26 Apr 18. The strong performance shown by US Majors continued into the First Quarter of 2018, where all the major players showed strong and resilient results reflecting growing US and international budgets.
Boeing
General Dynamics
Lockheed Martin
Northrop Grumman
Raytheon
Textron
United Technologies
Boeing
Boeing Reports Strong First-Quarter Results; Raises Cash Flow and EPS Guidance
* Revenue increased to $23.4bn reflecting 184 commercial deliveries and higher defense and services volume
* GAAP EPS of $4.15 and core EPS (non-GAAP)* of $3.64 on strong performance across the company
* Strong operating cash flow of $3.1bn; repurchased 8.9m shares for $3.0bn
* Backlog grew to $486bn, including over 5,800 commercial aircraft
* Cash and marketable securities of $9.9bn provide strong liquidity
* Operating cash flow, EPS and Commercial Airplanes margin guidance increased on performance
25 Apr 18. The Boeing Company [NYSE: BA] reported first-quarter revenue of $23.4bn reflecting higher commercial deliveries and mix, defense contract volume and services growth. GAAP earnings per share increased to $4.15 and core earnings per share (non-GAAP)* increased to $3.64 reflecting strong performance across the company.
The company’s cash flow guidance is increased to between $15.0 and $15.5bn, driven by improved performance. Full year EPS guidance is increased by $0.50 to between $16.40 and $16.60, and core earnings per share (non-GAAP)* guidance is increased to between $14.30 and $14.50 on performance.
“Across Boeing, our teams performed at a high level in the quarter, driving revenue and earnings growth at all three business units, increasing profitability and operating cash flow, and delivering more value to our customers,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “Customers continue to recognize the value of our products and services, with strong orders booked in the quarter for defense, services and commercial offerings, including 221 net commercial aircraft orders. During the quarter we captured important new business, including an initial contract for 28 F/A-18 Super Hornets for Kuwait, a Ground-based Midcourse Defense program contract extension from the Missile Defense Agency, and we delivered the first Space Launch System intertank hardware to NASA. We achieved the first flight of the 737 MAX 7, and delivered the first 787-10 Dreamliner and the first 737 MAX 9. Within our services business, we received a follow-on contract to support the Royal Canadian Air Force’s Chinook fleet, captured a landing gear exchange contract for Aeromexico, and released Self-Service Analytics to complement our digital solutions portfolio. All of these milestones demonstrated the value we bring to our customers through the strength of our One Boeing offerings.”
“Our team’s strong first-quarter performance, combined with the positive market outlook across our businesses and our confidence in executing on our production and development programs, gives us a solid foundation to raise our guidance for the year. Going forward, we remain focused on our disciplined growth strategy, improved profitability and cash flow to ensure we meet our commitments to our customers and our shareholders.”
Operating cash flow in the quarter of $3.1bn reflects planned higher commercial airplane production rates, improved performance, and favorable timing of receipts and expenditures. During the quarter, the company repurchased 8.9 m shares for $3.0bn, leaving $15.0bn remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $1.0bn in dividends in the quarter, reflecting a 20 percent increase in dividends per share compared to the same period of the prior year.
Cash and investments in marketable securities totaled $9.9bn, compared to $10.0bn at the beginning of the quarter. Debt was $12.5bn, up from $11.1bn at the beginning of the quarter, primarily due to the issuance of new debt.
Total company backlog at quarter-end was $486bn and included net orders for the quarter of $34bn. Backlog was up from $475bn at the beginning of the quarter, which has been adjusted to reflect the adoption of the new revenue recognition standard (ASC 606).
Segment Results
Commercial Airplanes
Commercial Airplanes first-quarter revenue was $13.7bn reflecting higher deliveries and mix. First-quarter operating margin increased to 11.0 percent, reflecting strong operating performance on production programs.
During the quarter, Commercial Airplanes delivered 184 airplanes, including delivery of the first 787-10 Dreamliner to Singapore Airlines and delivery of the first 737 MAX 9 to Lion Air Group. The 737 program reached additional milestones during the quarter, including first flight of the 737 MAX 7 and firm configuration of the 737 MAX 10. The 737 program has captured over 4,400 orders since launch for the 737 MAX, including a recent order from Jet Airways for 75 additional airplanes. Reflecting the strength of the cargo market, we now plan to increase the production rate on the 767 program from 2.5 to 3 per month beginning in 2020. Development on the 777X program remains on track as production began on the first 777X fuselage for structural testing.
Commercial Airplanes booked 221 net orders during the quarter. Backlog remains robust with over 5,800 airplanes valued at $415bn.
Defense, Space & Security
Defense, Space & Security first-quarter revenue increased to $5.8bn driven by C-17, international fighters, and weapons volume. First-quarter operating margin increased to 11.3 percent on solid execution and mix.
During the quarter, Defense, Space & Security was awarded an initial contract for 28 F/A-18 Super Hornets for Kuwait, a contract for the final C-17 for India, and an extension for Ground-based Midcourse Defense development and sustainment from the Missile Defense Agency. We continue to progress on development programs as the KC-46 Tanker program completed fuel on-load certification testing, the first Space Launch System intertank hardware was delivered to NASA, and the second Commercial Crew spacecraft successfully achieved power-on.
Backlog at Defense, Space & Security was $50bn, of which 36 percent represents orders from international customers.
Global Services
Global Services first-quarter revenue increased to $3.9bn, reflecting growth in commercial services (Table 6). First-quarter operating margin was 16.3 percent reflecting product and services mix.
During the quarter, Global Services was awarded a follow-on contract from the Royal Canadian Air Force to provide full system logistics, engineering support, supply chain, data analytics and training services to their fleet of Chinooks. Global Services also captured a contract from the Royal Saudi Air Force for F-15 repair support services and a contract from Aeromexico for the 787 landing gear exchange program. As part of Boeing AnalytX, we released Self-Service Analytics to complement our digital solutions portfolio, allowing customers to access data to develop deeper insights into their operations.
Additional Financial Information
At quarter-end, Boeing Capital’s net portfolio balance was $2.9bn. Total pension expense for the first quarter was $40m, down from $97m in the same period of the prior year. Revenue in other unallocated items and eliminations decreased primarily due to the sale of aircraft previously leased to customers in the first quarter of 2017. The effective tax rate for the first quarter decreased from the same period in the prior year primarily due to the reduction of the federal tax rate to 21%.
General Dynamics
General Dynamics Reports First-Quarter 2018 Results
* Diluted earnings per share from continuing operations of $2.65, up 6.9%
* Net earnings of $799 m, up 4.7%
* Return on sales of 10.6%
* 1.3% revenue growth with particular strength in our defense businesses
25 Apr 18. General Dynamics (NYSE: GD) today reported first-quarter 2018 net earnings of $799m, a 4.7 percent increase over first-quarter 2017, on revenue of $7.5bn. Diluted earnings per share from continuing operations were $2.65 compared to $2.48 in the year-ago quarter, a 6.9 percent increase.
“General Dynamics delivered solid first-quarter results, with growth in revenue, net earnings and EPS,” said Phebe Novakovic, chairman and chief executive officer of General Dynamics. “This is a strong start to 2018 and we remain confident in our outlook.”
Margin
Company-wide operating margin for the first quarter of 2018 was 13.4 percent, compared to 14.1 percent in first-quarter 2017. Consolidated operating margin was up 60 basis points, compared to 12.8 percent in fourth-quarter 2017.
Capital Deployment
The company repurchased 1.2 m of its outstanding shares in the first quarter. In addition, in March, the board of directors increased the company’s quarterly dividend to $0.93 per share, representing the 21st consecutive annual dividend increase. The 10.7 percent increase is consistent with increases over the past five years.
Backlog
General Dynamics’ total backlog at the end of first-quarter 2018 was $62.1bn. The estimated potential contract value, representing management’s estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $25.5bn. Total potential contract value, the sum of all backlog components, was $87.6bn at the end of the quarter.
There was order activity across the Gulfstream product portfolio and strong demand for defense products. Significant awards in the quarter include a contract with a total potential value of $1bn to deliver Piranha 5 wheeled armored vehicles to the Romanian Armed Forces, $695m from the U.S. Navy for long-lead materials for Block V Virginia-class submarines, $420m from the Navy for a second John Lewis-class ship, $355m from the U.S. Army for continued production and support of Stryker vehicles and $215m from NASA for the Space Network Ground Segment Sustainment project to modernize NASA’s ground infrastructure systems for its satellite network.
Lockheed Martin
Lockheed Martin Reports First Quarter 2018 Results
– Net sales of $11.6bn
– Net earnings of $1.2bn, or $4.02 per share
– Generated cash from operations of $632m after pension contributions of $1.5bn
– Achieved backlog of approximately $105bn
– Updates 2018 outlook for sales, business segment operating profit and earnings per share
24 Apr 18. Lockheed Martin (NYSE: LMT) today reported first quarter 2018 net sales of $11.6bn, compared to $11.2bn in the first quarter of 2017. Net earnings in the first quarter of 2018 were $1.2bn, or $4.02 per share, compared to $789m, or $2.69 per share, in the first quarter of 2017. Cash from operations in the first quarter of 2018 was $632m after pension contributions of $1.5bn, compared to $1.7bn of cash from operations in the first quarter of 2017.
“Strong operational and program execution in the first quarter allowed us to increase our financial guidance for sales, profit and earnings per share,” said Lockheed Martin Chairman, President and CEO Marillyn Hewson. “Our team remains dedicated to performing with excellence, offering affordable and innovative solutions for our customers, and delivering exceptional value to our shareholders.”
Cash Deployment Activities
The corporation’s cash deployment activities in the first quarter of 2018 consisted of the following:
* making contributions to its pension trust of $1.5bn, compared to no contributions in the first quarter of 2017;
* repurchasing 0.9m shares for $300m, compared to 1.9 m shares for $500m in the first quarter of 2017;
* paying cash dividends of $586m, compared to $544m in the first quarter of 2017; and
* making capital expenditures of $216m, compared to $170m in the first quarter of 2017.
Segment Results
The corporation operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the corporation’s business segments and reconciles these amounts to the corporation’s consolidated financial results.
Aeronautics
Aeronautics’ net sales in the first quarter of 2018 increased $278m, or 7 percent, compared to the same period in 2017. The increase was primarily attributable to higher net sales of approximately $185m for the F-35 program due to increased volume on production and sustainment; and about $80m for other combat aircraft modernization programs due to increased volume (primarily the F-16 and F-22 programs).
Aeronautics’ operating profit in the first quarter of 2018 increased $35m, or 8 percent, compared to the same period in 2017. Operating profit increased approximately $25m for the F-35 program primarily due to increased volume on production and sustainment; and about $15m for other combat aircraft modernization programs due to increased risk retirements and volume. Adjustments not related to volume, including net profit booking rate adjustments, were comparable in the first quarters of 2018 and 2017.
Missiles and Fire Control
MFC’s net sales in the first quarter of 2018 increased $128m, or 8 percent, compared to the same period in 2017. The increase was primarily attributable to higher net sales of approximately $70m for increased volume on classified programs; and about $50m for tactical missiles programs due to increased volume (primarily Long Range Stand Off (LRSO) missile and Joint Air-to-Surface Standoff Missile (JASSM).
MFC’s operating profit in the first quarter of 2018 increased $27m, or 12 percent, compared to the same period in 2017. Operating profit increased approximately $15 m for sensors and global sustainment (previously referred to as fire control) programs due to increased risk retirements, partially offset by lower operating profit due to contract mix (primarily Apache, LANTIRN® and SNIPER®); and about $15m for air and missile defense programs due to increased risk retirements. Adjustments not related to volume, including net profit booking rate adjustments, were about $45m higher in the first quarter of 2018 compared to the same period in 2017.
Rotary and Mission Systems
RMS’ net sales in the first quarter of 2018 increased $96m, or 3 percent, compared to the same period in 2017. The increase was primarily attributable to higher net sales of approximately $95 m for training and logistics solutions (TLS) programs due to higher volume on various programs; about $95 m for integrated warfare systems and sensors (IWSS) programs due to higher volume (primarily radar surveillance systems programs and the Aegis Combat System (Aegis)); and about $90 m for command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance (C6ISR) programs due to higher volume. These increases were partially offset by a decrease of $190m for Sikorsky helicopter programs due to lower volume for government helicopter programs.
RMS’ operating profit in the first quarter of 2018 increased $183m, or 143 percent, compared to the same period in 2017. Operating profit increased approximately $120m for C6ISR programs primarily due a charge for performance matters on the EADGE-T contract, which was recorded in the first quarter of 2017 and did not recur in 2018; about $50 m for Sikorsky helicopter programs primarily due to favorable cost performance; and about $10m for TLS programs due to higher volume. Operating profit for IWSS programs was comparable in both periods as a $35m charge for performance matters on a ground based radar program in the first quarter of 2018 was offset by increased risk retirements on other programs. Adjustments not related to volume, including net profit booking rate adjustments, were about $110m higher in the first quarter of 2018 compared to the same period in 2017.
Space
Space’s net sales in the first quarter of 2018 decreased $79m, or 3 percent, compared to the same period in 2017. The decrease was primarily attributable to approximately $100m for government satellite programs (primarily Space Based Infrared System (SBIRS) and Advanced Extremely High Frequency system (AEHF)) due to lower volume; and about $35m for commercial satellite programs due to lower volume. These decreases were partially offset by an increase of approximately $60m for strategic missile and defense systems programs due to higher volume from AWE Management Limited (AWE), partially offset by lower volume for Fleet Ballistic Missile (FBM) programs.
Space’s operating profit in the first quarter of 2018 decreased $26m, or 9 percent, compared to the same period in 2017. Operating profit decreased approximately $25m for strategic missile and defense systems due to lower risk retirements (primarily FBM programs). Operating profit for commercial satellites was comparable in the first quarter of 2018 and 2017, which included a charge for approximately $25m for a performance matter in both periods. Adjustments not related to volume, including net profit booking rate adjustments, were about $30m lower in the first quarter of 2018, compared to the same period in 2017.
Total equity earnings recognized by Space (primarily ULA) represented approximately $85m, or 32 percent, of Space’s operating profit in the first quarter of 2018, compared to approximately $80m, or 28 percent, in the first quarter of 2017.
]
Northrop Grumman
Northrop Grumman Reports First Quarter 2018 Financial Results
- Q1 Sales Increase 5 Percent to $6.7bn
- Q1 EPS Increase 14 Percent to $4.21
- 2018 EPS Guidance Increased to $15.40 to $15.65
25 Apr 18.Northrop Grumman Corporation (NYSE: NOC) reported first quarter 2018 sales increased 5 percent to $6.7bn from $6.4bn in the first quarter of 2017. First quarter 2018 net earnings increased 14 percent to $739m, or $4.21 per diluted share, compared with $650m, or $3.69 per diluted share, in the prior year period.
“Our strong first quarter financial results reflect our continued focus on delivering long-term profitable growth for our shareholders, customers and employees. All three of our businesses generated solid results. Based on our first quarter results we are raising our guidance for earnings per share,” said Wes Bush, chairman and chief executive officer.
The company’s first quarter 2018 results reflect the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, and Accounting Standards Update (ASU) No.
2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost, using the full retrospective method. Schedules 4 and 5 at the end of this release present comparable prior period consolidated and segment financial information recast to reflect the adoption of these standards.
First quarter 2018 sales increased 5 percent, due to higher sales in Aerospace Systems and Mission Systems, partially offset by lower sales at Technology Services. First quarter segment operating income increased 3 percent due to higher sales. Segment operating margin rate declined to 11.3 percent due to a lower margin rate at Aerospace Systems. First quarter operating income and margin rate declined to $854m and 12.7 percent, respectively, compared with $862m and 13.4 percent in the prior year period, primarily due to a $27m decrease in net FAS (service)/CAS pension adjustment, partially offset by a $21 m increase in segment operating income.
First quarter interest expense increased $68 m. Other, net increased $21m due to a $31m increase in interest income. These changes reflect the company’s issuance in October 2017 of $8.25bn of debt to finance its pending acquisition of Orbital ATK.
The company’s first quarter effective tax rate declined to 15.2 percent from 17.5 percent in the prior year period. The lower tax rate reflects the benefit of the Tax Cuts and Jobs Act of 2017, which reduced the federal statutory tax rate to 21 percent from 35 percent. First quarter 2018 tax benefits for research credits were comparable to the prior year period, and excess tax benefits related to employee share-based compensation totaled $26m in the first quarter of 2018 compared with $47m in the first quarter of 2017. The first quarter of 2017 also benefited from several other discrete items.
1 Non-GAAP measure — see definitions at the end of this earnings release.
First quarter 2018 cash used in operating activities totaled $237m compared with $439m used in the prior year period. After capital expenditures of $305m, first quarter 2018 free cash flow1 was a use of $542m.
Aerospace Systems
Aerospace Systems first quarter 2018 sales increased 10 percent, principally due to higher Manned Aircraft sales. Higher volume for restricted activities and the F-35 and E-2D programs were the primary drivers of increased Manned Aircraft volume. Autonomous Systems and Space Systems sales were slightly higher than the prior year period. Autonomous Systems sales included higher volume on the Fire Scout and Triton programs, partially offset by lower Global Hawk volume. Space sales included higher restricted and Ground Based Strategic Deterrent volume, partially offset by lower intercompany, James Webb Space Telescope and Advanced Extremely High Frequency payload volume.
Aerospace Systems first quarter 2018 operating income increased 6 percent due to higher sales, and operating margin rate declined to 10.4 percent primarily due to a non-programmatic benefit recognized during the first quarter of 2017 and higher volume on early phase development programs in 2018.
Mission Systems
Mission Systems first quarter 2018 sales increased 3 percent principally due to higher volume for
Sensors and Processing programs, partially offset by lower volume for Cyber and ISR programs. Higher Sensors and Processing sales are primarily due to higher volume on electro-optical/infrared self-protection and targeting programs, F-35 sensors, and restricted programs. Lower volume for Cyber and ISR reflects lower volume on restricted ISR activities. Advanced Capabilities sales were comparable to the prior year period.
Mission Systems first quarter 2018 operating income increased 3 percent, consistent with higher sales, and operating margin rate was comparable to the prior year period.
Technology Services
Technology Services first quarter 2018 sales decreased 4 percent due to the completion in 2017 of several programs in System Modernization and Services and Advanced Defense Services. These declines were partially offset by higher volume on several Global Logistics and Modernization programs, including the Special Electronic Mission Aircraft program.
Technology Services first quarter 2018 operating income decreased 5 percent and operating margin rate was comparable to the prior year period.
2018 Guidance
2018 financial guidance reflects the company’s judgment based on the information available to the company at the time of this release. The government budget and appropriations processes can impact our customers, programs and financial results. Government budgets, appropriations, including the timing of appropriations, and the occurrence of continuing resolutions and government shutdowns can impact the company’s ability to achieve 2018 guidance. While the company currently expects its previously announced acquisition of Orbital ATK will close in the first half of this year, 2018 guidance does not reflect the pending acquisition. Additionally, 2018 guidance reflects only six months of interest on the $8.25bn of debt issued in October 2017 to finance the acquisition. After the close of the acquisition, the company will update its financial guidance to reflect the acquisition.
Raytheon
Raytheon Reports Strong First Quarter 2018 Results
– Net sales of $6.3 bn, up 4.5 percent
– EPS from continuing operations of $2.20, up 27.2 percent
– Operating cash flow from continuing operations of $283 m
– Increased annual dividend by 8.8 percent, as previously announced
– Increased full-year 2018 guidance for sales and EPS
26 Apr 18. Raytheon Company (NYSE: RTN) today announced net sales for the first quarter 2018 of $6.3bn, up 4.5 percent compared to $6.0bn in the first quarter 2017. First quarter 2018 EPS from continuing operations was $2.20 compared to $1.73 in the first quarter 2017. The increase in the first quarter 2018 EPS from continuing operations was primarily driven by operational improvements and lower taxes.
“We delivered strong operating performance in the first quarter with our sales, earnings per share and cash flow all ahead of our expectations,” said Thomas A. Kennedy, Raytheon Chairman and CEO. “We continue to position the company for the future by executing our strategy and investing in advanced capabilities that align with our global customers’ evolving requirements.”
Operating cash flow from continuing operations for the first quarter 2018 was $283 m compared to an outflow of $41m for the first quarter 2017. The increase in operating cash flow from continuing operations in the first quarter 2018 was primarily due to favorable collections and lower net cash taxes.
In the first quarter 2018, the company repurchased 1.9 m shares of common stock for $400m. In addition, as previously announced, Raytheon’s Board of Directors voted to increase the annual dividend rate by 8.8 percent, from $3.19 to $3.47 per share, the fourteenth consecutive annual dividend increase.
The company had bookings of $6.3bn in the first quarter 2018, compared with $5.7bn in the first quarter 2017.
Backlog at the end of the first quarter 2018 was $38.1bn, an increase of approximately $2.1bn or 5.8 percent compared to the end of the first quarter 2017.
Outlook
The company has updated its financial outlook for 2018. Charts containing additional information on the company’s 2018 outlook are available on the company’s website.
Segment Results
The company’s reportable segments are: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint™.
Integrated Defense Systems
Integrated Defense Systems (IDS) had first quarter 2018 net sales of $1,489m, up 7 percent compared to $1,398m in the first quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales from an international Patriot® program awarded in the first quarter 2018.
IDS recorded $273m of operating income in the first quarter 2018 compared to $212m in the first quarter 2017. The increase in operating income for the quarter was primarily driven by a favorable change in program mix and higher net program efficiencies.
During the quarter, IDS booked over $2.0bn to provide advanced Patriot air and missile defense capabilities for the U.S. and multiple international customers, including a previously announced direct commercial contract for approximately $1.6bn to a member of the 15-nation Patriot partnership.
Intelligence, Information and Services
Intelligence, Information and Services (IIS) had first quarter 2018 net sales of $1,582m, up 5 percent compared to $1,507m in the first quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on classified and training programs.
IIS recorded $117m of operating income in the first quarter 2018 compared to $111m in the first quarter 2017.
During the quarter, IIS booked $80m on domestic and foreign training programs in support of Warfighter FOCUS activities. IIS also booked $514m on a number of classified contracts.
Missile Systems (MS)
Missile Systems (MS) had first quarter 2018 net sales of $1,848m, up 5 percent compared to $1,756m in the first quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs.
MS recorded $212m of operating income in the first quarter 2018 compared to $216m in the first quarter 2017. As expected, the decrease in operating margin for the quarter was primarily due to a change in program mix.
During the quarter, MS booked $552 m for Advanced Medium-Range Air-to-Air Missiles (AMRAAM®) for the U.S. Air Force, U.S. Navy, and international customers; $186m for Small Diameter Bomb II (SDB II™) for the U.S. Air Force; and $114m for Commander’s Independent Thermal Viewers (CITV) for the U.S. Army and an international customer. MS also booked $130m on a number of classified contracts.
Space and Airborne Systems (SAS) had first quarter 2018 net sales of $1,568m, up 1 percent compared to $1,555m in the first quarter 2017.
SAS recorded $193m of operating income in the first quarter 2018 compared to $190m in the first quarter 2017.
During the quarter, SAS booked $87 m on the next-generation Multi-Spectral Targeting System (MTS) for the U.S. Air Force and $85m for radar components for the U.S. Navy. SAS also booked $356m on a number of classified contracts.
Forcepoint
Forcepoint had first quarter 2018 net sales of $141m compared to $144m in the first quarter 2017.
Forcepoint recorded a loss of $7m in the first quarter 2018 compared to operating income of $16m in the first quarter 2017. As expected, the decrease in operating income for the quarter was primarily driven by higher operating costs.
Textron
* Income from continuing operations of $0.72 per share
* Segment profit $279m
* Operating margin of 8.5%, up from 7.1% a year ago
* $344m returned to shareholders through share repurchases
* Agreement to sell Tools & Test business for $810m
18 Apr 18. Textron Inc. (NYSE: TXT) today reported first quarter 2018 income from continuing operations of $0.72 per share. This compares to $0.37 per share in the first quarter of 2017, or $0.46 per share of adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release.
“Increased revenues reflected growth at Industrial, Bell, and Textron Aviation, with lower revenues at Textron Systems, consistent with our expectations,” said Textron Chairman and CEO Scott C. Donnelly. “Operationally we achieved significant margin improvements at Textron Aviation and Textron Systems over this quarter last year and sustained margin strength at Bell, reflecting strong performance in these segments.”
Cash Flow
Net cash used by operating activities of continuing operations of the manufacturing group for the first quarter totaled $53m, compared to $165m in last year’s first quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, reflected a use of cash of $158m compared to $227m during last year’s first quarter.
In the quarter, Textron returned $344m to shareholders through share repurchases, compared to $186m in the first quarter of 2017.
Divestiture
Today, Textron announced that it has reached a definitive agreement to sell its Tools & Test business to Emerson, a global technology and engineering company, for approximately $810m in cash.
Included in the sale are all the Textron Tools & Test businesses and brands – Greenlee, Greenlee Communications, Greenlee Utility, HD Electric, Klauke, Sherman+Reilly, and Endura. The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close during the third quarter of 2018. Proceeds from the sale are expected to be used to fund additional share repurchases to offset the earnings impact related to the sale.
Share Repurchase Plan
Textron’s Board of Directors has also authorized the repurchase of up to 40m shares of the company’s common stock which is sufficient for repurchases related to the Tools & Test divestiture as well as to continue the company’s practice of repurchasing shares to offset the impact of dilution from stock-based compensation and benefit plans, and for opportunistic capital management purposes. The new authorization replaces a previous one, approved in January 2017, which was nearing completion.
Outlook
Textron confirmed its 2018 earnings per share from continuing operations guidance of $2.95 to $3.15 and its expectation for cash flow from continuing operations of the manufacturing group before pension contributions of $700 to $800m with planned pension contributions of about $55m.
This guidance includes the expected impact of the Tools & Test divestiture on earnings per share and cash flow from continuing operations.
Donnelly continued, “We are on track for a strong 2018 as we continue our focus on operational improvement and look to capitalize on improving end markets.”
First Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.0bn were up 4%, primarily due to higher price and volume.
Textron Aviation delivered 36 jets, up from 35 last year, and 29 commercial turboprops, up from 20 last year.
Segment profit was $72 m in the first quarter, up from $36 m a year ago, due to favorable volume and mix, performance, and price.
Textron Aviation backlog at the end of the first quarter was $1.6bn.
Bell
Bell revenues were $752m, up 8% on higher military volume, partially offset by lower commercial revenues due to mix of aircraft sold.
Bell delivered 46 commercial helicopters in the quarter, up from 27 last year.
Segment profit of $87 m was up $4m, primarily due to the higher volume.
Bell backlog at the end of the first quarter was $3.6bn.
Textron Systems
Revenues at Textron Systems were $387m, down from $416m last year, largely on lower volume at Weapons & Sensors related to the discontinuance of SFW production in 2017.
Segment profit was up $30m despite the lower revenue, primarily reflecting improved performance at Marine and Land.
Textron Systems’ backlog at the end of the first quarter was $1.4bn.
Industrial
Industrial revenues increased $139m largely related to favorable foreign exchange, the Arctic Cat acquisition, and higher volumes across each business line.
Segment profit was down $12m despite the increase in revenues from the first quarter of 2017, due to the timing of the Arctic Cat acquisition in the prior year.
Finance
Finance segment revenues decreased $2 m and segment profit increased $2 m.
United Technologies
United Technologies Reports First Quarter 2018 Results, Raises 2018 Outlook
* Strong sales and operating profit drive United Technologies’ positive momentum in Q1;
* Adjusted operating profit growth across all four business units;
* Raises sales and adjusted EPS outlook for 2018
* Sales of $15.2bn, up 10 percent versus prior year including 6 percent organic growth
* GAAP EPS of $1.62, down 6 percent versus prior year reflecting the absence of a one-time gain in Q1 2017
* Adjusted EPS of $1.77, up 20 percent versus prior year
24 Apr 18. United Technologies Corp. (NYSE: UTX) today reported first quarter 2018 results and increased its full year sales and adjusted EPS outlook.
“We are off to a solid start in 2018,” said UTC Chairman and Chief Executive Officer Gregory Hayes. “Sales were up 10 percent, including 6 percent organic growth which represented our strongest first quarter organic growth rate since 2011, with all four businesses contributing. Our focus on innovation and execution is clearly paying off.”
“Based on a strong first quarter performance and solid fundamentals at each of our businesses, we are raising our 2018 sales outlook to a range of $63 to $64.5 bn and raising our adjusted EPS outlook range to $6.95 to $7.15.* We remain committed to executing on our strategic priorities and are well positioned to deliver sustainable long-term shareowner value,” Hayes concluded.
First quarter sales of $15.2bn were up 10 percent over the prior year, including 6 points of organic sales growth and 3 points of foreign exchange. GAAP EPS of $1.62 included 15 cents of net restructuring charges and other significant items and was down 6 percent versus the prior year, reflecting the absence of a one-time gain booked in Q1 2017. Adjusted EPS of $1.77 was up 20 percent with adjusted operating profit growth at all four segments.
Net income in the quarter was $1.3bn, down 6 percent versus the prior year. Cash flow from operations was $453m and capital expenditures were $337 m. Free cash flow was $116m reflecting higher use of working capital from strong organic growth and the timing of shipments, principally at Pratt & Whitney and UTC Climate, Controls & Security. UTC continues to expect $4.5 to $5.0bn* of free cash flow in 2018.
In the quarter, commercial aftermarket sales were up 18 percent at Pratt & Whitney and up 16 percent at UTC Aerospace Systems. Otis new equipment orders were down 4 percent organically versus the prior year. Equipment orders at UTC Climate, Controls & Security increased 10 percent organically.
UTC updates its 2018 outlook and now anticipates:
* Adjusted EPS of $6.95 to $7.15, up from $6.85 to $7.10*;
* Sales of $63.0 to $64.5bn, up from $62.5 to $64.0bn;
* There is no change in the Company’s previously provided 2018 expectations for organic sales growth of 4 to 6 percent* or free cash flow of $4.5 to $5.0bn.*
*Note: When we provide expectations for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See “Use and Definitions of Non-GAAP Financial Measures” below for additional information.