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Boeing's Operations Made Nothing: Net Income Deceives
7 Oct
Summary
- Boeing's operating margin was 0.00% on nearly $94 billion in revenue.
- Net income of $2.09 billion did not come from aircraft manufacturing.
- High debt levels and thin book value mask operational struggles.
Over the past twelve months, Boeing reported a stark contrast between its net income and operational performance. Despite a net income of $2.09 billion, the company's operating margin was a flat 0.00% on $93.99 billion in revenue. This indicates that the core business of building and selling airplanes generated no profit.
The nearly $94 billion in revenue yielded only a $4.43 billion gross profit, under five percent for a manufacturer, suggesting the cost of production nearly matched customer payments. Consequently, EBITDA was negative $2.9 billion. The reported net income of $2.09 billion did not originate from the factories but from items below the operating line.
While operating cash flow was $3.64 billion, this was largely due to customer deposits for aircraft ordered from Boeing's backlog. However, capital expenditures of $3.86 billion on plant and equipment consumed these advances. The company's financial health is further strained by $48.36 billion in debt against $19.3 billion in cash, resulting in a high debt-to-equity ratio of 790.88%. Book value per share stands at a thin $7.72, contributing to an inflated return on equity of 173.54% due to a small denominator, not operational success. Boeing has not paid a dividend since March 2020.
