The Boeing Company
) delivered upbeat second quarter 2014 results backed by robust
deliveries. The company reported adjusted second quarter 2014
earnings of $2.42 per share, beating the Zacks Consensus Estimate
by 19.8%. The quarterly number rose an impressive 44.9% from $1.67
per share a year ago.
Including pension-components related to market fluctuations and
other items, Boeing reported a profit of $2.24 a share, up 59% from
$1.41 per share in the year-ago quarter.
The Boeing Company - Earnings Surprise |
The company's top line rose a negligible 1.1% year over year to
$22,045 million in the reported quarter, failing to meet the Zacks
Consensus Estimate of $22,324 million.
Backlog at the end of the second quarter increased to $440.3
billion from $439.9 billion at the end of first quarter 2014.
Reported backlog included $23 billion of net orders during the
Commercial Airplane Segment
The segment saw a 5% increase in revenues to $14,304 million on
higher delivery volume. Operating margin expanded 10 basis points
(bps) to 10.8% on the back of higher deliveries and a robust
operating performance. However, margins were impacted by the $238
million pre-tax charge on the KC-46A Tanker program.
In the reported quarter, Boeing delivered 181 commercial
airplanes, approximately 7.1% higher than the year-ago number.
During the quarter, the Next Generation 737 model proved yet again
its unfailing popularity, delivering 124 airplanes, followed by its
787 model with 30 deliveries. In the year-earlier period, the
company had delivered 116 units of the 737 and 16 units of the 787
model. Boeing also delivered 24 777s during the second quarter
2014, while delivering 23 units in the year-ago period.
Its 787 Dreamliner, despite setbacks and technical snags,
remains a popular choice for major airlines, roughly doubling its
deliveries in the second quarter of 2014.
Boeing won net orders for 264 planes in the June 2014 quarter
with backlog reaching 5,200 airplanes valued at a record $377
Boeing Defense, Space & Security (BDS)
Boeing Defense, Space & Security segment however witnessed
an approximately 5% year-over-year decrease in its quarterly
revenues to $7,747 million. All its sub-segments - Boeing Military
Aircraft (BMA), Network & Space Systems (N&SS) and Global
Services & Support (GS&S) - recorded a top-line drop of 3%,
6% and 8%, respectively.
Quarterly operating margin contracted 200 bps year over year to
Backlog at Defense, Space & Security stood at $63 billion,
36% of which comprised orders from international clients.
Boeing's deliveries in the defense and space business numbered
47 in the second quarter 2014 compared with 31 in the year-ago
period. The breakdown includes 15 Chinook helicopters, 12 F/A-18E/F
and EA-18G fighter jets and 9 Apache helicopters, as well as 4
units of F-15, 2 C-17, 2 P-8, 2 Satellites (Government &
Commercial) and 1 AEW&C.
Boeing Capital Corporation (BCC)
Boeing Capital Corporation reported quarterly revenues of $90
million compared with $104 million in the year-ago quarter. The
segment witnessed earnings from operations of $33 million, up 73.7%
from the year-ago period.
At the end of second quarter 2014, BCC's portfolio balance was
$3.4 billion, down from $3.5 billion at the beginning of the
Boeing ended the second quarter with cash and cash equivalents
of $7,533 million and short-term investments of $3,797 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 $7,292 million in the reported quarter (versus $8,072
million at 2013 end) with a debt-to-capitalization ratio of
The company generated $1,809 million of operating cash flow
before pension contributions in the second quarter 2014, compared
with $3,480 million generated in the same period last year, showing
a significant 48% decrease.
The company raised its adjusted or core earnings per share
forecast for 2014 to $7.90 to $8.10 a share from its earlier view
of $7.15 to $7.35. The upsurge reflects $408 million in tax
benefits and strong operating performance.
Boeing expects 2014 GAAP earnings in the range of $6.85-$7.05
per share. The increased guidance triggered a 1.5% gain in the
share price in pre-market trade today.
The company, however, maintained its top-line projection in the
range of $87.5-$90.5 billion for 2014.
Commercial Airplanes' 2014 deliveries are expected between 715
and 725 airplanes. This includes approximately 110 units of 787.
Commercial Airplanes' 2014 revenues are pegged in a band of $57.5
billion to $59.5 billion with operating margin of over
Although the threat of defense cutbacks will continue to 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. The company
expects segment revenues 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
Boeing currently holds a Zacks Rank #3 (Hold).
This aerospace behemoth once again clocked solid second quarter
results buoyed by higher commercial aircraft deliveries. Boeing
made two strategic acquisitions during the quarter, namely, Ventura
Solutions Inc., a hardware and software engineering company and
AerData Group B.V., a provider of technical services for aircraft
and engine operators. These acquisitions will further enhance
Boeing's product offering.
In spite of setbacks and technical snags at its Commercial
Airplane Division, 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.
The gradual economic recovery and consolidation within the
industry have enabled airlines to place big orders for new
airplanes. The aircraft manufacturing market is limited to a few
players, namely, Boeing, Airbus, Bombardier and
). The company expects passenger traffic in the Asia-Pacific
region, specifically China, to rise by leaps and bounds driven by
At the Peers
Yesterday, Pentagon's prime contractor,
Lockheed Martin Corp.
), posted impressive second quarter 2014 earnings before the
opening bell in spite of the uncertain budget environment. The
company reported quarterly earnings of $2.76 per share, comfortably
surpassing the Zacks Consensus Estimate of $2.66 by 3.8%.
Boeing's closest peer,
Northrop Grumman Corp.
) reported second-quarter 2014 adjusted earnings of $2.04 per
share, lagging the Zacks Consensus Estimate of $2.20 by 7.3%.
However, earnings were 3.6% higher year over year.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
BOEING CO (BA): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
To read this article on Zacks.com click here.