Textron’s Q2 Earnings: Top-line Propelled By Increased Sales At Aviaition And Industrial

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Textron (NYSE:TXT) performed solidly this quarter beating the analyst consensus earnings estimate by $0.03 to come in at $0.66. Additionally, the industrial giant managed to record revenues at $3.5 billion (beating analyst estimates of $3.3 billion). Furthermore, the company reaffirmed its full year EPS guidance to $2.60-$2.80. All in all, Textron is off to a good start this year and the momentum is likely to continue through to Q4.

Key Highlights:

  • Sales were up at Aviation and Industrial as expected. Primarily, the revenues were up at Aviation 6.4% due to a greater volumes and product mix. Industrial benefitted from increased sales and strategic acquisitions. The company managed to deliver 45 Citation Jets (including the roll out of 9 NetJets) and 23 King Airs as opposed to 36 Jets and 30 King Airs in the same quarter last year. Due to strong demand, the company expects to increase prices of the NetJets starting in the second half of this year.
  • Revenues at Systems was up significantly due to higher sales of the unmanned aircraft and increased international weapons deliveries. The company won a contract worth $18 million to upgrade 24 Shadow systems for the U.S. Army. This will help sustain the Shadow program well into 2018 at current production levels. Furthermore, Textron acquired Airborne Tactical Advantage Company or ATAC within the quarter. The acquisition provides many synergies for the department and could prove to push the top line even further in the long run.
  • As expected, Bell sales were down this quarter as the segment continues to suffer from a stagnated market. Revenues came in at $804 million (down $46 million from last year). This was primarily due to decreased volumes in the commercial helicopters space. That being said, the number of H-1s produced were up to 9 this quarter, in comparison to 6 in the same quarter last year. Since oil production is still in its recovery stages, it could be a while before we see positive figures here.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis of Textron here

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