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Forever New Frontiers. Presentation By: Nick Little Mike Mittelman Ying Jin Lei Huang Nelson Rony. Overview. An American multinational aerospace and defense corporation Company founded in 1916 Two business units: -Boeing Commercial Airplanes -Boeing Defense, Space & Security
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Forever New Frontiers Presentation By: Nick Little Mike Mittelman Ying Jin Lei Huang Nelson Rony
Overview • An American multinational aerospace and defense corporation • Company founded in 1916 • Two business units: • -Boeing Commercial Airplanes • -Boeing Defense, Space & Security • World’s largest aerospace company • Second-largest defense contractor in the world
Boeing International • Customers and customer support in 150 countries • Contracts with 28,000 suppliers and partners globally • More than 170,000 Boeing employees in 50 states and 70 countries
Fortune 500: 2012 RankingsBoeing is #1 In Aerospace (again)!
2012 revenues of $49.1 billion • Represent three quarters of the world’s fleet! • Approximately 70 percent of Boeing commercial airplane sales are outside of the United States
Headquartered in St. Louis, Mo., with global operations in four nations and 21 states • Responsible for 45% of the company’s income • 2012 revenues of $32.6 billion • Approximately 60,000 employees
Major Subsidiaries • Aviall • Providing aftermarket supply-chain management services for the marine, aerospace and defense industries. • Continental DataGraphics (CDG) • Providing strategic engineering solutions and software for aerospace and defense. • Inventory Locator Service • Providing critical business intelligence regarding supply and demand of parts worldwide. • Jeppesen • A navigational solutions provider for the aviation, marine and rail industries.
Major Commercial Aerospace Products • Newest Product: Boeing 787 Dreamliner (bottom right two slides) • World’s Most Advanced Commercial Airplane
Major Defense Products 3 2 1 5 6 4 First Row: KC 767 Global Tanker1, AH 64D Apache2, ScanEagle3 Second Row: Unmanned Little Bird4, F-15E Strike Eagle5, Harpoon6
Liquidity Ratios - Cash balance and inventory has increased - Short-term and other investments have gone up. - Big increase in CFFO.
Efficiency Ratios • - Decreasing A/R collection period • - Biggest factor in a high CCC is • inventory, but it is the nature of our company - A/P is at a manageable time period
Boeing Buys Inventory Commodities at the right time, saving us money!
Profitability Ratios • Different core products have different needs and cost structures • Building planes requires more infrastructure and more labor = higher costs - Honeywell will try to influence you based on comparing ratios, but it's apples to oranges. Barcode scanners & air conditioning vs. Airplanes!
Effective Income Tax Rate • Tax benefits of $397m and $371m recorded in 2011 and 2010 • Absence of research and development tax credits, but also an even lesser total research & development expense!(nets to less total exp.)
Compensation to Employees • New health care plan • Good for employees w/o costing us a material amount more • Our Pension Plan • Majority have defined benefit pension plan – the BEST plan an employee can have. • Only 7% of U.S. employees have this plan. • Share-based Compensation • Stock options • Share value trust • Restricted stock units & other rewards
Boeing: Delivering the Future International Expansion
U.S. Market StableForeign Market Rapidly Expanding! • 80% of commercial airplanes orders from overseas • Budget cuts completely offset • 20 % increase in total revenues • Tripling and Doubling Revenues • -India • -Asia • -South Africa
Expanding Business Overseas: China! • 1916: the first engineer founder Bill Boeing hired wasChinese-born Wong Tsoo. • 1972: President Richard Nixon made his historic trip to China, opening up businesses to the multitude of opportunities China had to offer. • We have been conscious about expanding into China • every step of the way, from hiring our first engineer, to the opening of China’s business market by Nixon . Wong Tsoo (王助)
Huge sales volume increases in China! • As of March 5th, 2013:Air China placed an order for 31 airplanes! Main point:This one deal alone is worth over $5 billion dollars!
Huge sales volume increases in China! In 2013, Airplane deliveries to China are expected to increase 60% year-over-year! (source: http://www.china.org.cn/business/2013-03/03/content_28112442.htm) A Boeing 787 Dreamliner at Beijing Capital International Airport. Huge Business Milestone: 1,000th Boeing Plane will be delivered this month to China! More than 120 aircrafts will be delivered to various Chinese airlines this year alone.
Boeing (BA) Consistently Beats the Dow Jones & S&P 500 Averages
Long-Term Percentage Increase of Boeing’s Stock Value vs. Honeywell
Stock buyback plan • Negative on our books, which lowers our Equity • Buy back our own shares because we think they are undervalued • Means we are confident in our stock price rising significantly
Which is a better value investment? Dividend Yield: Boeing: 2.50% Honeywell: 2.30% 1-year Stock Price Projected Increase: BA: 8.97% increase HON: 4.18% increase
Summary : Why you should invest with us! • ProvidesBestbenefit to employees • World demand will double in 20 years • TheGreatest corporation in defense industry • Great inventory management leads tohuge gains by avoid cost rises! • Versus Honeywell: Better Dividend, Better 1-Year Stock Target Price& 5x betterstock appreciation for your money!
Forever New Frontiers Present by: Nick Little, Mike Mittelman, Ying Jin, Lei Huang, Nelson Rony
Risks Industry-Wide:Company Specific: 787 Dreamliner Battery problem: - Extremely cheap fix - FAA scheduled to re-approve this week!
Adjustment Adjusted Debt to equity ratio: 2012: (82929-6579)/(5967+6579)=6.09 2011: (76378-5743)/(3608+5743)=7.56 2010: (65703-5570)/(2862+5570)=7.13 2009: (59828-1914)/(2225+1914)=13.99 2008: (54921-3795)/(-1142+3795)=19.27 Adjusted return on equity ratio: 2012:35.6% 2011:45.1% 2010:52.7% 2009:39.3% 2008:100%
Revenues: Defense vs. Commercial 60 % commercial, 40 % government
What we did… • 1916 William Boeing founded Pacific Aero products Co • 1940 Boeing during World War II built a large number of bombers (B-17 and B-29) • 1955 Bomarc missiles became world’s first long-range anti-aircraft missiles • 1957 Boeing707, USA’s 1st commercial jet plane • 1961 Boeing participated in Apollo program • 1967 Boeing 737 became best-selling commercial plane • 1972 Boeing involved in Space Shuttle program • 1995 Boeing involved in Space Station Project • 1996 Boeing acquired Rockwell’s aerospace and defense units • 1997 McDonnell Douglas Corp & Boeing merged • 2001 Headquarters was moved to Chicago • 2004 Dreamliner was launched • 2006 Aviall, Carmen Systems, C-map came under Boeing • 2006 Boeing, Lockheed Martin joined for United Launch Alliance
What we do… • Design, assemble and support defense systems • – World’s largest designer and manufacturer of military transports, tankers, fighters and helicopters • – Support Systems provides services to government customers worldwide • Design and assemble satellites and launch vehicles • – World’s largest provider of commercial and military satellites; largest NASA contractor