Boeing Company (The)

Thank you for standing by. Good day, everyone, and welcome to the Boeing Company's fourth quarter 2022 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. To ask a question on today's conference, please press the digit 1 followed by the digit 0 on your touch-tone telephone. Again, it is 1-0 for questions. After pressing 1-0, you will hear that you've been placed in queue. Pressing 1-0 again will take you out of queue and may prevent you from being able to ask a question. At this time, for opening remarks and introductions, I'm turning the call over to Mr. Matt Welch, Vice President of Investor Relations for the Boeing Company. Mr. Welch, please go ahead.

Thank you, and good morning. Welcome to Boeing's fourth quarter 2022 earnings call. I am Matt Welch, and with me today are Dave Calhoun, 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. As always, detailed financial information is included in today's press release. Furthermore, projections, estimates, and goals included in today's discussion involve risk. including those described in our SEC filings and in the forward-looking statement disclaimer at the end of the web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of certain non-GAAP measures. Now I will turn the call over to Dave Calhoun.

Thanks, Matt. Good morning. Thanks to all of you for joining us this morning. Last time we were together was the 2nd of November where we had a chance for the first time at least in my three-year tenure, to talk about guidance and expectations for the years ahead. The good news is we had a very solid fourth quarter, a quarter that, in my view, puts us in good stead to step forward and meet the guidance that we have delivered to all of you. Not only have we taken big steps to reduce the risks that, of course, we've faced over the last three years, but importantly we're well on our way to restoring the operational and financial strength that we got used to prior to our max moment. Challenges remain. We have a lot to do, but overall we're feeling pretty good about the way we closed 22 and we're well positioned for 23 and beyond. Our key metric, as everybody knows, is free cash flow. Importantly, we were able to generate more than $3 billion in free cash flow in the fourth quarter, driven by the progress in our performance and, importantly, continued strong demand. And this helped us generate positive full-year cash flow for the first time since 2018, a very important turnaround metric for us. Several key milestones and events that I'd like to highlight. Let's start with the BCA deliveries, which I know everyone tracks. 22 total was 480 with 69 deliveries in December. Notably, the 737 deliveries, we had 387. That exceeded our target of 375, and it included 31 787s as we unwound inventory and delivered from the production line following the important return to delivery over the course of the summer. On the order front and on the market side, we continue to see very strong demand across the portfolio. More than 800 net orders on the year, driven by the 737 MAX and the 787. Highlighted most recently by the very historic deal with UAL, United Airlines in December. In 2022, we sold 200 plus net wide bodies. That's the most since 2018. More broadly, the 737 MAX team has made tremendous progress. Fleet is performing exceptionally well. Production is stabilizing, demand is strong. We delivered 1,000 plus 737 MAXs in total now. And since our return to service, the fleet has surpassed three million flight hours. It's safe, and it's the most reliable of the airplane fleets. Production, we've gone from zero to 31 a month, and we're prioritizing stability, which we have not yet achieved, but we're on a steady course to do so. And orders, more than 1,500 gross orders to date. 737 MAX returning to service in China is another indication of this overall improvement in our business. This month, of course, we all know that that occurred. We have more airplanes on the tarmac in China to bring back into service, just as we did here in the U.S. before we began any deliveries of any sort. And I'm not going to guess going forward when deliveries may or may not start. As everyone knows in our guidance, we have de-risked for that possibility. 737 Max 7 and 10. Everybody knows we got our extension approved and attached to legislation at the end of the year. That was a very important moment. I'll remind everyone that that doesn't mean that these were certified. It simply means that the FAA and Boeing can follow the existing application and do that job and do it the right way. So we feel very, very good about having de-risked that moment as well. I WILL ALSO WANT TO POINT OUT EVERY ARGUMENT WE MADE IN BEHALF OF THAT EXTENSION RELATED TO SAFETY. THE PREMISE FOR OUR CHOSEN COURSE AND THE APPLICATION THAT WE FILED WAS SAFETY FIRST AND IT WILL ALWAYS BE SAFETY FIRST. BOWING DEFENSE, OUR SLS LAUNCH. THIS WAS AN ENORMOUS EMOTIONAL UPPER FOR OUR COMPANY AND FOR OUR TEAM BROADLY. The Artemis I launch in November, which was powered by the SLS rocket, was more than a little inspiring. And I'd like to congratulate the NASA team broadly for the succession of the Starliner mission. It's an incredible success, incredible, and it went beautifully and almost flawlessly every step of the way. So again, a significant accomplishment for space travel in general. But that rocket, again, just shows what Boeing is capable of when we put our minds to it, we follow our disciplines, we stay patient, and ultimately prove to the world that there's more to do in space. Boeing Global Services, another terrific story. It is simply following the recovery of our industry in general and everywhere in the world. So we had a great quarter pretty much across the board. We continue to grow. We continue to invest so that we are prepared to support our customers as they bring their airlines back to where they were before COVID. So we'll reaffirm our guidance. And with this progress, which we feel good about both the financial and the operational outlook that we shared with you in November, and that includes the cash flow, the delivery ranges that we set for 23, as well as for the 2025 and 2026 timeframe. Our realities are still the same, a difficult, difficult supply chain. And while average deliveries met our objectives, we continue to face a few too many stoppages in our lines, simply so that we do not travel work as we run into supply chain shortfalls. So those stoppages, while they are coming down, are not where they need to be as we think about stable rates going forward. I will not, in this discussion and or in Q&A, highlight any one supplier within the supply chain. Know that we're working with all of them. There's a significant amount of transparency in those discussions between them, between us, and everybody is focused on the rate improvements that we have outlined to all of you. All things considered, and reflecting on these last few years, we're feeling pretty good about where we stand heading into this year. Demand very strong, portfolio very well positioned. We have faced plenty of tests in a number of orders all around the world with some of our toughest customers, and we know this portfolio is well positioned. We have a robust pipeline of development programs, including broadly across our defense business, and we're innovating new capabilities that prepare us for the next generation of products. One of the more significant achievements was recently announced by NASA in their sustainable flight demonstrator contract. This is a set of technologies that's intending to cut fuel emissions by up to 30%. Those are the kind of standards that in our view are required to ultimately launch a new commercial airplane wrapped in sustainability. We've de-risked major aspects of the business, and our performance is improving. We're embedding lean across our operations to drive productivity, ultimately to achieve the kinds of targets that we've set out. We've got work to do, but we're feeling really good about our progress. We're proud of our team, and we're confident in the future. With that, I'll turn it over to Brian West.