- EPS of $0.95, up 56% from adjusted EPS a year ago
- Operating margin of 9.1%, up from 7.7% a year ago
- $109 million returned to shareholders through share
repurchases
- Full-year EPS guidance narrowed to a range of $3.70 to
$3.80
- Full-year cash flow guidance revised to a range of $600 to $700
million
Textron Inc. (NYSE: TXT) today reported third quarter 2019 net
income of $0.95 per share, compared to $0.61 per share last year of
adjusted net income, a non-GAAP measure that is defined and
reconciled to GAAP in an attachment to this release, or net income
of $2.26 per share in the third quarter of 2018, which included the
gain on the sale of the Tools & Test product line of $1.65 per
share.
“Revenues were higher in the quarter primarily driven by Textron
Aviation and Industrial, and we continued to have good execution
with solid margin performance across our businesses,” said Textron
Chairman and CEO Scott C. Donnelly.
Cash Flow
Net cash provided by operating activities of the manufacturing
group for the third quarter totaled $238 million, compared to $319
million in last year’s third 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
$181 million compared to $259 million last year.
In the quarter, Textron returned $109 million to shareholders
through share repurchases.
Outlook
Textron now expects 2019 earnings per share to be in a range of
$3.70 to $3.80.
The company revised its expectation for manufacturing cash flow
before pension contributions to $600 to $700 million, from $700 to
$800 million. Expected pension contributions remain at about $50
million.
Third Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.2 billion were up $68 million
from last year’s third quarter, primarily due to higher jet and
aftermarket volume, partially offset by lower defense volume.
Textron Aviation delivered 45 jets, up from 41 last year, and 39
commercial turboprops, down from 43 last year.
Segment profit was $104 million in the third quarter, up $5
million from a year ago due to the higher volume and mix and
favorable performance, partially offset by higher net
inflation.
Textron Aviation backlog at the end of the third quarter was
$1.9 billion.
Bell
Bell revenues were $783 million, up $13 million from last year
on higher commercial revenues, partially offset by lower military
volume.
Bell delivered 42 commercial helicopters in the quarter, down
from 43 last year.
Segment profit of $110 million was down $3 million from a year
ago, primarily due to an unfavorable impact from performance which
included lower net favorable program adjustments, partially offset
by higher volume and mix.
Bell backlog at the end of the third quarter was $5.6
billion.
Textron Systems
Revenues at Textron Systems were $311 million, down $41 million
from last year, primarily reflecting lower armored vehicle volume
at Textron Marine & Land Systems.
Segment profit of $31 million was up $2 million from last year’s
third quarter.
Textron Systems’ backlog at the end of the third quarter was
$1.4 billion.
Industrial
Industrial revenues of $950 million increased $20 million from a
year ago, primarily related to a favorable impact from pricing
within the Textron Specialized Vehicles product line.
Segment profit was up $46 million from the third quarter of
2018, largely due to favorable performance and a favorable impact
from net pricing, primarily related to the Specialized Vehicles
product line.
Finance
Finance segment revenues were down $1 million, and profit was up
$2 million from last year’s third quarter.
Conference Call Information
Textron will host its conference call today, October 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 Thursday, October 17,
2019 by dialing (320) 365-3844; Access Code: 457172.
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; the impact of changes in tax legislation;
and the impact of the review of strategic alternatives for our
Kautex business and any resulting transaction on Textron and on
Kautex on a standalone basis, uncertainties as to the terms,
structure and timing of any transaction and if a transaction will
be completed, and whether the benefits of any transaction can be
achieved.
TEXTRON INC.Revenues by Segment and Reconciliation of Segment
Profit to Net Income(Dollars in millions, except per share
amounts)(Unaudited)
Three Months Ended Nine Months
Ended September 28,2019 September 29,2018
September 28,2019 September 29,2018 REVENUES MANUFACTURING: Textron Aviation
$
1,201
$
1,133
$
3,458
$
3,419
Bell
783
770
2,293
2,353
Textron Systems
311
352
926
1,119
Industrial
950
930
2,871
3,283
3,245
3,185
9,548
10,174
FINANCE
14
15
47
48
Total revenues
$
3,259
$
3,200
$
9,595
$
10,222
SEGMENT PROFIT
MANUFACTURING: Textron Aviation
$
104
$
99
$
315
$
275
Bell
110
113
317
317
Textron Systems
31
29
108
119
Industrial
47
1
173
145
292
242
913
856
FINANCE
5
3
17
14
Segment Profit
297
245
930
870
Corporate expenses and other, net
(17
)
(29
)
(88
)
(107
)
Interest expense, net for Manufacturing group
(39
)
(32
)
(110
)
(101
)
Gain on business disposition (a)
-
444
-
444
Income before income taxes
241
628
732
1,106
Income tax expense
(21
)
(65
)
(116
)
(130
)
Net Income
$
220
$
563
$
616
$
976
Earnings Per Share (EPS)
$
0.95
$
2.26
$
2.64
$
3.80
Diluted average shares outstanding
231,097,000
249,378,000
233,689,000
256,780,000
Net Income and Diluted Earnings Per Share GAAP to
Non-GAAP Reconciliation: Three Months EndedSeptember
29,2018 Nine Months EndedSeptember 29,2018 Diluted
EPS Diluted EPS Net income - GAAP
$
563
$
2.26
$
976
$
3.80
Gain on business disposition, net of taxes of $34 million
(410
)
(1.65
)
(410
)
(1.60
)
Adjusted net income - Non-GAAP (b)
$
153
$
0.61
$
566
$
2.20
(a) On July 2, 2018, Textron completed the sale of
the Tools & Test Equipment product line and recorded an
after-tax gain of $410 million, subject to post-closing
adjustments.
(b)
Adjusted net income and adjusted diluted
earnings per share are non-GAAP financial measures as defined in
"Non-GAAP Financial Measures" attached to this release.
Textron Inc. Condensed Consolidated Balance Sheets
(In millions) (Unaudited)
September 28,2019
December 29,2018 Assets Cash and equivalents
$
931
$
987
Accounts receivable, net
1,018
1,024
Inventories
4,436
3,818
Other current assets
856
785
Net property, plant and equipment
2,497
2,615
Goodwill
2,142
2,218
Other assets
2,225
1,800
Finance group assets
957
1,017
Total Assets
$
15,062
$
14,264
Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt
$
568
$
258
Current liabilities
3,198
3,248
Other liabilities
2,130
1,932
Long-term debt
2,909
2,808
Finance group liabilities
805
826
Total Liabilities
9,610
9,072
Total Shareholders' Equity
5,452
5,192
Total Liabilities and Shareholders' Equity
$
15,062
$
14,264
TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash
Flows
(In millions)
(Unaudited)
Three Months Ended
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Cash flows from operating activities: Net income
$
216
$
561
$
603
$
959
Depreciation and amortization
98
104
297
316
Changes in working capital
(124
)
74
(840
)
(204
)
Changes in other assets and liabilities and non-cash items
48
24
95
57
Gain on business disposition
-
(444
)
-
(444
)
Dividends received from TFC
-
-
50
50
Net cash from operating activities of continuing operations
238
319
205
734
Cash flows from investing activities: Capital expenditures
(81
)
(74
)
(216
)
(233
)
Net proceeds from business disposition
-
807
-
807
Net proceeds from corporate-owned life insurance policies
-
-
4
98
Proceeds from the sale of property, plant and equipment
2
2
6
12
Other investing activities, net
-
(3
)
-
(3
)
Net cash from investing activities
(79
)
732
(206
)
681
Cash flows from financing activities: Increase in short-term
debt
118
-
118
-
Net proceeds from issuance of long-term debt
-
-
297
-
Purchases of Textron common stock
(109
)
(468
)
(470
)
(1,383
)
Other financing activities, net
(1
)
16
8
49
Net cash from financing activities
8
(452
)
(47
)
(1,334
)
Total cash flows from continuing operations
167
599
(48
)
81
Total cash flows from discontinued operations
(1
)
-
(2
)
(1
)
Effect of exchange rate changes on cash and equivalents
(10
)
(3
)
(6
)
(9
)
Net change in cash and equivalents
156
596
(56
)
71
Cash and equivalents at beginning of period
775
554
987
1,079
Cash and equivalents at end of period
$
931
$
1,150
$
931
$
1,150
Manufacturing Cash Flow GAAP to Non-GAAP
Reconciliation:
Three Months Ended
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Net cash from operating activities of continuing operations -
GAAP
$
238
$
319
$
205
$
734
Less: Capital expenditures
(81
)
(74
)
(216
)
(233
)
Dividends received from TFC
-
-
(50
)
(50
)
Plus: Total pension contributions
11
12
36
37
Taxes paid on gain on business disposition
11
-
11
-
Proceeds from the sale of property, plant and equipment
2
2
6
12
Manufacturing cash flow before pension contributions - Non-GAAP
(a)
$
181
$
259
$
(8
)
$
500
(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
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Cash flows from operating activities: Net Income
$
220
$
563
$
616
$
976
Depreciation and amortization
100
106
302
322
Changes in working capital
(84
)
50
(787
)
(214
)
Changes in other assets and liabilities and non-cash items
49
24
94
57
Gain on business disposition
-
(444
)
-
(444
)
Net cash from operating activities of continuing operations
285
299
225
697
Cash flows from investing activities: Capital expenditures
(81
)
(74
)
(216
)
(233
)
Net proceeds from business disposition
-
807
-
807
Net proceeds from corporate-owned life insurance policies
-
-
4
98
Finance receivables repaid
-
-
20
25
Other investing activities, net
2
7
9
37
Net cash from investing activities
(79
)
740
(183
)
734
Cash flows from financing activities: Increase in short-term
debt
118
-
118
-
Net proceeds from issuance of long-term debt
-
-
297
-
Principal payments on long-term debt and nonrecourse debt
(7
)
(23
)
(42
)
(60
)
Purchases of Textron common stock
(109
)
(468
)
(470
)
(1,383
)
Other financing activities, net
(1
)
17
9
53
Net cash from financing activities
1
(474
)
(88
)
(1,390
)
Total cash flows from continuing operations
207
565
(46
)
41
Total cash flows from discontinued operations
(1
)
-
(2
)
(1
)
Effect of exchange rate changes on cash and equivalents
(10
)
(3
)
(6
)
(9
)
Net change in cash and equivalents
196
562
(54
)
31
Cash and equivalents at beginning of period
857
731
1,107
1,262
Cash and equivalents at end of period
$
1,053
$
1,293
$
1,053
$
1,293
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:
Net income and adjusted diluted
earnings per share
Net income and adjusted diluted earnings per share exclude Gain
on business disposition, net of taxes. The Gain on business
disposition is not considered indicative of ongoing operations as
it is a significant one-time transaction related to the sale of our
Tools and Test product line.
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.
Net Income and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP
Reconciliation and Outlook: Three Months
EndedSeptember 29,2018 Nine Months EndedSeptember
29,2018 Diluted EPS Diluted EPS Net income -
GAAP
$
563
$
2.26
$
976
$
3.80
Gain on business disposition, net of taxes of $34 million
(410
)
(1.65
)
(410
)
(1.60
)
Adjusted net income - Non-GAAP
$
153
$
0.61
$
566
$
2.20
Manufacturing Cash Flow Before Pension
Contributions GAAP to Non-GAAP Reconciliation and Outlook:
Three Months Ended
Nine Months Ended September 28,2019 September
29,2018
September 28,2019 September 29,2018 Net cash from
operating activities of continuing operations - GAAP
$
238
$
319
$
205
$
734
Less: Capital expenditures
(81
)
(74
)
(216
)
(233
)
Dividends received from TFC
-
-
(50
)
(50
)
Plus: Total pension contributions
11
12
36
37
Taxes paid on gain on business disposition
11
-
11
-
Proceeds from the sale of property, plant and equipment
2
2
6
12
Manufacturing cash flow before pension contributions -
Non-GAAP
$
181
$
259
$
(8
)
$
500
2019 Outlook Net cash from operating activities of
continuing operations - GAAP
$
933
-
1,033
Less: Capital expenditures
(350)
Dividends received from TFC
(50)
Plus: Total pension contributions
50
Taxes paid on gain on business disposition
11
Proceeds from the sale of property, plant and equipment
6
Manufacturing cash flow before pension contributions -
Non-GAAP
$
600
-
$
700
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191017005185/en/
Investor Contacts: Eric Salander – 401-457-2288 Jeffrey
Trivella – 401-457-2288 Media Contact: David Sylvestre –
401-457-2362
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