OREANDA-NEWS. The Boeing Company [NYSE: BA] reported first-quarter revenue increased 2 percent to $22.6 billion (Table 1). Core earnings per share (Non-GAAP)* of $1.74 reflect solid core operating performance that offset a $156 million after-tax charge ($0.24 per share) on the KC-46 Tanker program to maintain schedule with concurrency between late-stage development testing and the transition to initial production. GAAP earnings per share was $1.83.

The company's full year guidance is reaffirmed, primarily driven by improved performance.

"Higher year-over-year deliveries of military aircraft and continued solid operating performance on core production programs drove revenue growth and strong cash flow for Boeing in the first quarter," said Chairman, President and Chief Executive Officer Dennis Muilenburg. "This performance enabled our ongoing investments in new product innovation and in our people, and the return of significant cash to shareholders through stock repurchases and dividends."  

"Overall, we are pleased with our performance trends and our outlook for the year remains positive. On the tanker program, we are making the investments necessary to meet our customer commitments, deliver the initial production aircraft on schedule, and transition the program into full production," said Muilenburg.

"Our teams are focused intensely on delivering on our existing commitments including the production ramp-up associated with our large and diverse backlog, accelerating progress on quality, safety and productivity improvements company wide, returning greater value to shareholders through profitable growth, and investing in the future as we enter our second century in business."


Table 2. Cash Flow


First Quarter






Operating Cash Flow






Less Additions to Property, Plant & Equipment






Free Cash Flow*






Operating cash flow in the quarter was $1.2 billion, reflecting commercial airplane production rates, solid core operating performance and the timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 28.6 million shares for $3.5 billion, leaving $10.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $0.7 billion in dividends, reflecting an approximately 20 percent increase in dividends per share compared to the same period of the prior year.


Table 3. Cash, Marketable Securities and Debt Balances





Q1 16


Q4 15







Marketable Securities1












Debt Balances:


The Boeing Company, net of intercompany loans to BCC






Boeing Capital, including intercompany loans






Total Consolidated Debt







 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $8.4 billion, down from $12.1 billion at the beginning of the quarter, primarily due to share repurchases and the timing of cash flows. Debt was $10.0 billion, unchanged from the beginning of the quarter (Table 3).

Total company backlog at quarter-end was $480 billion, down from $489 billion at the beginning of the quarter, and included net orders for the quarter of $13 billion.

Segment Results

Commercial Airplanes


Table 4. Commercial Airplanes


First Quarter


(Dollars in Millions)








Commercial Airplanes Deliveries
















Earnings from Operations








Operating Margin






(3.3) Pts


Commercial Airplanes first-quarter revenue decreased to $14.4 billion on lower delivery volume (Table 4). First-quarter operating margin was 7.2 percent, reflecting the $162 million pre-tax charge on the KC-46 Tanker program, higher R&D, mix and a $70 million pre-tax charge on the 747 program.

During the quarter, the company completed first flight of the 737 MAX. The 737 program has captured nearly 3,100 orders for the 737 MAX since launch. Also during the quarter, the company began major assembly of the 787-10 ahead of schedule and launched the Next-Generation 737 freighter conversion program.

Commercial Airplanes booked 121 net orders during the quarter. Backlog remains strong with over 5,700 airplanes valued at $424 billion.

Defense, Space & Security


Table 5. Defense, Space & Security


First Quarter


(Dollars in Millions)









Boeing Military Aircraft








Network & Space Systems








Global Services & Support








Total BDS Revenues








Earnings from Operations1


Boeing Military Aircraft








Network & Space Systems








Global Services & Support








Total BDS Earnings from Operations








Operating Margin






(0.8) Pts



During the first quarter of 2016, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.

Defense, Space & Security's first-quarter revenue was $8.0 billion. First quarter operating margin was 10.3 percent, reflecting the $81 million pre-tax charge recorded at BMA on the KC-46 Tanker program partially offset by strong performance on production programs (Table 5).

Boeing Military Aircraft (BMA) first-quarter revenue increased to $3.7 billion, reflecting higher F-15 and C-17 deliveries. Operating margin was 9.1 percent, reflecting the KC-46 Tanker program charge partially offset by delivery mix. All four planned KC-46 test aircraft are now flying, and during the first quarter the KC-46 demonstrated its refueling capabilities with multiple other aircraft types. Also during the quarter, BMA was awarded a contract from the U.S. Navy for 20 P-8A Poseidon aircraft and a contract from the U.S. Army for 117 Apache helicopters.

Network & Space Systems (N&SS) first-quarter revenue was $1.7 billion. Operating margin was 8.5 percent, reflecting timing on United Launch Alliance launches. During the quarter, N&SS successfully launched the first of six Boeing-built Intelsat Epic satellites.

Global Services & Support (GS&S) first-quarter revenue increased to $2.6 billion, reflecting higher volume in Aircraft Modernization & Sustainment and Training Systems. Operating margin was 13.3 percent, reflecting program mix. During the quarter, GS&S was awarded a NATO contract for C-17 training.

Backlog at Defense, Space & Security was $56 billion, of which 37 percent represents orders from international customers.

Additional Financial Information


Table 6. Additional Financial Information


First Quarter

(Dollars in Millions)







Boeing Capital






Unallocated items, eliminations and other






Earnings from Operations


Boeing Capital






Unallocated pension/postretirement






Other unallocated items and eliminations






Other income/(loss), net






Interest and debt expense






Effective tax rate






At quarter-end, Boeing Capital's net portfolio balance was $3.2 billion, down from the beginning of the quarter. Unallocated items and eliminations first quarter revenue reflects the payoff of two aircraft previously financed by Boeing Capital. Total pension expense for the first quarter was $629 million, down from $785 million in the same period of the prior year. Other unallocated items and eliminations decreased from the same period in the prior year primarily due to lower deferred compensation expense.


The company's 2016 financial and delivery guidance (Table 7) is reaffirmed and reflects continued solid performance across the company.


Table 7. 2016 Financial Outlook



(Dollars in Billions, except per share data)




The Boeing Company




$93.0 - 95.0

Core Earnings Per Share*


$8.15 - 8.35

GAAP Earnings Per Share


$8.45 - 8.65

Operating Cash Flow




Commercial Airplanes




740 - 745



$64.0 - 65.0

Operating Margin




Defense, Space & Security




Boeing Military Aircraft



Network & Space Systems



Global Services & Support




Total BDS Revenue


$28.5 - 29.5


Operating Margin


Boeing Military Aircraft



Network & Space Systems



Global Services & Support




Total BDS Operating Margin




Boeing Capital


Portfolio Size






Pre-Tax Earnings




Research & Development


~ $3.6

Capital Expenditures


~ $2.8

Pension Expense 1


~ $2.1

Effective Tax Rate


~ 30.0%