The Boeing Company
) reported stellar fourth quarter 2013 results on the back of a
solid performance across the company's businesses and robust
deliveries. Its adjusted fourth quarter 2013 earnings came in at
$1.88 per share, beating the Zacks Consensus Estimate of $1.58 by
19.0% as well as the year-ago profit of $1.46 by 28.8%.
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Full year 2013 earnings came in at $7.07 per share, up 20.2% from
the year-earlier level of $5.88. The company's strong numbers
came from a solid operating performance fueled by higher aircraft
deliveries along with customer-focused business strategies and
disciplined execution. The full-year figure also surpassed the
Zacks Consensus Estimate of $6.72 per share.
The company's top line grew 6.6% year over year to $23,785
million in the reported quarter, beating the Zacks Consensus
Estimate of $22,316 million. In 2013, total revenue increased
6.0% year over year to $86,623 million, above our projection of
2013 year-end backlog also increased to a record $441 billion
from $415 billion at the beginning of the quarter. Reported
backlog included $48 billion of net orders during 2013. On a
year-over-year basis, backlog grew by $51 billion and included
$135 billion of net orders in 2013.
Commercial Airplane Segment
Boeing's deliveries in the Commercial Airplane segment boosted
4.2% year over year to 172. The segment saw a 4% increase in
revenue to $14,680 million on higher delivery volume. Operating
margin expanded 140 basis points (bps) to 10.3% on the back of
higher deliveries and robust operating performances.
During the fourth quarter, the 737 model continued to be the
pillar of Boeing's strength in the commercial airplane sector
with deliveries of 110 airplanes, followed by its 777 and 787
models with 25 deliveries each. In the year-earlier period, the
company delivered 105 units of the 737, 21 units of the 777 model
and 23 units of 787.
Boeing's commercial delivery of 648 planes during 2013
accelerated 7.8% year over year thanks to robust 787 Dreamliner
deliveries, which showed no slowing down even in the face of a
series of technical glitches.
Boeing won net orders for 465 planes in the Dec 2013 quarter and
1,355 during the year. Backlog at 2013 end remained strong
with 5,080 airplanes valued at a record $374 billion.
Boeing Defense, Space & Security (BDS)
Boeing Defense, Space & Security segment witnessed an
approximately 6% year-over-year improvement in its quarterly
revenue to $8,855 million. Of the sub-segments, Boeing Military
Aircraft (BMA) and Network & Space Systems (N&SS)
witnessed a top-line climb of 9% and 12%, respectively. However,
the Global Services & Support (GS&S) registered a decline
Quarterly operating margin expanded 180 bps year over year to
Backlog at Defense, Space & Security stood at $67 billion,
37% of which comprised orders from international clients.
Meanwhile, Boeing's deliveries in the defense and space business
numbered 52 in the reported quarter and 171 in 2013 compared with
35 in the fourth quarter of 2012 and 154 in 2012. In 2013,
numbering among the total deliveries were 48 F/A-18E/F and EA-18G
fighter jets, 44 Chinook helicopters, and 37 Apache helicopters.
The company also delivered 14 units of F-15, 11 P-8, 10 C-17 and
Boeing Capital Corporation (BCC)
Boeing Capital Corporation reported quarterly revenues of $105
million compared with $129 million in the year-ago quarter. The
segment witnessed earnings from operations of $9 million versus a
loss of $12 million in the year-ago period.
At the end of fourth quarter 2013, BCC's portfolio balance was
Boeing ended 2013 with cash and cash equivalents of $9,088
million and short-term investments of $6,170 million. At year-end
2012, the company had $10,341 million in cash and cash
equivalents and $3,217 million of short-term investments. The
long-term debt stood at $8,072 million in 2013 (versus $8,973
million at 2012 end) with a debt-to-capitalization ratio of
The company generated $1,409 million of operating cash flow
before pension contributions in the fourth quarter 2013, compared
with $4,204 million generated in the same period last year,
showing a 66.5% decrease.
Boeing provided full-year 2014 GAAP earnings guidance in the
range of $6.10-$6.30 per share. Its adjusted earnings guidance is
pegged at $7.00-$7.20 per share while the Zacks Consensus
Estimate is higher at $7.49 for 2014. The lower-than-expected
guidance was reflected in its share price, which fell 1.5% in
The company expects its top line 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 retains a Zacks Rank #1 (Strong Buy).
The gradual recovery in the global economy is bringing in a
steady improvement in passenger and freight traffic. This is
amply reflected in Boeing's swelling order book. After dominating
the Dubai Air Show with orders worth $101.5 billion, Boeing looks
to be in an advantageous position when compared to archrival
The aerospace major reported record jet deliveries in 2013,
beating its own projection, driven by strong commercial numbers.
The heightened deliveries were also a function of an increased
Besides its flourishing Commercial Airplane business, Boeing
continues to win substantial defense orders. Recently, the
company received a couple of contracts, worth $661 million, from
the U.S. Department of Defense. The solid performance of the
company over the last twelve months is also reflected in its
traded price. Boeing's share price closed at $136.49 on Dec 31,
reflecting a gain of 81.2% over the twelve-month period.
Moreover, its share price inched up 0.3% since the start of 2014.
At the Peers
The company's peer,
General Dynamics Corp
) fourth-quarter 2013 operating earnings were $1.76 per share, in
line with the Zacks Consensus Estimate. Earnings were ahead of
the year-ago figure of $1.39.
The world's largest stand-alone defense contractor,
Lockheed Martin Corp.
) posted fourth quarter 2013 adjusted earnings from continuing
operations of $2.38 per share, comfortably surpassing the Zacks
Consensus Estimate of $2.00 by 19.0%. Earnings in the reported
quarter also surged almost 21.4% from the year-ago adjusted
profit level of $1.96 per share. The upcast in earnings was
mainly attributable to its strong operational performance.
Boeing's closest peer,
Northrop Grumman Corp.
) is expected to release its fourth quarter 2013 results on Jan
30. The Zacks Consensus Estimate for the quarter is $1.94.