: BA) reported first-quarter core earnings per share (non-GAAP) increased 24 percent* to $1.73, driven by strong performance across the company's businesses (Table 1). First-quarter 2013 results included the expected benefit of $0.19 per share for the 2012 research and development tax credit; first-quarter 2012 included a benefit of $0.11 per share related to a favorable court judgment on satellite litigation. First-quarter core operating earnings (non-GAAP) increased 14 percent* to $1.9 billion from the same period of the prior year when excluding the benefit of $131 million related to the favorable court judgment. First-quarter revenue was $18.9 billion, earnings from operations was $1.5 billion and earnings per share was $1.44. The company reaffirmed its 2013 financial and deliveries guidance.
"Strong core operating performance fueled by productivity gains and solid program execution drove higher company earnings and double-digit operating margins in both major businesses during the quarter," said Boeing Chairman, President and Chief Executive Officer Jim McNerney. "Commercial Airplanes worked around the clock to resolve the 787 battery issue while also successfully increasing production rates on the 737 and 777 programs. Defense, Space & Security continued to perform exceptionally well, meeting tough affordability goals while investing in future growth."
"Our first priority in the days ahead is to fully restore our customers' 787 fleets to service and resume production deliveries. Our outlook for the year is positive, and our financial and delivery guidance is reaffirmed as we remain focused on the profitable ramp up in commercial airplane production rates, disciplined execution of our development programs, and continued growth in core, adjacent and international defense and space markets."
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Table 2.
Cash Flow |
|
First
Quarter
|
||||||
|
(Millions) |
|
2013
|
|
2012
|
||||
|
Operating
Cash Flow Before Pension Contributions* |
|
|
$524
|
|
|
|
$837
|
|
|
Pension
Contributions |
|
—
|
|
|
—
|
|
||
|
Operating
Cash Flow |
|
|
$524
|
|
|
|
$837
|
|
|
Less Additions to
Property, Plant & Equipment |
|
|
($521)
|
|
|
|
($424)
|
|
|
Free Cash
Flow* |
|
|
$3
|
|
|
|
$413
|
|
Operating cash flow in the quarter was $0.5 billion, reflecting inventory build on the 787 program offset by timing of receipts and expenditures (Table 2).
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Table 3.
Cash, Marketable Securities and Debt Balances |
|
Quarter-End
|
||||||
|
(Billions) |
|
Q1
13
|
|
Q4
12
|
||||
|
Cash |
|
|
$8.3
|
|
|
|
$10.3
|
|
|
Marketable
Securities1 |
|
|
$3.5
|
|
|
|
$3.2
|
|
|
Total |
|
|
$11.8
|
|
|
|
$13.5
|
|
|
Debt
Balances: |
|
|
|
|
||||
|
The Boeing
Company |
|
|
$7.1
|
|
|
|
$7.7
|
|
|
Boeing Capital
Corporation |
|
|
$2.1
|
|
|
|
$2.7
|
|
|
Total
Consolidated Debt |
|
|
$9.2
|
|
|
|
$10.4
|
|
|
1 Marketable
securities consists primarily of time deposits due within one year
classified as "short-term investments." |
Cash and investments in marketable securities totaled $11.8 billion at quarter-end (Table 3), down from $13.5 billion at the beginning of the year, primarily due to the pay-down of maturing debt. Debt was $9.2 billion, down from $10.4 billion at year-end, due to the maturities.
Total company backlog at year-end was a record $392 billion, up from $390 billion at the beginning of the year, and included net orders for the quarter of $20 billion.
Segment Results
Commercial Airplanes
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4.
Commercial Airplanes Operating Results |
|
First
Quarter
|
|
|
|||||||
|
(Dollars
in Millions) |
|
2013
|
|
2012
|
|
Change
|
|||||
|
|
|
|
|
|
|
|
|||||
|
Commercial
Airplanes Deliveries |
|
137
|
|
|
137
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|||||
|
Revenues |
|
|
$10,690
|
|
|
|
$10,937
|
|
|
(2)%
|
|
|
Earnings
from Operations |
|
|
$1,219
|
|
|
|
$1,081
|
|
|
13
%
|
|
|
Operating
Margins |
|
11.4%
|
|
|
9.9%
|
|
|
1.5 Pts |
|
||
Boeing Commercial Airplanes first-quarter revenue decreased to $10.7 billion on delivery mix and lower services revenue. First-quarter operating margin improved to 11.4%, reflecting the delivery mix and lower R&D, partially offset by higher period costs (Table 4).
During the quarter, Commercial Airplanes delivered the first 777 aircraft produced at a record production rate of 8.3-per-month and reached a four-year contract extension with the Society of Professional Engineering Employees in Aerospace (SPEEA). In April, Commercial Airplanes delivered the first 737 produced at a record production rate of 38-per-month.
In April, approval was given by the Federal Aviation Administration (FAA) for airlines to begin the process of returning the 787 to service with an enhanced battery system. The company is committed to the safety of all of our airplanes and has worked diligently alongside authorities to further enhance the safety of the 787.
Commercial Airplanes booked 209 net orders during the quarter. Backlog remains strong with more than 4,400 airplanes valued at a record $324 billion.
Boeing Defense, Space & Security
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5.
Defense, Space & Security Operating Results |
First
Quarter
|
|
|
|||||||
|
(Dollars
in Millions) |
2013
|
|
2012
|
|
Change
|
|||||
|
Revenues |
|
|
|
|
|
|||||
|
Boeing Military
Aircraft |
|
$4,109
|
|
|
|
$4,222
|
|
|
(3)%
|
|
|
Network &
Space Systems |
|
$1,960
|
|
|
|
$1,872
|
|
|
5
%
|
|
|
Global Services &
Support |
|
$2,041
|
|
|
|
$2,139
|
|
|
(5)%
|
|
|
Total BDS
Revenues |
|
$8,110
|
|
|
|
$8,233
|
|
|
(1)%
|
|
|
Earnings
from Operations |
|
|
|
|
|
|||||
|
Boeing Military
Aircraft |
|
$430
|
|
|
|
$399
|
|
|
8
%
|
|
|
Network &
Space Systems |
|
$156
|
|
|
|
$109
|
|
|
43
%
|
|
|
Global Services &
Support |
|
$246
|
|
|
|
$234
|
|
|
5
%
|
|
|
Total BDS
Earnings from Operations |
|
$832
|
|
|
|
$742
|
|
|
12
%
|
|
|
Operating
Margins |
10.3%
|
|
|
9.0%
|
|
|
1.3 Pts |
|
||
Boeing Defense, Space & Security's (BDS) first-quarter revenue was $8.1 billion, while operating margin was 10.3 percent (Table 5).
Boeing Military Aircraft (BMA) first-quarter revenue was $4.1 billion, primarily reflecting lower revenue on the F-15 program, partially offset by higher C-17 and Apache deliveries. Operating margin increased to 10.5 percent, due to delivery mix. During the quarter, BMA delivered the first Indian Air Force C-17 to flight test and completed the second Phantom Eye flight.
Network & Space Systems (N&SS) first-quarter revenue increased to $2.0 billion, primarily driven by higher volume in satellite programs as well as the Space Launch System program. Operating margin increased to 8.0 percent, reflecting the increased volume and mix in satellite programs. During the quarter, N&SS was awarded a contract in the small satellite business and had a successful flight test of the Ground-based Midcourse Defense (GMD) system.
Global Services & Support (GS&S) first-quarter revenue was $2.0 billion, reflecting lower volume in integrated logistics. Operating margin increased to 12.1 percent, reflecting improved performance in maintenance, modification and upgrades.
Backlog at BDS was $68 billion, of which 42 percent represents orders with international customers.
Additional Financial Information
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Table 6.
Additional Financial Information |
|
First
Quarter
|
||||||
|
(Dollars
in Millions) |
|
2013
|
|
2012
|
||||
|
Revenues |
|
|
|
|
||||
|
Boeing Capital
Corporation |
|
|
$105
|
|
|
|
$125
|
|
|
Other segment |
|
|
$27
|
|
|
|
$24
|
|
|
Unallocated items
and eliminations |
|
|
($39)
|
|
|
|
$64
|
|
|
Earnings
from Operations |
|
|
|
|
||||
|
Boeing Capital
Corporation |
|
|
$44
|
|
|
|
$33
|
|
|
Other segment
expense |
|
|
($58)
|
|
|
|
($79)
|
|
|
Unallocated
items and eliminations included in core operating earnings |
|
|
($170)
|
|
|
|
($4)
|
|
|
Unallocated
pension/postretirement expense |
|
|
($339)
|
|
|
|
($208)
|
|
|
Other
income, net |
|
|
$9
|
|
|
|
$12
|
|
|
Interest
and debt expense |
|
|
($99)
|
|
|
|
($114)
|
|
|
Effective
tax rate |
|
23.1%
|
|
|
36.8%
|
|
||
At quarter-end, Boeing Capital Corporation's (BCC) net portfolio balance was $4.2 billion and debt-to-equity ratio was 5.0-to-1.
Unallocated items and eliminations in the first quarter of 2012 included a $131 million favorable court judgment on satellite litigation. Total pension expense for the first quarter was $791 million up from $655 million in the same period last year.
The company's income tax expense was $332 million in the quarter, compared to $539 million in the same period of last year, as the expected $145 million benefit for the 2012 research and development credit was reflected in the first quarter of 2013.
Outlook
The company's 2013 financial guidance (Table 7) is reaffirmed and reflects continued strong core performance, generating an expected 5 percent increase in core earnings per share (non-GAAP).
|
|
|
|
|
|
|
Table 7.
Financial Outlook |
|
|
(Dollars
in Billions, except per share data) |
2013
|
|
|
|
|
The
Boeing Company |
|
|
Revenue |
$82
- 85
|
|
Core
Earnings Per Share* |
$6.10
- 6.30
|
|
Earnings
Per Share |
$5.00
- 5.20
|
|
Operating
Cash Flow Before Pension Contributions* |
>
$8
|
|
Operating Cash
Flow 1 |
>
$6.5
|
|
|
|
|
Boeing
Commercial Airplanes |
|
|
Deliveries 2 |
635
- 645
|
|
Revenue |
$51
- 53
|
|
Operating
Margin |
~
9.5%
|
|
|
|
|
Boeing
Defense, Space & Security |
|
|
Revenue |
|
|
Boeing Military
Aircraft |
~$15.5
|
|
Network &
Space Systems |
~$7.3
|
|
Global Services &
Support |
~$8.2
|
|
|
|
|
Total BDS
Revenue |
$30.5
- 31.5
|
|
|
|
|
Operating
Margin |
|
|
Boeing Military
Aircraft |
~
9.0%
|
|
Network &
Space Systems |
~
7.5%
|
|
Global Services &
Support |
~
10.5%
|
|
|
|
|
Total BDS
Operating Margin |
>
9.0%
|
|
|
|
|
Boeing
Capital Corporation |
|
|
Portfolio
Size |
Lower
|
|
Revenue |
~
$0.3
|
|
Pre-Tax
Earnings |
~
$0.05
|
|
|
|
|
Research &
Development |
~
$3.4
|
|
Capital
Expenditures |
$2.3
- $2.5
|
|
Pension Expense 3 |
~
$3.2
|
|
Effective Tax
Rate |
~
30%
|
|
1
|
After
discretionary cash pension contributions of $1.5 billion and
assuming new aircraft financings under $0.5 billion. |
|
2
|
Assumes
greater than 60 787 deliveries. |
|
3
|
Approximately
$1.4 billion is expected to be recorded in unallocated items and
eliminations. |
|
* |
Non-GAAP
measures. Complete definitions of Boeing's use of non-GAAP
measures begin on page 7, "Non-GAAP Measures Disclosures." |
