The FINANCIAL -- The Boeing Company reported higher first-quarter earnings and operating cash flow compared to the previous year, driven by solid execution on production programs and services.
First-quarter GAAP earnings per share increased to $2.34 and core earnings per share (non-GAAP) increased to $2.01. Revenue decreased to $21.0 billion, reflecting the timing of commercial and defense aircraft deliveries.
For the full year, GAAP earnings per share guidance increased to between $10.35 and $10.55 from $10.25 and $10.45 and core earnings per share (non-GAAP)* guidance increased to between $9.20 and $9.40 from $9.10 and $9.30, primarily driven by a lower-than-expected tax rate.
"With a sharp focus on performance and productivity, our team delivered another quarter of solid financial results, including year-over-year earnings growth and strong operating cash flow," said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. "In turn, we continued to position Boeing for growth with investments in new products and services, innovation, and our people, while again demonstrating our commitment to return significant cash to our shareholders."
"We also achieved major milestones, including the certification of the new 737 MAX 8 and first flight of the 787-10 Dreamliner, and we captured a $3.4 billion contract award for 268 Apache helicopters."
"We remain on track to achieve our full-year revenue, earnings and cash flow targets as our teams deliver on our large and diverse order backlog. As we do so, we're focused on accelerating productivity, quality and safety improvements, strengthening execution on development programs, and capturing new business opportunities."
Operating cash flow in the quarter of $2.1 billion was driven by solid operating performance and timing of receipts and expenditures. During the quarter, the company repurchased 14.9 million shares for $2.5 billion, leaving $11.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $868 million in dividends in the quarter, reflecting a 30 percent increase in dividends per share compared to the same period of the prior year, according to Boeing.
Cash and investments in marketable securities totaled $9.2 billion, down from $10.0 billion at the beginning of the quarter. Debt was $10.8 billion, up from the beginning of the quarter, primarily due to the issuance of new debt.
Total company backlog at quarter-end was $480 billion, up from $473 billion at the beginning of the quarter, and included net orders for the quarter of $27 billion.
Commercial Airplanes first-quarter revenue was $14.3 billion on services growth, offset by lower planned 737 deliveries, as we prepare for 737 MAX entry into service in May. First-quarter operating margin increased to 8.5 percent, reflecting improved performance on production and services programs, cost growth on the initial production of KC-46 Tanker aircraft, and less favorable delivery mix.
During the quarter, Boeing successfully completed first flight of the 787-10 Dreamliner. The 737 program rolled out the first 737 MAX 9 and received FAA certification for the 737 MAX 8. Demand continues to be strong for the 737 MAX with more than 3,700 orders since launch.
Commercial Airplanes booked 198 net orders during the quarter. Backlog remains robust with more than 5,700 airplanes valued at $417 billion.
Defense, Space & Security first-quarter revenue was $6.5 billion. First-quarter operating margin increased to 11.3 percent, reflecting improved performance at BMA.
Boeing Military Aircraft (BMA) first-quarter revenue was $2.6 billion, reflecting lower planned deliveries, and operating margin increased to 12.2 percent on improved performance. During the quarter, BMA was awarded a contract for 268 AH-64E Apache helicopters from the U.S. Army, a contract for 17 P-8A Poseidon aircraft from the U.S. Navy, Royal Australian Air Force, and the U.K. Royal Air Force, and a contract from the U.S. Air Force for an additional 15 KC-46 Tanker aircraft.
Network & Space Systems (N&SS) first-quarter revenue was $1.6 billion, reflecting lower volume on Commercial Crew. Operating margin was 6.3 percent driven by lower satellite services volume and investments in development efforts. During the quarter, N&SS announced an order for a 702 satellite with a dual payload from SKY Perfect JSAT and Kacific.
Global Services & Support (GS&S) first-quarter revenue was $2.3 billion, reflecting timing of contracts. Operating margin increased to 13.6 percent largely reflecting improved performance. During the quarter, GS&S was awarded a contract from the Republic of Korea Air Force to continue long-term sustainment of F-15 aircraft over the next five years.
Backlog at Defense, Space & Security was $63 billion, of which 34 percent represents orders from international customers.
At quarter-end, Boeing Capital's net portfolio balance was $4.0 billion. Total pension expense for the first quarter was $334 million, down from $629 million in the same period of the prior year. Unallocated items, eliminations and other revenue decreased primarily due to the elimination of intercompany revenue for one aircraft delivered under operating lease. The effective tax rate for the first quarter decreased from the same period in the prior year due to higher-than-expected tax benefits related to share-based compensation in the first quarter of 2017.
The company's 2017 updated financial and delivery guidance (Table 7) reflects continued solid performance across the company and the impact of the lower-than-expected tax rate.