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Boeing (BA) Beats on Q3 Earnings & Revenues, Lifts View
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Aerospace giant The Boeing Company (BA - Free Report) reported adjusted earnings of $3.51 per share for third-quarter 2016, beating the Zacks Consensus Estimate of $2.62 by a wide 34%. Reported earnings were also up 39.3% from the year-ago figure of $2.52.
The quarterly number reflects solid overall execution of production programs and services, favorable tax items (98 cents) and timing of aircraft deliveries.
On a GAAP basis, Boeing reported earnings of $3.60 per share, compared to earnings of $2.47 per share in the year-ago quarter.
The company's revenues amounted to $23.90 billion in the reported quarter, beating the Zacks Consensus Estimate of $23.46 billion by 1.8%. The reported figure, however, declined 7.5% year over year.
Total Backlog
Backlog at the end of the third quarter was down to $462.0 billion from $489.3 billion at 2015 end. Reported backlog included $15 billion of net orders during the quarter.
Quarterly Segment Results
Commercial Airplane Segment: The segment saw a 4.1% decline in revenues to $16.97 billion on lower planned delivery volumes. Operating margin contracted 60 basis points (bps) year over year to 9.4%, reflecting delivery volume and mix, partially offset by lower period costs.
Boeing’s commercial airplane deliveries decreased 5.5% to 188 in the third quarter due to low demand for the 737, 777 and 787 Dreamliners. Sequentially, deliveries registered a 5.5% drop. Deliveries of the single-aisle 737 slipped to 120 in the third quarter from 126 a year ago, as the company was busy with the production of a newer version of its most popular plane, the 737 MAX.
Shipments of the 777 and 787 Dreamliners were 22 and 36, compared with 27 and 37 in the year-ago period, respectively. For the 747 and 767 jets, the company clocked deliveries of 5 each, compared with 4 units of 747 and 5 units of 767 in the year-ago quarter.
Boeing won net orders for 107 planes during the quarter, with its backlog reaching 5,600 worth a total $409 billion.
Boeing Defense, Space & Security (BDS): The segment witnessed an approximate 10.1% year-over-year decrease in quarterly revenues to $7.51 billion. Revenues at two of the three sub-segments – Boeing Military Aircraft (BMA) and Network & Space Systems (N&SS) – recorded year-over-year deterioration of 19.2% and 20%, respectively. Global Services & Support (GS&S) witnessed 16.5% year-over-year growth in revenues.
Quarterly operating margin contracted 180 bps to 10.4%.
Backlog at BDS was $53 billion, 38% of which comprised orders from international clients.
In the defense and space business, Boeing’s deliveries totaled 50 in the third quarter of 2016, up from 48 a year ago and 45 in the preceding quarter. Total deliveries consisted of 19 AH-64 Apache helicopters (both new and remanufactured) and 14 Chinook helicopters (new and renewed). The company also delivered 6 F/A-18 jets, 4 P-8 models, 4 F-15s, 1 Military Satellite, and 2 Commercial and Civil Satellites.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $63 million, compared with $114 million in the year-ago quarter. The segment’s earnings were $13 million compared with $10 million a year ago.
At the end of the third quarter, BCC's portfolio balance was $3.7 billion, up from the beginning of the quarter.
Boeing exited the third quarter with cash and cash equivalents of $8.99 billion and short-term investments of $682 million. At year-end 2015, the company had $11.30 billion of cash and cash equivalents and $750 million of short-term investments. Long-term debt was $9.82 billion in the third quarter, up from $8.73 billion at 2015 end.
Boeing generated $3.20 billion of operating cash flow in the quarter, up 12% year over year. Free cash flow was $2.61 billion in the quarter compared with free cash of $2.30 billion a year back.
Guidance
Boeing raised its adjusted or core earnings per share expectation for 2016 to the range of $6.80–$7.00 from $6.10–$6.30 expected earlier. GAAP earnings are now expected in the range of $7.10–$7.30 per share, compared with $6.40–$6.60 projected earlier.
The company also raised its 2016 revenue guidance to the range of $93.5−$95.5 billion from the prior guidance of $93−$95 billion.
Commercial Airplanes' 2016 delivery expectations are in the band of 745−750 airplanes with revenues projected in the $64.5−$65.5 billion range, compared to the previous expectation of 740−745 airplanes with revenues in the $64.0−$65.0 billion band. Operating margin is still expected in the 4.5–5.0% range.
The company maintained 2016 defense revenues guidance in the $28.5–$29.5 billion range with operating margin of approximately 10%.
Boeing Capital Corp. expects the aircraft finance portfolio to remain stable. The company reiterated its segment revenue expectation of approximately $0.3 billion.
Boeing's 2016 R&D forecast has been maintained at approximately $4.8 billion. Capital expenditures for 2016 are still expected to be $2.8 billion.
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level, courtesy of strong revenue and operating margin growth.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $2.81 by 19.2%. Reported earnings were also up 22% from $2.75 recorded in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced third-quarter 2016 earnings from continuing operations of $2.48 per share, beating the Zacks Consensus Estimate of $2.37 by 4.6%. Reported earnings were also up 8.8% from $2.28 recorded in the year-ago quarter.
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Boeing (BA) Beats on Q3 Earnings & Revenues, Lifts View
Aerospace giant The Boeing Company (BA - Free Report) reported adjusted earnings of $3.51 per share for third-quarter 2016, beating the Zacks Consensus Estimate of $2.62 by a wide 34%. Reported earnings were also up 39.3% from the year-ago figure of $2.52.
The quarterly number reflects solid overall execution of production programs and services, favorable tax items (98 cents) and timing of aircraft deliveries.
On a GAAP basis, Boeing reported earnings of $3.60 per share, compared to earnings of $2.47 per share in the year-ago quarter.
Revenues
The company's revenues amounted to $23.90 billion in the reported quarter, beating the Zacks Consensus Estimate of $23.46 billion by 1.8%. The reported figure, however, declined 7.5% year over year.
Total Backlog
Backlog at the end of the third quarter was down to $462.0 billion from $489.3 billion at 2015 end. Reported backlog included $15 billion of net orders during the quarter.
Quarterly Segment Results
Commercial Airplane Segment: The segment saw a 4.1% decline in revenues to $16.97 billion on lower planned delivery volumes. Operating margin contracted 60 basis points (bps) year over year to 9.4%, reflecting delivery volume and mix, partially offset by lower period costs.
Boeing’s commercial airplane deliveries decreased 5.5% to 188 in the third quarter due to low demand for the 737, 777 and 787 Dreamliners. Sequentially, deliveries registered a 5.5% drop. Deliveries of the single-aisle 737 slipped to 120 in the third quarter from 126 a year ago, as the company was busy with the production of a newer version of its most popular plane, the 737 MAX.
Shipments of the 777 and 787 Dreamliners were 22 and 36, compared with 27 and 37 in the year-ago period, respectively. For the 747 and 767 jets, the company clocked deliveries of 5 each, compared with 4 units of 747 and 5 units of 767 in the year-ago quarter.
Boeing won net orders for 107 planes during the quarter, with its backlog reaching 5,600 worth a total $409 billion.
Boeing Defense, Space & Security (BDS): The segment witnessed an approximate 10.1% year-over-year decrease in quarterly revenues to $7.51 billion. Revenues at two of the three sub-segments – Boeing Military Aircraft (BMA) and Network & Space Systems (N&SS) – recorded year-over-year deterioration of 19.2% and 20%, respectively. Global Services & Support (GS&S) witnessed 16.5% year-over-year growth in revenues.
Quarterly operating margin contracted 180 bps to 10.4%.
Backlog at BDS was $53 billion, 38% of which comprised orders from international clients.
In the defense and space business, Boeing’s deliveries totaled 50 in the third quarter of 2016, up from 48 a year ago and 45 in the preceding quarter. Total deliveries consisted of 19 AH-64 Apache helicopters (both new and remanufactured) and 14 Chinook helicopters (new and renewed). The company also delivered 6 F/A-18 jets, 4 P-8 models, 4 F-15s, 1 Military Satellite, and 2 Commercial and Civil Satellites.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $63 million, compared with $114 million in the year-ago quarter. The segment’s earnings were $13 million compared with $10 million a year ago.
At the end of the third quarter, BCC's portfolio balance was $3.7 billion, up from the beginning of the quarter.
BOEING CO Price, Consensus and EPS Surprise
BOEING CO Price, Consensus and EPS Surprise | BOEING CO Quote
Financial Condition
Boeing exited the third quarter with cash and cash equivalents of $8.99 billion and short-term investments of $682 million. At year-end 2015, the company had $11.30 billion of cash and cash equivalents and $750 million of short-term investments. Long-term debt was $9.82 billion in the third quarter, up from $8.73 billion at 2015 end.
Boeing generated $3.20 billion of operating cash flow in the quarter, up 12% year over year. Free cash flow was $2.61 billion in the quarter compared with free cash of $2.30 billion a year back.
Guidance
Boeing raised its adjusted or core earnings per share expectation for 2016 to the range of $6.80–$7.00 from $6.10–$6.30 expected earlier. GAAP earnings are now expected in the range of $7.10–$7.30 per share, compared with $6.40–$6.60 projected earlier.
The company also raised its 2016 revenue guidance to the range of $93.5−$95.5 billion from the prior guidance of $93−$95 billion.
Commercial Airplanes' 2016 delivery expectations are in the band of 745−750 airplanes with revenues projected in the $64.5−$65.5 billion range, compared to the previous expectation of 740−745 airplanes with revenues in the $64.0−$65.0 billion band. Operating margin is still expected in the 4.5–5.0% range.
The company maintained 2016 defense revenues guidance in the $28.5–$29.5 billion range with operating margin of approximately 10%.
Boeing Capital Corp. expects the aircraft finance portfolio to remain stable. The company reiterated its segment revenue expectation of approximately $0.3 billion.
Boeing's 2016 R&D forecast has been maintained at approximately $4.8 billion. Capital expenditures for 2016 are still expected to be $2.8 billion.
Zacks Rank
Boeing currently holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
At Its Peers
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level, courtesy of strong revenue and operating margin growth.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $2.81 by 19.2%. Reported earnings were also up 22% from $2.75 recorded in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced third-quarter 2016 earnings from continuing operations of $2.48 per share, beating the Zacks Consensus Estimate of $2.37 by 4.6%. Reported earnings were also up 8.8% from $2.28 recorded in the year-ago quarter.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>