Boeing reports record 2017 results

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The Boeing Company reported fourth-quarter revenue of $25.4 billion with GAAP earnings per share of $5.18 and core earnings per share (non-GAAP) of $4.80 reflecting record deliveries and strong performance, as well as favorable tax reform of $1.74 per share.

Revenue was $93.4 billion for the full year reflecting deliveries mix with GAAP earnings per share of $13.43 and core earnings per share (non-GAAP) of $12.04 reflecting strong execution and favorable tax reform.

“Across Boeing our teams delivered a record year of financial and operational performance as they focused on disciplined execution of production and development programs, growing services, and delivering value to customers,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “That performance enables increased investments in our people and our business, and greater cash return to shareholders.”

“In 2017 we delivered the first 737 MAX airplanes, launched the 737 MAX 10 and completed the 787-10 first flight, all while delivering more commercial airplanes than ever before. We flew the first KC-46 Tanker to be delivered to the U.S. Air Force, were awarded an initial contract for the Ground Based Strategic Deterrent program, and a contract to provide 36 F-15 fighters to Qatar. We launched Boeing Global Services during the year, to deliver greater lifecycle value, and achieved growth that outpaced the market.”

“We actively positioned for future markets and growth by developing new products and services, investing to build vertical capabilities, launching the HorizonX innovation organization and bringing in new capabilities, including the acquisition of Aurora Flight Sciences. Looking forward, our team remains focused on winning through innovation, driving growth and productivity and extending our position as the world’s leading aerospace company – delivering the best value to our customers, our employees and our shareholders.”

Cash Flow Fourth Quarter Full Year
(Millions) 2017 2016 2017 2016
Operating Cash Flow $2,904 $2,832 $13,344 $10,499
Less Additions to Property, Plant & Equipment ($435) ($599) ($1,739) ($2,613)
Free Cash Flow $2,469 $2,233 $11,605 $7,886

Operating cash flow in the quarter of $2.9 billion was driven by strong operating performance. During the quarter, the company repurchased 6.7 million shares for $1.7 billion and paid $0.8 billion in dividends. For the full year, the company repurchased 46.1 million shares for $9.2 billion and paid $3.4 billion in dividends. Based on strong cash generation and confidence in the company’s outlook, the board of directors in December increased the quarterly dividend per share by 20 percent and replaced the existing share repurchase program with a new $18 billion authorization. Share repurchases under the new authorization are expected to be made over the next 24 to 30 months.

Cash, Marketable Securities and Debt Balances Quarter-End
(Billions) Q4 17 Q3 17
Cash $8.8 $8.6
Marketable Securities $1.2 $1.4
Total $10.0 $10.0
Debt Balances:
The Boeing Company, net of intercompany loans to BCC $8.6 $7.8
Boeing Capital, including intercompany loans $2.5 $3.0
Total Consolidated Debt $11.1 $10.8

Cash and investments in marketable securities totaled $10.0 billion, unchanged from the beginning of the quarter. Debt was $11.1 billion compared to $10.8 billion at the beginning of the quarter.

Total company backlog at quarter-end was $488 billion, up from $474 billion at the beginning of the quarter, and included net orders for the quarter of $40 billion.

Segment Results

Commercial Airplanes

Commercial Airplanes Fourth Quarter Full Year
(Dollars in Millions) 2017 2016 Change 2017 2016 Change

Commercial Airplanes Deliveries 209 185 13% 763 748 2%

Revenues1 $15,466 $14,382 8% $56,729 $58,012 (2)%
Earnings from Operations $1,784 $1,191 50% $5,432 $1,995 172%
Operating Margin1 11.5% 8.3% 3.2 Pts 9.6% 3.4% 6.2 Pts

Commercial Airplanes fourth-quarter revenue increased to $15.5 billion on higher planned delivery volume and mix. Fourth-quarter operating margin increased to 11.5 percent, reflecting strong execution.

During the quarter, Commercial Airplanes delivered a record 209 airplanes and the 787 program rolled out the first 787-10 airplane expected to deliver to launch customer Singapore Airlines. The 737 program delivered 44 MAX airplanes during the quarter and has captured over 4,300 orders since launch for the 737 MAX, including a recent order from flydubai for 175 airplanes. Development on the 777X is on track as production began on the first 777X flight test airplane this quarter.

Commercial Airplanes booked 414 net orders during the quarter. Backlog remains robust with over 5,800 airplanes valued at $421 billion.

Defense, Space & Security

Table 5. Defense, Space & Security Fourth Quarter Full Year
(Dollars in Millions) 2017 2016 Change 2017 2016 Change

Revenues $5,537 $5,282 5% $21,057 $22,563 (7)%
Earnings from Operations1 $553 $523 6% $2,223 $1,966 13%
Operating Margin1 10.0% 9.9% 0.1 Pts 10.6% 8.7% 1.9 Pts

Defense, Space & Security fourth-quarter revenue increased to $5.5 billion primarily on higher weapons deliveries, and fourth-quarter operating margin was 10.0 percent.

During the quarter, Defense, Space & Security signed a contract with the U.S. Air Force to provide 36 advanced F-15 fighter aircraft to Qatar. The KC-46 Tanker program received a contract to provide the first international KC-46 Tanker to Japan and received FAA certification for the 767-2C aircraft, verifying that the fundamental design of the KC-46 Tanker is safe and reliable. Additionally, we continued to make progress on the Commercial Crew program as we successfully completed Design Certification Review, which is a requirement prior to docking with the International Space Station.

Backlog at Defense, Space & Security was $50 billion, of which 40 percent represents orders from international customers.

Global Services

Table 6. Global Services Fourth Quarter Full Year
(Dollars in Millions) 2017 2016 Change 2017 2016 Change

Revenues $4,001 $3,417 17% $14,639 $13,925 5%
Earnings from Operations $617 $568 9% $2,256 $2,177 4%
Operating Margin 15.4% 16.6% (1.2) Pts 15.4% 15.6% (0.2) Pts

Global Services fourth-quarter revenue increased to $4.0 billion, reflecting growth across our portfolio. Fourth-quarter operating margin was 15.4 percent reflecting commercial parts mix.

During the quarter, Global Services was awarded a contract for F-15 Qatar Sustainment, signed an agreement with All Nippon for the 787 landing gear exchange program, and India selected BGS for P-8I Poseidon training. Global Services began flight testing on the first 737-800 Boeing Converted Freighter and received an order from GECAS for seven conversions. We continued to expand our digital solutions as a key enabler for growth, with our portfolio reaching around $1 billion of annual revenue in the quarter.

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