Textron Reports Fourth Quarter 2022 Results; Announces 2023

Textron Reports Fourth Quarter 2022 Results; Announces 2023 Financial Outlook


TEXTRON INC. Revenues by Segment and Reconciliation of Segment Profit to Net Income (Dollars in millions, except per share amounts) (Unaudited)

	Three Months Ended								Twelve Months Ended
	December 31, 2022				January 1, 2022				December 31, 2022				January 1, 2022
REVENUES
MANUFACTURING:
Textron Aviation		$	1,582			$	1,359			$	5,073			$	4,566
Bell			816				858				3,091				3,364
Textron Systems			314				313				1,172				1,273
Industrial			907				781				3,465				3,130
Textron eAviation (a)			6				—				16				—
			3,625				3,311				12,817				12,333
FINANCE			11				11				52				49
Total revenues		$	3,636			$	3,322			$	12,869			$	12,382

SEGMENT PROFIT
MANUFACTURING:
Textron Aviation		$	169			$	137			$	584			$	378
Bell			71				88				317				408
Textron Systems			40				45				152				189
Industrial			42				38				165				140
Textron eAviation (a)			(10	)			—				(26	)			—
			312				308				1,192				1,115
FINANCE			5				2				31				19
Segment profit (b)			317				310				1,223				1,134

Corporate expenses and other, net			(43	)			(29	)			(113	)			(129	)
Interest expense, net for Manufacturing group			(17	)			(29	)			(94	)			(124	)
Special charges (c)			—				(5	)			—				(25	)
Gain on business disposition (d)			—				—				—				17
Income from continuing operations before income taxes			257				247				1,016				873
Income tax expense			(31	)			(40	)			(154	)			(126	)
Income from continuing operations		$	226			$	207			$	862			$	747
Discontinued operations, net of income taxes			—				—				(1	)			(1	)
Net income		$	226			$	207			$	861			$	746

Earnings Per Share:
Income from continuing operations		$	1.07			$	0.93			$	4.01			$	3.30

Diluted average shares outstanding			210,488,000				222,860,000				214,973,000				226,520,000

Income from continuing operations and Diluted earnings per share (EPS) GAAP to Non-GAAP Reconciliation for the three and twelve months ended January 1, 2022:

					January 1, 2022								January 1, 2022
Income from continuing operations - GAAP						$	207							$	747
Add: Special charges, net of tax (c)							3								18
Less: Gain on business disposition, net of tax (d)							—								(17	)
Adjusted income from continuing operations - Non-GAAP (b)						$	210							$	748

Earnings Per Share:
Income from continuing operations - GAAP						$	0.93							$	3.30
Add: Special charges, net of tax (c)							0.01								0.08
Less: Gain on business disposition, net of tax (d)							—								(0.08	)
Adjusted income from continuing operations - Non-GAAP (b)						$	0.94							$	3.30


TEXTRON INC. Revenues by Segment and Reconciliation of Segment Profit to Net Income (Continued) (Dollars in millions, except per share amounts) (Unaudited)

(a)	On April 15, 2022, we acquired Pipistrel, a manufacturer of electrically powered aircraft. Beginning in the second quarter of 2022, we formed a new reporting segment, Textron eAviation, which combines the operating results of Pipistrel along with other research and development initiatives related to sustainable aviation solutions.
(b)	Segment profit, Adjusted income from continuing operations and Adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures and Outlook" attached to this release.
(c)	In connection with a restructuring plan initiated in the second quarter of 2020, we incurred special charges of $5 million and $25 million for the three and twelve months ended January 1, 2022.
(d)	In January 2021, we completed the sale of TRU Simulation + Training Canada Inc. which resulted in an after-tax gain of $17 million.


Textron Inc. Condensed Consolidated Balance Sheets (In millions) (Unaudited)

	December 31, 2022		January 1, 2022
Assets
Cash and equivalents	$	1,963	$	1,922
Accounts receivable, net		855		838
Inventories		3,550		3,468
Other current assets		1,033		1,018
Net property, plant and equipment		2,523		2,538
Goodwill		2,283		2,149
Other assets		3,422		3,027
Finance group assets		664		867
Total Assets	$	16,293	$	15,827


Liabilities and Shareholders' Equity
Current portion of long-term debt	$	7	$	6
Accounts payable		1,018		786
Other current liabilities		2,645		2,344
Other liabilities		1,879		2,005
Long-term debt		3,175		3,179
Finance group liabilities		456		692
Total Liabilities		9,180		9,012

Total Shareholders' Equity		7,113		6,815
Total Liabilities and Shareholders' Equity	$	16,293	$	15,827


TEXTRON INC. MANUFACTURING GROUP Condensed Schedule of Cash Flows (In millions) (Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2022			January 1, 2022			December 31, 2022			January 1, 2022
Cash Flows from Operating Activities:
Income from continuing operations	$	220		$	203		$	835		$	740
Depreciation and amortization		109			103			396			380
Deferred income taxes and income taxes receivable/payable		(56	)		18			(182	)		43
Pension, net		(42	)		(20	)		(165	)		(82	)
Gain on business disposition		—			—			—			(17	)
Changes in assets and liabilities:
Accounts receivable, net		(3	)		(66	)		(26	)		(58	)
Inventories		298			209			(55	)		45
Accounts payable		119			12			235			13
Other, net		(129	)		(2	)		423			405
Net cash from operating activities		516			457			1,461			1,469
Cash Flows from Investing Activities:
Capital expenditures		(162	)		(171	)		(354	)		(375	)
Net cash used in business acquisitions		(1	)		—			(202	)		—
Net (payments)/proceeds from corporate-owned life insurance policies		—			(2	)		23			(2	)
Proceeds from sale of property, plant and equipment		1			—			22			3
Net proceeds from business disposition		—			—			—			38
Other investing activities, net		—			1			—			1
Net cash from investing activities		(162	)		(172	)		(511	)		(335	)
Cash Flows from Financing Activities:
Increase/(decrease) in short-term debt		1			(1	)		(14	)		(1	)
Principal payments on long-term debt and nonrecourse debt		(2	)		(2	)		(18	)		(524	)
Purchases of Textron common stock		(228	)		(335	)		(867	)		(921	)
Dividends paid		(4	)		(4	)		(17	)		(18	)
Other financing activities, net		8			12			41			115
Net cash from financing activities		(225	)		(330	)		(875	)		(1,349	)
Total cash flows from continuing operations		129			(45	)		75			(215	)
Total cash flows from discontinued operations		—			—			(2	)		(1	)
Effect of exchange rate changes on cash and equivalents		17			(2	)		(32	)		(8	)
Net change in cash and equivalents		146			(47	)		41			(224	)
Cash and equivalents at beginning of period		1,817			1,969			1,922			2,146
Cash and equivalents at end of period	$	1,963		$	1,922		$	1,963		$	1,922

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:

	Three Months Ended						Twelve Months Ended
	December 31, 2022			January 1, 2022			December 31, 2022			January 1, 2022
Net cash from operating activities - GAAP	$	516		$	457		$	1,461		$	1,469
Less: Capital expenditures		(162	)		(171	)		(354	)		(375	)
Plus: Total pension contribution		13			12			49			52
Proceeds from sale of property, plant and equipment		1			—			22			3
Manufacturing cash flow before pension contributions - Non-GAAP (a)	$	368		$	298		$	1,178		$	1,149

(a)	Manufacturing cash flow before pension contributions is a non-GAAP financial measure as defined in "Non-GAAP Financial Measures and Outlook" attached to this release.


TEXTRON INC. Condensed Consolidated Schedule of Cash Flows (In millions) (Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2022			January 1, 2022			December 31, 2022			January 1, 2022
Cash Flows from Operating Activities:
Income from continuing operations	$	226		$	207		$	862		$	747
Depreciation and amortization		109			105			397			390
Deferred income taxes and income taxes receivable/payable		(63	)		1			(202	)		34
Pension, net		(42	)		(20	)		(165	)		(82	)
Gain on business disposition		—			—			—			(17	)
Changes in assets and liabilities:
Accounts receivable, net		(3	)		(66	)		(26	)		(58	)
Inventories		298			209			(55	)		45
Accounts payable		119			12			235			13
Captive finance receivables, net		6			(21	)		35			131
Other, net		(123	)		(2	)		409			396
Net cash from operating activities		527			425			1,490			1,599
Cash Flows from Investing Activities:
Capital expenditures		(162	)		(171	)		(354	)		(375	)
Net cash used in business acquisitions		(1	)		—			(202	)		—
Net (payments)/proceeds from corporate-owned life insurance policies		—			(2	)		23			(2	)
Proceeds from sale of property, plant and equipment		1			—			22			3
Net proceeds from business disposition		—			—			—			38
Finance receivables repaid		(1	)		—			20			19
Other investing activities, net		—			19			44			36
Net cash from investing activities		(163	)		(154	)		(447	)		(281	)
Cash Flows from Financing Activities:
Increase/(decrease) in short-term debt		1			(1	)		(14	)		(1	)
Principal payments on long-term debt and nonrecourse debt		(7	)		(6	)		(234	)		(621	)
Purchases of Textron common stock		(228	)		(335	)		(867	)		(921	)
Dividends paid		(4	)		(4	)		(17	)		(18	)
Other financing activities, net		8			12			41			115
Net cash from financing activities		(230	)		(334	)		(1,091	)		(1,446	)
Total cash flows from continuing operations		134			(63	)		(48	)		(128	)
Total cash flows from discontinued operations		—			—			(2	)		(1	)
Effect of exchange rate changes on cash and equivalents		17			(2	)		(32	)		(8	)
Net change in cash and equivalents		151			(65	)		(82	)		(137	)
Cash and equivalents at beginning of period		1,884			2,182			2,117			2,254
Cash and equivalents at end of period	$	2,035		$	2,117		$	2,035		$	2,117

TEXTRON INC.

Non-GAAP Financial Measures and Outlook

(Dollars in millions, except per share amounts)

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