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Textron (TXT) Tops Q2 Earnings, Retains '17 EPS Outlook

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Diversified U.S. conglomerate, Textron Inc. (TXT - Free Report) , reported second-quarter 2017 adjusted earnings from continuing operations of 60 cents per share, beating the Zacks Consensus Estimate of 55 cents by 9.1%.
 
Excluding one-time items, the company reported earnings of 57 cents. Adjusted earnings were down 9.1% from 66 cents in the year-ago quarter.

Revenues

Total revenue in the quarter was $3.60 billion, surpassing the Zacks Consensus Estimate of $3.59 billion by 0.3%. Reported revenues also increased 2.6% from the year-ago figure of $3.51 billion, primarily on account of lower contribution from the Industrial and the Bell segments.

Manufacturing revenues were up 2.7% to $3.59 billion, while revenues at the Finance division declined 10% to $18 million during the quarter.

Segment Performance

Textron Aviation: Revenues during the quarter fell 2.1% to $1,171 million from $1,196 million in the year-ago quarter owing to lower military and commercial turboprop volumes, partially offset by higher jet volumes.

The company delivered 46 new Citation jets, four Beechcraft T-6 trainers and 19 King Air turboprops compared with 45 jets, 11 trainers and 23 King Air turboprops in the prior-year quarter.

The segment registered profits of $54 million compared with $81 million in the year-ago quarter. Order backlog at the end of the quarter under review was $1 billion, flat sequentially.

Bell: Segment revenues were $825 million, up from the year-ago level of $804 million.

The segment delivered 21 commercial helicopters compared with 24 units in the prior-year quarter. Bell also delivered four V-22s (down from six in the second-quarter 2016) and 14 H-1s (up from nine in second-quarter 2016).

Segmental profits improved 38.3% to $112 million on favorable performance. Bell’s order backlog at the end of the quarter was $5.4 billion, down by $234 million from the preceding quarter.

Textron Systems: Revenues during the reported quarter came in at $477 million, down 2.1% year over year, mainly driven by higher volumes at Weapons and Sensors, and Unmanned Systems product lines partially offset by higher volumes at Marine and Land Systems.

Segmental profits declined to $42 million from $60 million due to lower volume and mix.

Textron Systems’ backlog at the end of the quarter was $1.6 billion, down by $170 million from the end of the first quarter of 2017.

Industrial: Segmental revenues grew 10.9% to $1,113 million driven by the impact of the Arctic Cat acquisition.

Segmental profits declined 17.2% to $82 million due to an operating loss at Arctic Cat and unfavorable pricing and inflation.

Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. Price, Consensus and EPS Surprise | Textron Inc. Quote

Financials

As of Jul 1, 2017, cash and cash equivalents were $938 million compared with $1,137 million as of Dec 31, 2016.

Capital expenditure during the quarter was $85 million compared with $119 million in the year-ago quarter.

Long-term debt was $2,774 million as of Jul 1, 2017, up from $2,414 million as of Dec 31, 2016.

Guidance

Textron reiterated its 2017 bottom-line guidance in the range of $2.40–$2.60 per share.

The company continues to expect cash flow from continuing operations (of the manufacturing group) before pension contributions in the $650–$750 million band for 2017. It also reaffirmed its net cash provided by operating activities of continuing operations of the manufacturing group guidance in $1,045–$1,145 million band.

Upcoming Peer Releases

General Dynamics Corp. (GD - Free Report) is scheduled to report quarterly results on Jul 26.

Leidos Holdings, Inc. (LDOS - Free Report) is slated to report quarterly results on Aug 3.

Northrop Grumman Corp (NOC - Free Report) is scheduled to report quarterly results on Jul 26.

Zacks Rank

Textron currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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