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Textron (TXT) Beats on Q3 Earnings, Ups '23 EPS View

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Textron Inc. (TXT - Free Report) reported third-quarter 2023 adjusted earnings of $1.49 per share, which surpassed the Zacks Consensus Estimate of $1.27 by 17.3%. The bottom line also improved 29.6% from the year-ago quarter’s recorded figure.

The company reported GAAP earnings of $1.35 per share, up from $1.06 registered in the third quarter of 2022.

Revenues

TXT reported total revenues of $3,343 million, which missed the Zacks Consensus Estimate of $3,448.8 million by 3.1%. However, the reported figure increased 8.6% from the year-ago quarter’s level of $3,078 million.

Manufacturing revenues improved 8.6% year over year to $3,330 million. Revenues in the Finance division surged 18.2% to $13 million.

Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. price-consensus-eps-surprise-chart | Textron Inc. Quote

Segmental Performance

Textron Aviation: Revenues from this segment increased 14.7% year over year to $1,338 million. The increase was primarily driven by higher volume and pricing.

The segment generated an operating profit of $160 million in the quarter under review compared with $131 million in the year-ago period. This improvement can be attributed to favorable pricing, net of inflation and a favorable impact from higher volume and mix.

Textron Aviation delivered 39 jets, in line with the year-ago quarter’s figure. It also delivered 38 commercial turboprops, up from 33 in the third quarter of 2022.

The segment’s order backlog at the end of the quarter totaled $7.4 billion.

Bell: Revenues from this segment amounted to $754 million, in line with the year-ago quarter’s reported number. This was due to higher military volume.

The segment’s profit increased 4% to $77 million, driven by lower research and development costs.

Bell delivered 23 commercial helicopters in the quarter, down from 49 last year. Its order backlog at the end of the quarter totaled $5.2 billion, down sequentially from $5.6 billion.

Textron Systems: This segment’s revenues totaled $309 million, up 5.8% from the year-ago period’s level. This improvement was driven by higher volume.

Segmental profits increased 32.3% year over year to $41 million, primarily driven by a favorable impact from performance.

Textron Systems’ backlog at the end of the third quarter totaled $2 billion.
Industrial: Revenues from this segment improved 8.6% to $922 million, driven by higher volume and mix at both Kautex and Textron Specialized Vehicles, as well as a favorable impact from pricing.

Moreover, the segment’s profit totaled $51 million compared with $36 million in the prior-year quarter. The improvement can be attributed to a higher volume and mix as well as a favorable impact from pricing, and net of inflation.

Textron eAviation: Revenues from the segment totaled $7 million, up 40% year over year. Meanwhile, it reported a loss of $19 million in the third quarter, wider than a reported loss of $7 million in the prior-year period.

Finance: This segment’s revenues improved 18.2% to $13 million. Its profit totaled $22 million in the third quarter compared with $7 million in the year-ago period.

Financials

As of Sep 30, 2023, cash and cash equivalents totaled $1,671 million compared with $1,963 million as of Dec 31, 2022.

Cash flow from operating activities amounted to $737 million as of Sep 30, 2023, compared with $945 million in the year-ago period.

Capital expenditures amounted to $79 million compared with $78 million in the prior-year period.

The long-term debt was $2,824 million as of Sep 30, 2023, compared with $3,175 million as of Dec 31, 2022.

Guidance

Textron has raised its guidance for 2023 adjusted earnings per share to $5.45-$5.55 from the earlier projected range of $5.20-$5.30. The Zacks Consensus Estimate for TXT’s 2023 earnings is pegged at $5.27 per share, which lies below the company’s guided range.

Zacks Rank

Textron currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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