Textron Inc., the Providence-based conglomerate, this month announced a third-quarter revenue increase of 18 percent, largely propelled by strong business in its commercial aircraft, industrial and financial sectors.
Lewis B. Campbell – Textron’s chairman, president and CEO – said Oct. 19 that the company had yielded earnings of $1.36 per share for continuing operations during the quarter that ended on Sept. 30. Including discontinued operations, the company posted third-quarter net income of $1.32 per share.
The earnings picture is vastly different from that in the third quarter of 2005, when the company experienced a loss of $1.20 per share.
This quarter’s $2.8 billion in revenue represented an 18-percent increase over the same 2005 period and resulted in net income of $169 million, a contrast to the loss of $164 million in 2005.
Revenue and profit were strongest at the company’s Cessna Aircraft Co., the world’s largest manufacturer of general aviation aircraft. Cessna reported revenue of more than $1 billion (18 percent higher than in the third quarter of 2005) and operating income of $162 million (an increase of 38.5 percent). The $45 million increase in profit for Cessna was largely due to higher pricing, higher volumes of Citation business jets and lower warranty costs.
The company reported a 5-percent increase in revenue at its industrial segment to $720 million, largely due to higher pricing, while the finance segment of Textron showed revenue growth of 36.8 percent to $212 million due to a higher average finance receivable. The combined segment profit for the two divisions was $81 million, an increase of 26.6 percent.
The company’s Bell Helicopter Division produced mixed results during the quarter. Revenue grew 26.8 percent to $855 million, with revenue related to U.S. government contracts up $145 million during the quarter. But operating profit at Bell fell 24.7 percent, to $67 million, in the same period.
Campbell said profits were down despite the increase in revenue mostly because commercial profits were down $36 million.
Also, he said, the company is currently incurring launch-and-development costs at the Bell Division for the new products it is rolling out, including upgraded H-1 helicopters.
In September, the company announced the delivery of the first production run of aircraft in the program – the AH-1Z attack helicopter and the UH-1Y helicopter – to the U.S. Department of Defense. The H-1 program calls for the upgrading of 280 attack and utility helicopters for the Marine Corps, with a goal of modernizing the Corps’ aging fleet and reducing maintenance costs by $3 billion in the next 30 years.
Campbell said he expects the investments at the Bell division will begin to yield profits in 2008, with double-digit profits by 2009. Until then, he said, the strong performance of the company’s other divisions will offset costs at Bell, as they did during the quarter just ended.
Campbell added that a strengthening economy also had played a role in the company’s strong quarter, with commodity inflation moderating during the three-month period.
“Overall, the world economy remains robust as it appears that lower commodity prices, particularly oil, are offsetting the impact of slightly higher interest rates,” he said.
In addition to strong earnings this quarter, losses per share during the third quarter last year can largely be attributed to the company’s decision to sell its Fastening Systems business, which resulted in a net loss of $164 million.
Looking forward, Campbell said he is anticipating strong results in 2006’s fourth quarter, with Cessna already having booked 160 orders for the quarter and filled its 2007 production run.
Cessna also recently unveiled its newest business jet, the Citation CJ4.
The jet is an extension of the popular Citation line, the company said last week, and will offer the strongest performance and payload balance in the Citation CJ series. It is configurable for seven to eight passengers in the main cabin and is expected to have a cruise speed of 500 miles per hour.
The company said Wednesday that it plans to acquire Morristown, N.J.-based Overwatch Systems LLC for about $325 million, to extend core capabilities in its aerospace and defense business. Overwatch Systems is a developer and provider of intelligence analysis tools and communications products for the Department of Defense, U.S. Department of Homeland Security, U.S. intelligence agencies and select foreign armed forces. It also has a commercial line of products for medical imaging analysis.
“This acquisition is in perfect alignment with our strategy to add important capabilities to our current strong businesses, to further serve our government, military and homeland security customers,” Campbell said.
