- EPS of $0.93, up 7% from a year ago
- Operating margin of 10.5%, up from 9.3% a year ago
- $159 million returned to shareholders through share
repurchases
- Full-year EPS guidance raised to $3.65 - $3.85 per share, up
$0.10
Textron Inc. (NYSE: TXT) today reported second quarter 2019 net
income of $0.93 per share, compared to $0.87 per share in the
second quarter of 2018.
“Operationally, we continued to have solid margin performance
across our businesses with improvements in the quarter at Aviation
and Industrial, and we remain on track for growth in the second
half of the year,” said Textron Chairman and CEO Scott C.
Donnelly.
Cash Flow
Net cash provided by operating activities of the manufacturing
group for the second quarter totaled $163 million, compared to $468
million in last year’s second quarter. Manufacturing cash flow
before pension contributions, a non-GAAP measure that is defined
and reconciled to GAAP in an attachment to this release, totaled
$102 million compared to $399 million last year.
In the quarter, Textron returned $159 million to shareholders
through share repurchases.
Outlook
Textron now expects 2019 earnings per share from continuing
operations to be in a range of $3.65 to $3.85, up $0.10 from our
previous outlook. Textron reiterated its expectation for cash flow
from continuing operations of the manufacturing group before
pension contributions of $700 to $800 million with planned pension
contributions of about $50 million.
Donnelly continued, “We remain on target for a strong 2019 as we
continue our focus on execution and earnings growth through the
balance of the year.”
Second Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.1 billion were down $153
million from last year’s second quarter, primarily due to lower
volume and mix across the commercial turboprop and defense product
lines.
Textron Aviation delivered 46 jets, down from 48 last year, and
34 commercial turboprops, down from 47 last year.
Segment profit was $105 million in the second quarter, up $1
million from a year ago as favorable performance was offset by the
lower volume and mix.
Textron Aviation backlog at the end of the second quarter was
$1.9 billion.
Bell
Bell revenues were $771 million, down 7% from last year,
primarily on lower military volume.
Bell delivered 53 commercial helicopters in the quarter, down
from 57 last year.
Segment profit of $103 million was down $14 million, primarily
due to the lower military volume.
Bell backlog at the end of the second quarter was $6.0
billion.
Textron Systems
Revenues at Textron Systems were $308 million, down from $380
million last year, primarily reflecting lower volume at TRU
Simulation + Training and Unmanned Systems.
Segment profit was up $9 million from last year’s second
quarter, primarily due to favorable performance which included a
gain related to the formation of our new training business with
FlightSafety International Inc.
Textron Systems’ backlog at the end of the second quarter was
$1.4 billion.
Industrial
Industrial revenues of $1.0 billion decreased $213 million,
largely related to the impact from the disposition of our Tools
& Test product line and lower volume.
Segment profit was down $4 million from the second quarter of
2018, largely due to the impact from lower volume and the product
line disposition, partially offset by favorable performance
primarily related to the Specialized Vehicles product line.
Finance
Finance segment revenues were down $1 million, and profit was up
$1 million from last year’s second quarter.
Conference Call Information
Textron will host its conference call today, July 17, 2019 at
8:00 a.m. (Eastern) to discuss its results and outlook. The call
will be available via webcast at www.textron.com or by direct dial at (800)
230-1951 in the U.S. or (612) 288-0340 outside of the U.S. (request
the Textron Earnings Call).
In addition, the call will be recorded and available for
playback beginning at 10:30 a.m. (Eastern) on Wednesday, July 17,
2019 by dialing (320) 365-3844; Access Code: 457171.
A package containing key data that will be covered on today’s
call can be found in the Investor Relations section of the
company’s website at www.textron.com.
About Textron Inc.
Textron Inc. is a multi-industry company that leverages its
global network of aircraft, defense, industrial and finance
businesses to provide customers with innovative solutions and
services. Textron is known around the world for its powerful brands
such as Bell, Cessna, Beechcraft, Hawker, Jacobsen, Kautex,
Lycoming, E-Z-GO, Arctic Cat, Textron Systems, and TRU Simulation +
Training. For more information visit: www.textron.com.
Forward-looking Information
Certain statements in this release and other oral and written
statements made by us from time to time are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements, which may
describe strategies, goals, outlook or other non-historical
matters, or project revenues, income, returns or other financial
measures, often include words such as “believe,” “expect,”
“anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,”
“target,” “potential,” “will,” “should,” “could,” “likely” or “may”
and similar expressions intended to identify forward-looking
statements. These statements are only predictions and involve known
and unknown risks, uncertainties, and other factors that may cause
our actual results to differ materially from those expressed or
implied by such forward-looking statements. Given these
uncertainties, you should not place undue reliance on these
forward-looking statements. Forward-looking statements speak only
as of the date on which they are made, and we undertake no
obligation to update or revise any forward-looking statements. In
addition to those factors described in our Annual Report on Form
10-K and our Quarterly Reports on Form 10-Q under “Risk Factors”,
among the factors that could cause actual results to differ
materially from past and projected future results are the
following: Interruptions in the U.S. Government’s ability to fund
its activities and/or pay its obligations; changing priorities or
reductions in the U.S. Government defense budget, including those
related to military operations in foreign countries; our ability to
perform as anticipated and to control costs under contracts with
the U.S. Government; the U.S. Government’s ability to unilaterally
modify or terminate its contracts with us for the U.S. Government’s
convenience or for our failure to perform, to change applicable
procurement and accounting policies, or, under certain
circumstances, to withhold payment or suspend or debar us as a
contractor eligible to receive future contract awards; changes in
foreign military funding priorities or budget constraints and
determinations, or changes in government regulations or policies on
the export and import of military and commercial products;
volatility in the global economy or changes in worldwide political
conditions that adversely impact demand for our products;
volatility in interest rates or foreign exchange rates; risks
related to our international business, including establishing and
maintaining facilities in locations around the world and relying on
joint venture partners, subcontractors, suppliers, representatives,
consultants and other business partners in connection with
international business, including in emerging market countries; our
Finance segment’s ability to maintain portfolio credit quality or
to realize full value of receivables; performance issues with key
suppliers or subcontractors; legislative or regulatory actions,
both domestic and foreign, impacting our operations or demand for
our products; our ability to control costs and successfully
implement various cost-reduction activities; the efficacy of
research and development investments to develop new products or
unanticipated expenses in connection with the launching of
significant new products or programs; the timing of our new product
launches or certifications of our new aircraft products; our
ability to keep pace with our competitors in the introduction of
new products and upgrades with features and technologies desired by
our customers; pension plan assumptions and future contributions;
demand softness or volatility in the markets in which we do
business; cybersecurity threats, including the potential
misappropriation of assets or sensitive information, corruption of
data or, operational disruption; difficulty or unanticipated
expenses in connection with integrating acquired businesses; the
risk that acquisitions do not perform as planned, including, for
example, the risk that acquired businesses will not achieve revenue
and profit projections; and the impact of changes in tax
legislation.
TEXTRON INC.Revenues by Segment and Reconciliation of Segment
Profit to Net Income(Dollars in millions, except per share
amounts)(Unaudited)
Three Months Ended Six Months
Ended June 29, 2019 June 30, 2018 June 29,
2019 June 30, 2018 REVENUES MANUFACTURING: Textron Aviation
$
1,123
$
1,276
$
2,257
$
2,286
Bell
771
831
1,510
1,583
Textron Systems
308
380
615
767
Industrial
1,009
1,222
1,921
2,353
3,211
3,709
6,303
6,989
FINANCE
16
17
33
33
Total revenues
$
3,227
$
3,726
$
6,336
$
7,022
SEGMENT PROFIT
MANUFACTURING: Textron Aviation
$
105
$
104
$
211
$
176
Bell
103
117
207
204
Textron Systems
49
40
77
90
Industrial
76
80
126
144
333
341
621
614
FINANCE
6
5
12
11
Segment Profit
339
346
633
625
Corporate expenses and other, net
(24
)
(51
)
(71
)
(78
)
Interest expense, net for Manufacturing group
(36
)
(35
)
(71
)
(69
)
Income before income taxes
279
260
491
478
Income tax expense
(62
)
(36
)
(95
)
(65
)
Net income
$
217
$
224
$
396
$
413
Earnings per share: Net income
$
0.93
$
0.87
$
1.69
$
1.59
Diluted average shares outstanding
233,545,000
257,177,000
234,993,000
260,462,000
Textron Inc. Condensed Consolidated Balance
Sheets (In millions) (Unaudited)
June
29,2019 December 29,2018 Assets Cash and
equivalents
$
775
$
987
Accounts receivable, net
989
1,024
Inventories
4,311
3,818
Other current assets
839
785
Net property, plant and equipment
2,517
2,615
Goodwill
2,147
2,218
Other assets
2,255
1,800
Finance group assets
963
1,017
Total Assets
$
14,796
$
14,264
Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt
$
457
$
258
Current liabilities
3,122
3,248
Other liabilities
2,157
1,932
Long-term debt
2,910
2,808
Finance group liabilities
814
826
Total Liabilities
9,460
9,072
Total Shareholders' Equity
5,336
5,192
Total Liabilities and Shareholders' Equity
$
14,796
$
14,264
TEXTRON INC. MANUFACTURING GROUP Condensed
Schedule of Cash Flows (In millions) (Unaudited)
Three Months Ended Six Months Ended June 29,
June 30, June 29, June 30,
2019
2018
2019
2018
Cash flows from operating activities: Net income
$
212
$
219
$
387
$
398
Depreciation and amortization
99
109
199
212
Changes in working capital
(162
)
98
(716
)
(278
)
Changes in other assets and liabilities and non-cash items
14
42
47
33
Dividends received from TFC
-
-
50
50
Net cash from operating activities of continuing operations
163
468
(33
)
415
Cash flows from investing activities: Capital expenditures
(76
)
(82
)
(135
)
(159
)
Net proceeds from corporate-owned life insurance policies
2
40
4
98
Proceeds from the sale of property, plant and equipment
3
1
4
10
Net cash from investing activities
(71
)
(41
)
(127
)
(51
)
Cash flows from financing activities: Decrease in short-term
debt
(100
)
(2
)
-
-
Net proceeds from issuance of long-term debt
297
-
297
-
Purchases of Textron common stock
(159
)
(571
)
(361
)
(915
)
Other financing activities, net
5
30
9
33
Net cash from financing activities
43
(543
)
(55
)
(882
)
Total cash flows from continuing operations
135
(116
)
(215
)
(518
)
Total cash flows from discontinued operations
(1
)
(1
)
(1
)
(1
)
Effect of exchange rate changes on cash and equivalents
(5
)
(17
)
4
(6
)
Net change in cash and equivalents
129
(134
)
(212
)
(525
)
Cash and equivalents at beginning of period
646
688
987
1,079
Cash and equivalents at end of period
$
775
$
554
$
775
$
554
Manufacturing Cash Flow Before Pension Contributions GAAP
to Non-GAAP Reconciliation: Three Months Ended
Six Months Ended June 29, June 30, June
29, June 30,
2019
2018
2019
2018
Net cash from operating activities of continuing operations -
GAAP
$
163
$
468
(33
)
$
415
Less: Capital expenditures
(76
)
(82
)
(135
)
(159
)
Dividends received from TFC
-
-
(50
)
(50
)
Plus: Total pension contributions
12
12
25
25
Proceeds from the sale of property, plant and equipment
3
1
4
10
Manufacturing cash flow before pension contributions - Non-GAAP
(a)
$
102
$
399
(189
)
$
241
(a) Manufacturing cash flow before pension contributions is
a non-GAAP financial measure as defined in "Non-GAAP Financial
Measures" attached to this release.
TEXTRON INC.
Condensed Consolidated Schedule of Cash Flows (In millions)
(Unaudited)
Three Months Ended Six Months
Ended June 29, June 30, June 29, June
30,
2019
2018
2019
2018
Cash flows from operating activities: Net income
$
217
$
224
$
396
$
413
Depreciation and amortization
100
111
202
216
Changes in working capital
(174
)
105
(703
)
(264
)
Changes in other assets and liabilities and non-cash items
13
43
45
33
Net cash from operating activities of continuing operations
156
483
(60
)
398
Cash flows from investing activities: Capital expenditures
(76
)
(82
)
(135
)
(159
)
Net proceeds from corporate-owned life insurance policies
2
40
4
98
Finance receivables repaid
8
9
20
25
Other investing activities, net
4
21
7
30
Net cash from investing activities
(62
)
(12
)
(104
)
(6
)
Cash flows from financing activities: Decrease in short-term
debt
(100
)
(2
)
-
-
Net proceeds from issuance of long-term debt
297
-
297
-
Principal payments on long-term debt and nonrecourse debt
(16
)
(15
)
(35
)
(34
)
Purchases of Textron common stock
(159
)
(571
)
(361
)
(915
)
Other financing activities, net
5
30
10
33
Net cash from financing activities
27
(558
)
(89
)
(916
)
Total cash flows from continuing operations
121
(87
)
(253
)
(524
)
Total cash flows from discontinued operations
(1
)
(1
)
(1
)
(1
)
Effect of exchange rate changes on cash and equivalents
(5
)
(17
)
4
(6
)
Net change in cash and equivalents
115
(105
)
(250
)
(531
)
Cash and equivalents at beginning of period
742
836
1,107
1,262
Cash and equivalents at end of period
$
857
$
731
$
857
$
731
TEXTRON INC. Non-GAAP Financial Measures
(Dollars in millions, except per share amounts)
We supplement the reporting of our financial information
determined under U.S. generally accepted accounting principles
(GAAP) with certain non-GAAP financial measures. These non-GAAP
financial measures exclude certain significant items that may not
be indicative of, or are unrelated to, results from our ongoing
business operations. We believe that these non-GAAP measures may be
useful for period-over-period comparisons of underlying business
trends and our ongoing business performance, however, they should
be used in conjunction with GAAP measures. Our non-GAAP measures
should not be considered in isolation or as a substitute for the
related GAAP measures, and other companies may define similarly
named measures differently. We encourage investors to review our
financial statements and publicly-filed reports in the entirety and
not to rely on any single financial measure. We utilize the
following definition for the non-GAAP financial measure included in
this release:
Manufacturing cash flow before pension
contributions Manufacturing cash flow before pension
contributions adjusts net cash from operating activities (GAAP) for
the following:
- Deducts capital expenditures and includes proceeds from the
sale of property, plant and equipment to arrive at the net capital
investment required to support ongoing manufacturing
operations;
- Excludes dividends received from Textron Financial Corporation
(TFC) and capital contributions to TFC provided under the Support
Agreement and debt agreements as these cash flows are not
representative of manufacturing operations;
- Adds back pension contributions as we consider our pension
obligations to be debt-like liabilities. Additionally, these
contributions can fluctuate significantly from period to period and
we believe that they are not representative of cash used by our
manufacturing operations during the period.
- Excludes taxes paid related to the gain realized in 2018 on the
Tools and Test business disposition. We have made this adjustment
to the non-GAAP measure because we believe this use of cash is not
representative of cash used by our manufacturing operations.
While we believe this measure provides a focus on cash generated
from manufacturing operations, before pension contributions, and
may be used as an additional relevant measure of liquidity, it does
not necessarily provide the amount available for discretionary
expenditures since we have certain non-discretionary obligations
that are not deducted from the measure.
Manufacturing Cash Flow Before Pension Contributions GAAP to
Non-GAAP Reconciliation and 2019 Outlook: Three
Months Ended Six Months Ended June 29,2019
June 30,2018 June 29,2019 June 30,2018 Net
cash from operating activities of continuing operations - GAAP
$
163
$
468
$
(33
)
$
415
Less: Capital expenditures
(76
)
(82
)
(135
)
(159
)
Dividends received from TFC
-
-
(50
)
(50
)
Plus: Total pension contributions
12
12
25
25
Proceeds from the sale of property, plant and equipment
3
1
4
10
Manufacturing cash flow before pension contributions -
Non-GAAP
$
102
$
399
$
(189
)
$
241
2019 Outlook Net cash from operating
activities of continuing operations - GAAP
$
1,066
-
$
1,166
Less: Capital expenditures
(380)
Dividends received from TFC
(50)
Plus: Total pension contributions
50
Taxes paid on gain on business disposition
10
Proceeds from the sale of property, plant and equipment
4
Manufacturing cash flow before pension contributions -
Non-GAAP
$
700
-
$
800
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190717005134/en/
Investor Contacts: Eric Salander – 401-457-2288 Jeffrey
Trivella – 401-457-2288
Media Contact: David Sylvestre – 401-457-2362
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