Textron(TXT) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q2 2023 were $3.4 billion, an increase of$270 million from Q2 2022 [3] - Segment profit for the quarter was $352 million, up$71 million from the same period last year [3] - Adjusted income from continuing operations was $1.46 per share, compared to$1.11 per share in Q2 2022 [4] - Manufacturing cash flow before pension contributions totaled $242 million, down from$309 million in Q2 2022 [4] Business Line Data and Key Metrics Changes - Aviation revenues were $1.4 billion, up$78 million from Q2 2022, with segment profit of $171 million, an increase of$22 million [10] - Bell revenues were $701 million, up$14 million from last year, with segment profit of $65 million, an increase of$11 million [11] - Textron Systems revenues were $306 million, up$13 million from last year, with segment profit of $37 million, down$1 million [12] - Industrial revenues were $1 billion, up$155 million from last year, with segment profit of $79 million, up$42 million [12] Market Data and Key Metrics Changes - Aviation backlog grew by $315 million, ending the quarter at$6.8 billion [5] - Bell's backlog ended the quarter at $5.6 billion, with$1.2 billion added related to the FLRAA contract [7][11] - Textron Systems backlog ended at 1.9 billion [12] Company Strategy and Development Direction - The company is focused on strong demand across all business lines, particularly in Aviation and Industrial sectors [5][8] - Investments in new products and technologies are prioritized, with ongoing development in eVTOL and hybrid electric aircraft [9][10] - The company plans to continue share repurchase programs to manage capital effectively while investing in R&D [14][25] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain challenges persist but are modestly improving, impacting delivery targets [17][18] - The company expects a slight revenue shortfall for the year but maintains a strong demand environment [18] - Guidance for full-year adjusted earnings per share has been increased to a range of 5.20 to $5.30 [14] Other Important Information - The company repurchased approximately 4.2 million shares in the quarter, returning$273 million to shareholders [14] - A new authorization for the repurchase of up to 35 million shares has been approved [14] Q&A Session Summary Question: How is the company managing delivery targets amid supply chain volatility? - Management indicated that while supply chain issues remain a challenge, order activity is strong, and they are optimistic about future demand [17][18] Question: What is the aftermarket growth for Aviation? - The aftermarket growth for the quarter was about 3%, accounting for 32% of total revenue [20] Question: How does the company view the B-22 program and its transition to FLRAA? - Management noted that the Navy is recognizing the versatility of the V-22, which may lead to increased demand for additional aircraft [22] Question: What is the company's approach to capital allocation? - The company continues to generate strong free cash flow, balancing investments in R&D and share repurchases [25][26] Question: What is the outlook for the general aviation market? - Management reported strong demand across all segments of general aviation, with training schools increasing orders to address pilot shortages [30] Question: How sustainable is the strong performance in the Industrial segment? - Management expressed optimism about the resilience of the U.S. consumer and strong demand in automotive and other sectors [46] Question: What is the company's strategy for growth in the A&D business? - The company aims to grow organically through investments in existing businesses while remaining open to acquisitions if opportunities arise [61][62]