Textron Reports Third Quarter 2021 Results; Raises Full Year EPS and Cash Guidance

 

TEXTRON INC.
Revenues by Segment and Reconciliation of Segment Profit to Net Income
(Dollars in millions, except per share amounts)
(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

October 2,
2021

October 3,
2020

 

October 2,
2021

October 3,
2020

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

MANUFACTURING:

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

$

1,181

 

 

 

 

$

795

 

 

 

 

 

$

3,207

 

 

 

 

$

2,414

 

 

 

Bell

 

769

 

 

 

 

793

 

 

 

 

 

2,506

 

 

 

 

2,438

 

 

 

Textron Systems

 

299

 

 

 

 

302

 

 

 

 

 

960

 

 

 

 

956

 

 

 

Industrial

 

730

 

 

 

 

832

 

 

 

 

 

2,349

 

 

 

 

2,134

 

 

 

 

 

2,979

 

 

 

 

2,722

 

 

 

 

 

9,022

 

 

 

 

7,942

 

 

 

FINANCE

 

11

 

 

 

 

13

 

 

 

 

 

38

 

 

 

 

42

 

 

 

Total revenues

 

$

2,990

 

 

 

 

$

2,735

 

 

 

 

 

$

9,060

 

 

 

 

$

7,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

MANUFACTURING:

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

$

98

 

 

 

 

$

(29

)

 

 

 

 

$

241

 

 

 

 

$

(92

)

 

 

Bell

 

105

 

 

 

 

119

 

 

 

 

 

320

 

 

 

 

352

 

 

 

Textron Systems

 

45

 

 

 

 

40

 

 

 

 

 

144

 

 

 

 

103

 

 

 

Industrial

 

23

 

 

 

 

58

 

 

 

 

 

102

 

 

 

 

56

 

 

 

 

 

271

 

 

 

 

188

 

 

 

 

 

807

 

 

 

 

419

 

 

 

FINANCE

 

8

 

 

 

 

1

 

 

 

 

 

17

 

 

 

 

8

 

 

 

Segment profit

 

279

 

 

 

 

189

 

 

 

 

 

824

 

 

 

 

427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate expenses and other, net

 

(23

)

 

 

 

(28

)

 

 

 

 

(100

)

 

 

 

(72

)

 

 

Interest expense, net for Manufacturing group

 

(28

)

 

 

 

(38

)

 

 

 

 

(95

)

 

 

 

(109

)

 

 

Special charges (a)

 

(10

)

 

 

 

(7

)

 

 

 

 

(20

)

 

 

 

(124

)

 

 

Gain on business disposition (b)

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

Inventory charge (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

Income from continuing operations before income taxes

 

218

 

 

 

 

116

 

 

 

 

 

626

 

 

 

 

67

 

 

 

Income tax (expense) benefit

 

(33

)

 

 

 

(1

)

 

 

 

 

(86

)

 

 

 

6

 

 

 

Income from continuing operations

 

$

185

 

 

 

 

$

115

 

 

 

 

 

$

540

 

 

 

 

$

73

 

 

 

Discontinued operations, net of income taxes

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

Net income

 

$

185

 

 

 

 

$

115

 

 

 

 

 

$

539

 

 

 

 

$

73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.82

 

 

 

 

$

0.50

 

 

 

 

 

$

2.37

 

 

 

 

$

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted average shares outstanding

 

226,490,000

 

 

 

 

229,279,000

 

 

 

 

 

227,795,000

 

 

 

 

228,837,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations and Diluted earnings per share (EPS) GAAP to Non-GAAP reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

October 2,
2021

October 3,
2020

 

 

October 2,
2021

 

 

October 3,
2020

 

Income from continuing operations - GAAP

 

$

185

 

 

 

 

$

115

 

 

 

 

 

$

540

 

 

 

 

$

73

 

 

 

Add: Special charges, net of tax (a)

 

8

 

 

 

 

6

 

 

 

 

 

15

 

 

 

 

103

 

 

 

Inventory charge, net of tax (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

Less: Gain on business disposition, net of tax (b)

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

 

Adjusted income from continuing operations - Non-GAAP (d)

 

$

193

 

 

 

 

$

121

 

 

 

 

 

$

538

 

 

 

 

$

231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations - GAAP

 

$

0.82

 

 

 

 

$

0.50

 

 

 

 

 

$

2.37

 

 

 

 

$

0.32

 

 

 

Add: Special charges, net of tax (a)

 

0.03

 

 

 

 

0.03

 

 

 

 

 

0.07

 

 

 

 

0.45

 

 

 

Inventory charge, net of tax (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.24

 

 

 

Less: Gain on business disposition, net of tax (b)

 

 

 

 

 

 

 

 

 

 

(0.08

)

 

 

 

 

 

 

Adjusted income from continuing operations - Non-GAAP (d)

 

$

0.85

 

 

 

 

$

0.53

 

 

 

 

 

$

2.36

 

 

 

 

$

1.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)  

In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. The restructuring plan primarily impacted the TRU Simulation + Training business within the Textron Systems segment and the Industrial and Textron Aviation segments. In connection with this plan, we incurred special charges of $10 million and $20 million for the three and nine months ended October 2, 2021, respectively, and $7 million and $85 million for the three and nine months ended October 3, 2020, respectively. Special charges for the nine months ended October 3, 2020 also included the impairment of indefinite-lived trade name intangible assets totaling $39 million, primarily in the Textron Aviation segment.

(b)  

On January 25, 2021, we completed the sale of TRU Simulation + Training Canada Inc. which resulted in an after-tax gain of $17 million.

(c)  

In connection with the restructuring plan described above, we ceased manufacturing at TRU's facility in Montreal, Canada, resulting in the production suspension of our commercial air transport simulators. As a result of this action and market conditions, we recorded a $55 million charge in the second quarter of 2020 to write-down the related inventory to its net realizable value.

(d)  

Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release.

 
 

Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)

 

 

 

 

 

 

October 2,
2021

January 2,
2021

Assets

 

 

 

 

Cash and equivalents

 

$

1,969

 

 

$

2,146

 

Accounts receivable, net

 

773

 

 

787

 

Inventories

 

3,670

 

 

3,513

 

Other current assets

 

890

 

 

950

 

Net property, plant and equipment

 

2,469

 

 

2,516

 

Goodwill

 

2,152

 

 

2,157

 

Other assets

 

2,468

 

 

2,436

 

Finance group assets

 

878

 

 

938

 

Total Assets

 

$

15,269

 

 

$

15,443

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current portion of long-term debt

 

$

7

 

 

$

509

 

Accounts payable

 

775

 

 

776

 

Other current liabilities

 

2,270

 

 

1,985

 

Other liabilities

 

2,292

 

 

2,357

 

Long-term debt

 

3,180

 

 

3,198

 

Finance group liabilities

 

708

 

 

773

 

Total Liabilities

 

9,232

 

 

9,598

 

 

 

 

 

 

Total Shareholders' Equity

 

6,037

 

 

5,845

 

Total Liabilities and Shareholders' Equity

 

$

15,269

 

 

$

15,443

 

     
     
 

TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows
(In millions)
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

October 2,
2021

 

 

October 3,
2020

 

 

 

October 2,
2021

 

 

October 3,
2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

179

 

 

 

 

$

114

 

 

 

 

 

$

537

 

 

 

 

$

67

 

 

 

Depreciation and amortization

 

94

 

 

 

 

93

 

 

 

 

 

277

 

 

 

 

279

 

 

 

Gain on business disposition

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

 

Deferred income taxes and income taxes receivable/payable

 

7

 

 

 

 

11

 

 

 

 

 

25

 

 

 

 

(29

)

 

 

Asset impairments and TRU inventory charge

 

5

 

 

 

 

1

 

 

 

 

 

11

 

 

 

 

111

 

 

 

Pension, net

 

(20

)

 

 

 

(3

)

 

 

 

 

(62

)

 

 

 

(11

)

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

46

 

 

 

 

(98

)

 

 

 

 

8

 

 

 

 

59

 

 

 

Inventories

 

(2

)

 

 

 

(14

)

 

 

 

 

(164

)

 

 

 

(258

)

 

 

Accounts payable

 

(187

)

 

 

 

133

 

 

 

 

 

1

 

 

 

 

(267

)

 

 

Other, net

 

211

 

 

 

 

131

 

 

 

 

 

396

 

 

 

 

269

 

 

 

Net cash from operating activities

 

333

 

 

 

 

368

 

 

 

 

 

1,012

 

 

 

 

220

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(76

)

 

 

 

(55

)

 

 

 

 

(204

)

 

 

 

(151

)

 

 

Net proceeds from business disposition

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

 

Proceeds from an insurance recovery and sale of property, plant and equipment

 

3

 

 

 

 

20

 

 

 

 

 

3

 

 

 

 

25

 

 

 

Other investing activities, net

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

10

 

 

 

Net cash from investing activities

 

(73

)

 

 

 

(31

)

 

 

 

 

(163

)

 

 

 

(116

)

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Decrease in short-term debt

 

 

 

 

 

(501

)

 

 

 

 

 

 

 

 

(2

)

 

 

Net proceeds from long-term debt

 

 

 

 

 

495

 

 

 

 

 

 

 

 

 

1,137

 

 

 

Principal payments on long-term debt and nonrecourse debt

 

(3

)

 

 

 

(1

)

 

 

 

 

(522

)

 

 

 

(195

)

 

 

Net borrowings against corporate-owned life insurance policies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

362

 

 

 

Purchases of Textron common stock

 

(299

)

 

 

 

 

 

 

 

 

(586

)

 

 

 

(54

)

 

 

Dividends paid

 

(5

)

 

 

 

(5

)

 

 

 

 

(14

)

 

 

 

(14

)

 

 

Other financing activities, net

 

28

 

 

 

 

10

 

 

 

 

 

103

 

 

 

 

2

 

 

 

Net cash from financing activities

 

(279

)

 

 

 

(2

)

 

 

 

 

(1,019

)

 

 

 

1,236

 

 

 

Total cash flows from continuing operations

 

(19

)

 

 

 

335

 

 

 

 

 

(170

)

 

 

 

1,340

 

 

 

Total cash flows from discontinued operations

 

 

 

 

 

(1

)

 

 

 

 

(1

)

 

 

 

(1

)

 

 

Effect of exchange rate changes on cash and equivalents

 

(7

)

 

 

 

8

 

 

 

 

 

(6

)

 

 

 

(2

)

 

 

Net change in cash and equivalents

 

(26

)

 

 

 

342

 

 

 

 

 

(177

)

 

 

 

1,337

 

 

 

Cash and equivalents at beginning of period

 

1,995

 

 

 

 

2,176

 

 

 

 

 

2,146

 

 

 

 

1,181

 

 

 

Cash and equivalents at end of period

 

$

1,969

 

 

 

 

$

2,518

 

 

 

 

 

$

1,969

 

 

 

 

$

2,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing cash flow GAAP to Non-GAAP reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

October 2,
2021

 

 

October 3,
2020

 

 

 

October 2,
2021

 

 

October 3,
2020

 

Net cash from operating activities - GAAP

 

$

333

 

 

 

 

$

368

 

 

 

 

 

$

1,012

 

 

 

 

$

220

 

 

 

Less: Capital expenditures

 

(76

)

 

 

 

(55

)

 

 

 

 

(204

)

 

 

 

(151

)

 

 

Plus: Total pension contributions

 

11

 

 

 

 

11

 

 

 

 

 

40

 

 

 

 

35

 

 

 

Proceeds from an insurance recovery and sale of property, plant and equipment

 

3

 

 

 

 

20

 

 

 

 

 

3

 

 

 

 

25

 

 

 

Manufacturing cash flow before pension contributions - Non-GAAP (a)

 

$

271

 

 

 

 

$

344

 

 

 

 

 

$

851

 

 

 

 

$

129

 

 

 


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