Boeing Reports First-Quarter Results and Reaffirms 2011 Guidance

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Boeing Reports First-Quarter Results and Reaffirms 2011 Guidance

Boeing Reports First-Quarter Results and Reaffirms 2011 Guidance

PR Newswire

CHICAGO, April 27, 2011 /PRNewswire/ --

  • Earnings per share of $0.78 on revenue of $14.9 billion
  • Backlog grew to $329 billion, including $23 billion in orders during the quarter
  • Operating cash flow of ($1.0) billion reflects delivery timing and continued investment in development programs
  • Cash and marketable securities of $7.8 billion provide strong liquidity
  • 2011 financial and deliveries outlook reaffirmed

Table 1.  Summary Financial Results





First Quarter

Change

(Dollars in Millions, except per share data)

2011

2010





Revenues

$14,910

$15,216

(2%)

Earnings From Operations

$1,000

$1,174

(15%)

Operating Margin

6.7%

7.7%

(1.0)Pts

Net Income

$586

$519

13%

Earnings per Share

$0.78

$0.70

11%

Operating Cash Flow

($953)

($285)

NM



The Boeing Company (NYSE: BA) reported first-quarter net income of $0.6 billion, or $0.78 per share, on revenue of $14.9 billion.  Operating margin of 6.7 percent reflects strong core performance across the company's businesses on expected lower volumes and higher pension expense.  The year-ago quarter included a $0.20 per share tax charge on health care legislation (Table 1).  The company also reaffirmed its 2011 revenue, earnings per share and operating cash flow outlook.

"We're off to a good start in an important year for our company," said Jim McNerney, Boeing chairman, president and chief executive officer.  "We delivered strong operating performance, made significant progress on 787 and 747-8 flight testing, and scored a major win on the U.S. Air Force Tanker program.  Our outlook remains positive, and our people are focused on meeting customer commitments, driving productivity and competitiveness gains, and capturing growth opportunities in our Commercial Airplanes and Defense, Space & Security businesses."

Table 2.  Cash Flow




First Quarter

(Millions)

2011

2010




Operating Cash Flow

($953)

($285)

  Less Additions to Property, Plant & Equipment

($417)

($186)

Free Cash Flow*

($1,370)

($471)

* Non-GAAP measure.  A complete definition and reconciliation of Boeing's use of non-GAAP measures,

 identified by an asterisk (*), is found on page 7, "Non-GAAP Measure Disclosure."



Boeing's quarterly operating cash flow was ($1.0) billion on the expected lower volumes and continued investment in development programs.  Free cash flow* was ($1.4) billion in the quarter (Table 2).

Table 3.  Cash, Marketable Securities and Debt Balances




Quarter-End

(Billions)

1Q11

4Q10




Cash

$5.7

$5.4

Marketable Securities(1)

$2.1

$5.1

  Total

$7.8

$10.5




Debt Balances:



The Boeing Company

$9.0

$9.0

Boeing Capital Corporation

$2.7

$3.4

  Total Consolidated Debt

$11.7

$12.4

(1) Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."



Cash and investments in marketable securities totaled $7.8 billion at quarter-end (Table 3), down from $10.5 billion at year-end.  Debt was $11.7 billion, down from $12.4 billion at year-end, primarily due to Boeing Capital Corporation maturities.  

Total company backlog at quarter-end was $329 billion, up from $321 billion at year-end.  Orders for the quarter were $23 billion and included a strong Commercial order mix, the U.S. Air Force KC-46A Tanker contract and the U.S. Navy P-8A low-rate initial production contract.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes Operating Results




First Quarter

Change

(Dollars in Millions)

2011

2010





Commercial Airplanes Deliveries

104

108

(4%)





Revenues

$7,118

$7,468

(5%)

Earnings from Operations

$509

$679

(25%)





Operating Margins

7.2%

9.1%

(1.9)Pts



Boeing Commercial Airplanes first-quarter revenue decreased by 5 percent to $7.1 billion on planned lower 777 deliveries.  Operating margin was 7.2 percent, reflecting the lower deliveries and higher R&D (Table 4).  

Flight testing on the 787 program continued during the quarter, surpassing 3,500 hours on 1,250 flights.  First delivery is expected in the third quarter of 2011. Total firm orders for the 787 at quarter-end were 835 airplanes from 56 customers.  

The 747-8 program flight test also progressed during the quarter, surpassing 2,500 hours on 900 flights.  First flight of the 747-8 Intercontinental was achieved in March.  Delivery of the first 747-8 Freighter is planned for mid-2011.

Commercial Airplanes booked 153 gross orders during the quarter while 47 orders were removed from its order book, bringing net orders to 106, up from the year-ago period when net orders were 83 airplanes.  Backlog remains strong with over 3,400 airplanes valued at $263 billion.

Boeing Defense, Space & Security

Table 5.  Defense, Space & Security Operating Results





First Quarter

Change

(Dollars in Millions)

2011

2010





Revenues




  Boeing Military Aircraft

$3,392

$3,241

5%

  Network & Space Systems

$2,349

$2,323

1%

  Global Services & Support

$1,876

$2,049

(8%)

Total BDS Revenues

$7,617

$7,613

0%





Earnings from Operations




  Boeing Military Aircraft

$369

$270

37%

  Network & Space Systems

$143

$174

(18%)

  Global Services & Support

$159

$220

(28%)

Total BDS Earnings from Operations

$671

$664

1%





Operating Margins

8.8%

8.7%

               0.1 Pts



Boeing Defense, Space & Security's (BDS) first-quarter revenue was $7.6 billion, while operating margin was 8.8 percent (Table 5).

Boeing Military Aircraft (BMA) first-quarter revenue increased by $0.2 billion to $3.4 billion, due to higher deliveries.  Operating margin was 10.9 percent, reflecting improved performance and mix in Global Strike programs and lower R&D.  During the quarter, BMA completed full scale static testing of P-8A and achieved first flight on the F-15 radar modernization program.

Network & Space Systems (N&SS) first-quarter revenue was $2.3 billion.  Operating margin was 6.1 percent, reflecting less favorable mix and lower earnings in the satellite business.  During the quarter, N&SS successfully completed an Inmarsat-5 satellite milestone and final acceptance of a SkyTerra satellite.

Global Services & Support (GS&S) first-quarter revenue decreased by $0.2 billion to $1.9 billion, due to the conclusion of the KC-10 support program in 2010 and delivery timing in integrated logistics and training systems & services.  Operating margin was 8.5 percent, reflecting lower earnings in integrated logistics and maintenance, modifications & upgrades.  During the quarter, GS&S was awarded a performance based logistics contract for the C-17 Globemaster III Sustainment Partnership and a follow-on to extend the F-22 sustainment contract.

Backlog at BDS increased slightly to $66 billion, approximately two times the unit's expected 2011 revenue.  

Additional Financial Information

Table 6.  Additional Financial Information




First Quarter

Change

(Dollars in Millions)

2011

2010





Revenues




   Boeing Capital Corporation

$143

$162

(12%)

   Other segment

$36

$36


   Unallocated items and eliminations

($4)

($63)






Earnings/(loss) from Operations




   Boeing Capital Corporation

$52

$46

13%

   Other segment

($22)

($50)


   Unallocated items and eliminations

($210)

($165)






Other income/(expense), net

$13

($2)


Interest and debt expense

($130)

($122)


Effective tax rate

33.4%

50.6%




During the quarter, Boeing Capital Corporation's (BCC) portfolio balance declined to $4.5 billion, down from $4.7 billion at the beginning of the year on run-off and asset sales.  BCC's debt-to-equity ratio was unchanged at 5.0-to-1.

The "Other" segment consists primarily of Boeing Engineering, Operations and Technology, as well as certain results related to the financial consolidation of all business units.  

Total pension expense for the first quarter was $526 million, as compared to $284 million in the same period last year.  A total of $431 million was allocated to the operating segments in the quarter, up from $305 million in the same period last year, and $95 million was recognized in unallocated items, compared to a benefit of $21 million in the same period last year.

The company's income tax expense was $295 million in the quarter, down from $531 million in the same period last year, as the year-ago quarter included a $150 million ($0.20 per share) tax charge on health care legislation.

Outlook

The company's 2011 financial guidance (Table 7) is reaffirmed, reflecting solid core operating performance, higher pension expense, planned deliveries on development programs and the current defense contracting environment.

Table 7.  Financial Outlook
(Dollars in Billions, except per-share data)

2011



The Boeing Company


 Revenue

$68 - 71

 Earnings Per Share (GAAP)

$3.80 - 4.00

 Operating Cash Flow (1)

> $2.5



Boeing Commercial Airplanes


 Deliveries (2)

485 - 500

 Revenue

$36 - 38

 Operating Margin

7.5% - 8.5%



Boeing Defense, Space & Security


 Revenue


   Boeing Military Aircraft

$14.2 - 14.7

   Network & Space Systems

$9 - 9.5

   Global Services & Support

$8.3 - 8.8

 Total BDS Revenue

$31.5 - 33



 Operating Margin


   Boeing Military Aircraft

~ 9%

   Network & Space Systems

~ 7%

   Global Services & Support

~ 10.5%

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