Q3 2024 Boeing Co Earnings Call

In This Article:

Participants

Matt Welch; Investor Relation; Boeing Co

Kelly Ortberg; President, Chief Executive Officer; Boeing Co

Brian West; Chief Financial Officer, Executive Vice President; Boeing Co

Myles Walton; Analyst; Wolfe Research LLC

David Strauss; Analyst; Barclays Bank PLC

Sheila Kahyaoglu; Analyst; Jefferies LLC

Douglas Harned; Analyst; Sanford C. Bernstein & Co LLC

Ronald Epstein; Analyst; BofA Securities

Seth Seifman; Analyst; JPMorgan Chase & Co

Peter Arment; Analyst; Robert W. Baird & Co

Noah Poponak; Analyst; Goldman Sachs Group Inc

Scott Deuschle; Analyst; Deutsche Bank AG

Jason Gursky; Analyst; Citigroup Inc

Cai von Rumohr; Analyst; TD Cowen

Richard Safran; Analyst; Seaport Global Securities LLC

Presentation

Operator

Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's third quarter 2024, earnings conference call. Today's call is being recorded. The management discussion and slide presentation plus the analyst question-and-answer session are being broadcast live over the Internet. (Operator Instructions) At this time, for opening remarks and introductions, I am turning the call over to Mr. Matt Welch, Vice President of Investor Relations for the Boeing Company. Mr. Welch, please go ahead.

Matt Welch

Thank you, and good morning. Welcome to Boeing's quarterly earnings call. I am Matt Welch, and with me today are Kelly Ortberg, Boeing's President and Chief Executive Officer; and Brian West, Boeing's Executive Vice President and Chief Financial Officer. And as a reminder, you can follow today's broadcast and slide presentation at boeing.com.
Projections, estimates and goals included in today's discussion involve risks, including those described in our SEC filings and in the forward-looking statement disclaimer at the beginning of the presentation. We also refer you to the disclosures relating to non-GAAP measures in our earnings release and presentation.
Now I will turn the call over to Kelly Ortberg.

Kelly Ortberg

Thanks, Matt, and thanks to everyone for joining today's call. Let me start by saying that it's an honor to be leading the Boeing company. I've spent my entire career in the aerospace and defense business and one constant has always been the critical role that Boeing plays, not just to the A&D industry, but to our national security and the overall global economy.
But we're clearly at a crossroads. The trust in our company has eroded or saddled with too much debt. We've had serious lapses in our performance across the company, which have disappointed many of our customers.
But by the same token, we have great opportunities ahead. Our company backlog is roughly $0.5 trillion. We have a customer base that wants us and needs us to succeed. We have employees who are thirsty to get back to the iconic company they know, setting the standard for the products that we deliver.
So my mission here is pretty straightforward, turn this big ship in the right direction and restore Boeing to the leadership position that we all know and want. Now to do this is going to require changes in four particular areas. And let me introduce them, and I'll come back and discuss each one.
First, we need a fundamental culture change in the company; second, we must stabilize the business; third, we need to improve our execution discipline on new platform commitments across the company; and fourth, while doing the first three, we must build a new future for Boeing.
So let me start with arguably the most important, changing the culture at Boeing. I spent the last two decades working with Boeing in the supply chain. So I have an outside-in view of Boeing, which is very helpful. That experience, combined now with seeing things from the inside the company, has helped provide an informed view of some of the actions we need to take.
Much has been written about how we got to where we are, but most also recognize that Boeing was once a benchmark for what good culture looks like. And I believe we can return to that legacy. I know culture change starts at the top. Our leaders from me on down need to be closely integrated with our business and the people who are doing the design and production of our products.
We need to be on the factory floors, in the back shops and in our engineering labs. We need to know what's going on, not only with our products, but with our people. And most importantly, we need to prevent the festering of issues and work better together to identify, fix and understand root cause.
I've already introduced a much more detailed business cadence to drive this across the organization, and this process of change is underway. Culture's driven by values and we'll redefine those for the company together. This has to be more than the poster on the wall. These values will be used to hold leaders accountable in how they lead our teams and delivering safe, high-quality products and services to our customers.
I recently had a meeting with our top executives in the company, and we talk specifically about this culture change. I see this more as a continuous process improvement rather than a milestone. We will be relentless in changing the Boeing culture through action, not just words on a page.
Now let me shift to the second item, which is stabilizing the business. This has been central to my focus since starting the job in August. We have some really big rocks that we need to get behind us to move the company forward.
The first and foremost on everybody's mind today is ending the IAM strike. We've been feverishly working to find a solution that works for the company and meets our employees' needs. I've met with the union leadership the first week on the job and let them know that I was committed to resetting the relationship.
And I remain committed to getting the team back and improving our relationships so we don't become so disconnected in the future. I'm very hopeful that the package we put forward will allow our employees to come back to work so we can immediately focus on restoring the company.
Once we get back, we have the task of restarting the factories and the supply chain, and it's much harder to turn this on than it is to turn it off. So it's absolutely critical that we do this right. Our safety and quality management system will guide us through the restart, and we have a detailed return to work plan in place, and I'm really looking forward to getting everybody back and getting to work on that plan.
One additional area of focus that is critical to our stability is the implementation of the safety and quality plan. As you know, this is a plan that we have reviewed with the FAA and will be part of the criteria we use to measure stability of our production system, which is necessary to gain authority to increase 737 rates. I'm encouraged with the progress we're making already, and we need to continue that momentum.
Another big rock to stabilize the company is managing our balance sheet to best support retaining our investment-grade credit rating. We have a plan, and we're executing that plan. And I'm confident that we have a good path forward to manage the realities of our business and retain our investment-grade rating.
So I've talked about culture and stability. The third area is improving the execution discipline on our new platforms, whether this be the commercial derivatives of the 737 MAX and 777 or the series of programs in our BDS business. We have to be better at understanding and managing the risk on these projects more proactively.
This include disciplined program and risk management in all phases of the project, including the bid phase. Again, this is an area where we need the management team much more focused on their programs and much more active working with their customers on ensuring success and anticipating risks before they happen. Supply chain management improvements will be critical to this effort.
Clearly, we have some difficult contracts in our defense business, but we have to do a better job of executing on the things that we can control.
So lastly, the fourth area to discuss is building a new future for Boeing. While we're somewhat consumed with the challenges of today, we need to be setting the foundation of the future for Boeing. Boeing's an airplane company. And at the right time in the future, we need to develop a new airplane, but we have a lot of work to do before them.
This includes stabilizing our business, improving the execution on the development programs, streamlining the portfolio to do what we do well and restoring the balance sheet so that we do have a path to the next commercial aircraft.
We need to reset priorities and create a leaner, more focused organization. We've recently announced a workforce reduction, which will focus on consolidation of areas where we're not efficient, and we need to continue to focus on reducing nonessential activity.
So before I hand it over to Brian, let me summarize by saying that we have a lot of work to do. We have a plan and changes already underway. This is a big shift that will take some time to turn, but when it does, it has the capacity to be great again.
This is a company that ushered in the new era of air travel and helped plan the first man on the moon. Getting back to the values that help define this legacy is what will define our future. I'm excited about the opportunity, and I look forward to working with all of you.
So with that, let me hand it off to Brian to cover the financials, and then we look forward to coming back and answering your questions. Brian?