Key Metrics
- Revenue: $17.8 billion (1% yoy)
- Commercial Airplanes: $7.443 billion (5% yoy)
- Defense, Space & Security: $5.536 billion (1% yoy)
- Global Services: $4.901 billion (2% yoy)
- Operating Margin (GAAP):
- Commercial Airplanes: (54.0)%
- Defense, Space & Security: (43.1)%
- Global Services: 17.0%
- Cash from Operations: ($1.345) billion
- Free Cash Flow: ($1.956) billion
- Total Backlog: $511 billion
- Contractual Backlog: $489.325 billion
- Commercial Airplane Deliveries: 116 airplanes (10% yoy)
Forward guidance
- 737 Production Rate: Expect to achieve a production rate of 38 per month by year-end 2024, but this timeline may extend due to the IAM work stoppage.
- 777X First Delivery: Anticipate first delivery of the 777X in 2026, with a $2.6 billion pretax charge reflecting delays in certification timelines.
- Free Cash Flow: Project negative free cash flow for the full year 2025, with expectations for significant improvement over 2024, turning positive in the second half of 2025.
- BDS Margins: Expect BDS margins to return to historical performance levels as production stabilizes and development programs execute effectively.
- Debt Management: Focus on maintaining $10 billion in cash alongside revolver capacity, with plans for a potential capital raise to support liquidity and investment-grade credit rating.
- Workforce Reduction: Announced workforce reduction aimed at streamlining operations and improving efficiency, with no specific numbers disclosed.
- Portfolio Review: Ongoing evaluation of the portfolio to identify non-core assets for potential divestiture, with a goal to complete assessments by the end of 2024.
Key takeaways
- Positives:
- Kelly Ortberg emphasized the importance of restoring Boeing's culture, stating, "Culture change starts at the top," indicating a commitment to leadership accountability and employee engagement.
- The company has a substantial backlog of approximately $0.5 trillion, with Ortberg noting, "We have a customer base that wants us and needs us to succeed," highlighting strong demand for Boeing's products.
- Boeing Global Services (BGS) reported a 2% revenue increase and a 17% operating margin, with Brian West stating, "It's a terrific long-term franchise focused on profitable, capital-efficient service offerings."
- The defense sector remains robust, with West mentioning, "The demand for our defense products remains very strong, supported by the threat environment," indicating a solid market position.
- Negatives:
- The IAM strike has severely impacted operations, with Ortberg acknowledging, "It's critical -- absolutely critical that we do this right," referring to the challenges of restarting production.
- Boeing reported a core loss per share of $10.44, primarily due to the strike and charges across commercial and defense programs, indicating ongoing financial strain.
- The defense business has faced persistent charges, with Ortberg admitting, "We've got some tough contracts," and emphasizing the need for improved risk management.
- West projected negative free cash flow for 2025, stating, "We expect the first half to be a cash usage," reflecting ongoing operational and financial challenges.
Peer Summary
- Defense Sector Demand: Lockheed Martin noted, "The demand for Lockheed Martin systems and services remains robust," reflecting strong market conditions that may contrast with Boeing's defense challenges, including "tough contracts" and ongoing charges.
- Free Cash Flow Strength: Lockheed Martin projected free cash flow of approximately $6.2 billion, while Boeing anticipates negative free cash flow for 2025, highlighting a potential liquidity gap in Boeing's operations.
- Operational Efficiency: Northrop Grumman achieved a segment operating margin of 11.5%, driven by "solid sales volume and strong operating performance," contrasting with Boeing's negative margins in defense and commercial segments.
- Supply Chain Challenges: General Dynamics and Northrop Grumman both cited ongoing supply chain issues, with General Dynamics stating, "The supply chain is not getting better at a fast enough rate," which may impact Boeing's recovery efforts.
- Commercial Aerospace Growth: RTX expects commercial OE sales to grow roughly 10%, while Boeing's commercial airplane deliveries increased by only 10% year-over-year, indicating a potential divergence in market recovery trajectories.
