| Table 1. Summary Financial Results | Fourth Quarter | Full Year | |||||||||
| (Dollars in Millions, except per share data) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||
| Revenues | $17,911 | $28,341 | (37)% | $76,559 | $101,127 | (24)% | |||||
| GAAP | |||||||||||
| (Loss)/Earnings From Operations | ($2,204) | $4,175 | NM | ($1,975) | $11,987 | NM | |||||
| Operating Margin | (12.3)% | 14.7% | NM | (2.6)% | 11.9% | NM | |||||
| Net (Loss)/Earnings | ($1,010) | $3,424 | NM | ($636) | $10,460 | NM | |||||
| (Loss)/Earnings Per Share | ($1.79) | $5.93 | NM | ($1.12) | $17.85 | NM | |||||
| Operating Cash Flow | ($2,220) | $2,947 | NM | ($2,446) | $15,322 | NM | |||||
| Non-GAAP* | |||||||||||
| Core Operating (Loss)/Earnings | ($2,526) | $3,867 | NM | ($3,390) | $10,660 | NM | |||||
| Core Operating Margin | (14.1)% | 13.6% | NM | (4.4)% | 10.5% | NM | |||||
| Core (Loss)/Earnings Per Share | ($2.33) | $5.48 | NM | ($3.47) | $16.01 | NM | |||||
| *Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.” |
The Boeing Company reported fourth-quarter revenue of $17.9 billion, GAAP loss per share of ($1.79) and core loss per share (non-GAAP)* of ($2.33), primarily reflecting the impacts of the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($2.2) billion and paid $1.2 billion of dividends.
“We recognize we have a lot of work to do,” said Boeing President and Chief Executive Officer David Calhoun. “We are focused on returning the 737 MAX to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. We are committed to transparency and excellence in everything we do. Safety will underwrite every decision, every action and every step we take as we move forward. Fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process.”
| Table 2. Cash Flow | Fourth Quarter | Full Year | |||||
| (Millions) | 2019 | 2018 | 2019 | 2018 | |||
| Operating Cash Flow | ($2,220) | $2,947 | ($2,446) | $15,322 | |||
| Less Additions to Property, Plant & Equipment | ($447) | ($495) | ($1,834) | ($1,722) | |||
| Free Cash Flow* | ($2,667) | $2,452 | ($4,280) | $13,600 | |||
| *Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.” |
Operating cash flow was ($2.2) billion in the quarter, primarily reflecting the impact of the 737 MAX grounding as well as timing of receipts and expenditures (Table 2). During the quarter, the company paid $1.2 billion of dividends.
| Table 3. Cash, Marketable Securities and Debt Balances | Quarter-End | |||
| (Billions) | Q4 19 | Q3 19 | ||
| Cash | $9.5 | $9.8 | ||
| Marketable Securities1 | $0.5 | $1.1 | ||
| Total | $10.0 | $10.9 | ||
| Debt Balances: | ||||
| The Boeing Company, net of intercompany loans to BCC | $25.3 | $22.8 | ||
| Boeing Capital, including intercompany loans | $2.0 | $1.9 | ||
| Total Consolidated Debt | $27.3 | $24.7 | ||
| 1 Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.” |
Cash and investments in marketable securities totalled $10.0 billion, compared to $10.9 billion at the beginning of the quarter (Table 3). Debt was $27.3 billion, up from $24.7 billion at the beginning of the quarter primarily due to increased commercial paper borrowings.
Total company backlog at quarter-end was $463 billion and included net orders for the quarter of $13 billion.
Segment Results
Commercial Airplanes
| Table 4. Commercial Airplanes | Fourth Quarter | Full Year | |||||||||
| (Dollars in Millions) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||
| Commercial Airplanes Deliveries | 79 | 238 | (67)% | 380 | 806 | (53)% | |||||
| Revenues | $7,462 | $16,531 | (55)% | $32,255 | $57,499 | (44)% | |||||
| (Loss)/Earnings from Operations | ($2,844) | $2,600 | NM | ($6,657) | $7,830 | NM | |||||
| Operating Margin | (38.1)% | 15.7% | NM | (20.6)% | 13.6% | NM | |||||
Commercial Airplanes fourth-quarter revenue was $7.5 billion and fourth-quarter operating margin decreased to (38.1) percent reflecting lower 737 deliveries and an additional pre-tax charge of $2.6 billion related to estimated potential concessions and other considerations to customers related to the 737 MAX grounding (Table 4). The estimated costs to produce 737 aircraft included in the accounting quantity increased by $2.6 billion during the quarter, primarily to reflect updated production and delivery assumptions. In addition, the suspension of 737 MAX production and a gradual resumption of production at low production rates will result in approximately $4 billion of abnormal production costs that will be expensed as incurred, primarily in 2020.
Commercial Airplanes delivered 79 aeroplanes during the quarter, including 45 787’s, and captured orders for 30 737 MAX aircraft at the Dubai Air Show and 2 777 freighters for Lufthansa. The 787 programme also booked 36 net orders in the quarter. As previously announced, the 787 production rate will be reduced from the current rate of 14 aeroplanes per month to 12 aeroplanes per month in late 2020. Based on the current environment and near-term market outlook, the production rate is expected to be further adjusted to 10 aeroplanes per month in early 2021, and return to 12 aeroplanes per month in 2023. The first flight of the 777X was completed on January 25, and the first delivery is targeted for 2021.
Commercial Airplanes backlog included over 5,400 aeroplanes valued at $377 billion.
Defense, Space & Security
| Table 5. Defense, Space & Security | Fourth Quarter | Full Year | |||||||||
| (Dollars in Millions) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||
| Revenues | $5,962 | $6,874 | (13)% | $26,227 | $26,392 | (1%) | |||||
| Earnings from Operations | $31 | $771 | (96)% | $2,608 | $1,657 | 57% | |||||
| Operating Margin | 0.5% | 11.2% | (10.7) Pts | 9.9% | 6.3% | 3.6 Pts | |||||
Defense, Space & Security fourth-quarter revenue decreased to $6.0 billion primarily driven by lower volume across the portfolio as well as the impact of a Commercial Crew charge (Table 5). Fourth-quarter operating margin decreased to 0.5 percent due to a $410 million pre-tax Commercial Crew charge primarily to provision for an additional uncrewed mission for the Commercial Crew program, performance and mix. NASA is evaluating the data received during the December 2019 mission to determine if another uncrewed mission is required.
During the quarter, Defense, Space & Security received an award for 10 Space Launch System core stages and up to 8 Exploration Upper Stages. Defense, Space & Security also received contracts for the remanufacture of 47 AH-64E Apache helicopters for three countries and to upgrade the NATO Airborne Warning & Control System fleet. Significant milestones achieved during the quarter included the delivery of the first modified MV-22 Osprey to the U.S. Marine Corps and delivery of the first P-8A Poseidon aircraft to the United Kingdom Royal Air Force. Defense, Space & Security also conducted a Commercial Crew spacecraft uncrewed Orbital Flight Test.
Backlog at Defense, Space & Security was $64 billion, of which 29 percent represents orders from customers outside the U.S.
Global Services
| Table 6. Global Services | Fourth Quarter | Full Year | |||||||||
| (Dollars in Millions) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||
| Revenues | $4,648 | $4,908 | (5)% | $18,468 | $17,056 | 8% | |||||
| Earnings from Operations | $684 | $737 | (7)% | $2,697 | $2,536 | 6% | |||||
| Operating Margin | 14.7% | 15.0% | (0.3) Pts | 14.6% | 14.9% | (0.3) Pts | |||||
Global Services fourth-quarter revenue was $4.6 billion, primarily driven by lower commercial services volume (Table 6). Fourth-quarter operating margin decreased to 14.7 percent primarily due to a charge related to the retirement of the Aviall brand and mix of products and services, partially offset by a gain on divestiture.
During the quarter, Global Services was awarded V-22 support contracts for Japan and the U.S. and AH-64 and CH-47 global support for the U.S. Army. Global Services signed a multi-year Landing Gear Exchange services agreement with LATAM Airlines Group and a 5-year digital navigation renewal agreement with Saudi Arabian Airlines. Global Services also expanded its digital offerings by launching ForeFlight Dispatch and signed a contract with Flexjet to be the inaugural customer.
Additional Financial Information
| Table 7. Additional Financial Information | Fourth Quarter | Full Year | |||||
| (Dollars in Millions) | 2019 | 2018 | 2019 | 2018 | |||
| Revenues | |||||||
| Boeing Capital | $37 | $60 | $244 | $274 | |||
| Unallocated items, eliminations and other | ($198) | ($32) | ($635) | ($94) | |||
| Earnings from Operations | |||||||
| Boeing Capital | ($58) | $8 | $28 | $79 | |||
| FAS/CAS service cost adjustment | $322 | $308 | $1,415 | $1,327 | |||
| Other unallocated items and eliminations | ($339) | ($249) | ($2,066) | ($1,442) | |||
| Other income, net | $104 | $29 | $438 | $92 | |||
| Interest and debt expense | ($242) | ($158) | ($722) | ($475) | |||
| Effective tax rate | 56.9% | 15.4% | 71.8% | 9.9% | |||
At quarter-end, Boeing Capital’s net portfolio balance was $2.3 billion. Revenue in other unallocated items and eliminations decreased primarily due to the timing of eliminations for intercompany aircraft deliveries. The change in earnings from other unallocated items and eliminations is primarily due to higher deferred compensation expense and increased enterprise research and development investment. Interest and debt expense increased due to higher debt balances. The fourth quarter 2019 effective tax rate reflects a $371 million tax benefit related to the settlement of state tax audits as well as the impact of pre-tax losses.
CHICAGO, Jan. 29, 2020 /PRNewswire/
This post was published on 29 January 2020 15:37
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