Boeing reported an unexpected loss to end 2022 as the planemaker grappled continued to grapple with high costs that threaten to slow further its already moribund recovery. The aerospace giant reported an adjusted EPS loss of $1.75 in the fourth quarter, missing estimates of a 26c profit on revenue of just under $20 billion, roughly in line (but below) the average estimate compiled by Bloomberg.
The Q4 details:
- Loss per share $1.75, Adjusted loss per share $1.06; missing estimate +0.26
- Revenue $19.98 billion, missing estimate $20.01 billion
- Commercial Airplanes revenue $9.22 billion, beating estimate $9.1 billion
- Defense, Space & Security revenue $6.18 billion, +5.4% y/y, missing estimate $6.27 billion
- Global Services revenue $4.57 billion, beating estimate $4.54 billion
- Boeing Capital revenue $49 million, missing estimate $66.9 million
- Operating cash flow $3.46 billion vs. $716 million y/y, beating estimate $3.32 billion
- Commercial airplanes oper loss $626 million, -86% y/y, worse than estimate loss $177.3 million
- Defense, space & security oper earnings $112 million vs. loss $255 million y/y, missing estimate $307.1 million
- Global services oper earnings $634 million, missing estimate $717.3 million
- Boeing Capital operating earnings $15 million, missing estimate $31.7 million
- Adjusted free cash flow $3.13 billion, beating estimate $2.89 billion
- Backlog $404 billion
“While we have made meaningful progress, challenges remain and we have more work ahead to drive stability in our operations and within the supply chain,” Boeing Chief Executive Officer Dave Calhoun said in a separate memo to employees. “This will be another important year for us as we look to steadily increase our production rates, further improve performance, progress in our development programs and deliver on our commitments.”
The disappointing Q4 results underscore the work Boeing still has to do to return its factories to full gear and fully capitalize on soaring demand for air travel. The US aviation titan has already endured a difficult few years marked by the grounding of the cash-cow 737 Max and Covid-19 pandemic, before recent signs of recovery.
On the other hand, Boeing made good on a cash-flow recovery promised by executives, generating $3.1 billion in the quarter thanks to a late-year flurry of jet deliveries. That was better than the $2.89 billion Wall Street had expected for the period, and lifted the company to its first positive cash flow on an annual basis since 2018. Boeing had burned through more than $28 billion over the three-year stretch before the 2022 rebound.
Increasing deliveries bolsters cash, although Boeing also faces the added expense of bringing the aircraft out of storage and making repairs so they meet the latest airworthiness standards, according to George Ferguson, an analyst with Bloomberg Intelligence. He estimated that the company had 229 undelivered Max in its storage lots as of December.
Some more comments and context from the Q4 results, courtesy of Bloomberg:
- CEO: Demand Across Our Portfolio Is Strong
- 737 Program Stabilizing Production Rate at 31 Per Month
- 787 Program Continues at A Low Production Rate
- To Ramp 737 Production to 50/MO in 2025/2026 Timeframe
- Plans to Ramp 787 Program to 5/Month in Late 2023
- Total Co. Backlog at Quarter-End $404B
- Plans to Ramp 787 Production up to 10/Month in ‘25/’26
- Total Backlog Including Over 4,500 Commercial Airplanes
- Generates Positive Fcf for Year for First Time Since ‘18
Looking ahead, Boeing kept its financial objective unchanged, centered around a goal of $10BN in free cash flow in 2025/26.
