BOEING CO Q1 FY2025 earnings call

Stabilizing the business - Balance sheet focus, equity raised last year to restore production system. Better than expected delivery performance in Q1 led to less cash drain. Expected divestiture of digital aviation solutions business to provide cash infusion. 737 MAX ramp up plan: currently producing in low 30s per month, aiming for 38 per month over next few months and to request increase to 42 per month with FAA later this year. 787 production at five per month, plan to move to seven per month provided stable production system, working through 787 seat certification issues. ### Improving development program execution - Active management on T7 program, revised VC-25B program plan for earlier first delivery. MQ-25 aircraft moved to final assembly. 777X got FAA approval to expand flight test activities. 737-7 and 737-10 certification programs ongoing. ### Changing culture - Held employee meetings on culture change. Formed enterprise working group to refresh values and behaviors. Completed all-employee survey, introduced new values and behaviors into performance management, leadership training, and selection criteria. ### Building the future - Planned divestiture of portions of digital aviation solutions business. F-47 win cementing fighter franchise.

BCA delivered 130 airplanes in the quarter, with revenue of $8.1 billion and an operating margin of -6.6%. BDS booked $4 billion in orders during the quarter, with revenue of $6.3 billion and an operating margin of +2.5%. BGS had revenue of $5.1 billion, with an operating margin of 18.6%. BCA's backlog ended at $460 billion, BDS's backlog at $62 billion, and BGS's backlog at $22 billion.

737 MAX production expected to move to 38 per month over next few months and then request increase to 42 per month with FAA later this year. 787 planned to move to seven per month this year provided stable production system. Free cash flow usage in Q1 was $2.3 billion, with conservative plan for the year to offset potential impacts from China deliveries and tariff-related input costs.

Input tariffs affecting manufacturing costs, with some suppliers in countries like Japan and Italy subject to 10% tariffs, but expecting to recover costs for exported aircraft. Potential retaliatory tariffs in China affecting aircraft deliveries, with about 50 China deliveries in the plan for the rest of the year, and actively assessing options for remarketing or redirecting supply.

Q: Doug Harned asked about interacting with Washington to get out of tariff environment and how it might evolve.

A: Kelly Ortberg said they're engaged with administration, hopeful for negotiated agreements, China is current problem but working to manage it.

Q: Myles Walton asked about 737 and 787 deliveries.

A: Brian West said 737 delivery ballpark still holds with offsetting pressure from China deliveries, 787 also in ballpark with China impacting a few airplanes.

Q: Seth Seifman asked about sizing tariff impacts and drawback process.

A: Kelly Ortberg and Brian West discussed net annual impact of input tariffs manageable, duty drawback opportunity, and working with supply chain.

Q: Sheila Kahyaoglu asked about production ramps and supply chain risks.

A: Kelly Ortberg said rate increase plan unchanged, Brian West said good alignment with suppliers and plenty inventory.

Q: Scott Mikus asked about F-47 contract structure.

A: Kelly Ortberg said can't disclose beyond Air Force's statement.

Q: David Strauss asked about KPIs and SPS fire.

A: Kelly Ortberg said 787 KPI on final ticketing is green, 737 rework coming down, SPS fire team managing it.

Q: Noah Poponak asked about reducing traveled work and defense margin.

A: Kelly Ortberg and Brian West discussed traveled work reduction through discipline and supply chain improvement, defense margin improvement through win-win contracts.

Q: Peter Arment asked about rate breaks and FAA involvement.

A: Kelly Ortberg said FAA is involved in reviewing KPIs with them for rate increases.

Q: Robert Stallard asked about sale impact on EBIT and free cash flow.

A: Brian West said sale has minimal impact on margins and net cash proceeds close to $10 billion.

Q: Richard Safran asked about Jeppesen sale and portfolio shaping.

A: Kelly Ortberg said retained necessary digital assets for future, with a couple more portfolio actions in consideration.