TXT Beats EPS, Reaffirms Outlook - Analyst Blog
20 Juli 2011 - 4:08PM
Zacks
Diversified U.S. conglomerate,Textron Inc.
(TXT) announced second quarter 2011 earnings of 29 cents per share
in line with the year-ago quarter. The second quarterly result also
exceeded the Zacks Consensus Estimate of 24 cents by 5 cents.
However, after including a restructuring charge, income from
continuing operations came in at 27 cents in the year-ago quarter
versus no special items in the reported quarter. Performance in the
reported quarter was boosted by higher aftermarket volumes at its
Cessna unit, along with improvement in the cost structures at its
Bell and Industrial units.
Operating Statistics
Textron clocked quarterly revenues of approximately $2.7 billion
which came in below the Zacks Consensus Estimate of $2.8 billion by
$82 million. However revenues marginally beat the year-ago
quarterly revenues by $19 million. The year-over-year stalemate in
revenues is mainly attributable to lower revenue in the Textron
Systems division on account of lower unmanned aircraft system sales
and lower mission support volume. The performance of the Financial
division was also lower than the year-ago quarter. This offset the
higher topline from Cessna, Bell and Industrial segments.
Overall in the quarter, the company reported income of $92
million from continuing operations versus $81 million in the
year-ago quarter. Net income came in at $90 million versus $82
million in the year-ago quarter.
Segmental Revenues
Cessna: Revenues from this division during the reported
quarter increased $17 million year-over-year to $652 million. The
rise was due to growth mainly in the aftermarket business. In the
reported quarter the company delivered 38 Citation jets, compared
with 43 deliveries in the year-ago quarter. Segment profit
increased $2 million year-over-year to $5 million. Quarterly
backlog at the end of the reported quarter was $2.5 billion, down
$113 million from the end of the first quarter of 2011.
Bell: Revenues from this division during the reported
quarter increased $49 million to $872 million. The year-over-year
growth was due to higher revenues generated by increasing
deliveries of V-22, H-1 and commercial aircraft. Bell delivered 9
V-22's, 8 H-1's and 22 commercial aircraft in the quarter compared
to 8 V-22's, 3 H-1's and 21 commercial units in the year-ago
quarter. Segmental profit increased $12 million to $120 million,
reflecting improved performance. Quarterly backlog at the end of
the reported quarter was $7.0 billion, down $365 million from the
end of the first quarter of 2011.
Textron Systems: Revenues from this division during the
reported quarter decreased $82 million to $452 million. The
downside in revenues was mainly due to lower unmanned aircraft
system sales and lower mission support volume. Segmental profit
decreased $21 million to $49 million primarily due to lower
volumes. Quarterly backlog at the end of the reported quarter was
$1.6 billion, down $60 million from the end of the first quarter of
2011.
Industrial: Revenues from this division increased $58
million during the quarter to $719 million from $661 million in the
year-ago quarter. The result benefited primarily due to a favorable
foreign exchange impact. This resulted in the segmental profit
rising by $4 million to $55 million.
Finance: Revenues from this division decreased $23
million year over year to $33 million. The decline in revenues was
primarily due to reduced earnings on lower finance receivables.
However the company was able to reduce segmental losses by $38
million and digested a quarterly loss of $33 million. This was
primarily due to lower loan loss provisions and lower operating
expenses. This was partially offset by lower interest margin on the
reduced portfolio of finance receivables.
Financial Condition
Textron ended the reported quarter with cash and cash
equivalents of approximately $610 million, compared to $898 million
at the end of fiscal 2010. The company generated $164 million of
cash from operations in the reported quarter, compared to $339
million used in the year-ago quarter. Capital expenditure during
the quarter was $91 million versus $45 million in the year ago
quarter. Long term debt fell to $2.2 billion at the end of the
reported quarter versus $2.3 billion at fiscal-end 2010. However
Textron's total debt was $4.4 billion, down $288 million from the
end of the first quarter of 2011.
Guidance
Textron, driven by the bullishness of its top line growth
prospects across its manufacturing segments, has reaffirmed its
fiscal 2011 EPS from continuing operations in the range of $1.00 –
$1.15.
Our
Take
Based in Providence, Rhode Island, Textron Inc. is a global
multi-industry company that manufactures aircraft, automotive
engine components and industrial tools.
Textron currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. Considering the fundamentals, we are
maintaining our Neutral recommendation on the stock. In the
near-term, we would advise investors to focus on the Zacks #1 Rank
(short-term Strong Buy rating) diversified conglomerate peers like
Danaher Corporation (DHR) and
CLARCOR Inc. (CLC).
CLARCOR INC (CLC): Free Stock Analysis Report
DANAHER CORP (DHR): Free Stock Analysis Report
TEXTRON INC (TXT): Free Stock Analysis Report
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