Textron Reports Fourth Quarter 2018 Results; Announces 2019 Financial Outlook

  • EPS from continuing operations of $1.02; adjusted EPS of $1.15
  • Segment profit of $397 million up 10.3% from prior year
  • Operating margin of 10.6%, up from 9.0% a year ago
  • $400 million returned to shareholders through share repurchases
  • 2019 full-year EPS outlook of $3.55 - $3.75

PROVIDENCE, R.I. — (BUSINESS WIRE) — January 24, 2019 — Textron Inc. (NYSE: TXT) today reported fourth quarter 2018 income from continuing operations of $1.02 per share. Adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.15 per share for the fourth quarter of 2018. Adjusted income from continuing operations excludes $73 million of pre-tax special charges recorded in the fourth quarter ($0.23 per share, after-tax), and other favorable one-time adjustments ($0.10 per share, after-tax).

Full-year income from continuing operations was $4.83 per share. Full-year adjusted income from continuing operations, a non-GAAP measure, was $3.34 per share, up from $2.45 in 2017.

“We had strong execution in both the quarter and full year with significant margin improvements at Aviation, Bell, and Systems” said Textron Chairman and CEO Scott C. Donnelly. “We were also encouraged by the continued strength in new aircraft demand at Aviation.”

Cash Flow

Net cash provided by operating activities of continuing operations of the manufacturing group for the full year was $1,127 million, compared to $930 million last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $784 million compared to $872 million last year.

In the quarter, Textron returned $400 million to shareholders through share repurchases, compared to $131 million in the fourth quarter of 2017. For the full year, Textron returned $1.8 billion to shareholders through share repurchases, including $797 million of proceeds from the sale of our Tools & Test businesses, compared to $582 million in 2017.

Outlook

Textron is forecasting 2019 revenues of approximately $14 billion, about flat with last year. Textron expects full-year 2019 earnings per share from continuing operations will be in the range of $3.55 to $3.75.

The company is estimating net cash provided by operating activities of continuing operations of the manufacturing group will be between $1,020 million and $1,120 million and manufacturing cash flow before pension contributions (a non-GAAP measure) will be between $700 million and $800 million, with planned pension contributions of about $50 million.

Donnelly continued, “Our outlook reflects the continued improvement in our operations to drive earnings growth and margin expansion. As we look to the future, we are investing for long-term growth to generate increases in shareholder value.”

Fourth Quarter Segment Results

Textron Aviation

Revenues at Textron Aviation of $1.6 billion were up 12%, due to higher volume and mix across the jet and commercial turboprop product lines, as well as favorable pricing.

Textron Aviation delivered 63 jets, up from 58 last year, and 67 commercial turboprops, up from 45 last year.

Segment profit was $170 million in the fourth quarter, up from $120 million a year ago, due to the higher volumes and favorable pricing.

Textron Aviation backlog at the end of the fourth quarter was $1.8 billion.

Bell

Bell revenues were $827 million, down from $983 million last year, primarily on lower military volume.

Bell delivered 46 commercial helicopters in the quarter, up from 45 last year.

Segment profit of $108 million was down $6 million, largely on the lower military volume, partially offset by favorable performance.

Bell backlog at the end of the fourth quarter was $5.8 billion.

Textron Systems

Revenues at Textron Systems were $345 million, down from $489 million last year, reflecting lower TAPV deliveries at Textron Marine & Land Systems and lower Unmanned Systems volume.

Segment profit was flat with last year’s fourth quarter at $37 million, with lower volume and mix, offset by favorable performance.

Textron Systems’ backlog at the end of the fourth quarter was $1.5 billion.

Industrial

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