Performance in 3Q17
In 3Q17, Boeing (BA) saw revenue of $24.3 billion, 2% growth from the $23.9 billion it reported in 3Q16. Its operating margin expanded from 9.5% in 3Q16 to 11.1% in 3Q17.
The Commercial Airplanes segment recorded a 1% YoY fall in revenue to $15.0 billion. The segment’s operating margin expanded from 8.5% in 3Q16 to 9.9% in 3Q17, resulting in earnings growth of 15% to $1.5 billion from $1.3 billion in 3Q16.
The Defense, Space & Security segment’s revenue fell 5% YoY to $5.5 billion. However, its operating margin expanded slightly, to 10.2% from 9.8% in 3Q16. Its earnings fell 1%, driven by revenue decline, to $559 million from $564 million in 3Q16.
The Global Services segment’s revenue rose 2% YoY to $3.6 billion. However, its operating margin narrowed slightly to 14.2% from 14.9% in 3Q16. As a result, its earnings fell 3% to $506 million from $524 million in 3Q16.
The company had operating cash flow of $3.4 billion, compared with $3.2 billion in 3Q16, resulting in its free cash flow rising to $3.0 billion in 3Q17 from $2.6 billion in 3Q16.
During the first nine months of 2017, Commercial Airplanes revenue fell 5% YoY to $41.3 billion. The segment’s margins improved from 1.8% to 8.8%, leading to 354% YoY earnings growth to $3.6 billion from $804 million in the corresponding period in 2016.
Defense, Space & Security revenue fell 10% YoY to $15.5 billion, and the segment’s margins improved from 8.4% in the first nine months of 2016 to 10.8% in 2017’s corresponding period. This margin expansion led to earnings growth of 16% YoY to $1.7 billion in the first nine months of 2017.
Global Services revenue rose 1% YoY to $10.6 billion, and the segment’s margins improved slightly to 15.4% from 15.3%. Its earnings rose 2% YoY to $1.6 billion.
Boeing forms ~9.5% of the iShares US Aerospace & Defense ETF (ITA), which has a 9% exposure to United Technologies (UTX), a ~7.9% exposure to Lockheed Martin (LMT), a 6.5% exposure to General Dynamics (GD), and a 6.5% exposure to Raytheon (RTN). In our next article, we’ll look at Boeing’s guidance for 2017.