Boeing Company (The)

Today's call is being recorded. The management discussion in the 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 touchtone telephone. Again, it's 10 for questions. After pressing 10, you will hear that you have been placed in queue. Pressing 10 again will take you out of queue. It 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 quarterly earnings call. I am Matt Welch, and with me today are Kelly Orberg, 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.

Thanks, Matt, and thanks to everyone for joining today's call. Before I get into the fourth quarter earnings, let me first offer our thoughts and deepest condolences for the families and loved ones of those on board Jeju Air Flight 2216. We continue to support the airline and the U.S. National Transportation Safety Board as they assist the South Korean authorities in the accident investigation. Now turning to the fourth quarter earnings. Starting the last call, I highlighted four areas critical to our recovery. And as the new year begins, we're making steady progress in all four areas. The first area. stabilizing the business. Following the resolution of the IEM strike, our commercial team has been executing a methodical plan to restart our factories within the framework of our safety management system. This included ensuring all manufacturing employees were current on their training and certifications prior to returning to work on the factory floor. We took time to rebalance the production line so that when we started up, we did so with a healthy production system. People are back to work and excited about the task ahead, and you can see the energy when you're on the factory floor. For the 737 MAX, we have sufficient parts inventory to enable producing at 38 a month, including fuselages, which were a pacing item prior to the strike. And all three of the production lines in Renton are now cycling. In the past quarter, we completed our safety management meeting with the FAA in which they reviewed our safety management system and our production status including spending time on the factory floor. They reported that they saw significant improvements and I'm pleased that we have an agreed upon path for rate increases beyond 38 per month. It's all about adhering to our safety management system and a stable factory as measured through agreed upon key performance indicators or KPIs. It's an early innings on the production ramp and we need to stay disciplined on maintaining a stable production system, but early signs are encouraging. The best news is that our customers are reporting that they are encouraged with what they're seeing as they monitor our production. Progress on the 787 also continues, and we finished last year at a production rate of five per month. Like the 737, we are working to ensure the 787 production system, including the supply chain, is stable prior to making the next rate increase. An important accomplishment to stabilize the business was to shore up our balance sheet. We are committed to recovering the business while maintaining an investment-grade credit rating and delivering for our shareholders. I think the demand for our offering last year speaks volumes about the market's confidence in our recovery. We're working across the supply chain, including the sub-tiers, to ensure readiness and stability with our production rates. Notably, supplier part shortages across all of our commercial programs are within their established control limits. We have instituted dedicated sessions with suppliers to provide insights as well as to promote two-way communication to stay aligned as we operate together as one extended production system. The second element of our recovery is to improve performance on our development programs. While the charges for the quarter in BDS are disappointing, I have had the opportunity to complete deep dive EAC reviews on all the troubled programs. We are very focused on creating stability within the EACs so we stop this quarterly drumbeat of cost growth. This means being more proactive and clear-eyed on the risks and our estimates to complete the projects. While I know it doesn't show in this past quarter's performance, we're making progress in working with our customers to actively manage the contracts to achieve better outcomes for both parties. You've seen that we've entered into an MOA with the US Air Force on the T7A program, and we're in active discussions on a second MOA on that program, all focused on improving the performance of the program. We're also in active discussions with our customer on the VC25B program to make the necessary changes to improve the program performance and delivery. The US Air Force has turned this as an active management, which is a term I really like we're focused on actively managing all of our problematic programs to improve the performance for the company and our customers. said there's no silver bullet on these fixed price programs, I do feel better about our ability to better manage the performance in 2025. On the commercial side, we continue to focus on getting the 737-7 and dash 10 as well as the 777X through certification. There are no updates to the timelines we previously communicated on these programs. On the dash 7 and dash 10, we're still working through the testing phase focused on finalizing the icing design solution, which we plan to include in the certification program. Working closely with the FAA, especially in light of their leadership changes, will be a key focus area for us this year. The 777X is back in flight test, and we have a good handle on fixing the thrust link issue we uncovered. Now moving to the third area, culture change. This will be a multi-year journey, but we're already making progress. Our leaders are getting more engaged with their teams and customers, We're having the frank discussions about what we need to change. In 2025, we'll be re-baselining our core values and behaviors to make our expectations perfectly clear to all our Boeing teammates. These will be incorporated into our leadership development program and become fundamental elements of our performance management system. Leadership promotions will be grounded not only in what we get done, but how we get things done. We're going to help focus the teams on what it takes to make Boeing successful and promote a culture of unity and accountability by implementing a single enterprise score for all of our annual incentive plans. As I talk with employees, there's a growing swell of excitement around restoring trust and getting their Boeing back. And they want to be a part of this turnaround. So the last area is building a new future for Boeing. While workforce reductions are always difficult, I'm pleased that we have been able to reduce layers of management and redundant overheads in our system. This will serve us well as we establish a less bureaucratic, more focused and agile operating environment for our future. We're preparing for the road ahead by continuing to make important investments in our core business while streamlining our portfolio in areas that aren't core to us. So let me wrap up by saying that the markets we serve are robust and growing. Demand for our core commercial and defense products and services remain strong. Our backlog of more than a half a trillion dollars clearly demonstrates the value of our portfolio. And we're focused on meeting our commitments and delivering safe, high-quality products to our customers. I do want to acknowledge and thank the incredibly talented employees at Boeing. Your resiliency and commitment gives me confidence in our path forward. It's going to take all of us working together. Next, let me turn it over to Brian to cover the operating results. And after that, we'll be happy to take your questions. So Brian, over to you.