Boeing Reports Fourth Quarter Earnings
Boeing today announced its fourth quarter, year end earnings.
As advised, the company maintained its delivery target of between 480-485 airplanes, having delivered 481 units during 2009.
The stand-out items for the period ended 2009 are as follows:
- Revenue grew to $68.3 billion while earnings reflected solid core operating performance affected by previously announced events
- Operating cash flow of $5.6 billion reflects strong management of working capital
- Cash and marketable securities of $11.2 billion provides strong liquidity for 2010
- Backlog of $316 billion - over four times current annual revenue
Image courtesy of Boeing
While EPS was lower, full year revenues were up 12% on the back of stronger deliveries in the first full year after the IAM machinist strike during the fall of 2008.
Boeing reaffirmed first flight of the 747-8F this year, with deliveries scheduled to commence by the fourth quarter, alongside the 787-8. Its guidance for commercial deliveries this year falls around 5% between 460-465 against 481 for 2009. Boeing also expects that spending on R&D will fall in FY11, with around $1.9bn marked for the second 787 final assembly line in South Carolina.
R&D for this year is expected to be between $3.9bn and $4.1bn
From the conference call, key details are as follows:
Jim McNerney
• Year of significant achievement
• Global recession resulted in lower orders and lower delivery prices
• DoD budget pressures
• Record revenue for the year
• Strong earnings
• Defense, Space & Security showed double-digit growth margins
• Cash performance “outstanding”
• Important milestones achieved in 2009
• First 777F delivery
• P8-A first flight
• Backlog of $316bn
• BCA backlog of $250bn (7x annual revenue)
• DSS backlog of $65bn
• Pleased with C-17 sales
• Less risk in supply chain after Vought/Global Aeronautica purchases
• 787 first flight – historic moment in aviation
• Continue to expand flight test envelope, more rigorous flight test regime
• All six flight test 787s flying by end of Q2 2010
• Aim for 10x 787s per month by end of 2013
• 747-8F first flight in very near future
• 747-8I EIS in Q4 2011
• Continue to see long term order value in 747-8 family
• Significant growth potential despite challenging environment
• Recession has impacted traffic growth
• 271 deferrals, 121 cancellations, 57 deferrals in Q4 2009
• Deferral rate decreased
• Oversold for FY 2011
• 9,300 job cuts completed in 2009
• Target is to get 787 into hands of customers
• Things to look at: 787 deliveries, progress at Charleston
• Order outlook: Book-to-build below 1 for 2010
• 737 re-engining decision will come quicker than decision on 777 update/replacement
• Block improvements on 787 are on track
• 787 weight within customer mission requirements
• Do not anticipate major modifications to 787
• Initial airworthiness certificate came quickly
• Customer base pushing Boeing to consider 737 re-engining as well as replace 737 family
• Less to do with obsolescence of 737NG than on airplane productivity
• Unidentified 737 orders due for delivery beyond 2011
• Financial strength in market place
• Growth in Chinese financing
• Close to 30 787s in inventory by year end / first delivery
• New opportunities to sell (747) at new prices as it proves itself (in flight tests)
• Confident of (747-8) marketability
• 747-8F productivity significant over other freighters
• Pickup in 747-8I activity
• No problem with profitability of 747-8 family if achieves half of “740” perceived market
James Bell
• Record $6.83bn revenue
• Operating cash flow $5.6bn
• BCA recorded 11.% margin in Q4 2009
• 787 costs rise by $1.3bn
• 787 not in loss position – accounts for side of body fix, schedule changes and R&D adjustments
• Zero margins on delivery, increase as further deliveries commence
• DSS - $8.5bn revenue with 9.7% margin in Q4 2009
• BCC provided $766m financing in 2009
• $1.5bn put into pension plan
• Strong liquidity
• Lower 777 volumes
• EPS target $3.70-$.400
• Few 787 and 747-8F deliveries in FY10
• Higher revenue seen in FY11 on higher widebody output
• $500m decrease in R&D in FY11
• Potential 737/777 investment
• Production sold out in 2011 and oversold
• Costs on 787 deliveries will be higher than R&D expensed 787s (x3)
34 comments January 27th, 2010
