Boeing [BA] on Wednesday reported strong earnings results as it swung to a profit versus a year ago when it suffered from more than $2 billion in charges on commercial and military aircraft programs.
Net income in the quarter was $1.8 billion, $2.89 earnings per share (EPS), versus a $234 million (37 cents EPS) loss a year ago. Core EPS, which excludes pension expenses, were $2.55, handily topping consensus estimates by 25 cents.
Sales were down, as expected, to $22.7 billion, 8 percent lower than $24.8 billion reported a year ago, on fewer commercial and military aircraft deliveries, lower satellite volume, and contract timing in the services and support portion of the defense segment.
The services and support business turned in strong operating income results, up more than 30 percent on strong performance.
Operating margin in the defense segment was 12.9 percent, a record, due to improved performance at all three business areas, Global Services and Support, Boeing Military Aircraft, and Network & Space Systems.
Improved performance and a lower than expected tax rate led Boeing to increase its earnings guidance for the year by 75 cents per share to between $11.10 and $11.30 EPS. Operating margin at Commercial Airplanes is now expected to be greater than 10 percent versus prior guidance of between 9.5 percent and 10 percent, and greeter than 11.5 percent at Defense, Space & Security compared to around 11.5 percent previously.
Free cash flow is also projected to be higher, around $10.3 billion versus $8.5 billion previously. Free cash flow in the quarter was $4.5 billion.
Sales are still expected to be between $90.5 billion and $92.5 billion.
Dennis Muilenburg, Boeing’s chairman, president and CEO, said demand remains “healthy” across the company’s commercial, defense and services markets.
Commercial airplane orders of 183 aircraft equaled deliveries in the quarter and orders in the defense segment were $5 billion. Commercial sales were $15.7 billion and defense sales were $6.9 billion.
Backlog in the commercial business stood at $424 billion and for defense $58 billion, 37 percent from international customers. International demand for the company’s defense products remains high, Muilenburg said, particularly for rotorcraft, commercial derivatives, fighter aircraft and satellites. Defense backlog a year ago was $55 billion.