TXT - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Textron Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session instructions will be given at that time. [Operator Instructions].

conference recorded. this reminder, a is being As

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

Eric Salander

good and Thanks, everyone. Greg, morning,

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

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

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

I'll Scott. it that, With turn over to

Scott Donnelly

Thanks, Eric, morning, and good everybody.

like lines been have through have those crisis, to like share for on sympathies those to to I'd and challenging daily by us our times pandemic, who community. all safe facing keep all recognize front First, I'd global the operating affected in our those in the of extraordinarily we to that we're thanking join behalf routines. this deepest and disruptions numerous been On particularly health while to care company, our working who the

As number we the priority COVID-XX respond a have of uncertain in environment that this safe health ensuring workforce we X our and remains world, the work to time in time. this during the our pandemic unprecedented

stepped who those TSV, hand for sanitizers producing and have and are and cloth and aviation essential constructing Caltex the items employees up Our communities Systems. and at across at plastic face facemasks shields needed gathering Bell

our to times, assessing still respect how limited having our we in understanding with We have will this continue crisis is to these in businesses, work the affect long impacts COVID-XX and markets. of in visibility but particularly

pandemic the on company and mitigate is operations. across to actions impact the implementing having We're our manage this

a of diversity effects range of had our wide of Given markets, have and business impacts operations. our on end COVID-XX the the segments

industrial to of base base our has deemed several reinforce nation's government defense the continue taken infrastructure. the and the essential of actions instance, nation's For industrial defense U.S. critical to as has part the importance

have maintained our we Looking at do defense throughout cadence operational expect businesses, health so. and continue steady the a to to them Textron Systems and Bell crisis,

Bell operating with revenue volume increased the XX% margin. and military well very a executed from in quarter higher

side last of from customers' aircraft inability first did XX see quarter. the delivered from deliveries accept helicopters, travel of resulting commercial down business, to XX the the we due restrictions. year's On several COVID-XX-related push out in quarter, to We

the acquisition in Army's During Army milestone programs the its when the Vertical of next strategically phase important these aircraft hit for the both Future quarter, Bell another it Lift future major of in down aviation. of selected pursuit for was programs

the in over Long-Range contract final in entering demonstrating autonomous has while flight. positioned piloted and well QX Army versatility with for years V-XXX On the Assault now speed, that is agility program, months, of selected over X its Valor the flying the both the this competitive process, continuously of acquisition preliminary phase will the was phase been V-XXX selection next next and X Aircraft XX demonstration the a year. of award and Bell competitors reduction risk Future X the design for expectation

X.X% of On X Relentless Bell Future outlook related their of was design, the our XXX Systems, for acquisition competitors strong system and airlines unfavorably operations X furloughs overall with devices operations the aviation. suspended Reconnaissance design. amid highly across high-performance proven rotor in while offering facility in and with significantly simulation selected manufacturing controls of higher was and The comparable lethal our in and affordable, trading the At Bell and sustainable at in as build Invictus fly-by-wire downturn as simulator includes volume reduced Montreal from the our product of XXX XXX X.X% crisis. this health Invictus line the quarter announced were for centers the by lower training our We've have Aircraft team product lines, the quarter Attack operating commercial testing the prototype most program, a margin to rotorcraft. of impacted to

& the on In the in second Connector next the Systems Land delivered $XXX Navy, contract for follow-on enter to quarter, the Craft builders' the quarter. Connector, Textron is U.S. Marine scheduled to XXX Craft Ship-to-Shore first and production XXX million XX and the the to now craft Also trials total milestone, at of XX the the craft built Navy's XX This to the program in to Systems a record. was definitized demonstrates brings commitment is program. be Textron fully mid-April. number we This of critical believe craft of Ship-to-Shore

Aviation, announced down related and year. both lower the from from $XXX expected recover $XXX quarter, deliveries change experienced in the aircraft the quarter, demand first end the for million, of March late furloughs of the service new jets, of we from quarter employee down we expect availability Entering as to aircraft sold million last turboprops, quarter. the first work lower year's were we Textron XX commercial down to composite at We following manufacturing last operations In mix and the last that in we accident revenues XX the and aircraft XXXX. XX of completed our delivered in year from activities. address unit XX the

Wichita inability also to to customers' experienced aircraft their in COVID-XX-related delays on During the in deliveries new travel we due based quarter, accept aircraft restrictions.

will aircraft as travel lift. begin these deliver to expect We the restrictions

March Service slow market, effects down compared through first revenues strong to expand. began the continued air first about pandemic as last of X% quarter on travel the to quarter. the as two the to months of year's aftermarket, were the activity to was in Looking but

due customer fourth a $XXX $X.X There backlog. a to to of decrease was fractional quarter from balance Moving primarily billion, from million resulting the pandemic. demand the revised outlook a from jet

led implemented, to actions activity quarter. restrictions the These demonstration travel as in flights other decline a order difficult to the government meetings experienced of face-to-face distancing and activity were retail social As increasingly sales pause guidelines we conduct. and in became

engine product front, completed the in March SkyCourier new ground for is flight On and runs in Cessna the track quarter. on first second the

related from year's Components at our to first began crisis manufacturers were line. last quarter, Industrial. of their and the of volume product Auto Functional $XXX Systems to down factories Moving largely January, to Fuel shut end the Revenues to in COVID-XX in $XXX lower million in response million beginning China.

to the their X industry, facilities As Caltex Tier closed supplier the accordingly.

the come most may from cases, shutdown In the expected recently auto signals facilities are China, began the with Europe have on OEMs in accordingly. Americas, our facilities Caltex demand mid-March ramping up customers. are in through online based back and early the In and last to and restarting

expected March the employee our lower began business. to address demand in across we Vehicles, Specialized Textron At furloughs

business been impacted equipment as monitor airlines have support to ground and will demand continue equipment particularly on Our Production has and has commercial slowed has purchases. outlook. we suspended, back been the hard air travel pulled

significantly outdoor to impacted And spending been government been by as powersports has dealers, restrictions. operating channel, has crisis and distribution including retail other and dealers stores the close have and consumer both shutdown stores many orders slowed and due to required

work Production working customer is social to as temporarily inefficiencies and distancing halted. doing products has meet The through been of required continuing the off-road job a they team guidelines Golf operate of by some PTV good difficult to driven times. commitments. these with are

customers employees, on a significant of has impact and In summary, had suppliers operations, our each across our COVID-XX segments.

protect to businesses we we've taken our confident With in the workers are actions customer continuing around while our that pandemic, the to maintain continued uncertainty and our commitments. meet the

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

Frank Connor

Aviation at good Revenues driven Textron quarter, first Thanks, by the and $XXX were volume largely down quarter morning Scott, from lower billion, million and everyone. in $X.X last year's Industrial.

impairment During this we $XX quarter, pre-tax Textron intangible due to and by at to pandemic. year's COVID-XX the economic the in million charges first Aviation of related recorded disruptions Industrial caused assets special

of per in profit net down in $XXX last year's from those $XXX per XXXX. million quarter million, $X.XX in income down Excluding the share Segment first $X.XX adjusted first charges, the from was share, was quarter. quarter

non-GAAP cash of measure, flow contributions, a which was our a with before use first-quarter Manufacturing $XXX million, reflected in of expectation. line cash pension

segments from to lower The mix Textron $XXX and related commercial were $XXX demand related Let's largely primarily manufacturing and of lower accident the in Textron occurred at $XXX that a Aviation with to pandemic, our December in in a and and travel disruption to year volume $XXX lower $XX turboprop in Revenues turboprop ago, decline due volume composite restrictions. million. volume XXXX, contributed Aviation. reflected of the the how of result of of jet jet largely of of review Citation aircraft volume delays in a million plant acceptance Citation of production starting million, million decrease due to the million COVID-XX down each

COVID-XX resulting $X $X.X includes from was from ended to quarter first due million first of and unfavorable $XX million impact the manufacturing the $XXX this pandemic. lower and Backlog million volume in down year, due idle segment which quarter, performance, in last temporary of billion. profit million the furloughs, facility $XX Segment cost primarily the closures at employee quarter recognized XXXX to of facility from the in

as million, other. restrictions. commercial $XXX Bell; performance due lower $X million, military from to volume, offset delayed the were principally volumes, on partially was Moving million of million $XX volume, $XX million up result unfavorable largely on revenues year, travel impact up slightly by of from higher last COVID-XX a $XXX higher and military by to Segment primarily offset deliveries of profit

the development adjustments, partially in $X.X at quarter costs. in favorable billion. research The $XX ended program and included lower other million performance lower segment net and by Backlog this offset

At largely million $X.X Segment our the in down at million, $XX $XX $X due by product up across Textron performance higher Systems, quarter offset million most were higher primarily to volume million from was profit of segment volume. of ago, Backlog year revenues $XXX billion. unfavorable this a ended as was lines.

our million a functional lower million ago, volume. profit lower line, fuel million, $X as and year, discussed earlier. Segment $XXX year were largely $XXX volume related down at last from $XXX primarily million Scott to related of revenues from to was product systems down components Industrial

was facility million performance first of quarter and also from decreased to revenues the favorable by other in realized manufacturing performance. approximately offset Finance unfavorable million. segment closures that the We $XX decreased employee $X and pandemic furloughs, resulting profit million mostly $X due

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

quarter, million fully refinance X. XX-year number of term XXX-day that issued activities enhance loan and marketplace. included of our April $XXX agreement debt on $XXX current $X.XX to of million the was to given drawn in maturities During debt the notes credit initiated billion million a We $XXX paper, we financing a X% of that year commercial position, the uncertainty liquidity

maturity. share year. suspended shares received refinance an X.X in overall we maturity until the against have To note we our to the $XXX and cost approximately outstanding we we have new upcoming repurchased $XXX under repurchases an of we $XXX on our XXXX the covenant proceeds position, million repaid. for Within further borrowings in from enhance the the that insurance is state with policies crisis, agreement Prior of later to of the this million at December million. Consistent expect Finance, million current about health balance quarter At we're term life liquidity environment, no focused this with in of first onset preservation. corporate-owned loan, this million, debt cash $XX in

perspective, liquidity of understand we've environment. to across our working businesses meet our manage working We eliminate leadership taken believe We're funds actions enhance obligations sufficient to teams We're efficiently uncertain expenses. we weekly profile. with on our From and cash this closely a our not managing time. the balances have evaluating critical discretionary despite capital all a our our importance the at capital liquidity and also we basis to

end cash matures billion, on October, undrawn of $X.X at balance the facility of of quarter in an billion, $X we and October XXXX. the credit maintained which was Our revolving

it Scott. hand to back I'll that, With

Scott Donnelly

Great. Thanks, Frank.

guidance Fuel dialogue with production. resume experiencing automotive expect China. Functional the and It's too each current to due production the obviously recovery industry I COVID-XX Americas Industrial, based our crisis suspended forecasts line are automotive still Components auto OEM and our around tell to production ultimately like At quarter our briefly for earnings today, touch the the with we in uncertainty in segment. and customers, sales And is outlook product we the we second But and While QX would early retail see in Europe ramping and reliant upon on to the expert impact the to QX. recovery. year pandemic, will production for Systems how on

we through are in In discretionary slowed. deliver of powersports remains to the been disruptions existing has significant take customers interaction aircraft aspect and manage aftermarket aircraft the minimize working the to the the the pace has continuing and we most continue services to TSV production orders, business markets. new downturn. capital vehicle obviously some end support. of but actions through experienced At of We've and while costs outdoor provide aviation, with Consumer difficult, while orders business, on taking our normal suspended customers May,

see region, will start the customers by it team latter While vary in with QX. we of engaging part our expect to sales

to and our segment an business For defense-oriented business, to QX. hours our will Systems flying and in parts in increase and in on to pick the our given aftermarket activity will of to we track year. remain we the meet up in for QX for At the expect expectations begin QX, expect service leading full be expectations our predominantly is defense strength Bell, we believe the consistent with business, year. overall performance

crisis we're the, this battery that presale implementing electric in cars. we Caltex, Bass execute as vehicles retail opportunities disruptions strengthen At vehicles At for the hybrid place business To necessary automotive new industry the continues channel the Snowmageddon to wrap through the powersports technologies to demonstrated the partnership our and position to Industrial, event and we and to that electric generation are we're we past, to plug-in well. actions continue our our our as as with with significant next ongoing to market address confident OEM for of to committed the through in we invest customers strategy evolve have in within up, our Pro business. we've ability collaborate

the fundamental we in Aviation, challenges this situation, XXXX-XXXX while differences believe the difficult downturn. At cycle clearly experienced we do from has

Citation pre-owned today fewer with a stronger and dramatically for for significantly lower compared much under secondary aircraft number as is sale market of XXXX, old. aircraft to The years aircraft XX

the aircraft. of such, view to As preowned sale we the not as impediment do new market an

private environment different crisis. economy. believe perception also resumption more travel on in financial negative aviation viewed health of associated of brought was during positively private aviation from today XXXX aircraft the The use Conversely, the the business with ways. perspective as that see a couple be the the don't private with the a is of will we restarts We

also highly the Latitude with introduced the entered product Longitude. a We cycle stronger the more and portfolio and having differentiated much

pipeline to markets. that we drive and new help Courier of growth Additionally, Sky aircraft Denali with will future have a in

development Bell significant milestones Ship-to-Shore we Systems, Our with future. medium in Connector recent believe current segment. program well represent defense growth on on Combat as under positioned and programs future as with in several promising programs opportunities aircraft that the to development awards addition contracts existing the Systems coupled surface programs. recent Vehicle in vessel unmanned Also, well businesses are for for we weapons awards our production both growth the the award present and opportunities important on contract At program at of Robotic the like achieved a programs

technologies address commitment us the Vertical on the FARA the Future to and of products support futures awards command new recent growth. the to war deployment specific finally, in are acquisition FLRAA accelerate the And [will and of to Lift Army important Army strategy with result weapon work our and the our programs programs help] fighter. awards to customer to continue for their requirements invest to these These future to system

concludes remarks. That our prepared

Operator

[Operator question of from Sheila Instructions] first comes line Your Kahyaoglu. the

Sheila Kahyaoglu

programs, in just to you here? be milestones, sure profitability two want And the hear Future consistent? nature these time about given Or note spending because how But how Vertical do we out I a Lift down-select from pretty start these R&D? big should about on aviation the the do we'll OTA think of for tons contracts, positive the think of line about levels terms later. I'm were

Scott Donnelly

question, good Well, Sheila. it's a

said, is the this way obviously, OTA, over XX-month has time now totally has the I an time this that and basically on I pretty has their think under consistent lines, and much on for into been customer entering the line, basically we've and the years delivering think mean, programs. two schedules is flying I FLRAA, their by who stayed mature, announcements on which the V-XXX, for awards very two with process. different are staying the we're phase

into into sure quarter accommodate the the what selection obviously important the a of the window we systems taking created accommodate customer and with us the Obviously, to in the on be requirements foundation expecting a V-XXX next this frame. on the work relatively fourth turn is short for we'd we've what's next It phase is the next and that this continue sensors to into and reduce time entry system. year making of to to weapons has risk, So and weapon future. mission in

investing in new phase, we're important brand The a us, other working, this which manufacturing center. is in obviously, very for thing technology

been able do. So we've what craft can the demonstrate to

to affordable production. have and great be that meet into and we they that when of into very demonstrate the EMD on that it Now need, go kind can can they it volumes

window. here the customer has they're that's what happen track to timeline. So terms they've needs And think XX-month everything demonstrated of said in on this in meeting and that again I

good we pretty So that. feel about

and different to FARA which for components Obviously, design place. fly through under process little a which is a starting of proposal went have were as from to a then through for and kind off. years -- -- FLRAA over will We've this we down critical go selected. And similar We'll paper program. two is have we're to in this already this of build started the years, it a the thing. go JMR couple fly program on

the a programs, we great timelines. about say, those phase next you again, years. about are are opportunities staying those few think good the programs. And for But out huge both if been on as has ultimately that's feel which, their there customer So selected I of we

R&D on Sheila. R&D -- I'm part the sorry, so,

pretty gross of R&D these on customer at Bell, one-third Bell, spending a two-third cost significantly. share. up programs will be this Both at are -- basis, So so point

So, because we'll you gross programs a on reduction in increase see to basis, cost but -- a see company purely on funded a we're net R&D. going R&D, should net an these in basis, actually largely from you'll on share, a

nature cost revenue that, out against contribution netted of goes be through that. in the none the we'll that remember, share of this customer incur because will And and R&D of contracts, line gross the

Frank Connor

timing anticipated of was with had We been we're what in and now is And Sheila, guidance. what the consistent the in guidance. our our down-selection awarded these scope

Scott Donnelly

Yeah.

original operating FLRAA have our We both and FARA plan. in

Sheila Kahyaoglu

I to then, was and Okay, thank your meet customer deterioration, remarks if you thought sell Aviation. I you. down was a pickup And of it's adamant, hard aircraft. that just I an can't that ticked were actually that demand sense one terms of a but area no ask prepared from GD sort the usage. pretty there on would be Embraer could surprised in might face, one customer. that face fractional fractional makes to see if backlog

Scott Donnelly

seen. good Well, and that's remains think be question a to that I

mean great hugely and secret, the fractional look, So in a of is partner It's market customer base. addressing been They it's fractional that I going NetJets, our relationship. terms our important part business not guys this These of are to a market. in are right. a

So right, stopped what happened? as Obviously the of hit. pandemic the saw, NetJets sales people thing we sort force same was which the saw

quite continue this and done customer on are sold we to operate still -- They and so of with there that NetJets year they and kind deliveries is commitments gone and Longitude. work taking have with what through them. Latitude And we've both a out aircraft few are

back take sales see would to we the to take the they we're said, this have that delivery on, going look, aircraft of other also aircraft But book. out -- turn year, until expected we

will what able think market the here once out are aircraft unlike fractional and happen force work, to is and we'll really our not sales in engage continue is of out. really see whole the that to how terms plays get I So people

in have what lot prospective lot about are Adam business aviation of been you and economy I get or thinking it's news think new lot a good lot when out to talk We a to And discussions with to we've the as they're customers you're the when and then a seen plants, of and discussions is guys. going turns membership people see of on, lot users factories, into customers of just had back model the in the Adam the jet and not NetJets because the frankly, come in or with I Dichter. in happens activity seeing both who and this. on of to Up Wheels whether see and expect start as a inquiry -- well Kenny that club card same road fractionals customers suppliers the we managed past, that

say are activity a this we some optimism into that there's coming it's that reason here potentially that at through aviation lot anecdotal industry. certainly, are seeing but players, seeing some I'd channels new the point, to fact of those have So the we're business around folks we new

Operator

comes question line Shapiro. next Your the George of from

George Shapiro

Just to on up follow question. Sheila's

how going that looked this because reduced the you were out? total like was if book-to-bill, of reasonably much seem X.XX at Because So NetJets mean, deliveries high year. the I NetJets would to it be percentage coming a of

Scott Donnelly

George, just other we the about what things. any of other didn't NetJets I than around have side talked cancellations

come So see other didn't out. we cancellations

get difficult probably and to they're April, with I the frankly, been a okay, One very to go it's move order for put out aircraft in it's came out there develop new mean, challenges, at and had X, go stuff and a There's look, we there course, in and now lot ahead the of not the But and who environment activity do rides, get in. demo rides, folks a saying, time and here go until it's of been of engaged looking didn't even stage pretty and who've well look new get at we through they sales is demo can this to And halt. come because Wichita certainly are can who interiors. can to really customers there see deals time, as game some at getting customers face-to-face, the us we had of closed. out

those the sales order you cancellations it's pieces new and a the lack frankly, lot As the of a side retail were just, But activity were, fractional the process. on of side. on involved know, pretty contributing

George Shapiro

to deliveries the of And weren't able make how because many you travel restrictions?

Scott Donnelly

in it I there King of number jets X a I X Airs, there It aircraft mean were was, XXXs. the of portfolio. pretty was couple of from when and CJ, MXs, revenue couple dozen but about a across Caravans, was or standpoint. Longitude, much number, whole was total mean a start But a CJXs, was a It true you relatively a a not small talking Longitudes it's

George Shapiro

for then was And one high, Frank. Bell particularly The margin maybe especially the lower EACs.

You it. lower the really some close it R&D said being to end do it XX%? just to I which is high of R&D, the And the of so? offset half subsequent your because of offset substantially I in able assume be margins to down mean get guidance, or quarters do of tick

Frank Connor

far. kind a increase quarter as over R&D mean time our it that on the Bell was track, Yes. expectation of Scott original consistent Bell. overall continue move to it's for guidance through good as for I we is our will said, so with year. And

George Shapiro

I you go going you some But it continues to number subsequent Unless And may of for where commentary reductions I in require don't to missed Scott. because give didn't to then year miss in each last years simulation did or of about the Systems. Maybe get and on see here, it? one is develop. down the substantial you, how commentary it your we'll that's just one quarters sectors, know to

Scott Donnelly

to sales Connector of terms milestone behind things important. a it. think, is was in couple not The craft, hit deliver very has George, of very the going XXX milestones important program well, the generally XXX systems, of in that first the of right? the getting across line Well, goal far are program I Ship-to-Shore starting

see still issues big We Definitization work mean a production contract. on contract to development XX had next very on, fee-for-service was there's unmanned of hours that's on which on good. next more a the continue for our of is deal. craft surface programs instance, craft deliver, programs. those through phase, the, into very the moving unmanned to lot I the to continuing We're obviously, our We've the increased key vessel for milestones aircraft

GBSD. contract, we other and, an programs, the but on weapons RCV medium as win, We did get development into I said, important

demand which the understandable. kind have So very things I only programs looking going that Systems think we that the very new the any But business critical programs were execution, both flow the execute to win wins need that doing The guys soft world upgrades again, business we is now now. have the CapEx on on are simulation particularly down, really on and current the as aren't are shut new normal market kind is, just of good. performance is Systems looking which are we The good. that in that, right These and side, right under don't spot we've the training laying transport that in of the air airline any out and be and of well outside quarter. quite both in current important as programs current strong in to side,

Operator

line Your Robert next the Stallard. question from of comes

Robert Stallard

be level Scott, on I plants of on like the It if real that's aviation, going to are case, do to, clarify things back just sounds they Or fraction at year? of at low what's you it to the where moving at come the the start were anticipate want volumes moment. back, the what of a being And was expect previously? say, when activity. do you a

Scott Donnelly

that's the right. All look, question. Robert, big

X-week So completed a now, is that has furlough. just what or we're completing We've aviation just X weeks. extended X-week right another doing a

furlough already order down. terms whole for built delivery. most in The aircraft included the So of workforce. activity is were production part, shutdown. But across under now X-week that the minimal completing are some right is what's the There an shut for in lines themselves

sort Sky the for way We of, for gauge getting into based always all new that and is sales of inquiry year. the to programs product moving what We we right in reason on that and taking just needs doing of the terms now, have don't the what's visibility at of this, balance an teams But production Robert, understanding the that bringing progression is in right? are teams good have be back don't normal and to order. we're are Courier through our rate going. we customer on from looking And order flow going we're

to doing we to up understand of see production rate economy run to start travel the need what basically balance to do year. for the so the can back that be we're where pick are buy So and they furloughs to set we gauge that time the able for to people

So that's, okay? that question, is mean big I the

pandemic from need again, want it people do on sort plays think quickly going be going aviation, how lot all that it business you to they don't know of of and as what travel airline know So, the a what the and around standpoint. I about reasons to side to role to availability, what and of you be safely out stuff. back, they comes this there's do and commercial a optimistic And that health routes, what's come

weigh So to that indicate about and that -- would reasons that acquire for also that and there expanding business feel aircraft. we certainly see optimism, they CapEx anecdotal do against to that is but have things you and confidence how people

and So doing, this we're seen why to we're remains right. that's be what doing

finish of set better time So mechanism production, about to visibility are the and think and can as furloughs our frankly we XXXX buy some how we believe so we we appropriate XXXX. what levels have that us

Robert Stallard

as a And raised the Yeah, sense. policy makes insurance you some against quarter. Frank, this follow-up, debt

this what went versus debt an cost I stuff? vanilla idea debt? pretty plain more it's Can why on far know, unusual. you was of of And sort avenue give down as the As this of us you

Frank Connor

the kind Fed so -- time where of source access cost borrowing 'XX, it's way acted this we did dislocations at it 'XX we had The seeing we we downside it make yet normal were of And anticipation liquidity It's very but just want we markets. a the frankly to sure to a not back higher a up. far. had did cash, Well, also. significant of financial Yeah. it's not the than that plenty ready what a seen dry potential were to it in frankly seeing we a kind People in was, acted. slightly were of got of markets to we've more in

against did policy value, to is The request cash can that and to provide the it. if is insurance insurance six time have it's So at months it it there scenario it a policies we is companies reason -- our we source of an insurance a a take where the of up bit liquidity. that

make so was front of sure of disruption any liquidity delay, there the markets. type we got in we if want to And that a really in

Robert Stallard

Okay, thank very much. you

Frank Connor

Sure.

Operator

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

Peter Arment

assess morning, thanks, lot the I -- been the mean or you Yeah, Frank. you risks business? have I your How good of times, do doing disruptions how you're assessments across are of chain. supply Scott, seeing you guess unprecedented that Scott, a

Scott Donnelly

doubt, Peter, shutdown It's think a and is and I haven't without right. rules we degrees of look, day-to-day a that this such question, states major issues. in track But good mean there different it's a patchwork seen every different any fight, I of we a day.

problem, so we're that's every an managing And it anything we day. unsolvable haven't seen but

around so, that. You have a week we that's supplier a down for work and or

sure, resolve the our Aviation day. the do operating while we day. We every -- is for again, down. operations, to right. flare-ups Systems able issues operates operating. every on supply own base golf and and I PTV our not have up that Bell we're lines goes frankly But for already we're on back is see those. small vehicle And Peter, And lot -- a is shut -- largely stuff So shut mean of down,

circumstances It's on nice job every And and under through inefficiencies of here -- are you're top day. guys I kind have issues. of a really and it these there. it the operating working But unusual staying think tactical and done it's of some a,

Peter Arment

Yeah. there, accident things stand Aviation, can post where you where update the on you there? just on just the facility quickly the us are composite And

Scott Donnelly

a up guys, did the have basically again, Look XXX%. We fabulous job. back operation the composites to sure. Yeah,

So we're to at some critical this up there operations components. on game, stage catch-up doing of been the working on catch We've activities. of kind the in

the we of to across we're autoclave So we're composite speed, do on that a autoclaves, work lot but operating, their and facility to fully need organic there's still capacity. having mostly in-house particularly to stuff all of of bring to sort detailed all layup using is but ship up and work back back the our town. up capability Spirit,

guys his to made that have us. available and Tom So

XXX%. running running. We're at we're So in

problem behind think us. that's I largely a So that's

the use okay. capacity get I able as having we that and inefficiencies it's Although now, back still new into be to operations. autoclave ultimately across to to have because place of But said, some town normal get for will

Operator

Your Copeland. of next Carter question comes from the line

Carter Copeland

that with me if done a able that Frank, were understand us help help book those for some could that you FLRAA I how about wondered the and I maybe the results in here? in margins results to just phasing been did have And event booking, the revenue Because the of we're the imagine to understand I terms was date. big the, work Bell in associated guys. from quarter, assume thinking and you revenues the,

Frank Connor

impact is doesn't What impact revenue. it R&D. does net Well, it

significant of a effort. lower advance the R&D why having and benefited at R&D sharing FARA vis-a-vis benefit rise and but quarter we net some we of move effort there's of that of see but Bell of effort both that FARA, at the award that did the that not effort, and Bell award our on FLRAA, in invested so effectively that net offsets the gross catch-up resulted kind both in we'll associated on going result in see a kind as with also said R&D some government we again, gross particularly R&D year first that I earlier So then as had quarter. increased through That's the

Scott Donnelly

FLRAA But our through line. on expected which our the a the, and result. in it's ramping, be what FARA. through understand, gross the the just will a of we through so the right? plan. as to And people through because level still It revenue, ramping cost R&D happen revenue QX significantly got go course couple not questions. the is the something to of We piece also And does year lower It net We've see will had execute R&D a of year share. ramp you'll this of go in not was

Carter Copeland

you, if parse And the differences But in color. wondered how aviation. All Scott, then follow-up, the turboprops kind as how that jets and I you're for of the versus you I'd clear. differently, very a appreciate about just play thinking forward right. that, outlook forward Okay. That's I outlook appreciate for out the the commentary,

Scott Donnelly

in way good Asian be of through Turboprop this, think, it. we're the on insight on get things. kind much hoping in will what's going question. do a the I better market, side into to which hit Asia to impactful, I Asia. we'll as insight some start turboprop Again, in we the particularly of year better And wish early so pretty works because had we was our

you On kind thought of I thing, jet think my they're this NetJets, and Kenny inquiry Adam activity that and things, of the to side again, Up and seeing. and you, customer and if around the see Wheels talking again, the

fly market, jet people It's of to of going like come of in Most And likely business whole seeing we to products, are, of we're aircraft for in ultimately, it's card, managed aircraft, think and in makes for everybody just kinds determine see this it this if people what into how a see me. to else this, a hours they that year will going look, sense need will, sort based again, fractional, particularly right, of makes start of are it's sense terms you it, in new do you club either are to which in start but as those that, industry. conclude aviation. in I many it on you and most charter some to membership, you where

things even from utilization, is is memberships flying, all in jet more more and right? if these important, perspective, But driving it's are service. which cards my So

looks or not As aircraft, obviously we'll customers of that's like. whether a equity timing I'm just, and do managed good don't fractional for And more us. sure that's a whole the I a just what love know we're, coming again, Up and that based, again, seeing very get it's better. we that enterprise, into the the lot activity Wheels trickles through new how give you this market will. time will that and us We see of to are to some help NetJets if whole customers kind sort that here of progression

Operator

comes Your Jon the of next line Raviv. question from

Jon Raviv

defense spot mentioned crisis today spot, sorts the you over much you're different certain from lot clearly this of how pulling is you certainly been appreciate you're than matter issues. how company decade emerge historically how experience. kind are in and through able maybe the these a just I and seeing what all deemphasizing done? How stronger of Textron a thinking, much of once sort manage deemphasizing history happens. has others? your Scott, ago. to is previous about no mean, business of are you the a that more that company But And want to of parts you it the Is sticky Appreciate

things Just the want the other thinking career? long with side? How your you on are to you how perspective emerge of

Scott Donnelly

today challenges have is of think I place, much balance we look, better where ago. that a we Well, part we where versus don't are decade sheet our the obviously. are in a some is of We had

better I investments been. ever we've products new than think our us positions in

Longitude through the Courier Sky like got just play pipeline. and FARAs you that fact the product, As the mean, the the cycle, Bell, you've that I at things FLRAAs the the have in you very certified, Latitude strong

around the the vehicles, land kind in is And robust make both I the our continue those in we're that going be those surface the businesses side. on in that to us what's Systems positioned. sure that now we that's then we product You strategies business, we've just and to do investments think of make both better Howe on how organic things of more the investments here works the much Howe side, unmanned vessels in made service a business. have that are, recently at and going acquisition air the look through done & we've and the

years one obviously. we've are mean, been that ever a this I to we'll of us come And in speak. position for that ever I that better than imagined, could But things this no is been. cycle as in a we've happening I believe absolutely have mean, investing place we out

later a I A gets a FLRAA it's Longitude this XX and and shame. days Things transient, right? thing stops. think But that's like like the certified market look, the pass. mean, too FARA shall down-selects. I

working that obviously, programs These shutdown. the make and are that go the to and middle very again, that's transient. Army have stay hard smack have need potential. gets order a that's, to What's the dab forward of unfortunate a that is for selected focused to be that and guy we happened to on customer us execute global very But right well with happen. in focused in to we ultimately keep economic And production,

obviously I But are very is are, thing. and these this of these in transient that happening a pandemic things see the nature

at, got very things. hard Now and ways operate, are to there's at look, if things, plant manage. more say all will some I efficient look are But to we businesses those that consolidate there other "Look looking we're where closed, some opportunities are there

me, of 'XX, different this businesses think the position our than important bottom-line in decade totally of So, shut different terrible down, some about where trust fun And running radically markets. think a a is, this moment think is your in most we're coming than that in of this And When transient. I a cycle. it's a were but coming not a you time. ago are I side, in just plants the but end we out it's dynamic, Aviation 'XX out is

Jon Raviv

to then, new for just be the about the military very And you that obviously story seems in thinking good a strong. is Bell, perspective. on thank Yes, quarter which

about the the obviously about of aftermarket years though, there that but V-XX the I thinking numbers talked bullying we know type that next down, you've somewhat. Just couple work know come

sort in just especially also we what trajectory now, the the commercial Bell of are XXX? And of then with So military? can like seeing of remind right you us Bell something

Scott Donnelly

obviously for it to So quarter Military, expect look, solid very and the that Bell stay way. we

and HX, of a significant of last forward and going year that flat continue talked transition here volumes function are just see VXX we sort growth in unit definitely we've and before, a the we'll seeing are to so over like been there about has As record on not or where the program little but a they're aftermarket. things of down to the bit

those looking have are maintaining government Both fleets. us starting some frankly of Their and and bigger a utilized. platforms upgrade is role frankly sustaining of and the play fleets for heavily in to those grown to

right. So that was positioned in well we're that think quarter here the born and for I out

the to a place growth So we we're and FARAs be, the that sustain and that it, much on May help focused and business the solid those of seeing in those frankly, will obviously world. in whatever good the platforms. as very new next FLRAAs things aftermarket on transition keep

a is we commercial is are Bell, a holding some sale, corporate which do shorter a instance, activity things. Those all lower of the now on cycle individuals things the of a lot parapublic up. and On largely of sales. side Obviously these like for right lot and international sales XXX, like businesses, small more type

a softer. So that little be I to expect

very much of so which go XXX amount and but that. But general more will cycle a be a through little to of EMS, fabulous set business, a the like of XXX, it small product. But will XXX, well markets, cycle resilient unlike associated of this diversified is a is a a end revenue margin parapublic, not pretty It's with a aviation sort that.

course, flying very rates are make which is service the People With order in those any production a adjustments, that business we'll quarter. in related was as people are, at markets. those as very again -- appropriate. we big solid and of That's obviously well, are up looking being and said,

Jon Raviv

Thank you.

Operator

Thank you.

question line ahead. next the of Please Epstein. Ron Your from comes go

Ronald Epstein

Hey, good morning guys.

Scott Donnelly

Good morning, Ron.

Ronald Epstein

any Has collapsed. on it is Maybe you or How Do an thinking that what the on it about of expect just have -- following given done, too Bell impact up are that? completely seen you impact yet? have question, prices you to? soon much energy Bell had oil

Scott Donnelly

There's totally countries related. related. pipeline Ron, that that that a have of but XXX couple of that because know, a in XXX we It's, are pipeline deals heard about as business number that's gas sort you and there's shut a of yet, just these or were kind couple said, are of the the in I haven't it's that of the were, oil of huge as we don't down. things part are

not, So strategy I whether know. or affects it their don't

in I know, gas of do standards ages don't many industry, operators, service hours and that put limits of meet aircraft fields. to and have a change how As to will and you think provide oil their the on this lot aircraft to

So Ron, today, of turnover a we're these mean, I And a regular not, there of lot drives there demand. big stuff, do we customers. It's field, don't likely tend hang that lot be with those remember, offshore is the right? the nearshore the of is, a in that to cost lower are of the the there. ones think It's lot I Gulf. and which more operations, sorts to key are

the to investments you're safe to of of say going not more a it's at big get expensive whole to think I some dollar oil. deepwater, now, see lot right

they're So have their operations. to but still are to people and producing, run still going

thing huge one market oil So think we it's have and which exposure. I for not don't but gas I the good a for mean, a to sure, it's

Ron Epstein

Finance, right, the have Got right. on it a just was, in obviously, But sadly, All of particularly you. put follow as as then what golf shadow last the And maybe Textron industry has on, once downturn. some a how been a And that has that for here. while golf ice wrapped mean you there's still, Has there. I finance? properties impacted Finance? up in Because seen E-Z-GO? of that impact still kind impacted I

Scott Donnelly

Yes.

things. X So

X that off, have account gone So last and an first are properties. TXT actually of last There golf The got year. we golf of all, sold now. closed no out in

course golf the of out officially finance are we business. So

all So are primarily as are we have know, Ron, exposure the there. no almost leased. Golf, you cars themselves

side a like leases. end business for extensions roll do X-month their you right can do So the strong. in leases, remains mean the and demand as clubs very of of stuff some those sure. they But the that end now reach the I golf and

the a As we haven't for long think, a time. year, long, while by seen product fabulous demand you market-leading very We've which we driven stuff nice a and a been is in that. gas a This strong. we been is introduced back, segment us. player for introduced that's know, we lithium-ion Demand big uptick brand-new, a a product,

business golf the So is running.

be person the My on the and but minutes, what to distancing, with that we're the folks every up They're produce car, difficulty and our X is now, right that's social Augusta our at a X golf doing can job. production weeks used is guys line, have in at or golf golf work few guideline. cells the we We've X.X great every right? doing could now moment in we, the right where just running station X cars. down minutes there only because was usually X And at them, area golf of I assembly got a building a challenge working. we work, are we're running about ago on have based I only

fast shipping So, but them we're shifts making and X as we them as running can.

Operator

Your comes next from Spingarn. question Robert the line of

Robert Spingarn

wanted this ask talk to on exhibit and which I This jets or what focus delivery your at down look the then was same the to we around disruption the for weakness or and about about But parse look down? in for furloughs. helpful But through. to much And We've into really or what quarter want Can earlier from to helicopters. balance with the here. quantify accident? perhaps was you, the are might the it's first a out destruction it's the questions. and delivered, obviously, question. have in to be might a all a defaults first how it talked we And thought commercial much Frank. you is quarter half supply-side you? quarter much demand that very How crept How lot doing follow-on is about talk factory either shut that? Can fact, factories for Scott from been be demand I that COVID-XX, could hoping difficult could be the I I

Scott Donnelly

it's, interruptions it have mean, we stuff aircraft I about that of out say, aircraft it. again, would quarter getting have delivery there's we're I we the there mean, right? Sure. and constraints, another still we're which, to where color I selling. that playing that in give back roughly is to based the some X/X, not transient, given would let's it's expected take X/X not can we're and I there, and that just would facilities We're aircraft think on able expected where deliver on There's back closed a just I aren't that probably aviation, couldn't the have composite that mean but at XXX%. because of closing control. catch-up would be our that under on delivered we X/X, stuff orders X/X, travel of people some X/X is

we out to quarter, those on pick I will composite clearly, get subsequent needs that clearly, can the caught order we'll the to get to back up up And deliver ones the into impact the restrictions think largely can And push due travel stuff. will, on as activity the sales.

all through those things, go to direct of the amongst but think have transient. don't I So which roughly it's all I are numbers, split

what... of terms In

Robert Spingarn

They're supply to a up right, able not shut the your problem, up all forth. and so show airplane pick the down, to COVID-XX accident being side, is factory

it has were side, like from than We really quarter. So competitor defaults you the cancellation of that anybody defaulted? other some demand a sounds it seen on the the some backlog. But haven't yet there in heard

Scott Donnelly

No.

I quarter activity. the So business be sales demand is certainly first certainly close is the a things right? there have demand. pandemic that people thing and lot Orders predict because I impact in of What There think, got future of some convert and to not because whole doing quarter So in really progressing back were that reacting volume to things some happen, these and again, that side. just to means hard in the when depending didn't right? lower was in would whole announced, normal sales we're we're orders on that you the clear, in supply expected you would the mean,

cancellation and aircraft. the So said, not get on, on phone we front, calls I no, as canceling did

put got in cash, there." calls, can't did, we you mean And "Hey, I we, said, even we fact, that aircraft, right? I So at to saw same get they cases and Bell. they and look, want additional dynamic said, where people In people well,

people canceling. calling pick and people not and it delivery. It of to wasn't it take able matter So was a up being

we talked only about the was, fractional side. cancellations the So again,

view, for our us, important. of I remember, I And that, lot sales NetJets force sells again, a very think is Their that's, don't aircraft.

for that's their so for a can't if out sell problem go and aircraft, and force sales NetJets And us.

So time turn back that having my can they're dynamic that engage I once way being which a they of of normally what sales own right, out get I will there engaging than don't force, different teams customers hard the expect would dynamic in their about that go sale business. with seeing the and is as and see will, the

Robert Spingarn

you've thing, demand we than during Scott deals I'm know what I two the it's at segments light and actually getting than the that about what the logistically not XX% prior hard but this the mid-jet much years. to worse worried done get down is a differently think period characterized couple people is But downturns, ignore were the prior see can't that that downturns. You sales that this so fact over of I'm is two the it's

that curious boardroom which And if see generally any the evidence that demand here yet. and destruction we're little looking at you're is the because we're to seeing there I'm hidden into accompanies going wondering these recession a buy I'm of just a if is of pencil. recoveries, the period airplane people a austerity, to sharpen willingness There less in

Scott Donnelly

selling. there not we're out Look, No.

mean right, I be So mean I we you know. might don't. I don't

coming of happened lot out were in going of what not 'XX, can my was things -- I XX, I'm again, guys. got But is at if is all your and there sure, your undisputable. are And For great understand. looked you facts on And right. do mean 'XX you I team. I this a sales completely on unknown, putting perspective, we've and 'XX the

a wealth. destruction of You had massive

aircraft five huge had in You built four, that years. of the been have volumes proceeding

And bias with not 'XX new low had timeframe 'XX, huge against. which a a business 'XX, of you selling still same production right. you airplanes, airplane hiding their very people that of hours, years in that were tons be political old virtually of of that model were were in there jets, the you with -- was underplay, So only to brand couple

is our some time a the I forecast market get mean on these -- again, clear. it why just all be don't a and want such I yet want can't why don't know -- we're are was to different very a, But we dynamic. We This just to better and a opinions. trying way will that behind in one and environment rates. us get other this permanent on what's production before to to or the going make of perspective look enough to we buy to what demand changes like I

Robert Spingarn

-- and Okay,

Scott Donnelly

I know. know. don't mean disagreeing with I just I perspective. your not We just understand I'm don't you.

Robert Spingarn

Yeah austerity what's and fact am I a I'm in overly trying we could and happened of I not is thing of to negative. period coming might at that this unknown, be that would -- simply out matter. looking before we but and the and think be it

Scott Donnelly

today, just middle point business better here guys get the looks there -- much all to cases is understanding we in stuff forward. be Well, that's as we're if the a will to demand going is we is the can do bull have make there to of react like environment case, what fundamental and is will decisions a where that to run accordingly. that trying we turns on But how matter out and bear sit know. don't it to and we There absolutely cases,

Robert Spingarn

color. thank for the Okay, you

Scott Donnelly

Sure.

Operator

from ahead. Next go please David question the comes Strauss, of line

David Strauss

Thanks, good morning.

Scott Donnelly

morning, David. Good

Frank Connor

morning. Good

David Strauss

plan roughly out XX been in but guess, not the line Is what with roughly only with at that think deliveries that initial industry looking your from all, there versus saying had looking I now percentage-wise NetJets versus publicly total XX. been I NetJets? year was plan Scott, you decline, what this they at are you're has

Scott Donnelly

the would we've out And for the with in of them I Adam think talked had put and I what worked balance we and is us. terms the outlook I backlog in what conversations that's with with about say our to how consistent revise line of year.

to So had that out that done what work and is dialogue with the put the consistent absolutely there delivery. we've we've realign that they

how see a if the quite today. deliveries for the it's reflects look XX looks the to going So today. here I'm it as he not from of again, days balance XX few year, it there are but now, the market's it indicated, market or but that's look, still they as how And days sure

David Strauss

can quickly can back deliveries and how to And that towards NetJets? mind, quickly you come on, and with back in they things how you turn pivot pivot you back increase if

Scott Donnelly

for backlog again, on going. particularly Longitudes, Latitudes that visibility, and based obviously, a where had pretty we and Well, we're good

are aircraft they're and of were XXX% categories based there, aircraft those of number completed, But of deliveries all I in clearly these some right? increase of these composite them waiting could that. for some parts. mean not So on they but are, we

be be we perfectly would on. problem So that a to happy would work

David Strauss

from Frank, use then you in us was how the I industrial And through assume But working about Obviously, help with capital the rest here would a of might give out any thinking Okay. here? mainly was from capital year? working sort at big can of and play it QX. that aviation.

Frank Connor

net cash that, the capital big flow was I I of, I working a about not use Obviously, Yes. mean, mean, year-over-year. overall, talk was in kind quarter. when

given of So of I the it in our terms normal cash the would the about. that cash some some of the talking we similar positive move and From economy some use there the expect be that we that cash we'd going uncertainty obviously, back was think second inventory flow year. in in of are is restart would and kind see second been end of variables the I get and expectation, mean we lot we've and see use a through flow the in then positive cash quarter, seasonality. this, a we perspective, then back assuming of in But of the year factory quarter and and of flow in year. start-up normal liquidation reflecting our end again, as of back the our around businesses

decelerated year. will coming inventory And in. that back the liquidation allow things for good of in We have half the of certainly

Operator

next the comes question from Seth line of Seifman. Your

Seth Seifman

spoke, Scott, the number here. think that more you craft the and I beginning, Maybe built. one Ship-to-Shore think, I about you got at of So I

as probably those can that a get does of cash is when builds aware you terms of kind learning guys the collections in and be crafts there those fair a number So of get make kind of that there should and of we some with starting profile to that delivered happen? down curve,

Scott Donnelly

been on I been, mean, don't know contract quite is we've mind, obviously, on Seth. the there's there things keep now anything for time. in I production if the operating some dramatic, undefinitized of we've one

of fact, been the has executed under that. half in program about So

expect there's now terms there collection. make different standard definitized, than nothing that contract we're very So for so. terms it cash what fully at you'd but payment The point of this government revenue quite look in would are a

Eric Salander

that will for it do now. Okay. Greg,

Operator

conclude participation that for Thank executive you AT&T Ladies gentlemen, teleconference. today. and for for Okay. and your using conference does your

You may disconnect. now

Textron (TXT) 2 May 202020 Q1 Earnings call transcript