Second-Quarter 2018 Performance Reviews2.q4cdn.com/661678649/files/doc_financials/... · The table...

Copyright © 2018 Boeing. All rights reserved.

Second-Quarter 2018Performance Review

Dennis MuilenburgChairman, President and Chief Executive Officer

Greg SmithChief Financial OfficerExecutive Vice President of Enterprise Performance & Strategy

July 25, 2018

Boeing | Investor Relations


Second-Quarter Summary

2

Strong results; business positioned for growth

FedEx Announced Order for 24 Medium and Large Freighters

5,876Airplanes in

backlog

2Q18 BCA Backlog

Other

Middle East

Southeast Asia

Europe

North America

Strong results - generated higher revenue and earnings; strong cash flow

Repurchased $3.0B of shares; paid $1.0B in dividends

Delivered 194 commercial airplanes, including 52 737 MAXs

Captured significant widebody orders and expanded order book

Secured key defense and space awards; completed key milestones

Demonstrated BGS growth and execution; captured new opportunities

Complemented organic growth strategy with selective investments



Commercial aviation remains long-term growth industry– 20 year Commercial Market Outlook increased by 1,700 airplanes to 42,730

Robust airline profitability, strong passenger traffic, renewed cargo strength

Diverse and balanced geographic, customer, and replacement demand

Domestic support for our key defense and space programs

Continuing international defense and space demand

Growth opportunities in 10-year, $2.8 trillion services market

Business Environment

3

Healthy demand; business environment supportive of growth

Strong and Growing Markets10 Year Served Market

Aerospace Services10 Year Served Market

$8.1T

Defense & Space Systems

Aerospace Services

Commercial Airplanes

$2.8T3.5% CAGR

Commercial Services

Defense Services



Second-Quarter Revenue and Earnings

4

Top and bottom line growth on strong performance

$2.49

$3.33

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

2017 Q2 2018 Q2

$23.1 $24.3

$0

$5

$10

$15

$20

$25

$30

2017 Q2 2018 Q2

Revenue (Billions) Core Earnings per Share

* Non-GAAP measures. Definitions, reconciliations, and further disclosures regarding this non-GAAP measure are provided in the company’s earnings press release dated July 25, 2018 and on slide 13 of this presentation.

*

2018 Q2 results included charges for KC-46 Tanker

($0.57) and litigation outcome ($0.21)



$14.3 $14.5

9.0%11.4%

0%

5%

10%

15%

20%

$0

$5

$10

$15

$20

2017 Q2 2018 Q2

Commercial Airplanes

Delivered 194 airplanes

– Included 52 737 MAX deliveries; 10 customers received their first MAX

Won 239 net orders– Encompassed 91 widebody orders including 19 777s and 59 787s

– Orders valued at $16B; robust backlog of $416B

Key delivery milestones

– 737 MAX marked one year anniversary of revenue service

– Over 150 737 MAXs delivered to-date

Continued progress on development programs

– First two 777X test airplanes moved into low-rate initial production line

– Began 777X systems testing

5

Healthy market; driving productivity while ramping production

Rev

enue

(billi

ons)

Mar

gin

First Two 777X Test Airplanes

Revenues & Operating Margins

Chart1

2017 Q22017 Q2

2018 Q22018 Q2

Revenue

Operating Margin

14.28

0.09

14.481

0.114

Sheet1

2017 Q22018 Q2

Revenue14.314.5

Operating Margin9.0%11.4%



$5.1 $5.6

11.9%9.3%

0%

5%

10%

15%

20%

$0

$2

$4

$6

$8

2017 Q2 2018 Q2

Defense, Space & Security

Captured new and follow-on business

– Finalized production contract for 28 F/A-18 Super Hornets for Kuwait

– Contract for 18 F/A-18 Super Hornets for U.S. Navy

– Awarded multi-year contract for 58 V-22 Osprey aircraft

Executed balanced portfolio

– Inducted first F/A-18 aircraft into the Service Life Modification program

– Supported two successful tests for U.S. Air Force’s Minuteman III

– Completed production of the 100th P-8 aircraft

– Completed O3b mPOWER preliminary design review with SES

Orders valued at $7B; Backlog of $52B

6

Solid execution and healthy demand; increasing productivity and competitiveness


V-22 Multi-year Award

Mar

gin

Rev

enue

(billi

ons)

Chart1

2017 Q22017 Q2

2018 Q22018 Q2

Revenue

Operating Margin

5.142

0.119

5.593

0.093

Sheet1

2017 Q22018 Q2

Revenue5.15.6




$3.6$4.1

16.0% 14.7%

0%

10%

20%

30%

$0

$2

$4

$6

2017 Q2 2018 Q2

Global Services

Captured new and follow-on business

– Awarded F/A-18 depot maintenance contract for Navy and Marine Corps

– Captured Primera Air 737 Global Fleet Care contract

– Secured rotorcraft PBL contracts for the Netherlands

– Contracted to implement crew management solutions at Etihad Airways

Delivered first 737 Boeing Converted Freighter

Entered into agreement to acquire KLX Aerospace

Agreed to strategic partnership with Safran for Auxiliary Power Units

Orders valued at $4B; Backlog of $20B

7

Sizable market opportunity; growth outpacing market…11% YTD growth

Rev

enue

(billi

ons)

Mar

gin

Awarded Five-Year F/A-18 Depot Maintenance Contract


Chart1

2017 Q22017 Q2

2018 Q22018 Q2

Revenue

Operating Margin

3.552

0.16

4.09

0.147

Sheet1

2017 Q22018 Q2

Revenue3.64.1




$4.9 $4.7

$7.0$7.8

$0

$5

$10

2017 Q2 2018 Q2 1H17 1H18

Cash Flow

Planned higher commercial production rates

Strong operating performance

Timing of receipts and expenditures

8

Strong cash flow reflects healthy business

Operating Cash Flow (Billions)



$0.7 $1.7

$9.2$8.1

$0

$3

$6

$9

$12

2018 Q1 2018 Q2

$10.0 $9.6

$2.5 $2.5

$0

$3

$6

$9

$12

2018 Q1 2018 Q2

Cash and Debt Balances

9

Strong liquidity with manageable debt levels

Boeing debt

BCC debt

Cash

Marketable Securities

S&P: AMoody’s: A2Fitch: A

$9.9 $9.8

Billions Billions



Financial Guidance

10

Upward revision in revenue and Commercial Airplanes margin

2018

Revenue $96.0 – 98.0B

Core EPS $14.30 – 14.50

Operating Cash Flow $15.0 – 15.5B

Capital Expenditures ~$2.2B

* Non-GAAP measures. Definitions, reconciliations, and further disclosures regarding this non-GAAP measure are provided in the company’s earnings press release dated July 25, 2018 and on slide 13 of this presentation.

$97.0 – 99.0B

*



Caution Concerning Forward-Looking Statements

12

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials; (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) threats to the security of our or our customers’ information; (14) potential adverse developments in new or pending litigation and/or government investigations; (15) customer and aircraft concentration in our customer financing portfolio; (16) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (17) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (18) the adequacy of our insurance coverage to cover significant risk exposures; (19) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks or natural disasters; (20) work stoppages or other labor disruptions; (21) substantial pension and other postretirement benefit obligations; (22) potential environmental liabilities.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.



Non-GAAP Measure Disclosure

13

The Boeing Company and SubsidiariesReconciliation of Non-GAAP Measures

(Unaudited)

The table provided below reconciles the non-GAAP financial measure core earnings per share with the most directly comparable GAAP financial measure diluted earnings pershare. See page 7 of the company's press release dated July 25, 2018 for additional information on the use of core earnings per share as a non-GAAP financial measure.



Non-GAAP Measure Disclosure

14

The Boeing Company and SubsidiariesReconciliation of Non-GAAP Measures

(Unaudited)

The table provided below reconciles segment operating margin excluding the KC-46 Tanker charge with segment operating margin, the most directly comparable GAAP financialmeasure.

Second-Quarter 2018�Performance ReviewSecond-Quarter SummaryBusiness EnvironmentSecond-Quarter Revenue and EarningsCommercial AirplanesDefense, Space & SecurityGlobal ServicesCash FlowCash and Debt BalancesFinancial GuidanceSlide Number 11Caution Concerning Forward-Looking StatementsNon-GAAP Measure DisclosureNon-GAAP Measure Disclosure

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