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Boeing(BA) - 2024 Q3 - Earnings Call Transcript
BABoeing(BA)2024-10-23 17:47
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Financial Data and Key Metrics - Revenue for the quarter was 17.8billion,down117.8 billion, down 1% YoY, primarily due to lower commercial wide-body deliveries and impacts from the IAM work stoppage [12] - Core loss per share was 10.44, reflecting impacts from the IAM work stoppage and previously announced charges across certain commercial and defense programs [12] - Free cash flow was a use of 2billioninthequarter,impactedbylowercommercialwide−bodydeliveriesandunfavorableworkingcapitaltiming[13]−BoeingCommercialAirplanes(BCA)delivered116airplanes,withrevenueof2 billion in the quarter, impacted by lower commercial wide-body deliveries and unfavorable working capital timing [13] - Boeing Commercial Airplanes (BCA) delivered 116 airplanes, with revenue of 7.4 billion and an operating margin of -54% [13] - Boeing Defense & Space (BDS) booked 8billioninorders,withrevenuestableat8 billion in orders, with revenue stable at 5.5 billion and an operating margin of -43.1% [16][17] - Boeing Global Services (BGS) revenue was 4.9billion,up24.9 billion, up 2% YoY, with an operating margin of 17%, up 70 basis points [20] Business Line Data and Key Metrics - 737 program delivered 92 airplanes, with production stabilization delayed due to the IAM work stoppage [14] - 787 program delivered 14 airplanes, with production recovery plans ongoing and a target to return to 5 per month by year-end [15] - 777X program recognized a 2.6 billion pretax charge due to certification delays and the IAM work stoppage, with first delivery now expected in 2026 [16] - BDS delivered 34 aircraft, including the first production MH-139A Grey Wolf, and recognized 2billioninpretaxchargesonseveralprograms[17]−BGSsecuredseveralkeyservicesagreements,includingwithANAandtheU.S.AirForce,andcontinuestoshowstrongperformance[20]MarketDataandKeyMetrics−Thecompanybacklogstandsatapproximately2 billion in pretax charges on several programs [17] - BGS secured several key services agreements, including with ANA and the U.S. Air Force, and continues to show strong performance [20] Market Data and Key Metrics - The company backlog stands at approximately 0.5 trillion, with BCA backlog at 428billionandBDSbacklogat428 billion and BDS backlog at 62 billion [3][13][16] - Demand for defense products remains strong, supported by the threat environment and contracts with the U.S. and allies [19] - BGS backlog ended at 20billion,withmid−single−digitrevenuegrowthandmid−teenmargins[20]CompanyStrategyandIndustryCompetition−Thecompanyisfocusedonfourkeyareas:culturechange,businessstabilization,executiondiscipline,andbuildinganewfuture[4][6][9][11]−Culturechangeisatoppriority,withafocusonleadershipaccountabilityandcontinuousprocessimprovement[5][6]−StabilizingthebusinessincludesresolvingtheIAMstrike,restartingfactories,andmanagingthebalancesheettoretainaninvestment−gradecreditrating[7][8][9]−Executiondisciplineiscriticalfornewplatforms,withafocusonriskmanagementandsupplychainimprovements[9][10]−Buildinganewfutureinvolvesstabilizingthebusiness,improvingdevelopmentprograms,andeventuallydevelopinganewcommercialaircraft[11]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Thecompanyisatacrossroads,witherodedtrustandsignificantdebt,butalsogreatopportunitiesahead[3]−ManagementiscommittedtorestoringBoeingtoaleadershipposition,withafocusonsafety,quality,andcustomerdelivery[3][6][11]−TheIAMworkstoppagehasdelayedproductionstabilizationandcertificationtimelines,butthecompanyisworkingtoresolvethestrikeandrestartoperations[7][14][15]−ThecompanyexpectsfreecashflowtobeauseinQ4and2025,withsignificantimprovementexpectedin2025asproductionrampsup[21][32]OtherImportantInformation−Thecompanyhasa20 billion, with mid-single-digit revenue growth and mid-teen margins [20] Company Strategy and Industry Competition - The company is focused on four key areas: culture change, business stabilization, execution discipline, and building a new future [4][6][9][11] - Culture change is a top priority, with a focus on leadership accountability and continuous process improvement [5][6] - Stabilizing the business includes resolving the IAM strike, restarting factories, and managing the balance sheet to retain an investment-grade credit rating [7][8][9] - Execution discipline is critical for new platforms, with a focus on risk management and supply chain improvements [9][10] - Building a new future involves stabilizing the business, improving development programs, and eventually developing a new commercial aircraft [11] Management Commentary on Operating Environment and Future Outlook - The company is at a crossroads, with eroded trust and significant debt, but also great opportunities ahead [3] - Management is committed to restoring Boeing to a leadership position, with a focus on safety, quality, and customer delivery [3][6][11] - The IAM work stoppage has delayed production stabilization and certification timelines, but the company is working to resolve the strike and restart operations [7][14][15] - The company expects free cash flow to be a use in Q4 and 2025, with significant improvement expected in 2025 as production ramps up [21][32] Other Important Information - The company has a 10 billion short-term credit facility and access to $20 billion in undrawn credit facilities [21] - Workforce reductions are focused on streamlining overhead and consolidating inefficient areas, not impacting production or engineering [36] - The company is evaluating its portfolio to focus on core businesses and may divest non-core assets [24][64] Q&A Session Summary Question: Core vs Non-core Business - The company is evaluating its portfolio to focus on core businesses like commercial airplanes and defense systems, with potential divestitures of non-core assets [24][64] Question: Balance Sheet and Capital Raise - The company is in active discussions with rating agencies and plans to raise capital to maintain liquidity and protect its investment-grade rating [27][28] - Free cash flow targets are under review, with no specific updates provided [30] Question: Free Cash Flow Outlook - Q4 free cash flow is expected to be a use, similar to Q2, with significant improvement expected in 2025 as production ramps up [31][32] Question: Leadership and Culture Change - The company is focused on rebuilding leadership talent and driving culture change, with potential external hires to supplement internal efforts [34][35] Question: Defense Business Challenges - The company is working to improve execution on defense contracts, with a focus on risk management and customer collaboration [41][42] Question: Supply Chain Management - The company is managing the supply chain carefully during the work stoppage, with plans to ramp up production post-strike [55][56] Question: Portfolio Review and Divestitures - The company is reviewing its portfolio and may divest non-core assets, with decisions expected by the end of the year [64][65] Question: Global Services Outlook - Global Services is performing well, with strong growth and margins, and is not a current priority for restructuring [67]