Diversified U.S. conglomerate
Textron Inc.
(
TXT
) announced fourth quarter 2012 adjusted earnings of 56 cents per
share versus 49 cents in the year-ago quarter. The fourth
quarterly result however came below the Zacks Consensus Estimate
of 57 cents. Lower numbers for the company were due to weakness
in the automotive and business jet markets.
Even though there is a possibility of improvement in the jet
markets in the long run, we feel the current reduced access to
the credit markets has led to lower spending by commercial air
carriers further accentuating the prolonged weakness in the
commercial jet market. Also, in the near term, the imbroglio over
The Boeing Company
's (
BA
) 787 Dreamliner has affected the jet markets.
On a reported basis, Textron clocked earnings of 51 cents per
share versus loss of 7 cents recorded in the year-ago quarter.
The 5 cent difference between reported and operating earnings,
during the reported quarter, was due to 6 cents in charges at
Cessna related to an unfavorable business arbitration award
offset by 1 cent related to discontinued operations.
Revenue
Textron clocked quarterly revenue of $3.4 billion, in line with
the Zacks Consensus Estimate and ahead of the year-ago quarterly
revenue of $3.3 billion. The upsurge came mainly from
manufacturing revenues, which were up 2.6% year over year.
The year-over-year upward spike in revenue is attributable to
higher performance from Bell and Textron Systems. The performance
of the Financial division was also higher than the year-ago
quarter.
Segment Performance
Cessna:
The revenue from this division during the fourth quarter
decreased $110 million year over year to approximately $901
million. In the reported quarter the company delivered 53 new
Citation jets, compared with 67 in last year's fourth
quarter.
Segment profit decreased $37 million to $23 million, primarily
due to a $27.4 million arbitration settlement charge and lower
jet volumes. Cessna order backlog at the end of the fourth
quarter was $1.1 billion, down $267 million from the end of the
third quarter 2012.
Bell:
The revenue from this division during the fourth quarter
increased $139 million to slightly more than $1.1 billion. Bell
delivered 9 V-22's, 6 H-1's and 65 commercial aircrafts in the
reported quarter compared to 7 V-22's, 6 H-1's and 62 commercial
units in last year's fourth quarter.
Segment profit increased $10 million, reflecting improved
performance. Bell's order backlog at the end of the fourth
quarter was $7.5 billion, up $1.2 billion from the end of the
third quarter 2012.
Textron Systems:
The revenue from this division during the reported quarter
increased $58 million to $571 million. The upside came from
higher deliveries in Unmanned Aerial Systems and Weapons and
Sensors.
Segment profit was $36 million versus loss of $8 million a
year ago. This was primarily due to higher volumes, partially
offset by a $19 million charge associated with the company's
fee-for-service unmanned aerial systems contracts. Textron
Systems' backlog at the end of the fourth quarter was $2.9
billion, relatively flat with the end of third quarter 2012.
Industrial:
The revenue from this division decreased $2 million during the
quarter to $706 million from $708 million in the year-ago
quarter. Segment profit decreased $6 million to $43 million,
reflecting cost inflation in excess of related price increases.
Finance:
The revenue from this division decreased $23 million to $35
million. The segment reported a profit of $2 million compared to
last year's $232 million fourth quarterly loss, which reflected a
mark-to-market charge.
Since the end of the third quarter 2012, nonaccrual finance
receivables decreased from $145 million to $143 million and
sixty-day plus delinquencies decreased from $114 million to $90
million. Finance receivables at the end of the quarter were $2.1
billion, reflecting liquidations of $65 million during the
quarter.
Financial Condition
Textron ended fiscal 2012 with cash and cash equivalents of
approximately $1.4 billion, compared with $871 million at the end
of fiscal 2011. The company generated $561 million of cash from
operations in the reported quarter, compared with $242 million
generated in the year-ago quarter.
Capital expenditure during the quarter was $166 million versus
$152 million in the year-ago quarter. Long-term debt fell to $1.8
billion at the end of fiscal 2012 from $2.3 billion at the end of
fiscal 2011.
Fiscal 2013 Guidance
Textron bullish on its top-line growth prospects across all of
its manufacturing segments is forecasting fiscal 2013 revenues of
approximately $12.9 billion, up about 6% from 2012. The company
anticipates earnings per share from continuing operations in the
range of $2.10-$2.30.
Cash flow from continuing operations before pension
contributions is estimated to be between $500 million and $550
million. The company anticipates planned pension contributions of
about $200 million.
Our Take
Based in Providence, the Rhode Island, Textron Inc. is a global
multi-industry company that manufactures aircraft, automotive
engine components, and industrial tools. The stock currently
carries a Zacks Rank #3 (Hold). Other stocks in the diversified
operations category worth mentioning are
Federal Signal Corp.
(
FSS
) and
Jardine Strategic Holdings Ltd.
(
JSHLY
). These stocks carry a Zacks Rank #1 (Strong Buy).
BOEING CO (BA): Free Stock Analysis Report
FED SIGNAL CP (FSS): Free Stock Analysis
Report
(JSHLY): ETF Research Reports
TEXTRON INC (TXT): Free Stock Analysis Report
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