As an investor (and a financial writer), I've been invested in and writing about Boeing (BA -2.87%) stock off an on for the better part of the last two decades. And I have to tell you -- there's something that's always bugged me about Boeing: its space business.
Think about it. Boeing has been involved in space exploration since the 1960s. Boeing helped get the Apollo program off the ground -- and to the moon. Boeing led the effort to build the International Space Station in the 1990s.
Today, Boeing's blazing new trails with its lead role in Project Artemis (to take mankind back to the moon after a 50-years absence), building new spacecraft to shuttle astronauts to ISS and back and keep them well-stocked with toothpaste and Tang (and other supplies). Boeing's even part of a consortium of companies working to develop a private space station to replace the International Space Station when it goes out of business in 2030.
And yet, as investors we know almost nothing about Boeing's second-biggest business.
Take a look at how Boeing breaks down its revenue by segment from its three major (and two very minor) business segments:
See that segment titled "Defense, Space and Security"? Boeing's entire space program is tucked away somewhere within that entry, routinely abbreviated "BDS." And yet Boeing gives its investors almost zero insight into precisely how its space program is performing within BDS.
Boeing's biggest black box
What do we know about Boeing's space business os it's part of a business segment -- BDS -- that generated $6.2 billion in revenue last quarter, and $23.2 billion in all of 2022, according to data from S&P Global Market Intelligence. We know this business has been moderately profitable for Boeing in the past, averaging an operating profit margin of 7.5% from 2017 through 2021, but that it became deeply unprofitable in 2022, losing $3.5 billion, and wiping out all the profit earned in the preceding two years.
What we don't know about Boeing's space business is precisely how big a part it plays within BDS. As a result, we don't know -- and can only really guess at -- how big a role Boeing's space program played in those losses. And we don't know how big a role "space" will play in Boeing's decision to sell, keep, or even expand its stake in its United Launch Alliance (ULA) space joint venture with Lockheed Martin (LMT -0.20%) later this year.
As Ars Technica reported earlier this month, ULA is for sale, and it's a real possibility this sale will take the form of Boeing buying Lockheed's 50% stake in the joint venture. Or Lockheed buying Boeing's stake. Or somebody else buying both Boeing's and Lockheed Martin's interests in ULA!
Boeing has a big decision to make
What would this mean for Boeing, and how will Boeing management decide whether to keep ULA, sell ULA, or buy even more ULA than it's ever owned before?
That's very hard to say, because the sad truth is that Boeing tells its investors very little about ULA -- or space in general -- and how important these businesses are to the overall segment titled "BDS." Of course, from the company's 10-K, we know that things aren't going great:
- All of BDS saw its revenue fall 12.5% between 2021 and 2022 (or down 11.5% between 2020 and 2022).
- Military aircraft deliveries -- presumably a big part of the BDS business, although Boeing won't say how big -- aren't making huge moves. With 154 military aircraft delivered in 2020, 169 in 2021, and 160 in 2022, Boeing's defense business seems to be rolling right along, but with no clear trend.
We can guess that Boeing's space business isn't doing as well. According to management, the value of Boeing's "equity investment" in ULA declined by 5% between 2021 and 2022 to $587 million. And Boeing's Commercial Crew program -- the Starliner spacecraft that Boeing built, and intends to use to fly astronauts and supplies to ISS -- recorded a $288 million "reach-forward loss" in 2022.
But the simple truth is that as much as Boeing tells us about its business, and its business segments, this is still not enough. It's not enough to help us decide if Boeing Space is a business worth keeping. And it's not enough to tell us -- when Boeing ultimately decides what to do with its stake in ULA -- whether that decision is good or bad.
A modest suggestion for Boeing
Investors deserve more disclosure from Boeing. And if you're listening, Boeing management, I've got just four words of advice:
Do better. Disclose more.
