Boeing (BA) is flying nicely higher today (+6%) after reporting strong upside results for Q4 and guiding well above expectations for 2019. Core (non-GAAP) EPS grew 8% YoY to $5.48 when the market was actually expecting a YoY decline. Revenue rose 14.4% year/year to $28.34 bln, which also was a good bit better than expected. BA guides only on a full year basis, so BA's initial guidance for 2019 was something investors were looking forward to seeing.
Speaking of the guidance for 2019, Boeing sees core EPS coming in at $19.90-20.10 which is nicely above the $16.01 earned in 2018. Revenue is expected at $109.5-111.5 bln vs 2018 revenue of $101.13 bln, so there is some nice growth expected there as well. Both guidance metrics were better than market expectations.
Another important part of the guidance was BA's outlook for commercial airplane deliveries of 895-905. That's up pretty substantially from 806 in 2018 and 763 in 2017. That's about 2.5 planes per day, which is pretty amazing if you think about it, considering how complicated it is to build a plane. And that does not even include the defense deliveries. Also, on prior conference calls, BA has guided to going north of 900 airplanes in the next two years. But now it looks like 2019 is a real possibility to hit that milestone.
Breaking down the Q4 results by segment, Commercial Airplanes revenue in Q4 increased 12% YoY to $17.3 bln, reflecting higher deliveries and favorable mix. Operating margin increased to 15.6% from 11.6% last year, driven by higher 737 volume and strong operating performance on production programs, including higher 787 margins.
During the quarter, Commercial Airplanes delivered 238 airplanes. The 737 program delivered 111 MAX airplanes in Q4, including the first MAX delivery from the China Completion Center, and delivered 256 MAX airplanes in 2018. Backlog remains robust with nearly 5,900 airplanes valued at $412 bln.
For its Defense, Space & Security segment, revenue increased 16% YoY to $6.1 bln, driven by increased volume across F/A-18, satellites, and weapons. Backlog stands at $57 bln, of which 30% represents orders from customers outside the US. And finally its Global Services segment saw revenue increase 29% YoY to $4.9 bln, primarily driven by higher parts volume including the acquisition of KLX.
Overall, this was a very nice quarter for Boeing. The strong results and the 2019 guidance for deliveries tell us that BA's new, more fuel-efficient planes, especially the new 737 models, are resonating with airline customers. Finally, be sure to keep an eye on Boeing suppliers, including ARNC, ATI, COL, GE, SPR, TDG, TGI, UTX, WWD. In particular, this report bodes well for SPR's Q4 report on Friday. SPR is the largest supplier of aerostructures (fuselages, propulsion systems) to Boeing and one of the largest to Airbus.