U.S. MAJORS SHOW FIRST QUARTER RESILIENCE

The Boeing Company

25 Apr 12. The Boeing Company (NYSE: BA) reported first-quarter net income rose to $0.9bn, or $1.22 per share, on revenue of $19.4bn. Earnings per share rose 56 percent, reflecting continued strong core performance across the company’s businesses, which more than offset higher pension expense. The results also include an increase in earnings of $0.11 per share related to a reduction in a litigation-related reserve. Earnings per share guidance for 2012 increased to between $4.15 and $4.35 to incorporate the reduction in the litigation-related reserve. The company reaffirmed its 2012 revenue and operating cash flow outlook.

“Strong core operating performance from our production programs and services businesses continues to drive expanded earnings, revenue and cash flow for Boeing,” said Jim McNerney, chairman, president, and chief executive officer. “We also grew our record backlog with more than 300 firm orders for our new 737 MAX, a contract award for 84 new F-15s for Saudi Arabia, and other key wins.”

“Our outlook for the year remains positive, and our team is focused on meeting our commitments to customers, profitably increasing commercial airplane production and delivery rates, and building on our strong position in defense, space and security markets.”

Boeing’s quarterly operating cash flow was $0.8bn, with higher commercial airplane deliveries, increased orders and strong operating performance more than offsetting continued investment in the 787 program. Free cash flow* was $0.4bn in the quarter.

Boeing Commercial Airplanes first-quarter revenue increased by 54 percent to $10.9bn on higher delivery volume and mix. Operating margin was 9.9 percent, reflecting the higher deliveries and lower R&D partially offset by higher period costs and the dilutive impact of 787 and 747-8 deliveries. During the quarter, the first two GEnx-powered 787s were delivered. The first 747-8 Intercontinental VIP airplane was also delivered during the quarter. Commercial Airplanes booked 412 net orders during the quarter, including 301 firm orders for the 737 MAX. Backlog remains strong with more than 4,000 airplanes valued at a record $308bn.

Boeing Defense, Space & Security’s first-quarter revenue increased to $8.2bn, while operating margin was 9.0 percent. Boeing Military Aircraft (BMA) first-quarter revenue increased to $4.3bn, primarily due to initial revenue for the F-15 Saudi Arabia contract. Operating margin was 10.1 percent, reflecting strong execution across various programs. During the quarter, BMA was awarded both domestic and international C-17 Globemaster III orders and delivered the first production P-8A Poseidon aircraft to the U.S. Navy.

Network & Space Systems (N&SS) first-quarter revenue decreased to $1.8bn, driven by lower volume on Brigade Combat Team Modernization and timing on United Launch Alliance. Operating margin was 4.1 percent, primarily due to the lower volume and satellite mix. During the quarter, N&SS launched its new 702 small satellite product line with a contract for four units through a joint international agreement.

Global Services & Support (GS&S) first-quarter revenue increased to $2.1bn, due to higher volume in integrated logistics. Operating margin was 10.9 percent, reflecting improved performance in integrated logistics. During the quarter, GS&S was awarded a performance-based logistics contract for the sustainment of the Republic of Korea Air Force fleet of F-15s.

Backlog at Defense, Space & Security increased by 20 percent to $72bn on F-15 and C-17 order activity in the quarter, bringing backlog to more than two times the unit’s projected 2012 revenue.

Boeing Capital Corporation

At quarter-end, Boeing Capital Corporation’s (BCC) portfolio balance was $4.2bn, down from $4.3bn at the beginning of the year on portfolio run-off and asset sales. BCC’s debt-to-equity ratio was 5.1-to-1, down from