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Textron(TXT) - 2022 Q3 - Earnings Call Transcript
TXTTextron(TXT)2022-10-27 17:50
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Financial Data and Key Metrics Changes - Revenues for Q3 2022 were 3.1billion,anincreaseof3.1 billion, an increase of 88 million from Q3 2021 [5] - Segment profit for the quarter was 299million,up299 million, up 20 million from the previous year [5] - Income from continuing operations was 1.06pershare,comparedto1.06 per share, compared to 0.85 per share on an adjusted basis in Q3 2021 [5] - Manufacturing cash flow before pension contributions totaled 292million,anincreaseof292 million, an increase of 21 million from Q3 2021 [6][14] Business Line Data and Key Metrics Changes - Textron Aviation revenues were 1.2billion,down1.2 billion, down 14 million from Q3 2021, with segment profit at 139million,up139 million, up 41 million [11] - Bell revenues were 754million,down754 million, down 15 million, with segment profit of 85million,down85 million, down 20 million [12] - Textron Systems revenues were 292million,down292 million, down 7 million, with segment profit of 37million,down37 million, down 8 million [12] - Industrial revenues increased to 849million,up849 million, up 119 million, with segment profit of 39million,up39 million, up 16 million [12][13] - Textron eAviation segment revenues were 5million,withasegmentlossof5 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 6.4billion,whileBell′sbacklogwas6.4 billion, while Bell's backlog was 4.9 billion, and Textron Systems' backlog was 2billion[11][12]CompanyStrategyandDevelopmentDirection−Thecompanyannouncedafocusonsustainableaircraftdevelopment,includingtheNexuseVTOLmodel[10]−Continuedinvestmentinresearchanddevelopmenttosupportlong−termstrategiesinurbanairmobilityandgeneralaviation[10]−Thecompanyismanagingsupplychainchallengeswhilemaintainingstrongdemandacrossitsproductlines[7][10]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedongoingsupplychaindisruptionsimpactingproductionschedulesbutnotedstrongdemandinthemarket[7][18]−ThecompanyexpectsAviationrevenuestobeapproximately2 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 200millionincashtoshareholders[15]−Full−yearcapitalexpendituresareexpectedtobeabout200 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 110millionforcorporateexpensesfortheyear[22]Question:ManufacturingfootprintinEuropeandFXimpact−ManagementnotedthatFXimpactshaveprimarilyaffectedtheKautexbusiness,withnosignificantenergy−relatedissuesimpactingproduction[24]Question:FLRAAcontracttimingandspending−ManagementexpectsadecisionontheFloridacontractinNovemberandiscommittedtosupportingtheprogram[27]Question:Bell′sperformancewithoutFLRAA−ManagementremainsoptimisticaboutBell′sperformance,regardlessofFLRAAoutcomes,citingstrongcommercialdemand[30]Question:Aviationdeliveryexpectationsfor2022and2023−Managementindicatedthatwhile2022deliverieswillbelowerthanexpected,theyanticipatearamp−upin2023[32]Question:Cashflowexpectationsfor2023−Managementexpectsstrongcashflowmanagementtocontinue,withnosignificantheadwindsanticipated[39]Question:Supplychainissuesandengineshortages−Managementconfirmedthatengineshortagesremainachallenge,buttheyaremanagingthroughvarioussupplychainissues[55]Question:Aftermarketperformance−Aftermarketrevenueswereup18110 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]