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Boeing (BA) Q3 Earnings Beat Estimates, Revenues Decline Y/Y

Zacks Equity Research
·4 min read

The Boeing Company BA incurred adjusted loss of $1.39 per share for third-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $2.33. However, the bottom line deteriorated from the year-ago quarter’s earnings of $1.45.

Including one-time items, the company posted GAAP loss of 79 cents per share against earnings of $2.05 registered in the third quarter of 2019.

The year-over-year deterioration can be attributed primarily to revenue decline in the reported quarter.

Revenues

In the quarter under review, Boeing’s revenues amounted to $14.14 billion, which beat the Zacks Consensus Estimate of $13.81 billion by 2.4%. The top line however declined 29.2% from the year-ago quarter’s figure of $19.98 billion.

This decline was due to lower year-over-year revenues that the company’s segments recorded in the reported quarter, except Boeing Capital.

The Boeing Company Price, Consensus and EPS Surprise
The Boeing Company Price, Consensus and EPS Surprise

Total Backlog

Backlog at the end of third-quarter 2020 dropped to $393.1 billion from $408.7 billion at the end of second-quarter 2020.

Segmental Performances

Commercial Airplane: Revenues at this segment plunged 56% to $3.60 billion due to lower delivery volume. The segment incurred operating loss of $1.37 billion compared with loss of $0.04 billion in the year-ago quarter.

Boeing delivered 28 commercial planes during the quarter under review, down 55% year over year.

Backlog for this segment remained healthy with over 4,300 airplanes valued at $313 billion.

Boeing Defense, Space & Security (BDS): This segment recorded revenues worth $6.85 billion in the third quarter, reflecting 2% year-over-year decline. The year-over-year deceleration can be attributed to derivative aircraft award timing.
Meanwhile, this unit generated operating income of $628 million, compared with $754 million in the year-ago quarter.

Backlog at BDS was $62 billion, 30% of which comprised orders from international clients.

Global Services: Revenues at this segment declined 21% to $3.69 billion on account of lower commercial services volume thanks to COVID-19 impacts. Moreover, this unit generated operating income of $271 million compared with $673 million in the year-ago quarter.

Boeing Capital Corporation (BCC): This segment reported quarterly revenues of $71 million compared with $66 million registered in the year-ago quarter.
At the end of third-quarter 2020, BCC's portfolio balance was $2 billion.

Financial Condition

Boeing exited the third quarter with cash and cash equivalents of $10.56 billion, and short-term and other investments of $16.55 billion. At the end of 2019, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $57.33 billion at the end of the reported quarter, significantly up from $19.96 billion at 2019 end.

Boeing’s operating cash outflow at the end of the third quarter was $14.40 billion compared with $0.23 billion at the end of September 2019.

Free cash outflow totaled $15.44 billion in third-quarter 2020 end compared with $1.61 billion at the end of third-quarter 2019.

Guidance

Due to the uncertainty regarding the timing and conditions related to 737 MAX fleet’s return to service, Boeing has once again refrained from issuing its guidance for now.

Zacks Rank

Boeing currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin LMT reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%.

Hexcel HXL reported third-quarter 2020 loss of 29 cents per share against the Zacks Consensus Estimate of earnings of 7 cents. The bottom line also declined from the prior-year quarter’s earnings per share of 90 cents.

Teledyne TDY reported third-quarter 2020 adjusted earnings of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.40 by 3.3%.

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