Driven by strong results across its operations, Boeing [BA] on Wednesday reported a big increase in its bottom line and a solid gain in the top line in its first quarter, and the company boosted its guidance this year for earnings and cash.
Net income was up 57 percent to $2.5 billion, $4.15 earnings per share (EPS), from $1.6 billion ($2.54 EPS) a year ago. Stripping out various pension adjustments, Boeings core earnings were also up richly, $3.64 EPS versus $2.17 EPS a year ago, outpacing consensus estimates by $1.07 per share.
Sales increased 6 percent to $23.4 billion from $22 billion a year ago.
The strong earnings result was led by the Commercial Aircraft segment, which boasted strong operating performance on higher sales. Revenue was up on more aircraft deliveries and operating margin rose 4.3 percent to 11 percent, driving a 73 percent increase in profit to $1.5 billion.
Boeing remains bullish on its commercial aircraft business amid rising passenger and cargo traffic.
The Defense, Space & Security segment also provided a lift, with sales up on international fighter aircraft, weapons, and the C-17 military transport program. The segment also posted strong operating profit, up 18 percent to $649 million on program performance and a mix of business that favored higher margin sales. Operating margin rose 60 basis points to 11.3 percent.
Dennis Muilenburg, Boeing’s chairman, president and CEO, said on the company’s earnings call that Boeing is on track to deliver the first 18 KC-46A aerial refueling tankers to the Air Force this year and continues to bring down technical risk on the program. Greg Smith, Boeing’s chief financial officer, said the company took an $81 million charge in the quarter to reflect cost growth on the tanker. Muilenburg said Boeing is “confident in the long-term value of this franchise.”
The Global Services segment posted a high single-digit increase in sales and low single-digit rise in operating profit, as commercial services drove the revenue gain.
Based on first quarter results, Boeing increased its projections for earnings and cash this year. Earnings are now expected to be between $16.40 and $16.60 per share, up 50 cents EPS from prior guidance, and core EPS are expected to be in the range of $14.30 and $14.50, also 50 cents higher than earlier predicted.
Cash flow is expected to be in the range of $15 billion to $15.5 billion versus the prior outlook of around $15 billion. Free cash flow in the quarter was $2.7 billion.
Total backlog at the end of the quarter stood at $486.2 billion versus $474.8 billion at the end of 2017. Backlog was higher in all three segments.