OREANDA-NEWS. Core EPS (non-GAAP) rose 29 percent to USD 1.88 on strong operating performance; GAAP EPS of USD 1.61.
Revenue increased 7 percent to USD 23.8 billion reflecting higher deliveries
Full Year 2013
Core EPS increased 20 percent to a record USD 7.07 on record revenue of USD 86.6 billion; GAAP EPS of USD 5.96
Operating cash flow before pension contributions* grew to USD 9.7 billion; GAAP operating cash flow of USD 8.2 billion
Backlog grew to a record USD 441 billion, including USD 135 billion of net orders during the year
Outlook for 2014
2014 Core EPS guidance of between USD 7.00 and USD 7.20; GAAP EPS guidance of between USD 6.10 and USD 6.30
Revenue guidance of between USD 87.5 and USD 90.5 billion with commercial deliveries of between 715 and 725.

The Boeing Company (NYSE: BA) reported fourth-quarter revenue of USD 23.8 billion and core earnings per share (non-GAAP) that increased 29 percent* to USD 1.88, driven by strong performance across the company's businesses and higher deliveries (Table 1). Fourth-quarter core operating earnings (non-GAAP) of USD 1.8 billion includes a USD 406 million non-cash charge to settle A-12 litigation dating back to 1991, retiring a longstanding risk to the company. Excluding the A-12 charge, fourth-quarter 2013 core operating earnings increased 22 percent* to USD 2.2 billion and core operating margin increased to 9.4 percent*. Core and GAAP earnings per share includes a charge of USD 0.34 per share related to A-12 partially offset by a benefit of USD 0.28 per share for a tax regulation change.
Revenue rose 6 percent in the full year to a record USD 86.6 billion and core earnings per share increased 20 percent* to a record USD 7.07. Full-year 2013 GAAP earnings per share was USD 5.96.
Core earnings per share guidance for 2014 is set at between USD 7.00 and USD 7.20, while GAAP earnings per share guidance is established at between USD 6.10 and USD 6.30. Revenue guidance is between USD 87.5 and USD 90.5 billion, including commercial deliveries of between 715 and 725. Operating cash flow before pension contributions* is expected to be approximately USD 7 billion, while operating cash flow guidance is set at approximately USD 6.25 billion.
"Strong fourth-quarter results underscored an outstanding full year of core operating performance that drove record revenue and earnings and increased returns to shareholders," said Boeing Chairman and Chief Executive Officer Jim McNerney.
"Our Commercial Airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response. Our Defense, Space & Security unit overcame a tough operating environment to record expanded revenue, earnings and margins while executing to our commitments on the KC-46A tanker and developing and delivering important new capabilities to customers, such as the P-8 maritime aircraft and the Inmarsat-5 satellite," said McNerney.
"For 2014, we remain focused on maintaining our commercial airplanes market leadership, strengthening and repositioning our defense, space and security business and continuing to meet the needs of our customers by improving productivity, executing to development plans and delivering our unmatched portfolio of innovative aerospace products and services."
Operating cash flow in the quarter was USD 1.4 billion, reflecting commercial airplane production rates, strong core operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 7.6 million shares for USD 1.0 billion and paid USD 0.4 billion in dividends, reflecting a 10 percent increase in dividends paid compared to the same period of the prior year. Based on the strong cash generation and outlook, in December, the board of directors authorized an additional USD 10 billion share repurchase program and raised the quarterly dividend 50 percent.
Cash and investments in marketable securities totaled USD 15.3 billion at year-end (Table 3), down from USD 15.9 billion at the beginning of the quarter. Debt was USD 9.6 billion, unchanged from the beginning of the quarter.
Total company backlog at year-end was a record USD 441 billion, up from USD 415 billion at the beginning of the quarter, and included net orders for the quarter of USD 48 billion. Backlog is up USD 51 billion from prior year-end, reflecting USD 135 billion of net orders in 2013.
Boeing Commercial Airplanes fourth-quarter revenue increased to USD 14.7 billion and full-year revenue increased to a record USD 53 billion on higher delivery volume. Fourth-quarter operating margin improved to 10.3 percent and full-year operating margin grew to 10.9 percent on the higher volume, favorable delivery mix and continued strong operating performance (Table 4).
During the quarter, the company launched the 777X with 259 orders and commitments. During the year, the 787 program completed first flight of the 787-9, successfully launched the 787-10 and began operating at a 10 per month production rate in final assembly. The 737 program delivered at a record production rate of 38 per month and has won nearly 1,800 firm orders for the 737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered. In January 2014, the company reached an eight-year contract extension through 2024 with the International Association of Machinists & Aerospace Workers District 751 (IAM).
Commercial Airplanes booked 465 net orders during the quarter and 1,355 during the year. Backlog remains strong with 5,080 airplanes valued at a record USD 374 billion.
Boeing Defense, Space & Security's fourth-quarter revenue increased 6 percent to USD 8.9 billion, while operating margin increased to 10.8 percent (Table 5). For the full year, revenue increased 2 percent to USD 33.2 billion, while operating margin increased to 9.7 percent.
Boeing Military Aircraft (BMA) fourth-quarter revenue increased to USD 4.4 billion, reflecting higher deliveries. Operating margin increased to 10.0 percent, reflecting the higher deliveries and strong performance. During the quarter, BMA achieved Initial Operating Capability (IOC) on the P-8A Poseidon aircraft.
Network & Space Systems (N&SS) fourth-quarter revenue increased to USD 2.3 billion, reflecting higher delivery volume and mix, and operating margin increased to 10.3 percent on strong performance. During the quarter, N&SS was awarded a contract for a fourth Inmarsat-5 satellite.
Global Services & Support (GS&S) fourth-quarter revenue was USD 2.2 billion, reflecting lower volume in integrated logistics. Operating margin was 12.8 percent. During the quarter, GS&S was awarded contracts for the B-52 and B-1 bomber modifications and upgrades.
Backlog at Defense, Space & Security was USD 67 billion, of which 37 percent represents orders with international customers.
At quarter-end, Boeing Capital Corporation's (BCC) net portfolio balance was USD 3.9 billion down from USD 4.1 billion at the beginning of the quarter. BCC's debt-to-equity ratio was 5.0-to-1. Other segment earnings decreased USD 130 million in the quarter partly due to higher asset impairment expense.
Unallocated items and eliminations excluding unallocated pension/postretirement expense increased in the fourth quarter of 2013 primarily due to a USD 406 million charge associated with the A-12 settlement. Total pension expense for the fourth quarter was USD 717 million, up from USD 576 million in the same period last year. The company's income tax expense was USD 201 million in the quarter, compared to USD 557 million in the same period of the prior year, due to a USD 212 million benefit recorded in fourth-quarter 2013 for a tax regulation change.