The US Majors provided upbeat Results boosted by an uptick in worldwide defense spending due to the ongoing war in Ukraine and post-Covid rise in air travel.
Northrop Grumman, Lockheed Martin Corp (LMT.N) and General Dynamics Corp (GD.N) reported upbeat sales for the quarter and are expected to benefit from Pentagon’s plans to spend $858bn on defense this year.
U.S. defense contractors have benefited as the war in Ukraine and tense U.S.-China relations have fueled demand for weapons such as tanks, submarines and munitions.
Boeing
26 Apr 23. Boeing Reports First-Quarter Results.
First Quarter 2023
- Still expect to deliver 400-450 737 airplanes in 2023; plan to increase production to 38 per month later this year
- Revenue increased to $17.9bn primarily reflecting 130 commercial deliveries
- Operating cash flow of ($0.3)bn and free cash flow of ($0.8)bn (non-GAAP); cash and marketable securities of $14.8bn
- Total company backlog of $411bn, including over 4,500 commercial airplanes
- Reaffirm guidance: $4.5-$6.5bn of operating cash flow and $3.0-$5.0bn of free cash flow (non-GAAP)
The Boeing Company [NYSE: BA] recorded first-quarter revenue of $17.9bn, GAAP loss per share of ($0.69), and core loss per share (non-GAAP)* of ($1.27). Boeing reported operating cash flow of ($0.3) bn and free cash flow of ($0.8) bn (non-GAAP). Results improved on commercial volume and performance.
“We delivered a solid first quarter and are focused on driving stability for our customers,” said Dave Calhoun, Boeing president and chief executive officer. “We are progressing through recent supply chain disruptions but remain confident in the goals we set for this year, as well as for the longer term. Demand is strong across our key markets and we are growing investments to advance our development programs and innovate strategic capabilities for our customers and for our future.”
Cash and investments in marketable securities totaled $14.8bn, compared to $17.2bn at the beginning of the quarter. Debt was $55.4bn, down from $57.0bn at the beginning of the quarter due to the pay down of debt maturities. The company has access to credit facilities of $12.0bn, which remain undrawn.
Total company backlog at quarter-end was $411bn.
Segment Results
Commercial Airplanes
Commercial Airplanes first-quarter revenue increased to $6.7bn driven by higher 737 and 787 deliveries, partially offset by 787 customer considerations. Operating margin of (9.2) percent also reflects abnormal costs and period expenses, including research and development.
On the 737 program, earlier this month the program’s fuselage supplier notified Boeing that a non-standard manufacturing process was used on two fittings in the aft fuselage section of certain 737 airplanes. This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. While near-term deliveries and production will be impacted as the program performs necessary inspections and rework, the program still expects to deliver 400-450 airplanes this year. On production, the supplier master schedule remains unchanged including anticipated production rate increases, which will result in higher inventory levels. The company expects final assembly production to recover in the coming months with plans to increase to 38 per month later this year and 50 per month in the 2025/2026 timeframe.
The 787 program is producing at three per month with plans to ramp production to five per month in late 2023 and to 10 per month in the 2025/2026 timeframe.
During the quarter, Commercial Airplanes secured net orders of 107. Also during the quarter the company secured commitments from Air India for 190 737 MAX, 20 787, and 10 777X airplanes and from Riyadh Air and Saudi Arabian Airlines for up to 121 787 airplanes. Commercial Airplanes delivered 130 airplanes during the quarter and backlog included over 4,500 airplanes valued at $334bn.
Defense, Space & Security
Defense, Space & Security first-quarter revenue was $6.5bn. First-quarter operating margin of (3.2) percent primarily reflects a $245m pre-tax charge on the KC-46A Tanker program largely driven by the previously shared supplier quality issue resulting in factory disruption and rework. Results also include the continued operational impact of labor instability and supply chain disruption on other programs.
During the quarter, Defense, Space & Security captured awards from the U.S. Army for 184 Apaches and from the U.S. Air Force for 15 KC-46A Tankers and the initial E-7 development contract. Backlog at Defense, Space & Security was $58bn, of which 30 percent represents orders from customers outside the U.S.
Global Services
Global Services first-quarter revenue of $4.7bn and operating margin of 17.9 percent reflect higher commercial volume and favorable mix.
During the quarter, Global Services committed to set up the first Boeing Converted Freighter line in India in collaboration with GMR Aero Technic, delivered AerCap’s 50th 737-800 Boeing Converted Freighter and broke ground on a new component operations facility in Jacksonville, Florida.
Additional Financial Information
The increase in loss from Other unallocated items and eliminations was driven by timing of allocations and deferred compensation expense. Other income primarily reflects an increase in investment income due to higher interest rates. The first-quarter effective tax rate primarily reflects the tax benefit of pretax losses.
Segment results reflect the realignment of Boeing Capital into the Commercial Airplanes segment during the first quarter of 2023. Prior period amounts have also been reclassified to conform to the 2023 presentation.
27 Apr 23. Boeing’s tanker losses top $7bn. Boeing reported a $245m charge on the KC-46A Pegasus tanker in the first quarter of 2023, due to a supplier’s quality issues. The penalty means the KC-46 has now racked up more than $7bn in charges, and follow a $1.2bn hit the company took on the Air Force tanker in the third quarter of 2022. The KC-46′s charge brought Boeing Defense, Space and Security into the red for the quarter, with the unit reporting a loss of $212m, the company said Wednesday. Boeing said ongoing labor and supply chain disruptions also hindered the company’s results. However, the outlook for Boeing’s defense unit showed signs of improvement from the first quarter of 2022, when it reported a $929m loss. Boeing defense also brought in $6.5bn in revenues in this year’s first quarter, a more than $1bn increase over 2022′s first quarter. Boeing also trimmed its overall losses in the quarter by about $1bn from the same period in 2022, while overall revenues grew to nearly $18bn in the first three months of this year.
Boeing said the charge was largely driven by a previously disclosed quality issue due to a supplier, but did not offer further details in a call with analysts. The aviation news website the Air Current reported in March a subcontractor had not followed proper painting and priming procedures on the center fuel tanks of some KC-46s and 767s, on which the KC-46 is based, which has held up deliveries. That quality issue could risk contamination of the aircrafts’ fuel systems, Air Current reported.
Brian West, Boeing’s chief financial officer, confirmed the quality issue with the 767 center fuel tanks later that month at a Bank of America conference.
David Calhoun, Boeing’s chief executive, said on Wednesday’s call work is progressing on fixing that problem. But the company warned investors more losses on the KC-46 could come during the remainder of the year.
Calhoun said the company is seeing bright spots in its defense business, with the Air Force possibly buying additional, modified KC-46s as an interim step until it can bring on a next-generation tanker. He also pointed to the up to $1.2bn contract the Air Force awarded Boeing in February to start building the E-7A battle management aircraft, to replace the aging E-3 Sentry airborne warning and control system, or AWACS, aircraft.
Awards in the first quarter for 15 more KC-46s and 184 Apache helicopters for the Army also reflected strong demand, Calhoun said.
(Source: Defense News)
General Dynamics
26 Apr 23. General Dynamics revenue rises on strong demand for weapons. General Dynamics Corp (GD.N) on Wednesday reported a 5.2% rise in quarterly revenue, boosted by strong demand for munitions amid geopolitical instability caused by Russia’s full scale invasion of Ukraine. Shares were up 1% to $225 in pre-market trading in New York.
Orders at General Dynamics’ Combat Systems business unit which makes tanks and munitions were at their highest level in eight years. The war in Ukraine has caused many militaries to increase their focus on the depth of their munitions stockpile.
Revenue in the first quarter rose to $9.88bn, compared with $9.39bn a year earlier.
However, quarterly profit was flat at $730m, as supply chain disruptions and labor shortages continue to hobble production.
Many aerospace industry companies are suffering similarly as the impact of the pandemic, especially with regards to retaining or training skilled labor, continue.
Sales at General Dynamics’ aerospace unit, which makes Gulfstream jets, declined marginally. Gulfstream deliveries in the first quarter were at 21 jets, down from 25 in the same period a year ago.
The company has said “abnormally high retirement” of workers had impacted its electric boat unit, which assembles nuclear-powered submarines.
Revenue at the Marine Systems unit, which makes ships in addition to submarines, increased 12.9% versus the same period a year ago with profit flat. Any increase in sales stemming from the recently agreed AUKUS submarine deal is still far in the future. However the first boat in the U.S.’s Columbia-class submarine fleet is now one third complete, the company said. (Source: Google/Reuters)
26 Apr 23. General Dynamics Reports First-Quarter 2023 Financial Results. General Dynamics (NYSE: GD) today reported first-quarter 2023 net earnings of $730m on revenue of $9.9bn. Diluted earnings per share (EPS) were $2.64.
“Our businesses delivered solid operating results despite persistent supply chain headwinds, with earnings before taxes up 3.7% and EPS up modestly,” said Phebe N. Novakovic, chairman and chief executive officer. “Strong cash flow positions us to continue to invest in our business, retire debt and return value to shareholders.”
Cash
Net cash provided by operating activities in the quarter totaled $1.5bn, or 200% of net earnings. The company invested $161m in capital expenditures and paid $345m in dividends, ending the quarter with $2bn in cash and equivalents.
Backlog
The consolidated book-to-bill ratio, defined as orders divided by revenue, was 0.9-to-1 for the quarter. Company-wide backlog of $89.8bn was up 3% from the year-ago quarter. Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $38.5bn. Total estimated contract value, the sum of all backlog components, was $128.4bn.
Significant awards for the defense segments included more than $1.1bn to produce and support Abrams tanks, Stryker combat vehicles and other armored vehicles for the U.S. Army and partner nations, including Poland and Colombia; $285m, with a maximum potential value of $1.3bn, to expand production of 155mm artillery projectile parts, plus $255m for various other munitions and ordnance; an Air Force IDIQ service contract with maximum potential value of $4.5 bn between two awardees; $130m, with a maximum potential value of $1.7bn, to provide flight simulation and training services to the Army; $260m from the U.S. Navy for maintenance and modernization of two amphibious ships and a destroyer; and $400m for several key classified contracts.
Honeywell
27 Apr 23. Honeywell (NASDAQ: HON) today announced results.
*Sales of $8.9bn, Reported Sales Up 6%, Organic Sales Up 8%
- Operating Margin up 390 Basis Points to 19.1%; Segment Margin1 up 90 Basis Points to 22.0%
- Earnings Per Share and Adjusted Earnings Per Share1 of $2.07, Exceeding High End of Guidance by 11 Cents
- Backlog2 Increased to a Record $30.3bn, Up 6% Year over Year
- Announced $670m Acquisition of Compressor Controls Corporation
- Company Raises Midpoint of Full-Year Adjusted EPS3 Guidance by 13 Cents; Reaffirms Full-Year Cash Flow1 Guidance
Honeywell (NASDAQ: HON) today announced results for the first quarter that exceeded the company’s guidance across all metrics. The company also raised the midpoint of its fullyear organic1 growth, segment margin, and adjusted EPS3 guidance ranges.
The company reported first-quarter year-over-year sales growth of 6% and organic1 sales growth of 8%, with another quarter of double-digit organic sales growth in Performance Materials and Technologies and Aerospace. Operating margin expanded 390 basis points to 19.1% and segment margin1 expanded by 90 basis points to 22.0%, led by continued robust expansion in Safety and Productivity Solutions and Honeywell Building Technologies.
Honeywell first-quarter earnings per share was $2.07, up 26% year over year, or up 8% adjusted1 year over year. Operating cash flow was negative $0.8bn and free cash flow1 was negative $1.0bn. Excluding the net impact of settlements signed in the fourth quarter of 2022, the company generated $0.3bn of free cash flow1 in the first quarter, $250m better than the first quarter of 2022.
“Honeywell delivered an outstanding start to 2023, exceeding expectations for all guided metrics in the first quarter,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “Organic sales growth1 was underpinned by double-digit growth in our commercial aviation, UOP, process solutions, building solutions, and advanced materials businesses. Backlog increased to a record $30.3bn, up 6% year over year, with particular strength in our aerospace business that gives us confidence in our full-year guidance. Our continued focus on commercial excellence and productivity enabled us to remain ahead of the inflation curve and overdeliver on our segment margin3 and earnings per share guidance. Excluding the net impact of settlements signed in the fourth quarter of 2022, we delivered free cash flow1 of $0.3bn. We also continued to leverage our strong balance sheet, deploying $1.6bn in the quarter to share repurchases, dividends, and capex. In addition, we announced the acquisition of Compressor Controls Corporation, a leading provider of turbomachinery controls and automation – MORE – solutions, which combined with our process solutions installed base and Honeywell Forge capabilities will help customers accelerate their energy transition.” Adamczyk continued, “As we look to the rest of 2023, we are well positioned to continue outperforming despite an uncertain macroeconomic environment. Our businesses are poised for sustained growth, our backlog will support our projections, and our technologically differentiated portfolio of solutions is allowing us to address the world’s toughest automation, digitalization, and sustainability challenges. This setup is enabling us to raise our fullyear 2023 guidance, and I am confident that Honeywell will continue to outperform under Vimal Kapur’s leadership. I am grateful for the opportunity I have had to lead Honeywell, and I know our future is bright.”
As a result of the company’s first-quarter performance and management’s outlook for the remainder of the year, Honeywell raised the midpoint of its full-year sales, segment margin, and adjusted earnings per share guidance. Full-year sales are now expected to be $36.5bn to $37.3bn with organic sales growth in the range of 3% to 6%. Segment margin is now expected to be in the range of 22.3% to 22.6%, with segment margin expansion of 60 to 90 basis points. Adjusted earnings per share3,4 is now expected to be in the range of $9.00 to $9.25, up 20 cents on the low end and 5 cents on the high end from the prior guidance range. Operating cash flow is still expected to be in the range of $4.9bn to $5.3bn. Free cash flow1 is still expected to be in the range of $3.9bn to $4.3bn, or $5.1bn to $5.5bn excluding the net impact of settlements signed in the fourth quarter of 2022.
First-Quarter Performance Honeywell sales for the first quarter were up 6% year over year on a reported basis and 8% year over year on an organic basis.
Aerospace sales for the first quarter were up 14% year over year on an organic basis led by commercial aviation. Commercial aviation aftermarket sales grew over 20%, supported by continued flight hour recovery in air transport. Commercial original equipment also had double-digit sales growth in the quarter, including over 30% growth in business and general aviation original equipment. Defense and space sales returned to growth in the first quarter and maintained a book-to-bill greater than one. Segment margin contracted 80 basis points to 26.6%, driven by higher sales of lower margin products partially offset by commercial excellence.
Honeywell Building Technologies sales for the first quarter were up 9% on an organic1 basis year over year. Building solutions grew 13% organically driven by the fourth consecutive quarter of double-digit project sales growth. Strong demand for our fire offerings resulted in 7% organic sales growth in building products. Segment margin expanded 170 basis points to 25.2% due to commercial excellence partially offset by cost inflation. Performance Materials and Technologies sales for the first quarter were up 15% on an organic1 basis year over year. Sales growth was led by UOP, which grew 19% organically due to strength in refining catalyst shipments and gas processing. In HPS, strength in projects and smart energy led to 16% organic growth in the quarter. Demand remained robust in fluorine products, which led to 12% growth in advanced materials. Segment margin contracted 20 basis points to 20.6% as a result of cost inflation and higher sales of lower margin products, partially offset by commercial excellence and volume leverage.
Safety and Productivity Solutions sales for the first quarter decreased 11% on an organic1 basis year over year. Sales declines were led by lower volumes in warehouse and workflow solutions and productivity solutions and services, partially offset by the sensing portion of sensing and safety technologies. Segment margin remained a Honeywell Q1’23 Results – 2 – MORE – positive contributor to Honeywell, expanding 270 basis points year over year to 17.2%, driven by productivity actions and commercial excellence, partially offset by lower volume leverage and cost inflation.
Lockheed Martin
18 Apr 23. Lockheed Martin taps strong defense demand to beat results estimates. U.S. weapons maker Lockheed Martin Corp’s (LMT.N) first-quarter results surpassed Wall Street targets on Tuesday despite parts and labor shortages, as simmering geopolitical tensions fueled demand from both U.S. and international customers. Rising tensions in Europe, the South China Sea and the Indo-Pacific region have translated to more orders for Lockheed’s F-35 fighter aircraft, missiles and other defense equipments, driving quarterly net sales of $15.13 bn above estimates of $15.03bn. The Pentagon’s $858bn defense budget for 2023 has also resulted in multiple contract wins for U.S. defense firms such as Lockheed, Raytheon Technologies (RTX.N) and Northrop Grumman Corp (NOC.N), which count the U.S. Department of Defense as their biggest customer.
Bethesda, Maryland-based Lockheed reported GAAP earnings per share of $6.61, which included non-operational gains of $0.18 per share, and adjusted earnings of $6.43 per share for the first quarter ended March 26. Analysts were expecting profits of $6.06 per share.
During the quarter, Australia said it would buy 40 Black Hawk military helicopters made by Lockheed from the U.S. for about $1.96bn as it boosts defense spending over issues with China’s presence in the Indo-Pacific region.
Lockheed had also finalized a deal to sell 88 F-35 jets to Canada in a $14.2bn project to replace the country’s aging fleet of fighter aircraft.
Supply-chain issues stemming from the pandemic are still hurting F-35 production volumes though, pulling down sales at the company’s aeronautics unit – its largest – by about 2.1% to $6.27 bn in the quarter.
Lockheed’s order backlog also fell to $145.1bn as of quarter-end from $150bn at the end of 2022.
The missiles maker reaffirmed its full-year outlook, projecting net sales in the range of about $65bn to $66bn and profits between $26.60 and $26.90 per share. (Source: Reuters)
18 Apr 23. Lockheed: F-35 upgrade delays will lead to fewer 2023 deliveries. Lockheed Martin may not be able to deliver as many F-35s as it had hoped this year due to delays involving the fighters’ upcoming Technology Refresh 3 upgrades.
Lockheed chief executive Jim Taiclet and chief financial officer Jay Malave said in a Tuesday earnings call with investors that the company now expects F-35 deliveries to be lower than it originally predicted because of software maturation issues with TR-3 and delays in delivering TR-3′s hardware.
Lockheed said in December 2022 that it expected to deliver between 147 and 153 F-35s this year as well as in 2024.
Malave said the company will “refine the impact” as the year continues, but Taiclet downplayed the magnitude of the delivery drop, saying it would be a “fraction” of total 2023 deliveries.
Taiclet also said the company expects the potential delivery delay to have “little to no” effect on the company’s aeronautics revenues or profits for 2023.
TR-3 is the name for a slate of hardware and software upgrades for the F-35 that is intended to give the jet better displays computer memory and processing power. The update is needed before the F-35 can receive a more wide-ranging modernization known as block 4, which will include new sensors, the ability to carry more long-range precision weapons, better data fusion, and updated electronic-warfare capabilities.
But TR-3 is slipping behind schedule. Lt. Gen. Michael Schmidt, the F-35′s program executive officer, told lawmakers March 29 that the upgrade is now expected to arrive somewhere between December 2023 and April 2024 — up to a year later than the original expected due date of April 2023.
The delay drew the ire of Rep. Rob Wittman, R-Va., chairman of the House Armed Services tactical air and land forces subcommittee, who said “the program has to do better.” Wittman also said TR-3 is running about $700 m over budget.
In Tuesday’s earnings call, Taiclet acknowledged the delays, but said Lockheed is “in the very late innings of fully implementing this Tech Refresh 3.”
Taiclet said flight tests of the TR-3-enabled F-35, which began in January, could be wrapped up sometime between October and December 2023. Lockheed will also have to review the test results, work with the government to ensure all parties are ready to start implementing TR-3, and start folding the new software loads into the F-35′s production system, he said.
But knitting together the multiple components that make up TR-3 is a “pretty intricate, fairly leading-edge [task] for the aerospace industry to accomplish,” Taiclet said.
“I would consider this [an] extremely high degree of difficulty dive, and we’re going to make sure that it’s done right, and we can produce at rate in our lot 15,” Taiclet said.
Schmidt told lawmakers in the March 29 hearing that the development of TR-3′s hardware fell behind and initial production was slow. But, he said, the hardware is now more reliable and passing flight safety requirements. Software integration also lagged, Schmidt said.
The next software drop for TR-3, which Schmidt told lawmakers would come in about a month, will be crucial, and it “unleashes most of the tactical capabilities in there so we can truly do a flight test for score across a large spectrum of the requirements.”
Schmidt also told reporters at the Navy League’s Sea Air Space conference April 3 that he’s concerned about the infrastructure available to conduct TR-3 flight tests. Those test aircraft tend to be some of the oldest F-35s, he said, and their age sometimes hinders the Air Force’s ability to conduct tests.
“When you see the issues, why they didn’t fly today, it’s usually not a TR-3 issue, it’s an old-airplane issue,” Schmidt said. “We’re trying to increase our flight test capacity.”
Schmidt said the Air Force had conducted 25 flight tests of TR-3-enabled fighters by the end of March.
Lockheed reported sales of about $15bn and profits of about $1.7bn in the first quarter of 2023, each roughly the same as a year earlier. Lockheed’s quarterly aeronautics sales of $6.4 bn and missiles and fire control sales of nearly $2.5 bn were each slightly higher than the first quarter of 2022, when those divisions recorded sales of nearly $6.3bn and $2.4bn, respectively.
Taiclet pointed to the U.S. military’s proposed 2024 budget, which requested funds to buy 83 F-35s for the Air Force, Navy and Marine Corps, and Canada’s January announcement that it would buy 88 F-35As to replace its retiring CF-18s, as a sign that demand for the fighter remains strong internationally. (Source: Defense News)
18 Apr 23. Lockheed Martin Reports First Quarter 2023 Financial Results.
- Net sales of $15.1bn
- Net earnings of $1.7bn, or $6.61 per share, inclusive of non-operational gains of $44m, or $0.18 per share
- Cash from operations of $1.6bn and free cash flow of $1.3bn
- Returned $1.3bn of cash to shareholders through dividends and share repurchases
- Reaffirms 2023 financial outlook
Lockheed Martin Corporation [NYSE: LMT] today reported first quarter 2023 net sales of $15.1bn, compared to $15.0bn in the first quarter of 2022. Net earnings in the first quarter of 2023 were $1.7 bn, or $6.61 per share, compared to $1.7bn, or $6.44 per share, in the first quarter of 2022. Cash from operations was $1.6bn in the first quarter of 2023, compared to $1.4bn in the first quarter of 2022. Free cash flow was $1.3bn in the first quarter of 2023, compared to $1.1 bn in the first quarter of 2022.
“We are off to a strong start for the new year in delivering to our customers the products and systems essential to enhancing national security and space exploration, and in delivering performance and value to our shareholders,” said Lockheed Martin Chairman, President, and CEO Jim Taiclet. “A few of the company’s notable accomplishments during the quarter included securing a contract for the first United States sea-based hypersonic missile program, Conventional Prompt Strike (CPS), delivering the first F-16 fighter aircraft out of our new Greenville, South Carolina factory, and being selected to provide 88 F-35 fifth-generation fighter aircraft to Canada.
“We remain on track to achieve our full year 2023 financial guidance and continue our robust approach to returning capital to shareholders, with $500 m in share repurchases and $784 m in dividends distributed in the first quarter. In addition, all of our Business Areas continue to develop mission-based solutions that are designed to be integrated into an open architecture using 21st century digital technologies to elevate the deterrence posture of the United States and its allies. We are demonstrating these capabilities in partnership with commercial technology leaders across a number of disciplines. Many of our signature platforms, including geosynchronous orbit infrared-sensing satellites, the F-35, the Aegis radar system, and our submarine combat systems, are being actively incorporated into this architecture, enhancing their effectiveness and attractiveness to our customers for many years to come. We intend to lead our industry into the future, and we’re doing it with a constant focus on rewarding our shareholders over the long run in the process.”
Cash Flows and Capital Deployment Activities
Cash from operations in the first quarter of 2023 was $1.6bn and capital expenditures were $294m, resulting in free cash flow of $1.3bn. The increase in operating and free cash flows in the first quarter of 2023 compared to the first quarter of 2022 was primarily due to various changes in working capital, primarily production and billing cycles impacting contract assets and receivables (primarily F-35 program at Aeronautics and missile programs at Missiles and Fire Control (MFC)), partially offset by the timing of cash payments for accounts payable (primarily Aeronautics).
The company’s cash activities in the first quarter of 2023, included the following:
- paying cash dividends of $784m; and
- paying $500m to repurchase 1.1m shares (including 0.2m shares received upon settlement of an accelerated share repurchase agreement (ASR) in April 2023).
Segment Results
The company 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 company’s business segments and reconciles these amounts to the company’s consolidated financial results. Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation and not included in management’s evaluation of performance of each segment. Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments. Business segment operating profit excludes the FAS/CAS pension operating adjustment, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, retiree benefits, significant severance actions, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit.
Changes in net sales and operating profit generally are expressed in terms of volume. Changes in volume refer to increases or decreases in sales or operating profit resulting from varying production activity levels, deliveries or service levels on individual contracts. Volume changes in segment operating profit are typically based on the current profit booking rate for a particular contract. In addition, comparability of the company’s segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on the company’s contracts. Increases in profit booking rates, typically referred to as favorable profit adjustments, usually relate to revisions in the estimated total costs to fulfill the performance obligations that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate, resulting in an increase in the estimated total costs to fulfill the performance obligations and a reduction in the profit booking rate and are typically referred to as unfavorable profit adjustments. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes.
The company’s consolidated net favorable profit booking rate adjustments represented approximately 25% and 24% of total segment operating profit in the quarters ended March 26, 2023 and March 27, 2022.
Aeronautics
Aeronautics’ net sales in the first quarter of 2023 decreased $132m, or 2%, compared to the same period in 2022. The decrease was primarily attributable to lower net sales of $335m for the F-35 program due to lower volume on production contracts. This decrease was partially offset by higher sales of $135m on classified programs due to higher volume and $70m for the F-16 program due to higher production and sustainment volume.
Aeronautics’ operating profit in the first quarter of 2023 was comparable to the same period in 2022. Operating profit for the F-35 program was comparable as lower volume on production contracts was mostly offset by contract mix. Operating profit for the F-16 program was comparable as higher volume on production and sustainment contracts was offset by higher unfavorable profit adjustments on a production contract and sustainment contracts. Total net profit booking rate adjustments were approximately $15m lower in the first quarter of 2023 compared to the same period in 2022.
Missiles and Fire Control
MFC’s net sales in the first quarter of 2023 decreased $64m, or 3%, compared to the same period in 2022. The decrease was primarily attributable to lower net sales of $85m for sensors and global sustainment programs as net sales for the first quarter of 2022 reflect the impact of a favorable profit adjustment on an international program as a result of a requirements modification that did not recur in the first quarter of 2023; and lower net sales of $60m for tactical and strike missile programs due to lower volume (Guided Multiple Launch Rocket Systems (GMLRS)). These decreases were partially offset by higher net sales of $70m for integrated air and missile defense programs due to the impact of higher net favorable profit adjustments (Patriot Advanced Capability-3 (PAC-3)).
MFC’s operating profit in the first quarter of 2023 decreased $8m, or 2%, compared to the same period in 2022. The decrease was primarily attributable to lower operating profit of $85m for sensors and global sustainment programs due to the favorable profit adjustment on an international program in the first quarter of 2022 as described above. This decrease was partially offset by higher operating profit of $60m for integrated air and missile defense programs due to the impact of higher net favorable profit adjustments (PAC-3). In addition, operating margin was positively impacted when compared to the first quarter of 2022 due to contract mix at tactical and strike missiles. Total net profit booking rate adjustments were approximately $25m lower in the first quarter of 2023 compared to the same period in 2022.
Rotary and Mission Systems
RMS’ net sales in the first quarter of 2023 decreased $42m, or 1%, compared to the same period in 2022. The decrease was primarily attributable to lower net sales of $75 m for Sikorsky helicopter programs due to lower production volume (Black Hawk); and lower net sales of $60 m for various C6ISR (command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance) programs due to lower volume. These decreases were partially offset by higher net sales of $85m for integrated warfare systems and sensors (IWSS) programs due to higher volume (Aegis and TPY-4 programs).
RMS’ operating profit in the first quarter of 2023 decreased $56 m, or 14%, compared to the same period in 2022. The decrease was primarily attributable to lower operating profit of $65 m for Sikorsky helicopter programs due to lower production volume, net favorable profit adjustments, and contract mix on the Black Hawk program and unfavorable profit adjustments (CH-53K). Total net profit booking rate adjustments were $35m lower in the first quarter of 2023 compared to the same period in 2022.
Space
Space’s net sales in the first quarter of 2023 increased $400m, or 16%, compared to the same period in 2022. The increase was primarily attributable to higher net sales of $185m for strategic and missile defense programs due to higher development volume (Next Generation Interceptor (NGI)); higher net sales of $170 m for national security space programs due to higher development volume (classified programs) and the impact of higher net favorable profit adjustments (Next Generation Overhead Persistent Infrared geosynchronous satellites (Next Gen OPIR) and classified programs); and higher net sales of $55m for commercial civil space programs due to higher volume (Orion).
Space’s operating profit in the first quarter of 2023 increased $32 m, or 13%, compared to the same period in 2022. The increase was primarily attributable to higher operating profit of $70m for national security space programs due to the impact of higher net favorable profit adjustments (Next Gen OPIR and classified programs). This increase was partially offset by $45m of lower equity earnings from the company’s investment in United Launch Alliance (ULA) due to lower launch volume and an increase in new product development costs. Total net profit booking rate adjustments were $85m higher in the first quarter of 2023 compared to the same period in 2022.
Total equity (losses)/earnings (primarily ULA) represented approximately $(15)m, or (5)%, of Space’s operating profit in the first quarter of 2023, compared to approximately $30 m, or 12%, in the first quarter of 2022.
Income Taxes
The company’s effective income tax rate was 15.3% and 15.9% for quarters ended March 26, 2023 and March 27, 2022. The rates for both periods benefited from research and development tax credits, tax deductions for foreign derived intangible income, dividends paid to the company’s defined contribution plans with an employee stock ownership plan feature, and employee equity awards. The rate for the first quarter of 2023 compared to the first quarter of 2022 was lower primarily due to increased research and development tax credits.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted accounting principles (non-GAAP) financial measures (as defined by U.S. Securities and Exchange Commission (SEC) Regulation G). While management believes that these non-GAAP financial measures may be useful in evaluating the financial performance of the company, this information should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. In addition, the company’s definitions for non-GAAP financial measures may differ from similarly titled measures used by other companies or analysts.
Business segment operating profit
Business segment operating profit represents operating profit from the company’s business segments before unallocated income and expense. This measure is used by the company’s senior management in evaluating the performance of its business segments and is a performance goal in the company’s annual incentive plan. Business segment operating margin is calculated by dividing business segment operating profit by sales. The table below reconciles the non-GAAP measure business segment operating profit with the most directly comparable GAAP financial measure, consolidated operating profit.
Free cash flow
Free cash flow is cash from operations less capital expenditures. The company’s capital expenditures are comprised of equipment and facilities infrastructure and information technology (inclusive of costs for the development or purchase of internal-use software that are capitalized). The company uses free cash flow to evaluate its business performance and overall liquidity and it is a performance goal in the company’s annual and long-term incentive plans. The company believes free cash flow is a useful measure for investors because it represents the amount of cash generated from operations after reinvesting in the business and that may be available to return to stockholders and creditors (through dividends, stock repurchases and debt repayments) or available to fund acquisitions or other investments. The entire free cash flow amount is not necessarily available for discretionary expenditures, however, because it does not account for certain mandatory expenditures, such as the repayment of maturing debt and pension contributions.
Adjusted earnings before income taxes; adjusted net earnings and adjusted diluted EPS
Earnings before income taxes, net earnings and diluted earnings per share (EPS) were impacted by certain non-operational items for all periods. Management believes the presentation of these measures adjusted for the impacts of these non-operational items is useful to investors in understanding the company’s underlying business performance and comparing performance from period to period. The tax effects related to each adjustment that impacted earnings before income taxes are based on a blended tax rate that combines the federal statutory rate of 21% plus an estimated state tax rate.
Total FAS/CAS pension adjustment – adjusted; Total FAS pension income – adjusted
Total FAS/CAS pension adjustment and Total FAS pension income have been adjusted for the noncash, non-operating pension settlement charge recorded in the second quarter 2022. Management believes that the exclusion of the pension settlement charge is useful to understanding the company’s underlying business performance and comparing performance from period to period.
Northrop Grumman
27 Apr 23. Northrop’s quarterly earnings beat estimates on weapon demand. – Northrop Grumman Corp (NOC.N) beat first-quarter earnings expectations on Thursday, helped by higher sales of weapons amid heightened geopolitical tensions Northrop’s overall sales rose 6% to $9.30bn in the reported quarter, beating analysts average estimate of $9.17bn, according to Refinitiv data. Sales in its space system segment, which makes satellites and payloads, jumped 17% to $3.35bn, helped by higher investments toward space exploration projects. The company’s net income was $842m. Its profit of $5.50 per share also beat analysts’ estimate of $5.09 per share. However, Northrop’s aeronautic systems business, its second-biggest by revenue and which houses its new B21 Raider jet program, posted a 23% decline in operating income. The company, had in January, said it was “reasonably possible” that the business would lose money on making the jets for the U.S. Air Force due to inflation pressures boosting its costs for the fixed-price contract. The company reaffirmed its annual outlook for sales between $38bn and $38.40bn. (Source: Reuters)
27 Apr 23. Northrop Grumman Reports First Quarter 2023 Financial Results
- Sales increased 6 percent to $9.3bn
- Operating income increased 6 percent to $947m
- Diluted earnings per share of $5.50
- $1.0bn returned to shareholders through dividends and share repurchases
- EPS guidance increased $0.40
◦ Reaffirming 2023 guidance for sales, operating income, and adjusted free cash flow1 based on the strength of Q1 performance and full year outlook
◦ Expect gain on sale of minority investment in an international business later this year
Northrop Grumman Corporation (NYSE: NOC) reported first quarter 2023 sales increased 6 percent to $9.3bn, as compared with $8.8bn in the first quarter of 2022. First quarter 2023 sales reflect continued strong demand. First quarter 2023 net earnings totaled $842m, or $5.50 per diluted share, as compared with $955m, or $6.10 per diluted share, in the first quarter of 2022. Net earnings were reduced by $164m, or $1.04 per diluted share, as a result of lower net FAS/CAS pension income.
“Our first quarter results reflect continued strong demand across our broad portfolio of products and services,” said Kathy Warden, chair, chief executive officer and president. “Our sales and operating income both increased by six percent in the first quarter, and based on our strong start to the year, we remain confident in our full year and long term outlook for the business. We continue to make significant investments in capability and capacity to support our global customers, while also returning $1bn to shareholders in the quarter, as part of our capital deployment strategy.” 1 Non-GAAP measure – see definitions at the end of this earnings release.
Sales
First quarter 2023 sales increased $504m, or 6 percent, due to higher sales at Space Systems, Defense Systems and Mission Systems, partially offset by lower sales at Aeronautics Systems. First quarter 2023 sales reflect continued strong demand. Operating Income and Margin Rate First quarter 2023 operating income increased $50m, or 6 percent, due to lower unallocated corporate expense and a reduction in the FAS/CAS operating adjustment, partially offset by lower segment operating income. First quarter 2023 operating margin rate of 10.2 percent was comparable to the prior year period. Segment Operating Income and Margin Rate First quarter 2023 segment operating income decreased $35m, or 3 percent, and includes an approximately $50m reduction related to higher projected CAS pension costs on the company’s fixed price contracts. Segment operating margin rate decreased to 10.8 percent from 11.8 percent and reflects lower operating margin rates at Aeronautics Systems, Mission Systems and Defense Systems, partially offset by a higher operating margin rate at Space Systems. Federal and Foreign Income Taxes The first quarter 2023 effective tax rate (ETR) decreased to 15.6 percent from 16.5 percent principally due to higher current year ETR benefits associated with research credits and FDII deductions as well as favorable returns on tax-exempt marketable securities, partially offset by higher interest expense on unrecognized tax benefits.
Net Earnings and Diluted EPS First quarter 2023 net earnings decreased $113m, or 12 percent, primarily due to a $244m reduction in the non-operating FAS pension benefit, partially offset by higher operating income, a $34m increase in returns on marketable securities related to our nonqualified benefit plans, and a lower effective tax rate. First quarter 2023 diluted earnings per share decreased 10 percent, reflecting lower net earnings and a 2 percent reduction in weighted-average diluted shares outstanding.
Cash Flows First quarter 2023 net cash used in operating activities increased $214m principally due to increases in trade working capital, largely related to the timing of vendor payments. First quarter 2023 adjusted free cash flow decreased $279m due to higher net cash used in operating activities and an increase in capital expenditures. The net use of cash during the first quarter is consistent with the company’s historical timing of operating cash flows, which are generally more heavily weighted towards the second half of the year. Awards and Backlog First quarter 2023 net awards totaled $8.0bn and backlog totaled $77.5bn. Significant first quarter new awards include $3.2bn for restricted programs (primarily at Mission Systems, Aeronautics Systems, and Space Systems), $0.3bn for ammunition programs at Defense Systems, $0.3bn for the Multi-Role Electronically Scanned Array (MESA) program and $0.2bn for the Surface Electronic Warfare Improvement Program (SEWIP).
Expected Sale of Minority Investment
The company expects to close on the sale of a minority investment in an international business later this year. Inclusive of taxes and other transaction related costs, the MTM-adjusted EPS1 benefit from the transaction is expected to be approximately $0.40.
Segment Operating Results
AERONAUTICS SYSTEMS
Three Months Ended March 31
Sales
First quarter 2023 sales decreased $188m, or 7 percent, due to lower volume in both Manned Aircraft and Autonomous Systems, including E-2, F-35, F/A-18 and Global Hawk, as well as lower volume on the Joint Surveillance and Target Attack Radar System (JSTARS) program as it nears completion. These decreases were partially offset by higher volume on restricted programs. Operating Income First quarter 2023 operating income decreased $70m, or 23 percent, due to a lower operating margin rate and lower sales. Operating margin rate decreased to 9.4 percent from 11.4 percent primarily due to lower net EAC adjustments. The prior year period includes a $67m favorable EAC adjustment on the engineering, manufacturing and development (EMD) phase of the B-21 program.
DEFENSE SYSTEMS
Three Months Ended March 31
Sales
First quarter 2023 sales increased $93m, or 7 percent, due to higher volume in both business areas. Battle Management & Missile Systems sales increased primarily due to higher volume on the Integrated Air and Missile Defense Battle Command System (IBCS) program and ramp-up on the 120mm Tank Training ammunition program. Mission Readiness sales increased primarily due to higher volume on an international training program, partially offset by wind-down of the JSTARS program. Operating Income First quarter 2023 operating income increased $5m, or 3 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 11.6 percent from 12.1 percent primarily due to lower net EAC adjustments at Battle Management & Missile Systems, partially offset by improved performance at Mission Readiness.
MISSION SYSTEMS
Three Months Ended March 31
Sales
First quarter 2023 sales increased $66m, or 3 percent, and reflects higher volume in all four business areas, including higher restricted sales in the Networked Information Solutions business area as well as higher volume on SEWIP, marine systems programs and infrared countermeasure programs. These increases were partially offset by lower volume on the Ground/Air Task Oriented Radar (G/ATOR) program and airborne radar programs, including F-35. Operating Income First quarter 2023 operating income decreased $25m, or 6 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 14.0 percent from 15.4 percent principally due to changes in contract mix toward more cost-type content and a loss recognized in connection with an unconsolidated joint venture.
SPACE SYSTEMS
Sales
First quarter 2023 sales increased $495m, or 17 percent, due to higher volume in both business areas.
Launch & Strategic Missiles sales increased primarily due to ramp-up on development programs, including a $161m increase on the Ground Based Strategic Deterrent (GBSD) program and higher volume on the Next Generation Interceptor (NGI) and Ground-based Midcourse Defense Weapon Systems (GWS) programs. Sales in the Space business area increased primarily due to higher volume on restricted programs, the NextGeneration Overhead Persistent Infrared Polar (NextGen Polar) program and the Space Development Agency (SDA) Tranche 1 Tracking Layer program. These increases were partially offset by lower volume for Commercial Resupply Services (CRS) missions. Operating Income First quarter 2023 operating income increased $52m, or 20 percent, due to higher sales and a higher operating margin rate. Operating margin rate increased to 9.3 percent from 9.1 percent primarily due to a higher operating margin rate at Launch & Strategic Missiles, including the sale of a license to a customer, partially offset by lower net EAC adjustments in the Space business area.
Raytheon
25 Apr 23. Raytheon’s quarterly adjusted profit rises 4% on aviation boost. Raytheon Technologies Corp (RTX.N) reported a 4% rise in quarterly adjusted profit on Tuesday, as the aerospace company benefited from strong demand for jet engine spare parts and services.
A stronger-than-expected recovery in travel has forced airlines to keep older jets in service for a longer period, helping companies such as Raytheon through sales of spare parts and other aftermarket services.
Raytheon’s Pratt & Whitney business, which makes engines for the Airbus A320neo family of aircraft, reported a 41% jump in adjusted operating profit and a 15% rise in adjusted sales in the first quarter.
Supply chain snags and labour shortages, however, continued to weigh on the company’s missiles and defense business, which reported a 13% fall in adjusted operating profit in the quarter through March.
Overall, Raytheon quarterly sales rose 10% to $17.21bn and adjusted profit rose to $1.79bn from $1.72bn a year earlier.
“Continued global airline travel and defense systems demand point to sustained top line growth,” Raytheon Chief Executive Greg Hayes said.
On a per share basis, the company posted adjusted profit of $1.22. Analysts on average were expecting a profit of $1.13 per share, as per Refinitiv data, but it was not immediately clear if the numbers were comparable. The Arlington, Virginia-based company reaffirmed its annual sales outlook of $72bn to $73 bn and adjusted profit per share forecast of $4.90 to $5.05. (Source: Google/Reuters)
25 Apr 23. Raytheon Technologies Reports Q1 2023 Results.
RTX delivers 10% sales growth and strong segment operating profit growth; Q1 book-to-bill of 1.25 with an RTX record backlog of $180bn
Raytheon Technologies Corporation (NYSE: RTX) reported first quarter 2023 results.
First quarter 2023
- Sales of $17.2bn, up 10 percent versus prior year including 10 percent organic growth
- GAAP EPS from continuing operations of $0.97, up 31 percent versus prior year, which included $0.25 of acquisition accounting adjustments and net significant and/or non-recurring charges
- Adjusted EPS of $1.22, up 6 percent versus prior year
- Operating cash outflow from continuing operations of $863m; Free cash outflow of $1,383m
- Company backlog of $180bn; including $71bn of defense and $109bn of commercial
- Achieved approximately $50m of incremental RTX gross cost synergies
- Repurchased $562m of RTX shares
Reaffirms outlook for full year 2023
- Sales of $72.0 – $73.0 bn
- Adjusted EPS of $4.90 – $5.05
- Free cash flow of approximately $4.8bn
- Share repurchase of $3.0bn of RTX shares
“Our year is off to a strong start, including solid top- and bottom-line performance. Continued global airline travel and defense systems demand point to sustained top line growth, as evidenced by $21bn in new orders and a record backlog of $180bn across our industry-leading portfolio,” said Raytheon Technologies Chairman and CEO Greg Hayes. “Our previously announced business realignment, which is on track for July, will unlock additional value as we more fully integrate our teams and capabilities to drive improved customer solutions and operational performance.”
Adjusted net sales, organic sales, adjusted operating profit (loss), adjusted net income, adjusted earnings per share (“EPS”) and free cash flow are non-GAAP financial measures. When we provide our expectation for adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures (expected diluted EPS from continuing operations and expected cash flow from operations) is not available without unreasonable effort due to the unavailability of items for exclusion from the GAAP measure (such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures and other structural changes). We are unable to address the probable significance of this information, the variability of which may have a significant impact on future GAAP results. See “Use and Definitions of Non-GAAP Financial Measures” below for information regarding non-GAAP financial measures.
First quarter 2023
Raytheon Technologies reported first quarter sales of $17.2 bn, up 10 percent over the prior year. GAAP EPS from continuing operations of $0.97 was up 31 percent versus the prior year and included $0.25 of acquisition accounting adjustments and net significant and/or non-recurring charges. Adjusted EPS of $1.22 was up 6 percent versus the prior year. The company recorded net income from continuing operations attributable to common shareowners in the first quarter of $1.4bn, up 29 percent versus the prior year which included $367m of acquisition accounting adjustments and net significant and/or non-recurring charges. Adjusted net income was $1.8bn, up 4 percent versus prior year. Operating cash flow from continuing operations was an outflow in the first quarter of $863m. Capital expenditures were $520m, resulting in free cash outflow of $1,383m.
Backlog and Bookings
Backlog at the end of the first quarter was $180bn, of which $109bn was from commercial aerospace and $71bn was from defense.
Notable defense bookings during the quarter included:
- $1.9bn of classified bookings at Raytheon Intelligence & Space (RIS)
- $1.2bn for Patriot Air Defense System for Switzerland at Raytheon Missiles & Defense (RMD)
- $827m of classified bookings at RMD
- $650m for Next Generation Jammer production for the U.S. Navy and Australia at RIS
- $619m for SPY-6 production and sustainment for the U.S. Navy at RMD
- $320m for StormBreaker production for the U.S. Navy and U.S. Air Force at RMD
- $308m for F119 sustainment at Pratt & Whitney
- $275m for missile tracking satellite constellation for the Space Development Agency at RIS
- $266m for airborne radar production for an international customer at RIS
- $234m for Naval Strike Missile production for the U.S. Navy at RMD
- $224m for F117 sustainment at Pratt & Whitney
- $217m for Tanker lots 8 & 9 at Pratt & Whitney
- $213m for F135 sustainment at Pratt & Whitney
- $212m for Excalibur production for the U.S. Army and international customers at RMD
Segment Results
The company’s reportable segments are Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space (RIS), and Raytheon Missiles & Defense (RMD).
Collins Aerospace had first quarter 2023 sales of $5,581m, up 16 percent versus the prior year. The increase in sales was driven by a 24 percent increase in commercial aftermarket, a 12 percent increase in commercial OE, and a 9 percent increase in military. The increase in commercial sales was driven primarily by the continued recovery of air traffic which resulted in higher flight hours and higher OE production rates.
Collins Aerospace recorded operating profit of $794 m, up 80 percent versus the prior year. Q1 2022 operating profit included the impact of impairment charges and reserve adjustments of $141m related to the Russia sanctions. Adjusted operating profit of $800m in the first quarter of 2023 was up 37 percent versus the prior year. The increase in operating profit was primarily driven by higher commercial aftermarket volume, as well as favorable mix, which more than offset higher production costs and SG&A expense.
Pratt & Whitney had first quarter 2023 sales of $5,230m, up 15 percent versus the prior year. The increase in sales was driven by a 27 percent increase in commercial OE, a 14 percent increase in commercial aftermarket and a 13 percent increase in military sales. The increase in commercial sales was primarily due to the continued commercial aftermarket recovery and higher commercial OE volume across both Large Commercial Engines and Pratt & Whitney Canada. The increase in military sales was driven by the Q2 2022 F135 production contract award and higher F135 sustainment volume. Pratt & Whitney recorded operating profit of $415m, up 175 percent versus the prior year. Q1 2022 operating profit included the impact of impairment charges and reserve adjustments of $155m related to the Russia sanctions. Pratt & Whitney recorded adjusted operating profit of $434m in the first quarter of 2023, up 41 percent versus the prior year. The increase in operating profit was primarily driven by drop through on higher commercial aftermarket sales, a favorable contract matter and higher military sales. This was partially offset by higher commercial OE volume.
Raytheon Intelligence & Space
RIS had first quarter 2023 sales of $3,565m, flat versus the prior year driven by lower Command, Control and Communications programs, mostly offset by higher Cyber and Services programs. RIS recorded operating profit of $324m, down 14 percent versus the prior year. The decrease in operating profit was driven by lower net program efficiencies, which was spread across numerous programs, with no individual or significant driver. On an adjusted basis, operating profit was down 13 percent versus the prior year.
Raytheon Missiles & Defense
RMD had first quarter 2023 sales of $3,671m, up 4 percent versus prior year. The increase in sales was primarily driven by higher sales in Advanced Technology and Air Power programs. RMD recorded operating profit of $328m, down 15 percent versus the prior year. The decrease in operating profit was driven by lower net program efficiencies and higher development program mix, partially offset by higher volume. Lower net program efficiencies included the unfavorable impact of a significant contract option exercised in the quarter. RMD recorded adjusted operating profit of $335m, down 13 percent versus the prior year.
Textron
27 Apr 23. Textron Reports First Quarter 2023 Results.
- EPS of $0.92; adjusted EPS of $1.05
- Net cash from operating activities of $153m in the first quarter of 2023
- $377 m returned to shareholders through share repurchases in the first quarter
Textron Inc. (NYSE: TXT) today reported first quarter 2023 net income of $0.92 per share, as compared to $0.88 per share in the first quarter of 2022. Adjusted net income, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.05 per share for the first quarter of 2023, compared to $0.97 per share in the first quarter of 2022.
“In the quarter, we saw revenue growth at Aviation, Industrial and Systems,” said Textron Chairman and CEO Scott C. Donnelly. “At Bell, we expect to see revenue growth through the remainder of the year following the resolution of the FLRAA contract protest earlier this month, which allowed us to restart work on the program.”
Cash Flow
Net cash provided by operating activities of the manufacturing group for the first quarter was $153m, compared to $225m last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $104m for the first quarter, compared to $209m last year.
In the quarter, Textron returned $377m to shareholders through share repurchases.
First Quarter Segment Results
Textron Aviation
Textron Aviation’s revenues were $1.1bn, up $109m from last year’s first quarter, reflecting higher pricing of $58m and higher volume of $51m, which included higher defense and aftermarket volume. Textron Aviation delivered 35 jets in the quarter, down from 39 last year, and 34 commercial turboprops, up from 31 in last year’s first quarter. Segment profit was $125m in the first quarter, up $15m from a year ago, largely due to favorable pricing, net of inflation, and the impact from higher volume, partially offset by an unfavorable impact from performance. Textron Aviation backlog at the end of the first quarter was $6.5bn.
Bell
Bell revenues in the quarter were $621m, down $213m from the first quarter of 2022, due to lower military revenues, reflecting lower spares and support volume and V-22 and H-1 production volume. Bell delivered 22 commercial helicopters in the quarter, down from 25 last year.
Segment profit of $60m was down $31m from last year’s first quarter, largely due to lower volume and mix, partially offset by a favorable impact from performance of $29m, reflecting lower research and development costs. Bell backlog at the end of the first quarter was $4.6 bn.
Textron Systems
Revenues at Textron Systems were $306m, up $33m from last year’s first quarter, largely reflecting higher volume. Segment profit of $34m was up $6m, compared with the first quarter of 2022, primarily due to a favorable impact from performance.
Textron Systems’ backlog at the end of the first quarter was $2.0bn.
Industrial
Industrial revenues were $932m, up $94m from last year’s first quarter, largely due to higher volume and mix at both Textron
Specialized Vehicles and Kautex.
Segment profit of $41m was up $2m from the first quarter of 2022, primarily due to higher volume and mix and a favorable impact from pricing, net of inflation, principally in the Specialized Vehicles product line, largely offset by an unfavorable impact from performance.
Textron eAviation
Textron eAviation segment revenues were $4m and segment loss was $9m in the first quarter of 2023, primarily related to research and development costs.
Finance
Finance segment revenues were $12m, and profit was $8m.
(Source: BUSINESS WIRE)