Boeing Earnings Beat Big
January 30, 2019
Boeing reported fourth-quarter revenue of $28.3 billion, GAAP earnings
per share of $5.93 and core earnings per share (non-GAAP) of $5.48, all
company records. These results reflect record commercial deliveries,
higher defense and services volume and strong performance which
outweighed favorable tax impacts recorded in the fourth quarter of 2017
(Table 1). Boeing generated operating cash flow of $2.9 billion,
repurchased 1.6 million shares for $0.6 billion, paid $1.0 billion of
dividends and completed the acquisition of KLX.
Boeing's huge fourth-quarter earnings
of $5.48 per share crushed expectations of 91 cents per share. The
firm's revenue of $28.3 billion was more than $1 billion that was
Revenue was a record $101.1 billion for the full year reflecting higher
commercial deliveries and increased volume across the company. Records
for GAAP earnings per share of $17.85 and core earnings per share (non-GAAP)*
of $16.01 were driven by higher volume, improved mix and solid
Boeing guided next year's earnings of $19.90 to $20.10 per share.
Investors were only looking for $18.31 a share for full-year 2019
"Across the enterprise our team delivered strong core operating
performance and customer focus, driving record revenues, earnings and
cash flow and further extending our global aerospace industry leadership
in 2018," said Boeing Chairman, President and Chief Executive Officer
Dennis Muilenburg. "Our financial performance provided a firm platform
to further invest in new growth businesses, innovation and future
franchise programs, as well as in our people and enabling technologies.
In the last 5 years, we have invested nearly $35 billion in key
strategic areas of our business, all while increasing cash returns to
"Our One Boeing focus, clear strategies for growth, and leading
positions in large and growing markets, give us confidence for continued
strong performance, revenue expansion and solid execution across all
three businesses, which is reflected in our 2019 guidance."
"We remain focused on executing on our production and development
programs as well as our growth strategy while driving further
productivity, quality and safety improvements, investing in our team and
creating more value and opportunity for our customers, shareholders and
Operating cash flow was $2.9 billion in the quarter and $15.3 billion
for the full year, reflecting planned higher commercial airplane
production rates and strong operating performance as well as timing of
receipts and expenditures (Table 2). During the quarter, the company
repurchased 1.6 million shares for $0.6 billion, paid $1.0 billion in
dividends, and completed the acquisition of KLX. For the full year, the
company repurchased 26.1 million shares for $9.0 billion and paid $3.9
billion in dividends. Based on strong cash generation and confidence in
the company's outlook, the board of directors in December increased the
quarterly dividend per share by 20 percent and replaced the existing
share repurchase program with a new $20 billion authorization.
Cash and investments in marketable
securities totaled $8.6 billion, compared to $10.0 billion at the
beginning of the quarter (Table 3). Debt was $13.8 billion, up from
$11.9 billion at the beginning of the quarter primarily due to the
issuance of new debt following the KLX acquisition.
Total company backlog at quarter-end was relatively unchanged at $490
billion and included net orders for the quarter of $27 billion.
Commercial Airplanes fourth-quarter
revenue increased to $17.3 billion reflecting higher deliveries and
favorable mix (Table 4). Fourth-quarter operating margin increased to
15.6 percent, driven by higher 737 volume and strong operating
performance on production programs, including higher 787 margins.
During the quarter, Commercial Airplanes delivered 238 airplanes,
including the delivery of the 787th 787 Dreamliner and the first 737 MAX
Boeing Business Jet. The 737 program delivered 111 MAX airplanes in the
fourth quarter, including the first MAX delivery from the China
Completion Center, and delivered 256 MAX airplanes in 2018. The first
777X flight test airplane completed final body join and power-on, and
the program remains on track for flight testing this year and first
delivery in 2020.
Commercial Airplanes booked 262 net orders during the quarter, valued at
$16 billion. Backlog remains robust with nearly 5,900 airplanes valued
at $412 billion.
Defense, Space & Security
fourth-quarter revenue increased to $6.1 billion driven by increased
volume across F/A-18, satellites, and weapons (Table 5). Fourth-quarter
operating margin increased to 10.9 percent, primarily reflecting
During the quarter, Defense, Space & Security was awarded contracts for
the second KC-46 Tanker to Japan, a joint ground system to provide
tactical satellite communications for the U.S. Air Force and to
modernize 17 Chinooks for Spain. Defense, Space & Security also
completed a successful test for the U.S. Air Force's Minuteman III and
unveiled the SB>1 DEFIANT helicopter for the U.S. Army. In January, the
first two KC-46 Tankers were delivered to the U.S. Air Force.
Backlog at Defense, Space & Security was $57 billion, of which 30
percent represents orders from customers outside the U.S.
Global Services fourth-quarter
revenue increased to $4.9 billion, primarily driven by higher parts
volume including the acquisition of KLX (Table 6). Fourth-quarter
operating margin increased to 15.0 percent reflecting improved
performance, partially offset by higher period costs.
the quarter, Global Services was awarded Performance Based Logistics
contracts for C-17 and F-22 for the U.S. Air Force and F-15 for Qatar as
well as contracts for F/A-18 services for the U.S Navy. Global Services
was also selected by Shenzhen Airlines to provide crew management
solutions, making them the first airline in China to utilize Boeing
AnalytX-powered services. Significant milestones during the quarter
included the first KC-46 training flight with the U.S. Air Force. In
addition, Global Services successfully began integrating KLX and began
operations of the Auxiliary Power Unit joint venture with Safran.
At quarter-end, Boeing Capital's net
portfolio balance was $2.8 billion. Revenue in other unallocated items
and eliminations decreased primarily due to the timing of eliminations
for intercompany aircraft deliveries and the 2017 sale of aircraft
previously leased to customers. The change in earnings from other
unallocated items and eliminations is primarily due to timing of expense
allocations. The effective tax rate for the fourth quarter increased
from the same period in the prior year primarily due to the favorable
impacts from the enactment of the Tax Cuts and Jobs Act recorded in the
fourth quarter of 2017.
Effective in the first quarter of 2019, the Company is making a change
to the accounting for military derivative aircraft. Revenues and costs
associated with military derivative aircraft were previously reported in
the Commercial Airplanes and Defense, Space & Security segments.
Beginning in 2019, all revenues and costs associated with military
derivative aircraft will be reported in the Defense, Space & Security