Textron (TXT) 17 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Eric Salander	Vice President of Investor Relations
Scott Donnelly	Chairman and CEO
Frank Connor	Chief Financial Officer
Sheila Kah	Jefferies
Cai von Rumohr	Cowen and Company
Seth Seifman	JPMorgan
Peter Arment	Baird
Pete Skibitski	Alembic Global
George Shapiro	Shapiro Research
Rajeev Lalwani	Morgan Stanley
David Strauss	Barclays
Jon Raviv	Citi
Robert Spingarn	Credit Suisse
Noah Poponak	Goldman Sachs
Caitlin Dullanty	Bank of America
Robert Stallard	Vertical Research
Carter Copeland	Melius Research

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Textron Third Quarter Earnings Conference Call. And at this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. And as a reminder, today's conference is being recorded.

the Relations, to Mr. turn President host, now Investor at will conference your over Vice I Eric Salander. ahead. go Please

Eric Salander

Thanks, Gregg, and good morning, everyone.

today. expectations Before mention, we factors, and our which and SEC in various release. also we to statements call during filings will be are subject begin, discussing future risk I'd to These forward-looking like in our press are detailed estimates today's

CEO, have and today, the we Scott Officer. Donnelly, Chairman Financial call Connor, Frank and our Chief On Textron's

found in Web be Investor earnings Relations our can Our call of the site. section presentation

Textron's million million, cash revenues adjusted of quarter to quarter. before flow to in in up the compared compared quarter were totaled million in Manufacturing $XXX share third from Net third net pension $X.X contributions billion, last income the was $XX share, per year's third $X.XX in per last the quarter. $XXX year's $X.XX year. income prior

With that, I'll turn Scott. the to over call

Scott Donnelly

Revenues driven was deliveries and and in good strong Year-to-date and of up in last popular the align customer platforms XXX models to production businesses. were our to continue orders execution ramp to of of Eric, basis across XXX demand. up we Segment primarily quarter continue to year's Industrial. were largely as with our are points morning, to Thanks the deliveries aircraft. ahead look up and revenues of these due we these see Aviation rate Textron profit everybody. forward Bell commercial by higher quarter XXX continue as we margin

from program expected award helicopter XXX GXI is FAA. later an received the certification entry the new has XXX decision this Bell proposed GXI Bell our its advanced where the year. training Navy's advance quarter, IFR the In systems as from

a UH-XY opportunities foreign is The we're $XXX side. of platform and for intent Republic helicopters utility transaction of of that military four Bill eight to several pursue. estimated military acquire one the continuing AH-X as million. their AHX- part Bell This our total attack at to mixed fleet Z to announced the Moving Czech

of a our commercial entrant unveiled characteristics validated in deliver The Bell on Within the solution Invictus the we meeting. XXX US model future Invictus new to new AUSA with affordable, vertical agile program XXX at Bell lethal unique Army's aircraft recently full-scale combines Army attack technologies the the reconnaissance our future battlefield. the US annual lift, to modern the on helicopters an XXX and more win Rotorcraft,

the systems builders' our prototypes next US down vehicle systems a At program. systems. were Army Textron the will for In deliveries Textron revenues trials. marine of XXX deliver selected armored the phase quarter Also in by trials to companies next-generation lower successfully craft connector three followed among down by completed Navy land quarter, acceptance be squad on now weapon at ship-to-shore was the

captured product Within platform. our line as at Aerosonde fee the robotic unmanned, in for service of AUSA, million program. US vehicle Army's over Earlier week MX to unveiled combat the $XX new we quarter the systems offered Textron Ripsaw wins for the this

volume well continue Also have year. independent Bass we and last of quarter, stores through vehicles. specialized reduction Capella marine were growth revenues reflecting realignment to this a retail saw initiated steady primarily industrial, improved Textron vehicles, we onboard at the favorable Specialized seen fourth cost the Pro quarter in from and performance as to dealers track actions Moving channel. in higher manufacturing we pricing continued and

last XX quarter, year. we aviation, jet volume. delivered In Textron to revenues from jets, aftermarket lower hired partially XX and from Moving turboprops last by year down from XX the up were and offset volumes, commercial defense up XX

began of as a In pickup certification in of Longitude the to late September, received the activity last order commercial October. week well and and compared sequentially we of at year. quarter FAA first deliveries Looking as the customer all-new saw we Citation turboprops, third

really We're quarter drive a margin expect to growth of hands this this revenue digit expansion customers and and the with have mid-single innovative platform had in Overall, revenue solid aviation our growth. aircraft in excited to the future.

year, legacy turboprops jet tracking our ahead with planned with plan. Coming of had with for turboprops to Year-to-date, compared higher running we flat. jet growth the about last is deliveries into XXX in commercial commercial volume to year legacy models XXX

aircraft the As to year QX through now excluding expect marketplace, it some those deliveries to quarter. customer the adjusting longitude, outlook be the light we continue for With will last of in flat occur about uncertainty current deliveries to of expect and remainder respect longitude started legacy and in sales our in with year. we're and the

Although, that was some modifications certification quarter. end next very pushing a year deliveries we've allow granted aircraft to related the require seen the of at for

also full-year Frank. defense revised our We've plan, order activity to volume call original With to have for in and guidance been delays compared experienced which the of that, I'll all turn over reflected in some XXXX.

Frank Connor

quarter And profit segment X.X%, XXX $XXX million, $XX the Scott. third year points with of you, the XXXX, basis morning, a was from from of ago. everyone. Segment margin quarter good in Thank million up profit up

contributed and ago Segment third higher a by offset higher Let's year profit defense Textron quarter, due offset last volumes, how partially $X.X inflation. third due the favorable primarily and million million was Textron the volume. $XXX starting and of $X $XX million review quarter, were billion each performance, in volume Revenues jet mix year's higher at Aviation to from from partially to of with net by Aviation. up the segments aftermarket lower

on third delivered XX impact the quarter net of from year. The up at lower from segment the of last Bell by billion. profit $XX Aviation quarter the mix. million performance partially of $XXX to compared Bell program military primarily adjustments, $X.X $XXX which $X included last due was offset higher commercial ago, lower volume XX million helicopters volume. at year from Textron down was the unfavorable a backlog offset favorable to an quarter was billion. backlog revenues, third and Bell end by $X.X year the end in partially revenues higher commercial million were million,

Revenues Textron $XX Systems. million, the Marine at down $X.X backlog Textron $XX armored third quarter at million quarter. profit Systems of Land was million was at vehicle of were Textron Systems volume $X from up year, from end the last & primarily third billion. lower $XXX million year's last reflecting Segment

million revenues XXXX, specialized $XXX favorable favorable from was quarter. year's pricing increased quarter was a third million Industrial Segment last profit related due and down $X to largely performance from related vehicle profit segment were from to of $X the $XX product revenues and specialized from million within impact primarily from Textron favorable impact line. Finance third to product $XX year million the of line. largely a the net ago, pricing vehicles a up

$XX segment profit, million million the below and expense in interest $XX were Moving was quarter. corporate expenses

We to million an returning also shareholders. cost shares in million. $XXX of repurchased at X.X million $XXX overall Year-to-date, cash we repurchased million shares X.X have

are effective narrowing up guidance wrap for we per includes revised of rate the to guidance, with earnings expected our share of full $X.XX. and range tax To a year. full-year XX% an and $X.XX This

can at We largely are to before open revising $XXX flow our range prepared Gregg, for we our $XXX ending outlook remarks. higher a concludes for manufacturing million of Aviation. line the That questions. Textron inventories to pension reflecting tax million contributions

Operator

Instructions] [Operator

Kah of Jefferies. from comes Please the ahead. go from Sheila line Your question first

SheilaKah

out talk Good how about you strategic decision wanted and the the put business. for tax thank Hi. to and alternatives morning for I to your time.

as as it Kind what you. selling thinking and here? about not about what's for are talked known changed You've long I've you of them

FrankConnor

for highly in sure over to alternatives like every good obviously back our might business the of that there's feedback from holding company that make attention been a to per be I we've a pretty given year Kautex. disconnect automotive otherwise of se sort last bit that the analysis engineered from at business. Sheila, is what paying fair what to the the so. do Well, there a in or And nothing look We seen a tier think thought in least we we an kind And to And appropriate explore X was market that. some it year portfolio fit of stock and get that we get and product, that of would investors end of feedback obviously as a we it standpoint. a we've is that

were that And that so why we process. launching we that's announced

SheilaKah

capital that capital ramp? about Got And on a cash working is just flow, think hindrance free much Frank, into in been here. we out it. has then, and Thank How given you. working do how longitudes pushed of Kind the XXXX?

FrankConnor

get the the But of will longitude, pushed some Yes. some see a inventory liquidate models here the Again, we capital given at will discussed on inventory working a that going of outlook $XXX kind legacy the as levels in next we think quarter. million and bit into we're reflects growth early of little fourth think Scott year. Aviation lot higher to

ScottDonnelly

on aircraft which be will based obviously. as deliveries still technical have few rolling longitude had year. there's a Frank quarter invasive through each these next of that trivial plan just mods several pieces But the our of Sheila, a last-minute longitudes we move few standpoint. will aircraft from probably a and in and are the of are production kind aircraft changes, that So, we're we've a that said, in of They'll means into bunch the

year, it year, customer military some fine if to does drive planned year originally which to take see some whom this to inventory. that take TXs put we as there. we get a trade any has asked have align that's for all price next softness versus We we've delivery and going to but delivery built said volume obviously having to we're was that And again

do the So obviously carrying softness. number if with in more seeing into penalty rather back a volume in than year. off there's market I'd next it's some that if dynamic the try of of it any rather signs and that us to the the inventory shows But sort push marketplace, we'd some of we're to on and

Operator

the Cai Textron. comes Your Please go from next from question von ahead. line Rumohr of

CaivonRumohr

didn't I joined you. I know -- Thank

ScottDonnelly

Kai. Welcome to board,

CaivonRumohr

Yes.

you're you vehicle, selling you up in part specialty ultimately I question quite look to wouldn't going Kautex if So if years? the is sell dilutive becomes, to it's to troubled follow five part Sheila's looks what and the of then Textron at question, three so think to more sell it industrial be on that also going Scott, like

ScottDonnelly

any business. vehicle we the on obviously, Well, haven't made had commentary Cai,

margins It It As and good you business us the good a had cash. business. for growth. generates vehicle know, good has historically been

I to went last through think harder issues some get year, we've been around. which turned obviously back we working

us one in businesses And a rest and business think of has lot kind the right we heading absolutely a better it's other guy of the matters, product the it I for you in the performance. like our a of in how are And direction. potential growth is market. like. in where is and the than those product businesses investing win having And of terms that strong

CaivonRumohr

Thank we in then Was if it. thought Kautex the they were keep looked significantly? down vehicles. talking on margins And specialty you. so, than at Got better like you Frank, weaker about Industrial, I look pricing and the

FrankConnor

I Kautex third mean, GSP. at No. a was we -- really fine. quarter which the this the quarter was year of last to pricing is tough was relative obviously

progress so well, we pricing. no and the saw Therefore And at having the of more and strategy considerable in of line. better revenue discounting Kautex perform longer kind of kind distribution year-over-year. pricing marketplace And margins made kind in Kautex terms was appropriate flat of a but strategy

Operator

Seth question the of go next from Your ahead. Seifman from Please JPMorgan. line comes

SethSeifman

good and market. that you follow-up jet wanted on Thanks just in the business I the some weakness very much mentioned of end to morning. Scott,

down excluding that driving And about a fourth that? that's customer set suggest that's made deliveries a of longitude or area commentary be particular XX models units set there the the quarter. particular year-on-year more will affecting geographical think is in I

ScottDonnelly

ex to on So, fourth longitude again from XXXX. Seth, flat fairly quarter would the be expect we

in has So book-to-bill of not to sort it Bill but order market the QX. there's be you an about down one here been activity obviously we're expecting knobs implied

intend but I in now, aircraft, it part saw have as and do saw to customers do uncertainty see mean market of in some and again softness the new discussions who in the So do QX. market, sort wait. I part the of buy QX of latter just it's been clearly do some we debating Indian not We horrible I we latter

again incentivize in they think to no action next prudent work would And go I next They're transactions move out there's and going reason to year not to in the and we happen. the try we're we've use so move price year. that in think the level pricing try all take those then But I after rather to deliveries a compromise we're But, yes, get done XX legacy about that. not to longitude back healthy up, far to non we on terms flat that's a We're of units talking year-to-date. one market it's-- down. should to on

not We XX we're a on giving we're expected those it's quarter sorry. back. basis, quarter-over- be where year-over-year that flat I'm just basis, to that's So right, comparing

SethSeifman

Okay.

XX then So and year-on-year be year-to-date you up okay-- You're up if you'll XX? are flat,

ScottDonnelly

That's right. Yes.

Now on sorry for a it's a flat on It's a quarter. confusion. year-over-year down, the not basis

SethSeifman

the In quarter? fourth

ScottDonnelly

Correct.

SethSeifman

Okay. about of years. coming come also Great. debt in the terms Thanks. a in $X thinking about share potential in. buyback. There's And then obviously next that quick just I think follow-up Kautex due a There's two proceeds do a billion as

So how proceeds do of level in you light --also think whatever target you in the about of those light have? leverage

ScottDonnelly

would the go sheet while at much decision with somewhat And this that point have buyback. it's Well, some appropriate at line think levered look, I to how share point, think make obviously that. under our in balance then is retirement you on we'll debt a

Operator

the ahead. from Arment line Peter question comes Please Your of from go Baird. next

PeterArment

morning, Scott, provide Yes. Kautex. the Thanks. been very you in Seth's made question guess Can on Frank. on there to good you? you little since color? I have Scott, for you've just maybe historically a just has lastly Good seen up Hey, business what interest announcement Is follow a

ScottDonnelly

us. can't fairly on we of have mean, interested lot a been There on. for early process. meetings process of obviously, been of -- that lot NDA's. early There's the whole running that give Goldman has I fairly prospective management it's is in a lot a I been with folks. But commentary. Look, process

PeterArment

you've what there? could heard unveiling. just some that have Okay. just think the of announcements and I XXX feedback what kind you then leveraging you'll Maybe on since commentary appreciate the advantages And out XXX that. already us give quickly you come Invictus

ScottDonnelly

Sure. Right. on I Monday. day was at AUSA all

folks well They're this the we what seen lot So for Obviously, when I'd think done. phase while kind probably I submitted opportunity point aircraft. as of that two and is customer for contract to a as of a flyable are say program, others build then has we of proposals is with number down our a of down community. with high. the intrigued had the pretty which towards And aiming at this that to will the the March go first with teams of interest level from the interact go our army we've year next to a is under selecting.

front I the craft rotor that mean is great get procreated from Invictus. as this But It's mean way I technology and the that clearly think the this speed very the obviously you I some is fly-by-wire agility not. made technology positive not and the is the we this investment -- that is-- absolutely scaling XXX in reaction leverages positive. technology, a were technology. and this on older the well and into huge

been or XXX. the very the customer's So I of we on as it their the has meet do exceed requirements. we risk performance And said, numbers flying technology terms And cost-effectively. lot of of the the with think validated a in can already entrance

very and was to falls hoping where down fly of the phase. the this the we're that select proceed March out obviously be But is response two what the think one I next into positive. gets see to So we'll out

Operator

Your of from next Skibitski Alembic. Pete comes ahead. line from Please question go the

PeteSkibitski

you painful another thoughts with for And Just want I is all that. for Is hand Yes. the to process Good going to to going issue would to lead Anything longitude get learned ask painful? away guys. or of maybe Scott, efforts morning, FAA make so you your things certification be or kind this that design guys on from future won't effort I maybe everybody? just this next are documentation from going about you that Boeing. think the the that taken want lessons certification. think through more

ScottDonnelly

Pete, both to and interactions there's from lot with a the part our learn I think Well, on this FAA.

the process, we designed I case. the built was we is and for reality and very think that well and And one understood. this The was understand we that is reality aircraft a scope new total pretty here changing. essentially extraordinary of process a the is was that evolving an which did had of sort had not frankly

we a lot process. conform done aircraft new And to so which safe, ended fantastic to what do work of a is this very to having up we had

but process. did. to of changes the painful this actually And the and changes in in the analysis and aircraft, were understand mods through material have scope new they And and to that didn't drove the critical it make the was and cases cases go not documentation impact the several what most but

is to that designed end work again, But way through there we had wildly with today order so certification that in required different we and painful. several areas up that through process certification than And built. were gain already the fundamentally aircraft than critical and our were changes different not the what

And we forward process of as think that we so, look, now go well. understand I very all first

our are that part aircraft with a XX I'm SkyCourier in XX next Obviously, start that's The going this pipeline to a part deck. on aircraft. aircraft not is

So process XX much past. aircraft in is done our different. lot the we've Obviously, the

have been is very I on lay working from sure get of do here So a we aircraft. understand we way we that with out to process FAA certification and make the very close in think the to what what there and that collaborative how

aircraft we're think And the as better in process, with of is the in it Denali. terms interaction work again, a FAA. understanding a So I of this much part place XX

to and longitude. than it's through that's smoother something much familiar the much expect certainly went I process So it would on more we to go us that

Operator

of George go from Your Shapiro Research. Shapiro Please next question the comes from line ahead,

GeorgeShapiro

ahead you of Yes. release inflation last higher in been the quarters or Good since the morning. was in that? that happened What's three aviation. seeing net commented you the we've Scott, four

ScottDonnelly

looking do we generally was didn't should. have we and as pretty Well, price But mean what that And dynamic market inflation. our price to inflation cautious obviously. the saying of have this and inflation unfortunately we're because of we need speaking going offset look price be And we to flat. happened, George, that to volume the is be part side netting at and about I the thing

flattened a are aviation some to offset lot to big continue not we increases, get need quarter. be, suggesting to we price was really we I'm performance price I of in mean, But And in inflation. price certainly good to helped and can't of the get there lot disconnect a Now that execution we up. of saw between but that going price and

GeorgeShapiro

is So quarter no? that to continuing the fourth or

ScottDonnelly

we'll we're saying to a clearly bit mean, to continue front. going offset little see, what maintain we're from off plan Obviously, got give volume we I our right. continue work I volume not standpoint on to the think and do inflation. price Well, up on back to a to on

GeorgeShapiro

talked into said And, weakening continue and Scott, and where the some August you July it Did pretty normally about was September. the strength? Because you've market October into are weak?

ScottDonnelly

to of what George, light bumpy. and with when activity instance activity QX had a turboprops. is looked that look we should I It's turboprops number say you QX a when right. at concerns at a fair lot has volume So, would way example been very order for level through of the we in QX. we and QX whole turboprop great and customers the that was do you year, mean on had in been a I

softened high-level a --when it that we in bit. activities literally it, something a that's little uncertainty kind market you is out things did of see So and has have

eye it of work the we on kind quarter. and it keep we'll as goes. And through why So an comes that's

GeorgeShapiro

than that quite that And you to perform Kautex industrial, did that worse me so correct then said last second statement? would vehicles imply Is one in a quarter. one. special the that In well,

ScottDonnelly

Well, George --

FrankConnor

year-over-year my did don't comment disclose to kind did No. George. a we -- that We XXXX. XXXX of Q Kautex things I level, basis, that mean on at margins was improved Kautex But --

GeorgeShapiro

Okay. And then How last you'd release? one get after aftermarket one. me let much comment was

ScottDonnelly

aviation? In

GeorgeShapiro

Right.

ScottDonnelly

About X%.

GeorgeShapiro

overlapped Okay. Is little to And or been was happening? that. running you've kind due what's a maybe down that that's flat of XXX but you've or bit

ScottDonnelly

No.

quarter. was little in again And Aviation a in on of we the the half the QX. think kind than It more first the I George, expected. second we increase year saw side, X% lighter stabilized the of

again out but there on, obviously strong little going was So a but are what started pretty whether mean deferrals, quarter. was QX it bit lighter in a it's I X%

Operator

Stanley. line question the next ahead. comes of Lalwani Your from from go Rajeev Please Morgan

RajeevLalwani

Hi, good morning.

some questions. parts of on color quarter the side quick provide Whether Scott, they're the two doing? Do simply recovery in back margins question Just business order the more or broader end on it's think color little the fragmented be can market different fourth into you aviation Scott, how level, market? need in turboprop where is? and And is going just second Just longitude? the given relatively you think to to you your higher you to end just consolidation So just a the comments there. they to a for the of get used overall how on side? the do upper market be aviation may necessary you

ScottDonnelly

Well, commentary so this quarter on first again. all of the

just think the you thing little I collapse around moving a you've are turboprops or year in through deliver and market to pretty softened, is month I month mean certainly say weakness is it see turboprops right? end again in last you there bit than the not think a of strong. don't a seen the activity, the for and the year. kind market, can should I order stronger strengths terms of it's Jet question a of is this more moving course in I we've volume and delivered around. of a a market

go we've the terms next at think position as We rolling at bit. QX. good Longitude the get the we that has a just to the the be through I aircraft think of been sort last when very high-end, in got it'll the demand that book. the be flat units and of we're we in strong. year on a we more Obviously, And quarter have non-longitude from interest And and been the in year. exceeding continues to little in deliveries in

of market in terms about given the we've like legacy of in aircraft fact at say feel said, we're the But is this good flattish mostly And we I to like seeing is where So marketplace. kind of the talked its flat. where point. is about is kind probably you I interest you that think that

I terms that, by products big a a to in make we destiny longitude in out we're sure putting and that. business grow our flattish the of behind example market. right control need behind Denali that mean to we is SkyCourier new need own growth there continue investments that making obviously to even to our that

the is manage sometimes Sometimes but it's we is. better, going to be market to not going to got that be market whatever better, and

So drive the to performance margin business. continuing we're the of

a this amount but see of But aircraft, expect through big the technical the of think to into put with the we I just these light the it's to place deal, getting early rework But modern invasive We and of cost that to certainly need phase that. fairly get in curves line, Again, into these to not from mods. dilution terms associated in labor standpoint those in in put make have of a productivity them. the it's we're a and we're field. that having aircraft good in touch terms particularly rework learning we getting him to in with of

to volume think only So track continue will end right helpful a Obviously, in and margins is I us. strong direction. the market to

and last or many spaces. gaining probably performing decade for would are too many opportunity that guys there As they're has nature so for think well these and everybody products the I given market in the some of think tell to how share too and very you been We we've look, is been of crowded these still areas. this in consolidation,

over see and right opportunities if in consolidation We know I continue invest to products. out that how plays there's we'll the time.

Operator

comes David Strauss of Barclays. the Please from next Your line ahead. from go question

DavidStrauss

Scott, certified Good a quick up saw morning. on the we longitude When that very on following Thanks. longitude. ramp. aggressive the got

with backlogs big NetJets had You there.

backlog program on should additional NetJets airplane up ramping? the How has options the longitude. about actually certified? was we big And had You any that of NetJets since firmed think

ScottDonnelly

in NetJets order work do kind sort we what one-year NetJets we have as and book. for we latitudes, a of the looked with comes horizon Longitudes at of as with to

backlog. put, it the we that NetJets about you work in we XX-months do they firms until up, together order their don't longitude to is kind that of not horizon big So firm which those would know, at be our with to do we as you'd again backlog is roughly, looking planning have and in move

So --the to ramp they will on latitude. the numbers ramp absolute the XXXX. we'll a think on as are I we And piece QX. be that to longitude high they're see significant market will, were a see ramp obviously that going continue not That's in here but a like smaller obviously is through of

DavidStrauss

I Okay extra and perspective you're to kind on XX months. carrying or can given of delayed? from to XX inventory you longitudes given inventory much XX it's delayed inventory- the us mean your that airplane kind certification sort mean delayed was an inventory how XX on I or give longitude. months excess of was any of sense

ScottDonnelly

original give our This our have going sold. been mods for I get said aircraft will is into for and a delivered are absolute these our you just to long aviation plan XXXX. revision mean that is these mean to to look incorporate customer. in ability as Well, we guide with which move mods the year are guidance that I and a inventory and wouldn't they're our to matter you at several think I them David, as cash as number, our aircraft of the make

to several of move XXXX we're been just limited time originally XXXX think amount that would into have those our going in of given I the So plan. see

combine that. you So

of drives change this You combine the a to bulk few cash delivered TXs that to year. that were guidance. That expected our be

largely aircraft but are or ordered aircraft at that turn deliveries these are into aircraft in again It aircraft aviation, going is deposited inventory XXXX. are that to simply sold

Operator

go the ahead. Your Jon from Raviv Citi. Please comes next question of from line

JonRaviv

guys. morning, good Hey,

biz jets once just So on again.

it talked Just be some tweaking around it down that. the fair is perhaps expect time like if last understand be XXXX, down to like too if about though run or legacy rate margin are jet jet just XXXX you up, rates we improve sounds say? this volumes And still Would tweaking deliveries you can see down? fully we year now we're right to in early to legacy XQ,

ScottDonnelly

way I say right. it's till would XXXX, a long

have I We up. NBAA got months. two we still So mean coming and another a full half

months. the too think finish we would to how the guiding production flat we view is rate And us would a run said going over for we the think few expect always we our our be year-over-year I again accordingly. But, we to basis. obviously, on XXXX. way what look will next that in working be It's XXXX of like. be So as quarter as adjust That's early deliveries

JonRaviv

Thanks, the you on guide but Can some margin give seem follow that segment just restructuring didn't then XQ that How of with And -- perhaps you next you industrial that year? within through. up by industrial, don't in I understand had us pick segment year Industrial get to Scott. segment. up the going rest do into see over pacing efforts the expected margins of out the

ScottDonnelly

kind on our channel I were vast going Snowmageddon. And go with a in QX. increased, rebating around as channel to they're volume The in around in majority inventory very track is is of we line launch impacted us what of the delivered as We of The not of with on tracker it's levels. changes the both XXXX. given we Cat model year-over-year The of do said obviously the was we discipline think business successful Arctic had that old the going going development pretty expected channel to terms that in needing our what snow inventory do. well well. with management kind in

was what pre-ordered. built We

in the and So from with our we perspective our in plan. of are expected margins what performance the line business the

a not to think coming, it's to one-year be. There's more I want we're that's on absolutely, to we So we improvement want where but turnaround get to track where be.

Operator

question from next comes Robert Your go the of from Suisse. Credit Spingarn line ahead. Please

RobertSpingarn

in we Hey, How to the about curve ask Good wanted longitude learning and margins fading in? that will with morning. in of I just aviation the beyond? think QX factor how

ScottDonnelly

that early units we've the obviously the aircraft, labor-intensive labor putting our process going going we're along overall fairly us again, the from And to it's to QX we're For longitudes those invasive coming but to not to into dilution. again dilution cause significant about is have with modifications the to the a market. rates are margin all combined as as what material a incorporate are talked

QX, lines, into the all put now become think that. to so is cost which I that And as we as that margins see guidance running accounted certainly into work production those they're our stronger just position clearly we've productivity, in we we'll which good. we've aircraft, our XXXX. get go our will through is you're for So way out. where see In coming good, you we XXXX

RobertSpingarn

of Okay down and guess you're the part what not then With the that separately of I on in side. helicopter is FARA, military if select? trajectory coming just spring the the

ScottDonnelly

are. Bell big pieces there's the Well, I right. there sustain military , three is non which multi-year story mean the we I more is -- I rates two of continue to where complicated two development, say that, just shouldn't think than V-XX we on

after-market because in B-XX Republic. are is selected HX Czech in that seeing the the being There we're several additional continue there. case is think of a announcement just We and Obviously, uptick grow. those both significant fleets important. FMS I saw to in FMS on out

I the a encouraging. on probably now you've Israelis P&A the formally have which seen think B-XX, is requested publicly

Obviously, Navy we've their CMV XXs. for deliveries the started on

which that business. the potential good grow I is and over very think which for there's would -- that be to see time

around is we pretty moving long military is to And obviously So the of around good army. FARA I a plan news be is are upside side FARA on good programs where V-XXX. well with term, in both the very think place sustain Bell. the seem those to out The have and we the big which

as that dates next already see move the And has in on XXXX. we select I March. of know, the and XXXX to out pretty We'll FARA. under are Army on down think terms from contract said, V-XXX, significant I you a left As made come to their the

that I further. think there's for accelerate potential to

that's the obviously, next what we of But probably made. win winner front. a But It program at people very contract contract think a to and processed early then decision start under and our compete is to again XX- V-XXX be this to point their would line-of-sight V-XXX in hopefully saying I have They're in would year great an selected got in contract. do they expect under that's or it's on I months army put the clear think .And the be be part to position, large award process. to official MD the

that. and future So place in and obviously the in those military think I HX bridge plan are and terrific sustain that to they business programs. But good are after market a both we have to B-XX pretty

Operator

the ahead. from Noah Please Sachs. question next Poponak of go comes Your from Goldman line

NoahPoponak

world some your what talking just is till going to was customers talking everyone. trade market, in broad now Is help Scott, concern on election their year you good XXXX business kind total you it or has at business act? and enthused to hone want if there? the about of to folks deal, in morning, customer the that directly, to get Cessna to Hey, macro the or Any in help what team possible order stock the in a earlier you're wait it passes when today? or to provide does your set can

ScottDonnelly

Noah, I it'll uncertainty. talk when think at customers be a think, surprise I they don't look you to and that

numbers, surveys stuff You customer of watching think you guys creates the uncertainty. these and numbers that's business of uncertainties. trade Most reflected or many a weren't And part in jets are we're deals, I we good a here, of we it because of of feel our that lot cases just, read can't our And in just all CapEx deferring those their the going understandable got lot In in mean but I businesses in Brexit. otherwise base look, not political small DC. big guys on right. this see is business as -- it's and confidence particularly business via we got which well. economist midsize investments it's

and concern people the a and administration things I obviously businesses anti mean of is that's over pause. one makes prospects. kind trade the think I the Brexit that things And

NoahPoponak

Yes.

Okay.

that there's And negative a -- what's accounting somewhere been of is? to change Can or of help makes in business had do XXX% flow six cash better the forward? have last guys get in guidance little would years flow builds you cash to better rate the conversion bit that of driving a today's net and you longitude below the Is to or so. before five below change, the been income you conversion going inventory capital. I working completion a change, On free get XXX%, kind understand total it's that? it why the cash sense, but percentage us think that And the do

ScottDonnelly

We've look, similar build So, of had there military about additional recognition. the we've drag. XXX Bell. coming to cash with has cash the on the longitude a situation revenue talked around we the for from number sure been been in it Obviously, going a a issues. and that from a roll had -- has performance versus Aviation at the in on side the Yes base how XXX kind flow cost of change clearly you

I So those five-year things into know, look a but back go -- to are not all probably it don't contributors. I'm prepared at

FrankConnor

most is addition cash timing we if will. kind going we all you year as certainly at five cash mean to Scott Bell, profit out where being standpoint what's we're in said. a and more But we've in analyzing or reverting difference And recently multi revenue two. that of ahead we're this about, cash, years were year I on a close which to to in recognition relative now on not from significant talking of aviation kind as line stuff highlighted Yes. the particularly

the been year the from of the terms that's of conversion big in away So aviation drag this inventory kind issue.

NoahPoponak

or perspective what expect Should XXXX-XXXX? -- lack that in kind accounting of we drag thereof should we from

ScottDonnelly

that. have two expect out we will shouldn't as itself so close That washed multiyear you out here,

NoahPoponak

in if talk RCB, as acquired that they've sneak And FLIR? Ripsaw that Got displayed about one vehicle? you for to decision and it then at I curious part to was you offerings just partner new could if on have the with AUSA your more I of unmanned could recently that

ScottDonnelly

I a felt vehicle, we look some their our I'm have out we've FLIR at organic Obviously, partner brought Howe itself what not about what which technology at FLIR, obviously acquired with of and in brought control terrific would I & great stuff Howe aircraft been the then programs. terms a in they Valley go you more than --obviously, platform. whole and Obviously, roots on technology business. think of the The the talked really into display. we which intersection technology fabulous lot we the of Hunt the detail shows technology that and when sure to in vehicle its terms I our terrific show. both around we've RCB think in that the because now SMET had has I in FLIR is sensor a that capability. a bringing think really partner has And

go would know more that. So I don't much that I than into

spectacular I think it's been we're really a and army looking that of forward some these well It's for programs. one received. obviously future vehicle competing to

Operator

Bank of . America Merrill the Please Epstein Lynch. from comes Ronald go question next of line ahead from Your

CaitlinDullanty

this programs guys provide for on quarter AUSA This XX% this term? Can from you a what volumes. and and will Guys. Systems Caitlin is year-over-year military on for you areas Did mid was growth Aviation down short Hi. in in expand new Textron you Ron. week? come defense anything weaker Dullanty mentioned saw that to

ScottDonnelly

sort end obviously, programs. we're system of TAPV and year-over-year the ANA which the of change Well the side, vehicle are programs on the is program the all

rest the look of moving program production terms we now big the pretty in of business business program. from that ship-to-shore like as XXXX it's and beyond land shape. into in marine go Obviously, In developmental a is change the systems a and into good connector

time go and on week, hours an this builder we which XXX with getting trials. and its passed point awful the first customer XXXX, over did XXXX, accomplished second for six the files. water detailed the through negotiations lot FY card. test We're acceptance the we've flew I ready way earlier our the this out the craft to flawlessly XXXX on as at By Navy It one. is of ran in We're said, a

balance terms of think challenging into that we which developmental a those I transitioning program been in So feel good the, now the has about of units. very program

production in obviously contracts. the And

into go as business a turnaround is that we for XXXX. the big So

year -- defense year a program in that's to mostly standpoint had has going customer this We're this bit supported. time. it's at delay start ago funding Again, foreign is fully to side at time always sales. Aviation, take and light this it's the problematic -- On in XXXX. T-X by a that something Obviously been, the Obviously, attack being from assured was These again program. budgeting things we going the early a military it's happen. little Congress, we in still

is now to a moved So being told books, the that into from a XXXX customer just XXXX we deferred we on whatever already our for going that again be versus And and but reasons that have expect plan. this budget That was are into sort activity. XXXX of XXXX.

of not of So there's there's are to programs. number a a lot be big program tending FMS smaller -- one aviation. in These driven

XXXX, next but Congress saw which notified all program, to on probably to nice a likelihood but deliveries one production which is would we in just T-X You -- Tunisia, again that in were have will year. starting

Operator

of Stallard from the question Robert Your go Vertical next from ahead. comes line Please Research.

RobertStallard

more never Good What I'm on Thanks front, difficult? in not this get sure Scott, you're but morning. seeing what you your the and you Or Are they from go. life and terms matching of are that on to so discipline doing on you price the competition? is jet Biz volume? much. making

ScottDonnelly

we've premium get competitors see because Well, on deal And the We we always is the this like think in to things And deal. share say aircraft. that it on that think again but customers. in a the is I take is pricing life They like that as like aircraft as got front demos difficult, the based it's the product absolutely our put Rob, believe better see at products feel look competitive say, sales. customers we I'd I the our from I more those than do. a aircraft. a a of today at market well, convert feedback in We makes Rob, longitude fly look our to And every better aircraft/ great we on we're do

RobertStallard

you on of models dynamics seeing as of older sort some your similar Are well?

ScottDonnelly

the and it's -- that few years, mean I know big than which think It's last in And driving of CJ's prices do we it's a of be in Embraer, most don't and over obviously, different but we've I market and I that to again it the I mean difference we we're that it's-- most seeing continue been of dynamic I there's very those successfully. make couple that. to the segments Yes. competition think last the don't that Robert. want XLS years MXs -- sure been for

RobertStallard

could to what happen and Kautex, there on they any secondly disposals, then been earning. are diluted And make Okay. historically reluctant if very to

big people disconnects here? think any So price share between you is change think there this of reflected the parts Are is pretty it what's where there other in portfolio of the is? and what the business

ScottDonnelly

I don't think so.

RobertStallard

So this thing, Kautex? one-off is a

ScottDonnelly

and understanding a model, selling But in different It's we in it is Tier might business a one business. right, than business and it's servicing automotive -- that X least warranted there what engineering and look, is Robert, for the good been us. that at successful model. It's as difference manufacturing And arguably a be. products. options No, at it's that's said different

Operator

go Please next Research. the of Carter Your ahead. from line from Melius comes question Copeland

CarterCopeland

Thanks. guys. Hey,

you could clarifications. impact more in couple net than rework just some systems? slightly a the longitudes And how here? roughly respect if aircraft was with than that. in Frank, of there us and EAC Scott a to One, a Just Is Thanks. --if it that, handful? what I quick insight many Less favorable about the talk we then, wondered give

ScottDonnelly

Carter, -- unit specific numbers. don't don't I we into go

haven't deliveries. We specific of number forecast

sure aircraft get a had go the quarter. it's been this number. finite to we'll and number. here in us behind not into So The Obviously, produced that I'm

extend So it that. not shouldn't. obviously beyond will

FrankConnor

was in out net you where But the that that quarter. we and that the the total $XX as don't the for by break was segments. EAC, we There resides. terms in of know, adjustments between companies Yes don't out program break million

CarterCopeland

was go rework to maybe of it it the Okay bound that in finite get were-- them try had to Scott, of in way, a that was all cert? limited and or pre aircrafts to construction another here number out to outcome just just back to

ScottDonnelly

mean you configuration. I right. all them, of all them same the it's bring to up to mean I have

are way, the in as these process the of all going of Carter, through mods. So mods, for it's same terms aircraft by the said, wiring changes. And some the I

guys through is not deal. to It's big hey channels at go different or right connectors. we to get invasive got So of a But kind it multiple that.

CarterCopeland

of Yes. Its' a work. lot

ScottDonnelly

to these no some wouldn't It's in behind. again And in aircraft. There's But any have change customer, of technically to that these --they the the modifications. do aircraft. things so make largely we and the in basic, Their there performance but had that really with it's --you just see are no difference difference minor redundancies yes to you'll aircraft. there's

CarterCopeland

well just scope, work understood tedious. it's It's

ScottDonnelly

It's tedious.

Operator

from comes of the Please David from ahead. question line Barclays. next Your Strauss go

DavidStrauss

up. follow the Thanks. Thanks for taking

So how multi going you onto the about close a And bit get you exactly Bell do to being you're way talk on through that multiyear little us III? when this year through you profile you be II Can the about completely all to III? pulling B-XX. going talked feel margin on to and how as is transition and multiyear

ScottDonnelly

complete. is year. remember delivery accounting the think QX of the last or beginning the under next revenue QX probably of And is I the Well, the I late that in most in

III lot year the to so. going get multiyear margin is little a forth the reductions ago than and adjustments reserve that because is a were Obviously, the in II. a a year and of again continue and so reaching take no, we've multiyear the I seen management II difference productivity we from big a standpoint, this drive which a they to think the of lower multiyear So program -- in look are margin to the time to it's

on XXXX of year on that we sure the basis. pretty from that be to specific this nothing at because multiyear now a but it's there'll we're lot as as like all some aircraft. more productivity roll to that pipe multiyear a in cost some is mean cost can working contract you XXXX. III of aircraft to the good margin go on, had But into lot want get we've into multiyear, and give But I I point. and most efficiency you I'm not a further XXXX rates we revenue this we're started III seeing

DavidStrauss

Right, currently pension on we think you're okay. And, booking rates least are pension next on amount income fair Frank, I at year-over-year today, with year? interest based where a then the any Are tax fair thoughts carrying down in those of XXXX? a you And also what contribution. amount I and and projected. rate think through than the originally numbers for corporate, on kinds burning lower corporate

FrankConnor

run XXX Kind obviously About we'll pension, kind all at numbers this prices the out see is million so guide at rate we're kind probably that things we're for of we of original haven't impacts as of expense, from on those our rate below So our of pension obviously, how XXX, $XX about XX corporate. looked yet obviously on looking ultimately we of probably year corporate that those share depends XX-ish maybe expense. kind XX-k play well million. a that's of and in basis disclosed discount standpoint points

change significant any ranges year. next of of to expect kind all types those budgeting those as But at yet. wouldn't through I gone look we haven't exercises we

DavidStrauss

And rate year? tax for next

FrankConnor

the of had that of area we have XX-ish to some lower in kind this had got us we slight that continue talked to percent we type to area, Tax XXs will rate are a about. benefit items items we've We're kind versus XX. of rate kind forward year a probably some look discrete that as

So maybe type XX-ish percent area.

Operator

ahead. question go from line the comes Please Shapiro Your Research. next George Shapiro from of

GeorgeShapiro

Yes.

look of kind the certainly systems the doesn't ones. going about a we're earlier What's in there. of for year? couple that like Just you year to be quick would for number the a said year Frank, revenues new $X.X get billion,

FrankConnor

a $X.X that on it's not short Systems, than kind a that little just change to revenue to We're level. running do and level it's in going from billion maybe that that slightly maybe a area. around but that standpoint, margin significant better of from a level, little but less of standpoint a

ScottDonnelly

margin to George, from in business The we performance revenues standpoint. the and close a what the should has been thought, be good very very

exceed guidance So upside exceed I guidance and much be should --for revenue line on in our actually sure the side. our an of it it'll on will pretty think

GeorgeShapiro

million or that in Does $XXX And drive what jump what's so like from quarter? fourth million was a that quarter? this $XXX big the imply like going to to

ScottDonnelly

going north know, are program our mean to George. of deliveries, that's I do never math, the what's forecast. going but we're I numbers latest be that. don't in roughly, program to it's-- and mean I to heard XXX right. I your our probably get not It's into but plan by

I be said, a think the a it's about little think wider margin going X.X obviously feel is programs good are Frank pretty and more to selections As end continue And the but probably we're very very performance to not and wins but dramatically than we to opportunities good in on come, strong. place. and I new

Operator

the Your Please line go next Jon from from ahead. Raviv question comes of Citi.

JonRaviv

thanks. Hey,

talk whether And for versus does it's service the little corporate? Can individual certification for that and does mean and pipeline, you actually the longitude, in support backlog pricing think On What versus waiting the I the your for bit backlog selling for entering while. certification the plane? a the margin plan? fractional a about

ScottDonnelly

go backlog. think don't -- not mean the I I into don't as we're Look, going going dissecting -- we're I to

we backlog NetJets fractional It's has a with great partner. on a longitude. it who's good think -- I have certainly some

see customers saw success we are lot said for class, lined to all that but We up that a well. along aircraft as in of as of a retail also expect much we have we as with latitude lot is the platform of

fourth where yes costs expect we be, aircraft of have getting sort through been problem, built the got quarter. we get but to of which in to already just it it we'll us making this has here and pricing the the behind Again, mods we the are issue a where expected that we activities finally behind be. us the as is So we'll

think we the great forward. on the profitability have outlook of I product success product and the And going a of the both

Operator

from next Please Cowen. the von go ahead. from line Cai question of comes Your Rumohr

CaivonRumohr

quick follow-up. a Just

mark-to-market? switching interest a cash you're million headwind. to with thoughts non obviously to So talking XXX $XX million close bps down about -$XX Any rates

ScottDonnelly

know comment look as seen I'm had team is certainly don't sure I at our we and do companies Right, will I if that sure I'm Cai. many are. other about, yet, right. just probably your we've mean some on you're. math it's that something companies

Q&A of End

Eric Salander

Gregg. Okay.

I for tomorrow, reached so it does it. I the think week, if today, any are next there And that follow-up can call. questions, be that's

Operator

conclude gentlemen, that does for conference Thank Executive today. and your for Ladies participation for AT&T Teleconference. you using and your

now may disconnect. You

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.