Textron Inc. (NYSE:TXT) Q4 2022 Earnings Conference Call January 25, 2023 8:00 AM ET Corporate Participants Eric Salander - Vice President, Investor Relations Scott Donnelly - Chairman and Chief Executive Officer Frank Connor - Chief Financial Officer Conference Call Participants Sheila Kahyaoglu - Jefferies David Strauss - Barclays Robert Stallard - Vertical Research Peter Arment - Baird Pete Skibitski - Alembic Global George Shapiro - Shapiro Research Noah Poponak - Goldman Sachs Ron Epstein - Bank of Ame ...

Financial Data and Key Metrics Changes - Revenues for Q3 2022 were $3.1 billion, an increase of $88 million from Q3 2021 [5] - Segment profit for the quarter was $299 million, up $20 million from the previous year [5] - Income from continuing operations was $1.06 per share, compared to $0.85 per share on an adjusted basis in Q3 2021 [5] - Manufacturing cash flow before pension contributions totaled $292 million, an increase of $21 million from Q3 2021 [6][14] Business Line Data and Key Metrics Changes - Textron Aviation revenues were $1.2 billion, down $14 million from Q3 2021, with segment profit at $139 million, up $41 million [11] - Bell revenues were $754 million, down $15 million, with segment profit of $85 million, down $20 million [12] - Textron Systems revenues were $292 million, down $7 million, with segment profit of $37 million, down $8 million [12] - Industrial revenues increased to $849 million, up $119 million, with segment profit of $39 million, up $16 million [12][13] - Textron eAviation segment revenues were $5 million, with a segment loss of $8 million [13] Market Data and Key Metrics Changes - Aviation segment profit margins improved to 11.9%, up from 8.3% in Q3 2021, despite lower revenues [7] - Backlog for Textron Aviation ended at $6.4 billion, while Bell's backlog was $4.9 billion, and Textron Systems' backlog was $2 billion [11][12] Company Strategy and Development Direction - The company announced a focus on sustainable aircraft development, including the Nexus eVTOL model [10] - Continued investment in research and development to support long-term strategies in urban air mobility and general aviation [10] - The company is managing supply chain challenges while maintaining strong demand across its product lines [7][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions impacting production schedules but noted strong demand in the market [7][18] - The company expects Aviation revenues to be approximately $300 million below original guidance for the year, but margins remain strong [20] - Management expressed confidence in the backlog and demand environment, anticipating a return to higher delivery levels in 2023 [36][38] Other Important Information - The company repurchased approximately 3.1 million shares, returning $200 million in cash to shareholders [15] - Full-year capital expenditures are expected to be about $375 million, with a tax rate around 16% [15] Q&A Session Summary Question: Revenue expectations for Aviation and Systems - Management confirmed that supply chain challenges have pushed some deliveries to the right, impacting revenue expectations [18] Question: Corporate expenses run rate - Management indicated a run rate of about $110 million for corporate expenses for the year [22] Question: Manufacturing footprint in Europe and FX impact - Management noted that FX impacts have primarily affected the Kautex business, with no significant energy-related issues impacting production [24] Question: FLRAA contract timing and spending - Management expects a decision on the Florida contract in November and is committed to supporting the program [27] Question: Bell's performance without FLRAA - Management remains optimistic about Bell's performance, regardless of FLRAA outcomes, citing strong commercial demand [30] Question: Aviation delivery expectations for 2022 and 2023 - Management indicated that while 2022 deliveries will be lower than expected, they anticipate a ramp-up in 2023 [32] Question: Cash flow expectations for 2023 - Management expects strong cash flow management to continue, with no significant headwinds anticipated [39] Question: Supply chain issues and engine shortages - Management confirmed that engine shortages remain a challenge, but they are managing through various supply chain issues [55] Question: Aftermarket performance - Aftermarket revenues were up 18% year-over-year, indicating strong demand [57] Question: Cash deployment strategy - Management plans to continue share repurchases, having already repurchased $640 million year-to-date [63]

Financial Data and Key Metrics Changes - Revenues for Q2 2022 were $3.2 billion, essentially flat compared to the same quarter last year [5] - Segment profit increased to $303 million, up $14 million from Q2 2021 [5] - Net income per share rose to $1.00 from $0.81 in the previous year [5] - Manufacturing cash flow before pension contributions was $309 million, down $200 million from Q2 2021 [5][14] Business Line Data and Key Metrics Changes Textron Aviation - Revenues increased to $1.3 billion, up $123 million from Q2 2021, driven by higher aircraft and aftermarket volume [12] - Segment profit rose to $155 million, up $59 million year-over-year [12] - Backlog at the end of the quarter was $5.8 billion [12] Bell - Revenues decreased to $687 million, down $204 million from last year, primarily due to lower military revenues [13] - Segment profit fell to $63 million, down $47 million from the previous year [13] - Backlog ended at $5.3 billion [13] Textron Systems - Revenues were $293 million, down $40 million from last year, reflecting lower volume due to the US Army's withdrawal from Afghanistan [13] - Segment profit decreased to $42 million, down $6 million year-over-year [13] - Backlog was $2.1 billion at the end of the quarter [13] Industrial - Revenues increased to $871 million, up $77 million from last year, driven by higher pricing and volume in specialized vehicles [14] - Segment profit rose to $41 million, up $9 million from Q2 2021 [14] Textron eAviation - Revenues were $5 million with a segment loss of $8 million [14] Market Data and Key Metrics Changes - Aviation segment saw strong demand with a backlog growth of $700 million, totaling $5.8 billion [6] - Bell's backlog increased by $500 million in Q2 [8] - Textron Systems received a $354 million contract for the production of ammunition [9] Company Strategy and Development Direction - The company is focused on ramping production in aviation to meet strong demand, despite supply chain challenges [17] - Investment in Future Vertical Lift programs is expected to continue, with a contract announcement anticipated in October [8] - The acquisition of PIPISTREL aims to enhance Textron's capabilities in electrically powered aircraft and sustainable aviation solutions [10][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions and labor shortages but expressed confidence in the company's resilience and performance [11] - The outlook for the second half of the year remains cautious, with expectations of continued headwinds but strong performance in aviation and industrial segments [17][19] - Management reiterated earnings per share guidance of $3.80 to $4.00 and increased cash flow guidance to $800 million to $900 million [15] Other Important Information - The company repurchased 4.4 million shares, returning $282 million to shareholders [15] - Significant cash tax payments were noted due to changes in R&D tax treatment [14] Q&A Session Summary Question: Supply chain headwinds and guidance for the year - Management acknowledged supply chain challenges but maintained that Textron Aviation's performance would remain strong, with some revenue misses expected [17] Question: Delinquency in finance segment - Management reassured that the finance segment is performing well despite a rise in delinquency [25] Question: Backlog management and production ramp - Management indicated strong demand and backlog growth, with efforts to ramp production while managing supply chain issues [27][29] Question: Confidence in FLRAA contract announcement - Management expressed confidence in an October announcement based on communications with the Army [31] Question: Working capital and pension thoughts for '23 - Management expects good working capital performance and potential tailwinds from pension in 2023 [36] Question: Corporate expenses and adjustments in Bell - Management explained lower corporate expenses were due to share price impacts and noted unfavorable program adjustments in Bell [38][40] Question: General aviation demand trends - Management reported strong demand in the business jet market, with increased international activity [42] Question: Engine supply issues - Management confirmed that engine supply issues are impacting deliveries but are being actively managed [80] Question: Pricing and inflation protections - Management stated that pricing strategies have incorporated inflation expectations, providing adequate protection [83] Question: Future margin expectations - Management anticipates continued positive margin progression, supported by a strong backlog and improved cost structure [86]

Textron Inc. (NYSE:TXT) Q1 2022 Earnings Conference Call April 28, 2022 8:00 AM ET Company Participants Eric Salander - Vice President, IR Scott Donnelly - Chairman, President & CEO Frank Connor - EVP & CFO Conference Call Participants Robert Stallard - Vertical Research Sheila Kahyaoglu - Jefferies David Strauss - Barclays Capital Seth Seifman - J.P. Morgan Ron Epstein - Bank of America Pete Skibitski - Alembic Global Robert Spingarn - Melius Research George Shapiro - Shapiro Research Noah Poponak - Goldma ...