2017 Annual Report Annual 2017
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2017 ANNUAL REPORT 2017 ANNUAL REPORT Textron’s Diverse Product Portfolio Textron is known around the world for its powerful brands of aircraft, defense and industrial products that provide customers with groundbreaking technologies, innovative solutions and first-class service. TEXTRON AVIATION BELL HELICOPTER INDUSTRIAL TEXTRON SYSTEMS Citation Longitude® Bell V-280 Valor Arctic Cat M8000 Mountain Cat Ship-to-Shore Connector (SSC) Citation Latitude® Bell-Boeing V-22 Osprey E-Z-GO RXV® ELiTETM NIGHTWARDENTM TUAS Textron Aviation Defense Scorpion® Bell 525 Relentless Jacobsen® HF600TM Heavy-Duty Fairway Mower Aerosonde® SUAS Cessna SkyCourierTM Bell 429 Global Ranger Greenlee® Gator® Next Gen Battery Tools Lycoming Engines 390 ThunderboltTM Beechcraft® King Air® 350i Bell 505 Jet Ranger X Kautex Fuel Tank TRU’s Boeing 737 MAX Full Flight Simulator Cessna Skylane® Bell AH-1Z Viper Textron GSE TUG MT Fury® Precision Weapon System Textron’s Global Network of Businesses TEXTRON AVIATION BELL HELICOPTER INDUSTRIAL TEXTRON SYSTEMS FINANCE Textron Aviation is home Bell Helicopter is the Our Industrial segment Textron Systems’ Our Finance segment, to the Beechcraft®, world’s leading supplier offers three main product businesses provide operated by Textron Cessna® and Hawker® of helicopters and lines: fuel systems and innovative solutions to Financial Corporation aircraft brands and related spare parts functional components the defense, aerospace (TFC), is a commercial continues to be a leader and services. Bell produced by Kautex; and general aviation finance business that in general aviation is the pioneer of the specialized vehicles markets. Product lines provides financing through two principal revolutionary tiltrotor such as golf cars, include unmanned solutions for purchasers lines of business: aircraft aircraft. Globally recreational and utility systems, advanced of Textron products, and aftermarket. Aircraft recognized for world- vehicles, aviation ground marine craft, armored primarily Textron includes sales of business class customer service, support equipment and vehicles, intelligent Aviation aircraft and Bell jet, turboprop and piston innovation and superior professional mowers, software solutions, helicopters. For more aircraft, as well as special quality, Bell’s global manufactured by Textron piston engines, than five decades, TFC mission and military aircraft. workforce serves Specialized Vehicles simulation, training has played a key role Aftermarket includes customers flying Bell businesses; and tools and other defense and for Textron customers commercial parts sales, aircraft in more than and test equipment made aviation mission support around the globe. maintenance, inspection 130 countries. by the Textron Tools & products and services. and repair services. Test companies. SELECTED YEAR-OVER-YEAR FINANCIAL DATA (Dollars in Millions, Except Per Share Amounts) 2017 2016 Total Revenues $14,198 $13,788 Total Segment Profit 1,169 1,309 Income from Continuing Operations—GAAP 306 843 Adjusted Income from Continuing Operations—Non-GAAP1 658 715 PER SHARE OF COMMON STOCK Common Stock Price: High $ 57.71 $ 49.82 Low 43.66 30.69 Year-End 56.59 48.56 Diluted Earnings from Continuing Operations—GAAP 1.14 3.09 Adjusted Diluted Earnings from Continuing Operations—Non-GAAP1 2.45 2.62 COMMON SHARES OUTSTANDING (In Thousands) Diluted Average 268,750 272,365 Year-End 261,471 270,287 FINANCIAL POSITION Total Assets $15,340 $15,358 Manufacturing Group Debt 3,088 2,777 Finance Group Debt 824 903 Shareholders’ Equity 5,647 5,574 Manufacturing Group Debt-to-Capital (Net of Cash) 26% 23% Manufacturing Group Debt-to-Capital 35% 33% KEY PERFORMANCE METRICS Net Cash Provided by Operating Activities of Continuing Operations for Manufacturing Group—GAAP $ 947 $ 988 Manufacturing Cash Flow Before Pension Contributions—Non-GAAP1 889 573 1. Adjusted Income from Continuing Operations, Adjusted Diluted Earnings Per Share from Continuing Operations and Manufacturing Cash Flow Before Pension Contributions are Non-GAAP Measures. See page 7 for a Reconciliation to GAAP. Textron 2017 Annual Report 1 FELLOW SHAREHOLDERS, It was a year of transition for its newest large-cabin jet, the Citation Longitude, our company as we put into for FAA certification and entry into service, which is place the building blocks that expected in early 2018. position us for growth in 2018 In addition to flight testing during the year, the first and beyond. production Longitude debuted at major business The achievements of aviation shows around the world and embarked on milestones within our new a 46-city demonstration tour across the U.S. The product programs, most Longitude follows the success of the Citation Latitude, Scott C. Donnelly notably, the first flight of the Chairman and the company’s first Citation large-cabin jet that entered Bell V-280 Valor and first Chief Executive Officer service in 2015 and achieved its milestone 100th delivery of the Bell 505 customer delivery during the fourth quarter of 2017. Jet Ranger X; introductions of new products like the In November, Textron Aviation introduced the Cessna Cessna SkyCourier turboprop; and our acquisition of SkyCourier, a new twin-engine, large-utility turboprop. Arctic Cat to expand our Textron Specialized Vehicles Textron Aviation collaborated with FedEx Express to product portfolio and dealer network all represented develop the performance specifications for the cargo progress in our long-term growth strategy. This resulted version of the SkyCourier and signed on as its launch in 2017 revenues of $14.2 billion, a 3.0% increase customer with an initial order for 50 aircraft and an over the previous year, and segment profit of $1.2 billion option to order 50 more. with a profit margin of 8.2%. Textron Aviation also continued development of the single-engine Cessna Denali turboprop. These new GROWTH THROUGH NEW PRODUCTS aircraft, together with the King Air and Caravan product lines, will represent the most comprehensive turboprop With the knowledge that innovation and new product product lineup in the market and provide our customers development are the lifeblood of our company, our with solutions to their aircraft needs for years to come. businesses maintained their focus in these key areas. On the military side at Textron Aviation, our Scorpion Understanding our customers and the trends that will jet and AT-6 Wolverine both performed extremely help shape their future needs have been hallmarks of well during August’s U.S. Air Force (USAF) OA-X light our businesses. Textron Aviation continued to prepare 2017 MILESTONES JANUARY FEBRUARY MARCH APRIL MAY JUNE E-Z-GO RXV® ELiTETM series vehicle is Textron completes acquisition of Arctic Cat. introduced. Bell Training Academy in Valencia, Spain Bell Helicopter delivers first Bell 505 Jet achieves EASA certification. Ranger X at Heli-Expo. 2 Textron 2017 Annual Report generation of vertical lift for the U.S. military through the Joint Multi-Role Technology Demonstrator initiative. Throughout the year, both our U.S. Army and foreign government customers experienced the V-280 mockup complete with virtual reality flights. On the commercial side, customers began taking deliveries of Bell’s newest aircraft, the Bell 505 Jet Ranger X, and flight testing Textron Aviation employees celebrated the rollout of the 100th production Cessna Citation resumed for the Bell 525 Relentless program. Latitude, accomplishing the feat in less than 2.5 years. With the acquisition of Arctic Cat in March, Textron Specialized Vehicles significantly expanded its product attack demonstration program at Holloman Air Force lineup of off-road vehicles, snowmobiles and its dealer Base in New Mexico. This exercise represented an network, while introducing new products like the important step in the USAF’s evaluation of its needs Havoc X side-by-side and the Arctic Cat ZR200 youth for a future light attack fleet. snowmobile. TSV also introduced the new E-Z-GO At Bell Helicopter, capping a successful year of ELiTE golf car powered by a lithium-ion battery. This development and testing, the Bell V-280 Valor completed new technology has been well-received among golf its first flight in December. With this achievement, the course owners and fleet managers around the world, V-280 comes one step closer to realizing the next lowering maintenance costs and emissions, while reducing the weight of the E-Z-GO ELiTE. Drawing on decades of successful unmanned aircraft systems products, including the Shadow Tactical Unmanned Aircraft System (TUAS) with more than one million flight hours, Textron Systems introduced the new NIGHTWARDEN TUAS as its next-generation platform. Within our Textron Tools & Test businesses, product development teams leveraged their expertise and relationships with customers to introduce new products throughout the businesses’ sales channels. Greenlee The United States Marine Corps received a special delivery from Bell Helicopter—our 350th launched new automated equipment to drive speed V-22 Osprey tiltrotor aircraft. and safety for electrical contractors, Sherman + Reilly JANUARY FEBRUARY MARCH APRIL MAY JUNE Bell Helicopter unveils FCX-001 concept Textron Aviation fabricates the first test Textron Systems’ NIGHTWARDENTM TUAS helicopter. components for Cessna Denali. is introduced. TRU’s first-ever Boeing 737 MAX Full Flight Klauke opens second production facility Simulator receives qualification. in Slovakia. Textron 2017 Annual Report 3 developed a new remote-controlled underground cable