Textron Reports Third Quarter 2019 Results

TEXTRON INC. Revenues by Segment and Reconciliation of Segment Profit to Net Income (Dollars in millions, except per share amounts) (Unaudited)

			Three Months Ended								Nine Months Ended
			September 28, 2019				September 29, 2018				September 28, 2019				September 29, 2018
REVENUES
MANUFACTURING:
		Textron Aviation		$	1,201			$	1,133			$	3,458			$	3,419
		Bell			783				770				2,293				2,353
		Textron Systems			311				352				926				1,119
		Industrial			950				930				2,871				3,283
					3,245				3,185				9,548				10,174

FINANCE					14				15				47				48
		Total revenues		$	3,259			$	3,200			$	9,595			$	10,222

SEGMENT PROFIT
MANUFACTURING:
		Textron Aviation		$	104			$	99			$	315			$	275
		Bell			110				113				317				317
		Textron Systems			31				29				108				119
		Industrial			47				1				173				145
					292				242				913				856

FINANCE					5				3				17				14
		Segment Profit			297				245				930				870

Corporate expenses and other, net					(17	)			(29	)			(88	)			(107	)
Interest expense, net for Manufacturing group					(39	)			(32	)			(110	)			(101	)
Gain on business disposition (a)					-				444				-				444
Income before income taxes					241				628				732				1,106
Income tax expense					(21	)			(65	)			(116	)			(130	)
Net Income				$	220			$	563			$	616			$	976

Earnings Per Share (EPS)				$	0.95			$	2.26			$	2.64			$	3.80

		Diluted average shares outstanding			231,097,000				249,378,000				233,689,000				256,780,000

Net Income and Diluted Earnings Per Share GAAP to Non-GAAP Reconciliation:

			Three Months Ended September 29, 2018								Nine Months Ended September 29, 2018
							Diluted EPS								Diluted EPS
Net income - GAAP				$	563			$	2.26			$	976			$	3.80
	Gain on business disposition, net of taxes of $34 million				(410	)			(1.65	)			(410	)			(1.60	)
Adjusted net income - Non-GAAP (b)				$	153			$	0.61			$	566			$	2.20

(a)

On July 2, 2018, Textron completed the sale of the Tools & Test Equipment product line and recorded an after-tax gain of $410 million, subject to post-closing adjustments.

(b)

Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release.

Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)


		September 28, 2019		December 29, 2018
Assets
Cash and equivalents		$	931	$	987
Accounts receivable, net			1,018		1,024
Inventories			4,436		3,818
Other current assets			856		785
Net property, plant and equipment			2,497		2,615
Goodwill			2,142		2,218
Other assets			2,225		1,800
Finance group assets			957		1,017
	Total Assets	$	15,062	$	14,264


Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt		$	568	$	258
Current liabilities			3,198		3,248
Other liabilities			2,130		1,932
Long-term debt			2,909		2,808
Finance group liabilities			805		826
	Total Liabilities		9,610		9,072

Total Shareholders' Equity			5,452		5,192
	Total Liabilities and Shareholders' Equity	$	15,062	$	14,264

TEXTRON INC. MANUFACTURING GROUP Condensed Schedule of Cash Flows (In millions) (Unaudited)

		Three Months Ended						Nine Months Ended
		September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Cash flows from operating activities:
Net income		$	216		$	561		$	603		$	959
Depreciation and amortization			98			104			297			316
Changes in working capital			(124	)		74			(840	)		(204	)
Changes in other assets and liabilities and non-cash items			48			24			95			57
Gain on business disposition			-			(444	)		-			(444	)
Dividends received from TFC			-			-			50			50
Net cash from operating activities of continuing operations			238			319			205			734
Cash flows from investing activities:
Capital expenditures			(81	)		(74	)		(216	)		(233	)
Net proceeds from business disposition			-			807			-			807
Net proceeds from corporate-owned life insurance policies			-			-			4			98
Proceeds from the sale of property, plant and equipment			2			2			6			12
Other investing activities, net			-			(3	)		-			(3	)
Net cash from investing activities			(79	)		732			(206	)		681
Cash flows from financing activities:
Increase in short-term debt			118			-			118			-
Net proceeds from issuance of long-term debt			-			-			297			-
Purchases of Textron common stock			(109	)		(468	)		(470	)		(1,383	)
Other financing activities, net			(1	)		16			8			49
Net cash from financing activities			8			(452	)		(47	)		(1,334	)
Total cash flows from continuing operations			167			599			(48	)		81
Total cash flows from discontinued operations			(1	)		-			(2	)		(1	)
Effect of exchange rate changes on cash and equivalents			(10	)		(3	)		(6	)		(9	)
Net change in cash and equivalents			156			596			(56	)		71
Cash and equivalents at beginning of period			775			554			987			1,079
Cash and equivalents at end of period		$	931		$	1,150		$	931		$	1,150

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:
		Three Months Ended						Nine Months Ended
		September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net cash from operating activities of continuing operations - GAAP		$	238		$	319		$	205		$	734
Less:	Capital expenditures		(81	)		(74	)		(216	)		(233	)
	Dividends received from TFC		-			-			(50	)		(50	)
Plus:	Total pension contributions		11			12			36			37
	Taxes paid on gain on business disposition		11			-			11			-
	Proceeds from the sale of property, plant and equipment		2			2			6			12
Manufacturing cash flow before pension contributions - Non-GAAP (a)		$	181		$	259		$	(8	)	$	500

(a)

Manufacturing cash flow before pension contributions is a non-GAAP financial measure as defined in "Non-GAAP Financial Measures" attached to this release.

TEXTRON INC. Condensed Consolidated Schedule of Cash Flows (In millions) (Unaudited)

	Three Months Ended						Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Cash flows from operating activities:
Net Income	$	220		$	563		$	616		$	976
Depreciation and amortization		100			106			302			322
Changes in working capital		(84	)		50			(787	)		(214	)
Changes in other assets and liabilities and non-cash items		49			24			94			57
Gain on business disposition		-			(444	)		-			(444	)
Net cash from operating activities of continuing operations		285			299			225			697
Cash flows from investing activities:
Capital expenditures		(81	)		(74	)		(216	)		(233	)
Net proceeds from business disposition		-			807			-			807
Net proceeds from corporate-owned life insurance policies		-			-			4			98
Finance receivables repaid		-			-			20			25
Other investing activities, net		2			7			9			37
Net cash from investing activities		(79	)		740			(183	)		734
Cash flows from financing activities:
Increase in short-term debt		118			-			118			-
Net proceeds from issuance of long-term debt		-			-			297			-
Principal payments on long-term debt and nonrecourse debt		(7	)		(23	)		(42	)		(60	)
Purchases of Textron common stock		(109	)		(468	)		(470	)		(1,383	)
Other financing activities, net		(1	)		17			9			53
Net cash from financing activities		1			(474	)		(88	)		(1,390	)
Total cash flows from continuing operations		207			565			(46	)		41
Total cash flows from discontinued operations		(1	)		-			(2	)		(1	)
Effect of exchange rate changes on cash and equivalents		(10	)		(3	)		(6	)		(9	)
Net change in cash and equivalents		196			562			(54	)		31
Cash and equivalents at beginning of period		857			731			1,107			1,262
Cash and equivalents at end of period	$	1,053		$	1,293		$	1,053		$	1,293

TEXTRON INC.

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