Textron Inc. (NYSE: TXT) today reported first quarter 2015
income from continuing operations of $0.46 per share, up 48.4
percent from $0.31 per share in the first quarter of 2014.
Revenues in the quarter were $3.1 billion, up 7.9 percent
compared to $2.8 billion in the first quarter of 2014. Textron
segment profit in the quarter was $259 million, up $40 million from
the first quarter of 2014. First quarter manufacturing cash flow
before pension contributions reflected a use of cash of $125
million compared to a use of cash of $111 million during last
year’s first quarter.
“Revenues at Textron Aviation and Industrial were up during the
quarter, while revenues at Bell and Textron Systems were down, as
we expected,” said Textron Chairman and CEO Scott C. Donnelly.
“Operationally, we achieved significant margin improvements at
Textron Aviation and Industrial, reflecting strong performance in
these segments.”
Donnelly continued, “While we expected military deliveries would
be down at Bell this year, the medium segment of the commercial
helicopter market remains soft. As a result, we are adjusting
production levels and taking additional cost actions to allow Bell
to perform within its targeted 2015 segment margin range of 11 to
12 percent.”
The company expects that the net impact of the Bell cost actions
and lower commercial revenues on Textron’s expected 2015 earnings
and cash flow will be offset by stronger results at Textron
Aviation and Industrial.
Outlook
Textron confirmed its 2015 earnings per share from continuing
operations guidance of $2.30 to $2.50 and its expectation for cash
flow from continuing operations of the manufacturing group before
pension contributions of $550 to $650 million with planned pension
contributions of about $80 million.
First Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation were up $266 million, primarily
reflecting the impact of the Beechcraft acquisition. Textron
Aviation delivered 33 new jets in the quarter, compared to 35 jets
in last year’s first quarter, and 25 King Air turboprops.
Textron Aviation recorded a segment profit of $67 million in the
first quarter compared to $14 million a year ago. The increase is
primarily due to improved performance, reflecting the impact of the
Beechcraft acquisition, and higher volumes.
Textron Aviation backlog at the end of the first quarter was
$1.3 billion, down $99 million from the end of the fourth
quarter.
Bell
Bell revenues decreased $60 million, primarily the result of
lower V-22 deliveries.
Bell delivered 6 V-22’s and 4 H-1’s in the quarter, compared to
8 V-22’s and 5 H-1’s in last year’s first quarter and 35 commercial
helicopters, compared to 34 units last year.
Segment profit decreased $20 million primarily due to the lower
volumes and an unfavorable mix of commercial aircraft
deliveries.
Bell backlog at the end of the first quarter was $5.3 billion,
down $237 million from the end of the fourth quarter.
Textron Systems
Revenues at Textron Systems decreased $48 million, primarily due
to lower Marine and Land Systems volumes.
Segment profit was down $11 million, reflecting the lower
volumes.
Textron Systems’ backlog at the end of the first quarter was
$3.0 billion, up $168 million from the end of the fourth
quarter.
Industrial
Industrial revenues increased $75 million due to higher overall
volumes and the impact of acquisitions, partially offset by a $62
million unfavorable year-over-year impact from foreign exchange.
Segment profit increased $16 million reflecting the higher
volumes.
Finance
Finance segment revenues decreased $7 million and segment profit
increased $2 million.
Conference Call Information
Textron will host its conference call today, April 28, 2015 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) 700-7860 in the U.S. or (612) 332-1210 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 Tuesday, April 28,
2015 by dialing (320) 365-3844 ; Access Code: 337219 .
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 Helicopter, Cessna, Beechcraft, Hawker, Jacobsen,
Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. For more
information visit: www.textron.com.
Non-GAAP Measures
Manufacturing cash flow before pension contributions is a
non-GAAP measure that is defined and reconciled to GAAP in an
attachment to this release.
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 under “RISK FACTORS” in our
Annual Report on Form 10-K, 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; and the risk that anticipated synergies and
opportunities as a result of acquisitions will not be realized or
the risk that acquisitions do not perform as planned, including,
for example, the risk that acquired businesses will not achieve
revenue and profit projections.
TEXTRON INC.
Revenues by Segment and Reconciliation
of Segment Profit to Net Income
Three Months Ended April 4, 2015 and
March 29, 2014
(Dollars in millions, except per share
amounts)
(Unaudited)
Three Months Ended
April 4, 2015
March 29, 2014
REVENUES
MANUFACTURING: Textron Aviation $ 1,051 $ 785 Bell 813 873 Textron
Systems 315 363 Industrial 872 797
3,051 2,818 FINANCE 22 29
Total revenues $ 3,073 $
2,847
SEGMENT
PROFIT
MANUFACTURING: Textron Aviation (a) $ 67 $ 14 Bell 76 96 Textron
Systems 28 39 Industrial 82 66 253 215
FINANCE 6 4
Segment
Profit 259 219 Corporate expenses and
other, net (42 ) (43 ) Interest expense, net for Manufacturing
group (33 ) (35 ) Acquisition and restructuring costs (b) -
(16 ) Income from continuing operations before
income taxes 184 125 Income tax expense (56 ) (38 )
Income from continuing operations 128
87 Discontinued operations, net of income taxes -
(2 )
Net income $ 128
$ 85 Earnings per share:
Income from continuing operations $ 0.46
$ 0.31 Discontinued operations, net of income taxes
- (0.01 )
Net income $
0.46 $ 0.30 Diluted
average shares outstanding 280,077,000
283,327,000
(a) Textron Aviation's segment profit for the three months ended
April 4, 2015 and March 29, 2014 includes $5 million and $12
million, respectively, related to fair value step-up adjustments of
acquired inventories sold during the periods.
(b) Acquisition and restructuring costs for the three months
ended March 29, 2014 include $11 million of transaction costs and
$5 million of restructuring costs incurred related to the
acquisition of Beech Holdings, LLC, the parent of Beechcraft
Corporation, which was completed on March 14, 2014.
Textron
Inc.Condensed Consolidated Balance Sheets(In
millions)(Unaudited)
April 4,2015
January 3,2015
Assets Cash and equivalents $ 561 $ 731 Accounts receivable,
net 1,133 1,035 Inventories 4,236 3,928 Other current assets 563
579 Net property, plant and equipment 2,460 2,497 Goodwill 2,013
2,027 Other assets 2,268 2,279 Finance group assets 1,504
1,529 Total Assets $ 14,738 $ 14,605
Liabilities and Shareholders' Equity Short-term debt and
current portion of long-term debt $ 34 $ 8 Other current
liabilities 3,700 3,630 Other liabilities 2,548 2,587 Long-term
debt 2,790 2,803 Finance group liabilities 1,276
1,305 Total Liabilities 10,348 10,333 Total Shareholders'
Equity 4,390 4,272 Total Liabilities and
Shareholders' Equity $ 14,738 $ 14,605
TEXTRON INC.MANUFACTURING
GROUPCondensed Schedule of Cash Flows and Manufacturing Cash
Flow GAAP to Non-GAAP Reconciliations(In millions)(Unaudited)
Three Months Ended April 4, March
29, 2015 2014 Cash flows
from operating activities: Income from continuing operations $
124 $ 84 Depreciation and amortization 108 95 Changes in working
capital (305 ) (263 ) Changes in other assets and liabilities and
non-cash items 6 20 Net cash
from operating activities of continuing operations (67 )
(64 )
Cash flows from investing activities:
Capital expenditures (79 ) (66 ) Net cash used in acquisitions (32
) (1,489 ) Proceeds from the sale of property, plant and equipment
1 2 Other investing activities, net (7 ) (3 )
Net cash from investing activities (117 )
(1,556 )
Cash flows from financing activities: Increase in
short-term debt 25 184 Proceeds from long-term debt - 1,093
Purchases of Textron common stock - (150 ) Other financing
activities, net (4 ) 13 Net cash from
financing activities 21 1,140
Total cash flows from continuing operations (163 ) (480 ) Total
cash flows from discontinued operations (2 ) (1 ) Effect of
exchange rate changes on cash and equivalents (5 )
-
Net change in cash and equivalents (170 )
(481 ) Cash and equivalents at beginning of period 731
1,163 Cash and equivalents at end of
period $ 561 $ 682
Manufacturing
Cash Flow GAAP to Non-GAAP Reconciliations:
Net cash from operating activities of continuing operations
- GAAP $ (67 ) $ (64 ) Less: Capital expenditures (79 ) (66 ) Plus:
Total pension contributions 20 17 Proceeds from the sale of
property, plant and equipment 1 2
Manufacturing cash flow before pension contributions-
Non-GAAP $ (125 ) $ (111 )
2015 Outlook Net cash from operating activities of
continuing operations - GAAP $ 944 - $ 1,044 Less: Capital
expenditures (475) Plus: Total pension contributions 80 Proceeds
from the sale of property, plant and equipment 1
Manufacturing cash flow before pension contributions- Non-GAAP $
550 - $ 650
Free cash flow is a measure generally used by investors,
analysts and management to gauge a company’s ability to generate
cash from operations in excess of that necessary to be reinvested
to sustain and grow the business and fund its obligations. Our
definition of Manufacturing free cash flow adjusts net cash from
operating activities of continuing operations for dividends
received from TFC, capital contributions provided under the Support
Agreement and debt agreements, capital expenditures, proceeds from
the sale of property, plant and equipment and contributions to our
pension plans. We believe that our calculation provides a relevant
measure of liquidity and is a useful basis for assessing our
ability to fund operations and obligations. This measure is not a
financial measure under GAAP and should be used in conjunction with
GAAP cash measures provided in our Consolidated Statements of Cash
Flows.
TEXTRON INC.Condensed
Consolidated Schedule of Cash Flows(In millions)(Unaudited)
Three Months Ended April 4, March 29,
2015 2014 Cash flows from operating
activities: Income from continuing operations $ 128 $ 87
Depreciation and amortization 110 98 Changes in working capital
(269 ) (233 ) Changes in other assets and liabilities and non-cash
items 12 22 Net cash from
operating activities of continuing operations (19 )
(26 )
Cash flows from investing activities: Capital
expenditures (79 ) (66 ) Net cash used in acquisitions (32 ) (1,489
) Finance receivables repaid 31 33 Other investing activities, net
23 2 Net cash from investing
activities (57 ) (1,520 )
Cash flows from
financing activities: Principal payments on long-term and
nonrecourse debt (70 ) (62 ) Increase in short-term debt 25 184
Proceeds from long-term debt 9 1,131 Purchases of Textron common
stock - (150 ) Other financing activities, net 5
13 Net cash from financing activities
(31 ) 1,116 Total cash flows from continuing
operations (107 ) (430 ) Total cash flows from discontinued
operations (2 ) (1 ) Effect of exchange rate changes on cash and
equivalents (5 ) -
Net change in
cash and equivalents (114 ) (431 ) Cash and equivalents at
beginning of period 822 1,211
Cash and equivalents at end of period $ 708 $ 780
Textron Inc.Investor Contacts:Douglas Wilburne –
401-457-2288orRobert Bridge – 401-457-2288orMedia
Contact:David Sylvestre – 401-457-2362
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