The Boeing Company
) reported stellar third quarter 2013 results on the back of a
solid performance across the company's businesses. Its adjusted
third quarter 2013 earnings came in at $1.80 per share, beating
the Zacks Consensus Estimate of $1.54 by 16.9% as well as the
year-ago profit of $1.55 by 16.1%.
The company's strong numbers came from solid operating
performance fueled by higher aircraft deliveries along with
customer-focused business strategies and disciplined execution.
Total revenue was $22,130 million, up 10.6% from $20,008 million
in the third quarter 2012 and ahead of the Zacks Consensus
Estimate of $21,612 million.
Backlog also increased to a record $415.1 billion from $410.3
billion in the preceding quarter. Reported backlog included $27
billion of net orders during the quarter.
Commercial Airplane Segment
Boeing's deliveries in the Commercial Airplane segment boosted
14.1% year over year to 170. The segment saw a 14.8% increase in
revenue to $13,987 million on higher delivery volume.
During the third quarter, the 737 model continued to be the
pillar of Boeing's strength in the commercial airplane sector
with deliveries of 112 airplanes, followed by its 777 model with
26 deliveries. Both these models continue to perform better than
competing models owing to their fuel efficiency and lower
In the year-earlier period, the company delivered 102 units of
the 737 and 20 units of the 777 model. Its 787 deliveries
advanced 91.6% on an annualized basis, delivering 23 units in the
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Operating margin expanded 210 basis points (bps) to 11.6% on the
back of higher deliveries and robust operating performances.
Boeing won net orders for 500 planes in the Sep 2013
quarter. Backlog at third quarter 2013 end remained strong
with more than 4,800 airplanes valued at a record $345 billion.
Boeing Defense, Space & Security (BDS)
Boeing Defense, Space & Security segment witnessed
approximately 3% year over year improvement in its quarterly
revenue to $8,046 million. Of the sub-segments, Network &
Space Systems (N&SS) and the Global Services & Support
(GS&S) witnessed a top-line climb of 9% and 10%,
respectively. However, Boeing Military Aircraft (BMA) registered
a decline of 5%.
Quarterly operating margin plunged 210 bps year over year to
Backlog at Defense, Space & Security stood at $70 billion,
38% of which comprised orders from international clients.
Meanwhile, Boeing's deliveries in the defense and space business
numbered 43 in the third quarter of 2013 compared with 50 in the
third quarter of 2012 and 31 in the second quarter 2013.
Boeing Capital Corporation (BCC)
Boeing Capital Corporation reported quarterly revenues of $94
million compared with $101 million in the year-ago quarter. The
segment witnessed a 25% increase in its earnings from operations
valued at $35 million in the reported quarter.
At the end of third quarter 2013, BCC's portfolio balance was
Boeing ended the third quarter with cash and cash equivalents of
$10,041 million and short-term investments of $5,870 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 $8,677 million in the reported quarter
(versus $8,973 million at 2012 end) with a debt-to-capitalization
ratio of 48.9%.
The company generated $4,308 million of operating cash flow
before pension contributions in the third quarter, compared with
$2,346 million generated in the same period last year, showing an
upsurge of 84%.
Boeing boosted its full-year 2013 GAAP earnings guidance to the
range of $5.40-$5.55 from its previous expectation of
$5.10-$5.30. The adjusted earnings guidance was raised to
$6.50-$6.65 per share from $6.20-$6.40 earlier. However, the
company maintained its top-line expectation in the range of
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 to $53 billion with operating margin greater
Although the threat of defense cutbacks will loom over the
company going forward, Boeing still remains optimistic with a
2013 defense revenue target of $31.5 billion to $32.5 billion and
an operating margin l of more than 9.25%.
Boeing Capital Corporation however expects its aircraft finance
portfolio to continue to shrink in 2013. Yet, the company boosted
its revenue expectation to approximately $0.4 billion, up from
about $0.3 billion.
Boeing's 2013 R&D forecast is now approximately $3.2 billion,
which is down from the earlier guidance of $3.3 billion. Capital
expenditures for 2013 are expected to be $2.3 billion.
Boeing currently retains a Zacks Rank #3 (Hold).
Despite the many technical glitches plaguing the much-hyped
Dreamliner, the company remains well on track with its robust
backlog and deliveries. During the quarter, its commercial unit
completed the first flight of the 787-9 and delivered 170
airplanes. Sequestration and budget cut notwithstanding, its
defense segment maintained a solid performance and fetched $7
billion in fresh new orders.
At the same time, we are cautious of the headwinds in the global
airline industry and cutbacks in the U.S. defense budget that
have certainly shaken the confidence of many investors. The
threat of sequestration has created significant planning
difficulties for the customers and the entire aerospace industry.
At the Peers
Boeing's closest peer,
Northrop Grumman Corp.
) reported third quarter 2013 results before the opening bell
today. Adjusted earnings per share of $1.97 comfortably surpassed
the Zacks Consensus Estimate of $1.81. Also, earnings were above
the year-ago figure by 13.9%.
General Dynamics Corp
) third quarter 2013 operating earnings of $1.84 per share
surpassed the Zacks Consensus Estimate of $1.68 by 9.5%. Earnings
were also ahead of the year-ago figure of $1.70, backed by robust
The world's largest stand-alone defense contractor,
Lockheed Martin Corp.
) posted third quarter 2013 earnings of $2.57 per share,
comfortably surpassing the Zacks Consensus Estimate of $2.26 by
13.7%. Earnings in the reported quarter also surged almost 16.3%
from the year-ago profit level of $2.21 per share. The upcast in
earnings was mainly attributable to strong operational