- Record $23.5 Billion Aircraft and Defense Backlog
- Manufacturing Businesses Post 16% Organic Growth
Providence, RI - July 17, 2008 - Textron Inc.
(NYSE: TXT) today reported solid second quarter results with a 21
percent increase in earnings per share from continuing operations on a
revenue increase of 21 percent. Year-to-date cash flow provided by
operating activities of continuing operations was $413 million,
resulting in free cash flow of $220 million.
"We achieved 19% organic growth in our aerospace and defense
businesses, as global demand remained very strong and led to another
record level of backlog," said Textron Chairman, President and CEO
Lewis B. Campbell. "Likewise, we had double-digit organic growth at
E-Z-GO, where our new golf car has been well received, and Fluid &
Power where our energy-related products are in high demand," Campbell
Second quarter 2008 income from continuing operations was $1.03
per share, compared to $0.85 in the second quarter of 2007. Including
discontinued operations, second quarter 2008 net income was $1.02 per
share compared to $0.83 a year ago. Second quarter 2008 revenue was
$3.9 billion, compared to $3.2 billion last year.
Reflecting continued strong demand in aircraft and defense,
combined backlog at Cessna, Bell Helicopter and Textron Systems
increased to $23.5 billion at the end of the quarter, up from $18.8
billion at the end of last year.
Textron continues to expect 2008 earnings per share from
continuing operations to be between $3.80 and $4.00 per share. The
company is initiating its third quarter earnings forecast at $0.80 to
$0.90 per share. The company continues to expect free cash flow for
the year will be in the range of $700 to $750 million.
Cessna's second quarter revenues increased $298 million over last
year's same period, reflecting delivery of 117 business jets compared
to 95 in 2007, improved pricing and a benefit from the Columbia
Aircraft Manufacturing Corporation acquisition.
Segment profit increased $62 million due to the impact from higher
volume, improved pricing, partially offset by inflation, and increased
engineering and product development expense.
Cessna backlog at the end of the second quarter was $16.0 billion,
up $3.4 billion from the end of last year, reflecting 437 Citation jet
orders in the first half.
Bell revenues increased $102 million compared to last year's
second quarter, while segment profit increased $61 million.
Revenues and segment profit for Bell's U.S. Government business
increased $97 million and $64 million, respectively. The increase in
revenues is due to higher H-1 and V-22 deliveries, and increased
spares and service volume. Segment profit primarily reflected improved
cost performance, largely attributable to the non-recurrence of last
year's $48 million charge on the Armed Reconnaissance Helicopter
program, and contribution from higher volume.
Revenues for Bell's commercial business increased $5 million,
while profit decreased $3 million. The increase in revenues was due to
higher pricing and the benefit of newly acquired businesses, partially
offset by lower helicopter volume. The decrease in segment profit
reflects inflation, unfavorable cost performance and lower volume,
which were partially offset by higher pricing.
Bell backlog at the end of the second quarter was $5.2 billion, up
$1.4 billion from the end of last year.
Defense & Intelligence
Revenues and profit increased $209 million and $15 million,
respectively. The increase in revenues is due to the acquisition of
AAI, higher volumes in Armored Security Vehicle aftermarket products,
Intelligent Battlefield Systems, Joint Direct Attack Munitions and
Lycoming products, which were partially offset by lower Sensor Fused
Segment profit increased reflecting the benefit from the AAI
acquisition and favorable pricing, which were partially offset by
unfavorable cost performance and inflation.
Second quarter ending backlog at Defense & Intelligence was $2.3
billion, compared to $2.4 billion at the end of 2007.
Industrial revenues increased $137 million, primarily due to a
favorable foreign exchange impact, higher volume, higher pricing and a
benefit from acquisitions.
Segment profit decreased $1 million, as higher pricing, favorable
foreign exchange and improved cost performance were essentially offset
Finance segment revenues decreased $62 million primarily due to
lower market interest rates and a decrease in fee income, which
reflected last year's $21 million gain from the sale of a leveraged
lease, offset by $5 million in higher securitization gains this year.
Revenues were also reduced to reflect the estimated impact on the
company's leveraged lease portfolio related to a court decision
involving other companies addressing the tax treatment of Sale-In,
Lease-Out (SILO) transactions.
Profit in the Finance segment decreased $55 million due to an
increased provision for loan losses, the decrease in fee income, which
reflected last year's $21 million gain, the impact of higher borrowing
costs relative to various market rate indices and the SILO adjustment.
These reductions in profit were partially offset by a benefit from
increased receivable yields on loans with interest rate floors and a
reduction in selling and administrative expenses. The increase in the
provision for loan losses was primarily driven by a reserve
established for one account in the golf finance portfolio and
increased loan loss provisions in the distribution finance portfolio.
The sixty-day plus delinquency percentage increased to 0.61
percent of finance receivables from 0.33 percent at the end of the
first quarter. Nonperforming assets (NPA) increased to 2.31 percent of
total finance assets from 1.84 percent at the end of the first
Conference Call Information
Textron will host a conference call today, July 17, 2008, at 9:00
a.m. Eastern time to discuss its results and outlook. The call will be
available via webcast at www.textron.com or by direct dial at (800)
288-8975 in the U.S. or (612) 332-0418 outside of the U.S. (request
the Textron Earnings Call).
The call will be recorded and available for playback beginning at
12:30 p.m. Eastern time on Thursday, July 17, 2008 by dialing (320)
365-3844; Access Code: 896297.
A package containing key data that will be covered on today's call
can be found in the Investor Relations section of the company's
website at www.textron.com.
About Textron Inc.
Textron Inc. is a $13.2 billion multi-industry company operating
in 34 countries with approximately 44,000 employees. The company
leverages its global network of aircraft, defense and intelligence,
industrial and finance businesses to provide customers with innovative
solutions and services. Textron is known around the world for its
powerful brands such as Bell Helicopter, Cessna Aircraft Company,
Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, Fluid & Power, Textron
Systems and Textron Financial Corporation. More information is
available at www.textron.com.
Certain statements in this release and other oral and written
statements made by us from time to time are forward-looking
statements, including those that discuss strategies, goals, outlook or
other non-historical matters, or project revenues, income, returns or
other financial measures. These forward-looking statements speak only
as of the date on which they are made, and we undertake no obligation
to update or revise any forward-looking statements. These
forward-looking statements are subject to risks and uncertainties that
may cause actual results to differ materially from those contained in
the statements including the following: (a) changes in worldwide
economic and political conditions that impact demand for our products,
interest rates and foreign exchange rates; (b) the interruption of
production at our facilities or our customers or suppliers; (c)
performance issues with key suppliers, subcontractors and business
partners; (d) our ability to perform as anticipated and to control
costs under contracts with the U.S. Government; (e) the U.S.
Government's ability to unilaterally modify or terminate its contracts
with us for the U.S. Government's convenience or for our failure to
perform, to change applicable procurement and accounting policies,
and, under certain circumstances, to suspend or debar us as a
contractor eligible to receive future contract awards; (f) changing
priorities or reductions in the U.S. Government defense budget,
including those related to Operation Iraqi Freedom, Operation Enduring
Freedom and the Global War on Terrorism; (g) changes in national or
international funding priorities, U.S. and foreign military budget
constraints and determinations, and government policies on the export
and import of military and commercial products; (h) legislative or
regulatory actions impacting defense operations; (i) the ability to
control costs and successful implementation of various cost-reduction
programs; (j) the timing of new product launches and certifications of
new aircraft products; (k) the occurrence of slowdowns or downturns in
customer markets in which our products are sold or supplied or where
Textron Financial Corporation offers financing; (l) changes in
aircraft delivery schedules or cancellation of orders; (m) the impact
of changes in tax legislation; (n) the extent to which we are able to
pass raw material price increases through to customers or offset such
price increases by reducing other costs; (o) our ability to offset,
through cost reductions, pricing pressure brought by original
equipment manufacturer customers; (p) our ability to realize full
value of receivables; (q) the availability and cost of insurance; (r)
increases in pension expenses and other postretirement employee costs;
(s) Textron Financial Corporation's ability to maintain portfolio
credit quality; (t) Textron Financial Corporation's access to
financing, including securitizations, at competitive rates; (u)
uncertainty in estimating contingent liabilities and establishing
reserves to address such contingencies; (v) risks and uncertainties
related to acquisitions and dispositions, including difficulties or
unanticipated expenses in connection with the consummation of
acquisitions or dispositions, the disruption of current plans and
operations, or the failure to achieve anticipated synergies and
opportunities; (w) the efficacy of research and development
investments to develop new products; (x) the launching of significant
new products or programs which could result in unanticipated expenses;
and (y) bankruptcy or other financial problems at major suppliers or
customers that could cause disruptions in our supply chain or
difficulty in collecting amounts owed by such customers.
Further information on risks and uncertainties that may impact
forward-looking statements is discussed under "Risk Factors" in our
most recent Annual Report on Form 10-K.