- EPS of $1.30; adjusted EPS of $1.46, up 32% from a year
ago
- Net cash from operating activities of $314 million in the
second quarter of 2023
- $273 million returned to shareholders through share repurchases
in the second quarter
- Full-year adjusted EPS outlook raised to $5.20 - $5.30
Textron Inc. (NYSE: TXT) today reported second quarter 2023
income from continuing operations of $1.30 per share, as compared
to $1.00 per share in the second quarter of 2022. Adjusted income
from continuing operations, a non-GAAP measure that is defined and
reconciled to GAAP in an attachment to this release, was $1.46 per
share for the second quarter of 2023, compared to $1.11 per share
in the second quarter of 2022.
“During the second quarter, revenue grew 8.6% year over year
with higher revenues in all our segments,” said Textron Chairman
and CEO, Scott C. Donnelly. "Operationally, execution was strong
across our segments with a segment profit margin of 10.3% in the
second quarter of 2023, up 140 basis points from last year's second
quarter."
Cash Flow
Net cash provided by operating activities of the manufacturing
group for the second quarter was $314 million, compared to $364
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 $242 million for the
second quarter, compared to $309 million last year.
In the quarter, Textron returned $273 million to shareholders
through share repurchases. Year to date, Textron has returned $650
million to shareholders through share repurchases.
Share Repurchase Program
On July 24, 2023, Textron’s Board of Directors approved a new
authorization for the repurchase of up to 35 million shares, under
which the company intends to purchase shares to offset the impact
of dilution from stock-based compensation and benefit plans and for
opportunistic capital management purposes.
Outlook
Textron now expects 2023 adjusted earnings per share from
continuing operations to be in a range of $5.20 to $5.30, up from
our previous outlook of $5.00 to $5.20. Textron reiterated its
expectation for cash flow from continuing operations of the
manufacturing group before pension contributions of $0.9 billion to
$1.0 billion with planned pension contributions of about $50
million.
Second Quarter Segment Results
Textron Aviation
Textron Aviation’s revenues were $1.4 billion, up $78 million
from last year's second quarter, reflecting higher pricing of $95
million, partially offset by lower volume and mix.
Textron Aviation delivered 44 jets in the quarter, down from 48
last year, and 37 commercial turboprops, up from 35 in last year's
second quarter.
Segment profit was $171 million in the second quarter, up $22
million from a year ago, largely due to favorable pricing, net of
inflation, of $52 million, partially offset by an unfavorable
impact from performance of $23 million. Performance included
unfavorable manufacturing performance, largely related to supply
chain and labor inefficiencies.
Textron Aviation backlog at the end of the second quarter was
$6.8 billion.
Bell
Bell revenues in the quarter were $701 million, up $14 million
from the second quarter of 2022, due to higher pricing of $21
million, partially offset by lower military volume of $7
million.
Bell delivered 35 commercial helicopters in the quarter, up from
34 last year.
Segment profit of $65 million was up $11 million from last
year's second quarter, due to a favorable impact from performance
of $13 million, largely reflecting lower research and development
costs, and a favorable impact from pricing, net of inflation, of $9
million, partially offset by lower volume and mix.
Bell backlog at the end of the second quarter was $5.6
billion.
Textron Systems
Revenues at Textron Systems were $306 million, up $13 million
from last year's second quarter, largely reflecting higher
volume.
Segment profit of $37 million was down $1 million, compared with
the second quarter of 2022.
Textron Systems’ backlog at the end of the second quarter was
$1.9 billion.
Industrial
Industrial revenues were $1.0 billion, up $155 million from last
year's second quarter, largely due to higher volume and mix at both
Kautex and Textron Specialized Vehicles of $121 million and a $37
million favorable impact from pricing.
Segment profit of $79 million was up $42 million from the second
quarter of 2022, primarily due to higher volume and mix of $32
million, and a favorable impact from pricing, net of inflation, of
$17 million, principally at Kautex, partially offset by an
unfavorable impact of $10 million from performance.
Textron eAviation
Textron eAviation segment revenues were $11 million and segment
loss was $12 million in the second quarter of 2023, primarily
related to research and development costs.
Finance
Finance segment revenues were $18 million, and profit was $12
million.
Conference Call Information
Textron will host its conference call today, July 27, 2023 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) 867-6169 in the U.S. or (409) 207-6975 outside of the
U.S.; Access Code: 7265882.
In addition, the call will be recorded and available for
playback beginning at 11:00 a.m. (Eastern) on Thursday, July 27,
2023 by dialing (402) 970-0847; Access Code: 4732406.
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, Pipistrel, Jacobsen, Kautex,
Lycoming, E-Z-GO, Arctic Cat, and Textron Systems. 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 and
inflationary pressures; 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
ongoing impacts of the COVID-19 pandemic and the war between Russia
and Ukraine 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
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
REVENUES
MANUFACTURING:
Textron Aviation
$
1,362
$
1,284
$
2,511
$
2,324
Bell
701
687
1,322
1,521
Textron Systems
306
293
612
566
Industrial
1,026
871
1,958
1,709
Textron eAviation (a)
11
5
15
5
3,406
3,140
6,418
6,125
FINANCE
18
14
30
30
Total revenues
$
3,424
$
3,154
$
6,448
$
6,155
SEGMENT
PROFIT
MANUFACTURING:
Textron Aviation
$
171
$
149
$
296
$
259
Bell
65
54
125
145
Textron Systems
37
38
71
66
Industrial
79
37
120
76
Textron eAviation (a)
(12
)
(7
)
(21
)
(7
)
340
271
591
539
FINANCE
12
10
20
19
Segment profit (b)
352
281
611
558
Corporate expenses and other, net
(21
)
(20
)
(60
)
(72
)
Interest expense, net for Manufacturing
group
(16
)
(28
)
(33
)
(56
)
LIFO inventory provision
(35
)
(17
)
(60
)
(29
)
Intangible asset amortization
(10
)
(13
)
(20
)
(26
)
Non-service components of pension and
postretirement income, net
59
60
118
120
Income from continuing operations before
income taxes
329
263
556
495
Income tax expense
(66
)
(45
)
(102
)
(84
)
Income from continuing
operations
$
263
$
218
$
454
$
411
Discontinued operations, net of income
taxes
—
(1
)
—
(1
)
Net income
$
263
$
217
$
454
$
410
Earnings Per Share:
Income from continuing
operations
$
1.30
$
1.00
$
2.22
$
1.88
Discontinued operations, net of income
taxes
—
—
—
—
Diluted earnings per share
$
1.30
$
1.00
$
2.22
$
1.88
Diluted average shares outstanding
202,509,000
216,658,000
204,760,000
218,133,000
Income from continuing operations and
Diluted earnings per share (EPS) GAAP to Non-GAAP
reconciliation
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Income from continuing operations -
GAAP
$
263
$
218
$
454
$
411
Add: LIFO inventory provision, net of
tax
26
13
45
22
Intangible asset amortization, net of
tax
7
9
15
19
Adjusted income from continuing
operations - Non-GAAP (b)
$
296
$
240
$
514
$
452
Earnings Per Share:
Income from continuing operations -
GAAP
$
1.30
$
1.00
$
2.22
$
1.88
Add: LIFO inventory provision, net of
tax
0.13
0.06
0.22
0.10
Intangible asset amortization, net of
tax
0.03
0.05
0.07
0.09
Adjusted income from continuing
operations - Non-GAAP (b)
$
1.46
$
1.11
$
2.51
$
2.07
(a)
In the second quarter of 2022, we acquired
Pipistrel, a manufacturer of electrically powered aircraft and
formed a new reporting segment, Textron eAviation. This segment
combines the operating results of Pipistrel along with other
research and development initiatives related to sustainable
aviation solutions.
(b)
Segment profit, adjusted income from
continuing operations 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)
July 1,
December 31,
2023
2022
Assets
Cash and equivalents
$
1,695
$
1,963
Accounts receivable, net
953
855
Inventories
4,108
3,550
Other current assets
829
1,033
Net property, plant and equipment
2,487
2,523
Goodwill
2,291
2,283
Other assets
3,472
3,422
Finance group assets
650
664
Total Assets
$
16,485
$
16,293
Liabilities and Shareholders'
Equity
Current portion of long-term debt
$
357
$
7
Accounts payable
1,227
1,018
Other current liabilities
2,820
2,645
Other liabilities
1,797
1,879
Long-term debt
2,825
3,175
Finance group liabilities
425
456
Total Liabilities
9,451
9,180
Total Shareholders' Equity
7,034
7,113
Total Liabilities and Shareholders'
Equity
$
16,485
$
16,293
TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash
Flows
(In millions)
(Unaudited)
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Cash Flows from Operating
Activities:
Income from continuing operations
$
253
$
210
$
438
$
395
Depreciation and amortization
101
98
193
191
Deferred income taxes and income taxes
receivable/payable
(77
)
(95
)
(61
)
(78
)
Pension, net
(51
)
(42
)
(102
)
(83
)
Changes in assets and liabilities:
Accounts receivable, net
(28
)
(85
)
(97
)
(48
)
Inventories
(173
)
(70
)
(553
)
(246
)
Accounts payable
(54
)
(14
)
207
24
Other, net
343
362
442
434
Net cash from operating
activities
314
364
467
589
Cash Flows from Investing
Activities:
Capital expenditures
(83
)
(66
)
(145
)
(114
)
Net cash used in business acquisitions
—
(198
)
—
(198
)
Net proceeds from corporate-owned life
insurance policies
18
23
38
25
Proceeds from sale of property, plant and
equipment
—
—
—
18
Net cash from investing
activities
(65
)
(241
)
(107
)
(269
)
Cash Flows from Financing
Activities:
Decrease in short-term debt
—
(15
)
—
(15
)
Principal payments on long-term debt and
nonrecourse debt
(1
)
(12
)
(3
)
(14
)
Purchases of Textron common stock
(273
)
(282
)
(650
)
(439
)
Dividends paid
(4
)
(4
)
(8
)
(9
)
Other financing activities, net
4
3
26
28
Net cash from financing
activities
(274
)
(310
)
(635
)
(449
)
Total cash flows from continuing
operations
(25
)
(187
)
(275
)
(129
)
Total cash flows from discontinued
operations
(1
)
(2
)
(1
)
(2
)
Effect of exchange rate changes on cash
and equivalents
2
(25
)
8
(27
)
Net change in cash and
equivalents
(24
)
(214
)
(268
)
(158
)
Cash and equivalents at beginning of
period
1,719
1,978
1,963
1,922
Cash and equivalents at end of
period
$
1,695
$
1,764
$
1,695
$
1,764
Manufacturing cash flow GAAP to
Non-GAAP reconciliation:
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net cash from operating activities -
GAAP
$
314
$
364
$
467
$
589
Less: Capital expenditures
(83
)
(66
)
(145
)
(114
)
Add: Total pension contributions
11
11
24
25
Proceeds from sale of property, plant and
equipment
—
—
—
18
Manufacturing cash flow before pension
contributions - Non-GAAP (a)
$
242
$
309
$
346
$
518
(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
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Cash Flows from Operating
Activities:
Income from continuing operations
$
263
$
218
$
454
$
411
Depreciation and amortization
101
98
193
191
Deferred income taxes and income taxes
receivable/payable
(81
)
(105
)
(63
)
(86
)
Pension, net
(51
)
(42
)
(102
)
(83
)
Changes in assets and liabilities:
Accounts receivable, net
(28
)
(85
)
(97
)
(48
)
Inventories
(173
)
(70
)
(553
)
(246
)
Accounts payable
(54
)
(14
)
207
24
Captive finance receivables, net
(21
)
17
(15
)
35
Other, net
341
359
436
417
Net cash from operating
activities
297
376
460
615
Cash Flows from Investing
Activities:
Capital expenditures
(83
)
(66
)
(145
)
(114
)
Net cash used in business acquisitions
—
(198
)
—
(198
)
Net proceeds from corporate-owned life
insurance policies
18
23
38
25
Proceeds from sale of property, plant and
equipment
—
—
—
18
Finance receivables repaid
7
8
19
21
Other investing activities, net
1
1
2
44
Net cash from investing
activities
(57
)
(232
)
(86
)
(204
)
Cash Flows from Financing
Activities:
Decrease in short-term debt
—
(15
)
—
(15
)
Principal payments on long-term debt and
nonrecourse debt
(17
)
(104
)
(34
)
(223
)
Purchases of Textron common stock
(273
)
(282
)
(650
)
(439
)
Dividends paid
(4
)
(4
)
(8
)
(9
)
Other financing activities, net
4
3
26
28
Net cash from financing
activities
(290
)
(402
)
(666
)
(658
)
Total cash flows from continuing
operations
(50
)
(258
)
(292
)
(247
)
Total cash flows from discontinued
operations
(1
)
(2
)
(1
)
(2
)
Effect of exchange rate changes on cash
and equivalents
2
(25
)
8
(27
)
Net change in cash and
equivalents
(49
)
(285
)
(285
)
(276
)
Cash and equivalents at beginning of
period
1,799
2,126
2,035
2,117
Cash and equivalents at end of
period
$
1,750
$
1,841
$
1,750
$
1,841
TEXTRON INC. Non-GAAP Financial
Measures and Outlook (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:
Segment Profit
Segment profit is an important measure used by our chief
operating decision maker for evaluating performance and for
decision-making purposes. Beginning in 2023, we changed how we
measure our manufacturing segment operating results to exclude the
non-service components of pension and postretirement income, net;
LIFO inventory provision; and intangible asset amortization. This
measure also continues to exclude interest expense, net for
Manufacturing group; certain corporate expenses; gains/losses on
major business dispositions; and special charges. The prior period
has been recast to conform to this presentation. The measurement
for the Finance segment includes interest income and expense along
with intercompany interest income and expense.
Adjusted Income from Continuing
Operations, Adjusted Diluted Earnings Per Share and
Outlook
Adjusted income from continuing operations and adjusted diluted
earnings per share exclude special charges, net of tax and
gains/losses on major business disposition, 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.
Beginning in 2023, these measures also exclude LIFO inventory
provision, net of tax and Intangible asset amortization, net of
tax. LIFO inventory provision is excluded to improve comparability
with other companies in our industry who have not elected to use
the LIFO inventory costing method. Intangible asset amortization is
excluded to improve comparability as the impact of such
amortization can vary substantially from company to company
depending upon the nature and extent of acquisitions and exclusion
of this expense is consistent with the presentation of non-GAAP
measures provided by other companies within our industry.
Management believes that it is important for investors to
understand that these intangible assets were recorded as part of
purchase accounting and contribute to revenue generation. The prior
period has been recast to conform to this presentation.
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Income from continuing operations -
GAAP
$
263
$
218
$
454
$
411
Add: LIFO inventory provision, net of
tax
26
13
45
22
Intangible asset amortization, net of
tax
7
9
15
19
Adjusted income from continuing
operations - Non-GAAP
$
296
$
240
$
514
$
452
Earnings Per Share:
Income from continuing operations -
GAAP
$
1.30
$
1.00
$
2.22
$
1.88
Add: LIFO inventory provision, net of
tax
0.13
0.06
0.22
0.10
Intangible asset amortization, net of
tax
0.03
0.05
0.07
0.09
Adjusted income from continuing
operations - Non-GAAP
$
1.46
$
1.11
$
2.51
$
2.07
2023 Outlook
Diluted EPS
Income from continuing operations -
GAAP
$
927
$
947
$
4.59
$
4.69
Add: LIFO inventory provision, net of
tax
96
0.48
Intangible asset amortization, net of
tax
27
0.13
Adjusted income from continuing
operations - Non-GAAP
$
1,050
—
$
1,070
$
5.20
—
$
5.30
TEXTRON INC. Non-GAAP Financial
Measures and Outlook (Continued) (Dollars in millions, except
per share amounts)
Manufacturing Cash Flow Before Pension
Contributions and Outlook 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
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net cash from operating activities -
GAAP
$
314
$
364
$
467
$
589
Less: Capital expenditures
(83
)
(66
)
(145
)
(114
)
Add: Total pension contributions
11
11
24
25
Proceeds from sale of property, plant and
equipment
—
—
—
18
Manufacturing cash flow before pension
contributions - Non-GAAP
$
242
$
309
$
346
$
518
2023 Outlook
Net cash from operating activities -
GAAP
$
1,275
—
$
1,375
Less: Capital expenditures
(425)
Add: Total pension contributions
50
Manufacturing cash flow before pension
contributions - Non-GAAP
$
900
—
$
1,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727988640/en/
Investor Contacts: Eric Salander – 401-457-2288 Cameron
Vollmuth – 401-457-2288
Media Contact: Mike Maynard – 401-457-2362
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