- Revenue: $3.4 billion, up from $3.3 billion in last year's third quarter.
- Adjusted Income from Continuing Operations: $1.40 per share, compared to $1.49 per share in last year's third quarter.
- Manufacturing Cash Flow Before Pension Contributions: $147 million, compared to $205 million in the third quarter of 2023.
- Aviation Deliveries: 41 jets (up from 39 last year) and 25 commercial turboprops (down from 38 last year).
- Aviation Backlog: Grew $162 million, ending the quarter at $7.6 billion.
- Bell Revenue: $929 million, up $175 million over last year.
- Bell Segment Profit: $98 million, up $21 million compared to last year.
- Bell Backlog: Grew by $2.3 billion, totaling $6.5 billion.
- Textron Systems Revenue: $301 million, down $8 million from last year.
- Textron Systems Segment Profit: $39 million, down $2 million from last year.
- Industrial Revenue: $840 million, down $82 million from last year.
- Industrial Segment Profit: $32 million, down $19 million from last year.
- eAviation Revenue: $6 million.
- eAviation Segment Loss: $18 million, compared to a loss of $19 million last year.
- Finance Segment Revenue: $12 million.
- Finance Segment Profit: $5 million.
- Share Repurchase: Approximately 2.4 million shares, returning $215 million in cash to shareholders.
- 2024 Adjusted EPS Outlook: Revised to $5.40 to $5.60 per share, down from $6.20 to $6.40 per share.
- 2024 Manufacturing Cash Flow Outlook: Revised to $650 million to $750 million, down from $900 million to $1 billion.
Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Textron Inc (TXT, Financial) reported an increase in revenues to $3.4 billion for the third quarter, up from $3.3 billion in the same period last year.
- Aviation segment saw strong demand with over $1 billion in new orders and a backlog increase of $162 million, ending the quarter at $7.6 billion.
- Bell segment revenues increased by $175 million to $929 million, with a significant backlog growth of $2.3 billion due to the FLRAA program.
- Textron Aviation delivered the 400th Cessna Citation Latitude, maintaining its position as the best-selling aircraft in the midsize jet segment.
- Textron repurchased approximately 2.4 million shares, returning $215 million in cash to shareholders during the quarter.
Negative Points
- Aviation segment was impacted by a labor strike, resulting in a $50 million revenue reduction and a $30 million decrease in segment profit.
- Manufacturing cash flow before pension contributions decreased to $147 million from $205 million in the third quarter of 2023.
- Textron Systems experienced a slight decline in revenues and profits compared to the previous year.
- Industrial segment faced lower revenues and operating profit due to continued softness in Specialized Vehicles end markets.
- Textron adjusted its full-year outlook, lowering expected adjusted earnings per share from $6.20-$6.40 to $5.40-$5.60 due to the strike's impact.
Q & A Highlights
Q: How is Textron Aviation handling the restart of production after the strike, and what is the updated forecast for Aviation revenue?
A: Scott Donnelly, Chairman and CEO, explained that the workforce is gradually returning, with about 60% back as of the call. The strike's impact is more like five weeks, affecting the $0.5 billion revenue drop. The focus is on ramping up production and improving efficiency as employees return.
Q: What accounts for the additional $200 million hit on free cash flow beyond the lower earnings?
A: Frank Connor, CFO, noted inventory headwinds due to the slower ramp-up and production impact. The focus is on maintaining supply chain health, which will result in inventory that can be sold in 2025.
Q: How do you view the demand environment for Textron Aviation, especially after NBAA?
A: Scott Donnelly highlighted strong demand, with over $1 billion in orders in Q3. The refreshed models and new features like Autoland are driving demand, and the market remains favorable.
Q: What is the outlook for Textron Systems, and how critical are the FTUAS and Robotic Combat Vehicle programs?
A: Scott Donnelly emphasized that these programs are key growth drivers. Despite challenges like the Machado issue, Systems is performing well and meeting original revenue and margin guidance.
Q: How is Textron managing labor productivity post-pandemic, and what are the challenges?
A: Scott Donnelly mentioned that labor productivity has been impacted by supplier part shortages and workforce turnover. The new labor contract aims to stabilize the workforce, making Textron an attractive employer and improving productivity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
