TXT - Earnings call transcript Q2 2020

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 Second Quarter Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

conference recorded. today’s reminder, a is being As I’d Vice Salander. President to turn over to the conference of now like Investor Relations, Eric go ahead. Please

Eric Salander

Thanks, morning, good Ryan, everyone. and

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

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

Our Web the in from of X.X earnings year’s be Investor the found down last call presentation site. can second Relations section quarter. X.X billion, quarter our billion in in Revenues were

recorded valuation TRU Simulation During ceased share. and in net pre-tax million our June in related charge manufacturing the XX at Montreal plan per Training this loss we was special non-cash million as for announced year's quarter a second we inventory XX The facility. to quarter, & charges the restructuring $X.XX

net second per was XX charges, year's million profit quarter the these share up share, in second down in quarter. before pension was million, from cash the Manufacturing last per from $X.XX adjusted turn XXX call that, With flow million Scott. quarter last XXX totaled second I’ll million, contributions XXX in of Excluding year's from Segment down the quarter. income $X.XX to XXXX. over

Scott Donnelly

given difficult strong market underlying the Overall, conditions, results everybody. morning, and performance cash with good positive were quarter and solid Eric, adjusted Thanks, second earnings.

well at and Bell defense with growth performance operating Textron businesses revenue Our performed and extremely strong Systems.

increased of with and spending a volume. Bell, manufacturing aggressive to efforts, very the quarter. had by shutdowns discretionary At military reduced margin, a furloughs, revenue strong implemented employee in mitigation temporary businesses commercial quarter driven operating revenues cost declines Our offset XX.X% higher the impact we and including

to model commercial XXX to restrictions. last we delivery delays lower Ranger for X a second due down side in the demand of delivered COVID-XX Jet driven year’s XX the largely lesser Bell, and extent helicopters, from XX quarter travel by On

international on During the first due revenues the quarter, higher of to Textron milestones volume Systems of and delivery including Delivery delivery in to of XXXth Carrier the two Japan. the the U.S. CMV the for program, Textron the V-XX the Mission, systems Navy to we awarded achieved a variant for Onboard primarily total number Also product within up our were delivery V-XX unmanned FMS & the first the both Systems million. in was contracts spares, XXX. unmanned, for the line. initial the of Systems logistics Ship increase builders connector quarter, to next In these Shore completed including first an trading in Textron new definitization of $XX Connector resulted backlog XXX and totaling acceptance Marine contract and Land quarter. to million Craft support systems, Aerosonde along Shore production trials awards five Together and the second Ship with equipment other in V-XX, successfully

to $XXX expect on delivery to the a selected program Air over the worth Navy task performance next million the recently We Tactical of Systems, covering Company U.S. Force at months. up two for was Also Airborne U.S. our in QX. of orders Advantage CAPCAS unit XX period this

Sorties XXXX of of expected fall fleet in FX under task our Mirage commence these are to utilizing the aircraft. orders

the substantial commercial transport the of decline and for side air commercial long-term business. on light Systems, seen expected the we’ve of cancellations pandemic flight in a On of simulators in order the demand impact

down formalized We from in from deliveries turboprops the the year delivered and air down jets, the year’s the second manufacturing to Montreal. demand. we to facility by at effect quarter. shut transport restructuring in our last restarted temporarily demand impacts And in second direct result, of Aviation, in revenues aftermarket manufacturing XX initiating commercial the ceasing in already the COVID-XX our quarter, as our on our previously indirect as quarter, response XX on Entering we commercial and aircraft workforce expected, due of of restructuring plan reductions simulation announced a As furloughing plans plan. the begun structure employees were which by simulator last cost our outlook we operations business our effects have part XX most a demand. pandemic XX and we had In with down to manufacturing down In to the align since second quarter quarter, new operations.

point XX% low low Looking aircraft second compared down year’s direction due quarter April. from a to utilization positive overall to last has trended in aftermarket, revenues to in which a were steadily

remained several Service closed the XXXERs Doctor of in Our to XXXs the in very group Special of to Greece two in three quarter King Customs including agency. Air two orders, Royal Flying Ministry Australia, and active and patrol Missions to the U.S. the Health and Border quarter the XXXs

of product aircraft’s the SkyCourier new has significant systems date. key control Cessna in to the through hours test front, flight XX with gone stability, On performance, of completed testing its a milestone well Testing flight and May. first

At to globe. as our year demand and of Moving With product reduce quarter operations, exited over throughout of that, manufacturers the Frank. last the restructuring Kautex, our month reopened streamline Vehicles, year’s In Golf rebound turn June. to of and the the the outdoor At to related were we’ve from our for we closures at auto retail operations about powersports, announced Specialized PTV XX% facilities quarter. lines. overall the planned includes quarter our second performance I’ll consolidate market with call plans the cost sales manufacturing Textron manufacturing quarter their rate Industrial, structure a across down facilities remained of the in strong temporary the seen run of ahead global second and factories. with to prior revenues levels of across the several retail

Frank Connor

Thanks, Scott, everyone. and good morning,

to XXX jet lower segment volume of million. down Segment lower largely citation a volume in XXX related a in to of second XX volume impact million in delays each starting aftermarket aircraft costs and the of million in primarily related quarter, utilization. million reflected XX decline million from travel Textron recognized aftermarket acceptance million the XXXX. lower aircraft segments of second was ago, idle loss due Backlog and and million quarter the at how in reflected profit citation performance COVID-XX the to Textron XXX with restrictions. unfavorable extent volume X.X facility volume Revenues the which lesser The included year billion. million at jet XXX XXX Aviation review demand the to XX from contributed, a last due down in Aviation. quarter the Let’s to of the ended of year, largely pandemic lower of lower The were from decrease of of

primarily at recognized Moving at on partially to volume. by on XX XXX an Systems, from military & our partially an from by last the due down Backlog impact million to second our related quarter million Segment Segment to million million, Bell, military million X lower X quarter. partially the performance. million down million, the decreased million XX FlightSafety from assets year at temporary gain with quarter and lower X.X of lower commercial by profit line. the a by XX functional offset X.X billion. million a of to and XXX offset Unfavorable XXX XXX primarily of unfavorable were offset profit which systems volume the activities, to in year, at million last volume segment facility due cost the largely International. included to of up to related higher the was was in performance. from primarily related billion. contribution in Backlog up revenues the last segment volume fuel offset quarter in were higher of revenues manufacturing performance and million. revenues and unfavorable training ago, Vehicles, X of loss XX profit idle million closures. by profit costs XX were performance At components primarily ended year, a segment formed to Systems unfavorable volume, of Textron systems volume, decreased reduction impact in year's was Marine Industrial million product in revenues Segment million, a XX of Finance Land unmanned Specialized from largely XXX from business offset XXX XXX in lower year impact partially XX million, included million, quarter Textron up XX XX due down million line, million ended mix, product million ago, volume

with Working liquidity across cash second ceased up the inventory to focus was manufacturing perspective, were of the on facility. XX have million the XX continued we and closely before pre-tax a Simulation operations uncertain expenses From expense our million, generated funds XXX a interest second XX obligations to million. we valuation our management. believe and fund we TRU environment. and preservation quarter, leadership Montreal announced profit, a of in as restructuring our With we to million working on below & quarter. last we teams contributions line million Training despite million sufficient the year's cash we and of pension non-cash charges plan recorded Throughout respect flow manufacturing XX charge XXX Moving at our charges quarter, businesses, our special from capital segment meet corporate

million down X.X the cash second XXX quarter at Our paper. was balance of debt end paying the commercial long-term of billion and after about

credit revolving undrawn of billion of in XXXX. facility to I’ll that an October Scott. hand maintain $X to continue back With it We matures that,

Scott Donnelly

Frank. Thanks,

activity we of to and powersports begin Vehicles to of seeing We we second half what economy, systems the and half back are is the restart of fuel and touch business we’re encouraged and demonstration OEM basis. of to in Aviation, the the aftermarket As on and revenue the market to like flights. and through the in with the year segments in functional customers second expect In team deliveries the meeting At and see revenue new gain XXXX. half in sales expect higher up components a around ramp in in jet clarity the I’d Industrial, latter arranging demand. field growth pickup sequential to the in auto we part manufacturing production year we’re line of the the operations the aircraft outlook. QX by a saw on Specialized running from the powersports our with fight sequential their up we and of continue each expect business, second

and are saw to continue the will awards early So testing working drive the Army V-XXX on information FARA, development On we unmanned and we where future in requests to with lines. the responding a our in businesses program. growth At Systems, in number product that adversary of and related U.S. invest to air lift these prototype of actively flight FARA. we continue to with in continue we’re vertical stages we the

in soldier the vehicle We’re unmanned FTUAS Hybrid our air our prepared of build-out Quad vehicles. concludes phase and of the Aerosonde with progressing assessment we’re with remarks. That initial program on RCV-Medium

we can the So, line for questions. open operator,

Operator

[Operator Okay. Instructions].

going first ahead. to Our with come from is of the go question Please Sheila line Jefferies. Kahyaoglu

line Your is open.

Sheila Kahyaoglu

what baseline in by to expect you of Aviation about benefits. Good with the Hi. that or the XX guys. million you million offset Scott, cost XX a out You morning, were for that? called XX you’re Can time. going see talked thank of about unfavorable of of seeing for terms back idle out you million in margins favorable in And what field. you just the talk sales aerospace and

your back view? So in like Aviation we when and get normal takes the and to just margins puts our

Scott Donnelly

kind significant to to so the we’ve did of have most improvements the up the that. you initially Sheila, cost sequential operations believe manufacturing respect rate out through facilities. see furloughs had Aviation, in respect we of bit we – year operations of the to expect through and do we Obviously, with the all as our We As back in pretty a for balance manufacturing our quarter, underutilized set I of run know, is quarter certainly of we the restructuring fair what through and in now the XXXX. take our a expense second said with

encouraging. we as but through rate, certainly suffice improve will that in we give of them certainly on we pick the jets, say which we up. on A lot see of is go that and It’s specific won’t seen to particularly obviously QX. have guidance sales we the margin a expect light depend level So Right QX to the turboprops now, and the activity see.

longitudes, certainly, are going coming We’re yet for businesses not certainly I oriented But people there since expect dialogues the dialogue activity in latitudes the but of about end XXXX, on. and a lot of are up uptick and to as see people order as most and go are there’s are the worried terms their And beginning own those seeing primarily in much there. the businesses operating. corporate getting an we the think as back, into of And of instance, as well. aircraft, year activity

we’re considerably improvements now we the again, re-baselined this sequential in but expect the factories be we given balance going several year to shut for So the were of that and through know do volume, to we’ve year. certainly [ph] margins off see the fact months

Sheila Kahyaoglu

question Great. And then on just another Systems.

You entered a pricing sims fairly years you that about about environment. excited it, were remember five is in and I tough ago but since quick [ph] exit pretty

puts the What So Margins that future the in sense. do Systems makes here? are takes, segment. the of were from decision good see you really and how

Scott Donnelly

the which have can where tough are it’s business. right been a issue as business tough we a certainly has now the think transport is very, I very and well and Systems spot commercial given this you in airlines understand performed in really

And back The of makes to that so Systems I balance sense for think really in us strong. it has scale been area. performance

execute I time our think for to unmanned land there. The team Our see a well is is continues vehicle deal Connector and We be big side. us Shore really to under expect business grow the to The like that certainly side things definitization. business well. production now to over Ship now, the RCV-Medium, executing program grow

forward. grow. of production expect see we deliveries better we to going And into margins continue clearly development So that again, the we to move deliveries and as out the incremental

performance driven forward. and think liked, the received growth we we bit strong we overall that the about think again there which invested there I revenue It that that strong took get is the to continued air and margins of by see expect growth to business we’ve good is add but both with will and adversary margin than a have in. we longer little So going the great would I feel awards something

of kind more of is growth a Systems think and performance. I So margin better moving into

I think quarter performance. you second see that the in

Sheila Kahyaoglu

you Thank Great. very much.

Scott Donnelly

Sure.

Operator

the David come from And Strauss will question go line our Please Barclays. next of ahead. with

open. Your line is

David Strauss

I had Thanks. they follow Good morning. Can last that something impacts the year, how an they guess how to on reverse I but their question talked came the reduce with or quarter think day quarter NetJets. out going you Back were plan up last on wanted yesterday about the Scott, NetJets, for announcement that going I to think you? I were with before to they saying that. just talk about

Scott Donnelly

sales Look, David, stopped. I saw, hit, first this think kind what NetJets of activity saw, the same right. thing all that team our thing When

And so sales off. sales saw taper understandably NetJets’ team their activity all

and of space are aviation on customers the at inquiring the looking are looking go-forward even private on saw seeing use they that from last awful aviation. people, Lots the not There’s demand privation been we’re in we thing think you basis. and lot the aviation a seeing of well, are NetJets call note this as standpoint. private is there. that out that sales at that same talked on before of I about that An increased have a using

in long term, thing for think healthy mid the industry. a is I So the this to very

a whether I that’s Textron number flow to important demand, bottom they think see that’s good demand fractional, whether huge as is increased rebounded we markets see whole rate at that’s that, those cycles ours increased the that that’s flying, for longitude the and volumes and you and right so Aviation. much of NetJets what of than us. obviously of look back as latitude will And in or the customer increased see aerospace, pieces you’ve line very of seen demand frankly encouraging. in quicker is, other aircraft has

David Strauss

Okay.

fair they with that it their is they plan with you, up plan revising to after down revised So their say you?

Scott Donnelly

safe very that’s think I to say.

David Strauss

Okay, thanks.

Scott Donnelly

Sure.

David Strauss

thinking flow now? what bit a that. and the guess could you on for a then talk business free you, Thanks. know a cash the by of had that came a Can And Maybe finer surprised for a source follow you flow. bit on was cash offer contribution year. of now that up you where about from if are Frank, I in pauses I the cash I inventory point was quarter. you

Frank Connor

to really of the commercial the job on all kind deceleration businesses did side the Look, Yes. businesses. responding of a nice the of

all businesses terms capital saw in we well a management. and perform frankly the working So of inventory

And saw working so you strong the a we said, quarter. as performance capital in

expect We to performance capital year. half good of continue working the to see in back the

be expect the the of positive cash not year flow from We’re and to cash get going certainly but full flow for specific half into positive guidance, the to year. second

David Strauss

very Thanks right. All much.

Operator

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

Carter Copeland

Good morning, gentlemen.

Scott Donnelly

Hi, Carter.

Carter Copeland

cycles across expand sales you sales change in that that at budgeting have honest side are this lot what something if a potential kind of real not of happens They Aviation is anything it your seasonality Scott, look teams it there’s And wondered so is year up. get I think works. or how in it the Hi. getting us to When sales at complex. might and that will you I’m really all there’s that the is that like corporate cadence if is and Is help when of more on variability cycle a or – that year? next corporations demand? any

Scott Donnelly

good Carter. That’s a question, very

the activity I are as of strong. orders are have MXs stronger closing very Air right. level strong. now said, are So light King and on XXXs that the side, been right

their as a going right. more corporate conversations, customers budgeting very have CapEx latitude their businesses, individuals’ are been. cycles. a high-net just you’re sort longitude, There’s they’re Those our and watching companies Obviously, but private of lot we customers. have lot dialogue have there’s on. They worth that So more of been closely of of

to and important to pace to economy down market sign how of segment the it of deposits the be going seeing certainty actually put recovers is think really I that So provides deals. and – the really start

I you So lot I give a that. wish could insight in better

why the encouraged We and have by everybody of how things start over months, out back but watching We’re to degree of the there of some out the of the continue starts look of America of certainly are we moved see CapEx of to else. as and progress normalcy. need part piece probably QX that to like to the last economy kind even couple again. head more QX think I in corporate beginning we XXXX into commitments deliveries latter at make to That’s

Carter Copeland

for give if us I one quarter, adjusted And be the EAC just the Thanks adjustments detail wonder you helpful the any for Great. always. that as could just Frank. color. would cumulative in on

Frank Connor

The year-over-year we a from net, XX. Yes. unfavorable year so were million down basis. a XX, a XX favorable, Favorable was on ago bit was

Carter Copeland

for Thanks Awesome. the details, guys.

Scott Donnelly

Yes.

Operator

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

George Shapiro

Good follow up. to idle negative million and one morning. cost got I’ve Frank, a The million just impacts. XX clarification led of facility XX

I unless if million two XX of I’m those subtract deposit just reading improperly? was what it So numbers,

Frank Connor

pieces a George, that, lot moving more So, there’s right. than

we net volume There’s challenging a in the lot a helped a there the would A you cost. There’s to a to number idle the of down much would furloughs kind So a been more other do it, environment. that Obviously offset what number. through has of the that’s where of that parts idle facility. impacts savings number overall quarter. lot of to in lower expect have that and frankly facility right. To through a we spike obviously that out significant lot derive performance cost of

matter would was the savings other lot of that, take not I in the – there performance of of cost than sort was There just you a one say. So noise thing. but guess lot to it’s more quarter not a just a total it’s

George Shapiro

relative that out to pretty took. idle a the netted It cost you facility positive to significant

Frank Connor

And cost of cost to Unfortunately of and we shutdown, we direct were furloughs sure. furloughs, permanent has took Yes, result by we transitioned that the basis. which and adjustments the that the from a the were go-forward on for the plants the make fact of to had while a that’s obviously a now indirect where out took the the align a that restructuring driven savings lot for furloughing. lot both through

George Shapiro

up follow Okay. And to then just question. David’s a

So include that you say were additional the that that quarter? billion backlog that X.X Aviation, in first the did NetJets orders in some reversed for out

Scott Donnelly

backlog change no NetJets in There the in QX. was

George Shapiro

are my questions. Those Okay. Thanks.

Operator

Peter Next, to line ahead. Please go Arment. we’ll go the of

Your line is open.

Peter Arment

just flight from we Aviation in the second we expect Scott, what on Frank. it the How what and does kind mentioned, as and the it March kind mentioned comments now about down. [ph] look circling kind If aftermarket know Scott did the for kind jet aftermarket morning, of half? from of like on Good true quarter for falloff of was perform at and look Frank exiting your quarter? back of your kind of a should activity you’ve the saw side. just the XX% I July. the we expectations V

Scott Donnelly

cycles of Yes. the for quarter, North America look It to mentioned. as pretty marked of change big was Peter, from was down if both our a June. But we progression total you at in jet there XX% Europe, the markets, biz and April

part consumption I would aircraft up that and expect so work will kind the lag little of bit. And service showing and a that

though to QX even to service a service activity June, QX. utilization business those up significantly and particularly through positively certainly certainly between in rates see the just the aircraft and There’s activity start we So we up. impact guide picking quarter, pick that up as lag pretty expect picking into we saw

Peter Arment

And anything quick a supply chain helpful. kind disruptions meaningful that’s out? any all one. just to at Okay, Are further call you then or of seeing that’s

Scott Donnelly

material, would food is say It’s Peter. I Nothing day. every a fight that

issue every still up a have and stuff it a day-by-day or right. and guys our But, here across kind a it through had on with it’s our impacts some look, we’ve or through we just way there and manage all our There’s of a have whatever. day of different an basis. supplier You suppliers that or flare businesses, work manage shutdown

Peter Arment

the color. I appreciate Thanks.

Operator

Stallard to of Robert with Next, Please line go we’ll Vertical the Research. ahead. go

Robert Stallard

Good very morning. Thanks much.

Scott Donnelly

Good morning.

Frank Connor

morning. Good

Robert Stallard

you. for Scott, one

that second wondering of us you’re rate Aviation if the year that now a maybe at compares is was of idea run at is rate I got where where it an question you a a run give the you well. how mentioned versus it were of where run a with. percentage rate, change happy follow-up to then, better I’ve could as And You and sort was start now.

Scott Donnelly

visibility, somewhere about now between think in weeks way XXXX that there’s we I the down rates, probably the right. made of given probably we’re right of had be think the a fact But I shutdown long at you more XX% it there’s couple the that think stage. thinking again adjustments setting towards The production Robert, looking so, XXXX. – XXXX. But of we’ve sort year you and way and in would But how the end about not or rates, if in terms XX% huge into rates the deliveries get reduction XXXX. XX%, that’s go down plant for of this back look that run a that here we we’re you’d anticipate and going half as to

Robert Stallard

for one then And great. That’s Frank.

of you paying got liquidity plans some It rest further the were back. unusual you’ll the was in bit debt see You down for Have a in debt paying any adding XXXX? and in aerospace things quarter. reduction

Frank Connor

of to so effectively that. of paydown the Well, we a that did and pre-fund was essentially earlier debt you’ll the year the XXXX our of in kind just in – recall maturities offering paydown debt

coming We XXX have already we in November that of debt have again effectively million another due refinanced. kind of

kind have us. that’s standpoint feel of we good debt we shape from we’re like in front that, in what of but kind other of a So structure than

Robert Stallard

That’s great. much. Thank very you

Operator

Seth Next, JPMorgan. go we’ll Seifman the go ahead. of Please to line with

open. Your line is

Seth Seifman

just much if include along in 'XX, the Thanks 'XX about we shift very good talked pickup in then of not so part guess I and expect the lines to you pick rate and there? when could wonder is deliveries, toward in more decline should some and NetJets And a back up was when mix the the to talked about in longitude, I fact the taking starting latitude that you morning. what Aviation you much run that, you mentioned a expected little as dissidents come about surprised and on talk smaller. if side about maybe and seeing as talk I of

Scott Donnelly

is mix the mix oriented not to we’re different mix a aircraft right a activity shift of it as mix year towards said, now aircraft. – I the We do certainly Okay. progresses. more better pickup larger to in The expect better the but as seeing a smaller

are factoring going respect with day, their put we’re working what is so we in these stuff I every to guys think we like. with demand look Look, again, to believe didn’t NetJets, we and backlog the the quarter. them in larger Obviously QX. through dialogue see the pick continues to aircraft to expect NetJets would up into with certainly in for backlog I and fourth third

Seth Seifman

the and Thanks. great. of you Okay, talk vehicles. if case, a bit vehicles pretty at autos loss could Caltex that And to up could relative you industrial, specialized and a and sort about and back profitability autos if as the clear for in and then each? It between follow a maybe is about just talk has path of path kind like sounds little the

Scott Donnelly

in auto we so profit shutdown Well, had and QX, shut Caltex the down, by individual vast demand. was into obviously no saw we our in world the just OEMs global shut The majority of the down op go don’t our businesses. the But there plants plants down. all we

said, I back we’re As least at around running that globally XX%.

If again, of looking stuff terms data our what – we And forecasting up. this we make base is really in base at. our you and IHS guys, on remember look don’t

– given there’s down plants utilization But up that now, was things no QX got So right we shut you QX see expect to tough around question plants again, QX. pick the where quarter a when your in world. really are those in and that Caltex for

continue and operating they’re performing back So plants – volume. up. have now picked They’re see to that

And look, terms all business, up. be sports are the see did the QX In change June as of factories activity, business. given the that really as you think robust. the in markets So will vehicle a particularly quarter the of of well contributor in case those Golf retail profitability market. back the and result of go starting to vehicle uptick XXXX I as significant in industrial We performed on the those in the PTV outdoor years produce in QX. we a a good we’ve turned on into significant in remain markets came the The back and that news is, demand power model in markets and

So both when improvements a plants it from businesses, sequentially quarter shut was I be a basis there tough will in are Caltex down. think relative in but your

Seth Seifman

Thank you much. very

Operator

go Please Skibitski with of Next, Global. Alembic the ahead. to we’ll line Pete go

Peter Skibitski

Systems, than for is be from coming just revenue units Lycoming headwinds like that I But guys. by imagine you, were growth into at kind just be. secular guess headwind big more this to thought the and second this of quarter just the collectively, Is had almost business? and ISR would TRU services Scott, Good point? morning, offset I I at driver that those it a TRU

Scott Donnelly

year. and but the where the and TAPV unmanned was last the grow our roll in Land expect the think largest there. Marine Ship year – the we offset driving bit programs, and course of to little we to I of do really business Yes, this to continues Shore the last was was side ANA look, & to for obviously the strong a the through had well quarter of us. a was continue It ago

but So and with rolling significant business of the is performing headwind obviously shutdown, for the well. simulator sure, a rest the business again

Peter Skibitski

the of collecting? be give unit And in wins ATAC, color then kind all great. that’s that with that terms it’s big you any how Okay, can can of

Scott Donnelly

task half $XXX So about – is awarded the said over that million we the years. next are two and about four we orders

good expect So that’s if Look, in at year million you invested and a of we aircraft. about be it we’ve revenue the $XX look margin. to that,

We assets. the have

already XX of ready great job. go. and are the done aircraft TRU airworthiness Our a There’s flying to that and team’s

this revenue we that see be in starting So should those to QX associated programs. with of year

Peter Skibitski

Okay. I appreciate the color.

Operator

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

Your line is open.

Jon Raviv

lot lower you. be morning. of we growth the jets, Thank about in you people need there. kind attract in to the where cost the Good entry to business of market long-term a When more talk opportunity it’s

more planes? from role? aftermarket around change thinking does us flying versus of and much long if look business us OE smaller there of what business, that truly about might that of comes forward and like today, if more just sort is So how kind the that of that truly on in of – profit going How term model start

Scott Donnelly

Well, and again business all these that I our we’ll of lot profitable dynamic, a I don’t of a think is out. to very see as business Look, I aerospace as jet portfolio see think this into how general we that, the aviation people I more in plays think been good businesses, the serve the see the entering aftermarket right. part business changing. marketplace, of place which at or always we has But look

CJ think lineup of family and And that have product jet MX at turboprop We whether then strong a the the and through line. King Air people very entry level, it’s or that look latitude has or as very our into the in portfolio space product in competitive even or ever XLS and better. it’s we’ve whether longitude, larger, very, been I got think I

up you’ll right picking expect migrate as seeing we’re everything that mid-sized would the is most I people activity entry the clearly well. strength into now, aircraft those but So see that like point of what

Jon Raviv

truly you follow how you’re it conserve a then you’re – Scott. think up the on still pretty in right largely. tough a to as Thank now allocation, in position. you, good cash were But and do time capital And having

capital 'XX visibility. down So deliveries in forward down in are do know little you you biz how this of going where context you XX% have more competitors, a I later XX% in The guys markets think deliveries your down about sometimes maybe the asset allocation from jets. year?

are some Sometimes for consolidation. those markets right

and So in thoughts any capital context consolidation going forward? jet that biz on allocation

Scott Donnelly

it’s about that. early talk little to a look, probably Well,

our to there actions I Obviously to in take to very standpoint are cash on that think happy basis. we’ll a sheet where balance a continue now. are we strengthen go-forward continue derisk right with and we’re from that that

the shape demonstrating But this, and on is near-term horizon. very to far right everybody we’re and imagine. on good very this something In in see company it’s Do That’s terms I obviously, in that’s of makes sort uncertainties, we’re I time in any making term hard and says good weathering consolidation and now, the that in think kind through the I near industry. all sure that valuations consolidation, of given so shape. the sense think healthy happening focused of we’re

Jon Raviv

Thank you, Scott.

Scott Donnelly

Sure.

Operator

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

Scott Donnelly

you are Noah, there?

Operator

Possibly you have on. your mute button

Noah Poponak

hear me? guys. Can Hi, you

Scott Donnelly

we you. Yes, got

Noah Poponak

Okay.

over – more – a sounds sat absolutely I’ve wanting to NetJets I’ve to orders is In or that real commercial versus real just I’m is did like want came for that. I new of risks trend not you are in fly it, on curious. on. about pushing I’m have me risks the It clearly to flying in seeing don’t we’re quarter, but from being the that trying always flying how the fly sense perceived always fence Sorry to get customers and deal private commercial said, been and commercial that fence anecdotal? I the

Scott Donnelly

as then think and right. and it we whole But moves before, I real. think into ownership, it’s fractionals with Club Hour before remember, said and very I Charter starts and

Somebody There’s here into aviation. that’s a equity going in entry of position. jump start buy of a to that’s utilizing normal it of to the going which progression large right. anybody business with before fractionals, it jet a new the it and and business doesn’t never with going on to been think They’re see see. a kind airplane, of get hour progress I sort not is the that on sort a to by some process experience They’re we by and normal

across is shares. guys I are that think and it’s seeing Club NetJets very NetJets everything. it’s when older both strong Wheels So I to Charter but aircraft, fractional also are the that are that It’s talked that you and companies folks like flying the there operating are folks interested cards again models, membership in out it’s think Up

well these to are migrating to people known business. new see you brands the So as that

don’t I So anecdotal. think

real. I a starts of more ownership, a sort from aircraft perspective, in towards that’s But it’s whole migrates and or it path think non-equity ultimately whether fraction again, our quite in the owner. through in a mode

Noah Poponak

have Okay, production to or half call on Cessna is on you here it the In into – see in and Bell in XXXX with year for the did then you you how of terms back desire commercial the Bell just loading this of that’s visibility do commercial, units? interesting. pretty share similarly how to

Scott Donnelly

totally market, right. a it’s different Look,

a doesn’t share particular around analogy that. So it

aircraft I more lighter of that it’s volume. seen It’s think where area is cycle. we individual, has about a worth the talked lower on which short we’ve in and more some XXX, seen we’ve a high-net spend, – we’ve seeing volume when sell you which of the only lower activity been a discretionary

commercial market. some other there’s nowhere – the very is we’ll you of the the lead a year. the time They’re as the and EMS. are as And aircraft deliveries going think are the That is to no process. through into of side I training, business of longer of balance see other going market softening lower But doubt in tends aftermarket’s dramatic acquisition utilization defense think very Bell near different the sort Look, part I a a a see police, see but we’ll public. obviously of you’ll lot where volume high, power, which into that piece in strong strong. fixed-wing have good,

performance Bell’s So as both future. of it’s good feel for opportunities terms hard where well not the as position to about in the

Noah Poponak

units asking did really actually if the actually change It’s you But next Cessna provide commercial directional of you for you was for color. helpful. same year that year I see and just in rate there? the would way appreciate I Yes, this

Scott Donnelly

production lighter you’re But market visibility. some is sure No, the color now would I not. going to for on and Other be of it, better on than rest XXXs accordingly. we’ve giving the adjusted

Noah Poponak

just I I but didn’t now. Thanks very come wasn’t my sure understand much. question if across, Okay.

Scott Donnelly

Ryan, the queue? we another do have caller in

Operator

the Bank Please next question ahead. comes Epstein go from with Our America. of of line Ron

Ronald Epstein

guys. morning, Good

Scott Donnelly

Good morning.

Frank Connor

morning. Good

Ronald Epstein

the you aircraft tails whitetails any do have right you And a now? and at used floating aviation follow then one any Maybe sold? a quick around? up. have Do guys Are all

Scott Donnelly

word We time. in used whitetail very a long very, the haven’t

So we and of kind as a forecast for do. continue build what you to years we that’s now, know to

inquiring about I I’m an aircraft, can sure if So you’re help wanting buy to you.

Ronald Epstein

could life. wish I in I another

Scott Donnelly

But remember building dynamics the look, on talked you whole the run lower our that, because The cancellations. Ron, ago made making backlog one to news that The our you big to seeing thing the creation certainly obviously the demand saw that unlike the fractional rate stayed massive unfortunately adjustments at is the these we’ll used would do the we see aimed we’re the And to at it, that up doing. supply everything in right. good obviously look, or be demand on our haven’t that the we’re I’d remains is we’ve I see aircraft The years were the It selling. helped We’ll through objective. comes the made that very this in adjustments on different, the we previous flood going and airplane. year we airplane. use say, you by And order. now environment way want don’t we of into seen their but along to marketplace. my factory And the as have situation good see pretty at improve say The backlog XXXX saying, want customers match don’t shutdown, gotten two that on keep we so can of here seeing cancel we’ve or aircraft number this the cycles, that market. side, and about that whitetail having the and of was don’t sale flood all the we’ve a used side expect into for low I of levels. incoming align sure was also People down, to that’s hey, adjust and keep available calls of you been I our do obviously we’ve balance to demand. production into and

out ago seeing which the a market, here volume that in obviously obviously of some aircraft last huge actually we’re there’s the the put years of lot flooding into the uptick that that not the We’re nature used few an bit used new are just very on light pressure price lower aircraft. And of in pandemic months. of given of over segment, there the lack little number pricing a seeing of again, them because a

remains good. which is think that So healthy, market I

Ronald Epstein

much that. picture on color for the maybe you Okay, just then question. Thank And great. that’s bigger one

do past about on easy the make to so just on like of we and company you for look busy, your usual you take pandemic, some company and it and at reasons. make lot this other opportunity changes have changes do to lot tanks so maybe to wouldn’t when things to of pandemic and out out of so when the opportunities forth? because make with some point you and gas to get company seat and that or here different from couldn’t a right? out get give done resize cuttings think there’s stronger But Textron you so portfolio that breath door the of calls have at been Does trying the door As a to a focus or teams, couldn’t a reshaping management look you we the listen these there and so cost some or was obvious if you’re are airplanes when as the view an everybody of fundamental was any business from either to on forth

Scott Donnelly

the this had at then is last R&D about as we latitude think Aviation we and few the very over high brought more as we’ve years longitude particularly and brought recognizing I right, into specifically Look, levels, market. that

very a that we through are much programs are Denali magnitude a of SkyCourier longitude. have large and these roadmap, smaller So gone a things on were in position already still situated like and the phase. a we We but had something R&D of where

upgrade We’re that to are lot also aircraft our a of getting back to doing there. programs out existing

couple So our got next – I great a I three we’ve perspective, portfolio. is this look – over think the as two, from think years, we

that’s we’ve We line. like a then is intensive lot keeps have And lot not coming great have of growth as of which along are product refreshing and SkyCourier got that well. R&D a product should the upgrade things which but programs really a

taking into on rate run late at if lower a We that we’re accordingly see associated costs with certainly year stronger we this going demand. forward out adjust least obviously XXXX. through production So can

some changing businesses, business In some as things some see those in as forward, fundamental do terms of this efficiently we of can just consolidating beyond a vehicle think where and couple more don’t other making forward. of and I that we cases the the were in slowdown, business, in cost we’re R&D about air the of dramatic around we’ve say would I such side probably transport I profile. we’re a doing than structural we Aviation, are operations, things a change from So better with other obviously our out position a going the run side come the things looking in the the of we’ve absolutely a restructuring operations talked at fundamentally standpoint, them better we’re downturn place we going seen

Ronald Epstein

Okay, great. you. Thank

Eric Salander

we Okay, questions Ryan. in for it will That the and does end queue call. the

Operator

you Ladies participation. Okay. and gentlemen, like does thank that conference. your to I’d for conclude today’s

now may disconnect. You

Textron (TXT) 30 Jul 202020 Q2 Earnings call transcript