Boeing (BA) is trading sharply higher today (+6%) after reporting strong Q4 results this morning. Boeing is a supplier of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. It's one of the two major manufacturers of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the US.
Turning to the Q4 results, non-GAAP EPS came in at $3.06, which was a good bit better than market expectations. Revenue rose 8.9% year/year to $25.37 bln, which also was better than expected. Total company backlog at quarter-end was $488 bln, up from $474 bln at the beginning of the quarter, and included net orders for the quarter of $40 bln. In terms of its outlook for 2018, Boeing expects core EPS to grow to $13.80-14.00 while revenue is expected to grow modestly to $96-98 bln, up from $94 bln in 2017. But after revenue declines in 2016 and 2017, a return to revenue growth is nice to see.
In 2017, the company delivered the first 737 MAX airplanes, launched the 737 MAX 10 and completed the 787-10 first flight, all while delivering more commercial airplanes than ever before. The 737 MAX 10 will be the airlines' most profitable single-aisle airplane, offering the lowest seat costs ever. Like Boeing's other 737 MAX models, the MAX 10 incorporates the latest technology CFM International LEAP-1B engines, Advanced Technology winglets, Boeing Sky Interior, large flight deck displays, and other improvements to deliver the highest efficiency and passenger comfort in the single-aisle market.
The entire 737 MAX family has been designed to offer customers exceptional performance, flexibility and efficiency, with lower per-seat costs and an extended range that will open up new destinations in the single-aisle market. The 737 MAX is the fastest-selling airplane in Boeing history. The first MAX variant, the 737 MAX 8 has entered commercial service and will followed by the MAX 9, MAX 7 and the MAX 10, which will be introduced in the 2020 time frame.
On the commercial side in Q4, segment revenue increased to $15.5 bln on higher planned delivery volume and mix. Segment operating margin increased to 11.5%. During the quarter, Commercial Airplanes delivered a record 209 airplanes and the 787 program rolled out the first 787-10 airplane expected to deliver to launch customer Singapore Airlines. The 737 program delivered 44 MAX airplanes during the quarter and has captured over 4,300 orders since launch for the 737 MAX, including a recent order from flydubai for 175 airplanes. Development on the 777X is on track as production began on the first 777X flight test airplane this quarter. Commercial Airplanes booked 414 net orders during the quarter. Backlog remains robust with over 5,800 airplanes valued at $421 billion.
On the defense side, segment revenue increased to $5.5 bln primarily on higher weapons deliveries, and Q4 segment operating margin was 10.0%. During the quarter, BA signed a contract with the US Air Force to provide 36 advanced F-15 fighter aircraft to Qatar. The KC-46 Tanker program received a contract to provide the first international KC-46 Tanker to Japan and received FAA certification for the 767-2C aircraft, verifying that the fundamental design of the KC-46 Tanker is safe and reliable. The KC-46A Pegasus is a widebody, multirole tanker that can refuel all US, allied and coalition military aircraft compatible with international aerial refueling procedures. The aircraft can detect, avoid, defeat and survive threats using multiple layers of protection, which will enable it to operate safely in medium-threat environments.
Overall, it was a strong way to finish up the year. The stock has made a terrific run over the past year. In fact, it was the best performer by far in the Dow 30 in 2017. Demand remains robust and the company sounds excited about the potential for its 737 MAX product line as customers are excited about the potential cost savings. Also, BA should benefit more than most from the tax reform bill as it has a high amount of cap-ex and those costs can now be expensed more quickly. On a final note, be sure to keep an eye on Boeing suppliers, including ARNC, COL, GE, SPR, TDG, TGI and UTX.