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Original Source: FD (FAIR DISCLOSURE) WIRE
. David Dohnalek, The Boeing Company, VP, IR . Jim McNerney, The Boeing Company, Chairman & CEO . James Bell, The Boeing Company, CFO . Tod Hullin, The Boeing Company, SVP, Communications
The Co. reported 2Q05 revenues of $15b and EPS of $0.70 per share. The Co. said that it expects 2005 revenue to come in at $58b and EPS to be between $2.75-2.85. For 2006, the Co. expects revenue to come in at $62b and EPS to be in the range of $3.00-3.20. Q&A Focus: Financials, guidance, and defense programs.
A. Key Data From Call 1. 2Q05 revenues = $15b. 2. 2Q05 EPS = $0.70.
3. 2Q05 cash and liquid investment = $7.9b. 4. 2Q05 stock repurchase = 10.3m shares for $646m. 5. 2005 expected revenue = $58b. 6. 2006 expected revenue = $62b. 7. 2005 expected EPS = $2.75-2.85. 8. 2006 expected EPS = $3.00-3.20.
S1. Financial Review (J.B.) 1. 2Q05 Review: 1. BA continued to perform well in 2Q05 delivering excellent results across its businesses. 2. Integrated Defense Systems delivered another qtr. of solid growth and outstanding margins while Commercial Airplanes
generated double-digit revenue and earnings growth and
expanded its backlog by more than 25%. 3. Commercial Markets continue to gain strength, which has enabled BA to raise its financial outlook for BA Commercial Airplanes. 4. Though slower defense budget growth will affect near-term revenue growth, BA's defense markets remain strong. 5. The Co.'s businesses delivered outstanding cash flow, which it used to fund its major growth programs, continue share repurchase program, and repay maturing debt. 6. With a focused set of strategies, the strong performance of the BA team, reinvestment of cash and key growth programs and its large backlog, the Co. is confident in its outlook.
2. Revenue & Earnings: 1. Revenues rose 15% in 2Q05 to $15b, driven by a 20% increase on higher deliveries at Commercial Airplanes and an 8% rise at IDS. 2. The Co. earned $0.70 per share 2Q05. 1. This represents significant growth vs. 2Q04 after considering the $0.23 tax benefit the Co. received during 2Q04 and the $0.09 charge taken this year related to the sale of Wichita and Tulsa operations. 3. The results of 2Q05 also include significant increases in non-cash pension expense and share base plan expense. 3. Integrated Defense Systems: 1. IDS had an excellent 2Q05, delivering strong revenue growth and outstanding margins. 2. Revenue increased 8% as all four segments delivered topline growth. 3. Aircraft and weapons systems led the way with 15% increase driven by higher deliveries of production aircraft. 4. IDS operating margins reached 10.5% as support systems in aircraft and weapons systems turned in another qtr. of solid
double-digit margins. 5. Network systems margins were down reflecting costs in fee estimates in the proprietary area and on the 737 AEW/C program. 6. IDS also delivered strong results in the Launch & Orbital Systems segment due to improved performance at Commercial Satellites and solid results from its NASA programs.
7. During 2Q05, IDS hit several important milestones as future
combat systems passed its milestone B review, the multi-mission maritime aircraft completed wind tunnel testing, and the JU cash program completed its systems requirements review. 8. Also during 2Q05, BA announced the United Launch Alliance joint venture with Lockheed Martin, which will combine the government launch businesses of both companies to create additional value for its customers and shareholders. 9. Despite slowing growth in the DOD budget over the next few years, IDS is performing very well and is positioned for modest growth and excellent profitability with an $82b backlog and a broad portfolio of defense and intelligence programs. 4. Commercial Airplanes: 1. BCA performed very well in 2Q05 with significant gains in revenue and earnings as its industry leading products and continuing focus on operational efficiency generated strong results.
2. BCA revenues rose 20% to $6.8b on higher deliveries of 85
airplanes and a stronger twin aisle mix. 3. Operating margins grew to 7% as the higher revenues and excellent cost performance offset the non-recurring charge related to divesting the Wichita and Tulsa operations. 4. Excluding the Wichita charge, program margins were 8.1%. 5. Unit cost margins were 10.3% and as expected, exceeded program margins as cost reductions continued to benefit current production blocks. 6. BCA's innovative product strategy continued to deliver outstanding sales success during 2Q05 as BCA captured 376 orders bringing total gross orders for 1H05 to 439. 7. Firm backlog rose 26% to $87b. 8. In addition to strong demand for the 737, the 777 and the 787 airplanes, BCA received orders for 747 and 767 airplanes, which allows it to defer any program completion decision into 2006 at the earliest.
9. The 787 program remains on track. 1. The Co. has finalized the exterior look in 2Q05 as the Co. continues to progress towards firm configuration later this year. 2. During 2Q05, customers increased their 787 orders and commitments by 59 aircraft. 3. Since the 787 program launch in 2004, the program has captured 252 airplane orders and commitments from 20 airlines. 10. BCA reached important milestones during 2Q05 with the launch of the 777 freighter program and the start of work on the first 747-400 special freighter. 11. BA also completed the sale of its commercial operations in Wichita and Tulsa to Onyx and entered into a long-term supply contract with the firm, which will drive cost savings in its airplane business going forward. 12. Driven by the industry leading 737, 787, and the 777 product lines, Commercial Airplanes expects to see significant growth
in airplane deliveries, revenue and earnings during the guidance period. 5. Boeing Capital Corporation: 1. BCC continues to perform well and produce solid financial results in 2Q05. 2. Strong revenue and earnings growth at BCC enabled the unit to contribute $150m in cash dividends to the parent during 2Q05. 3. Aircraft leasing rates continued to improve and BCC remains focused on managing and reducing risks. 6. Connexion By Boeing: 1. Connexion by Boeing continues to expand its business during 2Q05 with service now available on over 70 aircraft operating on more than 100 daily flights. 2. Orders and options for Connexion Commercial Service now totals over 500 airplanes from 11 airlines. 3. Connexion also signed its first maritime contract with Teekay
Shipping for up to 90 vessels. 7. Cash Flow: 1. Cash performance remained outstanding as the Co. delivered $2.7b of operating cash in 2Q05. 2. This performance reflected …