It's that time of the year when the world's largest plane maker, Boeing (NYSE:BA), is scheduled to release its third-quarter results. With solid performance in the first half, there are expectations that the company will not only sustain the rhythm but also achieve greater heights in the remaining half. Will the third-quarter earnings release on Oct. 22 delight investors, or should we expect some hidden surprises? Let's break down the four key result areas and do some number crunching.

Impressive deliveries to support revenue
Analysts expect third-quarter revenue to come in at around $23 billion, compared with the $22.1 billion recorded in the year-ago quarter. Commercial deliveries during the quarter have been quite impressive, as Boeing dispatched 186 planes in the period, up 9.4% from last year. Though defense deliveries also improved by 11.6% over the past year to 48 units, revenue from this business is likely to remain depressed on the back of constrained military spending by the government. The higher commercial deliveries could pitch in to offset the defense weakness. 

As expected, the next-generation 737 aircraft was the volume driver with 120 deliveries. In second place was a pleasant surprise as the 787 Dreamliner stood out from the rest, with delivery of 31 units, followed by the popular 777 with 27 deliveries. Dreamliner deliveries are stabilizing and could be inching close to breakeven.

Chart by author. Data source: Boeing,

For the full year, Boeing expects to record revenue in the range of $87.5 billion to $90.5 billion, while analysts estimate the top line to come in at $89.6 billion -- the higher side of the company's guidance. Commercial deliveries are significantly up for the first nine months at 528 units, from 476 in the same period a year earlier. This makes the fiscal-year revenue target achievable, but will the gain reverberate on the bottom line?

Operating efficiency to boost profits
In the past quarter, management had raised its guidance for core earnings per share by $0.75 to a range of $7.90 to $8.10. The revision was made to reflect the gain on account of tax credit and efficient core operations. For the third quarter, analysts expect Boeing's core earnings per share to rise more than 9% from past year's $1.80 a share to $1.98. Strength in deliveries, along with a favorable delivery mix, should aid the quarter's profitability.

Boeing has been raising its operational efficiency, which helped the company achieve the impressive delivery figures, and could take earnings higher. It has accelerated the production rate of the 737 and 787. The 737's output was increased from 38 to 42 a month in March, and the 787's production improved to 10 a month at the end of 2013. In addition, Boeing's unremitting focus on the "partnering for success" program should help fetch components at lower rates and control costs. In all, Boeing's earnings are expected to be sound and sturdy.

Order book continues to be heavy
At the end of the second quarter, Boeing had an astounding backlog of 5,237 units, of which more than three-quarters was for its single-aisle 737 aircraft. Apart from this, the 787 Dreamliner and the 777 aircraft have the highest firm orders. Backlog during the third quarter has gone up as the plane maker secured orders for 201 planes, a business worth $40.2 billion, at the Farnborough air show held in July. At the event, the 737 won the highest number of orders, with 123 units. Equipped with better engines, the 777X was the next big gainer, as Qatar Airways stepped up to order 50 777-9Xes. The company also received orders for 12 777-300ERs, with options for another four from leasing companies.

Qatar Airways Boeing 777-2DZ-LR. Source: Wikimedia Commons.

In September, Ethiopian Airlines ordered 20 units of the 737 Max. There were cancellations as well, when struggling operator Air Berlin backed out from honoring the contract for 18 737s and 15 787s. But despite those cancellations, Boeing's order book is robust, so much so that the company's thinking about ramping up its 737 production rate to 52 a month in 2018 or 2019. Boeing's website shows net orders for 1,011 jetliners, adjusted for 106 cancellations through Oct. 14.

Cash generation could be stabilizing
Boeing's free cash flow is quite irregular, and that automatically invites special attention from its stakeholders. Boeing CFO Greg Smith says the company is committed to deploying cash efficiently. Apart from that, the 787 Dreamliner, which has been a financial nightmare for the plane maker after it's drained billions in cash to fix production and technical problems, is gradually looking up.

According to a Reuters report, a 787 costs more than its price, but with stabilizing deliveries, the revolutionary jet could convert into a cash spinner and play a significant role in regularizing cash flows. In the past six quarters, Boeing's managed to push up Dreamliner deliveries to edge closer to breakeven.

In the third quarter of 2013, free cash flow came in at $2.3 billion on the back of strong deliveries and improving operational competence. This quarter, too, cash generation should head north, with robust deliveries and increasing process efficiency. Higher 777 and 787 deliveries should boost the company's operating cash flows, which Boeing forecasts to come in at around $6.25 billion this year. In December 2013, the aero major announced a 50% dividend increase, reflecting the company's confidence in solid operations and cash generation. 

Putting the pieces together
Strong deliveries, better operational performance, and a continuous flow of orders stack up well for Boeing. Cash flows also seem to be getting better with every passing quarter. Investors could see another set of healthy numbers this earnings season.