Boeing’s quarterly earnings were chaotic again.
On the company’s earnings conference call, more bad news related to the 737 Max caused the stock to pare all of its gains after a strong start to Wednesday’s session.
(Stock ticker: BA) It posted an adjusted loss of 37 cents a share on sales of $16.7 billion in the second quarter. Wall Street was looking for a profit of one cent per share on sales of $17.6 billion. It’s the fourth consecutive profit the company has missed.
Shares are up about 4% at their highest levels of the day as investors have seen the company burn less cash in the last quarter. But those gains were given up and the stock fell about 1% in Wednesday afternoon trading. The S&P 500 and Dow Jones industrial indexes rose 1.3% and 0.2%, respectively.
Slowing 737 MAX deliveries appears to be the problem. Management now expects MAX deliveries to be in “400 seconds less” for the full year. Wall Street had hoped to deliver the 450 Max.
Boeing delivered 121 commercial aircraft in the second quarter of 2022, including 100 Max aircraft, up from 95 commercial aircraft delivered in the first quarter. Before the pandemic and problems with the 737 Max, Boeing delivered about 190 planes in the second quarter of 2018.
But there was good news, too. The company earned about $200 million in the second quarter, down from about $3.6 billion in the first quarter. It was also much less than analysts had expected at $520 million to burn cash.
“We made significant progress across key programs in the second quarter and are building momentum in our transformation,” CEO Dave Calhoun said in the company’s press release. “As we started to deliver on key milestones, we were able to generate positive operating cash flow during the quarter and stay on track to deliver positive free cash flow for 2022.”
Positive free cash flow for the full year would be nice, but it wouldn’t be a complete surprise. Wall Street is modeling free cash flow to be roughly flat in 2022. The company generated about $4.4 billion in 2021.
The operating loss for the commercial unit came in at $242 million, better than the $859 million loss in the first quarter of 2022.
The defense, aerospace and security business posted a profit of $71 million after losing $929 million in the first quarter. Profit is good, but this business can make hundreds of millions every quarter. Gains were again hampered by fees on fixed-rate defense contracts.
Overall, it appears to be a better report than the one that Boeing published in April. At the time, the shares were down 7.5% after losing a large dividend.
The Covid-19 pandemic and problems with the 737 MAX and 787 have made it very difficult to predict the outcome.
The MAX was shut down worldwide between March 2019 and November 2020 after two fatal accidents within five months. The 787 has not been delivered for over a year after some quality issues were discovered in the manufacturing.
Some of the issues that generate quarterly volatility are out of Boeing’s hands, says Rob Stallard, an analyst at Vertical Research Partners. Clearance 787, MAX return to flight in China, MAX 10 [certification] And maybe I’ll add supply chain/inflation to the list as well,” says Stallard.
As trading begins Wednesday, Boeing stock is down about 23% year-to-date, while the S&P 500 and Dow Jones industrial average are down about 18% and 13%, respectively. Stocks fell nearly 65% from their all-time high shortly before the MAX’s second crash.
Write to Al Root at email@example.com
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