Diversified U.S. conglomerate Textron Inc. (TXT) reported fourth-quarter 2014 earnings from continuing operations of 79 cents per share, beating the Zacks Consensus Estimate by 6.8% and exceeding the year-ago figure of 60 cents by 31.7%. The improved performance reflects the positive impact of acquisitions made by the company.
Earnings came at $2.13 per share in 2014, beating the Zacks Consensus Estimates by 0.5%. Full-year earnings were also higher than the year-ago number by 21.7%.
Revenues
Total revenue in the quarter was $4,096 million, missing the Zacks Consensus Estimate of $4,296 million by 4.7%. However, revenues increased 16.8% from the year-ago figure of $3,506 million primarily on account of higher contribution from the Beechcraft acquisition.
Manufacturing revenues climbed 17.1% year over year to $4,074 million, while revenues from the Finance division declined 15.4% during the quarter.
Revenues for 2014 stood at $13,878 million, lagging the Consensus estimates by 1.7%. Reported revenues however surpassed the year-ago figure of $12,104 million by 14.7%.
Segment Performance
Textron Aviation: Revenues from this division during the fourth quarter surged to $1,520million from $923 million in the year-ago quarter. This improvement reflects the impact of the Beechcraft acquisition along with higher volume of jet deliveries. The company delivered 41 King Air turboprops and 55 new jets in the quarter, compared with 62 jets in the prior-year period.
The segment registered a profit of $130 million versus $33 million in the prior-year quarter. Segment order backlog at the end of the third quarter was $1.4 billion, flat sequentially.
Bell: Segment revenues decreased 22.1% to $1,071 million from the year-ago level of $1,375 million due to lower volumes registered on theV-22 program and commercial deliveries.
The segment delivered 57 commercial helicopters compared with 75 units in the prior-year period. Bell also delivered 7 V-22s and 7 H-1s compared with the year-ago delivery of 13 units and 6 units, respectively.
Segment profit also decreased 18% year over year to $146 million in the quarter. Bell’s order backlog at the end of the quarter was $5.5 billion, up $192 million sequentially.
Textron Systems: Revenues from this division during the reported quarter were $621 million, representing a year-over-year increase of 51.8%. Revenues surged on account of higher volumes of Unmanned Systems and the impact of acquisitions, partially offset by lower volumes of Marine and Land Systems.
Segment profit of $50 million registered a year-over-year increase of 25%, reflecting higher volumes.
Textron Systems’ backlog at the end of the fourth quarter was $2.8 billion, down $336 million from the end of the third quarter.
Industrial: Segment revenues increased 11.5% year over year to $862 million driven by higher volumes and the positive impact of acquisitions. Segment profit increased $13 million to $67 million.
Finance: Revenues from this division decreased 15.4% year over year to $22 million. The segment profit however increased to $5 million from the year-ago level of $2 million.
Financials
As of Jan 3, 2015, cash and cash equivalents stood at $731million, compared with $1,163 million as of Dec 28, 2013.
Capital expenditure during the quarter was $174 million versus $144 million in the year-ago quarter. Long-term debt was $2,803 million as of Jan 3, 2015versus $1,923 million as of Dec 28, 2013.
Guidance
Textron expects earnings from continuing operations for 2015 to be in the band of $2.30–$2.50 per share with revenues of about $14.4 billion. The company expects that the capital investments made in the field of research and development, and expansion of product capabilities through acquisitions will fuel bottom-line growth.
Cash flow from continuing operations before pension contributions is estimated in the band of $550–$650 million.
Other Releases
Rockwell Collins Inc. (COL) reported adjusted first-quarter earnings of $1.10, missing the Zacks Consensus Estimate by 1.8%.
Lockheed Martin Corp. (LMT) reported adjusted fourth-quarter earnings of $3.01 per share, comfortably surpassing the Zacks Consensus Estimate of $2.81 by 7.1%.
General Dynamics Corp. (GD) fourth-quarter 2014 earnings of $2.19 per share comfortably surpassed the Zacks Consensus Estimate of $2.10 by 4.3%.
Our Take
Textron reported a strong fourth quarter. Accretive acquisitions along with focus on investments in new products helped it achieve higher earnings.
The current sequestration wave has driven defense players like Textron to resort to acquisitions. The strategic acquisition program will enable the company to leverage its existing distribution network to gain market share and realize synergies.
The stock currently carries a Zacks Rank #3 (Hold).
(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)
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