Boeing Co. — 2022 Form 10-K Summary
Business context and reporting period
For the fiscal year ended December 31, 2022, Boeing reported four segments: Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS), and Boeing Capital (BCC). This is an annual summary, not a standalone fourth-quarter report.
Key financial metrics
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $66.6 billion | $62.3 billion |
| GAAP operating loss / margin | $3.5 billion / (5.3%) | $2.9 billion / (4.7%) |
| Net loss attributable to Boeing shareholders | $4.9 billion | $4.2 billion |
| Diluted loss per share | $8.30 | $7.15 |
| Operating cash flow | $3.5 billion provided | $3.4 billion used |
| Cash and cash equivalents | $14.6 billion | $8.1 billion |
| Total debt | $57.0 billion | $58.1 billion |
| Total backlog | $404.4 billion | $377.5 billion |
Revenue rose approximately 7%. GAAP operating margin deteriorated by 0.6 percentage points; net loss widened by $0.7 billion. Cost of sales was 94.7% of revenue, compared with 95.2% in 2021. Non-GAAP core operating loss was $4.7 billion (7.0% margin), versus $4.1 billion (6.5%) in 2021; the measure excludes FAS/CAS pension and postretirement service-cost adjustments.
Cash, cash equivalents and short-term investments totaled approximately $17.2 billion at year-end. Boeing reported $12.0 billion of unused revolving credit capacity. Current liabilities exceeded current assets; the balance sheet showed a $15.8 billion shareholders’ deficit. Debt principal payments of approximately $14.5 billion were due over the next three years, according to management’s disclosure.
Segments and material changes
- BCA: Revenue increased to $25.9 billion from $19.5 billion; operating loss narrowed to $2.4 billion from $6.5 billion. Higher 737 and 787 deliveries and lower abnormal production costs helped, but production, rework and development costs remained significant.
- BDS: Revenue declined to $23.2 billion from $26.5 billion. The segment recorded a $3.5 billion operating loss, versus $1.5 billion of earnings, driven chiefly by charges on fixed-price development programs.
- BGS: Revenue rose to $17.6 billion from $16.3 billion and operating earnings increased to $2.7 billion from $2.0 billion, supported by commercial services recovery.
- BCC: Revenue was $199 million, down from $272 million; operating earnings were $29 million, down from $106 million.
Operating cash flow improved by $6.9 billion year over year, largely from changes in working capital and liabilities, including accrued program losses, payables and inventory. Boeing reported $3.5 billion of operating cash flow despite its net loss. Investing cash flow provided $4.4 billion, including investment proceeds; capital expenditures were $1.2 billion. No dividends were paid in 2022, and open-market share repurchases remained suspended.
Outlook, commentary, risks and unusual items
- Management cited recovering air travel and services demand, but said supply-chain disruption, labor instability and inflation continued to constrain production and cash flow. It expected 787 production to gradually reach five aircraft per month in 2023; the 777X production pause was expected to end in 2023.
- Management expected 737-7 certification and delivery in 2023, 737-10 certification flight testing in 2023 and first delivery in 2024. It expected the 777X-9 first delivery in 2025 and the 777X-8 freighter first delivery in 2027. These schedules depend on regulatory approval and remain subject to delay.
- Boeing recorded $5.3 billion of unfavorable net cumulative catch-up adjustments on long-term contracts in 2022. Major BDS program charges included VC-25B ($1.452 billion), KC-46A ($1.374 billion), MQ-25 ($579 million), T-7A production options ($552 million), T-7A EMD ($203 million) and Commercial Crew ($288 million). Management warned further losses may occur.
- The 787 delivery pause ended in August 2022 after FAA authorization. Boeing delivered 31 aircraft during the year, continued inspection and rework, and increased its estimated cumulative abnormal production costs to $2.8 billion. Approximately 100 787s remained in inventory at year-end.
- Boeing had approximately 250 737s in inventory, including about 140 intended for Chinese customers; most were expected to be delivered by the end of 2024. Timing of renewed deliveries in China remained uncertain. Boeing also completed 747 production in 2022.
- Other notable matters included a $200 million SEC settlement charge related to the 737 MAX accidents; $212 million of charges related to the Russia-Ukraine war; and a $752 million environmental remediation liability. Boeing disclosed pending litigation related to the 737 MAX accidents and could not estimate any additional loss range for remaining matters.
- Key risks include aircraft certification and quality issues, production ramp-up and supplier performance, fixed-price contract overruns, customer cancellations or delivery remedies, defense budget changes, geopolitical and trade developments, environmental obligations, and access to debt markets. The Jeppesen cybersecurity incident disclosed for November 2022 was reported as having no material impact and no flight-safety risk.
The auditor issued an unqualified opinion on the financial statements and reported effective internal control over financial reporting as of year-end. The auditor identified critical audit matters involving fixed-price development contract cost estimates and 777X and 787 program accounting estimates.
Investor verification points
- Track BDS fixed-price program cost growth, reach-forward losses and related cash requirements.
- Check aircraft certification, production rates, delivery timing and inventory reduction against management’s schedules, especially for the 737, 787 and 777X.
- Monitor cash generation, working-capital movements, debt maturities, available liquidity and customer financing commitments.
- Assess the realization of the $404.4 billion backlog, including customer cancellations, China deliveries and conversion timing.
- Review developments in 737 MAX litigation, environmental remediation and Boeing’s deferred-tax valuation allowance.