- EPS from continuing operations of $0.82; Adjusted EPS of
$0.85
- Aviation backlog $3.5 billion at quarter-end, up $1.9 billion
year to date
- Net cash from operating activities of $333 million
- Full-year adjusted EPS outlook raised to a range of $3.20 to
$3.30
- Full year cash flow guidance raised to a range of $1 billion to
$1.1 billion
Textron Inc. (NYSE: TXT) today reported third quarter 2021
income from continuing operations of $0.82 per share. Adjusted
income from continuing operations, a non-GAAP measure that is
defined and reconciled to GAAP in an attachment to this release,
was $0.85 per share for the third quarter of 2021, compared to
$0.53 per share in the third quarter of 2020.
“In the quarter, we saw solid execution, higher manufacturing
margin and continued strong cash generation,” said Textron Chairman
and CEO Scott C. Donnelly. "At Textron Aviation, we continued to
see signs of a strong recovery in the general aviation market with
a 49% increase in revenues over last year's third quarter and a
$721 million increase in backlog."
Cash Flow
Net cash provided by operating activities of continuing
operations of the manufacturing group for the third quarter was
$333 million, compared to $368 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,
totaled $271 million for the third quarter, compared to $344
million last year. Year to date, manufacturing cash flow before
pension contributions totaled $851 million.
In the quarter, Textron returned $299 million to shareholders
through share repurchases. Year to date, share repurchases totaled
$586 million.
Outlook
Textron now expects 2021 earnings per share from continuing
operations to be in a range of $3.17 to $3.29, or $3.20 to $3.30 on
an adjusted basis. Textron also expects cash flow from continuing
operations of the manufacturing group before pension contributions
to be in a range of $1 billion to $1.1 billion with planned pension
contributions of about $50 million.
Third Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.2 billion were up $386
million from the third quarter of 2020, largely due to higher
Citation jet volume of $290 million, aftermarket volume of $62
million and commercial turboprop volume of $48 million.
Textron Aviation delivered 49 jets, up from 25 last year, and 35
commercial turboprops, up from 21 last year.
Segment profit was $98 million in the third quarter, up $127
million from a year ago, largely due to the higher volume and mix
of $96 million and favorable pricing, net of inflation of $22
million.
Textron Aviation backlog at the end of the third quarter was
$3.5 billion.
Bell
Bell revenues were $769 million, down $24 million from last
year, largely reflecting lower military revenues.
Bell delivered 33 commercial helicopters in the quarter, down
from 41 last year.
Segment profit of $105 million was down $14 million, primarily
due to lower military revenues.
Bell backlog at the end of the third quarter was $4.1
billion.
Textron Systems
Revenues at Textron Systems were $299 million, down $3 million
from last year's third quarter due to lower volume of $39 million
in the Air Systems product line which primarily reflected the
impact from the U.S. Army’s withdrawal from Afghanistan on the
product line’s fee-for-service contracts, partially offset by
higher volume in the Other product line.
Segment profit of $45 million was up $5 million from a year ago,
largely due to a favorable impact from performance and other.
Textron Systems’ backlog at the end of the third quarter was
$2.2 billion.
Industrial
Industrial revenues were $730 million, down $102 million from
last year, reflecting lower volume and mix of $156 million, largely
in the Fuel Systems and Functional Components product line
reflecting order disruptions related to the global auto OEM supply
chain shortages, partially offset by a favorable impact of $44
million from pricing, largely in the Specialized Vehicles product
line.
Segment profit of $23 million was down $35 million from the
third quarter of 2020, primarily due to the lower volume and mix
described above partially offset by higher pricing, net of
inflation in the Specialized Vehicles product line.
Finance
Finance segment revenues were $11 million, and profit was $8
million.
Conference Call Information
Textron will host its conference call today, October 28, 2021 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 11:00 a.m. (Eastern) on Thursday, October 28,
2021 by dialing (402) 970-0847; Access Code: 6190396.
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;
risks and uncertainties related to the impact of the COVID-19
pandemic on our business and operations; and the ability of our
businesses to hire and retain the highly skilled personnel
necessary for our businesses to succeed.
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
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
REVENUES
MANUFACTURING:
Textron Aviation
$
1,181
$
795
$
3,207
$
2,414
Bell
769
793
2,506
2,438
Textron Systems
299
302
960
956
Industrial
730
832
2,349
2,134
2,979
2,722
9,022
7,942
FINANCE
11
13
38
42
Total revenues
$
2,990
$
2,735
$
9,060
$
7,984
SEGMENT
PROFIT
MANUFACTURING:
Textron Aviation
$
98
$
(29
)
$
241
$
(92
)
Bell
105
119
320
352
Textron Systems
45
40
144
103
Industrial
23
58
102
56
271
188
807
419
FINANCE
8
1
17
8
Segment profit
279
189
824
427
Corporate expenses and other, net
(23
)
(28
)
(100
)
(72
)
Interest expense, net for Manufacturing
group
(28
)
(38
)
(95
)
(109
)
Special charges (a)
(10
)
(7
)
(20
)
(124
)
Gain on business disposition (b)
—
—
17
—
Inventory charge (c)
—
—
—
(55
)
Income from continuing operations before
income taxes
218
116
626
67
Income tax (expense) benefit
(33
)
(1
)
(86
)
6
Income from continuing
operations
$
185
$
115
$
540
$
73
Discontinued operations, net of income
taxes
—
—
(1
)
—
Net income
$
185
$
115
$
539
$
73
Earnings per share:
Income from continuing
operations
$
0.82
$
0.50
$
2.37
$
0.32
Diluted average shares outstanding
226,490,000
229,279,000
227,795,000
228,837,000
Income from continuing operations and
Diluted earnings per share (EPS) GAAP to Non-GAAP
reconciliation:
Three Months Ended
Nine Months Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Income from continuing operations -
GAAP
$
185
$
115
$
540
$
73
Add: Special charges, net of tax (a)
8
6
15
103
Inventory charge, net of tax
(c)
—
—
—
55
Less: Gain on business disposition, net of
tax (b)
—
—
(17
)
—
Adjusted income from continuing
operations - Non-GAAP (d)
$
193
$
121
$
538
$
231
Earnings per share:
Income from continuing operations -
GAAP
$
0.82
$
0.50
$
2.37
$
0.32
Add: Special charges, net of tax (a)
0.03
0.03
0.07
0.45
Inventory charge, net of tax
(c)
—
—
—
0.24
Less: Gain on business disposition, net of
tax (b)
—
—
(0.08
)
—
Adjusted income from continuing
operations - Non-GAAP (d)
$
0.85
$
0.53
$
2.36
$
1.01
(a)
In the second quarter of 2020, we
initiated a restructuring plan to reduce operating expenses through
headcount reductions, facility consolidations and other actions in
response to the economic challenges and uncertainty resulting from
the COVID-19 pandemic. The restructuring plan primarily impacted
the TRU Simulation + Training business within the Textron
Systems segment and the Industrial and Textron Aviation segments.
In connection with this plan, we incurred special charges of $10
million and $20 million for the three and nine months ended October
2, 2021, respectively, and $7 million and $85 million for the three
and nine months ended October 3, 2020, respectively. Special
charges for the nine months ended October 3, 2020 also included the
impairment of indefinite-lived trade name intangible assets
totaling $39 million, primarily in the Textron Aviation
segment.
(b)
On January 25, 2021, we completed the sale
of TRU Simulation + Training Canada Inc. which resulted in an
after-tax gain of $17 million.
(c)
In connection with the restructuring plan
described above, we ceased manufacturing at TRU's facility in
Montreal, Canada, resulting in the production suspension of our
commercial air transport simulators. As a result of this action and
market conditions, we recorded a $55 million charge in the second
quarter of 2020 to write-down the related inventory to its net
realizable value.
(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)
October 2, 2021
January 2, 2021
Assets
Cash and equivalents
$
1,969
$
2,146
Accounts receivable, net
773
787
Inventories
3,670
3,513
Other current assets
890
950
Net property, plant and equipment
2,469
2,516
Goodwill
2,152
2,157
Other assets
2,468
2,436
Finance group assets
878
938
Total Assets
$
15,269
$
15,443
Liabilities and Shareholders'
Equity
Current portion of long-term debt
$
7
$
509
Accounts payable
775
776
Other current liabilities
2,270
1,985
Other liabilities
2,292
2,357
Long-term debt
3,180
3,198
Finance group liabilities
708
773
Total Liabilities
9,232
9,598
Total Shareholders' Equity
6,037
5,845
Total Liabilities and
Shareholders' Equity
$
15,269
$
15,443
TEXTRON INC. MANUFACTURING
GROUP Condensed Schedule of Cash Flows (In millions)
(Unaudited)
Three Months Ended
Nine Months Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Cash Flows from Operating
Activities:
Income from continuing operations
$
179
$
114
$
537
$
67
Depreciation and amortization
94
93
277
279
Gain on business disposition
—
—
(17
)
—
Deferred income taxes and income taxes
receivable/payable
7
11
25
(29
)
Asset impairments and TRU inventory
charge
5
1
11
111
Pension, net
(20
)
(3
)
(62
)
(11
)
Changes in assets and liabilities:
Accounts receivable,
net
46
(98
)
8
59
Inventories
(2
)
(14
)
(164
)
(258
)
Accounts payable
(187
)
133
1
(267
)
Other, net
211
131
396
269
Net cash from operating
activities
333
368
1,012
220
Cash Flows from Investing
Activities:
Capital expenditures
(76
)
(55
)
(204
)
(151
)
Net proceeds from business disposition
—
—
38
—
Proceeds from an insurance recovery and
sale of property, plant and equipment
3
20
3
25
Other investing activities, net
—
4
—
10
Net cash from investing
activities
(73
)
(31
)
(163
)
(116
)
Cash Flows from Financing
Activities:
Decrease in short-term debt
—
(501
)
—
(2
)
Net proceeds from long-term debt
—
495
—
1,137
Principal payments on long-term debt and
nonrecourse debt
(3
)
(1
)
(522
)
(195
)
Net borrowings against corporate-owned
life insurance policies
—
—
—
362
Purchases of Textron common stock
(299
)
—
(586
)
(54
)
Dividends paid
(5
)
(5
)
(14
)
(14
)
Other financing activities, net
28
10
103
2
Net cash from financing
activities
(279
)
(2
)
(1,019
)
1,236
Total cash flows from continuing
operations
(19
)
335
(170
)
1,340
Total cash flows from discontinued
operations
—
(1
)
(1
)
(1
)
Effect of exchange rate changes on cash
and equivalents
(7
)
8
(6
)
(2
)
Net change in cash and
equivalents
(26
)
342
(177
)
1,337
Cash and equivalents at beginning of
period
1,995
2,176
2,146
1,181
Cash and equivalents at end of
period
$
1,969
$
2,518
$
1,969
$
2,518
Manufacturing cash flow GAAP to
Non-GAAP reconciliation:
Three Months Ended
Nine Months Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Net cash from operating activities -
GAAP
$
333
$
368
$
1,012
$
220
Less: Capital expenditures
(76
)
(55
)
(204
)
(151
)
Plus: Total pension contributions
11
11
40
35
Proceeds from an insurance
recovery and sale of property, plant and equipment
3
20
3
25
Manufacturing cash flow before pension
contributions - Non-GAAP (a)
$
271
$
344
$
851
$
129
(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
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Cash Flows from Operating
Activities:
Income from continuing operations
$
185
$
115
$
540
$
73
Depreciation and amortization
97
95
285
283
Gain on business disposition
—
—
(17
)
—
Deferred income taxes and income taxes
receivable/payable
9
3
33
(35
)
Asset impairments and TRU inventory
charge
5
1
11
111
Pension, net
(20
)
(3
)
(62
)
(11
)
Changes in assets and liabilities:
Accounts receivable, net
46
(98
)
8
59
Inventories
(2
)
(14
)
(164
)
(258
)
Accounts payable
(187
)
133
1
(267
)
Captive finance receivables, net
63
(11
)
152
(25
)
Other, net
205
131
387
270
Net cash from operating
activities
401
352
1,174
200
Cash Flows from Investing
Activities:
Capital expenditures
(76
)
(55
)
(204
)
(151
)
Net proceeds from business disposition
—
—
38
—
Proceeds from an insurance recovery and
sale of property, plant and equipment
3
20
3
25
Finance receivables repaid
—
1
19
21
Other investing activities, net
11
6
17
13
Net cash from investing
activities
(62
)
(28
)
(127
)
(92
)
Cash Flows from Financing
Activities:
Decrease in short-term debt
—
(501
)
—
(2
)
Net proceeds from long-term debt
—
495
—
1,137
Principal payments on long-term debt and
nonrecourse debt
(62
)
(6
)
(615
)
(235
)
Net borrowings against corporate-owned
life insurance policies
—
—
—
362
Purchases of Textron common stock
(299
)
—
(586
)
(54
)
Dividends paid
(5
)
(5
)
(14
)
(14
)
Other financing activities, net
28
10
103
14
Net cash from financing
activities
(338
)
(7
)
(1,112
)
1,208
Total cash flows from continuing
operations
1
317
(65
)
1,316
Total cash flows from discontinued
operations
—
(1
)
(1
)
(1
)
Effect of exchange rate changes on cash
and equivalents
(7
)
8
(6
)
(2
)
Net change in cash and
equivalents
(6
)
324
(72
)
1,313
Cash and equivalents at beginning of
period
2,188
2,346
2,254
1,357
Cash and equivalents at end of
period
$
2,182
$
2,670
$
2,182
$
2,670
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 their entirety
and not to rely on any single financial measure. We utilize the
following definitions for the non-GAAP financial measures included
in this release and have provided a reconciliation of the GAAP to
non-GAAP amounts for each measure:
Adjusted Income from Continuing
Operations and Adjusted Diluted Earnings Per Share
Adjusted income from continuing operations and adjusted diluted
earnings per share exclude special charges, net of tax. We consider
items recorded in special charges, such as enterprise-wide
restructuring, certain asset impairment charges, and
acquisition-related restructuring, integration and transaction
costs, to be of a non-recurring nature that is not indicative of
ongoing operations. In addition, we have excluded certain impacts
of the enterprise-wide restructuring plan on TRU Simulation +
Training Canada Inc. (TRU Canada) that are not included within
special charges, but are of a non-recurring nature and are not
indicative of ongoing operations. At TRU Canada, an inventory
charge is excluded as it relates to the write-down of inventory in
connection with an action taken under the restructuring plan. Due
to the substantial decline in demand and order cancellations for
flight simulators resulting from the impact of the pandemic on the
commercial air transportation business, we ceased manufacturing at
TRU Canada’s Montreal facility, resulting in the production
suspension of its commercial air transport simulators. As a result
of this action and market conditions, the related inventory was
written down to its net realizable value in the second quarter of
2020. In the first quarter of 2021, TRU Canada was sold and the
after-tax gain is excluded as it was incurred in connection with
the enterprise-wide restructuring plan.
Three Months Ended
Nine Months Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Income from continuing operations -
GAAP
$
185
$
115
$
540
$
73
Add: Special charges, net of tax
8
6
15
103
Inventory charge, net of
tax
—
—
—
55
Less: Gain on business disposition, net of
tax
—
—
(17
)
—
Adjusted income from continuing
operations - Non-GAAP
$
193
$
121
$
538
$
231
Earnings per share:
Income from continuing operations -
GAAP
$
0.82
$
0.50
$
2.37
$
0.32
Add: Special charges, net of tax
0.03
0.03
0.07
0.45
Inventory charge, net of
tax
—
—
—
0.24
Less: Gain on business disposition, net of
tax
—
—
(0.08
)
—
Adjusted income from continuing
operations - Non-GAAP
$
0.85
$
0.53
$
2.36
$
1.01
2021 Outlook
Diluted EPS
Income from continuing operations -
GAAP
$
717
—
$
747
$
3.17
—
$
3.29
Add: Special charges, net of tax (a)
25
—
20
0.11
—
0.09
Less: Gain on business disposition, net of
tax (b)
(17
)
—
(17
)
(0.08
)
—
(0.08
)
Adjusted income from continuing
operations - Non-GAAP
$
725
—
$
750
$
3.20
—
$
3.30
(a) Special charges, net of tax includes costs we expect
to incur in connection with the restructuring plan initiated in
2020. (b) Gain on disposition, net of tax includes the gain
on the sale of TRU Canada.
TEXTRON INC. Non-GAAP Financial Measures
(Continued) Dollars in millions, except per share amounts)
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
insurance recoveries and 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.
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.
Three Months Ended
Nine Months Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Net cash from operating activities -
GAAP
$
333
$
368
$
1,012
$
220
Less: Capital expenditures
(76
)
(55
)
(204
)
(151
)
Plus: Total pension contributions
11
11
40
35
Proceeds from an insurance
recovery and sale of property, plant and equipment
3
20
3
25
Manufacturing cash flow before pension
contributions - Non-GAAP
$
271
$
344
$
851
$
129
2021 Outlook
Net cash from operating activities -
GAAP
$
1,347
—
$
1,447
Less: Capital expenditures
(400)
Plus: Total pension contributions
50
Proceeds from sale of property,
plant and equipment
3
Manufacturing cash flow before pension
contributions - Non-GAAP
$
1,000
—
$
1,100
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028005152/en/
Investors: Eric Salander – 401-457-2288 Cameron Vollmuth
– 401-457-2288
Media: Mike Maynard – 401-457-2362
Textron (NYSE:TXT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Textron (NYSE:TXT)
Historical Stock Chart
From Sep 2023 to Sep 2024