Boeing Company (BA) has posted fourth quarter fiscal 2009 earnings of $1.79 per diluted share, flying past the Zacks Consensus Estimate of $1.37 per share. For fiscal 2009 the company reported earnings of $1.89, beating the Zacks Consensus Estimate of $1.45 per share.
Boeing’s results reflect solid performance across its businesses. By contrast, the year-ago quarter results were affected by labor strike and a charge on the 747 program.
Boeing’s revenue for fiscal 2009 increased to $68.3 billion on higher commercial airplane deliveries and growth in the Defense, Space & Security business. By contrast, the company generated only $61 billion in revenues in fiscal 2009. In the fourth quarter of fiscal 2009 revenues rose 41.6% year-over-year to $18 billion.
Segmental Results
Commercial Airplane
Boeing Commercial Airplane segment’s fourth quarter revenue doubled to $9.2 billion from $4.6 billion in the year-ago quarter. The variance was largely due to a labor strike in the year-ago period. In the reported quarter, operating margin of 11.1% reflects strong operating performance and a diversified model mix in airplane deliveries.
Commercial Airplane segment’s fiscal 2009 revenue rose to $34.1 billion on higher airplane deliveries, partially offset by lower services volume. However, the segment posted a loss of $0.6 billion for fiscal 2009 due to charges on 787 and 747 series airplanes. The 787 charge reduced 2009 operating earnings by $2.7 billion. The charge was due to the reclassification of costs for the first three flight-test airplanes from program inventory to research and development expense. Series 747 charge was due to escalation in costs totaling $1.4 billion.
Commercial Airplanes booked 82 gross orders during the fourth quarter. At year’s end, Boeing’s fiscal 2009 contractual backlog remains strong with 3,375 airplanes valued at $250 billion.
Boeing Defense, Space & Security
Boeing Defense, Space & Security segment’s fourth quarter revenue rose 6% to $8.5 billion on account of increased military aircraft deliveries and higher volume in services. Operating margins were 9.7%, reflecting strong performance in Boeing Military Aircraft and Global Services & Support partially offset by additional costs on the Airborne Early Warning and Control program, which reduced margins by 1.6 points.
Boeing Defense, Space & Security segment’s fiscal 2009 revenue increased by 5% to $33.7 billion on growth in Global Services & Support and Boeing Military Aircraft segments. Operating earnings grew 2% to $3.3 billion, producing operating margins of 9.8%.
As of year-end 2009, segmental backlog stood at $64.8 billion, approximately two times expected 2010 revenue.
Boeing Capital Corporation
Boeing Capital Corporation reported fourth quarter revenue of $164 million compared to $168 million in the year-ago quarter. The segment generated earnings of $14 million compared to $19 million in the year-ago period. The downside was reflected in fiscal 2009 also when the company generated 6% lower revenues ($660 million) and 22% lower earnings ($126 million) compared to fiscal 2008.
Financial Condition
Boeing ended fiscal 2009 with cash and cash equivalents of $9.2 billion and short-term investments of $2 billion. At year’s end, fiscal 2008, the company had $3.3 billion in cash and cash equivalents and $11 billion of short-term investments.
The company generated $5.6 billion of cash in operating activities at the end of fiscal 2009, compared to $401 million in cash used in fiscal 2008. Long-term debt increased to $12.2 billion at the end of fiscal 2009 from $7 billion at the end of fiscal 2008.
Fiscal 2010 Outlook
Boeing expects its 2010 revenue to be in the guidance range of $64 billion – $66 billion. The guidance range is based upon stable operating performance amid lower volumes, higher pension expense and investment in development programs. Boeing in 2010 expects production rate reductions on 777 series and Army modernization and missile defense programs. The company expects fiscal 2010 earnings in the range of $3.70 – $4.00 per share. Boeing expects to contribute less than $100 million in pension contributions in fiscal 2010.
Fiscal 2011 Outlook
Boeing expects its fiscal 2011 revenue to be higher than its 2010 guidance range of $64 billion – $66 billion. The upside in revenue is expected to be fuelled by higher 787 and 747-8 series deliveries. Overall, the company expects to generate operating cash flow in excess of $5 billion.
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