Textron (TXT) Q4 Earnings Beat Estimates, Revenues Fall Y/Y

Zacks Equity Research
·4-min read

Textron Inc. TXT reported fourth-quarter 2020 adjusted earnings of $1.06 per share, which exceeded the Zacks Consensus Estimate of 91 cents by 16.5%. The bottom-line figure however deteriorated 4.5% from the year-ago quarter’s figure.

Including one-time items, the company posted GAAP earnings of $1.03 per share compared with 87 cents generated in the year-ago quarter.

For 2020, the company reported adjusted earnings of $2.07 per share, which surpassed the Zacks Consensus Estimate of $1.93. However, the full-year earnings also deteriorated from 2019’s earnings of $3.74 per share.

Revenues

Total revenues came in at $3,667 million, which surpassed the Zacks Consensus Estimate of $3,469 million by 5.7%. The reported figure however decreased 9.1% from the year-ago quarter’s $4,035 million on lower contributions from each of its segments.

Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. Price, Consensus and EPS Surprise
Textron Inc. Price, Consensus and EPS Surprise

Textron Inc. price-consensus-eps-surprise-chart | Textron Inc. Quote

For 2020, the company recorded revenues worth $11.65 billion, thereby beating the Zacks Consensus Estimate of $11.41 billion. The full-year revenues however deteriorated from 2019’s $13.63 billion.

Manufacturing revenues decreased 9% in the fourth quarter to $3,654 million while revenues at the Finance division declined 31.6% to $13 million.

Segmental Performance

Textron Aviation: In the quarter under review, revenues at this segment declined 9.8% year over year to $1,560 million. The decline was primarily due to lower Citation jet volume and lower aftermarket volume.

The company delivered 61 jets, down from 71 in the year-ago quarter. It also delivered 61 commercial turboprops, up from 59 in fourth-quarter 2019.

The segment generated operating profit of $108 million in the quarter compared with $134 million earned in the year-ago quarter, owing to lower volume and mix. The order backlog at the end of the quarter was $1.6 billion.

Bell: Revenues from this segment slipped 1% to $871 million, primarily due to lower military volume and commercial volume.

The segment delivered 57 commercial helicopters in the quarter, down from 76 last year.

Segment profits were down 6.8% to $110 million on account of lower volume. Bell’s order backlog at the end of the quarter was $5.3 billion, down $0.4 billion sequentially.

Textron Systems: Revenues at this segment came in at $357 million, down 10.5% the year-ago period. The deterioration can be attributed to lower volume at the TRU Simulation and Training business.

Segmental profits increased 48.5% year over year to $49 million in the fourth quarter due to favorable performance.

Textron Systems’ backlog at the end of the fourth quarter was $2.6 billion, up sequentially.

Industrial: Revenues at this segment declined 6.6% to $866 million due to reduced demand in the ground support equipment business within the Specialized Vehicles product line.

Moreover, segment profit was $55 million compared with $44 million in the previous year quarter. The improvement can be attributed to a favorable impact from pricing and inflation, and favorable performance.

Finance: Revenues at this segment decreased to $13 million from $19 million in the year-ago quarter.

Financials

As of Jan 2, 2021, cash and cash equivalents totaled $2,146 million compared with $1,181 million as of Jan 4, 2020.

Cash flow from operating activities amounted to $833 million at the end of Jan 2, 2021 compared with $960 million at the end of Jan 4, 2020.

Capital expenditures were $317 million during 2020 compared with $339 million in 2019.

Long-term debt was $3,198 million as of Jan 2, 2021, compared with $2,563 million as of Jan 4, 2020.

Guidance

Textron expects to generate adjusted earnings in the range of $2.70-2.90 per share in 2021 on revenues of $12.5 billion. The current Zacks Consensus Estimate for 2021 earnings is pegged at $2.68 per share, lower than the guided range.

The consensus mark for revenues, pegged at $12.58 billion, lies above the guided figure.

Zacks Rank

Textron currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Raytheon Technologies Corporation’s RTX fourth-quarter 2020 adjusted earnings per share (EPS) of 74 cents outpaced the Zacks Consensus Estimate of 71 cents by 4.2%.

Lockheed Martin LMT reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, which came in line with the Zacks Consensus Estimate.

An Upcoming Defense Release

L3Harris Technologies LHX is scheduled to announce its fourth-quarter results on Jan 29.

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