Boeing Reports Strong Fourth-Quarter Results and 2012 Guidance

By on Friday, January 27th, 2012

The Boeing Company reported fourth-quarter net income rose to $1.4 billion, or $1.84 per share, on revenue of $19.6 billion. The results reflect continued strong core performance across the company’s businesses, a $0.52 per share impact related to a favorable tax settlement, and higher pension expense (Table 1). Fourth-quarter 2010 results included a $0.50 per share favorable tax settlement.

Net income for the full year increased to $4.0 billion, or $5.34 per share, on revenue of $68.7 billion, which included the impact of the favorable tax settlement ($0.53 per share for the year). Full-year 2010 results included the $0.50 per share favorable tax settlement and a $0.20 per share tax charge resulting from health care legislation.

Earnings guidance for 2012 has been established at between $4.05 and $4.25 per share reflecting solid core performance and higher pension expense. Revenue guidance for 2012 is between $78 and $80 billion.

Fourth-Quarter 2011

  • Earnings per share rose to $1.84, driven by strong core performance
  • EPS includes favorable tax settlement of $0.52 compared with $0.50 in 2010
  • Revenue rose to $19.6 billion on increased commercial airplane deliveries

Full Year 2011

  • Earnings per share increased 20 percent to $5.34 on record revenue of $68.7 billion
  • Operating cash flow increased 36 percent to $4.0 billion
  • Backlog grew to a record $356 billion including $103 billion of orders during the year

Outlook for 2012

  • EPS guidance of between $4.05 and $4.25 reflects strong operating performance offset by $0.83 of higher pension expense
  • Revenue guidance established at between $78 and $80 billion
  • Operating cash flow guidance set at greater than $5.0 billion includes $1.5 billion of discretionary pension contributions

“Strong fourth-quarter operating performance, record revenue and backlog, and expanded earnings and cash flow capped a year of substantial progress for Boeing in 2011,” said Jim McNerney, Boeing chairman, president, and chief executive officer. “Major accomplishments of our team during the year included certifying and delivering the first 787s and 747-8s, winning the U.S. Air Force Tanker program, launching the 737 MAX, and securing both an important U.S. missile defense contract and a key agreement for F-15s to Saudi Arabia.”

“We enter 2012 with renewed momentum, and proven business and product strategies. With a record backlog and intense focus on productivity, we are well positioned to deliver growth and increased competitiveness, even as we face constrained U.S. defense spending and pension headwinds. Our priorities for the year are to continue with disciplined increases in production rates for our commercial airplane customers, and to build on our strong position in defense, space and security with aggressive pursuit of growth in core, adjacent and international markets,” he said.

Boeing’s quarterly operating cash flow was $2.9 billion, with strong operating performance more than offsetting continued investment in the 787 and 747-8 programs. For the full year, operating cash flow was $4.0 billion. Free cash flow* was $2.4 billion in the quarter (Table 2).

Cash and investments in marketable securities totaled $11.3 billion at year-end (Table 3), up from $9.2 billion at the beginning of the quarter. Debt was unchanged in the quarter.

Total company backlog at year-end was a record $356 billion, up from $332 billion at the beginning of the quarter. Net orders for the quarter were $42 billion and included a significant mix of wide-body commercial airplanes. Backlog is up $34.6 billion from prior year-end, reflecting $103 billion of net orders in 2011.

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes fourth-quarter revenue increased by 31 percent to $10.7 billion on higher delivery volume and mix. Operating margin was 9.2 percent, reflecting lower R&D partially offset by the dilutive impact of initial 787 and 747-8 deliveries and higher period costs (Table 4).

For the full year, revenue increased by 14 percent on higher delivery volume, increased services revenue and mix. Operating margin was 9.7 percent, reflecting improved mix and lower R&D partially offset by higher period costs and the dilutive impact of initial 787 and 747-8 deliveries.

During the quarter, the first 747-8 Freighter was delivered to Cargolux and the 747-8 Intercontinental achieved FAA certification. Also during the quarter, the company and the International Association of Machinists & Aerospace Workers reached agreement on a four-year contract extension primarily related to machinists in Puget Sound.

At year-end, the company had over 1,000 orders and commitments for the 737 MAX, including 150 firm orders from launch customer Southwest Airlines.

Commercial Airplanes booked 379 net orders during the quarter and 805 during the full year. Backlog remains strong with more than 3,700 airplanes valued at a record $296 billion.

Boeing Defense, Space & Security

Boeing Defense, Space & Security’s fourth-quarter revenue increased by 4 percent to $8.5 billion, while operating margin was 10.2 percent (Table 5).

For the full year, revenue was unchanged at $32.0 billion. Operating margin increased to 9.9 percent, driven by higher Boeing Military Aircraft (BMA) margins.

BMA fourth-quarter revenue increased to $3.9 billion, due to Airborne Early Warning & Control (AEW&C) mix and higher KC-767 International Tanker deliveries partially offset by fewer C-17 deliveries. Operating margin increased to 9.5 percent, reflecting strong execution across various programs. Fourth-quarter 2010 included charges for higher costs on the AEW&C program. During the quarter, the U.S. Government and Saudi Arabia reached agreement on the purchase of 84 new F-15SA aircraft and upgrades to an additional 70 F-15Ss. Additionally, BMA was awarded the P-8A low rate initial production lot II production award from the U.S. Navy.

Network & Space Systems (N&SS) fourth-quarter revenue decreased to $2.0 billion, due to lower volume driven by termination of the Brigade Combat Team Modernization program. Operating margin decreased to 8.6 percent, reflecting higher R&D. During the quarter, N&SS was awarded the development and sustainment contract for Ground-based Midcourse Defense from the U.S. Missile Defense Agency. Also during the quarter, N&SS delivered the first 702 medium power satellite.

Global Services & Support (GS&S) fourth-quarter revenue increased to $2.6 billion, due to higher revenues in integrated logistics. Operating margin decreased to 12.6 percent, reflecting the current defense contracting environment. During the quarter, GS&S was awarded the C-17 Globemaster III Integrated Sustainment Program from the U.S. Air Force.

Backlog at Defense, Space & Security was $60 billion.

Read Full Report, detailed with tables, etc., at Boeing’s website

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