CHICAGO, July 22, 2015 /PRNewswire/ —

 

Table 1. Summary

Financial Results        Second Quarter            First Half

(Dollars in Millions,

except per share

data)                    2015     2014     Change  2015     2014     Change

 

Revenues                 $24,543  $22,045  11%     $46,692  $42,510  10%

 

Non-GAAP*

———————-

Core Operating Earnings  $1,713   $1,991   (14)%   $3,845   $4,086   (6)%

                                           (2.0)                     (1.4)

Core Operating Margin    7.0%     9.0%     Pts     8.2%     9.6%     Pts

Core Earnings Per Share  $1.62    $2.42    (33)%   $3.59    $4.16    (14)%

GAAP

———————-

Earnings From

 Operations              $1,683   $1,787   (6)%    $3,702   $3,329   11%

                                           (1.2)                     0.1

Operating Margin         6.9%     8.1%     Pts     7.9%     7.8%     Pts

Net Earnings             $1,110   $1,653   (33)%   $2,446   $2,618   (7)%

Earnings Per Share       $1.59    $2.24    (29)%   $3.46    $3.50    (1)%

Operating Cash Flow      $3,297   $1,809   82%     $3,385   $2,921   16%

 

 

* 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 second-quarter revenue increased 11 percent to $24.5 billion on record commercial deliveries (Table 1). Second quarter 2015 results included the previously announced $536 million after-tax charge ($0.77 per share) on the KC-46 Tanker program reflecting higher estimated costs. Core earnings per share (non-GAAP)* guidance for 2015 has been adjusted to between $7.70 and $7.90 per share, from $8.20 and $8.40, to reflect the impact of the second quarter 2015 KC-46 Tanker charge ($0.77 per share), partially offset by strong performance ($0.27 per share). GAAP earnings per share has been adjusted to between $7.60 and $7.80, from $8.10 and $8.30.

“Record commercial airplane deliveries to customers worldwide drove solid revenue growth, and the strength of our overall portfolio and diligent focus produced significant operating cash flow during the quarter,” said Boeing President and Chief Executive Officer Dennis Muilenburg. “Strong operating performance across our commercial and defense production programs partially offset the tanker charge and enabled us to maintain our commitments to return cash to our shareholders and invest in innovation and our people.”

“Overall, our outlook for the second half of the year remains positive. On the tanker program, we are investing the necessary resources to keep this vitally important program on schedule for our customer. We have a clear understanding of the work to be done and we are confident that the long-term financial value of the program will reward our additional investment.”

“With our sustained focus on productivity and growth, we will continue to profitably deliver on our large and diverse backlog, capture new orders, and deliver increasing value to all of our stakeholders.”

 

 

Table 2. Cash

Flow               Second Quarter     First Half

(Millions)         2015      2014     2015      2014

Operating Cash

 Flow               $3,297   $1,809   $3,385    $2,921

Less Additions to

 Property, Plant &

 Equipment          ($692)   ($449)   ($1,266)  ($946)

Free Cash Flow*     $2,605   $1,360   $2,119    $1,975

 

Operating cash flow in the quarter was $3.3 billion, reflecting commercial airplane production rates and strong operating performance (Table 2). During the quarter, the company repurchased 14 million shares for $2.0 billion, leaving $7.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. 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)                                         Q2 15     Q1 15

Cash                                                $9.1     $8.6

Marketable Securities(1)                            $0.5     $1.0

Total                                               $9.6     $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 $9.6 billion and debt totaled $9.0 billion, both unchanged from the beginning of the quarter (Table 3).

Total company backlog at quarter-end was $489 billion, down from $495 billion at the beginning of the quarter, and included net orders for the quarter of $18 billion.

Segment Results

Commercial Airplanes

 

 

Table 4. Commercial

Airplanes                Second Quarter            First Half

(Dollars in Millions)    2015     2014     Change  2015     2014     Change

 

Commercial Airplanes

 Deliveries              197      181      9%      381      342      11%

 

Revenues                 $16,877  $14,304  18%     $32,258  $27,041  19%

Earnings from

 Operations              $1,206   $1,550   (22)%   $2,823   $3,052   (8) %

                                           (3.7)                     (2.5)

Operating Margin         7.1%     10.8%    Pts     8.8%     11.3%    Pts

 

Commercial Airplanes second-quarter revenue increased 18 percent to $16.9 billion on higher delivery volume and mix (Table 4). Second-quarter operating margin was 7.1 percent, reflecting the previously announced $513 million pre-tax charge on the KC-46 Tanker program and the dilutive impact of higher 787 and 747 deliveries partially offset by strong performance on production programs.

During the quarter, Commercial Airplanes captured orders for 116 737 MAX airplanes. The 737 program has won over 2,800 firm orders for the 737 MAX since launch. Also during the quarter, the company started assembly of the first 737 MAX airplane and the 787-10 program completed its Critical Design Review which indicated the program’s design is sound and development is on schedule.

Commercial Airplanes booked 171 net orders during the quarter. Backlog remains strong with nearly 5,700 airplanes valued at $431 billion.

Defense, Space & Security

 

Table 5. Defense,

Space & Security         Second Quarter           First Half

(Dollars in Millions)    2015    2014     Change  2015     2014     Change

Revenues(1)

Boeing Military

 Aircraft                $3,488  $3,520   (1)%    $6,232   $6,975   (11)%

Network & Space Systems  $1,938  $1,920   1%      $3,670   $3,796   (3)%

Global Services &

 Support                 $2,118  $2,307   (8)%    $4,351   $4,609   (6)%

Total BDS Revenues       $7,544  $7,747   (3)%    $14,253  $15,380  (7)%

Earnings from

Operations(1)

Boeing Military

 Aircraft                $123    $164     (25)%   $384     $496     (23)%

Network & Space Systems  $151    $150     1%      $318     $318     –%

Global Services &

 Support                 $272    $268     1%      $587     $546     8%

Total BDS Earnings from

 Operations              $546    $582     (6)%    $1,289   $1,360   (5)%

                                          (0.3)                     0.2

Operating Margin         7.2%    7.5%     Pts     9.0%     8.8%     Pts

 

 

 

(1) During the first quarter of 2015, certain programs were realigned between

Boeing Military Aircraft and Global Services & Support.

 

Defense, Space & Security’s second-quarter revenue was $7.5 billion. Second quarter operating margin was 7.2 percent, reflecting the previously announced $322 million pre-tax charge recorded at BMA on the KC-46 Tanker program partially offset by strong performance on production programs and mix (Table 5).

Boeing Military Aircraft (BMA) second-quarter revenue was $3.5 billion, reflecting planned timing of deliveries and mix. Operating margin was 3.5 percent, reflecting the KC-46 Tanker program charge partially offset by strong performance on production programs. During the quarter, BMA was awarded contracts for six C-17 Globemaster III airlifters.

Network & Space Systems (N&SS) second-quarter revenue was $1.9 billion and operating margin was unchanged at 7.8 percent. During the quarter, NASA awarded Boeing the first ever commercial contract for a human spaceflight mission as part of the existing Commercial Crew contract.

Global Services & Support (GS&S) second-quarter revenue was $2.1 billion, reflecting lower volume in Aircraft Modernization and Sustainment. Operating margin increased to 12.8 percent on improved program mix. During the quarter, GS&S was awarded an F-15 international services contract extension.

Backlog at Defense, Space & Security was $58 billion, of which 39 percent represents orders from international customers.

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22 Jul 2015 07:30 EDT Press Release: Boeing Reports Second-Quarter -2-

Additional Financial Information

 

 

Table 6. Additional

Financial Information         Second Quarter    First Half

(Dollars in Millions)         2015     2014     2015    2014

Revenues

Boeing Capital                $115     $90      $201    $172

Unallocated items,

 eliminations and other       $7       ($96)    ($20)   ($83)

Earnings from Operations

Boeing Capital                $11      $33      $31     $77

Unallocated

 pension/postretirement       ($30)    ($204)   ($143)  ($757)

Other unallocated items and

 eliminations                 ($50)    ($174)   ($298)  ($403)

Other income, net             $15      $11      $3      $20

Interest and debt expense     ($75)    ($81)    ($136)  ($173)

Effective tax rate            31.6%    3.7%     31.5%   17.6%

 

At quarter-end, Boeing Capital’s net portfolio balance was $3.3 billion, down from $3.4 billion at the beginning of the quarter (Table 6). Total pension expense for the second quarter was $523 million, down from $693 million in the same period of the prior year. Other unallocated items and eliminations totaled $50 million at quarter end, down from $174 million in the same period of the prior year, primarily due to lower elimination of intercompany profit and deferred compensation expense. The company’s effective income tax rate was 31.6 percent at quarter end, up from 3.7 percent in the same period of the prior year. The second quarter 2014 effective income tax rate included $524 million in tax benefits.

Outlook

The company’s 2015 financial and delivery guidance (Table 7) reflects the impact of the KC-46 Tanker charge and 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                                          $94.5 – 96.5  $94.5 – 96.5

Core Earnings Per Share*                         $7.70 – 7.90  $8.20 – 8.40

GAAP Earnings Per Share                          $7.60 – 7.80  $8.10 – 8.30

Operating Cash Flow                              > $9          > $9

 

Commercial Airplanes

Deliveries                                       750 – 755     750 – 755

Revenue                                          $64.5 – 65.5  $64.5 – 65.5

Operating Margin                                 9.0%         9.5% – 10.0%

 

Defense, Space & Security (revised for business

realignment)

Revenue

Boeing Military Aircraft                         $12.5        $12.5

Network & Space Systems                          $8.0         $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%           9.5%

Network & Space Systems                          9.0%         9.0%

Global Services & Support                        11.5%        11.0%

 

Total BDS Operating Margin                       9.5%         9.75% – 10.0%

 

Boeing Capital

Portfolio Size                                   Stable        Stable

Revenue                                          $0.3         $0.3

Pre-Tax Earnings                                 $0.05        $0.05

 

Research & Development                            $3.5         $3.5

Capital Expenditures                              $2.8         $2.8

Pension Expense (1)                               $2.1         $2.1

Effective Tax Rate (2)                            29.0%        30.5%

 

 

 

(1)   Approximately $0.3 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.”