Boeing Co Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Myles Walton - Wolfe Research LLC - Analyst : Nice to speak with you again, Kelly. In your remarks, you talked about Boeing as an airplane company. And so I just want to understand what is core and noncore outside of Boeing Commercial Airplanes as you see it and specifically, how significant portfolio shaping and simplifying the business is in your turnaround you're describing looking forward?

Question: David Strauss - Barclays Bank PLC - Analyst : So wanted to ask you about the balance sheet and the plan there. So how you're thinking around the parameters in terms of the size and timing of a potential capital raise? I'm sure this is a function of your discussions with the rating agencies as well as your ability to generate cash over the longer term. So maybe some color on what you're hearing from the credit -- from the rating agencies as well as your thoughts, maybe initial thoughts around the ability of the company to generate free cash flow in the future relative to that $10 billion target that's been out there?

Question: David Strauss - Barclays Bank PLC - Analyst : Okay. And Kelly, maybe if you could take that question around the $10 billion target that's out there. Is that a realistic target to think about any time over the next several years for this company based on what you've seen so far?

Question: Sheila Kahyaoglu - Jefferies LLC - Analyst : Kelly, nice speaking with you again. And Brian, thanks as always. So Brian, you mentioned free cash flow usage in Q4 and in 2025, as a total. Obviously, that assumes the vote is positive today. Can you talk about some of the drivers that were more positive in Q3? How do we think about the Q4 outflow? And what are you assuming for BCA delivery ranges in your free cash flow outflow next year in BDS losses? And does it become positive anytime in '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 2:30PM, BA.N - Q3 2024 Boeing Co Earnings Call

Question: Douglas Harned - Sanford C. Bernstein & Co LLC - Analyst : Kelly, you've referred to the idea that Boeing was once a benchmark for culture. And that was a long time ago. I mean if you look over the last five years, Boeing's lost many experienced leaders from senior management to the factory floor, who were part of that culture. And you're also initiating a large headcount reduction. So how are you thinking about rebuilding leadership talent in this environment to make your goals for cultural change, stabilization of the business and execution achievable? And should this involve internal and external approaches?

Question: Ronald Epstein - BofA Securities - Analyst : Nice to talk to you again. When you sit back and you think about where you want the Boeing company to be in five years, how do you think about that? I mean this kind of addresses some of the questions we've already hit. Where do you think you could feather in a new airplane? And really, where could this company be? And as outsiders looking in, what should we expect that it will be?

Question: Seth Seifman - JPMorgan Chase & Co - Analyst : Good to speak with you, Kelly. Maybe if I could do a question and a clarification. Kelly, I wonder if you could talk a little bit about the defense business. I think a lot of us have been surprised by the magnitude of the charges there in recent years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 2:30PM, BA.N - Q3 2024 Boeing Co Earnings Call There's obviously some tough contract terms, but the fact that the charges are so persistent suggest that there's an estimating problem there as well. And so what do you see as kind of the core of the problem at BDS? And what does it take to get to an acceptable level there? And then maybe, Brian, you talked about the -- getting to an acceptable production rate by the -- or normal production rates by the end of next year. What are those normal production rates?

Question: Peter Arment - Robert W. Baird & Co - Analyst : Nice to talk to you again, Kelly. And Kelly, you spent a few decades in -- as a supplier and are very familiar with Boeing from the outside and now you're inside. Can you talk a little bit about -- you've got a -- Boeing has a deal to acquire Spirit and pull it in house, how you're thinking about kind REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 2:30PM, BA.N - Q3 2024 Boeing Co Earnings Call of that and being vertically integrated and what kind of capabilities? I know you've got a lot on your plate still evaluating lots of things in the portfolio and things, but could you maybe address that point?

Question: Noah Poponak - Goldman Sachs Group Inc - Analyst : Just to be 100% clear, you guys are saying you expect negative free cash flow for full year 2025?

Question: Noah Poponak - Goldman Sachs Group Inc - Analyst : So Brian, can you talk maybe a little bit more about the pieces of that? Because I guess I would have thought if you could have a little bit of MAX production rate recovery momentum exiting '24 into '25, you could certainly get that to a cash flow positive place. 8 7, it sounds like is on pretty decent footing exiting the year. You still have a ton of inventory to unwind. I guess I don't know where you stand with the advances relative to being behind schedule. And I guess, I don't know what you're assuming for defense? And maybe the MAX ramp back up post labor dispute takes -- is a lot tougher than I'm appreciating. But maybe you could just talk more about those moving pieces that roll up to that.

Question: Noah Poponak - Goldman Sachs Group Inc - Analyst : I guess what's your best guess of number of months it takes to get the MAX back to what that first half of September was looking like once you have a labor resolution?

Question: Scott Deuschle - Deutsche Bank AG - Analyst : Kelly, just following up on supply chain. Can you provide more detail on how you're managing supply chain through this work stoppage? And also what specific steps you're taking to ensure that supply chain remains in a position to ramp up once the strike is over? And I ask because last time, there was a broad-based work stoppage and getting things back on track was clearly a challenge and frankly, we're still seeing the ghost of that four years later. And so just looking for some more clarity here on how we kind of avoid mistakes of the past.

Question: Jason Gursky - Citigroup Inc - Analyst : Yeah. And Kelly, welcome back to the fun of quarterly earnings calls.

Question: Jason Gursky - Citigroup Inc - Analyst : Let's see here, I want to just talk a little bit about the bigger picture turnaround here and particularly as it relates to the balance sheet. It seems to me like you're getting ready here to deploy a pretty well thought out plan. You've got some cost cutting that you're doing here. You've talked about you're going to look at the portfolio, there might be some divestitures potentially there. Brian's talked about the capital raise and you've talked about better execution. I think the one thing that may be missing from that list, I just wanted to try to get a sense from you on is the potential of just exiting some programs or some contracts that you've got absolutely no path to profitability or free cash flow on over the longer term. And whether there's an opportunity for you all to get out of some of these contracts or get out of some of these programs and how you go about doing that. And just want to get a really good sense of whether that is kind of on the menu of options that you have because I think we're all looking for ways on how you can kind of increase the pace of this turnaround. I know you say it's going to take a long time, but just kind of what are some of the tools at your disposal here?

Question: Cai von Rumohr - TD Cowen - Analyst : Welcome back, Kelly. So two questions for you. First, would you consider hiring from the outside to fill the BDS head slot because obviously, the folks there have really not been getting the job done? And secondly, if we look at your portfolio, you have several properties in Global Services on the commercial side that looked like they could be very highly valued, specifically Jeppesen, you could argue are not directly required to build planes successfully. So would you consider divesting any of those because that would significantly reduce the amount you'd have to raise via equity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 2:30PM, BA.N - Q3 2024 Boeing Co Earnings Call

Question: Cai von Rumohr - TD Cowen - Analyst : Yeah, on the properties in Global Services that you've got things like Jeppesen that arguably could command a very high price and don't look like they're totally required to build planes successfully. Would you consider divesting any of those to supplement an equity raise?

Question: Cai von Rumohr - TD Cowen - Analyst : Do you have any time frame to make that decision? Like are we talking three months? Are we talking nine months?

Question: Richard Safran - Seaport Global Securities LLC - Analyst : Kelly, great to be speaking with you again. So I thought I'd ask also about Global Services, but I think you may have some better visibility. We've seen some modest growth this year. We had about 70 basis points of margin improvement this quarter. I thought you might talk about your near- and long-term outlook for the segment, how you see sales and margins trending? And Kelly, is there any read-through to Global Services from your core part structure? Or you're pretty happy with the way things are going there?