Boeing misses by $0.08, reports revs in-line; reaffirms FY23 OCF and FCF guidance; results reflects lower 737 deliveries and abnormal costs; lowers 737 unit delivery guidance (182.36)
- Reports Q3 (Sep) core (non-GAAP) loss of $(3.26) per share, excluding non-recurring items, $0.08 worse than the FactSet Consensus of ($3.18); revenues rose 13.5% year/year to $18.10 bln vs the $18.01 bln FactSet Consensus. Q3 results were impacted by unfavorable defense performance and lower 737 deliveries.
- Co reaffirms FY23 guidance of $4.5-$6.5 bln of operating cash flow and $3-5 bln of free cash flow (non-GAAP); co still expects to deliver 70-80 787 and now expects to deliver 375-400 737 airplanes in FY23 vs 400-450 prior guidance.
- "We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term," said Dave Calhoun, Boeing president and chief executive officer. "We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand."
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Segment Overview:
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Commercial Airplanes revenue rose 25% yr/yr to $7.88 bln with operating margin of (8.6)%, which reflects lower 737 deliveries as well as abnormal costs and period expenses, including R&D.
- On the 737 program, during the quarter a supplier non-conformance was identified on the aft pressure bulkhead section of certain 737 airplanes. This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. Near-term deliveries and production will be impacted as the program performs necessary inspections and rework, and the company now expects to deliver 375-400 airplanes this year. On production, suppliers are continuing with planned rate increases, and the company expects to complete the final assembly transition to 38 per month by year-end, with plans to increase to 50 per month in the 2025/2026 timeframe.
- The 787 program is now transitioning production to five per month and plans to increase to 10 per month in the 2025/2026 timeframe. The program still expects to deliver 70-80 airplanes this year.
- During the quarter, Commercial Airplanes booked 398 net orders, including 150 737 MAX 10 airplanes for Ryanair, 50 787 airplanes for United Airlines, and 39 787 airplanes for Saudi Arabian Airlines. Commercial Airplanes delivered 105 airplanes during the quarter and backlog included over 5,100 airplanes valued at $392 bln.
- Defense, Space & Security segment revenue rose 3% yr/yr to $5.48 bln. Results were impacted by a $482 mln loss on the VC-25B program driven by higher estimated manufacturing cost related to engineering changes and labor instability, as well as resolution of supplier negotiations. Results were also impacted by $315 mln of losses on a satellite contract due to estimated customer considerations and increased costs.
- Global Services revenue rose 9% yr/yr to $4.81 bln.
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