LONDON, UK / ACCESSWIRE / October 27, 2016 / Active Wall St. announces its post-earnings coverage on Textron Inc. (NYSE: TXT). The company reported its financial results for the third quarter fiscal 2016 on October 20 2016. The maker of Cessna small planes and Bell helicopters posted higher-than-expected income for the quarter. However, revenue numbers were below market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the three months ended on October 1st, 2016, Textron reported net income from continuing operations of $1.10 per share compared to $0.63 per share in Q3 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 $115 million pre-tax restructuring charge ($0.27 per share, after-tax). Excluding these items, adjusted income from continuing operations was $0.61 per share for Q3 2016, down $0.02 from Q3 2015. The results beat analysts’ expectations for earnings of $1.06 per share.
The Providence, Rhode Island-based company’s revenues in the reported quarter were $3.3 billion, up 2.2% from the year ago period of revenue of $3.18 billion, missing market expectations of $3.41 billion.
“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,” CEO Scott Donnelly said in a statement.
Segment Results
During Q3 2016, revenues at Textron Aviation were $1.20 billion, up $39 million from the year ago period, primarily due to volume and mix. During the reported quarter, the division delivered 41 new Citation jets and 29 King Air turboprops compared to 37 jets and 29 King Airs in the year earlier quarter. Textron Aviation recorded a segment profit of $100 million in Q3 2016 compared to $107 million a year ago. Textron Aviation backlog at the end of the Q3 2016 was $1.1 billion, approximately flat sequentially.
Revenue from Textron’s Bell division came in at $734 million, down $22 million from the prior year’s quarter. The Bell delivered 25 commercial helicopters compared to 45 units last year. This segment’s profit was down $2 million, primarily due to the lower commercial aircraft volumes. Bell backlog at the end of Q3 2016 was $4.9 billion, approximately flat compared to Q2 2016.
During Q3 2016, revenues at Textron Systems unit were $413 million, down $7 million compared to the year earlier quarter, primarily due to lower Weapons and Sensors volume, partially offset by higher revenues at Marine and Land Systems. This segment’s profit was up $5 million, reflecting improved performance. Textron Systems’ backlog at the end of Q3 2016 was $2.2 billion, down $74 million from the end of the previous quarter.
Textron’ Industrial segment reported revenues of $886 million, which was higher by $58 million compared to Q3 2015, due to the impact of acquired businesses and higher volumes. This segment’s profit increased $5 million, largely reflecting improved performance. During Q3 2016, Textron’ Finance segment’s revenues increased $3 million and the segment’s profit decreased $3 million.
Capital Structure and Investments
Net cash provided by operating activities of continuing operations of its manufacturing group for Q3 2016 was $178 million compared to $231 million in last year’s third quarter. Manufacturing cash flow before pension contributions were $94 million compared to $116 million during Q3 2015.
Restructuring Plans
On August 30, 2016, Textron announced a restructuring plan with estimated pretax charges in the range of $110 million to $140 million with expected cash outlays in the range of $65 million to $85 million. The company now estimates pre-tax charges will be in the range of $140 million to $170 million, with expected cash outlays in the range of $100 million to $120 million.
Looking Forward
Textron expects FY16 earnings per share from continuing operations to be in the range of $3.06 to $3.21, or $2.65 to $2.75 on an adjusted basis. The company revised its expectation for cash flow from continuing operations of the manufacturing group before pension contributions to $500 million to $600 million from its previous estimate of $600 million to $700 million.
Stock Performance
On Wednesday, October 26, 2016, Textro’s shares were up 1.84%, finishing the day at $39.85. A total volume of 1.83 million shares exchanged hands by the close of the trading session, which was higher than the 3 months average volume of 1.14 million shares. For the last three months and past six months, the stock has gained 1.71% and 1.50%, respectively. Shares of the company have a PE ratio of 12.76. The stock currently has a market cap of $10.90 billion.
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