Boeing Earnings Revealed Another Big Loss. What Saved the Day for the Stock.

Text size

Boeing’s quarterly earnings were messy, again, but there was still, enough good news to move the stock higher early Wednesday.

B

oeing

(ticker: BA) reported an adjusted loss of 37 cents a share from sales of $16.7 billion in the second quarter. Wall Street was looking for a profit of 1 cent a share from sales of $17.6 billion.

It’s another earnings miss, the company’s fourth consecutive. Cash burn fell dramatically, though. The company burned through about $200 million in the second quarter. Analysts projected it would use about $520 million, down from about $3.6 billion in the first quarter.

“We made important progress across key programs in the second quarter and are building momentum in our turnaround,” said CEO Dave Calhoun in the company’s news release. “As we begin to hit key milestones, we were able to generate positive operating cash flow this quarter and remain on track to achieve positive free cash flow for 2022.”

Positive free cash flow for the full year would be nice, but to a complete surprise. Wall Street is modeling free cash flow to be roughly flat for 2022. The company burned through about $4.4 billion in 2021.

Shares are up about 2.6% in premarket trading. S&P 500 and Dow Jones Industrial Average futures were up 0.9% and 0.4%, respectively.

Boeing delivered 121 commercial jets in the second quarter of 2022, up from 95 jets delivered in the first quarter. Before the pandemic and 737 MAX problems, Boeing delivered about 190 jets in the second quarter of 2018.

The commercial unit’s operating loss came in at $242 million, better than the $859 million loss in the first quarter of 2022.

The Defense, Space & Security business posted earnings of $71 million after a loss of $929 million in the first quarter. A profit is nice, but that business can earn hundreds of millions a quarter. Earnings were hampered again by charges on fixed prices defense contracts.

Overall it looks like a better report that the company posted in April. Back then, shares fell 7.5% after a significant earnings miss.

The pandemic and problems with the 737 MAX and the 787 have made forecasting results incredibly difficult.

The MAX was grounded worldwide between March 2019 and November 2020 following two deadly crashes inside of five months. And the 787 hasn’t been delivered in more than a year after some quality issues were discovered in manufacturing.

Some of the issues that generate the quarterly volatility are out of Boeing’s hands, says Vertical Research Partners analyst Rob Stallard. “787 clearance, MAX return to flight in China, MAX 10 [certification] extension, and I’d probably add supply chain/inflation to the list too,” says Stallard.

Options markets imply that Boeing stock will move about 5%, up or down, following earnings. That is similar to the post-earnings volatility experience over the past four quarterly reports.

Coming into Wednesday trading, 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. Shares are off about 65% from their all-time high set shortly before the second tragic MAX crash.

Write to Al Root at [email protected]