Textron Inc. (NYSE:TXT) today reported third quarter 2016 income from continuing operations of $1.10 per share compared to $0.63 per share in the third quarter of 2015. During this year’s third quarter, the company recorded a tax benefit of $0.76 per share related to settlement of U.S. Internal Revenue Service audits and recorded a $115 million pre-tax restructuring charge ($0.27 per share, after-tax). Excluding these items, adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $0.61 per share for the third quarter of 2016, down $0.02 from last year’s third quarter.
Revenues in the quarter were $3.3 billion, up 2.2 percent from the third quarter of 2015. Textron segment profit in the quarter was $310 million, down $2 million from the third quarter of 2015.
“We had good execution in the quarter with margin improvements at Systems and Bell,” said Textron Chairman and CEO Scott C. Donnelly. “At Aviation, we continue to be encouraged by the strong market acceptance of the Latitude and progress on our new Longitude platform with a very successful first flight two weeks ago.”
Donnelly added, “We are also pleased with progress on the Scorpion and have accelerated investment in this program to support the accreditation process and increased customer engagement.”
Cash Flow
Net cash provided by operating activities of continuing operations of the manufacturing group for the third quarter was $178 million, compared to $231 million in last year’s third quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $94 million compared to $116 million during last year’s third quarter.
Restructuring
On August 30, 2016, Textron announced a restructuring plan with estimated pretax charges in the range of $110 million to $140 million with expected cash outlays in the range of $65 million to $85 million. The company now estimates pre-tax charges will be in the range of $140 million to $170 million, with expected cash outlays in the range of $100 million to $120 million.
Outlook
Textron expects full-year 2016 GAAP earnings per share from continuing operations will be in the range of $3.06 to $3.21, or $2.65 to $2.75 on an adjusted basis (non-GAAP), which is reconciled to GAAP in an attachment to this release. The company revised its expectation for cash flow from continuing operations of the manufacturing group before pension contributions to $500 million to $600 million from its previous estimate of $600 million to $700 million.
Donnelly continued, “We are on track to achieve our operating plan for the year, while accelerating investments that will drive future revenue growth and improved cost productivity.”
Third Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation were up $39 million, primarily due to volume and mix.
Textron Aviation delivered 41 new Citation jets and 29 King Air turboprops in the quarter, compared to 37 jets and 29 King Airs in last year’s third quarter.
Textron Aviation recorded a segment profit of $100 million in the third quarter compared to $107 million a year ago. The decrease in segment profit in the third quarter was primarily due to the mix of products sold.
Textron Aviation backlog at the end of the third quarter was $1.1 billion, approximately flat with the second quarter.
Bell
Bell revenues were down $22 million, as Bell delivered 25 commercial helicopters, compared to 45 units last year. This was partially offset by the military business with 6 V-22’s in the quarter, up from 4 V-22’s in last year’s third quarter and, 8 H-1’s compared to 5 H-1’s last year.
Segment profit was down $2 million, primarily due to the lower commercial aircraft volumes.
Bell backlog at the end of the third quarter was $4.9 billion, approximately flat with the second quarter.
Textron Systems
Revenues at Textron Systems decreased $7 million, primarily due to lower Weapons and Sensors volume partially offset by higher revenues at Marine and Land Systems. Segment profit was up $5 million, reflecting improved performance.
Textron Systems’ backlog at the end of the third quarter was $2.2 billion, down $74 million from the end of the second quarter.
Industrial
Industrial revenues increased $58 million due to the impact of acquired businesses and higher volumes.
Segment profit increased $5 million, largely reflecting improved performance.
Finance
Finance segment revenues increased $3 million and segment profit decreased $3 million.
Non-GAAP Measures
Adjusted income from continuing operations and manufacturing cash flow before pension contributions are non-GAAP measures that are defined and reconciled to GAAP in an attachment to this release.
Conference Call Information
Textron will host its conference call today, October 20, 2016 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) 288-8960 in the U.S. or (651) 291-0344 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 Thursday, October 20, 2016 by dialing (320) 365-3844; Access Code: 373340.
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, Textron Systems, and TRU Simulation + Training. For more information visit: www.textron.com.
