Boeing Reports Fourth-Quarter 2010 Results and 2011 Guidance

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Boeing Reports Fourth-Quarter 2010 Results and 2011 Guidance

Boeing Reports Fourth-Quarter 2010 Results and 2011 Guidance

PR Newswire

CHICAGO, Jan. 26, 2011 /PRNewswire-FirstCall/ --

Fourth-Quarter 2010

  • Earnings per share of $1.56, including favorable tax settlement, on revenue of $16.6 billion
  • Operating cash flow of $1.1 billion reflects strong operating performance

Full Year 2010

  • Earnings per share of $4.45 on revenue of $64.3 billion
  • Operating cash flow of $3.0 billion and cash and marketable securities of $10.5 billion provide strong liquidity
  • Backlog grew to $321 billion including $69 billion of new orders during the year

Outlook

  • 2011 EPS guidance of between $3.80 and $4.00 reflects solid core performance, higher pension expense and the recently revised 787 schedule

Table 1.  Summary Financial Results




Fourth Quarter


Full Year


(Dollars in Millions, except per share data)

2010

2009

Change

2010

2009

Change








Revenues

$16,550

$17,937

(8%)

$64,306

$68,281

(6%)

Earnings From Operations

$1,103

$1,693

(35%)

$4,971

$2,096

137%

Operating Margin

6.7%

9.4%

 (2.7)Pts

7.7%

3.1%

  4.6 Pts

Net Income

$1,164

$1,268

(8%)

$3,307

$1,312

152%

Earnings per Share

$1.56

$1.75

(11%)

$4.45

$1.84

142%

Operating Cash Flow

$1,116

$3,212

(65%)

$2,952

$5,603

(47%)



The Boeing Company (NYSE: BA) reported fourth-quarter net income of $1.2 billion, or $1.56 per share, on revenue of $16.6 billion.  The results reflect solid performance across the company's core programs, a favorable tax settlement (+$0.50 per share), and a special one-time contribution to Boeing's charitable trust (-$0.05 per share) (Table 1).  

Net income for the full year was $3.3 billion, or $4.45 per share, on revenue of $64.3 billion, which included the $0.45 per share net impact of the favorable tax settlement and the charitable trust contribution.  First-quarter 2010 included a $0.20 per share tax charge on health care legislation.  Earnings per share for 2009 of $1.84 included a combined $3.58 per share impact due to the 787 R&D reclassification and 747 charges.

Earnings guidance for 2011 has been established at between $3.80 and $4.00 per share reflecting solid core performance, higher pension expense, the revised 787 schedule and the current defense contracting environment.

"Boeing delivered strong operating performance and exceptional cash generation from core production and services businesses in 2010, which helped mitigate the impact of development program challenges," said Jim McNerney, Boeing chairman, president and chief executive officer.  "We're entering 2011 well-positioned for growth, with a large order book, increasing global demand for commercial airplanes, greater clarity around our domestic defense outlook, and significant international defense sales opportunities.  Our focus for the year is to deliver the 787 and 747-8; manage disciplined increases in commercial airplane production rates and drive improved competitiveness and financial performance throughout the business."

Boeing's quarterly operating cash flow was $1.1 billion, reflecting strong operating performance while continuing to invest in development programs.  For the full year, operating cash flow was $3.0 billion.  Free cash flow* was $0.7 billion in the quarter and $1.8 billion for the year (Table 2).

Table 2.  Cash Flow






Fourth Quarter

Full Year

(Millions)

2010

2009

2010

2009






Operating Cash Flow

$1,116

$3,212

$2,952

$5,603

  Less Additions to Property, Plant & Equipment

($400)

($221)

($1,125)

($1,186)

Free Cash Flow*

$716

$2,991

$1,827

$4,417

* Non-GAAP measure.  A complete definition and reconciliation of Boeing's use of non-GAAP measures, identified by an asterisk (*), is found on page 8, "Non-GAAP Measure Disclosure."



Cash and investments in marketable securities totaled $10.5 billion at year-end (Table 3), up 5 percent in the quarter.  Debt was essentially unchanged in the quarter, and the company did not acquire any of its shares.

Table 3.  Cash, Marketable Securities and Debt Balances




Quarter-End

(Billions)

4Q10

3Q10

Cash

$5.4

$2.9

Marketable Securities(1)

$5.1

$7.1

  Total

$10.5

$10.0




Debt Balances:



The Boeing Company

$9.0

$8.9

Boeing Capital Corporation

$3.4

$3.5

  Total Consolidated Debt

$12.4

$12.4

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



Total company backlog at year-end was $321 billion, unchanged from the prior quarter and up 2 percent from the prior year.

Segment Results  

Commercial Airplanes

Boeing Commercial Airplanes fourth-quarter revenue decreased by 11 percent to $8.2 billion on lower expected 777 and 747 airplane deliveries.  Operating margin was 7.7 percent, reflecting the lower deliveries and higher R&D and other period costs (Table 4).  

For the full year, revenue decreased by 7 percent to $31.8 billion on the lower expected 777 and 747 airplane deliveries.  Commercial Airplanes operating earnings were $3.0 billion on higher planned R&D spending.  The prior-year results were impacted by the reclassification of 787 R&D costs of $2.7 billion and 747 charges totaling $1.4 billion.

Commercial Airplanes booked 180 gross orders during the quarter while 22 orders were removed from its order book.  This contrasts with the year-ago period when net orders were 62 airplanes.  For the full year, net orders were 530 airplanes.  Contractual backlog remains strong with 3,443 airplanes valued at $256 billion.  

Table 4. Commercial Airplanes Operating Results


Fourth Quarter


Full Year


(Dollars in Millions)

2010

2009

Change

2010

2009

Change








Commercial Airplanes Deliveries

116

122

(5%)

462

481

(4%)








Revenues

$8,184

$9,183

(11%)

$31,834

$34,051

(7%)

Earnings/(Loss) from Operations

$627

$1,020

(39%)

$3,006

($583)

NA








Operating Margins

7.7%

11.1%

(3.4)Pts

9.4%

(1.7%)

NA



The 787 program experienced an in-flight electrical incident on a test flight in November.   As disclosed last week, first delivery is now expected in the third quarter of 2011 and includes the time required to produce, install and test updated software and new electrical power distribution panels in the flight test and production airplanes.  Total firm orders for the 787 at year-end were 847 airplanes from 57 customers.  

Flight testing of the 747-8 Freighter progressed during the quarter, and the first two Intercontinental passenger models had electrical power successfully turned on.  Delivery of the first 747-8 Freighter is planned for mid-2011.

Boeing Defense, Space & Security

Boeing Defense, Space & Security's fourth-quarter revenue declined 4 percent to $8.2 billion on lower revenue in Boeing Military Aircraft (BMA) and Global Services & Support (GS&S).  Operating margin was 10.0 percent reflecting improved margins in Network & Space Systems (N&SS) (Table 5).

For the full year, revenue decreased by 5 percent to $31.9 billion on expected lower volume in N&SS.  Operating earnings decreased by $0.4 billion to $2.9 billion, producing operating margins of 9.0 percent on lower margins in BMA.

Table 5.  Defense, Space & Security Operating Results


Fourth Quarter


Full Year


(Dollars in Millions)

2010

2009

Change

2010

2009

Change








Revenues







  Boeing Military Aircraft

$3,627

$3,805

(5%)

$14,238

$14,304

(0%)

  Network & Space Systems

$2,434

$2,385

2%

$9,455

$10,877

(13%)

  Global Services & Support

$2,104

$2,357

(11%)

$8,250

$8,480

(3%)

Total BDS Revenues

$8,165

$8,547

(4%)

$31,943

$33,661

(5%)








Earnings from Operations







  Boeing Military Aircraft

$323

$363

(11%)

$1,258

$1,528

(18%)

  Network & Space Systems

$218

$141

55%

$711

$839

(15%)

  Global Services & Support

$275

$325

(15%)

$906

$932

(3%)

Total BDS Earnings from Operations

$816

$829

(2%)

$2,875

$3,299

(13%)








Operating Margins

10.0%

9.7%

  0.3 Pts

9.0%

9.8%

 (0.8)Pts



BMA fourth-quarter revenue decreased by $0.2 billion to $3.6 billion, due to fewer deliveries and less favorable mix.  Operating margin was 8.9 percent, reflecting strong execution across its programs, offset by higher costs on the Airborne Early Warning & Control program, which reduced BMA margins by 3.8 points.  During the quarter, BMA delivered 29 aircraft, and the U.S. Naval Air Systems Command awarded it an A160T Hummingbird unmanned vehicle contract.

N&SS fourth-quarter revenue was essentially unchanged at $2.4 billion.  Operating margin grew to 9.0 percent on improved performance in Space and Intelligence Systems.  During the quarter, the Mexican government signed a contract for three geomobile satellites and the X-37B Orbital Test Vehicle completed its first flight.

GS&S revenue decreased by $0.3 billion to $2.1 billion in the quarter due to lower volume in maintenance, modifications and upgrades and integrated logistics.  Operating margin was 13.1 percent, driven by strong performance across its portfolio.  During the quarter, the company was awarded a contract for the development of the Future Logistic Information Services from the U.K. Minis

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