The Boeing Company
) once again started the year on an impressive note, delivering
strong first quarter 2014 results backed by robust deliveries.
The company reported adjusted first quarter 2014 earnings of
$1.76 per share, beating the Zacks Consensus Estimate as well as
ahead of the year-ago adjusted profit of $1.54 by 14.3%.
The company's top line grew 8.3% year over year to $20,465
million in the reported quarter, beating the Zacks Consensus
Estimate of $20,305 million.
Backlog at the end of the first quarter decreased to $439.8
billion from $440.9 billion at the end of 2013. Reported backlog
included $19 billion of net orders during the quarter. Although
the backlog declined sequentially, it grew by $48.1 billion on a
Commercial Airplane Segment
The segment saw a 19% increase in revenue to $12,737 million on
higher delivery volume. Operating margin expanded 40 basis points
(bps) to 11.8% on the back of higher deliveries and a robust
In its first quarter of 2014, Boeing delivered 161 airplanes,
approximately 17.5% higher than the year-ago number. During the
quarter, the Next Generation 737 model continued to be the pillar
of Boeing's strength in the commercial airplane sector with
deliveries of 115 airplanes, followed by its 777 model with 24
Both these models continue to perform better than competing
models owing to fuel efficiency and lower operating costs. In the
year-earlier period, the company had delivered 102 units of the
737 and 24 units of the 777 model.
Boeing also delivered 18 787s during the first quarter 2014,
while delivering only 1 unit in the year-ago period.
Boeing won net orders for 235 planes in the March 2014 quarter
with backlog reaching 5,100 airplanes valued at a record $374
Boeing Defense, Space & Security (BDS)
Boeing Defense, Space & Security segment however witnessed an
approximately 6% year-over-year decrease in its quarterly revenue
to $7,633 million. Of the sub-segments, Boeing Military Aircraft
(BMA) and Network & Space Systems (N&SS) recorded a
top-line plunge of 13% and 4%, respectively. However, Global
Services & Support (GS&S) registered an improvement of
Quarterly operating margin contracted 10 bps year over year to
Backlog at Defense, Space & Security stood at $66 billion,
35% of which comprised orders from international clients.
Meanwhile, Boeing's deliveries in the defense and space business
numbered 46 in the first quarter 2014 compared with 45 in the
comparable period last year. In the quarter under review,
numbering among the total deliveries were 17 Chinook helicopters,
11 F/A-18E/F and EA-18G fighter jets and 10 Apache helicopters.
The company also delivered 4 units of F-15, 3 C-17 and 1
Boeing Capital Corporation (BCC)
Boeing Capital Corporation reported quarterly revenues of $82
million compared with $105 million in the year-ago quarter. The
segment witnessed earnings from operations of $44 million, at par
with the year-ago period.
At the end of first quarter 2014, BCC's portfolio balance was
$3.5 billion, down from $3.9 billion at the end of fourth quarter
Boeing ended the first quarter with cash and cash equivalents of
$6,942 million and short-term investments of $5,282 million. At
year-end 2013, the company had $9,088 million in cash and cash
equivalents and $6,170 million of short-term investments.
Long-term debt stood at $7,275 million in the reported quarter
(versus $8,072 million at 2013 end) with a debt-to-capitalization
ratio of 33.2%.
The company generated $1,112 million of operating cash flow
before pension contributions in the first quarter 2014, compared
with $524 million generated in the same period last year, showing
a significant 112% increase.
Boeing reaffirmed its full-year 2014 GAAP earnings guidance in
the range of $6.10-$6.30 per share. The company raised its 2014
forecast for core earnings per share to a range of $7.15 to
$7.35, up 15 cents at both ends. The Zacks Consensus Estimate is
higher at $7.40 for 2014. The increased guidance triggered a 2.7%
gain in the share price in pre-market trade today.
The company also maintained its top-line projection in the range
of $87.5-$90.5 billion for 2014.
Commercial Airplanes' 2014 deliveries are expected to be between
715 and 725 airplanes. This includes approximately 110 units of
787 deliveries. Commercial Airplanes' 2014 revenue is expected in
a band of $57.5 billion to $59.5 billion with operating margin at
Although the threat of defense cutbacks will loom over the
company going forward, Boeing still remains optimistic with a
2014 defense revenue target of $30.0 billion to $31.0 billion and
an operating margin of approximately 9.5%.
Boeing Capital Corporation, however, expects its aircraft finance
portfolio to continue to shrink in 2014. Yet, the company expects
segment revenue to approximate $0.3 billion.
Boeing's 2014 R&D forecast is now approximately $3.2 billion.
Capital expenditures for 2014 are expected to be $2.5 billion.
Boeing currently holds a Zacks Rank #3 (Hold).
After reporting record jet deliveries last year, this aerospace
behemoth once again clocked solid first quarter results buoyed by
higher aircraft deliveries.
That said, the company has certainly witnessed setbacks and
technical snags at its Commercial Airplane Division.
Notwithstanding, Boeing is seeing strong growth driven by rising
demand for air travel from the emerging markets and replacement
(of older aircraft) demand from the developed markets.
Moreover, a recovery from the financial crisis and
consolidation within the industry have enabled airliners to place
big orders for new airplanes with aircraft manufacturers like
Boeing, Airbus, Bombardier and
). The company expects passenger traffic in the Asia-Pacific
region to rise by leaps and bounds driven by growing economies.
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Besides its flourishing Commercial Airplane business, Boeing
continues to win substantial defense orders. Recently, the
company won a sizable $1.16 billion contract modification to
supply the U.S. Army with AH-64E Apache helicopters.
Although the threat of defense cutbacks will loom over the
company going forward, with 7he $1.1 trillion Omnibus spending
measure, the defense majors are expected to see stability in
At the Peers
Yesterday, Pentagon's prime contractor,
Lockheed Martin Corp.
), posted impressive first quarter 2014 earnings before the
opening bell amid an uncertain budget environment. The company
reported quarterly earnings of $2.87 per share, comfortably
surpassing the Zacks Consensus Estimate of $2.52 by 13.9%.
Earnings in the reported quarter also surged 27.6% from $2.25 in
the year-ago quarter.
Boeing's closest peer,
Northrop Grumman Corp.
) reported first quarter 2014 adjusted earnings of $2.40 per
share, surpassing the Zacks Consensus Estimate of $2.15 by 11.6%.
Another defense major,
General Dynamics Corp.
), posted first quarter profit of $1.71 per share, beating the
bottom line consensus of $1.63 by 4.9%. The reported figure also
increased 5.6% year over year.