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Textron (TXT) Beats on Q3 Earnings, Raises 2021 EPS View

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Textron Inc. (TXT - Free Report) reported third-quarter 2021 adjusted earnings of 85 cents per share, which exceeded the Zacks Consensus Estimate of 75 cents by 13.3%. The bottom line also improved 60.4% from 53 cents recorded in the year-ago quarter.

Including one-time items, the company posted GAAP earnings of 82 cents per share compared with 50 cents reported in the year-ago quarter.

This year-over-year improvement can be attributed to higher revenues as well as segment profit generated this quarter.

Revenues

Total revenues came in at $2,990 million, which missed the Zacks Consensus Estimate of $3,104 million by 3.7%. The reported figure, however, increased a solid 9.3% from the year-ago quarter’s $2,735 million, driven by higher contribution from the Textron Aviation segment.

Manufacturing revenues increased 9.4% to $2,979 million. Revenues at the Finance division declined 15.4% to $11 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: In the quarter under review, revenues at this segment improved 48.6% to $1,181 million from $795 million in the year-ago quarter. The upside was driven by higher Citation jet volume, aftermarket volume and commercial turboprop volume.

The company delivered 49 jets, up from 25 in the year-ago quarter. It also delivered 35 commercial turboprops, up from 21 in third-quarter 2020.

The segment generated a profit of $98 million in the quarter against a loss of $29 million incurred in the year-ago quarter. The upside was driven by higher volume and mix, a positive performance impact of $96 million, and favorable pricing, net of inflation.

The order backlog at the end of the quarter was $3.5 billion, down $0.8 billion sequentially.

Bell: Revenues from this segment were $769 million, down 3% from the year-ago quarter’s $793 million, owing to lower military revenues.

The segment delivered 33 commercial helicopters in the quarter, down from 41 in last year’s quarter.

Segment profits were down 11.8% to $105 million on account of lower military revenues. Bell’s order backlog at the end of the quarter was $4.1 billion, down $0.7 billion sequentially.

Textron Systems: Revenues at this segment came in at $299 million, which slipped 1% year over year due to the lower volume observed in the Air Systems product line.

Segmental profits increased 12.5% year over year to $45 million in the third quarter, driven by favorable performance.

Textron Systems’ backlog at the end of the third quarter was $2.2 billion, down $0.1 billion sequentially.

Industrial: Revenues at this segment declined 12.3% to $730 million, primarily due to lower volume and mix of $156 million, largely in the Fuel Systems and Functional Components product line, reflecting order disruptions related to the global auto OEM supply chain shortages.

Segment profit was $23 million, down 60.3% from the previous-year quarter owing to lower volume and mix.

Finance: Revenues at this segment decreased to $11 million from $13 million in the year-ago quarter. The profit of this segment was $8 million compared with $1 million in the third quarter of 2020.

Financials

As of Oct 2, 2021, cash and cash equivalents totaled $1,969 million compared with $2,146 million as of Jan 2, 2021.

Cash flow from operating activities amounted to $1,012 million at the end of the third quarter compared with $220 million at the end of the prior-year period.

Capital expenditures were $76 million in third-quarter 2021 compared with $55 million in third-quarter 2020.

Long-term debt was $3,80 million as of Oct 2, 2021, compared with $3,198 million as of Jan 2, 2021.

Guidance

Textron currently expects to generate adjusted earnings per share from continuing operations in the range of $3.20 to $3.30, indicating an increase from the prior guidance range of $3.00-$3.20.  

The Zacks Consensus Estimate for 2021 of $3.28 lies above the mid-point of the company’s newly guided range.

Zacks Rank

Textron currently carries 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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