Boeing reports a first quarter loss

boeing 737 max family fltlr

Boeing issued this financial report for the first quarter:

First Quarter 2022

737 production and deliveries continue to increase; submitted 787 certification plan to the FAA
Launched 777-8 Freighter; now anticipate first 7779 delivery in 2025
Recorded charges on fixedprice defense development programs as well as for impacts of the war in Ukraine
Operating cash flow of ($3.2) billion; continue to expect positive cash flow for 2022
Revenue of $14.0 billion; GAAP loss per share of ($2.06) and core (non-GAAP)* loss per share of ($2.75)
Total backlog of $371 billion; including nearly 4,200 commercial airplanes

Table 1. Summary Financial Results

First Quarter

(Dollars in Millions, except per share data)

2022

2021

Change

Revenues

$13,991

$15,217

(8)%

GAAP

Loss From Operations

($1,169)

($83)

NM

Operating Margin

(8.4)%

(0.5)%

NM

Net Loss

($1,242)

($561)

NM

Loss Per Share

($2.06)

($0.92)

NM

Operating Cash Flow

($3,216)

($3,387)

NM

Non-GAAP*

Core Operating Loss

($1,452)

($353)

NM

Core Operating Margin

(10.4)%

(2.3)%

NM

Core Loss Per Share

($2.75)

($1.53)

NM

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

The Boeing Company reported first-quarter revenue of $14.0 billion, driven by lower defense volume and charges on fixed-price defense development programs, partially offset by commercial services volume. GAAP loss per share of ($2.06) and core loss per share (non-GAAP)* of ($2.75) also reflect $212 million of pre-tax charges for impacts of the war in Ukraine (Table 1). Boeing recorded operating cash flow of ($3.2) billion.

“While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” said Dave Calhoun, Boeing president and chief executive officer. “We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA. Despite the pressures on our defense and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production. Leading with safety and quality, we’re taking the right actions to drive stability throughout our operations, deliver on our commitments to customers and position Boeing for a sustainable future.”

Table 2. Cash Flow

First Quarter

(Millions)

2022

2021

Operating Cash Flow

($3,216)

($3,387)

Less Additions to Property, Plant & Equipment

($349)

($291)

Free Cash Flow*

($3,565)

($3,678)

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

Operating cash flow was ($3.2) billion in the quarter due to unfavorable receipt timing (Table 2).

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q1 22

Q4 21

Cash

$7.4

$8.0

Marketable Securities1

$4.9

$8.2

Total

$12.3

$16.2

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$56.2

$56.6

Boeing Capital, including intercompany loans

$1.5

$1.5

Total Consolidated Debt

$57.7

$58.1

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

Cash and investments in marketable securities decreased to $12.3 billion, compared to $16.2 billion at the beginning of the quarter, primarily driven by operating cash outflows and debt repayment (Table 3). The company has access to credit facilities of $14.7 billion which remain undrawn.

Total company backlog at quarter-end was $371 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

First Quarter

(Dollars in Millions)

2022

2021

Change

Commercial Airplanes Deliveries

95

77

23%

Revenues

$4,161

$4,269

(3)%

Loss from Operations

($859)

($856)

NM

Operating Margin

(20.6)%

(20.1)%

NM

Commercial Airplanes first-quarter revenue of $4.2 billion decreased slightly, primarily due to timing of wide-body deliveries, partially offset by higher 737 deliveries (Table 4). Operating margin of (20.6)% also reflects abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expense.

Boeing has nearly completed the global safe return to service of the 737 MAX and the fleet has flown more than one million total flight hours since late 2020. The 737 production rate continues to increase and is expected to increase to 31 airplanes per month during the second quarter.

On the 787, the company has submitted the certification plan to the FAA. Rework has been completed on the initial airplanes and the company continues to work closely with the FAA on timing of resuming deliveries. The program is producing at a very low rate and will continue to do so until deliveries resume, with an expected gradual return to five per month over time. The company continues to anticipate 787 abnormal costs of approximately $2 billion, with most being incurred by the end of 2023, including $312 million recorded in the quarter.

During the quarter, the company launched the 777-8 Freighter with an order from Qatar Airways. Delivery of the first 777-9 airplane is now expected in 2025, which reflects an updated assessment of the time required to meet certification requirements. To minimize inventory and the number of airplanes requiring change incorporation, the 777-9 production rate ramp is being adjusted, including a temporary pause through 2023. This will result in approximately $1.5 billion of abnormal costs beginning in the second quarter of this year and continuing until 777-9 production resumes. The 777 program is also leveraging the adjustment to the 777-9 production rate ramp to add 777 Freighter capacity starting in late 2023.

Commercial Airplanes delivered 95 airplanes during the quarter and backlog included nearly 4,200 airplanes valued at $291 billion.

Defense, Space & Security

Table 5. Defense, Space & Security

First Quarter

(Dollars in Millions)

2022

2021

Change

Revenues

$5,483

$7,185

(24)%

(Loss)/earnings from Operations

($929)

$405

NM

Operating Margin

(16.9)%

5.6%

NM

Defense, Space & Security first-quarter revenue decreased to $5.5 billion and first-quarter operating margin decreased to (16.9) percent, primarily driven by lower volume and charges on fixed-price development programs, including VC-25B and T-7A Red Hawk. The VC-25B program recorded a $660 million charge, primarily driven by higher supplier costs, higher costs to finalize technical requirements and schedule delays. The T-7A Red Hawk program recorded $367 million in charges, primarily driven by ongoing supplier negotiations impacted by supply chain constraints, COVID-19 and inflationary pressures.

During the quarter, Defense, Space & Security captured an award for 6 MH-47G Block II Chinook rotorcraft for U.S. Army Special Operations. Defense, Space & Security completed mission profile flights on the SB>1 DEFIANT and completed the 400th test flight on the T-7A Red Hawk. Also in the quarter, Defense, Space & Security began build of the first P-8A for the Royal New Zealand Air Force and delivered 41 aircraft.

Backlog at Defense, Space & Security was $60 billion, of which 33% percent represents orders from customers outside the U.S.

Global Services

Table 6. Global Services

First Quarter

(Dollars in Millions)

2022

2021

Change

Revenues

$4,314

$3,749

15%

Earnings from Operations

$632

$441

43%

Operating Margin

14.6%

11.8%

24%

Global Services first-quarter revenue increased to $4.3 billion and first-quarter operating margin increased to 14.6 percent primarily driven by higher commercial volume and favorable mix.

During the quarter, Global Services secured a fuel-saving digital solutions contract for Etihad Airways’ 787 fleet and was awarded a contract for KC-135 horizontal stabilizers from the U.S. Air Force. Global Services captured a 767 converted freighter order from Air Transport Services Group and also announced plans to create additional capacity for 767 converted freighters.

Additional Financial Information

Table 7. Additional Financial Information

First Quarter

(Dollars in Millions)

2022

2021

Revenues

Boeing Capital

$46

$60

Unallocated items, eliminations and other

($13)

($46)

(Loss)/Earnings from Operations

Boeing Capital

($36)

$21

FAS/CAS service cost adjustment

$283

$270

Other unallocated items and eliminations

($260)

($364)

Other income, net

$181

$190

Interest and debt expense

($630)

($679)

Effective tax rate

23.2%

1.9%

At quarter-end, Boeing Capital’s net portfolio balance was $1.6 billion. Earnings from operations at Boeing Capital decreased primarily due to a provision for losses related to the war in Ukraine. The change in loss from other unallocated items and eliminations was primarily due to decreased share-based plan expense and deferred compensation expense as compared to the first quarter 2021. The first quarter effective tax rate primarily reflects the tax benefit of pretax losses and realizable R&D tax credits.

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