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Boeing (BA) Q2 Earnings Miss Estimates, Sales Decline Y/Y

The Boeing Company BA incurred adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.93. However, the bottom line improved from the year-ago quarter’s loss of $5.82.

Including one-time items, the company posted GAAP loss of $4.20 per share compared with loss of $5.21 registered in the second quarter of 2019.

Revenues

In the quarter under review, Boeing’s revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate of $12.61 billion by 6.3%. The top line declined 25% from the year-ago quarter’s figure of $15.75 billion.

This decline was due to lower year-over-year revenues that the company’s segments recorded in the reported quarter, except its defense unit.

Total Backlog

Backlog at the end of second-quarter 2020 slipped to $408.7 billion from $438.6 billion at the end of first-quarter 2020.

The Boeing Company Price, Consensus and EPS Surprise

The Boeing Company Price, Consensus and EPS Surprise

The Boeing Company price-consensus-eps-surprise-chart | The Boeing Company Quote

Segmental Performances

Commercial Airplane: Revenues at this segment plunged 65% to $1.63 billion due to lower delivery volume. The segment incurred operating loss of $2.76 billion compared with loss of $4.95 billion in the year-ago quarter.

Boeing delivered 20 commercial planes during the quarter under review, down 78%.

Backlog for this segment remains healthy with over 4,500 airplanes valued at $326 billion.

Boeing Defense, Space & Security (BDS): This segment recorded revenues worth $6.59 billion in the second quarter, reflecting almost no year-over-year change. While COVID-19 had an adverse impact on derivative aircraft programs, higher volume across the remainder of the portfolio offset that impact.

Meanwhile, this unit generated operating income of $600 million, compared with $975 million in the year ago quarter.

Backlog at BDS was $64 billion, 31% of which comprised orders from international clients.

Global Services: Revenues at this segment declined 23% to $3.49 billion on account of COVID-19 impacts. Moreover, this unit incurred operating loss of $672 million against operating income of $687 million in the year-ago quarter.

Boeing Capital Corporation (BCC): This segment reported quarterly revenues of $69 million compared with $75 million registered in the year-ago quarter.

At the end of second-quarter 2020, BCC's portfolio balance was $2.1 billion.

Financial Condition

Boeing exited the second quarter with cash and cash equivalents of $20 billion, and short-term and other investments of $12.44 billion. At the end of 2019, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $58.46 billion at the end of the reported quarter, up from $19.96 billion at 2019 end.

Boeing’s operating cash outflow at the end of the second quarter was $9.58 billion against cash inflow of $2.20 billion at the end of June 2019.

Free cash outflow totaled $10.36 billion at second-quarter 2020 end against free cash flow of $1.28 billion at the end of second-quarter 2019.

Guidance

Due to the uncertainty regarding the timing and conditions related to the 737 MAX fleet’s return to service, Boeing has once again refrained from issuing its guidance for now.

Zacks Rank

Boeing currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Teledyne Technologies TDY reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%.

Lockheed Martin LMT reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

Hexcel Corporation HXL reported second-quarter 2020 adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 20 cents by 60%.

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