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MIXED RESULTS FROM U.S. MAJORS

20 Oct 10. The third-quarter reporting season got under way with Lockheed Martin issuing flat figures with a profit warning, whilst Boeing produced improved results on the back of improved civil aircraft sales.

Boeing

The Boeing Company (NYSE: BA) reported third-quarter net income of $0.8bn, or $1.12 per share, on revenue of $17.0bn. The results reflect higher Commercial Airplanes volume and strong performance across the company’s core businesses. Results in 2009 were impacted by a 787 R&D reclassification ($2.60 per share) and a 747 charge ($0.99 per share).

The company increased its 2010 earnings per share guidance to between
$3.80 and $4.00 per share and operating cash flow guidance to greater than $1.5bn reflecting the continued strong performance in its Commercial Airplanes business. Revenue guidance was narrowed to between $64.5bn and $65.5bn.

“Our results and revised outlook reflect the continued strong performance of our commercial production and services programs and the ability of our defense businesses to produce solid results in a challenging environment,” said Jim McNerney, Boeing chairman, president and chief executive officer. “Orders were particularly encouraging, with a multi-year production contract for 124 F/A-18 aircraft and more than 200 net commercial airplane orders booked in the quarter, increasing our backlog and demonstrating improved overall market confidence.”

Boeing’s quarterly operating cash flow was $1.9bn, reflecting strong operating performance and timing of certain receipts and expenditures.

For the first nine months of 2010, operating cash flow was $1.8bn. Free cash flow was $1.6bn in the quarter and $1.1bn. Cash and investments in marketable securities totalled $10.0bn at quarter-end, unchanged from the prior quarter. Debt decreased by $0.5bn in the quarter due to Boeing Capital Corporation maturities. Also during the quarter, the company paid $0.8bn for the previously announced Argon ST and Narus acquisitions. Total company backlog at quarter-end was $321bn, up 3 percent in the
quarter, as backlog for both Commercial Airplanes and Defense, Space & Security increased during the period.

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes third-quarter revenue was $8.7bn, on higher airplane deliveries and services volume. Operating margin was 11.6 percent, reflecting the higher deliveries and continued strong operating performance. The prior year quarterly results were impacted by a $2.6bn 787 R&D reclassification and a $1.0bn 747 charge. Commercial Airplanes booked 257 gross orders during the quarter while 36 orders were removed from its order book. This contrasts with the year-ago period when net orders were 79 airplanes. Contractual backlog remains strong with 3,401 airplanes valued at $255bn, more than seven times the unit’s projected 2010 revenue.

Commercial Airplanes Operating Results

The 787 program achieved a series of flight test milestones during the quarter, and the sixth – and final – dedicated test aircraft joined the flight test fleet on October 4. Total firm orders for the 787 at quarter-end were 847 airplanes from 55 customers. First delivery is expected in mid-first quarter 2011.

Flight testing of the 747-8 Freighter also continued during the quarter as engineers worked to resolve previously identified technical discoveries. Delivery of the first 747-8 is planned for mid-2011, and a fifth flight test aircraft is being added to support the test schedule.

Boeing Defense, Space & Security

Boeing Defense, Space & Security’s third-quarter revenue declined 6 percent to $8.2bn and operating margin was 8.4 percent on lower volume and margins in Network & Space Systems (N&SS) and Boeing Military Aircraft (BMA).

BMA third-quarter revenue decreased by 5 percent to $3.8bn driven by fewer deliveries and a less favourable mix on the C-17 program. Op

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