Strength in the services segment and solid Boeing Commercial Aircraft (BCA) volume helped Boeing offset nearly $420 million in KC-46 tanker charges--the bulk of which hit BCA.
Boeing Global Services (BGS) saw revenue increase 15% to $4.1 billion. The unit's operating margin slipped 1.3% to 14.7%--still tops among Boeing's business units.
BCA revenue was up 1%, to $14.5 billion and its operating margin widened 2.4% to 11.4%, thanks in part to a more profitable 787 program, the company said. Boeing delivered 194 commercial aircraft last quarter and booked 239 net orders.
Boeing Defense, Space & Security (BSS) pushed quarterly revenue up 9% to $5.6 billion, backed by "F/A-18 and weapons volume," Boeing said. Operating margin slipped 2.6% to 9.3%.
Both BCA and BSS felt the pain of more KC-46 cost overruns. BCA took a $307 million charge "primarily due to higher estimated costs of incorporating changes into six flight test and two early build aircraft as well as additional costs as we progress through late stage testing and the certification process," Boeing explained. BSS took a $111 million KC-46 "cost growth" charge.
Boeing's overall revenues were up 5% in the quarter, to $24.3 billion.
The company revised its full-year revenue guidance upward $1 billion, to $97-99 billion, adding half a billion each to BGS (now $15.5-16 billion) and Defense and Space ($22-23 billion). Overall operating margin is now projected to top 11.5%, but Defense and Space saw its margin forecast pulled down 0.5-1% to 10-10.5%.
The OEM is sticking with its full-year commercial deliveries target of 810-815 aircraft as well as its core earnings-per-share target of $14.30-$14.50 and operating cash flow projection of $15-15.5 billion.