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BC

BOEING CO (BA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue fell 31% year over year to $15.2B, with diluted loss per share of ($5.46) and core (non‑GAAP) loss per share of ($5.90), driven by IAM work stoppage impacts, defense program charges, and workforce reduction costs .
  • Commercial Airplanes revenue dropped to $4.8B with operating margin of (43.9)%, reflecting lower deliveries and $1.1B pretax charges on 777X and 767; Defense booked $5.4B revenue with (41.9)% margin on $1.7B charges; Global Services achieved 19.5% margin on $5.1B revenue .
  • Operating cash flow was ($3.45)B and free cash flow ($4.10)B; cash and marketable securities rose to $26.3B, supported by a $24B capital raise, while consolidated debt declined to $53.9B after early bond repayment—an important liquidity and balance sheet stabilizer .
  • Management highlighted production restart progress (737 at 38/month framework, 787 at 5/month aiming for 7 in 2025) and reaffirmed first 777‑9 delivery in 2026; 2025 free cash flow expected to be a net usage but materially better than 2024, improving in 2H as deliveries ramp .

What Went Well and What Went Wrong

What Went Well

  • Global Services posted record operating margin of 19.5% on $5.1B revenue, supported by higher commercial volume and awards (C‑17 sustainment and F‑15 Japan upgrades) .
  • Liquidity strengthened: cash and marketable securities increased to $26.3B (from $10.5B in Q3) after a successful $24B capital raise; debt declined by $3.8B via early repayment, de‑risking 2025 maturities to ~$0.8B .
  • Production system stabilization underway: 737 factory restarted with sufficient parts inventory; FAA acknowledged improvements and agreed KPI‑based path for rate increases beyond 38/month—“early signs are encouraging” .

What Went Wrong

  • Company‑wide revenue fell 31% YoY; GAAP operating margin compressed to (24.7)% and free cash flow turned to ($4.1)B usage, reflecting IAM stoppage and working capital headwinds .
  • Commercial Airplanes delivered only 57 aircraft (down 64% YoY), with operating margin (43.9)% due to lower deliveries and $1.1B charges on 777X/767 .
  • Defense recognized $1.7B pretax charges across KC‑46A, T‑7A, Commercial Crew, VC‑25B, and MQ‑25, driving operating margin to (41.9)%; management acknowledged “disappointing results” and continued fixed‑price program pressures .

Financial Results

Sequential performance (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$16,866 $17,840 $15,242
Diluted EPS ($)($2.33) ($9.97) ($5.46)
Operating Margin (%)(6.5)% (32.3)% (24.7)%
Operating Cash Flow ($USD Millions)($3,923) ($1,345) ($3,450)
Free Cash Flow ($USD Millions, non‑GAAP)($4,327) ($1,956) ($4,098)

Year-over-year for the quarter (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$22,018 $15,242
Diluted EPS ($)($0.04) ($5.46)
Operating Margin (%)1.3% (24.7)%
Operating Cash Flow ($USD Millions)$3,381 ($3,450)
Free Cash Flow ($USD Millions, non‑GAAP)$2,950 ($4,098)

Segment breakdown (Sequential and YoY)

SegmentQ2 2024 Revenue ($MM)Q2 2024 Op Margin (%)Q3 2024 Revenue ($MM)Q3 2024 Op Margin (%)Q4 2024 Revenue ($MM)Q4 2024 Op Margin (%)
Commercial Airplanes$6,003 (11.9)% $7,443 (54.0)% $4,762 (43.9)%
Defense, Space & Security$6,021 (15.2)% $5,536 (43.1)% $5,411 (41.9)%
Global Services$4,889 17.8% $4,901 17.0% $5,119 19.5%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Total Commercial Deliveries (units)92 116 57
737 Deliveries (units)70 92 36
787 Deliveries (units)9 14 15
Total Backlog ($USD Millions)$515,874 $510,509 $521,336
Cash + Marketable Securities ($USD Billions)$12.6 $10.5 $26.3
Consolidated Debt ($USD Billions)$57.9 $57.7 $53.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
737 MAX production rate2025Increase to 38/month by YE 2024 Restarted; framework to go above 38/month later in 2025 subject to FAA KPI approval Updated (timing shifted, KPI‑gated)
787 production rate2025Return to 5/month by YE 2024 At 5/month; aiming for 7/month sometime in 2025; high‑teens from inventory Raised (rate goal to 7/month)
777‑9 first delivery20262026 first delivery 2026 first delivery reaffirmed; certification flight testing resumed Maintained
2025 Free Cash Flow2025N/A (no formal numeric guidance)Net usage but materially better than 2024; 1H negative, 2H positive and accelerating New qualitative framework
2025 CapEx2025N/AUp ~$500M YoY to support growth (BCA and BDS) New qualitative framework
Dividends/Tax rate/OpEx2025N/ANo formal guidance disclosed in Q4 materials N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Production ramp & FAA KPIsPlan for 737 to 38/month by YE 2024; 777X began FAA certification flight testing FAA observed improvements; agreed KPI‑based path beyond 38/month; 3 lines cycling; approach is data‑driven Improving, KPI‑gated ramp
787 supply chain (seats/heat exchangers)787 aiming for 5/month by YE; supply chain constraints affected defense KC‑46 787 at 5/month; seats/monument certification and doors remain challenges; plan to space “code 1” configs; Lufthansa seats cited Stabilizing, certification bottlenecks
Defense fixed‑price program riskQ3: $2.0B charges on T‑7A, KC‑46A, Crew, MQ‑25; unfavorable performance Q4: $1.7B charges; MOA updates on T‑7A to reduce concurrency; aim for breakeven in 2026/2027 Active remediation, long tail
Balance sheet & liquidityQ2: $10B new debt; access to $10B facilities Cash & marketable securities to $26.3B on $24B raise; debt down $3.8B; $10B RCF undrawn Strengthened
Spirit AeroSystems integrationAnnounced acquisition; expected close mid‑2025 Not viewed as rate constraint; integration targeted mid‑year; team working “hand in glove” On track
777X timeline & cash cadenceQ3: program spending and certification flight testing $900M charge (labor costs from IAM agreement); largest cash use in year before EIS; deliveries accelerate cash post‑2026 Cash use peaking pre‑EIS

Management Commentary

  • “We made progress on key areas to stabilize our operations during the quarter… focused on making the fundamental changes needed to fully recover our company's performance and restore trust” — Kelly Ortberg, President & CEO .
  • “We expect to be in a position to go above 38 per month later in the year… FAA agreed upon path for rate increases beyond 38 per month” — Brian West & Kelly Ortberg on 737 ramp .
  • “The updated acquisition approach for the T‑7A is a proof point for how we are working with our customers to find better overall outcomes for both parties” — Brian West on BDS programs .
  • “2025 will be an important year… still expect it to be a use of cash… first half negative, second half positive and accelerating” — Brian West on cash outlook .

Q&A Highlights

  • Ramp and KPIs: Management emphasized six FAA‑agreed KPIs (notice of escape hours, shortages, employee proficiency, rework by line, traveled work at rollout, ticketing performance) and will not request rate increases without KPI stability .
  • Free cash flow dynamics: 2025 net usage expected with higher CapEx (~$500M) and BDS charge cash impact; BCA negative in 1H flips positive in 2H as deliveries accelerate; BDS improves on seasonal receipts; BGS steady contributor .
  • BDS fixed‑price programs: MOAs to reduce T‑7A concurrency risk and adjust equipment sourcing; target breakeven in 2026/2027; one‑third of new charges hit cash over next few years .
  • 787 and seats: Seat/monument certification remains a constraint; plan to stagger “code 1s”; Lufthansa cited; aim for 7/month rate in 2025 plus high‑teens inventory deliveries .
  • 777X cash cadence: Heavy cash usage in 2025 (pre‑EIS), then cash generation accelerates in 2027 with deliveries .

Estimates Context

  • Consensus EPS and revenue estimates from S&P Global were unavailable at the time of writing due to rate limits; therefore, we cannot assess beat/miss versus Wall Street for Q4 2024. Management’s commentary implies 2025 expectations should reflect 1H cash usage and 2H improvement, KPI‑gated production rate increases, and continued BDS remediation .
  • Values intended for estimates would be retrieved from S&P Global when available.*

Key Takeaways for Investors

  • Liquidity and runway improved materially via the $24B capital raise, lifting cash and marketable securities to $26.3B and trimming debt—reducing near‑term refinancing risk .
  • Commercial execution is recovering: 737 restart with KPI‑based ramp, 787 at 5/month targeting 7/month, while 777X certification flight testing resumed with first delivery still in 2026 .
  • Services strength offsets some volatility: BGS delivering mid‑teens margins and stable cash conversion, anchoring overall profitability amid BCA/BDS pressures .
  • Defense remains the swing factor: fixed‑price program charges weighed heavily again; MOAs and proactive contract management are necessary but will take time to translate into margin/cash improvements .
  • Near‑term cash profile: 2025 likely a net usage but substantially better than 2024, with 2H turning positive as deliveries ramp and shadow factories wind down—an important setup for 2026 .
  • Watch operational KPIs and FAA gating for rate increases; any slippage could defer margin recovery and cash inflection, particularly at BCA .
  • Focus catalysts: confirmation of 737 rate approvals, 787 seat certification progress, closing of Spirit integration, and visible BDS program stabilization milestones .