Boeing Co. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; the figures below are full-year results, not standalone fourth-quarter results. Boeing operates Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS) and Boeing Capital (BCC).
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $62.3 billion | $58.2 billion |
| GAAP operating loss / margin | $2.9 billion / (4.7)% | $12.8 billion / (22.0)% |
| Net loss attributable to Boeing shareholders | $4.2 billion | $11.9 billion |
| Diluted loss per share | $7.15 | $20.88 |
| Operating cash flow | $(3.4) billion | $(18.4) billion |
| Cash and short-term investments at year-end | $16.2 billion | $25.6 billion |
| Debt at year-end | $58.1 billion | $63.6 billion |
Revenue rose about 7% year over year, while Boeing remained loss-making and used cash from operations. Cash and short-term investments declined as the company repaid debt and investment balances fell. GAAP operating margin improved from 2020 but remained negative. Non-GAAP core operating loss was $4.1 billion, versus $14.2 billion in 2020; the company defines this measure to exclude pension and postretirement service-cost adjustments.
Year-end total backlog was $377.5 billion, up from $363.4 billion. BCA revenue was $19.5 billion and operating loss was $6.5 billion; BDS revenue was $26.5 billion and operating earnings were $1.5 billion; BGS revenue was $16.3 billion and operating earnings were $2.0 billion. BCC revenue was $272 million and operating earnings were $106 million.
Material changes and unusual items
- BCA revenue increased by $3.3 billion, mainly reflecting higher 737 MAX deliveries after regulatory approval and the absence of some 2020 customer-consideration charges; fewer 787 deliveries partly offset the increase.
- Boeing recorded a $3.46 billion 787 program reach-forward loss in 2021, citing extended rework and delivery delays. The 787 delivery pause began in May 2021; approximately 110 aircraft were in inventory at year-end. Boeing expected about $2 billion of cumulative abnormal production costs, mostly by the end of 2023.
- The 777X program had a near-break-even gross margin at year-end following a $6.49 billion reach-forward loss recorded in 2020. Boeing continued to anticipate first delivery in late 2023, subject to certification and other risks.
- BDS recorded a further $402 million KC-46A Tanker reach-forward loss in the fourth quarter, primarily due to factory and supply-chain disruption and higher costs for the Remote Vision System. Further losses were also recorded on Commercial Crew and VC-25B.
- Operating cash flow improved substantially from 2020, but remained negative. Boeing paid $2.5 billion in 737 MAX customer compensation during 2021 and received $1.7 billion in income-tax refunds.
Outlook, management commentary and risks
Management said it expected negative operating cash flows in future quarters until commercial deliveries recover. Boeing expected commercial air travel to return to 2019 levels in 2023–2024, with the recovery uneven and narrow-body demand recovering faster than wide-body demand. The filing does not provide a clear consolidated earnings or revenue guidance range for 2022.
Boeing expected to increase 737 MAX production to 31 aircraft per month by early 2022, subject to demand and supply-chain capacity. Resumption of 737 MAX deliveries to China remained subject to final regulatory approvals. The 787 delivery restart depended on rework and FAA actions. The company expected higher capital expenditures in 2022 than in 2021.
- Liquidity and debt: Boeing reported $14.7 billion of unused revolving credit capacity and said it believed it could fund operations for the foreseeable future, based on current estimates and continued capital-market access. It also cautioned that weaker performance or credit-rating downgrades could constrain financing. About $11.4 billion of debt principal was due over the next three years.
- 737 MAX: The year-end liability for customer concessions and other considerations was $2.94 billion, including $0.7 billion still subject to negotiation. Regulatory, delivery, litigation and customer-claim uncertainties remained.
- Program execution: Certification delays, production quality, rework, supplier shortages and cost overruns could delay deliveries, reduce backlog and cause additional program losses. BCA had about 335 737 MAX aircraft in inventory at year-end.
- Other exposures: Risks include COVID-19 and airline financial health, fixed-price defense contracts, government budgets and contract audits, customer financing commitments, legal proceedings, environmental remediation, labor actions and international trade or geopolitical developments.
- Capital returns: Boeing paid no dividends in 2021; its dividend suspension remained in effect. The share-repurchase authorization had been terminated, and no open-market repurchases were made.
The DOJ Deferred Prosecution Agreement required total payments of $2.51 billion related to the 737 MAX matter; Boeing reported that the criminal penalty and victim-compensation amounts were paid in 2021, with the airline-customer portion included in previously recorded customer considerations. The filing also disclosed a proposed shareholder-derivative settlement, subject to court approval, under which Boeing would receive approximately $237 million before attorneys’ fees and make governance changes. Deloitte & Touche issued unqualified opinions on the financial statements and internal control over financial reporting.
Most important facts for investors to verify
- Timing and conditions for FAA approval to resume 787 deliveries, completion of rework, and the expected cost and delivery consequences.
- Progress on 737 MAX production and deliveries, particularly China approvals, inventory reduction and settlement of the remaining $0.7 billion of customer considerations.
- Whether the 777X can meet its late-2023 first-delivery expectation without further losses or accounting-quantity reductions.
- Cash burn, debt maturities, access to credit markets and availability of the $14.7 billion revolving facilities.
- Further cost growth on KC-46A, Commercial Crew, VC-25B and other fixed-price development contracts, as well as resolution of significant litigation and investigations.