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

TEXTRON INC.

Revenues by Segment and Reconciliation of Segment Profit to Net Income (Loss)

(Dollars in millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

July 3,
2021

July 4,
2020

 

July 3,
2021

July 4,
2020

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

MANUFACTURING:

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

$

1,161

 

 

 

$

747

 

 

 

 

$

2,026

 

 

 

$

1,619

 

 

Bell

 

891

 

 

 

822

 

 

 

 

1,737

 

 

 

1,645

 

 

Textron Systems

 

333

 

 

 

326

 

 

 

 

661

 

 

 

654

 

 

Industrial

 

794

 

 

 

562

 

 

 

 

1,619

 

 

 

1,302

 

 

 

 

3,179

 

 

 

2,457

 

 

 

 

6,043

 

 

 

5,220

 

 

FINANCE

 

12

 

 

 

15

 

 

 

 

27

 

 

 

29

 

 

Total Revenues

 

$

3,191

 

 

 

$

2,472

 

 

 

 

$

6,070

 

 

 

$

5,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

MANUFACTURING:

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

$

96

 

 

 

$

(66

)

 

 

 

$

143

 

 

 

$

(63

)

 

Bell

 

110

 

 

 

118

 

 

 

 

215

 

 

 

233

 

 

Textron Systems

 

48

 

 

 

37

 

 

 

 

99

 

 

 

63

 

 

Industrial

 

32

 

 

 

(11

)

 

 

 

79

 

 

 

(2

)

 

 

 

286

 

 

 

78

 

 

 

 

536

 

 

 

231

 

 

FINANCE

 

3

 

 

 

4

 

 

 

 

9

 

 

 

7

 

 

Segment Profit

 

289

 

 

 

82

 

 

 

 

545

 

 

 

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate expenses and other, net

 

(37

)

 

 

(30

)

 

 

 

(77

)

 

 

(44

)

 

Interest expense, net for Manufacturing group

 

(32

)

 

 

(37

)

 

 

 

(67

)

 

 

(71

)

 

Special charges (a)

 

(4

)

 

 

(78

)

 

 

 

(10

)

 

 

(117

)

 

Gain on business disposition (b)

 

2

 

 

 

 

 

 

 

17

 

 

 

 

 

Inventory charge (c)

 

 

 

 

(55

)

 

 

 

 

 

 

(55

)

 

Income (loss) from continuing operations before income taxes

 

218

 

 

 

(118

)

 

 

 

408

 

 

 

(49

)

 

Income tax (expense) benefit

 

(34

)

 

 

26

 

 

 

 

(53

)

 

 

7

 

 

Income (loss) from continuing operations

 

$

184

 

 

 

$

(92

)

 

 

 

$

355

 

 

 

$

(42

)

 

Discontinued operations, net of income taxes

 

(1

)

 

 

 

 

 

 

(1

)

 

 

 

 

Net Income (Loss)

 

$

183

 

 

 

$

(92

)

 

 

 

$

354

 

 

 

$

(42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.81

 

 

 

$

(0.40

)

 

 

 

$

1.56

 

 

 

$

(0.18

)

 

Discontinued operations, net of income taxes

 

(0.01

)

 

 

 

 

 

 

(0.01

)

 

 

 

 

Earnings (Loss) Per Share

 

$

0.80

 

 

 

$

(0.40

)

 

 

 

$

1.55

 

 

 

$

(0.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted average shares outstanding (d)

 

228,446,000

 

 

 

228,247,000

 

 

 

 

228,296,000

 

 

 

228,279,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from continuing operations and Diluted Earnings (Loss) Per Share (EPS) GAAP to Non-GAAP Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

July 3,
2021

July 4,
2020

 

 

July 3,
2021

 

 

July 4,
2020

 

Income (Loss) from continuing operations - GAAP

 

$

184

 

 

 

$

(92

)

 

 

 

$

355

 

 

 

$

(42

)

 

Add: Special charges, net of tax (a)

 

3

 

 

 

67

 

 

 

 

7

 

 

 

97

 

 

Inventory charge, net of tax (c)

 

 

 

 

55

 

 

 

 

 

 

 

55

 

 

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

 

(2

)

 

 

 

 

 

 

(17

)

 

 

 

 

Adjusted Income from Continuing Operations - Non-GAAP (e)

 

$

185

 

 

 

$

30

 

 

 

 

$

345

 

 

 

$

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from continuing operations - GAAP

 

$

0.81

 

 

 

$

(0.40

)

 

 

 

$

1.56

 

 

 

$

(0.18

)

 

Add: Special charges, net of tax (a)

 

0.01

 

 

 

0.29

 

 

 

 

0.03

 

 

 

0.42

 

 

Inventory charge, net of tax (c)

 

 

 

 

0.24

 

 

 

 

 

 

 

0.24

 

 

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

 

(0.01

)

 

 

 

 

 

 

(0.08

)

 

 

 

 

Adjusted Income from Continuing Operations - Non-GAAP (e)

 

$

0.81

 

 

 

$

0.13

 

 

 

 

$

1.51

 

 

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

(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 $4 million and $10 million for the three and six months ended July 3, 2021, respectively, and $78 million for both the three and six months ended July 4, 2020. Special charges for the six months ended July 4, 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)

For the three and six months ended July 3, 2021, fully dilutive shares were used to calculate EPS. For the three and six months ended July 4, 2020, the diluted average shares used to calculated EPS on a GAAP basis excluded potential common shares (stock options and restricted stock units), due to their antidilutive effect resulting from the net loss.

(e)

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)

 

 

 

 

 

 

 

July 3,
2021

 

January 2,
2021

Assets

 

 

 

 

Cash and equivalents

 

$

1,995

 

 

$

2,146

 

Accounts receivable, net

 

822

 

 

787

 

Inventories

 

3,664

 

 

3,513

 

Other current assets

 

874

 

 

950

 

Net property, plant and equipment

 

2,488

 

 

2,516

 

Goodwill

 

2,155

 

 

2,157

 

Other assets

 

2,456

 

 

2,436

 

Finance group assets

 

925

 

 

938

 

Total Assets

 

$

15,379

 

 

$

15,443

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current portion of long-term debt

 

$

7

 

 

$

509

 

Accounts payable

 

965

 

 

776

 

Other current liabilities

 

2,035

 

 

1,985

 

Other liabilities

 

2,327

 

 

2,357

 

Long-term debt

 

3,182

 

 

3,198

 

Finance group liabilities

 

762

 

 

773

 

Total Liabilities

 

9,278

 

 

9,598

 

 

 

 

 

 

Total Shareholders' Equity

 

6,101

 

 

5,845

 

Total Liabilities and Shareholders' Equity

 

$

15,379

 

 

$

15,443

 

     
     

TEXTRON INC.

MANUFACTURING GROUP

Condensed Schedule of Cash Flows

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

July 3,
2021

 

 

July 4,
2020

 

 

 

July 3,
2021

 

 

July 4,
2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

181

 

 

 

$

(95

)

 

 

 

$

358

 

 

 

$

(47

)

 

Depreciation and amortization

 

95

 

 

 

97

 

 

 

 

183

 

 

 

186

 

 

Gain on business disposition

 

(2

)

 

 

 

 

 

 

(17

)

 

 

 

 

Deferred income taxes and income taxes receivable/payable

 

30

 

 

 

(49

)

 

 

 

18

 

 

 

(40

)

 

Asset impairments and TRU inventory charge

 

3

 

 

 

71

 

 

 

 

6

 

 

 

110

 

 

Pension, net

 

(19

)

 

 

(3

)

 

 

 

(42

)

 

 

(8

)

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

65

 

 

 

110

 

 

 

 

(38

)

 

 

157

 

 

Inventories

 

16

 

 

 

124

 

 

 

 

(162

)

 

 

(244

)

 

Accounts payable

 

(71

)

 

 

(351

)

 

 

 

188

 

 

 

(400

)

 

Other, net

 

274

 

 

 

341

 

 

 

 

185

 

 

 

138

 

 

Net cash from operating activities

 

572

 

 

 

245

 

 

 

 

679

 

 

 

(148

)

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(75

)

 

 

(46

)

 

 

 

(128

)

 

 

(96

)

 

Net proceeds from business disposition

 

(1

)

 

 

 

 

 

 

38

 

 

 

 

 

Net proceeds from corporate-owned life insurance policies

 

 

 

 

15

 

 

 

 

 

 

 

17

 

 

Proceeds from the sale of property, plant and equipment

 

 

 

 

4

 

 

 

 

 

 

 

5

 

 

Other investing activities, net

 

 

 

 

(2

)

 

 

 

 

 

 

(11

)

 

Net cash from investing activities

 

(76

)

 

 

(29

)

 

 

 

(90

)

 

 

(85

)

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in short-term debt

 

 

 

 

(104

)

 

 

 

 

 

 

499

 

 

Net proceeds from long-term debt

 

 

 

 

(1

)

 

 

 

 

 

 

642

 

 

Principal payments on long-term debt and nonrecourse debt

 

(252

)

 

 

(187

)

 

 

 

(519

)

 

 

(194

)

 

Proceeds from borrowings against corporate-owned life insurance policies

 

 

 

 

 

 

 

 

 

 

 

377

 

 

Payment on borrowings against corporate-owned life insurance policies

 

 

 

 

(15

)

 

 

 

 

 

 

(15

)

 

Purchases of Textron common stock

 

(196

)

 

 

 

 

 

 

(287

)

 

 

(54

)

 

Dividends paid

 

(4

)

 

 

(4

)

 

 

 

(9

)

 

 

(9

)

 

Other financing activities, net

 

51

 

 

 

1

 

 

 

 

75

 

 

 

(8

)

 

Net cash from financing activities

 

(401

)

 

 

(310

)

 

 

 

(740

)

 

 

1,238

 

 

Total cash flows from continuing operations

 

95

 

 

 

(94

)

 

 

 

(151

)

 

 

1,005

 

 

Total cash flows from discontinued operations

 

(1

)

 

 

1

 

 

 

 

(1

)

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

4

 

 

 

6

 

 

 

 

1

 

 

 

(10

)

 

Net Change in Cash and Equivalents

 

98

 

 

 

(87

)

 

 

 

(151

)

 

 

995

 

 

Cash and Equivalents at Beginning of Period

 

1,897

 

 

 

2,263

 

 

 

 

2,146

 

 

 

1,181

 

 

Cash and Equivalents at End of Period

 

$

1,995

 

 

 

$

2,176

 

 

 

 

$

1,995

 

 

 

$

2,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

July 3,
2021

 

 

July 4,
2020

 

 

 

July 3,
2021

 

 

July 4,
2020

 

Net Cash from Operating Activities - GAAP

 

$

572

 

 

 

$

245

 

 

 

 

$

679

 

 

 

$

(148

)

 

Less: Capital expenditures

 

(75

)

 

 

(46

)

 

 

 

(128

)

 

 

(96

)

 

Plus: Total pension contributions

 

12

 

 

 

12

 

 

 

 

29

 

 

 

24

 

 

Proceeds from the sale of property, plant and equipment

 

 

 

 

4

 

 

 

 

 

 

 

5

 

 

Manufacturing Cash Flow Before Pension Contributions - Non-GAAP (a)

 

$

509

 

 

 

$

215

 

 

 

 

$

580

 

 

 

$

(215

)

 

 
 

(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

 

 

Six Months Ended

 

 

July 3,
2021

 

 

July 4,
2020

 

 

 

July 3,
2021

 

 

July 4,
2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

184

 

 

 

$

(92

)

 

 

 

$

355

 

 

 

$

(42

)

 

Depreciation and amortization

 

98

 

 

 

98

 

 

 

 

188

 

 

 

188

 

 

Gain on business disposition

 

(2

)

 

 

 

 

 

 

(17

)

 

 

 

 

Deferred income taxes and income taxes receivable/payable

 

24

 

 

 

(48

)

 

 

 

24

 

 

 

(38

)

 

Asset impairments and TRU inventory charge

 

3

 

 

 

71

 

 

 

 

6

 

 

 

110

 

 

Pension, net

 

(19

)

 

 

(3

)

 

 

 

(42

)

 

 

(8

)

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

65

 

 

 

110

 

 

 

 

(38

)

 

 

157

 

 

Inventories

 

16

 

 

 

124

 

 

 

 

(162

)

 

 

(244

)

 

Accounts payable

 

(71

)

 

 

(351

)

 

 

 

188

 

 

 

(400

)

 

Captive finance receivables, net

 

20

 

 

 

(14

)

 

 

 

89

 

 

 

(14

)

 

Other, net

 

274

 

 

 

347

 

 

 

 

182

 

 

 

139

 

 

Net cash from operating activities

 

592

 

 

 

242

 

 

 

 

773

 

 

 

(152

)

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(75

)

 

 

(46

)

 

 

 

(128

)

 

 

(96

)

 

Net proceeds from business disposition

 

(1

)

 

 

 

 

 

 

38

 

 

 

 

 

Finance receivables repaid

 

6

 

 

 

7

 

 

 

 

19

 

 

 

20

 

 

Net proceeds from corporate-owned life insurance policies

 

 

 

 

15

 

 

 

 

 

 

 

17

 

 

Proceeds from sale of property, plant and equipment

 

 

 

 

4

 

 

 

 

 

 

 

5

 

 

Other investing activities, net

 

 

 

 

(1

)

 

 

 

6

 

 

 

(10

)

 

Net cash from investing activities

 

(70

)

 

 

(21

)

 

 

 

(65

)

 

 

(64

)

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in short-term debt

 

 

 

 

(104

)

 

 

 

 

 

 

499

 

 

Net proceeds from long-term debt

 

 

 

 

(1

)

 

 

 

 

 

 

642

 

 

Principal payments on long-term debt and nonrecourse debt

 

(266

)

 

 

(205

)

 

 

 

(553

)

 

 

(229

)

 

Proceeds from borrowings against corporate-owned life insurance policies

 

 

 

 

 

 

 

 

 

 

 

377

 

 

Payment on borrowings against corporate-owned life insurance policies

 

 

 

 

(15

)

 

 

 

 

 

 

(15

)

 

Purchases of Textron common stock

 

(196

)

 

 

 

 

 

 

(287

)

 

 

(54

)

 

Dividends paid

 

(4

)

 

 

(4

)

 

 

 

(9

)

 

 

(9

)

 

Other financing activities, net

 

51

 

 

 

1

 

 

 

 

75

 

 

 

4

 

 

Net cash from financing activities

 

(415

)

 

 

(328

)

 

 

 

(774

)

 

 

1,215

 

 

Total cash flows from continuing operations

 

107

 

 

 

(107

)

 

 

 

(66

)

 

 

999

 

 

Total cash flows from discontinued operations

 

(1

)

 

 

1

 

 

 

 

(1

)

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

4

 

 

 

6

 

 

 

 

1

 

 

 

(10

)

 

Net Change in Cash and Equivalents

 

110

 

 

 

(100

)

 

 

 

(66

)

 

 

989

 

 

Cash and Equivalents at Beginning of Period

 

2,078

 

 

 

2,446

 

 

 

 

2,254

 

 

 

1,357

 

 

Cash and Equivalents at End of Period

 

$

2,188

 

 

 

$

2,346

 

 

 

 

$

2,188

 

 

 

$

2,346

 

 

 
 

TEXTRON INC.

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