NASDAQ: BA
Revenue
- 1Q2012 $19.4 billion
- Previous quarter $19.6 billion
- Same quarter 2011 $14.9 billion
- Revenue down by $.2 billion from previous quarter which was anticipated after a decrease in network and space systems, driven by the expected lower volume associated with the Brigade Combat Team Modernization program.
Revenue higher than last year due to increased commercial airplane delivery volume and a successful F-15 Saudi program:
U.S., Saudi Arabia Sign $29.4 Billion F-15 Fighter Deal Backed By Congress
Steady Sales:52 week low $56.01 and 52 week high $77.83
Company backlog increased $24 billion in the first quarter
?Our company backlog of $380 billion is close to 5x our current annual revenue estimate. ? ?W. James McNerney, Boeing CEO
Delivered 137 airplanes, including five 787s and six 747-8s, and recorded net orders for 412 airplanes, including 301 firm orders for the 737 MAX. Customer response for the 737 MAX remains positive. Boeing continues to convert existing commitments to firm orders as planned, with a total of 451 recorded to date. Reported 30 defense/security aircraft as well as three satellite deliveries in the first quarter.
Future perspective
Boeing increases earnings per share guidance to be between $4.15 and $4.35 per share to incorporate the reduction in a litigation-related reserve. All other financial guidance remains unchanged. Commercial deliveries forecast remains at about 585 to 600 airplanes. Forecast continues to include a combined 70 to 85 787s and 747-8 deliveries split roughly equally between the 2 programs.
Focus is on production ramp-up and profitability across all Commercial Airplane programs; successful execution of ongoing development efforts on the 787-9, the 737 MAX and the Air Force Tanker; and repositioning Defense business while extending core programs and expanding internationally
Boeing has suggested that 787 deliveries will range between 35 and 42 for 2012 (combined 747 and 787 deliveries are expected to be 70-85, and management suggested an even split between the two). With a list price of $193.5 million per plane and around 40 aircraft, the 787 could deliver $7.8 billion in revenue for 2012 and help drive total 2012 aircraft segment sales of $48.5 billion (at the midpoint) from $36 billion in 2011.?Seeking Alpha
A record backlog of commercial-jet orders is setting up Boeing for a surge in cash as the Chicago-based planemaker cranks up production and trims spending for aircraft development programs such as the 787 Dreamliner.
Production ramp-up
Production rate increases planned over the next 3 years will increase output by more than 40%. From a unit cost perspective, the 787 has already seen an average 40% to 50% reduction in production expense.
Working with supplier partners to ensure successful production rate increases, not only on the 787 and the 747-8, but also on the 737 and the 777. Recently transitioned the 787 production line to a build rate of 3.5 per month in final assembly in Everett, marking the second successful rate increase in the past 6 months. Production rate on the 737 is planned to increase to 38 per month in the second quarter of 2013, and then up to 42 per month in the first half of 2014. Production on the 777 program will increase to 8.3 per month in the first quarter of 2013.
The machinist contract signed in 2011 will help execute plans to increase production.
President?s fiscal year 2013 budget and defense spending
The Department of Defense’s fiscal 2013 budget request of $525 billion in the base budget and $88.4 billion for overseas contingency operations was a decline of around $32 billion from fiscal 2012. The Budget Control Act of 2011 paved the way for the Defense Department to remove $487 billion over 10 years from defense spending, including $259 billion in the first five years. Still, Boeing estimates that its top 15 programs will see a 4.2% reduction versus the 13% reduction for all Defense Department programs for fiscal 2013 due to anticipated alignment in the proposed budget and the Defense Department’s new strategic guidance with several of Boeing’s targeted growth areas, including space, unmanned, ISR and cyber security.
?We’ve invested significantly over the last few years either through prototyping or external growth and acquisition in cyber, unmanned and ISR. So we’re trying to position ourselves well for that world that’s coming at us. And when you add it all up, both on market share on the international side is increasing…and our position within the U.S. budget is strong. And I didn’t even mention P-8 and Tanker, which are the 2 growth programs that are on top of all of that. So we feel like it’s a down environment in defense. We feel about as well positioned as we could be.? ?W. James McNerney
The defense segment historically brought in around half of Boeing’s total revenue, but will begin to contribute less starting in 2012. Over the years, this segment has delivered solid performance, with operating margins around 10%. By consolidating facilities and cutting the executive-level workforce over the past three years, the division is prepared to post similar profitability in the new environment of limited growth in defense spending.?Seeking Alpha
Earnings estimates
Most analysts are upgrading Boeing stock. The average price target is $85.21 (Highest $96.00, Barclays Lowest: $72.00, Nomura Securities)
Product pipeline
Steady progress has been made on development of the 787-9, with engineering design tracking in support of first flight scheduled for the second half of 2013 and first delivery in early 2014. ANA will receive four additional copies of the Boeing 787-9 Dreamliner after adjusting their 55 plane order.
In addition to its sales momentum, the 737 MAX achieved a major development milestone in February when it began the final phase of wind tunnel testing. The MAX is on schedule to reach firm configuration in 2013. (451 of the 1,000 August 2011 commitments have now converted to official orders.)
Boeing successfully completed a Preliminary Design Review (PDR) of the company?s integrated Commercial Crew Space Transportation system, which includes the Crew Space Transportation (CST)-100 spacecraft, on March 12. The integrated system will provide the United States with the capability to transport people and cargo to the International Space Station (ISS), the Bigelow Space Complex and other destinations in low Earth orbit.
UAVs
Boeing?s liquid-hydrogen powered Phantom Eye spy plane has completed its first autonomous flight.
The new technology was designed with the capability of four days of unrefueled, autonomous flight.
New alliances
Boeing and Embraer Sign Agreement to Collaborate on KC-390 Program
The collaboration will involve sharing technical know-how and market analysis, including development of aviation biofuels to spur development of the Brazilian firm’s KC-390 military aircraft.
Boeing cash flows are ready for uplift, driven by commercial aircraft delivery growth. The order book is extremely strong, and production is likely to hold even in a slower economic growth environment.
Second quarter 2012 revenue is forecasted to grow to US$17.5 billion, an increase of 5.9 percent over the year-ago quarter and a decline of almost 10 percent from the first quarter of the year. Revenue-share is forecasted to grow to 97.7.Given the forecast for an increase in revenue-share, investors should accumulate shares of Boeing on dips as the downside to value is limited. Additionally, the long-term prospects of the firm remain excellent.
Boeing fully expects to win orders from traditional Airbus customers in 2012 as it talks to them about the improved fuel economics with MAX over Airbus’ A320neo. Furthermore, Boeing is in a position to continue challenging Airbus in the twin aisle market with the 787-9 versus Airbus’ A350 platform.?Seeking Alpha
Productivity and cost-effectiveness are the measures under which defense will continue to operate. As the spending environment becomes difficult, the company with the best products and the lowest total costs will win more business. Boeing’s defense backlog ended 2011 at $62.2 billion, a slight decline from $65.3 billion at year-end 2010. It bounced back strongly in the first quarter of 2012, to $74.5 billion.
