Boeing Raises Guidance Following Solid Q3

Boeing Co. (NYSE: BA) reported third-quarter 2012 results before markets opened this morning. The aerospace company posted diluted earnings per share (EPS) of $1.35 on revenues of $20 billion. In the same period a year ago, the company reported EPS of $1.46 on revenues of $17.7 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $1.12 and $20 billion in revenues.

The company raised its full-year guidance, now expecting revenue of $80.5 to $82 billion and EPS of $4.80 to $4.95. Both numbers represent increases from previous guidance for revenue of $79.5 to $81.5 billion and EPS of $4.40 to $4.60. Boeing expects to deliver 585 to 600 new commercial aircraft in the year at an operating margin of 9%. The consensus estimate calls for EPS of $4.73 on revenues of $80.65 billion.

Boeing’s CEO said:

Our Defense, Space & Security business maintained double-digit margins in a challenging environment while Commercial Airplanes continued to build momentum with 787 deliveries and 737 MAX orders. Underpinned by our solid performance to date and positive outlook, we are raising our year-end guidance for revenue, earnings and operating cash flow. We remain well positioned for long-term growth with a clear focus on quality, productivity and disciplined program execution.

Operating cash flow before voluntary pension contributions totaled $2.35 billion, up from $949 million in the same period a year ago. Operating cash flow totaled $1.6 billion compared with $449 million a year ago, and free cash flow totaled $1.17 billion, up from just $69 million a year ago.

The company’s order backlog at the end of the quarter totaled $378 billion, which includes net third-quarter orders worth $24 billion.

Operating margins in the company’s commercial aircraft division fell from 11.4% to 9.5% due to “the dilutive impact of 787 and 747-8 deliveries and higher period costs.”

Operating margin in Boeing’s defense division rose from 10% in the year-ago quarter to 10.5% this year. But sales of military aircraft fell, as did sales in the network and space systems group. As a whole, sales were down 4% in the defense division.

Boeing’s shares are up about 3.1% in premarket trading this morning at $75.10, in a 52-week range of $62.12 to $77.83. The consensus target price for the shares was around $87.40 before today’s report.

Paul Ausick