Textron Reports Third Quarter 2020 Results

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 3, 2020				September 28, 2019				October 3, 2020				September 28, 2019
REVENUES
MANUFACTURING:
Textron Aviation		$	795			$	1,201			$	2,414			$	3,458
Bell		793				783				2,438				2,293
Textron Systems		302				311				956				926
Industrial		832				950				2,134				2,871
		2,722				3,245				7,942				9,548
FINANCE		13				14				42				47
Total Revenues		$	2,735			$	3,259			$	7,984			$	9,595

SEGMENT PROFIT
MANUFACTURING:
Textron Aviation		$	(29	)		$	104			$	(92	)		$	315
Bell		119				110				352				317
Textron Systems		40				31				103				108
Industrial		58				47				56				173
		188				292				419				913
FINANCE		1				5				8				17
Segment Profit		189				297				427				930

Corporate expenses and other, net		(28		)		(17		)		(72		)		(88		)
Interest expense, net for Manufacturing group		(38		)		(39		)		(109		)		(110		)
Special charges (a)		(7		)		—				(124		)		—
Inventory charge (b)		—				—				(55		)		—
Income before income taxes		116				241				67				732
Income tax expense		(1		)		(21		)		6				(116		)
Net Income		$	115			$	220			$	73			$	616

Earnings Per Share		$	0.50			$	0.95			$	0.32			$	2.64

Diluted average shares outstanding		229,279,000				231,097,000				228,837,000				233,689,000

Net Income and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation:

	Three Months Ended October 3, 2020								Nine Months Ended October 3, 2020
					Diluted EPS								Diluted EPS
Net Income - GAAP		$	115			$	0.50			$	73			$	0.32
Add: Special charges, net of taxes		6				0.03				103				0.45
Inventory charge, net of taxes		—				—				55				0.24
Adjusted Net Income - Non-GAAP (c)		$	121			$	0.53			$	231			$	1.01

(a)		In June 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 impacts the TRU Simulation + Training (TRU) business within the Textron Systems segment, the Textron Aviation segment and the Textron Specialized Vehicles business within the Industrial segment. In connection with this plan, special charges for the three and nine months ended October 3, 2020, includes severance and related costs of $5 million and $56 million, respectively, asset impairment charges of $2 million and $17 million, respectively, and contract termination and other facility closing costs of $0 million and $12 million, respectively. Special charges for the nine months ended October 3, 2020 also includes the impairment of indefinite-lived trade name intangible assets totaling $32 million in the Textron Aviation segment and $7 million in the Industrial segment resulting from changes in valuation assumptions related to the economic and business disruptions caused by the pandemic.
(b)		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.
(c)		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 3, 2020		January 4, 2020
Assets
Cash and equivalents	$	2,518	$	1,181
Accounts receivable, net	872		921
Inventories	4,252		4,069
Other current assets	825		894
Net property, plant and equipment	2,438		2,527
Goodwill	2,159		2,150
Other assets	1,863		2,312
Finance group assets	934		964
Total Assets	$	15,861	$	15,018


Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt	$	859	$	561
Accounts payable	1,121		1,378
Other current liabilities	2,011		1,907
Other liabilities	2,159		2,288
Long-term debt	3,199		2,563
Finance group liabilities	771		803
Total Liabilities	10,120		9,500

Total Shareholders' Equity	5,741		5,518
Total Liabilities and Shareholders' Equity	$	15,861	$	15,018

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

	Three Months Ended						Nine Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Cash Flows from Operating Activities:
Net income	$	114		$	216		$	67		$	603
Depreciation and amortization	93			98			279			297
Deferred income taxes and income taxes receivable/payable	11			(32		)	(29		)	11
Pension, net	(3		)	(15		)	(11		)	(44		)
Changes in assets and liabilities:
Accounts receivable, net	(98		)	(43		)	59			(7		)
Inventories	(14		)	(147		)	(258		)	(679		)
Accounts payable	133			2			(267		)	134
Dividends received from Finance group	—			—			—			50
Other, net	132			159			380			(160		)
Net cash from operating activities	368			238			220			205
Cash Flows from Investing Activities:
Capital expenditures	(55		)	(81		)	(151		)	(216		)
Proceeds from an insurance recovery and sale of property, plant and equipment	20			2			25			6
Net proceeds from corporate-owned life insurance policies	4			—			21			4
Other investing activities, net	—			—			(11		)	—
Net cash from investing activities	(31		)	(79		)	(116		)	(206		)
Cash Flows from Financing Activities:
Increase (decrease) in short-term debt	(501		)	118			(2		)	118
Net proceeds from long-term debt	495			—			1,137			297
Net borrowings against corporate-owned insurance policies	—			—			362			—
Principal payments on long-term debt and nonrecourse debt	(1		)	—			(195		)	(1		)
Purchases of Textron common stock	—			(109		)	(54		)	(470		)
Dividends paid	(5		)	—			(14		)	(9		)
Other financing activities, net	10			(1		)	2			18
Net cash from financing activities	(2		)	8			1,236			(47		)
Total cash flows from continuing operations	335			167			1,340			(48		)
Total cash flows from discontinued operations	(1		)	(1		)	(1		)	(2		)
Effect of exchange rate changes on cash and equivalents	8			(10		)	(2		)	(6		)
Net Change in Cash and Equivalents	342			156			1,337			(56		)
Cash and Equivalents at Beginning of Period	2,176			775			1,181			987
Cash and Equivalents at End of Period	$	2,518		$	931		$	2,518		$	931

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:

	Three Months Ended						Nine Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Net Cash from Operating Activities - GAAP	$	368		$	238		$	220		$	205
Less: Capital expenditures	(55		)	(81		)	(151		)	(216		)
Dividends received from TFC	—			—			—			(50		)
Plus: Total pension contribution	11			11			35			36
Proceeds from an insurance recovery and sale of property, plant and equipment	20			2			25			6
Taxes paid on gain on business disposition	—			11			—			11
Manufacturing Cash Flow Before Pension Contributions - Non-GAAP (a)	$	344		$	181		$	129		$	(8	)

(a)		Manufacturing cash flow before pension contributions is a non-GAAP financial measure as defined in "Non-GAAP Financial Measures" attached to this release.

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

	Three Months Ended						Nine Months Ended
	October 3, 2020			September 28, 2019			October 3, 2020			September 28, 2019
Cash Flows from Operating Activities:
Net income	$	115		$	220		$	73		$	616
Depreciation and amortization	95			100			283			302
Deferred income taxes and income taxes receivable/payable	3			(31		)	(35		)	15
Pension, net	(3		)	(15		)	(11		)	(44		)
Changes in assets and liabilities:
Accounts receivable, net	(98		)	(43		)	59			(7		)
Inventories	(14		)	(147		)	(258		)	(652		)
Accounts payable	133			2			(267		)	134
Captive finance receivables, net	(11		)	41			(25		)	22
Other, net	132			158			381			(161		)
Net cash from operating activities	352			285			200			225
Cash Flows from Investing Activities:
Capital expenditures	(55		)	(81		)	(151		)	(216		)
Proceeds from an insurance recovery and sale of property, plant and equipment	20			2			25			6
Finance receivables repaid	1			—			21			20
Net proceeds from corporate-owned life insurance policies	4			—			21			4
Other investing activities, net	2			—			(8		)	3
Net cash from investing activities	(28		)	(79		)	(92		)	(183		)
Cash Flows from Financing Activities:
Increase (decrease) in short-term debt	(501		)	118			(2		)	118
Net proceeds from long-term debt	495			—			1,137			297
Net borrowings against corporate-owned insurance policies	—			—			362			—
Principal payments on long-term debt and nonrecourse debt	(6		)	(7		)	(235		)	(42		)
Purchases of Textron common stock	—			(109		)	(54		)	(470		)
Dividends paid	(5		)	—			(14		)	(9		)
Other financing activities, net	10			(1		)	14			18
Net cash from financing activities	(7		)	1			1,208			(88		)
Total cash flows from continuing operations	317			207			1,316			(46		)
Total cash flows from discontinued operations	(1		)	(1		)	(1		)	(2		)
Effect of exchange rate changes on cash and equivalents	8			(10		)	(2		)	(6		)
Net Change in Cash and Equivalents	324			196			1,313			(54		)
Cash and Equivalents at Beginning of Period	2,346			857			1,357			1,107
Cash and Equivalents at End of Period	$	2,670		$	1,053		$	2,670		$	1,053

TEXTRON INC.

« Previous Page 1 | 2 | 3 | 4 | 5 Next Page »