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TI

TEXTRON INC (TXT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $3.61B and GAAP EPS was $0.76; adjusted EPS was $1.34, both down year over year due to the Textron Aviation strike disrupting production and delivery cadence .
  • Segment dynamics: Bell revenue grew on FLRAA, but margin mix was dilutive; Aviation revenue and profit fell on lower volumes and inefficiencies; Systems held steady; Industrial was pressured by end-market softness and restructuring-related charges .
  • 2025 outlook calls for ~$14.7B revenue, GAAP EPS $5.19–$5.39, adjusted EPS $6.00–$6.20, and manufacturing cash flow before pension contributions of $800–$900M, with an Aviation margin rebuild and FLRAA/commercial OEM ramp at Bell .
  • Street consensus comparisons were unavailable from S&P Global due to a rate-limit error; estimate context and potential revision directions are discussed qualitatively below.

What Went Well and What Went Wrong

What Went Well

  • Bell revenue increased to $1.1B (up $58M YoY) as FLRAA ramped and military/support revenue rose; management highlighted strong backlog and predictable sustainment on H-1/V-22 .
  • Aftermarket momentum: Aviation aftermarket revenues grew 6.3% in 2024; demand for Gen3 light jets drove strong order activity and a year-end Aviation backlog of $7.8B (up $676M YoY) .
  • Strategic program progress: FLRAA achieved Milestone B (EMD phase) and Bell received a follow-on award (option for two limited user test aircraft) in Q4; Systems advanced FTUAS and Navy ship-to-shore connector programs .

What Went Wrong

  • Aviation volumes were materially disrupted: 32 jets and 38 turboprops delivered in Q4 vs 50 and 44 a year ago; Aviation segment profit fell $93M YoY and Q4 margin was an “anomaly” due to strike-driven inefficiencies and idle costs .
  • Industrial segment pressure: Revenues fell to $869M (down $92M YoY) on lower volume; restructuring included $53M of special charges and a $38M powersports inventory valuation charge as production was indefinitely paused .
  • Cash flow conversion headwinds: Q4 LIFO provision rose to $80M; working capital and timing of military payments will weigh on 2025 cash flow cadence (back-end loaded) with higher CapEx for growth and FLRAA prep .

Financial Results

Consolidated Income Statement Highlights

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($USD Billions)$3.89 $3.43 $3.61
GAAP EPS ($)$1.01 $1.18 $0.76
Adjusted EPS ($)$1.60 $1.40 $1.34
Segment Profit ($USD Millions)$384 $284 $283
LIFO Provision ($USD Millions)$21 $49 $80
Special Charges ($USD Millions)$126 $2 $53

Segment Breakdown

SegmentMetricQ4 2023Q3 2024Q4 2024
Textron AviationRevenues ($MM)$1,524 $1,339 $1,282
Textron AviationSegment Profit ($MM)$193 $128 $100
Textron AviationProfit Margin (%)12.7% 9.6% 7.8%
BellRevenues ($MM)$1,071 $929 $1,129
BellSegment Profit ($MM)$118 $98 $110
BellProfit Margin (%)11.0% 10.5% 9.7%
Textron SystemsRevenues ($MM)$314 $301 $311
Textron SystemsSegment Profit ($MM)$35 $39 $42
Textron SystemsProfit Margin (%)11.2% 13.0% 13.5%
IndustrialRevenues ($MM)$961 $840 $869
IndustrialSegment Profit ($MM)$57 $32 $48
IndustrialProfit Margin (%)5.9% 3.8% 5.5%
eAviationRevenues ($MM)$10 $6 $11
eAviationSegment Profit ($MM)($23) ($18) ($22)
eAviationProfit Margin (%)(230.0%) (300.0%) (200.0%)
FinanceRevenues ($MM)$12 $12 $11
FinanceProfit ($MM)$4 $5 $5

KPIs

KPIQ4 2023Q3 2024Q4 2024
Aviation Jets Delivered (units)50 41 32
Aviation Turboprops Delivered (units)44 25 38
Bell Commercial Helicopters Delivered (units)91 44 78
Aviation Backlog ($B)$7.1 (approx., implied)$7.6 $7.8
Bell Backlog ($B)N/A$6.5 $7.5
Manufacturing Cash Flow Before Pension ($MM)$380 $147 (Q3) $306
Share Repurchases ($MM)$283 (Q4 2023) $215 (Q3 2024) $232 (Q4 2024)
LIFO Inventory Provision ($MM)$21 $49 $80
Special Charges ($MM)$126 $2 $53
Powersports Inventory Valuation Charge ($MM)——$38

Note: Aviation backlog year-end increase of $676M vs 2023 is cited in summary; quarter-end backlog points provided above .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($B)FY 2025Not previously provided~$14.7 New
GAAP EPS ($)FY 2025Not previously provided$5.19–$5.39 New
Adjusted EPS ($)FY 2025Not previously provided$6.00–$6.20 New
Net Cash from Ops – Manufacturing ($B)FY 2025Not previously provided$1.175–$1.275 New
Manufacturing Cash Flow Before Pension ($MM)FY 2025Not previously provided$800–$900 New
Pension Contributions ($MM)FY 2025Not previously provided~$50 New
CapEx ($MM)FY 2025Not previously provided~$425 New
Effective Tax Rate (%)FY 2025Not previously provided~18% New
Corporate Expense ($MM)FY 2025Not previously provided~$160 New
Net Interest (Manufacturing) ($MM)FY 2025Not previously provided~$130 New
LIFO Provision ($MM)FY 2025Not previously provided~$165 New
Intangible Amortization ($MM)FY 2025Not previously provided~$35 New
Non-service Pension Income ($MM)FY 2025Not previously provided~$265 New
Segment Revenues ($B)FY 2025Not previously providedAviation ~$6.1; Bell ~$4.0; Systems ~$1.3; Industrial ~$3.2; eAviation ~$0.045 New
Segment Margin (%)FY 2025Not previously providedAviation 12–13; Bell 8.5–9.5; Systems 12–13; Industrial 4.5–5.5 New
Finance Segment Profit ($MM)FY 2025Not previously provided~$25 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Aviation Strike/Production RecoveryN/A (no strike; Aviation revenues $1.475B, strong y/y) Strike occurred; lowered Q3 deliveries/profit; backlog up to $7.6B; Gen3 product announcements Workforce stabilized post 5-year contract; Q4 deliveries light; margin to ramp through 2025 Improving operationally in 2025
Bell FLRAA ProgramPreparing; Bell revenue $794M; margin expansion vs 2023 Milestone B achieved; backlog +$2.3B; revenue $929M FLRAA ramp and LUT option exercised; dilutive fixed-price options impacted Q4 margin Revenue growth with margin mix dilution
Aftermarket StrengthAviation aftermarket supportive; segment profit solid Aviation aftermarket +5% Q3; year-to-date +8% Aviation aftermarket +6.3% for 2024; Bell aftermarket strong but flatter in 2025 Sustained but normalizing
Industrial/PowersportsSolid prior-year comps; some restructuring actions start Specialized Vehicles softness; cost actions Indefinite pause of powersports; $53M special charges; $38M inventory valuation Restructuring underway; margin preservation focus
Orders/BacklogHealthy demand; Aviation revenue growth Aviation bookings >$1B; Bell commercial demand rising Strong demand across portfolio; Aviation backlog $7.8B; Bell backlog $7.5B Book-to-bill ~1:1 planned
Cash Flow CadenceQ2 manufacturing cash flow before pension $296M Q3 MCFOBP $147M; FY guide cut to $650–$750M Q4 MCFOBP $306M; 2025 $800–$900M, back-end loaded Rebuild in 2025; timing headwinds

Management Commentary

  • CEO on Aviation recovery and demand: “While the strike was unfortunate, we did take this opportunity to significantly improve our parts flow… we expect… improved efficiency going forward… steady customer demand… backlog of $7.8 billion” .
  • CEO on Bell outlook and risk: “Most of the commercial business is well booked… sustainment around V-22 and H-1 is very predictable… I don’t think there’s a lot of risk to the downside of where we are on the Bell numbers” .
  • CFO on Q4 below-the-line items: “Corporate expenses were $17M… net interest $21M… LIFO $80M… intangible amortization $8M… non-service pension income $65M… special charges $53M and inventory valuation charge $38M” .
  • CEO on margins: “The 7.8% [Aviation] is certainly an anomaly… volumes unusually low… overhead not burdened… expect progression through the year” .
  • CEO on demand narrative: “Demand and order activity across every model has been good… very strong quarter in CJ3/CJ4 with Gen3 announcements… planning 1:1 book-to-bill” .

Q&A Highlights

  • Aviation deliveries/margin cadence: Quarterly ramp through 2025 with margin progression; early 2025 deliveries include 2024-priced aircraft, with margin improving across the year .
  • Cash flow bridge: Back-end loaded 2025 cash; inventory levels required for ramp; timing of military payments and higher CapEx (FLRAA prep) temper conversion .
  • Bell margin drivers: FLRAA ramp and higher commercial OEM deliveries are dilutive; sustainment remains stable; expect operating profit dollars to be held near levels despite revenue growth .
  • Aviation supply chain and workforce: Parts supply improved vs 2024; workforce stability post contract; confidence in delivering ~$6.1B Aviation revenue guide .
  • Macro/policy: Potential business-friendly tax/regulatory environment supports private aviation demand; tariff outcomes are a wildcard given Canada/Mexico operations and suppliers .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates (EPS and revenue) from S&P Global for Q4 2024 and prior quarters, but the request failed due to a daily rate limit exceeded. As a result, exact consensus numbers and beat/miss determinations versus S&P Global could not be provided. Potential Street adjustments may focus on: Aviation margin ramp timing, Bell margin mix dilution versus FLRAA/commercial OEM growth, and back-end loaded cash flow cadence in 2025 [GetEstimates error: “Daily Request Limit Exceeded”].

Key Takeaways for Investors

  • Aviation is set for a volume and margin recovery in 2025 as production stabilizes; the Q4 margin was a strike-driven anomaly. Watch quarterly margin cadence and deliveries versus the ~$6.1B revenue and 12–13% margin guide .
  • Bell’s revenue growth is supported by FLRAA and commercial volumes, but margin mix will compress; focus on operating profit dollars and backlog execution (limited user test fixed-price options already pressured Q4) .
  • Industrial restructuring (powersports pause) reduces near-term revenue but should support margin structure; monitor cost reductions and Specialized Vehicles demand stabilization .
  • Back-end loaded cash flow and working capital timing, plus higher CapEx for growth (FLRAA prep), imply near-term FCF conversion remains a key sensitivity; expect stronger 2H 2025 .
  • Demand signals remain constructive across Aviation (Gen3 jets) and Bell commercial; management plans ~1:1 book-to-bill to align with lead times—sustained backlog supports medium-term visibility .
  • Policy tailwinds (tax/regulatory) could bolster private aviation demand; tariff risks (Canada/Mexico exposure) represent an overhang to monitor .
  • Near-term trading: Expect the stock to react to proof points of Aviation margin progression and Bell FLRAA execution; medium-term thesis hinges on Aerospace & Defense growth offsetting Industrial softness and delivering on 2025 EPS/FCF targets .