Business context and reporting period
The Boeing Company’s unaudited Form 10-Q covers the quarter and nine months ended September 30, 2022, compared with the corresponding 2021 periods. Boeing operates Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS), and Boeing Capital (BCC). The interim results are not necessarily indicative of full-year results.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $15.956 billion | $15.278 billion | $46.628 billion | $47.493 billion |
| Operating income/(loss), GAAP | ($2.799 billion) | $329 million | ($3.194 billion) | $1.269 billion |
| Operating margin, GAAP | (17.5)% | 2.2% | (6.8)% | 2.7% |
| Net loss attributable to Boeing shareholders | ($3.275 billion) | ($109 million) | ($4.301 billion) | ($59 million) |
| Diluted loss per share | ($5.49) | ($0.19) | ($7.24) | ($0.10) |
Cash flow and liquidity: Nine-month operating cash flow was $55 million, versus cash used of $4.132 billion a year earlier. Investing activities provided $6.521 billion, largely reflecting net investment proceeds; financing activities used $1.016 billion. At September 30, cash and cash equivalents were $13.494 billion and short-term and other investments were $763 million, a combined $14.3 billion, down from $16.2 billion at year-end 2021. Boeing reported total debt of $57.2 billion, down from $58.1 billion; $5.431 billion was current debt. Unused revolving credit capacity was $12.0 billion.
Balance sheet: Total assets were $137.558 billion and total liabilities were $155.193 billion. Shareholders’ deficit was $17.699 billion. Inventories were $79.777 billion, up from $78.823 billion at year-end, including continuing 787 and 777X aircraft buildup.
Segments: Nine-month BCA revenue was $16.643 billion and operating loss $1.744 billion; BDS revenue was $16.981 billion and operating loss $3.656 billion; BGS revenue was $13.044 billion and operating earnings $2.093 billion; BCC revenue was $150 million and operating earnings $14 million.
Material changes versus the prior comparable period
- Q3 revenue rose 4.4%, primarily on higher BCA revenue from resumed 787 deliveries and increased 737 MAX deliveries, plus stronger BGS commercial services. Nine-month revenue fell 1.8%, mainly due to lower BDS revenue.
- Boeing moved from operating earnings to substantial operating losses in both comparison periods. BDS recorded $4.429 billion of development-program charges in the first nine months; the third-quarter charges were $2.762 billion. These drove much of the deterioration in consolidated results.
- BCA’s nine-month operating loss narrowed year over year, reflecting higher 737 MAX deliveries and lower abnormal production costs. BGS earnings increased with commercial services volume and mix. BCC earnings declined, including from higher financing-receivable loss allowances associated with the war in Ukraine.
- Nine-month operating cash flow improved from a $4.132 billion use to $55 million provided. The filing attributes the change in part to movements in accounts payable and accrued liabilities; inventory growth remained a cash use.
Outlook, management commentary, risks and unusual items
- Cash and operations: Management expects operating cash flow to remain pressured until commercial deliveries ramp up, and expects BDS fixed-price development-contract charges to affect future cash flows. It believes funding operations for the foreseeable future is probable, based on demand, planned production, cash timing, liquidity actions and access to liquidity.
- Commercial programs: Boeing expected to deliver most of its approximately 270 737 MAX aircraft in inventory by the end of 2024, while deliveries to China remained subject to regulatory approval; approximately 140 inventory aircraft were designated for Chinese customers. 787 deliveries resumed in August 2022 after FAA authorization; Boeing expected to gradually return production to five per month in 2023. First 777X-9 delivery was delayed to 2025, with production paused during 2022–2023; the 777X-8 freighter’s first delivery was expected in 2027.
- Certification: The 737 MAX 7 and MAX 10 were undergoing certification. Boeing warned that failure to meet the December 27, 2022 statutory deadline for specified flight-crew alerting-system requirements, absent an extension, could lead it to discontinue either model and incur further charges. The company’s stated certification and entry-into-service dates were expectations, not guarantees.
- BDS contract losses: Major nine-month reach-forward loss increases included VC-25B ($1.452 billion), KC-46A ($1.374 billion), MQ-25 ($576 million), T-7A production options ($536 million), Commercial Crew ($288 million), and T-7A EMD ($203 million). Boeing cited technical requirements, labor shortages, supply-chain disruption, inflation, schedule delays, engineering changes and supplier costs; additional losses remain possible.
- Other exposures: Environmental remediation liabilities were $754 million, with reasonably possible costs estimated as much as $1.066 billion above recorded liabilities. Outstanding letters of credit and surety bonds totaled approximately $4.850 billion. Customer financing commitments were $16.495 billion and related to customers Boeing believed had less than investment-grade credit, although management said it expected limited funding needs and could not assure that outcome.
- Legal and other unusual items: Boeing recorded a $200 million SEC settlement charge related to the 737 MAX accidents, paid in October 2022. It could not reasonably estimate potential losses, if any, beyond available insurance from pending MAX-related actions and investigations. The Embraer termination dispute remained in arbitration, with no reasonably estimable loss range. The filing also identified supply-chain constraints, labor shortages, inflation, COVID-19 effects, geopolitical risks and possible changes in U.S. defense funding as risks.
- No formal consolidated financial guidance: The filing provides program and market expectations but does not state a clear consolidated revenue, earnings or cash-flow forecast.
Important facts for investors to verify
- Whether BDS fixed-price contract estimates stabilize or produce further charges, and how those charges affect cash flow.
- The timing and pace of 737 MAX deliveries, especially in China, and progress on MAX 7/MAX 10 certification.
- Whether 787 rework, inventory delivery plans and the expected production ramp proceed as described.
- Whether 777X certification, production pause and first-delivery expectations remain achievable without further losses.
- Liquidity and debt trends, including upcoming debt maturities, available credit capacity and actual operating cash generation.
- Potential additional environmental, warranty, legal, customer-concession or financing losses beyond recorded amounts.