Textron Q2 results get boost from Specialized Vehicles
Textron Inc., parent company of brands including Arctic Cat, today reported second quarter 2019 net income of $0.93 per share, compared to $0.87 per share in the second quarter of 2018.
“Operationally, we continued to have solid margin performance across our businesses with improvements in the quarter at Aviation and Industrial, and we remain on track for growth in the second half of the year,” said Textron Chairman and CEO Scott C. Donnelly.
Cash Flow
Net cash provided by operating activities of the manufacturing group for the second quarter totaled $163 million, compared to $468 million in last year’s second quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $102 million compared to $399 million last year.
In the quarter, Textron returned $159 million to shareholders through share repurchases.
Outlook
Textron now expects 2019 earnings per share from continuing operations to be in a range of $3.65 to $3.85, up $0.10 from our previous outlook. Textron reiterated its expectation for cash flow from continuing operations of the manufacturing group before pension contributions of $700 to $800 million with planned pension contributions of about $50 million.
Donnelly continued, “We remain on target for a strong 2019 as we continue our focus on execution and earnings growth through the balance of the year.”
Second Quarter Segment Results
Textron Aviation
Revenues at Textron Aviation of $1.1 billion were down $153 million from last year’s second quarter, primarily due to lower volume and mix across the commercial turboprop and defense product lines.
Textron Aviation delivered 46 jets, down from 48 last year, and 34 commercial turboprops, down from 47 last year.
Segment profit was $105 million in the second quarter, up $1 million from a year ago as favorable performance was offset by the lower volume and mix.
Textron Aviation backlog at the end of the second quarter was $1.9 billion.
Bell
Bell revenues were $771 million, down 7% from last year, primarily on lower military volume.
Bell delivered 53 commercial helicopters in the quarter, down from 57 last year.
Segment profit of $103 million was down $14 million, primarily due to the lower military volume.
Bell backlog at the end of the second quarter was $6.0 billion.
Textron Systems
Revenues at Textron Systems were $308 million, down from $380 million last year, primarily reflecting lower volume at TRU Simulation + Training and Unmanned Systems.
Segment profit was up $9 million from last year’s second quarter, primarily due to favorable performance which included a gain related to the formation of our new training business with FlightSafety International Inc.
Textron Systems’ backlog at the end of the second quarter was $1.4 billion.
Industrial (Sales of products from such brands as E-Z-GO, Cushman, Textron Off Road, Arctic Cat and more)
Industrial revenues of $1.0 billion decreased $213 million, largely related to the impact from the disposition of our Tools & Test product line and lower volume.
Segment profit was down $4 million from the second quarter of 2018, largely due to the impact from lower volume and the product line disposition, partially offset by favorable performance primarily related to the Specialized Vehicles product line.
Finance
Finance segment revenues were down $1 million, and profit was up $1 million from last year’s second quarter.
Unfortunately Textron is trying to cut its way to profitability with the Arctic Cat line of products. Long term dealers (and personnel) are being cut left and right without any thought of the potential impact at the consumer level. In the past the “old” company would put dealers on opposite corners in order to get distribution, but now dealers are being forced to sever their Arctic Cat relationship, leaving customers, very loyal ones at that, with no one for sales & service within 30-50 mile radius. We’ve seen the affect of attrition from dealership closures 5 years ago when Arctic Cat was “clinging to life” and pushing excessive product was their only option, forcing dealers into a take or leave it position. 2 local “big number” dealers (40+ years each) closed and very few of their customers traveled to other Cat dealers, but instead jumped to the competition. The current deal with Tracker/Cabella’s unfortunately could be the death knell to a great product with a proud history. I don’t think the current regime at Textron understands the relationship snowmobile and atv customers have with their dealers. These machine purchases are made due to the comfort level one has with the dealership and it’s sales/service department. The business is unique in that the consumer wants to see consistency in personnel, be known by his first name, be able to share his stories/experiences with them. I don’t see the “Tracker/Cabella” experience being one that meets those needs with the employee turnover and experience level…or lack thereof. I could be wrong…wife and kids have told me this many times over the years but I think in an effort to “right the Arctic Cat ship”, Textron is on a path to sinking it. Keeping my fingers crossed!!