Boeing Co. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited interim results. The independent accountant performed a review, not a full audit.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $16.569 billion | $17.921 billion |
| Operating loss; GAAP margin | $86 million; (0.5)% | $149 million; (0.8)% |
| Net loss attributable to Boeing shareholders | $343 million | $414 million |
| Diluted loss per share | $0.56 | $0.69 |
| Operating cash flow | $(3.362) billion | $(318) million |
- Non-GAAP core operating loss was $388 million, versus $440 million; core operating margin was (2.3)% versus (2.5)%. Core loss per share was $1.13 versus $1.27. These measures exclude specified pension and postretirement items.
- Cash and cash equivalents were $6.914 billion at quarter-end, down from $12.691 billion at December 31, 2023; short-term and other investments were $615 million. Boeing reported $10.0 billion of unused revolving credit capacity.
- Total debt was approximately $47.9 billion, down from $52.3 billion at year-end; $1.063 billion was current. Shareholders’ deficit was $17.009 billion.
- Operating cash use increased sharply, mainly as commercial aircraft inventory grew $3.778 billion amid lower 737 deliveries. Investing activities provided $2.074 billion, primarily reflecting investment maturities; financing activities used $4.462 billion, including $4.442 billion of debt repayments.
Changes versus the prior year
- Revenue declined 7.5%, driven mainly by a $2.051 billion decrease in Commercial Airplanes (BCA), partly offset by growth in Defense, Space & Security (BDS) and Global Services (BGS).
- BCA revenue fell to $4.653 billion from $6.704 billion, and its operating loss widened to $1.143 billion from $615 million. Boeing delivered 83 commercial aircraft, versus 130 in Q1 2023, including 67 737s versus 113.
- BDS revenue rose to $6.950 billion from $6.539 billion and operating results improved to $151 million earnings from a $212 million loss. BGS revenue increased to $5.045 billion from $4.720 billion and earnings rose to $916 million from $847 million.
- Total backlog increased to $528.749 billion from $520.195 billion at year-end. Boeing expects about 27% to convert to revenue through 2025 and 71% through 2028, while noting considerable timing uncertainty.
Outlook, commentary, and risks
- The January 5 Alaska Airlines 737-9 door-plug accident and subsequent FAA actions led Boeing to slow production and strengthen inspections and quality controls. The FAA said it would not approve 737 MAX production-rate increases until satisfied with compliance. Boeing said the resulting disruption materially affected Q1 results and cash flow and could continue until production recovers. The filing gives no formal earnings or cash-flow guidance.
- Boeing recorded a $443 million Q1 charge, net of insurance recoveries, for estimated 737-9 customer considerations. It paid $553 million in MAX customer concessions during the quarter; the related liability was $1.284 billion at March 31.
- Management expects 2024 capital expenditures to exceed 2023 levels. It said cash, short-term investments, operating cash flow and capital-market access should fund requirements, while warning that weaker performance or further credit-rating downgrades could raise borrowing costs or restrict access. Moody’s placed Boeing’s ratings on review for downgrade during Q1.
- Production and program risks include supply-chain constraints, labor instability, certification delays, and cost overruns on fixed-price development contracts. Boeing slowed 787 production to below five aircraft per month; about 40 inventory aircraft required rework. The filing cites a $128 million Q1 increase in the KC-46A reach-forward loss and a $94 million increase for T-7A.
- Boeing expected the first 777-9 delivery in 2025, the 777-8 freighter in 2027, and no 777-8 passenger delivery before 2030. The planned May 2024 Starliner crewed flight test and 737-7/-10 certification remained subject to timing and technical risks.
- Legal proceedings and regulatory investigations related to the Alaska Airlines accident and 737 program are ongoing; Boeing said potential uninsured losses could not be reasonably estimated. Other exposures include environmental remediation liabilities of $837 million and possible additional losses on fixed-price contracts. Boeing was in preliminary discussions to acquire Spirit AeroSystems but had no definitive agreement.
Most important facts for investors to verify
- Whether Boeing’s corrective actions satisfy FAA requirements and permit safe, sustained production and delivery recovery.
- Whether lower deliveries, inventory accumulation and customer compensation continue to pressure cash flow and liquidity.
- Progress on 737-7/-10 and 777X certification and the delivery timelines stated in the filing.
- Whether fixed-price program estimates, legal matters, or Spirit acquisition discussions lead to additional charges, liabilities or financing needs.