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Introduction

April 22, 2015: c. Leeham Co. Boeing may have reported solid earnings for the first quarter, but aerospace analysts focused on free cash flow (FCF) and gave the company a raspberry.

Analysts have been increasingly pinpointing and asking questions about FCF since the third quarter call, when Boeing stock got pummeled over the issue. Boeing surprised Wall Street with the fourth quarter numbers in which FCF was sharply higher and greater than expected.

Last week, we reported UBS’ analysis of FCF and how it was driven up by more advanced (pre-delivery payments, or PDPs) than usual.

On the 1Q earnings call, Ron Epstein, the aerospace analyst doe Bank of America Merrill Lynch, honed in on the issue.

Summary

• Our Market Intelligence since January has identified hundreds of millions of dollars in accelerated advances from customers to bolster cash flow.
• Money needed to meet promises of shareholder buybacks, say sources on and off Wall Street.
• Accelerated cash advances required throughout this year and into next, say sources.
• Boeing declines further comment.