Fourth-Quarter 2009
. Revenue grew to $17.9 billion and operating margin grew to 9.4 percent, driving net income to $1.75 per share
. Operating cash flow increased to $3.2 billion
Full-Year 2009
. Revenue grew to $68.3 billion while earnings reflected solid core operating performance affected by previously announced events
. Operating cash flow of $5.6 billion reflects strong management of working capital
. Cash and marketable securities of $11.2 billion provides strong liquidity for 2010
. Backlog of $316 billion - over four times current annual revenue
Outlook
2010 EPS guidance of $3.70 to $4.00 reflects lower volumes and considers risks
Table 1. Summary Financial Results
(Dollars
in
Millions,
except
per Fourth Quarter Full Year
share -------------- -------------
data) 2009 2008 Change 2009 2008 Change
--------------------------------------------------------------------
Revenues $17,937 $12,664 42% $68,281 $60,909 12%
Earnings/
(Loss)
From
Operations $1,693 ($243) NA $2,096 $3,950 (47%)
Operating
Margin 9.4% (1.9%) 11.3 Pts 3.1% 6.5% (3.4)Pts
Net
Income/
(Loss) $1,268 ($86) NA $1,312 $2,672 (51%)
Earnings/
(Loss)
per
Share $1.75 ($0.12) NA $1.84 $3.67 (50%)
Operating
Cash
Flow $3,212 ($1,641) NA $5,603 ($401) NA
The Boeing Company (NYSE: BA) reported fourth-quarter net income of $1.3 billion, or $1.75 per share, as revenue rose 42 percent to $17.9 billion. Current period results reflect solid performance across core businesses and represent a significant improvement over the year-ago quarter, which included a labor strike and a charge on the 747 program (Table 1).
Revenue for the full year reached a record $68.3 billion on higher commercial deliveries and growth in Defense, Space & Security. Earnings for the year declined to $1.84 per share due to a combined $3.58 per share impact from previously announced 787 and 747 events in Commercial Airplanes. Earnings for 2008 of $3.67 per share included a combined $2.56 per share impact primarily due to a labor strike and charges on the 747 program.
Earnings guidance for 2010 has been established at $3.70 to $4.00 per share, reflecting the previously announced 777 production rate reduction, reduced scope on Army modernization and missile defense programs, and some consideration for development program and market risks.
"We put a strong finish on 2009 by getting the 787 in the air and generating solid core operating performance across the company," said Jim McNerney, Boeing chairman, president and chief executive officer. "Focus areas for 2010 are to continue our strong operational performance, certify and deliver the 787 and 747-8, and further reposition our defense, space and security business. While the challenges ahead are significant, I believe we have the people and the resources we need to be successful and to begin consistently delivering on this company's great potential."
Boeing's quarterly operating cash flow was $3.2 billion, which includes higher cash receipts than the strike-affected period a year ago partially offset by continued investment in development programs (Table 2). For the full year, operating cash flow was $5.6 billion. Free cash flow* was $3.0 billion in the quarter and $4.4 billion for the year.
Table 2. Cash Flow
Fourth Quarter Full Year
-------------- ---------------
(Millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
Operating Cash Flow (1) $3,212 ($1,641) $5,603 ($401)
Less Additions to
Property, Plant &
Equipment ($221) ($445) ($1,186) ($1,674)
--------------------------------------
Free Cash Flow* $2,991 ($2,086) $4,417 ($2,075)
(1) Operating cash flow for the full year includes cash
contributions to pension plans of $82 million in 2009
and $531 million in 2008.
* Non-GAAP measure. A complete definition and
reconciliation of Boeing's use of non-GAAP measures,
identified by an asterisk (*), is found on page 8, "Non-GAAP
Measure Disclosure."
Cash and investments in marketable securities totaled $11.2 billion at year-end, up 70 percent in the quarter. The cash position was improved by the issuance of $2.2 billion in debt during the quarter and disciplined operational management (Table 3).
Table 3. Cash, Marketable Securities and Debt Balances
Quarter-End
-------------
(Billions) 4Q09 3Q09
----------------------------------------------------------------
Cash $9.2 $6.1
Marketable Securities(1) $2.0 $0.5
---- ----
Total $11.2 $6.6
Debt Balances:
The Boeing Company $8.8 $7.6
Boeing Capital Corporation $4.1 $3.4
---- ----
Total Consolidated Debt $12.9 $11.0
(1) Marketable securities consists primarily of time deposits
due within one year classified as "short-term investments."
Total company backlog at quarter-end was $316 billion, down 1 percent in the quarter, as backlog for both Commercial Airplanes and Defense, Space & Security declined during the period.
Outlook
The company's 2010 financial guidance reflects solid operating performance amid lower volumes, higher pension expense and continued investment in development programs (Table 7).
Boeing's 2010 revenue guidance is $64 billion to $66 billion and reflects previously announced production rate reductions on 777 and reduced scope on Army modernization and missile defense. Earnings guidance for 2010 of $3.70 to $4.00 per share reflects the lower revenue and includes some consideration for development program and market risks. Operating cash flow is expected to be approximately zero in 2010, including less than $100 million of pension contributions, as the company continues to build inventory on key development programs.
The company expects that 2011 revenue will be higher than 2010, primarily driven by higher estimates of 787 and 747-8 deliveries. Combining higher estimated deliveries with plans for R&D and other factors, operating cash flow in 2011 is expected to be greater than $5 billion.
Commercial Airplanes' 2010 delivery guidance is established at between 460 and 465 airplanes (reflecting fewer twin-aisle deliveries) and is sold out. It includes the first few 787 and 747-8 deliveries, which are expected to begin in the fourth quarter. The unit's 2010 revenue is expected to be $31 billion to $32 billion with operating margins between 6.5 percent and 7.5 percent.
Defense, Space & Security's revenue for 2010 is expected to be $32 billion to $33 billion with operating margins of approximately 10 percent.
Boeing Capital Corporation expects that its aircraft finance portfolio will continue to reduce as its expected new aircraft financing for 2010 is less than $0.5 billion, below normal portfolio runoff through customer payments and depreciation. BCC's debt-to-equity ratio is expected to return to the 5.0-to-1 level in the second half of 2010.
Table 7. Financial Outlook
(Dollars in Billions, except per-share data) 2010
-------------------------------------------------------------
The Boeing Company
Revenue $64 - $66
Earnings Per Share (GAAP) $3.70 - $4.00
Operating Cash Flow(1) ~ $0
Boeing Commercial
Airplanes
Deliveries 460 - 465
Revenue $31 - $32
Operating Margin 6.5% - 7.5%
Boeing Defense, Space & Security
Revenue
Boeing Military Aircraft ~ $15
Network & Space Systems ~ $9
Global Services & Support ~ $8.5
----------
Total BDS Revenue $32 - $33
Operating Margin
Boeing Military Aircraft ~ 10.5%
Network & Space Systems ~ 8.5%
Global Services & Support ~ 11%
----------
Total BDS Operating Margin ~ 10%
Boeing Capital
Corporation
Portfolio Size Lower
Revenue ~ $0.6
Return on Assets > 1.0%
Research & Development $3.9 - $4.1
Capital Expenditures ~ $1.9
(1) After cash pension contributions of less than $0.1 billion and
assuming new aircraft financings under $0.5 billion.
Boeing's 2010 R&D forecast is $3.9 billion to $4.1 billion on continued investment in development programs, including an operating model adjustment to better balance future R&D efforts at Commercial Airplanes. R&D is expected to decrease significantly in 2011. Capital expenditures for 2010 are expected to be approximately $1.9 billion reflecting the bulk of capital investments required for the second 787 assembly line in South Carolina. Capital expenditures in 2011 are expected to be lower than in 2010.
The company's non-cash pension expense is expected to be approximately $1.2 billion in 2010.
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