hird Quarter 2023

• Reaffirm guidance: $4.5-$6.5 billion of operating cash flow and $3.0-$5.0 billion of free cash flow (non-GAAP)
• Still expect to deliver 70-80 787 and now expect to deliver 375-400 737 airplanes
• Now transitioning 787 to five per month; plan to complete 737 production transition to 38 per month by year-end
• Revenue of $18.1 billion reflecting 105 commercial deliveries
• Total company backlog of $469 billion, including over 5,100 commercial airplanes

Table 1. Summary Financial Results						Third Quarter																		Nine Months
(Dollars in Millions, except per share data)						2023						2022						Change						2023						2022						Change
Revenues						$18,104						$15,956						13 %						$55,776						$46,628						20 %
GAAP
Loss from operations						($808)						($2,792)						NM						($1,056)						($3,174)						NM
Operating margins						(4.5)		%				(17.5)		%				NM						(1.9)		%				(6.8)		%				NM
Net loss						($1,638)						($3,308)						NM						($2,212)						($4,390)						NM
Loss per share						($2.70)						($5.49)						NM						($3.64)						($7.24)						NM
Operating cash flow						$22						$3,190						NM						$2,579						$55						NM
Non-GAAP*
Core operating loss						($1,089)						($3,071)						NM						($1,919)						($4,020)						NM
Core operating margins						(6.0)		%				(19.2)		%				NM						(3.4)		%				(8.6)		%				NM
Core loss per share						($3.26)						($6.18)						NM						($5.35)						($9.31)						NM

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”

The Boeing Company [NYSE: BA] recorded third quarter revenue of $18.1 billion, GAAP loss per share of ($2.70) and core loss per share (non-GAAP)* of ($3.26) (Table 1). Third quarter results were impacted by unfavorable defense performance and lower 737 deliveries. Boeing reported operating cash flow of $0.0 billion and free cash flow of ($0.3) billion (non-GAAP).

“We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term,” said Dave Calhoun, Boeing president and chief executive officer. “We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand. The important work we’re doing to add rigor around our quality systems and build a culture of transparently bringing forward any issue, no matter the size, can bring short-term challenges – but it is how we set ourselves on the right course for our long-term future. Leading with safety, quality and transparency, we will continue to restore our operational and financial strength.”

Table 2. Cash Flow						Third Quarter												Nine Months
(Millions)						2023						2022						2023						2022
Operating cash flow						$22						$3,190						$2,579						$55
Less additions to property, plant & equipment						($332)						($284)						($1,096)						($896)
Free cash flow*						($310)						$2,906						$1,483						($841)

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”

Operating cash flow was $0.0 billion in the quarter reflecting less favorable receipt timing, including the absence of a prior year tax refund (Table 2).

Table 3. Cash, Marketable Securities and Debt Balances						Quarter End
(Billions)						Q3 23						Q2 23
Cash						$6.8						$7.3
Marketable securities1						$6.6						$6.5
Total						$13.4						$13.8
Consolidated debt						$52.3						$52.3

1 Marketable securities consist primarily of time deposits due within one year classified as “short-term investments.”

Cash and investments in marketable securities totaled $13.4 billion, compared to $13.8 billion at the beginning of the quarter (Table 3). The company has access to credit facilities of $10.0 billion, which remain undrawn.

Total company backlog at quarter end was $469 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes						Third Quarter																		Nine Months
(Dollars in Millions)						2023						2022						Change						2023						2022						Change
Deliveries						105						112						(6) %						371						328						13 %
Revenues						$7,876						$6,303						25 %						$23,420						$16,755						40 %
Loss from operations						($678)						($622)						NM						($1,676)						($1,738)						NM
Operating margins						(8.6)		%				(9.9)		%				NM						(7.2)		%				(10.4)		%				NM

Commercial Airplanes third quarter revenue increased to $7.9 billion driven by higher 787 deliveries (Table 4). Operating margin of (8.6) percent also reflects lower 737 deliveries as well as abnormal costs and period expenses, including research and development.

On the 737 program, during the quarter a supplier non-conformance was identified on the aft pressure bulkhead section of certain 737 airplanes. This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. Near-term deliveries and production will be impacted as the program performs necessary inspections and rework, and the company now expects to deliver 375-400 airplanes this year. On production, suppliers are continuing with planned rate increases, and the company expects to complete the final assembly transition to 38 per month by year-end, with plans to increase to 50 per month in the 2025/2026 timeframe. The estimated cost associated with performing the rework is immaterial and included in third quarter results.

The 787 program is now transitioning production to five per month and plans to increase to 10 per month in the 2025/2026 timeframe. The program still expects to deliver 70-80 airplanes this year.

During the quarter, Commercial Airplanes booked 398 net orders, including 150 737 MAX 10 airplanes for Ryanair, 50 787 airplanes for United Airlines, and 39 787 airplanes for Saudi Arabian Airlines. Commercial Airplanes delivered 105 airplanes during the quarter and backlog included over 5,100 airplanes valued at $392 billion.

Defense, Space & Security

Table 5. Defense, Space & Security						Third Quarter																		Nine Months
(Dollars in Millions)						2023						2022						Change						2023						2022						Change
Revenues						$5,481						$5,307						3 %						$18,187						$16,981						7 %
Loss from operations						($924)						($2,798)						NM						($1,663)						($3,656)						NM
Operating margins						(16.9)		%				(52.7)		%				NM						(9.1)		%				(21.5)		%				NM

Defense, Space & Security third quarter revenue was $5.5 billion. Third quarter operating margin was (16.9) percent, due to a $482 million loss on the VC-25B program driven by higher estimated manufacturing cost related to engineering changes and labor instability, as well as resolution of supplier negotiations. Results were also impacted by $315 million of losses on a satellite contract due to estimated customer considerations and increased costs to enhance the constellation and meet lifecycle commitments.

During the quarter, Defense, Space & Security delivered the first T-7A Red Hawk to the U.S. Air Force and captured an award from the U.S. Army for 21 AH-64E Apaches. Backlog at Defense, Space & Security was $58 billion, of which 29 percent represents orders from customers outside the U.S.

Global Services

Table 6. Global Services						Third Quarter																		Nine Months
(Dollars in Millions)						2023						2022						Change						2023						2022						Change
Revenues						$4,812						$4,432						9 %						$14,278						$13,044						9 %
Earnings from operations						$784						$733						7 %						$2,487						$2,093						19 %
Operating margins						16.3		%				16.5		%				-0.2 pts						17.4		%				16.0		%				1.4 pts

Global Services third quarter revenue of $4.8 billion and operating margin of 16.3 percent reflect higher commercial volume and mix.

During the quarter, Global Services delivered the 150th 737-800 Boeing Converted Freighter, received an order from the U.S. Navy for P-8 trainer upgrades and signed a digital maintenance solution agreement with Philippine Airlines for Airplane Health Management.

Additional Financial Information

Table 7. Additional Financial Information						Third Quarter												Nine Months
(Dollars in Millions)						2023						2022						2023						2022
Revenues
Unallocated items, eliminations and other						($65)						($86)						($109)						($152)
Earnings/(loss) from operations
FAS/CAS service cost adjustment						$281						$279						$863						$846
Other unallocated items and eliminations						($271)						($384)						($1,067)						($719)
Other income, net						$297						$288						$919						$722
Interest and debt expense						($589)						($628)						($1,859)						($1,921)
Effective tax rate						(48.9)		%				(5.6)		%				(10.8)		%				(0.4)		%

Other unallocated items and eliminations primarily reflects timing of allocations. The third quarter effective tax rate primarily reflects additional tax expense to adjust prior quarters’ results to the current estimate of the annual effective tax rate.

Non-GAAP Measures Disclosures

We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:

Core Operating Loss, Core Operating Margin and Core Loss Per Share

Core operating loss is defined as GAAP Loss from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as Core operating loss expressed as a percentage of revenue. Core loss per share is defined as GAAP Diluted loss per share excluding the net loss per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating loss, core operating margin and core loss per share for purposes of evaluating and forecasting underlying business performance. Management believes these core measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the non-GAAP and GAAP measures is provided on page 12 and page 13.

Free Cash Flow

Free cash flow is GAAP operating cash flow reduced by capital expenditures for property, plant and equipment. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. See Table 2 on page 2 and page 14 for reconciliations of free cash flow to GAAP operating cash flow.

Photo Rob Vogelaar