Textron (TXT) Q3 Earnings call transcript Oct 24, 2024

In Textron's third-quarter earnings call for 2024, the company shared insights into its performance and outlook, with a particular focus on the impact of a labor strike at its aviation division and the strategic investments in its Bell and eAviation segments. Here are some key takeaways from the call.

Labor Strike and Its Impact

The most significant topic of discussion was the labor strike at Textron's Aviation division, which disrupted production and service activities in its Wichita facilities. The strike, which lasted for four weeks, has caused delays in aircraft deliveries and service activities, affecting both the Aviation and Bell segments. While the strike has ended with the ratification of a new contract, the aftermath will impact Textron's 2024 financial results. The company expects disruptions to recover gradually as employees return to work and production activities resume.

Strong Demand and Order Bookings

Despite the labor strike, Textron reported strong demand for its products, with over $1 billion in new orders booked during the quarter. The Cessna Citation Latitude, in particular, saw the delivery of its 400th unit, underscoring its popularity in the midsized jet segment. The company also announced updates to several of its aircraft models, reflecting ongoing investments in its product portfolio.

Investments in Bell and eAviation

The call highlighted Textron's focus on strategic investments in its Bell and eAviation segments. At Bell, the company achieved a significant milestone with the approval of Milestone B for the FLRAA program, paving the way for the engineering and manufacturing development phase. This marks a significant step forward in the development of the Future Long-Range Assault Aircraft, a program that is expected to drive growth for the company.

In the eAviation segment, Textron is investing in the Nuuva 300, which is currently undergoing integration testing. The company also announced plans for the first hover flight, which is expected in the fourth quarter of 2024. These investments underscore Textron's commitment to innovation and growth in the aviation industry.

Financial Performance and Outlook

Textron reported revenues of $3.4 billion for the third quarter, up from $3.3 billion in the same period last year. However, the company's adjusted income from continuing operations decreased to $1.40 per share from $1.49 per share in the third quarter of 2023. The manufacturing cash flow before pension contributions totaled $147 million in the quarter, down from $205 million in the third quarter of 2023.

Looking ahead, Textron has adjusted its full-year outlook to reflect the impact of the Aviation strike on its financial results. The company now expects adjusted earnings per share from continuing operations to be in the range of $5.40 to $5.60 per share, down from the previous outlook of $6.20 to $6.40 per share. Manufacturing cash flow before pension contributions is also expected to be in the range of $650 million to $750 million, down from the previous outlook of $900 million to $1 billion.

Leadership Changes

The call also saw the announcement of leadership changes, with Frank Connor, the CFO, planning to retire from the company on February 28, 2025. He will be succeeded by Dave Rosenberg, the current Vice President in Investor Relations, who will take on the role of Executive Vice President and Chief Financial Officer. Scott Hegstrom has also been elected Vice President of Investor Relations, effective March 1, 2025.

Conclusion

Textron's third-quarter earnings call provided a comprehensive update on the company's performance and outlook, with a particular focus on the impact of the Aviation strike and the strategic investments in its Bell and eAviation segments. Despite the challenges posed by the strike, the company remains optimistic about its future prospects, driven by strong demand for its products and ongoing investments in innovation and growth.