Business Wire | Jul 29, 2021 06:30AM EDT

Textron Reports Second Quarter 2021 Results; Raises Full Year EPS and Cash Guidance

Jul. 29, 2021

PROVIDENCE, R.I.--(BUSINESS WIRE)--Jul. 29, 2021--Textron Inc. (NYSE: TXT) today reported second quarter 2021 income from continuing operations of $0.81 per share. Adjusted net income, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was also $0.81 per share for the second quarter of 2021, compared to $0.13 per share in the second quarter of 2020.

"In the quarter, we saw higher revenues across all our manufacturing segments, good execution with solid margin performance at Systems, Bell and Aviation, and strong cash generation," said Textron Chairman and CEO Scott C. Donnelly.

Cash Flow

Net cash provided by operating activities of continuing operations of the manufacturing group for the second quarter was $572 million, compared to $245 million last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $509 million compared to $215 million last year.

In the quarter, Textron returned $196 million to shareholders through share repurchases.

Outlook

Textron now expects 2021 earnings per share from continuing operations to be in a range of $2.97 to $3.21, or $3.00 to $3.20 on an adjusted basis, up $0.20 from our previous outlook. Textron also expects cash flow from continuing operations of the manufacturing group before pension contributions to be in a range of $800 million to $900 million, up $200 million, with planned pension contributions of about $50 million.

Donnelly continued, "As the economy strengthens, our outlook reflects continued growth in business aviation, improving execution on new programs at Systems, ongoing investments in Future Vertical Lift at Bell and strong retail demand in our end-markets at Industrial."

Second Quarter Segment Results

Textron Aviation

Revenues at Textron Aviation of $1.2 billion were up $414 million from the second quarter of 2020, largely due to higher Citation jet volume of $174 million, aftermarket volume of $98 million and commercial turboprop volume of $75 million.

Textron Aviation delivered 44 jets, up from 23 last year, and 33 commercial turboprops, up from 15 last year.

Segment profit was $96 million in the second quarter, up $162 million from a year ago, due to the higher volume and mix of $117 million, a favorable impact from performance of $34 million and favorable pricing, net of inflation of $11 million.

Textron Aviation backlog at the end of the second quarter was $2.7 billion.

Bell

Bell revenues were $891 million, up $69 million from last year, on higher commercial revenues of $99 million, partially offset by lower military revenues.

Bell delivered 47 commercial helicopters in the quarter, up from 27 last year.

Segment profit of $110 million was down $8 million, primarily due to higher research and development costs in the quarter, largely related to the future vertical lift programs.

Bell backlog at the end of the second quarter was $4.8 billion.

Textron Systems

Revenues at Textron Systems were $333 million, up $7 million from last year's second quarter.

Segment profit of $48 million was up $11 million from a year ago, largely due to a favorable impact from performance.

Textron Systems' backlog at the end of the second quarter was $2.3 billion.

Industrial

Industrial revenues were $794 million, up $232 million from last year, with $169 million from Fuel Systems and Functional Components and $63 million from Specialized Vehicles, largely reflecting higher volume and mix.

Segment profit of $32 million was up $43 million from the second quarter of 2020, primarily due to the higher volume and mix at each of the businesses.

Finance

Finance segment revenues were $12 million, and profit was $3 million.

Conference Call Information

Textron will host its conference call today, July 29, 2021 at 8:00 a.m. (Eastern) to discuss its results and outlook. The call will be available via webcast at www.textron.com or by direct dial at (844) 721-7241 in the U.S. or (409) 207-6955 outside of the U.S.; Access Code: 4252363.

In addition, the call will be recorded and available for playback beginning at 11:00 a.m. (Eastern) on Thursday, July 29, 2021 by dialing (402) 970-0847; Access Code: 9928221.

A package containing key data that will be covered on today's call can be found in the Investor Relations section of the company's website at www.textron.com.

About Textron Inc.

Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Arctic Cat, Textron Systems, and TRU Simulation + Training. For more information visit: www.textron.com.

Forward-looking Information

Certain statements in this release and other oral and written statements made by us from time to time are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "guidance," "project," "target," "potential," "will," "should," "could," "likely" or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under "Risk Factors", among the factors that could cause actual results to differ materially from past and projected future results are the following: Interruptions in the U.S. Government's ability to fund its activities and/or pay its obligations; changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries; our ability to perform as anticipated and to control costs under contracts with the U.S. Government; the U.S. Government's ability to unilaterally modify or terminate its contracts with us for the U.S. Government's convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards; changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products; volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products; volatility in interest rates or foreign exchange rates; risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries; our Finance segment's ability to maintain portfolio credit quality or to realize full value of receivables; performance issues with key suppliers or subcontractors; legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products; our ability to control costs and successfully implement various cost-reduction activities; the efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs; the timing of our new product launches or certifications of our new aircraft products; our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers; pension plan assumptions and future contributions; demand softness or volatility in the markets in which we do business; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or, operational disruption; difficulty or unanticipated expenses in connection with integrating acquired businesses; the risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections; the impact of changes in tax legislation; and risks and uncertainties related to the impact of the COVID-19 pandemic on our business and operations.

TEXTRON INC.

Revenues by Segment and Reconciliation of Segment Profit to Net Income (Loss)

(Dollars in millions, except per share amounts)

(Unaudited)

Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

REVENUES

MANUFACTURING:

Textron $ 1,161 $ 747 $ 2,026 $ 1,619 Aviation

Bell 891 822 1,737 1,645

Textron 333 326 661 654 Systems

Industrial 794 562 1,619 1,302

3,179 2,457 6,043 5,220

FINANCE 12 15 27 29

Total Revenues $ 3,191 $ 2,472 $ 6,070 $ 5,249



SEGMENT PROFIT

MANUFACTURING:

Textron $ 96 $ (66 ) $ 143 $ (63 ) Aviation

Bell 110 118 215 233

Textron 48 37 99 63 Systems

Industrial 32 (11 ) 79 (2 )

286 78 536 231

FINANCE 3 4 9 7

Segment Profit 289 82 545 238



Corporateexpenses and (37 ) (30 ) (77 ) (44 ) other, net

Interestexpense, netfor (32 ) (37 ) (67 ) (71 ) Manufacturinggroup

Special (4 ) (78 ) (10 ) (117 ) charges (a)

Gain onbusiness 2 - 17 - disposition(b)

Inventory - (55 ) - (55 ) charge (c)

Income (loss)fromcontinuing 218 (118 ) 408 (49 ) operationsbefore incometaxes

Income tax(expense) (34 ) 26 (53 ) 7 benefit

Income (loss)from $ 184 $ (92 ) $ 355 $ (42 ) continuingoperations

Discontinuedoperations, (1 ) - (1 ) - net of incometaxes

Net Income $ 183 $ (92 ) $ 354 $ (42 ) (Loss)



Earnings(Loss) Per Share:

Income (loss)from $ 0.81 $ (0.40 ) $ 1.56 $ (0.18 ) continuingoperations

Discontinuedoperations, (0.01 ) - (0.01 ) - net of incometaxes

Earnings(Loss) Per $ 0.80 $ (0.40 ) $ 1.55 $ (0.18 ) Share



Dilutedaverage shares 228,446,000 228,247,000 228,296,000 228,279,000 outstanding(d)



Income (Loss) from continuing operations and Diluted Earnings (Loss) Per Share (EPS) GAAP to Non-GAAP Reconciliation:



Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Income (Loss)fromcontinuing $ 184 $ (92 ) $ 355 $ (42 ) operations -GAAP

Add: Specialcharges, net 3 67 7 97 of tax (a)

Inventorycharge, net of - 55 - 55 tax (c)

Less: Gain onbusiness (2 ) - (17 ) - disposition,net of tax (b)

AdjustedIncome fromContinuing $ 185 $ 30 $ 345 $ 110 Operations -Non-GAAP (e)



Earnings Per Share:

Income (Loss)fromcontinuing $ 0.81 $ (0.40 ) $ 1.56 $ (0.18 ) operations -GAAP

Add: Specialcharges, net 0.01 0.29 0.03 0.42 of tax (a)

Inventorycharge, net of - 0.24 - 0.24 tax (c)

Less: Gain onbusiness (0.01 ) - (0.08 ) - disposition,net of tax (b)

AdjustedIncome fromContinuing $ 0.81 $ 0.13 $ 1.51 $ 0.48 Operations -Non-GAAP (e)



(a)

In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. The restructuring plan primarily impacted the TRU Simulation + Training business within the Textron Systems segment and the Industrial and Textron Aviation segments. In connection with this plan, we incurred special charges of $4 million and $10 million for the three and six months ended July 3, 2021, respectively, and $78 million for both the three and six months ended July 4, 2020. Special charges for the six months ended July 4, 2020 also included the impairment of indefinite-lived trade name intangible assets totaling $39 million, primarily in the Textron Aviation segment.

(b)

On January 25, 2021, we completed the sale of TRU Simulation + Training Canada Inc. which resulted in an after-tax gain of $17 million.

(c)

In connection with the restructuring plan described above, we ceased manufacturing at TRU's facility in Montreal, Canada, resulting in the production suspension of our commercial air transport simulators. As a result of this action and market conditions, we recorded a $55 million charge in the second quarter of 2020 to write-down the related inventory to its net realizable value.

(d)

For the three and six months ended July 3, 2021, fully dilutive shares were used to calculate EPS. For the three and six months ended July 4, 2020, the diluted average shares used to calculated EPS on a GAAP basis excluded potential common shares (stock options and restricted stock units), due to their antidilutive effect resulting from the net loss.

(e)

Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release.

In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. The restructuring plan primarily impacted the TRU Simulation + Training business within the Textron Systems(a) segment and the Industrial and Textron Aviation segments. In connection with this plan, we incurred special charges of $4 million and $10 million for the three and six months ended July 3, 2021, respectively, and $78 million for both the three and six months ended July 4, 2020. Special charges for the six months ended July 4, 2020 also included the impairment of indefinite-lived trade name intangible assets totaling $39 million, primarily in the Textron Aviation segment.

(b) On January 25, 2021, we completed the sale of TRU Simulation + Training Canada Inc. which resulted in an after-tax gain of $17 million.

In connection with the restructuring plan described above, we ceased manufacturing at TRU's facility in Montreal, Canada, resulting in the(c) production suspension of our commercial air transport simulators. As a result of this action and market conditions, we recorded a $55 million charge in the second quarter of 2020 to write-down the related inventory to its net realizable value.

For the three and six months ended July 3, 2021, fully dilutive shares were used to calculate EPS. For the three and six months ended July 4,(d) 2020, the diluted average shares used to calculated EPS on a GAAP basis excluded potential common shares (stock options and restricted stock units), due to their antidilutive effect resulting from the net loss.

Adjusted net income and adjusted diluted earnings per share are non-GAAP(e) financial measures as defined in "Non-GAAP Financial Measures" attached to this release.

Textron Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

July 3, 2021

January 2, 2021

Assets

Cash and equivalents

$

1,995

$

2,146

Accounts receivable, net

822

787

Inventories

3,664

3,513

Other current assets

874

950

Net property, plant and equipment

2,488

2,516

Goodwill

2,155

2,157

Other assets

2,456

2,436

Finance group assets

925

938

Total Assets

$

15,379

$

15,443

Liabilities and Shareholders' Equity

Current portion of long-term debt

$

7

$

509

Accounts payable

965

776

Other current liabilities

2,035

1,985

Other liabilities

2,327

2,357

Long-term debt

3,182

3,198

Finance group liabilities

762

773

Total Liabilities

9,278

9,598

Total Shareholders' Equity

6,101

5,845

Total Liabilities and Shareholders' Equity

$

15,379

$

15,443

Textron Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)



July 3, January 2, 2021 2021

Assets

Cash and equivalents $ 1,995 $ 2,146

Accounts receivable, net 822 787

Inventories 3,664 3,513

Other current assets 874 950

Net property, plant and equipment 2,488 2,516

Goodwill 2,155 2,157

Other assets 2,456 2,436

Finance group assets 925 938

Total Assets $ 15,379 $ 15,443





Liabilities and Shareholders' Equity

Current portion of long-term debt $ 7 $ 509

Accounts payable 965 776

Other current liabilities 2,035 1,985

Other liabilities 2,327 2,357

Long-term debt 3,182 3,198

Finance group liabilities 762 773

Total Liabilities 9,278 9,598



Total Shareholders' Equity 6,101 5,845

Total Liabilities and Shareholders' Equity $ 15,379 $ 15,443

TEXTRON INC.

MANUFACTURING GROUP

Condensed Schedule of Cash Flows

(In millions)

(Unaudited)

Three Months Ended

Six Months Ended

July 3, 2021

July 4, 2020

July 3, 2021

July 4, 2020

Cash Flows from Operating Activities:

Income (loss) from continuing operations

$

181

$

(95

)

$

358

$

(47

)

Depreciation and amortization

95

97

183

186

Gain on business disposition

(2

)

-

(17

)

-

Deferred income taxes and income taxes receivable/payable

30

(49

)

18

(40

)

Asset impairments and TRU inventory charge

3

71

6

110

Pension, net

(19

)

(3

)

(42

)

(8

)

Changes in assets and liabilities:

Accounts receivable, net

65

110

(38

)

157

Inventories

16

124

(162

)

(244

)

Accounts payable

(71

)

(351

)

188

(400

)

Other, net

274

341

185

138

Net cash from operating activities

572

245

679

(148

)

Cash Flows from Investing Activities:

Capital expenditures

(75

)

(46

)

(128

)

(96

)

Net proceeds from business disposition

(1

)

-

38

-

Net proceeds from corporate-owned life insurance policies

-

15

-

17

Proceeds from the sale of property, plant and equipment

-

4

-

5

Other investing activities, net

-

(2

)

-

(11

)

Net cash from investing activities

(76

)

(29

)

(90

)

(85

)

Cash Flows from Financing Activities:

Increase (decrease) in short-term debt

-

(104

)

-

499

Net proceeds from long-term debt

-

(1

)

-

642

Principal payments on long-term debt and nonrecourse debt

(252

)

(187

)

(519

)

(194

)

Proceeds from borrowings against corporate-owned life insurance policies

-

-

-

377

Payment on borrowings against corporate-owned life insurance policies

-

(15

)

-

(15

)

Purchases of Textron common stock

(196

)

-

(287

)

(54

)

Dividends paid

(4

)

(4

)

(9

)

(9

)

Other financing activities, net

51

1

75

(8

)

Net cash from financing activities

(401

)

(310

)

(740

)

1,238

Total cash flows from continuing operations

95

(94

)

(151

)

1,005

Total cash flows from discontinued operations

(1

)

1

(1

)

-

Effect of exchange rate changes on cash and equivalents

4

6

1

(10

)

Net Change in Cash and Equivalents

98

(87

)

(151

)

995

Cash and Equivalents at Beginning of Period

1,897

2,263

2,146

1,181

Cash and Equivalents at End of Period

$

1,995

$

2,176

$

1,995

$

2,176

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:

Three Months Ended

Six Months Ended

July 3, 2021

July 4, 2020

July 3, 2021

July 4, 2020

Net Cash from Operating Activities - GAAP

$

572

$

245

$

679

$

(148

)

Less: Capital expenditures

(75

)

(46

)

(128

)

(96

)

Plus: Total pension contributions

12

12

29

24

Proceeds from the sale of property, plant and equipment

-

4

-

5

Manufacturing Cash Flow Before Pension Contributions - Non-GAAP (a)

$

509

$

215

$

580

$

(215

)

TEXTRON INC.

MANUFACTURING GROUP

Condensed Schedule of Cash Flows

(In millions)

(Unaudited)



Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Cash Flows from Operating Activities:

Income (loss) from $ 181 $ (95 ) $ 358 $ (47 ) continuing operations

Depreciation and 95 97 183 186 amortization

Gain on business (2 ) - (17 ) - disposition

Deferred income taxesand income taxes 30 (49 ) 18 (40 ) receivable/payable

Asset impairments and 3 71 6 110 TRU inventory charge

Pension, net (19 ) (3 ) (42 ) (8 )

Changes in assets and liabilities:

Accounts receivable, 65 110 (38 ) 157 net

Inventories 16 124 (162 ) (244 )

Accounts payable (71 ) (351 ) 188 (400 )

Other, net 274 341 185 138

Net cash from 572 245 679 (148 ) operating activities

Cash Flows from Investing Activities:

Capital expenditures (75 ) (46 ) (128 ) (96 )

Net proceeds from (1 ) - 38 - business disposition

Net proceeds fromcorporate-owned life - 15 - 17 insurance policies

Proceeds from thesale of property, - 4 - 5 plant and equipment

Other investing - (2 ) - (11 ) activities, net

Net cash from (76 ) (29 ) (90 ) (85 ) investing activities

Cash Flows from Financing Activities:

Increase (decrease) - (104 ) - 499 in short-term debt

Net proceeds from - (1 ) - 642 long-term debt

Principal payments onlong-term debt and (252 ) (187 ) (519 ) (194 ) nonrecourse debt

Proceeds fromborrowings against - - - 377 corporate-owned lifeinsurance policies

Payment on borrowingsagainst - (15 ) - (15 ) corporate-owned lifeinsurance policies

Purchases of Textron (196 ) - (287 ) (54 ) common stock

Dividends paid (4 ) (4 ) (9 ) (9 )

Other financing 51 1 75 (8 ) activities, net

Net cash from (401 ) (310 ) (740 ) 1,238 financing activities

Total cash flows from 95 (94 ) (151 ) 1,005 continuing operations

Total cash flows fromdiscontinued (1 ) 1 (1 ) - operations

Effect of exchangerate changes on cash 4 6 1 (10 ) and equivalents

Net Change in Cash 98 (87 ) (151 ) 995 and Equivalents

Cash and Equivalentsat Beginning of 1,897 2,263 2,146 1,181 Period

Cash and Equivalents $ 1,995 $ 2,176 $ 1,995 $ 2,176 at End of Period



Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:



Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Net Cash fromOperating Activities $ 572 $ 245 $ 679 $ (148 ) - GAAP

Less: Capital (75 ) (46 ) (128 ) (96 ) expenditures

Plus: Total pension 12 12 29 24 contributions

Proceeds from thesale of property, - 4 - 5 plant and equipment

Manufacturing CashFlow Before Pension $ 509 $ 215 $ 580 $ (215 ) Contributions -Non-GAAP (a)

(a)

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

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

TEXTRON INC.

Condensed Consolidated Schedule of Cash Flows

(In millions)

(Unaudited)

Three Months Ended

Six Months Ended

July 3, 2021

July 4, 2020

July 3, 2021

July 4, 2020

Cash Flows from Operating Activities:

Income (loss) from continuing operations

$

184

$

(92

)

$

355

$

(42

)

Depreciation and amortization

98

98

188

188

Gain on business disposition

(2

)

-

(17

)

-

Deferred income taxes and income taxes receivable/payable

24

(48

)

24

(38

)

Asset impairments and TRU inventory charge

3

71

6

110

Pension, net

(19

)

(3

)

(42

)

(8

)

Changes in assets and liabilities:

Accounts receivable, net

65

110

(38

)

157

Inventories

16

124

(162

)

(244

)

Accounts payable

(71

)

(351

)

188

(400

)

Captive finance receivables, net

20

(14

)

89

(14

)

Other, net

274

347

182

139

Net cash from operating activities

592

242

773

(152

)

Cash Flows from Investing Activities:

Capital expenditures

(75

)

(46

)

(128

)

(96

)

Net proceeds from business disposition

(1

)

-

38

-

Finance receivables repaid

6

7

19

20

Net proceeds from corporate-owned life insurance policies

-

15

-

17

Proceeds from sale of property, plant and equipment

-

4

-

5

Other investing activities, net

-

(1

)

6

(10

)

Net cash from investing activities

(70

)

(21

)

(65

)

(64

)

Cash Flows from Financing Activities:

Increase (decrease) in short-term debt

-

(104

)

-

499

Net proceeds from long-term debt

-

(1

)

-

642

Principal payments on long-term debt and nonrecourse debt

(266

)

(205

)

(553

)

(229

)

Proceeds from borrowings against corporate-owned life insurance policies

-

-

-

377

Payment on borrowings against corporate-owned life insurance policies

-

(15

)

-

(15

)

Purchases of Textron common stock

(196

)

-

(287

)

(54

)

Dividends paid

(4

)

(4

)

(9

)

(9

)

Other financing activities, net

51

1

75

4

Net cash from financing activities

(415

)

(328

)

(774

)

1,215

Total cash flows from continuing operations

107

(107

)

(66

)

999

Total cash flows from discontinued operations

(1

)

1

(1

)

-

Effect of exchange rate changes on cash and equivalents

4

6

1

(10

)

Net Change in Cash and Equivalents

110

(100

)

(66

)

989

Cash and Equivalents at Beginning of Period

2,078

2,446

2,254

1,357

Cash and Equivalents at End of Period

$

2,188

$

2,346

$

2,188

$

2,346

TEXTRON INC. Non-GAAP Financial Measures(Dollars in millions, except per share amounts)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. We utilize the following definitions for the non-GAAP financial measures included in this release and have provided a reconciliation of the GAAP to non-GAAP amounts for each measure:

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted net income and adjusted diluted earnings per share exclude special charges, net of tax. We consider items recorded in special charges, such as enterprise-wide restructuring, certain asset impairment charges, and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. In addition, we have excluded certain impacts of the enterprise-wide restructuring plan on TRU Simulation + Training Canada Inc. (TRU Canada) that are not included within special charges, but are of a non-recurring nature and are not indicative of ongoing operations. At TRU Canada, an inventory charge is excluded as it relates to the write-down of inventory in connection with an action taken under the restructuring plan. Due to the substantial decline in demand and order cancellations for flight simulators resulting from the impact of the pandemic on the commercial air transportation business, we ceased manufacturing at TRU Canada's Montreal facility, resulting in the production suspension of its commercial air transport simulators. As a result of this action and market conditions, the related inventory was written down to its net realizable value in the second quarter of 2020. In the first quarter of 2021, TRU Canada was sold and the after-tax gain is excluded as it was incurred in connection with the enterprise-wide restructuring plan.

TEXTRON INC.

Condensed Consolidated Schedule of Cash Flows

(In millions)

(Unaudited)

Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Cash Flows from Operating Activities:

Income (loss) from $ 184 $ (92 ) $ 355 $ (42 ) continuing operations

Depreciation and 98 98 188 188 amortization

Gain on business (2 ) - (17 ) - disposition

Deferred income taxesand income taxes 24 (48 ) 24 (38 ) receivable/payable

Asset impairments and 3 71 6 110 TRU inventory charge

Pension, net (19 ) (3 ) (42 ) (8 )

Changes in assets and liabilities:

Accounts receivable, 65 110 (38 ) 157 net

Inventories 16 124 (162 ) (244 )

Accounts payable (71 ) (351 ) 188 (400 )

Captive finance 20 (14 ) 89 (14 ) receivables, net

Other, net 274 347 182 139

Net cash from 592 242 773 (152 ) operating activities

Cash Flows from Investing Activities:

Capital expenditures (75 ) (46 ) (128 ) (96 )

Net proceeds from (1 ) - 38 - business disposition

Finance receivables 6 7 19 20 repaid

Net proceeds fromcorporate-owned life - 15 - 17 insurance policies

Proceeds from sale ofproperty, plant and - 4 - 5 equipment

Other investing - (1 ) 6 (10 ) activities, net

Net cash from (70 ) (21 ) (65 ) (64 ) investing activities

Cash Flows from Financing Activities:

Increase (decrease) - (104 ) - 499 in short-term debt

Net proceeds from - (1 ) - 642 long-term debt

Principal payments onlong-term debt and (266 ) (205 ) (553 ) (229 ) nonrecourse debt

Proceeds fromborrowings against - - - 377 corporate-owned lifeinsurance policies

Payment on borrowingsagainst - (15 ) - (15 ) corporate-owned lifeinsurance policies

Purchases of Textron (196 ) - (287 ) (54 ) common stock

Dividends paid (4 ) (4 ) (9 ) (9 )

Other financing 51 1 75 4 activities, net

Net cash from (415 ) (328 ) (774 ) 1,215 financing activities

Total cash flows from 107 (107 ) (66 ) 999 continuing operations

Total cash flows fromdiscontinued (1 ) 1 (1 ) - operations

Effect of exchangerate changes on cash 4 6 1 (10 ) and equivalents

Net Change in Cash 110 (100 ) (66 ) 989 and Equivalents

Cash and Equivalentsat Beginning of 2,078 2,446 2,254 1,357 Period

Cash and Equivalents $ 2,188 $ 2,346 $ 2,188 $ 2,346 at End of Period

TEXTRON INC. Non-GAAP Financial Measures(Dollars in millions, except per share amounts)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. We utilize the following definitions for the non-GAAP financial measures included in this release and have provided a reconciliation of the GAAP to non-GAAP amounts for each measure:

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted net income and adjusted diluted earnings per share exclude special charges, net of tax. We consider items recorded in special charges, such as enterprise-wide restructuring, certain asset impairment charges, and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. In addition, we have excluded certain impacts of the enterprise-wide restructuring plan on TRU Simulation + Training Canada Inc. (TRU Canada) that are not included within special charges, but are of a non-recurring nature and are not indicative of ongoing operations. At TRU Canada, an inventory charge is excluded as it relates to the write-down of inventory in connection with an action taken under the restructuring plan. Due to the substantial decline in demand and order cancellations for flight simulators resulting from the impact of the pandemic on the commercial air transportation business, we ceased manufacturing at TRU Canada's Montreal facility, resulting in the production suspension of its commercial air transport simulators. As a result of this action and market conditions, the related inventory was written down to its net realizable value in the second quarter of 2020. In the first quarter of 2021, TRU Canada was sold and the after-tax gain is excluded as it was incurred in connection with the enterprise-wide restructuring plan.

Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Income (Loss) from continuing $ 184 $ (92 ) $ 355 $ (42 ) operations - GAAP

Add: Special charges, net of tax 3 67 7 97

Inventory charge, net of tax - 55 - 55

Less: Gain on disposition, net (2 ) - (17 ) - of tax

Adjusted Net Income - Non-GAAP $ 185 $ 30 $ 345 $ 110



Earnings Per Share:

Income (Loss) from continuing $ 0.81 $ (0.40 ) $ 1.56 $ (0.18 ) operations - GAAP

Add: Special charges, net of tax 0.01 0.29 0.03 0.42

Inventory charge, net of tax - 0.24 - 0.24

Less: Gain on disposition, net (0.01 ) - (0.08 ) - of tax

Adjusted Net Income - Non-GAAP $ 0.81 $ 0.13 $ 1.51 $ 0.48



2021 Outlook

Diluted EPS

Net Income - GAAP

$

677

-

$

732

$

2.97

-

$

3.21

Add: Special charges, net of tax (a)

25

-

15

0.11

-

0.07

Less: Gain on disposition, net of tax (b)

(17

)

-

(17

)

(0.08

)

-

(0.08

)

Adjusted Net Income - Non-GAAP

$

685

-

$

730

$

3.00

-

$

3.20

2021 Outlook

Diluted EPS

Net Income - GAAP $ 677 - $ 732 $ 2.97 - $ 3.21

Add: Special charges, net of tax 25 - 15 0.11 - 0.07 (a)

Less: Gain on disposition, net of (17 ) - (17 ) (0.08 ) - (0.08 ) tax (b)

Adjusted Net Income - Non-GAAP $ 685 - $ 730 $ 3.00 - $ 3.20



(a)

Special charges, net of tax includes costs we expect to incur in connection with the restructuring plan initiated in 2020.

(b)

Gain on disposition, net of tax includes the gain on the sale of TRU Canada.

TEXTRON INC. Non-GAAP Financial Measures (Continued)(Dollars in millions, except per share amounts)

Manufacturing Cash Flow Before Pension Contributions

Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following:

* Deducts capital expenditures and includes proceeds from insurance recoveries and the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations; * Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations; * Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period.

While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure.

(a) Special charges, net of tax includes costs we expect to incur in connection with the restructuring plan initiated in 2020.

(b) Gain on disposition, net of tax includes the gain on the sale of TRU Canada.

TEXTRON INC. Non-GAAP Financial Measures (Continued)(Dollars in millions, except per share amounts)

Manufacturing Cash Flow Before Pension Contributions

Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following:

* Deducts capital expenditures and includes proceeds from insurance recoveries and the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations; * Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations; * Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period.

While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure.

Three Months Ended Six Months Ended

July 3, July 4, July 3, July 4, 2021 2020 2021 2020

Net Cash from Operating $ 572 $ 245 $ 679 $ (148 ) Activities - GAAP

Less: Capital expenditures (75 ) (46 ) (128 ) (96 )

Plus: Total pension 12 12 29 24 contributions

Proceeds from the sale of - 4 - 5 property, plant and equipment

Manufacturing Cash Flow BeforePension Contributions - $ 509 $ 215 $ 580 $ (215 ) Non-GAAP



2021 Outlook

Net Cash from Operating Activities - GAAP

$

1,150

-

$

1,250

Less: Capital expenditures

(400)

Plus: Total pension contributions

50

Manufacturing Cash Flow Before Pension Contributions - Non-GAAP

$

800

-

$

900

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005151/en/

CONTACT: Investor Contacts: Eric Salander - 401-457-2288 Cameron Vollmuth - 401-457-2288

CONTACT: Media Contact: Mike Maynard - 401-457-2362