Textron Beats on EPS, Misses on Revenue

Textron (NYSE:TXT), a multifaceted industrial company known for its aviation and defense businesses, released its fourth-quarter 2024 earnings results on Jan. 22. The company posted adjusted earnings per share (EPS) of $1.34, surpassing the consensus expectation of $1.28 by 4.7%. Revenue reached $3.613 billion, slightly missing the expected $3.748 billion. Despite certain segmental headwinds, Textron ended the quarter on a positive note.

Source: Analysts' estimates for the quarter provided by FactSet.

Business Overview

Textron is a prominent player in both the commercial and military manufacturing sectors. Its Textron Aviation unit, known for aircraft brands like Cessna and Beechcraft, and the Bell segment, known for military and commercial helicopters, form the backbone of its operations. The company's diversification across multiple sectors balances risk.

Recently, it has been focusing on cutting-edge products and sustainability, particularly within aviation. Innovations in electric aircraft and commercial service advancements reflect its forward-looking strategy. Its investments in research and its efforts to maintain its competitive edge within defense contracting have been key to its success.

Quarterly Highlights

The company's aviation business faced significant hurdles in Q4, primarily from a major labor strike. As a result, revenue decreased by $242 million year over year. Aircraft deliveries of 32 jets and 38 turboprops were down significantly from the 50 jets and 44 turboprops delivered in the prior-year period. Yet the segment's backlog grew by $676 million year over year to $7.8 billion, providing hope for a rebound.

Bell's performance was a bright spot, with revenues climbing 5.4% to $1.129 billion, thanks to strong military program activities. Gains were bolstered by the Future Long Range Assault Aircraft (FLRAA) program transitioning into an advanced stage, offsetting declines in other programs' volumes.

Its Textron Systems and industrial segments showed less favorable results. Both suffered slight revenue declines, which management attributed to market pressures and softer demand for specialized vehicles. Despite these challenges, strategic initiatives such as the development of sustainable aviation technologies continue to support Textron’s market positioning.

The company spent $232 million on share repurchases during the quarter, bringing its total buybacks for the year to $1.1 billion. However, manufacturing cash flow dipped to $692 million from $931 million the previous year.

Looking Ahead

For 2025, management forecasts that revenue will jump to approximately $14.7 billion as it puts its disruptive labor issues behind it. Adjusted earnings are projected to land in the range of $6 per share and $6.20 per share -- up from $5.48 in 2024 -- indicating potential recovery and expansion.

Investors should watch how Textron navigates labor relations post-strike and improves productivity in the wake of prior disruptions. They should also pay attention to evolving military contracts and sustainable aviation initiatives. These will be particularly important for Textron given its strategic emphasis on these growth vectors.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Textron. The Motley Fool has a disclosure policy.