Boeing Company (The)

Thank you for standing by. Good day everyone and welcome to the Boeing Company's third quarter 2026 earnings conference call. At this time all participants are in a listen only mode. Please be advised that 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 call please press star then one on your telephone. At this time I am turning the call over to Mr. Eric Hill, Vice President of Investor Relations for opening remarks and introductions. Mr. Hill, please go ahead.

Thank you and good morning. Welcome to Boeing's quarterly earnings call. With me today are Kelly Ortberg, Boeing's President and Chief Executive Officer, and Jay Malave, Boeing's Executive Vice President and Chief Financial Officer. This quarter's webcast, earnings release, and presentation which include relevant disclosures and non-GAAP reconciliations are available on our website. Today's discussion includes forward-looking statements that are subject to risk and uncertainties, including the ones described in our SEC filings. As always, we'll leave time at the end of the call for analyst questions. With that, I will turn the call over to Kelly Ortberg.

Well, thanks, Eric, and good morning, everyone. Thanks for joining in today's call. As we enter the final months of the year, we're continuing to make progress across our businesses. having completed many of the key milestones in our 2026 plan and building on the trust we've restored with our stakeholders. Through the third quarter, we delivered 161 commercial aircraft, the most since 2018. We received FAA certification for the 737-7 in July and 737-10 just last week. We reached a new four-year agreement with Union representing our engineering and technical workforce in the Pacific Northwest, avoiding any work interruption. And we secured major program awards across our defense and space portfolio, including multi-billion dollar contracts on key programs like the PAC-3 and the F-15EX. And we scored a generational win with U.S. Navy when they selected Boeing to design, build and deliver It's 6th generation fighter jet, making Boeing the exclusive 6th generation fighter company for both the US Air Force and the US Navy. These accomplishments reflect the significant progress we're making, and they're made possible by the sustained focus of our team on safety, quality and performance. We know there's more work to do and I've said before our progress is not always going to be perfectly linear, but we continue to improve and I'm confident we're on the right track. I'll touch on the highlights I just shared as well as areas that require more attention in the quarters ahead. And let's start with our development programs. All year we've said that certifying our new aircraft models is one of our most important goals. The FAA certification of the 737-7 and the dash 10 represents the culmination of nearly 1500 test flights and more than 4000 hours of ground and flight testing. And I want to thank our employees who worked on or supported these programs and never lost sight of our mission. And to our customers and partners, I extend my gratitude for the steadfast support and confidence in these airplanes. And we look forward to the newest members of the 737 MAX family delivering on their promise of greater efficiency and more capability. With the 737-7 and 737-10 FAA certification were complete, our focus now centers squarely on the 777-9. We continue to make progress on flight testing and still need approval to begin the balance of the flight test program, including ETOPS testing. We continue to expect first delivery in 2027 and all of our latest assumptions continue to be within the EAC we reset last year. Turning now to our commercial factories. On 737, we continue to work towards stabilizing production at 47 airplanes per month. Our factory key performance indicators are performing well, particularly in the final assembly where we've seen a 40% improvement in rework since the start of last year. However, as I mentioned at a conference last month, it is taking us longer than we had expected to demonstrate performance at rate 47. We're making progress, but we still have more work to do and I'm expecting it'll take us into next year to get fully stable at this rate. Our output of wings is improving, but we need to demonstrate sustained performance at this level and ensure we have a high confidence plan to step up to rate 52 when the system is ready. To reach 52 aircraft per month, we have to get the Northline certified and producing, our back shops including wings, stable and ready, and fuselages in Wichita stable at the higher rates. Taken together and integrating our learning from this year, our financial plan will target rate 52 in the back half of 2027. And as I've said many times before, it's more important that we do this ramp right than what particular month we achieve a rate break. And we'll stay disciplined here. Switching now to 787, we are stable at eight aircraft per month while the factory is performing well. While we have stability in our factory, delivery cadence has been uneven month to month due to the seat certification challenges we've discussed previously. We are seeing increased stability in our supply chain and closely watching engine delivery performance as it remains the pacing item for rate 10. We still expect to start the transition to 10 per month yet this year, and we're making good progress on our Charleston expansion to support even higher production rates. Beyond the progress we're making in our factories, we're also continuing to position Boeing for the long term. That is showing up in the quality of our backlog, the demand we're seeing across the portfolio and in the investments and program wins that position us well into the future. Last month, we achieved a transformational win that'll shape the company for decades to come when the US Navy selected Boeing as the winner of the FAXX competition. To be selected for another sixth generation fighter program is a testament to our innovation, our team and trust we've built with our customers. It is a true honor to support the national security priorities and a responsibility we take very seriously. In addition to faxx we continue to see strong demand for proven franchises across our defense and space portfolio. Boeing received a seven-year contract to accelerate and eventually triple the pac-3 seeker production supported by our early investments in facilities workforce and supply chain. In the quarter, we also received a contract to manufacture 22 more F-15EX aircraft for the US Air Force. And this award brings the total number of aircraft under contract to 120 with the potential for additional upside as the F-15EX continues to demonstrate the value of its unmatched payload and range capability. Beyond new franchise wins, we also continue to see tangible benefits from the active management approach we've talked about. As I said last quarter, Starliner was a program where we still had work to do with the customer. We've since worked with NASA on a path forward to support future flights while reducing our program risks, including $359 million of additional NASA funding. Taken together, these are the kinds of actions and outcomes that will support our customers, strengthen Boeing, and position us well for the future. That long term position is also beginning to give us greater visibility into the financial path forward. As I mentioned over the last two years, we've made exceptional progress, restoring trust, retiring risk and transforming our culture and rebuilding the foundation of safety and quality that will help ensure durable success. We have also been deliberate about not getting ahead of ourselves given the range of outcomes tied to the production ramp, certification timing, and other critical program execution. But we appreciate that it's been difficult for shareholders to assess how our progress will translate into financial performance. We're now at a point where the range of outcomes is narrowing. As we look ahead, our outlook is supported by a record backlog of $745 billion. with improved pricing dynamics, a more stable production system, and better underwriting on development programs and our plans for continued progress on aircraft certification. taken together, those factors give us confidence to share a multi-year free cash flow target for the business. We've narrowed our range and expect to generate approximately $2 billion of free cash flow in 2026. I'm expecting that that'll improve to about $3 billion in 2027, inclusive of the additional CapEx to support the FAXX development. We believe this should improve to about $6 billion in 2028, as we start to burn off some of the headwinds and accelerate from there. And I expect to achieve the $10 billion target in 2029. Jay will provide further color on the elements driving this trajectory in his remarks, but it's important to highlight we continue to see significant growth potential beyond the $10 billion in line with our prior comments. So to sum it up, we remain well positioned for the long term. I'm pleased with our progress we've made so far. we've come a long way but we're entering a new phase and the bar is higher now as it should be our job is to keep raising our performance to meet higher expectations while always prioritizing safety quality and stability i'm confident we'll get there because we're doing the right work and taking the right actions to build more durable dependable performance over time So before I close, I want to thank all of our employees for the work they're doing every day to move Boeing forward. And with that, I'll turn it over to Jay to discuss our financial results in more detail before we move to question and answer.