Diversified U.S. conglomerate
) reported third quarter 2013 earnings from continuing operation
of 35 cents per share, missing the Zacks Consensus Estimate of 47
cents by 25.5%. The quarterly figure also came in below the
year-ago level by 27.1%. The weak performance reflects lower
contribution from Cessna, as the light-to-midsize business jet
market remained soft.
Total revenue in the quarter was $2,904.0 million, lower than the
Zacks Consensus Estimate of $2,968.0 million and the year-ago
figure of $3,000.0 million.
Manufacturing revenues were down 2.2% year over year to $2,871.0
million, while revenue from the Finance division declined 48.4%
during the quarter.
The revenue from this division during the third quarter decreased
23.8% year over year to approximately $593.0 million. The
significant decline reflects delivery of only 25 new Citation
jets, compared with 41 in the prior-year period.
The segment registered a loss of $23 million versus a profit of
$30 million in the third quarter of 2012. Cessna's order backlog
at the end of the third quarter was $1.07 billion, up
sequentially by $61 million.
Segment revenue increased 8.1% to $1,162 million from the
year-earlier level of $1,075.0 million. The growth reflects
delivery of 54 commercial helicopters compared with 46 units in
the prior-year period. Bell delivered 10 V-22's and 7 H-1's
compared with 11 and 5 deliveries, respectively, a year ago.
However, segment profit declined 20.6% to $131 million in the
quarter from $165 million reported in the same period last year,
due to manufacturing inefficiencies associated with labor
disruptions. Bell's order backlog at the end of the quarter was
$6.40 billion, down $543 million sequentially.
The revenue from this division during the reported quarter was
$405.0 million, representing a year-over-year increase of 1.3%.
The results were driven by higher volumes at Weapons and Sensors
product lines. These were, however, partially offset by lower
deliveries at Unmanned Aircraft Systems and Marine & Land
Segment profit was $35 million, up from $21.0 million in the
year-ago quarter, reflecting impressive performances across most
product lines. Textron Systems' backlog at the end of the third
quarter was $2.89 billion, up $266 million sequentially.
The revenue from this division increased 4.1% year over year to
$711.0 million driven by higher volumes and acquisitions. Segment
profit increased 36.8% year over year to $52.0 million driven by
improved performance and higher volume.
The revenue from this division decreased 48.4% year over year to
$33.0 million. Its segment profit also declined to $13.0 million
from $28.0 million in the year-ago period.
Textron ended third quarter 2013 with cash and cash equivalents
of approximately $444 million, compared with $1,378.0 million at
the end of 2012. The company's cash from operating activities was
$361.0 million compared with $316.0 million in the year-ago
Capital expenditure during the quarter was $110.0 million versus
$156.0 million in the year-ago quarter. Long-term debt was $1,916
million at the end of the third quarter 2013 versus $1,766.0
million at the end of 2012.
Textron lowered its earnings per share guidance from continuing
operations to $1.75-$1.85 from its previous expectation of
$1.90-$2.10. Cash flow from continuing operations before pension
contributions is estimated to be in the band of $200-$300
million. The company anticipates planned pension contributions of
about $200 million.
The cut in the guidance mainly reflects lower margins at Bell for
manufacturing inefficiencies along with labor disruptions, and
lower aircraft deliveries at Cessna.
Textron missed the Zacks Consensus Estimate hurt by a weak
performance at Cessna. The company, like its peers
Rockwell Collins Inc.
), continues to face defense budget deficits and political
uncertainty. Though the company received a number of contracts
this quarter, those were not sizeable. Budget cuts from
sequestration have reduced the number of contracts awarded by the
Department of Defense. However, going forward, the company's
strong presence in diverse areas of general aviation aircraft,
helicopter, aircraft engines, golf carts, turf maintenance
equipment, electronic test equipment and blow-molded fuel tanks
will likely fetch lucrative returns.
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). The stock to look out for in this
) with a Zacks Rank #2 (Buy).
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