We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Boeing (BA) Incurs Loss in Q2 Hit by Charges, Guides Down
Read MoreHide Full Article
Aerospace giant The Boeing Company (BA - Free Report) incurred an adjusted loss of 44 cents per share in second-quarter 2016. The loss was, however, much narrower than the Zacks Consensus Estimate of a loss of 88 cents.
The quarterly number reflects after-tax charges in relation to three separate programs: the 787, the 747 and the KC-46 tanker aircraft program.
The bottom line plunged 127% year over year from earnings of $1.62 per share a year ago, owing to a 787 cost reclassification ($1.33 per share), and charges on the 747 ($1.28 per share) and the KC-46 Tanker (62 cents per share) programs.
On a GAAP basis, Boeing reported a loss of 37 cents per share, in stark contrast to earnings of $1.59 per share in the year-ago quarter.
The company's revenues increased 1% year over year to $24.76 billion in the reported quarter. The reported figure was also ahead of the Zacks Consensus Estimate of $24.45 billion.
Total Backlog
Backlog at the end of the second quarter declined to $472.2 billion from $489.3 billion at 2015 end. Reported backlog included $17 billion of net orders during the quarter.
Quarterly Segment Results
Commercial Airplane Segment: The segment saw 3% growth in revenues to $17.46 billion on higher delivery volume. Operating margin contracted 1,270 basis points (bps) year over year that reflected a previously announced R&D reclassification of $1,235 million on the 787 program, a pre-tax charge of $1,188 million on the 747 program, and a pre-tax charge of $354 million on the KC-46 Tanker program.
Boeing’s commercial deliveries of 199 airplanes increased 1% in the second quarter driven by higher demand for its 777 and 787 Dreamliners. Sequentially, deliveries showed a 13.1% uptick. However, deliveries of its single-aisle 737, its most popular plane, slipped to 127 in the second quarter from 128 a year ago as it was busy with a newer version, the 737 MAX.
Shipments for 777 and 787 Dreamliners were 28 and 38 compared with 26 and 34 in the year-ago period, respectively. For the 747 and 767 jets, the company’s deliveries were a respective 2 and 4 in the quarter, compared with 5 units of 747s and 4 units of 767s in the year-ago quarter.
Boeing won net orders for 152 planes in the Jun 2016 quarter with backlog reaching 5,700 airplanes valued at $417 billion.
Boeing Defense, Space & Security (BDS): The segment witnessed an approximately 5% year-over-year decrease in its quarterly revenues to $7.17 billion. Revenues for two of the three sub-segments – Boeing Military Aircraft (BMA) and Network & Space Systems (N&SS) – recorded year-over-year declines of 14% and 7%, respectively. Global Services & Support (GS&S) witnessed 12% year-over-year revenue growth.
Quarterly operating margin, however, expanded 110 bps year over year to 8.3%.
Backlog at BDS was $55 billion, 37% of which comprised orders from international clients.
In the defense and space business, Boeing’s deliveries numbered 45 in the second quarter of 2016, compared with 56 a year ago and 50 in the preceding quarter. Total deliveries in the quarter consisted of 15 AH-64 Apache helicopters (both new and remanufactured) and 14 Chinook helicopters (new and renewed). The company also delivered 6 F/A-18 jets, 5 P-8 models, 3 F-15s, 1 C-17 Globemaster III and 1 Commercial and Civil Satellite.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $84 million compared with $115 million in the year-ago quarter. The segment’s earnings were $18 million compared with $11 million a year ago.
At the end of the second quarter, BCC's portfolio balance was $3 billion, down from the beginning of the quarter.
Financial Condition
Boeing ended the second quarter with cash and cash equivalents of $8.61 billion and short-term investments of $660 million. At year-end 2015, the company had $11.30 billion of cash and cash equivalents and $750 million of short-term investments. Long-term debt was $9.85 billion in the second quarter, up from $8.73 billion at 2015 end.
The company generated $3.23 billion of operating cash flow in the quarter, down 2% year over year. Free cash flow was $2.56 billion in the quarter as against free cash of $2.61 billion a year back.
Guidance
Boeing lowered its adjusted or core earnings per share expectation to the range of $6.10–$6.30 from $8.15−$8.35 expected earlier for 2016. GAAP earnings are now expected in the range of $6.40–$6.60 per share versus $8.45-$8.65 projected earlier.
The company, however, maintained its 2016 revenue guidance in the range of $93−$95 billion.
Commercial Airplanes' 2016 delivery expectations are in the band of 740−745 airplanes with revenues projected in the $64−$65 billion range. Operating margin is now expected in the 4.5%-5.0% range (versus 9%).
The company maintained 2016 defense revenues in the $28.5 billion to $29.5 billion range and operating margin of approximately 10%.
Boeing Capital Corp. expects its aircraft finance portfolio to remain stable. The company expects segment revenues to approximate $0.3 billion.
Boeing's 2016 R&D forecast is now approximately $4.5 billion (versus $3.6 billion). Capital expenditures for 2016 are expected to be $2.8 billion.
Zacks Rank
Boeing currently holds a Zacks Rank #3 (Hold).
At the Peers
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings also increased 12.9% from the year-ago level.
Northrop Grumman (NOC - Free Report) reported second-quarter 2016 adjusted earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.50 by 4%. Earnings also jumped 5.3% from $2.47 earned in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced second-quarter 2016 earnings from continuing operations of $2.44 per share, beating the Zacks Consensus Estimate of $2.30 by 6.1%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Boeing (BA) Incurs Loss in Q2 Hit by Charges, Guides Down
Aerospace giant The Boeing Company (BA - Free Report) incurred an adjusted loss of 44 cents per share in second-quarter 2016. The loss was, however, much narrower than the Zacks Consensus Estimate of a loss of 88 cents.
The quarterly number reflects after-tax charges in relation to three separate programs: the 787, the 747 and the KC-46 tanker aircraft program.
The bottom line plunged 127% year over year from earnings of $1.62 per share a year ago, owing to a 787 cost reclassification ($1.33 per share), and charges on the 747 ($1.28 per share) and the KC-46 Tanker (62 cents per share) programs.
On a GAAP basis, Boeing reported a loss of 37 cents per share, in stark contrast to earnings of $1.59 per share in the year-ago quarter.
Revenues
The company's revenues increased 1% year over year to $24.76 billion in the reported quarter. The reported figure was also ahead of the Zacks Consensus Estimate of $24.45 billion.
Total Backlog
Backlog at the end of the second quarter declined to $472.2 billion from $489.3 billion at 2015 end. Reported backlog included $17 billion of net orders during the quarter.
Quarterly Segment Results
Commercial Airplane Segment: The segment saw 3% growth in revenues to $17.46 billion on higher delivery volume. Operating margin contracted 1,270 basis points (bps) year over year that reflected a previously announced R&D reclassification of $1,235 million on the 787 program, a pre-tax charge of $1,188 million on the 747 program, and a pre-tax charge of $354 million on the KC-46 Tanker program.
Boeing’s commercial deliveries of 199 airplanes increased 1% in the second quarter driven by higher demand for its 777 and 787 Dreamliners. Sequentially, deliveries showed a 13.1% uptick. However, deliveries of its single-aisle 737, its most popular plane, slipped to 127 in the second quarter from 128 a year ago as it was busy with a newer version, the 737 MAX.
Shipments for 777 and 787 Dreamliners were 28 and 38 compared with 26 and 34 in the year-ago period, respectively. For the 747 and 767 jets, the company’s deliveries were a respective 2 and 4 in the quarter, compared with 5 units of 747s and 4 units of 767s in the year-ago quarter.
Boeing won net orders for 152 planes in the Jun 2016 quarter with backlog reaching 5,700 airplanes valued at $417 billion.
Boeing Defense, Space & Security (BDS): The segment witnessed an approximately 5% year-over-year decrease in its quarterly revenues to $7.17 billion. Revenues for two of the three sub-segments – Boeing Military Aircraft (BMA) and Network & Space Systems (N&SS) – recorded year-over-year declines of 14% and 7%, respectively. Global Services & Support (GS&S) witnessed 12% year-over-year revenue growth.
Quarterly operating margin, however, expanded 110 bps year over year to 8.3%.
Backlog at BDS was $55 billion, 37% of which comprised orders from international clients.
In the defense and space business, Boeing’s deliveries numbered 45 in the second quarter of 2016, compared with 56 a year ago and 50 in the preceding quarter. Total deliveries in the quarter consisted of 15 AH-64 Apache helicopters (both new and remanufactured) and 14 Chinook helicopters (new and renewed). The company also delivered 6 F/A-18 jets, 5 P-8 models, 3 F-15s, 1 C-17 Globemaster III and 1 Commercial and Civil Satellite.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $84 million compared with $115 million in the year-ago quarter. The segment’s earnings were $18 million compared with $11 million a year ago.
At the end of the second quarter, BCC's portfolio balance was $3 billion, down from the beginning of the quarter.
Financial Condition
Boeing ended the second quarter with cash and cash equivalents of $8.61 billion and short-term investments of $660 million. At year-end 2015, the company had $11.30 billion of cash and cash equivalents and $750 million of short-term investments. Long-term debt was $9.85 billion in the second quarter, up from $8.73 billion at 2015 end.
The company generated $3.23 billion of operating cash flow in the quarter, down 2% year over year. Free cash flow was $2.56 billion in the quarter as against free cash of $2.61 billion a year back.
Guidance
Boeing lowered its adjusted or core earnings per share expectation to the range of $6.10–$6.30 from $8.15−$8.35 expected earlier for 2016. GAAP earnings are now expected in the range of $6.40–$6.60 per share versus $8.45-$8.65 projected earlier.
The company, however, maintained its 2016 revenue guidance in the range of $93−$95 billion.
Commercial Airplanes' 2016 delivery expectations are in the band of 740−745 airplanes with revenues projected in the $64−$65 billion range. Operating margin is now expected in the 4.5%-5.0% range (versus 9%).
The company maintained 2016 defense revenues in the $28.5 billion to $29.5 billion range and operating margin of approximately 10%.
Boeing Capital Corp. expects its aircraft finance portfolio to remain stable. The company expects segment revenues to approximate $0.3 billion.
Boeing's 2016 R&D forecast is now approximately $4.5 billion (versus $3.6 billion). Capital expenditures for 2016 are expected to be $2.8 billion.
Zacks Rank
Boeing currently holds a Zacks Rank #3 (Hold).
At the Peers
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings also increased 12.9% from the year-ago level.
Northrop Grumman (NOC - Free Report) reported second-quarter 2016 adjusted earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.50 by 4%. Earnings also jumped 5.3% from $2.47 earned in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced second-quarter 2016 earnings from continuing operations of $2.44 per share, beating the Zacks Consensus Estimate of $2.30 by 6.1%.
BOEING CO Price, Consensus and EPS Surprise
BOEING CO Price, Consensus and EPS Surprise | BOEING CO Quote
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>