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20 Oct 16. Textron Reports Third Quarter 2016 Results; Narrows Full-Year EPS Guidance Range. Textron Inc. (TXT) today reported third quarter 2016 income from continuing operations of $1.10 per share compared to $0.63 per share in the third quarter of 2015. During this year’s third quarter, the company recorded a tax benefit of $0.76 per share related to settlement of U.S. Internal Revenue Service audits and recorded a $115m pre-tax restructuring charge ($0.27 per share, after-tax). Excluding these items, adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $0.61 per share for the third quarter of 2016, down $0.02 from last year’s third quarter.
Revenues in the quarter were $3.3bn, up 2.2 percent from the third quarter of 2015. Textron segment profit in the quarter was $310m, down $2m from the third quarter of 2015.
“We had good execution in the quarter with margin improvements at Systems and Bell,” said Textron Chairman and CEO Scott C. Donnelly. “At Aviation, we continue to be encouraged by the strong market acceptance of the Latitude and progress on our new Longitude platform with a very successful first flight two weeks ago.”
Donnelly added, “We are also pleased with progress on the Scorpion and have accelerated investment in this program to support the accreditation process and increased customer engagement.”
Cash Flow
Net cash provided by operating activities of continuing operations of the manufacturing group for the third quarter was $178m, compared to $231m in last year’s third quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $94m compared to $116m during last year’s third quarter.
Restructuring
On August 30, 2016, Textron announced a restructuring plan with estimated pretax charges in the range of $110m to $140m with expected cash outlays in the range of $65m to $85m. The company now estimates pre-tax charges will be in the range of $140m to $170m, with expected cash outlays in the range of $100m to $120m.
Outlook
Textron expects full-year 2016 GAAP earnings per share from continuing operations will be in the range of $3.06 to $3.21, or $2.65 to $2.75 on an adjusted basis (non-GAAP), which is reconciled to GAAP in an attachment to this release. The company revised its expectation for cash flow from continuing operations of the manufacturing group before pension contributions to $500m to $600 m from its previous estimate of $600m to $700m.
Donnelly continued, “We are on track to achieve our operating plan for the year, while accelerating investments that will drive future revenue growth and improved cost productivity.”
Third Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation were up $39m, primarily due to volume and mix.
Textron Aviation delivered 41 new Citation jets and 29 King Air turboprops in the quarter, compared to 37 jets and 29 King Airs in last year’s third quarter.
Textron Aviation recorded a segment profit of $100m in the third quarter compared to $107m a year ago. The decrease in segment profit in the third quarter was primarily due to the mix of products sold.
Textron Aviation backlog at the end of the third quarter was $1.1bn, approximately flat with the second quarter.
Bell
Bell revenues were down $22m, as Bell delivered 25 commercial helicopters, compared to 45 units last year. This was partially offset by the military business with 6 V-22’s in the quarter, up from 4 V-22’s in last year’s third quarter and, 8 H-1’s compared to 5 H-1’s last year. Segment profit was down $2m, primarily due to the lower commercial aircra