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Boeing’s Q2 Financials: Challenges and Opportunities

Boeing’s Q2 Financials reflect the aerospace giant’s ability to adapt to industry challenges and identify opportunities for growth.

Boeing Commercial Airplanes

Boeing’s Commercial Airplanes second-quarter revenue increased to $14 billion, primarily due to an increase in deliveries. The company delivered 136 commercial airplanes, including 77 737s, 14 747s, 12 767s, 21 777s and 12 787s. This is a significant improvement compared to the same quarter in the previous year. 

Boeing Defense, Space & Security (BDS)

BDS’s second-quarter revenue was $6.3 billion, with an operating margin of 9.2%. Notable highlights for the quarter include the delivery of the 100th KC-46 tanker to the U.S. Air Force and the award of a contract for 11 P-8A Poseidon aircraft for the U.S. Navy and the government of Australia. 

Boeing Global Services

Boeing Global Services’ second-quarter revenue was $4.7 billion, reflecting lower commercial services volume due to COVID-19 impacts. Despite the challenging environment, the business continued to support defense, space and commercial customers around the globe. 

Boeing Financials

Operating cash flow for the quarter was $2.9 billion, primarily reflecting commercial deliveries and timing of receipts and expenditures. The company ended the quarter with strong liquidity, including cash and marketable securities of $13.8 billion, reflecting the strong performance across the business. 

Boeing Backlog

At quarter-end, Boeing’s backlog was $440 billion, spread across a diverse range of products and services. This includes over 4,800 commercial airplanes, providing a solid foundation for future growth. 

Boeing Guidance Update

Boeing is reaffirming guidance for 2023, with expected operating cash flow between $4.5 billion and $6.5 billion and free cash flow (non-GAAP) between $3.0 billion and $5.0 billion.

Boeing Second Quarter Results 2023 Highlights

  • Transitioning 737 production to 38 per month; increased 787 production to four per month
  • Revenue increased to $19.8 billion, primarily reflecting 136 commercial deliveries.
  • Operating cash flow of $2.9 billion and free cash flow of $2.6 billion (non-GAAP); cash and marketable securities of $13.8 billion
  • Total company backlog of $440 billion, including over 4,800 commercial airplanes
  • Reaffirm guidance: $4.5-$6.5 billion of operating cash flow and $3.0-$5.0 billion of free cash flow (non-GAAP)

Table 1. Summary Financial Results

 

Second Quarter

   

First Half

  

(Dollars in Millions, except per share data)

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

             

Revenues

 

$19,751

  

$16,681

  

18 %

 

$37,672

  

$30,672

  

23 %

GAAP

            

(Loss)/earnings from operations

 

($99)

  

$780

  

NM

 

($248)

  

($382)

  

NM

Operating margins

 

(0.5)

%

 

4.7

%

 

NM

 

(0.7)

%

 

(1.2)

%

 

NM

Net (loss)/earnings

 

($149)

  

$160

  

NM

 

($574)

  

($1,082)

  

NM

(Loss)/earnings per share

 

($0.25)

  

$0.32

  

NM

 

($0.93)

  

($1.73)

  

NM

Operating cash flow

 

$2,875

  

$81

  

NM

 

$2,557

  

($3,135)

  

NM

Non-GAAP*

            

Core operating (loss)/earnings

 

($390)

  

$496

  

NM

 

($830)

  

($949)

  

NM

Core operating margins

 

(2.0)

%

 

3.0

%

 

NM

 

(2.2)

%

 

(3.1)

%

 

NM

Core loss per share

 

($0.82)

  

($0.37)

  

NM

 

($2.08)

  

($3.11)

  

NM

Source: Boeing

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.” 

Boeing Q2 2023 Revenue: $19.8 billion

In the second quarter, The Boeing Company [NYSE: BA] reported revenue of $19.8 billion. This was accompanied by a GAAP loss per share of ($0.25), and a non-GAAP core loss per share of ($0.82) (Table 1). The quarter’s results were characterized by a surge in commercial volume, albeit with diminished defense margins. In terms of cash flow, Boeing generated $2.9 billion in operating cash, as well as a non-GAAP free cash flow of $2.6 billion.

“We had a solid second quarter with improved deliveries and strong free cash flow generation. We are well positioned to meet the operational and financial goals we set for this year and for the long term,” said Dave Calhoun, Boeing president and chief executive officer. “While we have more work ahead, we are making progress in our recovery and driving stability in our factories and the supply chain to meet our customer commitments. With demand strong, we’re steadily increasing our production rates across key programs and growing investments in our people, products and technologies.”

Table 2. Cash Flow

Second Quarter

First Half

(Millions)

2023

2022

2023

2022

Operating cash flow

$2,875

$81

$2,557

($3,135)

Less additions to property, plant & equipment

($296)

($263)

($764)

($612)

Free cash flow*

$2,579

($182)

$1,793

($3,747)

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.” 

Operating cash flow was $2.9 billion in the quarter, reflecting higher commercial deliveries and favorable receipt timing (Table 2).

Table 3. Cash, Marketable Securities and Debt Balances

Quarter End

(Billions)

Q2 23

Q1 23

Cash

$7.3

$10.8

Marketable securities1

$6.5

$4.0

Total

$13.8

$14.8

Consolidated debt

$52.3

$55.4

Source: Boeing

1 Marketable securities consist primarily of time deposits due within one year classified as “short-term investments.”

Boeing Cash and Marketable Securities: $13.8 billion

Boeing’s cash and marketable securities stood at a robust $13.8 billion by the end of the second quarter, showing a slight dip from $14.8 billion at its inception (Table 3). Debt levels showed a positive trend, decreasing to $52.3 billion from $55.4 billion at the quarter’s start, a result of timely debt maturity payments. Boeing also retains unutilized credit facilities amounting to $12.0 billion.

By the close of the quarter, Boeing had amassed a substantial company backlog, amounting to $440 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

Second Quarter

 

First Half

 

(Dollars in Millions)

2023

2022

Change

2023

2022

Change

Deliveries

136

 

121

 

12 %

266

 

216

 

23% %

Revenues

$8,840

 

$6,258

 

41 %

$15,544

 

$10,452

 

49 %

Loss from operations

($383)

 

($219)

 

NM

($998)

 

($1,116)

 

NM

Operating margins

(4.3)

%

(3.5)

%

NM

(6.4)

%

(10.7)

%

NM

Source: Boeing

Boeing: Q2 2023 Surge in Commercial Airplanes Revenue

The second quarter saw a surge in Commercial Airplanes’ revenue, reaching a robust $8.8 billion. This was primarily propelled by an increase in 787 deliveries (Table 4). However, an operating margin of (4.3) percent was recorded, reflecting abnormal costs and period expenses, inclusive of research and development. 

Significant strides are being made in the 737 program, with production transitioning to 38 aircraft per month. The goal is to upscale to 50 per month in the 2025/2026 timeframe, with an anticipated delivery of 400-450 airplanes within this year. 

The 787 program is also on the rise, ramping up production to four per month. The plan is to accelerate to five per month by late 2023, and further to 10 per month in the 2025/2026 timeframe. The program aims to deliver between 70-80 airplanes this year. 

Commercial Airplanes had a productive quarter, securing 460 net orders. Notable among these were 220 for Air India and 39 for Riyadh Air, and a commitment from Ryanair for up to 300 737 MAX airplanes. Deliveries for the quarter amounted to 136 airplanes, with a backlog of over 4,800 airplanes valued at an impressive $363 billion.

Boeing Defense, Space & Security

Table 5. Defense, Space & Security

Second Quarter

 

First Half

 

(Dollars in Millions)

2023

2022

Change

2023

2022

Change

       

Revenues

$6,167

 

$6,191

 

— %

$12,706

 

$11,674

 

9 %

(Loss)/earnings from operations

($527)

 

$71

 

NM

($739)

 

($858)

 

NM

Operating margins

(8.5)

%

1.1

%

NM

(5.8)

%

(7.3)

%

NM

Boeing: Q2 2023 Defense, Space & Security, Revenue $6.2 billion

The second quarter saw Defense, Space & Security generate a revenue of $6.2 billion. Losses on several fixed-price development programs primarily influenced an operating margin of (8.5) percent. These losses were exacerbated by labor instability and disruptions in the supply chain that affected other programs. The Commercial Crew program reported a $257 million loss, mainly due to the impacts of a previously announced launch delay. The T-7A program incurred a $189 million loss, primarily attributed to increased costs on production contracts. Lastly, the MQ-25 program registered a $68 million loss due to scheduling delays on the Engineering and Manufacturing Development contract. 

Despite these challenges, the quarter also marked several achievements for Defense, Space & Security. They successfully completed the first flight of the T-7A Red Hawk for the U.S. Air Force, initiated construction on the Advanced Coatings Center in St. Louis, and secured a contract from the U.S. Army for 19 CH-47 Chinooks. The backlog for Defense, Space & Security stood at $58 billion, with 31 percent of the orders originating from customers outside the US.

Boeing Global Services

Table 6. Global Services

Second Quarter

   

First Half

  

(Dollars in Millions)

2023

 

2022

 

Change

 

2023

 

2022

 

Change

            

Revenues

$4,746

  

$4,298

  

10 %

 

$9,466

  

$8,612

  

10 %

Earnings from operations

$856

  

$728

  

18 %

 

$1,703

  

$1,360

  

25 %

Operating margins

18.0

%

 

16.9

%

 

1.1 pts

 

18.0

%

 

15.8

%

 

2.2 pts

The second quarter saw Boeing’s Global Services amass a revenue of $4.7 billion, bolstered by an impressive operating margin of 18.0 percent. This upward trend is attributable to increased commercial volume and a beneficial mix. 

Noteworthy developments for Global Services during this quarter included the inception of a new parts distribution site in Poland, a partnership with CAE to refine and broaden their training solutions, and the adoption of the Boeing Insight Accelerator by Japan Airlines for their 787 fleet.

Boeing: Additional Financial Information

Table 7. Additional Financial Information

 

Second Quarter

 

First Half

(Dollars in Millions)

 

2023

 

2022

 

2023

 

2022

Revenues

        

Unallocated items, eliminations and other

 

($2)

  

($66)

  

($44)

  

($66)

 

Earnings/(loss) from operations

        

FAS/CAS service cost adjustment

 

$291

  

$284

  

$582

  

$567

 

Other unallocated items and eliminations

 

($336)

  

($84)

  

($796)

  

($335)

 

Other income, net

 

$320

  

$253

  

$622

  

$434

 

Interest and debt expense

 

($621)

  

($656)

  

($1,270)

  

($1,293)

 

Effective tax rate

 

62.8

%

 

57.6

%

 

35.9

%

 

12.8

%

The increase in loss from Other unallocated items and eliminations was primarily driven by deferred compensation expense. Other income primarily reflects an increase in investment income due to higher interest rates. The second quarter effective tax rate primarily reflects the tax benefit on pre-tax losses including cumulative adjustments related to a projected increase in the valuation allowance.

Boeing’s Q2 2023 — By the numbers 

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

 

Six months ended
June 30

 

Three months ended
June 30

(Dollars in millions)

2023

 

2022

 

2023

 

2022

Revenues:

       

Commercial Airplanes

$15,544

  

$10,452

  

$8,840

  

$6,258

 

Defense, Space & Security

12,706

  

11,674

  

6,167

  

6,191

 

Global Services

9,466

  

8,612

  

4,746

  

4,298

 

Unallocated items, eliminations and other

(44)

  

(66)

  

(2)

  

(66)

 

Total revenues

$37,672

  

$30,672

  

$19,751

  

$16,681

 

(Loss)/earnings from operations:

       

Commercial Airplanes

($998)

  

($1,116)

  

($383)

  

($219)

 

Defense, Space & Security

(739)

  

(858)

  

(527)

  

71

 

Global Services

1,703

  

1,360

  

856

  

728

 

Segment operating earnings/(loss)

(34)

  

(614)

  

(54)

  

580

 

Unallocated items, eliminations and other

(796)

  

(335)

  

(336)

  

(84)

 

FAS/CAS service cost adjustment

582

  

567

  

291

  

284

 

(Loss)/earnings from operations

(248)

  

(382)

  

(99)

  

780

 

Other income, net

622

  

434

  

320

  

253

 

Interest and debt expense

(1,270)

  

(1,293)

  

(621)

  

(656)

 

(Loss)/earnings before income taxes

(896)

  

(1,241)

  

(400)

  

377

 

Income tax benefit/(expense)

322

  

159

  

251

  

(217)

 

Net (loss)/earnings

(574)

  

(1,082)

  

(149)

  

160

 

Less: net loss attributable to noncontrolling interest

(11)

  

(56)

     

(33)

 

Net (loss)/earnings attributable to Boeing Shareholders

($563)

  

($1,026)

  

($149)

  

$193

 

Research and development expense, net:

       

Commercial Airplanes

$915

  

$693

  

$471

  

$372

 

Defense, Space & Security

420

  

466

  

225

  

233

 

Global Services

54

  

54

  

28

  

27

 

Other

149

  

118

  

73

  

66

 

Total research and development expense, net

$1,538

  

$1,331

  

$797

  

$698

 

Unallocated items, eliminations and other:

       

Share-based plans

($38)

  

($108)

  

$14

  

($25)

 

Deferred compensation

(96)

  

166

  

(42)

  

124

 

Amortization of previously capitalized interest

(47)

  

(47)

  

(24)

  

(24)

 

Research and development expense, net

(149)

  

(118)

  

(73)

  

(66)

 

Eliminations and other unallocated items

(466)

  

(228)

  

(211)

  

(93)

 

Sub-total (included in core operating (loss)/earnings

(796)

  

(335)

  

(336)

  

(84)

 

Pension FAS/CAS service cost adjustment

445

  

413

  

222

  

205

 

Postretirement FAS/CAS service cost adjustment

137

  

154

  

69

  

79

 

FAS/CAS service cost adjustment

582

  

567

  

$291

  

$284

 

Total

($214)

  

$232

  

($45)

  

$200

 

The Boeing Company and Subsidiaries Deliveries and Backlog

(Unaudited)

Deliveries

 

Six months ended
June 30

 

Three months ended
June 30

 

Commercial Airplanes

 

2023

 

2022

 

2023

 

2022

 

737

 

216

  

189

  

103

  

103

  

747

 

1

  

3

  

  

2

  

767

 

9

  

12

  

8

  

7

  

777

 

9

  

12

  

5

  

9

  

787

 

31

  

  

20

  

  

Total

 

266

  

216

  

136

  

121

  
 

Defense, Space & Security

         

AH-64 Apache (New)

 

12

  

13

  

5

  

6

 

AH-64 Apache (Remanufactured)

 

29

  

28

  

16

  

13

 

CH-47 Chinook (New)

 

7

  

9

  

2

  

5

 

CH-47 Chinook (Renewed)

 

4

  

4

  

3

  

1

 

F-15 Models

 

6

  

5

  

4

  

4

 

F/A-18 Models

 

13

  

8

  

6

  

4

 

KC-46 Tanker

 

1

  

8

  

  

4

 

P-8 Models

 

5

  

6

  

2

  

3

 

Commercial and Civil Satellites

 

3

  

  

  

 
          

Total backlog (Dollars in millions)

             

June 30
2023

 

December 31
2022

                

Commercial Airplanes

             

$362,866

  

$329,824

                 

Defense, Space & Security

             

57,505

  

54,373

                 

Global Services

             

18,455

  

19,338

                 

Unallocated items, eliminations and other

             

738

  

846

                 

Total backlog

             

$439,564

  

$404,381

                 
                                 

Contractual backlog

             

$417,037

  

$381,977

                 

Unobligated backlog

             

22,527

  

22,404

                 

Total backlog

             

$439,564

  

$404,381

                 
                                 

SOURCE Boeing

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