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Textron (TXT) Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Zacks Equity Research
·4 mins read

Textron Inc. TXT reported second-quarter 2020 adjusted earnings of 13 cents per share against the Zacks Consensus Estimate of a loss of 15 cents.

Including one-time items, the company posted GAAP loss of 40 cents per share against income of 93 cents generated in the year-ago quarter.

This year-over-year deterioration can be attributed to COVID-19, which led the company to witness lower commercial volume and idle facility cost.

Revenues

Total revenues came in at $2,472 million, which surpassed the Zacks Consensus Estimate of $2,351 million by 5.1%. However, the reported figure decreased 23.5% from the year-ago quarter’s $3,227 million on lower contributions from the company’s Aviation and Industrial segments.

Manufacturing revenues decreased 23.5% to $2,472 million, while revenues at the Finance division declined 6.3% to $15 million.

Textron Inc. Price, Consensus and EPS Surprise

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 plunged 33.5% to $747 million from $1,123 million in the year-ago quarter. The decline was primarily due to lower Citation jet volume, delays in the acceptance of aircraft related to COVID-19 travel restrictions, and lower aftermarket volume, reflecting lower aircraft utilization.

The company delivered 23 jets, down from 46 in the year-ago quarter. It also delivered 15 commercial turboprops, down from 34 in first-quarter 2019.

The segment incurred loss of $66 million in the quarter, down from loss of $105 million in the year-ago quarter, owing to lower volume and mix. The order backlog at the end of the quarter was $1.4 billion.

Bell: Revenues from this segment were $822 million, up 6.6% from the year-ago quarter’s $771 million, primarily due to higher military volume.
The segment delivered 27 commercial helicopters in the quarter, down from 53 last year.

Segment profits were up 14.6% to $118 million on account of higher military volume. Bell’s order backlog at the end of the quarter was $5.8 billion, down $0.6 billion sequentially.

Textron Systems: Revenues at this segment came in at $326 million, up from $308 million in the year-ago period. The upside can be primarily attributed to higher volume at this unit’s unmanned systems product line.

Segmental profits decreased 24.5% year over year to $37 million in the second quarter.

Textron Systems’ backlog at the end of the second quarter was $1.9 billion, higher than $1.4 billion at the end of the previous quarter.

Industrial: Revenues at this segment declined a huge 44.3% to $562 million, due to lower revenues from Fuel Systems and Functional Components as well as Textron Specialized Vehicles.

Moreover, segmental loss was $11 million compared to loss of $76 million in the previous quarter owing to lower volume and mix.

Finance: Revenues at this segment decreased to $15 million from $16 million in the year-ago quarter.

Financials

As of Jul 4, 2020, cash and cash equivalents totaled $2,176 million compared with $1,181 million as of Jan 4, 2020.

Cash outflow from operating activities amounted to $148 million at the end of the second quarter compared with cash outflow of $33 million at the end of the prior-year period.

Capital expenditures were $46 million in second-quarter 2020 compared with $76 million in second-quarter 2019.

Long-term debt was $2,955 million as of Jul 4, 2020, compared with $2,563 million as of Jan 4, 2020.

Zacks Rank

Textron currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Teledyne Technologies TDY reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%.

Lockheed Martin LMT reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

Hexcel Corporation HXL reported second-quarter 2020 adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 20 cents by 60%.

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