Boeing [BA] on Wednesday posted strong fourth quarter results driven by a benefit from new tax legislation, higher commercial airplane deliveries, and higher operating earnings across its three segments.
Net income rocketed 92 percent to $3.1 billion, $5.18 earnings per share (EPS), from $1.6 billion ($2.59 EPS) a year ago, boosted by a $1.1 billion ($1.74 EPS) gain from a tax reform law that went into effect on Jan. 1 but caused the company to remeasure U.S. deferred tax liabilities. The tax bill, which lowers corporate tax rates to 21 percent from the prior 35 percent level, negatively impacted fourth quarter 2017 earnings at General Dynamics [GD], Lockheed Martin [LMT], Northrop Grumman [NOC], and Raytheon [RTN], which have already reported.
Operating margin in the quarter was up 2.5 percent to 11.9 percent.
Excluding pension adjustments, Boeing’s core earnings in the quarter were $4.80 EPS, topping consensus estimates of $2.89 EPS. Excluding the tax benefit, core earnings of $3.06 EPS still handily beat expectations. Free cash flow was $2.5 billion.
Boeing’s Commercial Airplanes segment led earnings gains at the operating level, up 50 percent to $1.8 billion as operating margin grew 3.2 percent to 11.5 percent on higher sales and strong execution, the company said. Operating income in the Global Services segment was up 9 percent to $617 million on higher sales and more profitable commercial parts, and the Defense, Space & Security segment rose 6 percent to $553 million on higher sales and improved performance.
Sales in the quarter rose 9 percent to $25.4 billion from $23.3 billion a year ago as all three of Boeing’s operating segments aided the top line growth.
The Defense, Space & Security segment rose 5 percent to $5.5 billion on higher weapons and rotorcraft deliveries, and Global Services, which stood up last year and includes a mix of commercial and defense work, grew its top line 17 percent to $4 billion on growth across the portfolio.
For the year, Boeing’s sales fell a percent to $93.4 billion from $94.6 billion in 2016 while net income soared 67 percent to $8.2 billion ($13.43 EPS) from $4.9 billion ($7.61 EPS) and operating margin grew 4.8 percent to 11 percent. Core earnings were $12.04 EPS and free cash flow was a stellar $11.6 billion.
