Textron's (TXT) Q3 Earnings Beat Estimates, Revenues Miss

Textron Inc. TXT reported third-quarter 2019 earnings from continuing operations of 95 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 11.8%. The bottom line also increased 55.7% from 61 cents in the year-ago quarter.

This year-over-year improvement can be attributed to lower number of outstanding shares of the company in the quarter under review.

Revenues

Total revenues came in at $3,259 million, which fell short of the Zacks Consensus Estimate of $3,351 million by 2.7%. However, the reported figure increased 1.8% from the year-ago quarter’s $3,200 million on higher contributions from the company’s Aviation, Bell and Industrial segments.

Manufacturing revenues increased 1.9% to $3,245 million, while revenues at the Finance division grew 6.7% to $14 million.

Segmental Performance

Textron Aviation: In the quarter under review, revenues at this segment rose 6% to $1,201 million from $1,133 million in the year-ago quarter. The growth can be attributed to higher jet and aftermarket volumes.

The company delivered 45 jets, up from 41 in the year-ago quarter. It also delivered 39 commercial
turboprops, down from 43 in third-quarter 2018.

The segment registered profits of $104 million in the quarter, up from $99 million in the year-ago quarter, owing to higher volume and mix, and favorable performance. The order backlog at the end of the quarter was $1.9 billion.

Bell: Revenues from this segment summed $783 million, up 1.7% from the year-ago quarter’s $770 million, primarily due to higher commercial revenues.

The segment delivered 42 commercial helicopters in the quarter, down from 43 last year.

Segment profits were down 2.7% to $110 million. Bell’s order backlog at the end of the quarter was $5.6 billion, down $0.4 billion sequentially.

Textron Systems: Revenues at this segment came in at $311 million, down from $352 million a year ago. The downside can be primarily attributed to lower armored vehicle volumes at Textron Marine and Land Systems.

Segmental profits increased 6.9% year over year to $31 million in the third quarter.

Textron Systems’ backlog at the end of the third quarter summed $1.4 billion, in line with the figure at the end of the previous quarter.

Industrial: Revenues at this segment rose 2.15% to $950 million, primarily led by a favorable impact of pricing in the Textron Specialized Vehicles product line.

Moreover, segmental profits were up $46 million from the third quarter of 2018, largely owing to a favorable performance and a positive impact of net pricing in the Specialized Vehicles product line.

Finance: Revenues at this segment decreased to $14 million from $15 million in the year-ago quarter. Segmental profits, however, increased $2 million from third-quarter 2018.

Financials

As of Sep 28, 2019, cash and cash equivalents totaled $931 million compared with $987 million as of Dec 29, 2018.

Cash inflow from operating activities amounted to $238 million at the end of the third quarter compared with the cash inflow of $319 million at the end of the prior-year period.

Capital expenditures were $81 million in the third quarter compared with $74 million in the year-ago period.

Long-term debt was $2,909 million as of Sep 28, compared with $2,808 million as of Dec 29, 2018.

Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. Price, Consensus and EPS Surprise

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

Guidance

Textron slashed its guidance for 2019. The company currently expects full-year earnings from continuing operations of $3.7-$3.8 per share compared with $3.65-$3.85 anticipated earlier.

The Zacks Consensus Estimate for current-year earnings is $3.73, which lies below the midpoint of the company’s guided range.

Textron has also revised its expectation for manufacturing cash flow before pension contributions to $600-$700 million from $700-$800 million.

Zacks Rank

Textron currently carries a Zacks Rank #4 (Sell).

Upcoming Defense Releases

Lockheed Martin Corp. LMT, a Zacks Rank #2 (Buy) company, is set to report third-quarter 2019 results on Oct 22. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Dynamics Corp. GD, a Zacks Rank #3 (Hold) company, is scheduled to report third-quarter 2019 results on Oct 23.

Raytheon Company RTN, a Zacks Rank #4 company, is scheduled to report third-quarter 2019 results on Oct 24.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.50% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Dynamics Corporation (GD) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Textron Inc. (TXT) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research