Textron (TXT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues rose to $3.43 billion, up 3% year-over-year, driven by strong Bell segment growth and stable Textron Aviation revenues, but offset by declines in Industrial and Textron Systems; adjusted EPS was $1.40, down from $1.49, and GAAP EPS was $1.18, down from $1.35.

• Net income for Q3 2024 was $223 million, down from $269 million year-over-year; segment profit declined to $284 million from $332 million.

• Bell segment saw 23% revenue growth to $929 million, segment profit up 27% to $98 million, and backlog boosted by a $2.5 billion FLRAA contract and Milestone B approval.

• Textron Aviation was impacted by a four-to-five-week IAM labor strike, causing production delays, a $50 million revenue and $30 million profit loss, and continued effects into Q4.

• Executive changes announced: CFO Frank Connor to retire in February 2025, succeeded by David Rosenberg.

Financial highlights

• Q3 2024 revenues: $3.43 billion (up 3% year-over-year); adjusted income from continuing operations was $265 million, down from $297 million; net income $223 million; adjusted EBITDA $421 million; manufacturing cash flow before pension contributions was $147 million, down from $205 million.

• Diluted average shares outstanding decreased to 188.9 million from 200.0 million year-over-year.

• Backlog reached $16.0 billion, up from $13.9 billion at year-end 2023, driven by the FLRAA contract at Bell.

• Repurchased 2.4 million shares in Q3, returning $215 million to shareholders; $890 million YTD.

• Operating cash flow for nine months was $569 million, down from $718 million year-over-year, mainly due to working capital changes and labor disruption.

Outlook and guidance

• 2024 adjusted EPS guidance lowered to $5.40–$5.60 from $6.20–$6.40 due to labor disruption.

• Manufacturing cash flow before pension contributions now expected at $650–$750 million, down from $900 million–$1 billion.

• Aviation revenue for 2024 expected at $5.5 billion with 11% segment margin; Bell margin improved to 10.5%–11%; Industrial revenue expected at $3.5 billion with 4% margin.

• Q4 revenue and segment profit expected to be unfavorably impacted by the recent labor strike and production recovery.

• Additional special charges of $15–$20 million anticipated in Q4, mainly for Industrial segment headcount reductions; restructuring plan charges expected to be substantially completed by year-end 2024.