- Revenue growth of $285 million, up 7.6% from prior year
- The new Citation Longitude enters service with 13 aircraft
deliveries in the quarter
- EPS of $0.87; adjusted EPS of $1.11, excluding fourth quarter
special charges
- 2020 full-year EPS outlook of $3.50 - $3.70
Textron Inc. (NYSE: TXT) today reported fourth quarter 2019 net
income of $0.87 per share. Adjusted net income, a non-GAAP measure
that is defined and reconciled to GAAP in an attachment to this
release, was $1.11 per share for the fourth quarter of 2019,
compared to $1.15 per share in the fourth quarter of 2018. Adjusted
net income for 2019 excludes $72 million of pre-tax special charges
($0.24 per share, after-tax) recorded in the fourth quarter,
primarily related to restructuring activities announced in December
2019.
Full-year 2019 net income was $3.50 per share. Full-year 2019
adjusted net income, a non-GAAP measure, was $3.74 per share, up
from $3.34 in 2018.
“Textron Aviation saw double digit revenue growth in the quarter
driven largely by initial deliveries of our new Citation Longitude,
reflecting our continued investment in new products,” said Textron
Chairman and CEO Scott C. Donnelly. “We also saw growth from strong
commercial volume at Bell.”
Cash Flow
Net cash provided by operating activities of continuing
operations of the manufacturing group for the full year was $960
million, compared to $1,127 million last year. Manufacturing cash
flow before pension contributions, a non-GAAP measure that is
defined and reconciled to GAAP in an attachment to this release,
was $642 million compared to $784 million last year.
For the full year, Textron returned $503 million to shareholders
through share repurchases.
Outlook
Textron is forecasting 2020 revenues of approximately $14
billion, up from $13.6 billion. Textron expects full-year 2020
earnings per share will be in the range of $3.50 to $3.70.
The company is estimating net cash provided by operating
activities of continuing operations of the manufacturing group will
be between $1,010 million and $1,110 million and manufacturing cash
flow before pension contributions (a non-GAAP measure) will be
between $700 million and $800 million, with planned pension
contributions of about $50 million.
Fourth Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.7 billion were up 11%,
primarily due to higher volume and mix, largely reflecting the
Longitude’s entry into service.
Textron Aviation delivered 71 jets, up from 63 last year, and 59
commercial turboprops, down from 67 last year.
Segment profit was $134 million in the fourth quarter, down from
$170 million a year ago, primarily due to the mix of products sold
and an unfavorable impact from inflation, net of pricing.
Textron Aviation backlog at the end of the fourth quarter was
$1.7 billion.
Bell
Bell revenues were $961 million, up 16% from $827 million last
year, primarily on higher commercial volume.
Bell delivered 76 commercial helicopters in the quarter, up from
46 last year.
Segment profit of $118 million was up $10 million, largely on
the higher commercial volume.
Bell backlog at the end of the fourth quarter was $6.9
billion.
Textron Systems
Revenues at Textron Systems were $399 million, up 16% from $345
million last year, primarily due to higher volume.
Segment profit of $33 million was down from $37 million last
year, due to unfavorable performance, partially offset by higher
volume and mix.
Textron Systems’ backlog at the end of the fourth quarter was
$1.2 billion.
Industrial
Industrial revenues were $927 million, a decrease of $81 million
from last year, largely related to lower volume and mix primarily
at Textron Specialized Vehicles, principally reflecting a shift in
the timing of snow sales to the third quarter of 2019.
Segment profit was down $29 million from the fourth quarter of
2018, largely due to volume and mix at Kautex and the lower volume
at Textron Specialized Vehicles, partially offset by favorable
performance.
Finance
Finance segment revenues were up $1 million, and profit was up
$2 million from last year’s fourth quarter.
Conference Call Information
Textron will host its conference call today, January 29, 2020 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 (844) 721-7241 in the U.S. or (409) 207-6955 outside of the
U.S.; Access Code: 4252363.
In addition, the call will be recorded and available for
playback beginning at 10:30 a.m. (Eastern) on Wednesday, January
29, 2020 by dialing (402) 970-0847; Access Code: 2549478.
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 Twelve Months
Ended January 4,2020 December 29,2018 January
4,2020 December 29,2018 REVENUES MANUFACTURING: Textron Aviation
$
1,729
$
1,552
$
5,187
$
4,971
Bell
961
827
3,254
3,180
Textron Systems
399
345
1,325
1,464
Industrial
927
1,008
3,798
4,291
4,016
3,732
13,564
13,906
FINANCE
19
18
66
66
Total revenues
$
4,035
$
3,750
$
13,630
$
13,972
SEGMENT PROFIT
MANUFACTURING: Textron Aviation
$
134
$
170
$
449
$
445
Bell
118
108
435
425
Textron Systems
33
37
141
156
Industrial
44
73
217
218
329
388
1,242
1,244
FINANCE
11
9
28
23
Segment Profit
340
397
1,270
1,267
Corporate expenses and other, net
(22
)
(12
)
(110
)
(119
)
Interest expense, net for Manufacturing group
(36
)
(34
)
(146
)
(135
)
Special charges (a)
(72
)
(73
)
(72
)
(73
)
Gain on business disposition (b)
-
-
-
444
Income before income taxes
210
278
942
1,384
Income tax expense (c)
(11
)
(32
)
(127
)
(162
)
Net Income
$
199
$
246
$
815
$
1,222
Earnings Per Share
$
0.87
$
1.02
$
3.50
$
4.83
Diluted average shares outstanding
229,790,000
242,569,000
232,709,000
253,237,000
Net Income and Diluted Earnings Per Share GAAP to
Non-GAAP Reconciliation: Three Months Ended
Twelve Months Ended January 4,2020 December
29,2018 January 4,2020 December 29,2018 Net
income - GAAP
$
199
$
246
$
815
$
1,222
Special charges, net of income taxes of $17 million for each period
(a)
55
56
55
56
Gain on business disposition, net of income tax expense (benefit)
of $(9) million and $25 million, respectively (b)
-
(9
)
-
(419
)
Income tax benefit resulting from the Tax Cuts and Jobs Act (c)
-
(14
)
-
(14
)
Adjusted net income - Non-GAAP (d)
$
254
$
279
$
870
$
845
Earnings per share: Net income - GAAP
$
0.87
$
1.02
$
3.50
$
4.83
Special charges, net of income taxes
0.24
0.23
0.24
0.22
Gain on business disposition, net of income taxes
-
(0.04
)
-
(1.65
)
Income tax benefit resulting from the Tax Cuts and Jobs Act
-
(0.06
)
-
(0.06
)
Net income - Non-GAAP (d)
$
1.11
$
1.15
$
3.74
$
3.34
(a) In the fourth quarter of 2019, we recorded
special charges of $72 million under a restructuring plan,
principally impacting the Industrial and Textron Aviation
segments. Special charges of $73 million were recorded in the
fourth quarter of 2018 under a restructuring plan for the Textron
Specialized Vehicles businesses within our Industrial segment. (b)
On July 2, 2018, Textron completed the sale of the Tools & Test
Equipment product line which resulted in an after tax gain of $419
million. (c) In the fourth quarter of 2018, we completed our
analysis of the tax reform legislation enacted in 2017, known as
the Tax Cuts and Jobs Act, and recorded a $14 million income tax
benefit. (d) 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)
January
4,2020
December 29,
2018
Assets Cash and equivalents
$
1,181
$
987
Accounts receivable, net
921
1,024
Inventories
4,069
3,818
Other current assets
894
785
Net property, plant and equipment
2,527
2,615
Goodwill
2,150
2,218
Other assets
2,312
1,800
Finance group assets
964
1,017
Total Assets
$
15,018
$
14,264
Liabilities and Shareholders'
Equity Current portion of long-term debt
$
561
$
258
Current liabilities
3,285
3,248
Other liabilities
2,288
1,932
Long-term debt
2,563
2,808
Finance group liabilities
803
826
Total Liabilities
9,500
9,072
Total Shareholders' Equity
5,518
5,192
Total Liabilities and Shareholders' Equity
$
15,018
$
14,264
TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash
Flows
(In millions)
(Unaudited)
Three Months Ended Twelve Months Ended
January 4, December 29, January 4, December
29,
2020
2018
2020
2018
Cash flows from operating activities: Income from continuing
operations
$ 190
$ 239
$ 793
$ 1,198
Depreciation and amortization
113
113
410
429
Changes in working capital
460
1
(380)
(203)
Changes in other assets and liabilities and non-cash items
(8)
40
87
97
Gain on business disposition
-
-
-
(444)
Dividends received from TFC
-
-
50
50
Net cash from operating activities of continuing operations
755
393
960
1,127
Cash flows from investing activities: Capital expenditures
(123)
(136)
(339)
(369)
Net proceeds from business disposition
-
-
-
807
Net cash (used)/proceeds from corporate-owned life insurance
policies
(2)
12
2
110
Proceeds from the sale of property, plant and equipment
3
2
9
14
Net cash used in acquisitions
(2)
(20)
(2)
(23)
Other investing activities, net
1
-
1
-
Net cash from investing activities
(123)
(142)
(329)
539
Cash flows from financing activities: Decrease in short-term
debt
(118)
-
-
-
Net proceeds from long-term debt
4
-
301
-
Principal payments on long-term debt
(252)
(1)
(252)
(5)
Purchases of Textron common stock
(33)
(400)
(503)
(1,783)
Other financing activities, net
7
(3)
15
50
Net cash from financing activities
(392)
(404)
(439)
(1,738)
Total cash flows from continuing operations
240
(153)
192
(72)
Total cash flows from discontinued operations
-
(1)
(2)
(2)
Effect of exchange rate changes on cash and equivalents
10
(9)
4
(18)
Net change in cash and equivalents
250
(163)
194
(92)
Cash and equivalents at beginning of period
931
1,150
987
1,079
Cash and equivalents at end of period
$ 1,181
$ 987
$ 1,181
$ 987
Manufacturing Cash Flow GAAP to Non-GAAP
Reconciliation: Net cash from operating activities of
continuing operations - GAAP
$ 755
$ 393
$ 960
$ 1,127
Less: Capital expenditures
(123)
(136)
(339)
(369)
Dividends received from TFC
-
-
(50)
(50)
Plus: Total pension contributions
15
15
51
52
Taxes paid on gain on business disposition
-
10
11
10
Proceeds from the sale of property, plant and equipment
3
2
9
14
Manufacturing cash flow before pension contributions - Non-GAAP
(a)
$ 650
$ 284
$ 642
$ 784
(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 Twelve Months Ended January 4, December
29, January 4, December 29,
2020
2018
2020
2018
Cash flows from operating activities: Income from continuing
operations
$
199
$
246
$
815
$
1,222
Depreciation and amortization
114
115
416
437
Changes in working capital
490
12
(297
)
(202
)
Changes in other assets and liabilities and non-cash items
(12
)
39
82
96
Gain on business disposition
-
-
-
(444
)
Net cash from operating activities of continuing operations
791
412
1,016
1,109
Cash flows from investing activities: Capital expenditures
(123
)
(136
)
(339
)
(369
)
Net proceeds from business disposition
-
-
-
807
Net cash (used)/proceeds from corporate-owned life insurance
policies
(2
)
12
2
110
Finance receivables repaid
28
2
48
27
Net cash used in acquisitions
(2
)
(20
)
(2
)
(23
)
Other investing activities, net
16
28
25
68
Net cash from investing activities
(83
)
(114
)
(266
)
620
Cash flows from financing activities: Decrease in short-term
debt
(118
)
-
-
-
Net proceeds from long-term debt
4
-
301
-
Principal payments on long-term debt and nonrecourse debt
(261
)
(71
)
(303
)
(131
)
Purchases of Textron common stock
(33
)
(400
)
(503
)
(1,783
)
Other financing activities, net
(6
)
(3
)
3
50
Net cash from financing activities
(414
)
(474
)
(502
)
(1,864
)
Total cash flows from continuing operations
294
(176
)
248
(135
)
Total cash flows from discontinued operations
-
(1
)
(2
)
(2
)
Effect of exchange rate changes on cash and equivalents
10
(9
)
4
(18
)
Net change in cash and equivalents
304
(186
)
250
(155
)
Cash and equivalents at beginning of period
1,053
1,293
1,107
1,262
Cash and equivalents at end of period
$
1,357
$
1,107
$
1,357
$
1,107
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:
Adjusted
net income and adjusted diluted earnings per share
Adjusted net income and adjusted diluted earnings per share both
exclude Special charges, net of taxes, Gain on business
disposition, net of taxes, and the income tax benefit resulting
from the Tax Cuts and Jobs Act (the "Tax Act"). We consider items
recorded in Special charges such as enterprise-wide restructuring
and acquisition-related restructuring, integration and transaction
costs, to be of a non-recurring nature that is not indicative of
ongoing operations. 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. In addition, the impact from the Tax Act is not
considered to be indicative of ongoing operations since it
represents a one-time adjustment related to a significant tax
reform of a non-recurring nature.
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: Three Months Ended
Twelve Months Ended January 4,2020 December
29,2018 January 4,2020 December 29,2018 Net
Income - GAAP
$
199
$
246
$
815
$
1,222
Special charges, net of income taxes of $17 million for each period
55
56
55
56
Gain on business disposition, net of income tax expense (benefit)
of $(9) million and $25 million, respectively
-
(9
)
-
(419
)
Income tax benefit resulting from the Tax Cuts and Jobs Act
-
(14
)
-
(14
)
Adjusted Net Income - Non-GAAP
$
254
$
279
$
870
$
845
Earnings per share: Net Income -
GAAP
$
0.87
$
1.02
$
3.50
$
4.83
Special charges, net of income taxes
0.24
0.23
0.24
0.22
Gain on business disposition, net of income taxes
-
(0.04
)
-
(1.65
)
Income tax benefit resulting from the Tax Cuts and Jobs Act
-
(0.06
)
-
(0.06
)
Adjusted Net Income - Non-GAAP
$
1.11
$
1.15
$
3.74
$
3.34
Manufacturing Cash Flow Before Pension Contributions GAAP to
Non-GAAP Reconciliation and 2020 Outlook:
Three Months Ended Twelve Months Ended January
4,2020 December 29,2018 January 4,2020
December 29,2018 Net cash from operating activities of
continuing operations - GAAP
$
755
$
393
$
960
$
1,127
Less: Capital expenditures
(123
)
(136
)
(339
)
(369
)
Dividends received from TFC
-
-
(50
)
(50
)
Plus: Total pension contributions
15
15
51
52
Taxes paid on gain on business disposition
-
10
11
10
Proceeds from the sale of property, plant and equipment
3
2
9
14
Manufacturing cash flow before pension contributions -
Non-GAAP
$
650
$
284
$
642
$
784
2020
Outlook Net cash from operating activities of continuing
operations - GAAP
$
1,010
-
$
1,110
Less: Capital expenditures
(360)
Plus: Total pension contributions
50
Manufacturing cash flow before pension contributions -
Non-GAAP
$
700
-
$
800
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200129005188/en/
Investor Contacts: Eric Salander – 401-457-2288 Cameron
Vollmuth – 401-457-2288
Media Contact: David Sylvestre – 401-457-2362
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