A Mixed-Bag at Big “B”

The Boeing Company recorded third quarter revenue of $18.1-billion, GAAP loss per share of $2.70 and core loss per share (non-GAAP) of $3.26. Third-quarter results were impacted by unfavorable defense performance and lower 737 deliveries. Boeing reported operating cash flow of $0.0-billion and free cash flow of $0.3-billion non-GAAP.

"We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term," said Dave Calhoun, Boeing president and chief executive officer. "We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand. The important work we're doing to add rigor around our quality systems and build a culture of transparently bringing forward any issue, no matter the size, can bring short-term challenges – but it is how we set ourselves on the right course for our long-term future. Leading with safety, quality and transparency, we will continue to restore our operational and financial strength."

Commercial Airplanes third quarter revenue increased to $7.9-billion driven by higher 787 deliveries. Operating margin of 8.6-percent also reflects lower 737 deliveries as well as abnormal costs and period expenses, including research and development.

On the 737 program, during the quarter a supplier non-conformance was identified on the aft pressure bulkhead section of certain 737 airplanes. This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. Near-term deliveries and production will be impacted as the program performs necessary inspections and rework, and the company now expects to deliver 375-400 airplanes this year. On production, suppliers are continuing with planned rate increases, and the company expects to complete the final assembly transition to 38 per-month by year-end, with plans to increase to fifty per-month in the 2025/2026 timeframe. The estimated cost associated with performing the rework is immaterial and included in third-quarter results.

The 787 program is now transitioning production to five per month and plans to increase to ten per-month in the 2025/2026 timeframe. The program still expects to deliver seventy-to-eighty airplanes this year.

During the quarter, Commercial Airplanes booked 398 net orders, including 150 737 MAX 10 airplanes for Ryanair, fifty 787 airplanes for United Airlines, and 39 787 airplanes for Saudi Arabian Airlines. Commercial Airplanes delivered 105 airplanes during the quarter and backlog included over 5,100 airplanes valued at $392-billion.

Defense, Space & Security third-quarter revenue was $5.5-billion. Third-quarter operating margin was 16.9-percent, due to a $482-million loss on the VC-25B program driven by higher estimated manufacturing cost related to engineering changes and labor instability, as well as resolution of supplier negotiations. Results were also impacted by $315-million of losses on a satellite contract due to estimated customer considerations and increased costs to enhance the constellation and meet lifecycle commitments.

During the quarter, Defense, Space & Security delivered the first T-7A Red Hawk to the U.S. Air Force and captured an award from the U.S. Army for 21 AH-64E Apaches. Backlog at Defense, Space & Security was $58-billion, of which 29-percent represents orders from customers outside the U.S. Global Services third-quarter revenue of $4.8-billion and operating margin of 16.3-percent reflect higher commercial volume and mix.

During the quarter, Global Services delivered the 150th 737-800 Boeing Converted Freighter, received an order from the U.S. Navy for P-8 trainer upgrades and signed a digital maintenance solution agreement with Philippine Airlines for Airplane Health Management.

Other unallocated items and eliminations primarily reflect timing of allocations. The third-quarter effective tax rate primarily reflects additional tax expense to adjust prior quarters' results to the current estimate of the annual effective tax rate.

FMI: www.boeing.com