Textron Inc. (TXT, Financial) has announced a strategic review of its Powersports product line within the Industrial segment's Textron Specialized Vehicles (TSV) business. This decision comes as the consumer demand for powersports products continues to remain soft. As part of its annual operating plan process, TSV will pause production of its powersports products. This pause will take effect after completing limited production runs to fulfill existing customer commitments, with an indefinite halt expected in the first half of 2025.
In light of these developments, Textron's management has approved additional actions under the company's 2023 restructuring plan. The total pretax special charges related to this plan are now projected to increase from the previously announced range of $165 million to $170 million to a new range of $190 million to $205 million. The additional charges, estimated between $25 million to $35 million, are primarily associated with contract termination costs due to the production pause. These charges will be recorded in the fourth quarter of 2024, with further cash outlays anticipated mainly in the first half of 2025. The restructuring plan is expected to be substantially completed by mid-2025.
Furthermore, due to the indefinite production pause, Textron anticipates an inventory valuation charge ranging from $30 million to $40 million to adjust the value of production-related powersports inventory to its net realizable value. This charge is expected to reduce the company's adjusted earnings per share for 2024 by approximately $0.12 to $0.16.
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