Aerospace giant The Boeing Company ( BA ) reported stellar
first quarter 2013 results, attributable to solid performance
across the company's businesses. Its adjusted first quarter 2013
earnings came in at $1.73 per share, beating the Zacks Consensus
Estimate of $1.47 by 17.7% as well as the year-ago profit level of
$1.40 by 24%.
The company's strong numbers came from solid operating performance
fueled by productivity gains and impressive program
However, on the revenue front, total revenue was $18,893 million,
down 3% from $19,383 million in the first quarter 2012 while
beating the Zacks Consensus Estimate of $18,666 million.
Although higher airplane deliveries on the 737 and 777 pulled up
the quarterly revenue beyond our expectation, lower 787 deliveries
undid the gains.
Backlog also increased to a record $392 billion that includes $20
billion of net orders during the quarter.
Commercial Airplane Segment
Boeing's deliveries in the Commercial Airplane segment remained at
par with the year-ago quarter at 137. The segment saw a 2% decrease
in revenue to $10,690 million due to delivery mix and lower
In the reported quarter, the 737 model continued to be the
pillar of Boeing's strength in the commercial airplane sector with
deliveries touching 102 airplanes. This was followed by its 777
model with 24 deliveries. In the year-earlier period, the company
delivered 99 units of the 737 and 20 units of the 777 model.BOEING CO (BA): Free Stock Analysis ReportGENL DYNAMICS (GD): Free Stock Analysis ReportLOCKHEED MARTIN (LMT): Free Stock Analysis
ReportNORTHROP GRUMMN (NOC): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
The company also delivered 6 747 series, 4 767 series and single
787 series airplanes versus 6, 7 and 5 deliveries, respectively, in
the year-ago period.
Operating margin surged 150 basis points (bps) to 11.4% on the
back of a favorable delivery mix and lower research and development
(R&D) expenses. This was partially offset by higher period
Boeing won net orders for 209 planes in the Mar 2013
quarter. Backlog at first quarter 2013 end remained strong
with more than 4,400 airplanes valued at a record $324
Boeing Defense, Space & Security (BDS)
Boeing Defense, Space & Security segment witnessed a 1% fall
in its quarterly revenue to $8,110 million. Of the sub-segments,
only Network & Space Systems (N&SS) witnessed a top-line
climb of 5%. However, both the Boeing Military Aircraft (BMA) and
the Global Services & Support (GS&S) registered declines of
3% and 5%, respectively.
Quarterly operating margin climbed 130 bps to 10.3%. This was due
to higher margins in all the three sub-segments.
Backlog at Defense, Space & Security stood at $68.0 billion,
42% of which comprises orders with international clients.
Boeing Capital Corporation (BCC)
Boeing Capital Corporation reported quarterly revenues of $105
million compared with $125 million in the year-ago quarter. The
segment witnessed 33.3% growth in its earnings from operations
valued at $44 million in the reported quarter.
At the end of first quarter 2013, BCC's portfolio balance was $4.2
Boeing ended the first quarter with cash and cash equivalents of
$8,335 million and short-term investments of $3,518 million. At
year-end 2012, the company had $10,341 million in cash and cash
equivalents and $3,217 million of short-term investments. Long-term
debt stood at $8,254 million in the reported quarter (versus $8,973
million at the 2012-end) with a debt-to-capitalization ratio of
The company generated more than $524 million of cash from
operating activities in the first quarter, compared with $837
million generated in the same period last year.
Boeing reaffirmed its full-year 2013 GAAP earnings in the range of
$5.00-$5.20 per share, and adjusted earnings of $6.10-$6.30 per
share. Revenue for 2013 is expected to be between $82 billion and
Commercial Airplanes' 2013 deliveries are expected to be between
635 and 645 airplanes. This includes more than 60 units of 787
deliveries. Commercial Airplanes' 2013 revenue is expected in a
band of $51 billion and $53 billion with operating margin of
Although the threat of defense cutbacks will loom over the company
going forward, the company still expects defense revenue for 2013
to be between $30.5 billion and $31.5 billion with operating margin
greater than 9%.
Boeing Capital Corporation expects that its aircraft finance
portfolio will continue to decline in 2013, as new aircraft
financing of less than $0.5 billion is expected to be lower than
the normal portfolio runoff through customer payments and
Boeing's 2013 R&D forecast is approximately $3.4
billion. Capital expenditures for 2013 are expected to be
between $2.3 billion and $2.5 billion.
Concerns relating to 787 units were finally resolved as Boeing
received the green light from the U.S. Federal Aviation
Administration ("FAA") for the 787 Dreamliner's redesigned
Following a broad review of certification tests, Boeing's new
improved 787 battery system was approved by the FAA. The company
has already initiated the modification work and FAA will likely
issue a directive soon, lifting the three-month ban once the fixing
Boeing currently retains a Zacks Rank #3 (Hold).
Its closest peer, Northrop Grumman Corporation (
NOC ) reported first
quarter 2013 results before the opening bell today. Adjusted
earnings per share of $1.94 easily surpassed the Zacks Consensus
Estimate of $1.73 and the year-ago figure of $1.88. The
significant upside in earnings was attributable to a lower share
count and strong operating performance.
Another peer, General Dynamics Corporation 's (
GD ) first-quarter
2013 operating earnings of $1.62 per share surpassed the Zacks
Consensus Estimate of $1.51 by 7.3%. Earnings were ahead of the
year-ago figure by 5 cents.
Again, the world's largest stand-alone defense contractor,
Lockheed Martin Corporation ( LMT ) posted first
quarter 2013 adjusted earnings of $2.48 per share, comfortably
surpassing the Zacks Consensus Estimate of $2.01 by 23.4%. The
upcast in earnings was mainly attributable to lower tax
While Northrop Grumman and Lockheed Martin retain a Zacks Rank #3
(Hold), General Dynamics carries a Zacks Rank #4 (Sell).