The Boeing Company (BA) Bundle
Understanding The Boeing Company (BA) Revenue Streams
Understanding The Boeing Company’s Revenue Streams
The Boeing Company generates revenue through various streams, primarily categorized into three main segments: Commercial Airplanes, Defense, Space & Security, and Global Services. Below is a comprehensive breakdown of these revenue sources as of 2024.
Revenue Breakdown by Segment
| Segment | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Change (in millions) |
|---|---|---|---|
| Commercial Airplanes | $18,099 | $23,420 | ($5,321) |
| Defense, Space & Security | $18,507 | $18,187 | $320 |
| Global Services | $14,835 | $14,278 | $557 |
| Unallocated items, eliminations and other | ($166) | ($109) | ($57) |
| Total Revenue | $51,275 | $55,776 | ($4,501) |
Year-over-Year Revenue Growth Rate
The total revenue for the nine months ended September 30, 2024, decreased by 8.1% compared to the same period in 2023, primarily driven by a significant decline in Commercial Airplanes revenue due to lower deliveries across all programs. The following table illustrates revenue growth rates for each segment:
| Segment | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Year-over-Year Growth Rate |
|---|---|---|---|
| Commercial Airplanes | $18,099 | $23,420 | -22.7% |
| Defense, Space & Security | $18,507 | $18,187 | 1.8% |
| Global Services | $14,835 | $14,278 | 3.9% |
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contribution of each business segment to total revenue is as follows:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Commercial Airplanes | $18,099 | 35.3% |
| Defense, Space & Security | $18,507 | 36.1% |
| Global Services | $14,835 | 28.9% |
Analysis of Significant Changes in Revenue Streams
The decline in the Commercial Airplanes segment can be attributed to several factors:
- Lower deliveries across all programs, particularly in the 777 and 787 models.
- Customer considerations related to the January 2024 grounding of the 737-9 aircraft.
- Ongoing supply chain disruptions affecting production timelines.
In contrast, the Defense, Space & Security segment experienced a 1.8% increase in revenue, driven by higher volumes on weapons and proprietary programs. The Global Services segment also saw growth, with a 3.9% increase largely due to higher commercial services revenue.
Overall, the company’s total revenue for the nine months ended September 30, 2024, was $51,275 million, a decrease from $55,776 million in the previous year, indicating the challenges faced in the commercial aviation market amidst ongoing operational issues.
A Deep Dive into The Boeing Company (BA) Profitability
A Deep Dive into Boeing's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin stood at -0.8%, compared to 12.8% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was -13.5%, a significant decrease from 9.0% in the prior year.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was -15.5%, compared to -3.7% in the same period in 2023.
Trends in Profitability Over Time
In recent quarters, the company has experienced a downward trend in profitability metrics:
- Net loss attributable to shareholders for the nine months ended September 30, 2024, was $7.952 billion, compared to a net loss of $2.199 billion for the same period in 2023.
- Loss from operations increased to $6.937 billion for the nine months ended September 30, 2024, from $1.056 billion in the previous year.
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios are currently below industry averages:
| Metric | Boeing (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | -0.8% | 20% |
| Operating Profit Margin | -13.5% | 8% |
| Net Profit Margin | -15.5% | 5% |
Analysis of Operational Efficiency
Operational efficiency has been impacted by various challenges:
- Cost Management: Total costs and expenses for the nine months ended September 30, 2024, were $51.677 billion, compared to $50.749 billion in 2023.
- Gross Margin Trends: The gross margin has decreased significantly due to supply chain disruptions and production delays.
- Research and Development Expenses: For the nine months ended September 30, 2024, R&D expenses were $2.976 billion, up from $2.496 billion in 2023.
In summary, Boeing's profitability metrics reflect a challenging financial landscape, with significant losses reported in 2024, contrasting sharply with previous years' performance.
Debt vs. Equity: How The Boeing Company (BA) Finances Its Growth
Debt vs. Equity: How Boeing Finances Its Growth
As of September 30, 2024, the total debt balance of the company was $57.7 billion, an increase from $52.3 billion at December 31, 2023. This debt consists of $4.5 billion classified as short-term debt, while the remaining $53.2 billion is long-term debt.
The company's debt-to-equity ratio stands at approximately -2.45, reflecting a negative equity position of ($23.56 billion) as of the same date. This ratio is notably higher than the aerospace industry average, which typically hovers around 1.5. This disparity highlights the company's reliance on debt financing amid ongoing operational challenges.
In recent financing activities, on May 1, 2024, the company issued $10 billion in fixed-rate senior notes. Additionally, it entered into a $4 billion five-year revolving credit agreement expiring in May 2029. As of September 30, 2024, the company had $10 billion of unused borrowing capacity on its revolving credit line agreements.
Credit ratings have been impacted as Moody's downgraded the company's long-term and short-term ratings to Baa3/P-3 in April 2024. Furthermore, both Moody's and S&P placed their ratings under review for downgrade in September and October 2024, respectively.
The company strikes a balance between debt financing and equity funding by maintaining access to various credit facilities while navigating operational challenges that necessitate liquidity. This includes implementing cost-cutting measures and workforce reductions to manage cash flow.
| Debt Type | Amount (in billions) |
|---|---|
| Short-term Debt | $4.5 |
| Long-term Debt | $53.2 |
| Total Debt | $57.7 |
| Equity Position | ($23.56) |
| Debt-to-Equity Ratio | -2.45 |
| Unused Borrowing Capacity | $10.0 |
Assessing The Boeing Company (BA) Liquidity
Assessing Boeing's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 1.08, indicating that the company has slightly more current assets than current liabilities.
Quick Ratio: The quick ratio was reported at 0.82, suggesting potential liquidity concerns as it excludes inventory from current assets.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was approximately $3.5 billion, down from $4.2 billion at December 31, 2023. This decline reflects increased current liabilities, primarily due to the ongoing challenges in production and delivery.
Cash Flow Statements Overview
| Cash Flow Category | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Net cash provided/(used) by operating activities | ($8.6 billion) | $2.6 billion |
| Net cash provided/(used) by investing activities | $0.7 billion | ($5.2 billion) |
| Net cash provided/(used) by financing activities | $5.2 billion | ($5.1 billion) |
| Cash and cash equivalents at end of period | $9.98 billion | $6.83 billion |
Operating activities experienced a significant cash outflow of $8.6 billion during the nine months ended September 30, 2024, largely driven by reduced deliveries and halted production due to labor disputes and supply chain issues.
Potential Liquidity Concerns or Strengths
Despite a cash balance of $10.5 billion and $10 billion of unused borrowing capacity, the company faces liquidity risks stemming from a high debt load of $57.7 billion as of September 30, 2024. This includes $4.5 billion classified as short-term debt.
In response to liquidity challenges, the company has implemented measures such as hiring freezes, temporary furloughs, and deferrals of non-essential capital expenditures. The ongoing strike by IAM 751 poses a significant risk to future cash flows, potentially leading to continued negative operating cash flows until production stabilizes.
Is The Boeing Company (BA) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we analyze key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio is -9.69 as of September 30, 2024, reflecting a significant loss in earnings which results in a negative P/E ratio.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at -1.66 as of the latest quarter, indicating that the company's market price is less than its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently -24.95, signifying substantial operational losses and a negative EBITDA.
Stock Price Trends
The stock price over the last 12 months has shown significant volatility, currently trading at approximately $125.00 per share. Over the past year, the price peaked at $230.00 and dropped to a low of $100.00.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0%, reflecting the ongoing financial challenges and focus on recovery.
Analyst Consensus
As of the latest reports, the analyst consensus on the stock is predominantly a "Hold" rating, with some analysts suggesting potential for long-term recovery but cautioning against immediate investment.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | -9.69 |
| Price-to-Book (P/B) Ratio | -1.66 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | -24.95 |
| Current Stock Price | $125.00 |
| 52-Week High | $230.00 |
| 52-Week Low | $100.00 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing The Boeing Company (BA)
Key Risks Facing The Boeing Company
The financial health of the company is influenced by various internal and external risk factors. These risks can significantly impact operations, revenues, and overall financial performance.
Industry Competition
The aerospace and defense industry is characterized by intense competition. Key competitors include Airbus, Lockheed Martin, and Northrop Grumman. The company faces pressure to maintain market share while managing costs and innovation. In 2024, the company's total revenues decreased to $51.3 billion from $55.8 billion in 2023, primarily due to lower deliveries across commercial airplane programs.
Regulatory Changes
Changes in regulations can impact operations and compliance costs. The company has faced increased scrutiny following safety incidents, such as the grounding of the 737 MAX. As of September 30, 2024, net losses attributed to the company shareholders were reported at $7.95 billion, with a basic loss per share of $12.91.
Market Conditions
Global economic fluctuations, including inflationary pressures and supply chain disruptions, continue to affect operations. The company reported $8.6 billion in net cash used by operating activities for the nine months ended September 30, 2024, driven by slowed production and delivery issues.
Operational Risks
Operational disruptions due to labor strikes significantly impact production. The ongoing work stoppage initiated by IAM 751 on September 13, 2024, has paused production across multiple aircraft models, leading to reduced deliveries and operational inefficiencies. The loss from operations for the nine months ended September 30, 2024, was $6.94 billion, compared to $1.06 billion in the same period in 2023.
Financial Risks
As of September 30, 2024, the total debt balance was $57.7 billion, up from $52.3 billion at December 31, 2023. Short-term debt amounted to $4.5 billion. Additionally, the company has airplane financing commitments totaling $17.4 billion. Moody's downgraded the company's credit ratings to Baa3/P-3, which may lead to increased borrowing costs.
Strategic Risks
Strategic decisions, such as mergers and acquisitions, carry inherent risks. The pending acquisition of Spirit AeroSystems Holdings, Inc. at an equity value of approximately $4.7 billion could affect financial stability if not executed successfully.
Mitigation Strategies
The company is implementing several strategies to mitigate these risks, including:
- Reducing discretionary spending and pausing non-essential capital expenditures.
- Implementing temporary furloughs and hiring freezes across all levels.
- Continuously monitoring supplier health and safety to stabilize the supply chain.
Financial Performance Overview
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenues | $51.3 billion | $55.8 billion |
| Net Loss | $7.95 billion | $2.20 billion |
| Basic Loss per Share | $12.91 | $3.64 |
| Total Debt | $57.7 billion | $52.3 billion |
| Cash and Short-term Investments | $10.5 billion | $10.0 billion |
Future Growth Prospects for The Boeing Company (BA)
Growth Opportunities
Future revenue growth for the company is expected to be driven by several key factors:
Key Growth Drivers
- Product Innovations: The company is investing significantly in research and development, with a total R&D expense of $2,976 million for the nine months ended September 30, 2024, compared to $2,496 million for the same period in 2023.
- Market Expansions: The backlog for commercial airplanes stood at $427,733 million as of September 30, 2024, down from $440,507 million at the end of 2023, indicating ongoing demand despite recent challenges.
- Acquisitions: The company announced plans to acquire Spirit AeroSystems in an all-stock transaction valued at approximately $4.7 billion.
Future Revenue Growth Projections
Analysts project that revenues for the overall market will stabilize as supply chain issues are addressed. The company reported total revenues of $51,275 million for the nine months ended September 30, 2024, a decrease from $55,776 million in the same period in 2023.
Strategic Initiatives and Partnerships
Strategic initiatives include enhancing partnerships within the defense sector, with revenues from Defense, Space & Security increasing to $18,507 million in the first nine months of 2024 compared to $18,187 million in 2023.
Competitive Advantages
- Established Market Presence: The company maintains a strong market position with cumulative deliveries of commercial aircraft reaching 8,757 as of September 30, 2024.
- Innovative Product Lines: The ongoing development of next-generation aircraft, such as the 777X, positions the company favorably against competitors.
Financial Overview
| Financial Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Total Revenues | $51,275 million | $55,776 million |
| Net Loss | $7,952 million | $2,199 million |
| R&D Expense | $2,976 million | $2,496 million |
| Commercial Airplanes Backlog | $427,733 million | $440,507 million |
| Debt Balance | $57.7 billion | $52.3 billion |
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Article updated on 8 Nov 2024
Resources:
- The Boeing Company (BA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Boeing Company (BA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Boeing Company (BA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.