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Business Highlights

Largest growth occurring through increased production of the 737 Max

Plans to hire an additional 10,000 workers in 2023 to support this growth

Current production of 30-35 commercial jets per month

Ensuring capacity for 50-60 per month by 2025

Opportunities for sustained international growth, particularly in India

International orders for the 737 Max skyrocketed after the FAA ban was lifted

Sustained market share in contracts with the Department of Defense

In 2022, they earned approximately 4% of all contracts awarded by the Department of Defense

Sources: Boeing, Department of Defense

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Primary Revenue Streams

Boeing 737

Best-selling and most produced product in BCA history; the 737 Max Dreamliner was just approved for delivery

Accounted for 81% of plane deliveries in 2022

Estimated 50% growth in the single-aisle market over the next 50 years
Plans to increase monthly 737 Max production from 31 to 50 planes per month by the end of 2026

AH-64 Apache Combat Helicopter

AH-64A is their most popular model, utilized by defensive forces around the globe
Recently introduced the AH-64D, a revolutionized version of the helicopter

Upgraded reconnaissance capabilities through further investment in autonomous weapons

Sources: Boeing

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Financial Profile

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Consolidated Statement of Comprehensive Income

	2022	2021	2020
Revenue	$ 66,608.00	$ 62,286.00	$ 58,158.00
Expenses	$ 63,106.00	$ 59,269.00	$ 63,843.00
Net Operating Income (Loss)	$ 3,502.00	$ 3,017.00	$ (5,685.00)
Other Comprehensive Income	$ 2,109.00	$ 5,474.00	$ (980.00)
Net Income (Loss)	$ (2,944.00)	$ 1,184.00	$ (12,921.00)

Sources: Boeing

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Consolidated Balance Sheet

	2022	2021
Current Assets	$ 109,523.00	$ 108,666.00
PP&E	$ 10,550.00	$ 10,918.00
Total Assets	$ 137,100.00	$ 138,552.00

Current Liabilities	$ 90,052.00	$ 81,992.00
Long-Term Liabilities	$ 152,948.00	$ 153,398.00
Stockholder's Equity	$ (15,848.00)	$ (14,846.00)
Total Liabilities & Equity	$ 137,100.00	$ 138,552.00

Sources: Boeing

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Consolidated Statement of Cash Flows

	2022	2021	2020
Cash from Operating Activities	$ 3,512.00	$ (3,416.00)	$ (18,410.00)
Cash from Investing Activities	$ 4,370.00	$ 9,324.00	$ (18,366.00)
Cash from Financing Activities	$ (1,266.00)	$ (5,600.00)	$ 34,955.00

Beginning Cash	$ 8,104.00	$ 7,835.00	$ 9,571.00
Change in Cash	$ 6,616.00	$ 308.00	$ (1,821.00)
Ending Cash	$ 14,720.00	$ 8,143.00	$ 7,750.00

Sources: Boeing

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Key Ratios

Current Ratio	1.2x
Quick Ratio	0.3x
Return on Assets	-0.15%
Return on Common Equity	31.96%

Sources: S&P Capital IQ

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Profitability Overview

Defense, Space & Security consistently stabilizes market-related losses in Commercial Airplanes

BCA is their largest business segment, but BDS accounts for roughly one-third of its revenue

Introduction of new products and streamlined processes creates opportunities for growth
Despite recessionary and legal pressures, they have a demonstrated ability to maintain strong cash flows

Sources: Boeing

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Industry Overview

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The Competitive Landscape

Founded in 1970
The world’s leading aircraft and helicopter manufacturer
Operates primarily in Europe with some influenced in the American market

Founded in 1995
The largest recipient of Department of Defense Contracts (11.1% of the total)
Solely focused on Defense and Aeronautic Innovation

Sources: Airbus, Lockheed Martin, Department of Defense

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The Narrow Body Market

Since 2010, the space has been characterized as a duopoly between the Boeing 737 and Airbus A320-Neo

Between May 2021 and August 2022, Boeing was banned from delivering 737s resulting from FAA concerns over the Dreamliner
Airbus has suffered similar struggles following a lawsuit from Qatar Airways over surface degradation, with a trial set for June 2023

In 2022, Airbus delivered 38% more narrow-body planes than Boeing, with a 6% margin over Boeing with US Firms

Boeing’s CEO attributes the struggles to supply chain issues and ongoing litigation
With the FAA ban lifted, there is a strong case to be made for Boeing to reclaim the market

Sources: SimpleFlying

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Market Share by Company

“As the airline industry expands its recovery, we are seeing strong demand across our product family”

- Stan Deal, Head of BCA

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Investment Thesis

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Our Thinking

Air Force One Will Always Be a Boeing 747.

Have existed since 1916 as the American airplane manufacturer

Defense is Recession-Proof.

The Department of Defense has a budget of $842 billion which will only go up

Lawsuits Settled. Airports Open.

Boeing was dealt a terrible hand and managed to weather the storm: it is only up from here

Good Management is their Greatest Asset.

David Calhoun has been an executive at everything from Blackstone to Caterpillar

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Financial & Equity Performance

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Free Cash Flow Projections

	2018A	2019A	2020A	2021A	2022A	2023E	2024E	2025E
Revenue	$ 101,127.00	$ 76,559.00	$ 58,158.00	$ 62,286.00	$ 66,608.00	$ 78,024.64	$ 91,103.97	$ 99,286.82
YoY Growth		-24.29%	-24.04%	7.10%	6.94%	17.14%	16.76%	8.98%
EBITDA	$ 13,957.00	$ 169.00	$ (6,239.00)	$ 1,639.00	$ 1,647.00	$ 1,724.11	$ 2,013.12	$ 2,193.94
Margin	13.80%	0.17%	-6.17%	1.62%	1.63%	2.21%	2.21%	2.21%
Unlevered FCF	$ 11,454.00	$ (253.00)	$ (4,587.00)	$ (1,034.00)	$ 6,229.00	$ 7,727.58	$ 7,827.84	$ 7,890.56

Sources: S&P Capital IQ

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Key Facts

WACC	11.00%
Shares Outstanding (Millions)	598
Share Price (As Of 4/21/23)	$205.15

Sources: S&P Capital IQ, Yahoo Finance

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Summary of Valuations

	Bear	Base	Bull
Growth (Years 1-5)	7.50%	10.00%	12.50%
Growth (Indefinite)	3.00%	3.50%	4.00%
Equity Value (Millions)	$108,602	$123,259	$140,792
Implied Share Price	$181.57	$206.08	$235.39

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Recommendation

What To Watch

Increase in hiring as stated in the 2023 Yearly Financials
Outcome of remaining unsettled lawsuits and reaction of foreign governments
United, American, and Delta contract allocations for 2023 and beyond

Upside	1.28
Beta	1.43 (High)
Duration	5-10 Years
Consensus	Buy

Sources: Yahoo Finance

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