Textron [TXT] yesterday reported strong sales and earnings growth, driven by demand for business jets, defense equipment and the company’s acquisition of AAI Corp.
Net income increased 18 percent to $231 million, 91 cents earnings per share (EPS), from $196 million (77 cents EPS) a year ago. Free cash flow was $78 million.
Sales grew 19 percent to $3.5 billion from $3 billion, with the growth driven by the Defense & Intelligence segment, which benefited acquisition of AAI Corp., and the Cessna aircraft making division, which delivered 28 more business jets than a year ago. Backlog in the company’s aerospace and defense segments was up $3.2 billion to $22 billion from the end of 2007.
The Defense & Electronics segment was created by separating Textron Systems from the company’s Bell segment. Textron said that Textron Systems, which makes military vehicles, weapons systems, marine systems, electronic test equipment, unmanned aerial vehicles and related ground control stations, “with recent acquisitions and organic growth…now provides a significant portion of consolidated revenues.”
Bell sales declined slightly as a dropoff in commercial revenues more than offset higher military sales related to the V-22 tilt-rotor program and increased spares and service work.
The increase in income was driven by the Defense & Intelligence segment due to the AAI purchase and contract adjustments on the Armored Security Vehicle program stemming from program performance. Cessna also posted strong profits due to the higher aircraft deliveries, improved pricing and favorable warranty performance. Bell profits were also up due to mainly to improved cost performance and higher sales for military work.
The overall strong performance by the aerospace and defense businesses were offset somewhat by the Industrial and Finance segment. Industrial sales increased but profits declined due to inflation. Finance revenues also increased but profits fell due to an increase in the provision for loan losses.
Textron increased its 2008 earnings guidance by five cents to between $3.80 and $4 EPS.