Textron Inc. (NYSE: TXT) today reported fourth quarter 2015
income from continuing operations of $0.81 per share, up 6.6
percent from $0.76 per share in the fourth quarter of 2014.
Revenues in the quarter were $3.9 billion, down 4.2 percent
compared to $4.1 billion in the fourth quarter of 2014. Textron
segment profit in the quarter was $378 million, down $20 million
from the fourth quarter of 2014. Fourth quarter manufacturing cash
flow before pension contributions was $534 million compared to $449
million during last year’s fourth quarter.
“We had good execution in the quarter with margin improvements
at Aviation, Systems and Industrial and solid double digit margins
at Bell,” said Textron Chairman and CEO Scott C. Donnelly. “While
overall revenues were down in the quarter, we were encouraged by
continued strong demand at Industrial, the ramp-up of our new
Latitude business jet and the positive customer reception to our
new Longitude and Hemisphere jets announced during November’s
National Business Aviation Association Exhibition.”
Full-year income from continuing operations was $2.50 per share,
compared to $2.15 in 2014. Full-year 2015 manufacturing cash flow
before pension contributions was $631 million compared to $753
million in 2014.
Outlook
Textron is forecasting 2016 revenues of approximately $14.3
billion, up six percent, and earnings per share from continuing
operations in the range of $2.60 to $2.80. The company is
estimating cash flow from continuing operations of the
manufacturing group before pension contributions will be between
$600 and $700 million with planned pension contributions of about
$60 million.
Donnelly continued, “Our outlook for 2016 reflects the success
of our strategy of investing in both new product development and
acquisitions. As we look to the future, we remain committed to
making investments to drive growth and shareholder value.”
Fourth Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation were down $32 million, primarily
reflecting lower King Air and used pre-owned aircraft volumes
partially offset by higher jet volume. Textron Aviation delivered
60 new jets and 33 King Airs in the quarter, compared to 55 jets
and 41 King Airs in last year’s fourth quarter.
Textron Aviation recorded a segment profit of $138 million in
the fourth quarter compared to $130 million a year ago. The
increase is primarily due to improved performance, which included
lower amortization of $8 million related to fair value step-up
adjustments, partially offset by the impact of lower volumes.
Textron Aviation backlog at the end of the fourth quarter was
$1.1 billion, down $308 million from the end of the third
quarter.
Bell
Bell revenues decreased $36 million, primarily the result of
lower commercial aftermarket volume and a change in mix of
commercial aircraft delivered in the quarter partially offset by
higher military deliveries. Bell delivered 8 V-22’s and 9 H-1’s in
the quarter compared to 7 V-22’s and 7 H-1’s in last year’s fourth
quarter and 56 commercial helicopters compared to 57 units last
year.
Segment profit decreased $22 million, primarily due to
unfavorable impact from the change in the mix of commercial
aircraft delivered in the quarter and the lower commercial
aftermarket volume partially offset by favorable performance.
Bell backlog at the end of the fourth quarter was $5.2 billion,
up $76 million from the end of the third quarter.
Textron Systems
Revenues at Textron Systems decreased $158 million, primarily
due to lower Unmanned Systems volume partially offset by higher
Marine and Land Systems volume.
Segment profit was down $9 million, reflecting the impact of the
lower volumes.
Textron Systems’ backlog at the end of the fourth quarter was
$2.3 billion, down $270 million from the end of the third
quarter.
Industrial
Industrial revenues increased $55 million due to higher overall
volumes and the impact of acquisitions, partially offset by a $50
million unfavorable impact from foreign exchange.
Segment profit increased $6 million reflecting the impact of the
higher volumes.
Finance
Finance segment revenues decreased $2 million and segment profit
decreased $3 million.
Conference Call Information
Textron will host its conference call today, January 27, 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) 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 Wednesday, January
27, 2016 by dialing (320) 365-3844 ; Access Code: 337222.
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.
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 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; 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; and cybersecurity threats, including the potential
misappropriation of assets or sensitive information, corruption of
data or operational disruption.
TEXTRON INC.Revenues by Segment
and Reconciliation of Segment Profit to Net IncomeThree and
Twelve Months Ended January 2, 2016 and January 3, 2015(Dollars
in millions, except per share amounts)(Unaudited)
Three Months Ended
Twelve Months Ended
January 2, 2016
January 3, 2015
January 2, 2016
January 3, 2015
REVENUES
MANUFACTURING: Textron Aviation $ 1,488 $ 1,520 $ 4,822 $ 4,568
Bell 1,035 1,071 3,454 4,245 Textron Systems 463 621 1,520 1,624
Industrial
917 862 3,544
3,338 3,903 4,074 13,340 13,775 FINANCE 20
22 83 103
Total
revenues $ 3,923 $ 4,096
$ 13,423 $ 13,878
SEGMENT
PROFIT
MANUFACTURING: Textron Aviation (a) $ 138 $ 130 $ 400 $ 234 Bell
124 146 400 529 Textron Systems 41 50 129 150 Industrial 73
67 302 280 376 393
1,231 1,193 FINANCE 2 5
24 21
Segment Profit 378
398 1,255 1,214 Corporate expenses and
other, net (52 ) (58 ) (154 ) (161 ) Interest expense, net for
Manufacturing group (32 ) (40 ) (130 ) (148 ) Acquisition and
restructuring costs (b) - (13 ) -
(52 ) Income from continuing operations before
income taxes 294 287 971 853 Income tax expense (69 )
(74 ) (273 ) (248 )
Income from continuing
operations 225 213 698 605
Discontinued operations, net of income taxes 1
(1 ) (1 ) (5 )
Net income $ 226
$ 212 $ 697
$ 600 Earnings per share:
Income from continuing operations $ 0.81
$ 0.76 $ 2.50 $ 2.15
Discontinued operations, net of income taxes 0.01
- - (0.02 )
Net income
$ 0.82 $ 0.76 $
2.50 $ 2.13 Diluted
average shares outstanding 276,653,000
279,771,000 278,727,000 281,790,000
(a) Textron Aviation's segment profit includes $12 million for
the twelve months ended January 2, 2016, and $8 million and $63
million for the three and twelve months ended January 3, 2015,
respectively, related to fair value step-up adjustments of acquired
inventories sold during the periods.
(b) Acquisition and restructuring costs for the three and twelve
months ended January 3, 2015 includes $13 million and $41 million,
respectively, of restructuring costs incurred related to the
acquisition of Beech Holdings, LLC, the parent of Beechcraft
Corporation, which was completed on March 14, 2014. Transaction
costs of $11 million related to the Beechcraft acquisition are also
included in the twelve months ended January 3, 2015.
Textron Inc.Condensed Consolidated Balance
Sheets(In millions)(Unaudited)
January 2,2016
January 3,2015
Assets Cash and equivalents
$
946
$
731
Accounts receivable, net 1,047 1,035 Inventories 4,144 3,928 Other
current assets (a) 341 320 Net property, plant and equipment 2,492
2,497 Goodwill 2,023 2,027 Other assets (a) 2,399 2,538 Finance
group assets 1,316 1,529 Total Assets
$
14,708
$
14,605
Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt
$
262
$
8
Other current liabilities 3,530 3,630 Other liabilities 2,376 2,587
Long-term debt 2,435 2,803 Finance group liabilities 1,141
1,305 Total Liabilities 9,744 10,333 Total
Shareholders' Equity 4,964 4,272 Total Liabilities
and Shareholders' Equity
$
14,708
$
14,605
(a) In the fourth quarter of 2015, we adopted a new accounting
standard that requires all deferred tax assets and liabilities be
classified as noncurrent. To conform with the current year
presentation, $259 million of deferred tax assets at January 3,
2015 have been reclassified from Other current assets to Other
assets.
TEXTRON
INC.MANUFACTURING GROUPCondensed Schedule of Cash
Flows and Manufacturing Cash Flow GAAP to Non-GAAP
Reconciliations(In millions)(Unaudited)
Three Months Ended Twelve
Months Ended January 2,2016 January
3,2015 January 2,2016 January
3,2015 Cash flows from operating activities:
Income from continuing operations $ 224 $ 208 $ 684 $ 590
Depreciation and amortization 125 131 449 446 Changes in working
capital 258 225 (297 ) 20 Changes in other assets and liabilities
and non-cash items 41 42 139 41 Dividends received from TFC
43 - 63 - Net cash
from operating activities of continuing operations 691
606 1,038 1,097
Cash flows from investing activities: Capital expenditures
(134 ) (174 ) (420 ) (429 ) Net cash used in acquisitions - (48 )
(81 ) (1,628 ) Proceeds from the sale of property, plant and
equipment 2 2 8 9 Other investing activities, net 1
2 (3 ) (17 ) Net cash from investing
activities (131 ) (218 ) (496 ) (2,065
)
Cash flows from financing activities: Principal payments
on long-term (100 ) (358 ) (100 ) (559 ) Proceeds from long-term
debt - 346 - 1,439 Purchases of Textron common stock (8 ) (38 )
(219 ) (340 ) Other financing activities, net 3
(29 ) 11 12 Net cash from
financing activities (105 ) (79 ) (308 )
552 Total cash flows from continuing operations 455
309 234 (416 ) Total cash flows from discontinued operations - - (4
) (3 ) Effect of exchange rate changes on cash and equivalents
(6 ) (8 ) (15 ) (13 )
Net change in
cash and equivalents 449 301 215 (432 ) Cash and equivalents at
beginning of period 497 430 731
1,163 Cash and equivalents at end of period $
946 $ 731 $ 946 $ 731
Manufacturing Cash Flow GAAP to Non-GAAP Reconciliations:
Net cash from operating activities of
continuing operations - GAAP $ 691 $ 606 $ 1,038 $ 1,097 Less:
Capital expenditures (134 ) (174 ) (420 ) (429 ) Dividends received
from TFC (43 ) - (63 ) - Plus: Total pension contributions 18 15 68
76 Proceeds from the sale of property, plant and equipment 2
2 8 9
Manufacturing cash flow before pension contributions- Non-GAAP $
534 $ 449 $ 631 $ 753
2016 Outlook
Net cash from operating activities of continuing operations - GAAP
$1,015 - $ 1,115 Less: Capital expenditures (475) Plus: Total
pension contributions 60 Manufacturing cash flow before pension
contributions- Non-GAAP $600 - $ 700
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 Twelve
Months Ended January 2,2016 January
3,2015 January 2,2016 January
3,2015 Cash flows from operating activities:
Income from continuing operations $ 225 $ 213 $ 698 $ 605
Depreciation and amortization 129 134 461 459 Changes in working
capital 285 247 (207 ) 119 Changes in other assets and liabilities
and non-cash items 36 48 142
28 Net cash from operating activities of
continuing operations 675 642
1,094 1,211
Cash flows from investing
activities: Capital expenditures (134 ) (174 ) (420 ) (429 )
Net cash used in acquisitions - (48 ) (81 ) (1,628 ) Finance
receivables repaid 1 14 67 91 Other investing activities, net
15 14 46 47
Net cash from investing activities (118 ) (194 )
(388 ) (1,919 )
Cash flows from financing
activities: Principal payments on long-term and nonrecourse
debt (160 ) (442 ) (356 ) (904 ) Proceeds from long-term debt 6 380
61 1,567 Purchases of Textron common stock (8 ) (38 ) (219 ) (340 )
Other financing activities, net 2 (29 )
10 12 Net cash from financing activities
(160 ) (129 ) (504 ) 335 Total
cash flows from continuing operations 397 319 202 (373 ) Total cash
flows from discontinued operations - - (4 ) (3 ) Effect of exchange
rate changes on cash and equivalents (6 ) (8 )
(15 ) (13 )
Net change in cash and equivalents 391
311 183 (389 ) Cash and equivalents at beginning of period
614 511 822 1,211
Cash and equivalents at end of period $ 1,005 $ 822 $
1,005 $ 822
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160127005105/en/
Textron Inc.Investor Contacts:Douglas Wilburne,
401-457-2288orRobert Bridge, 401-457-2288orMedia
Contact:David Sylvestre, 401-457-2362
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