Textron Inc.

Ladies and gentlemen, thank you for standing by and 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. If you wish to ask a question, please press 1 then 0 at any time during today's call. As a reminder, today's conference is being recorded. I'd now like to turn the conference over to Vice President of Investor Relations, Eric Salander. Please go ahead.

Thanks, Ryan, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, Textron's Chairman and CEO, and Frank Conner, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website. Revenues in the quarter were $2.5 billion, down from $3.2 billion in last year's second quarter. During this year's second quarter, we recorded $78 million in pre-tax special charges related to the restructuring plan announced in June, and a $55 million non-cash inventory valuation charge as we ceased manufacturing at our True Simulation and Training Montreal facility. The net loss for the quarter was $0.40 per share. Excluding these charges, adjusted net income was $0.13 per share, down from $0.93 per share in last year's second quarter. Segment profit in the quarter was $82 million, down from $339 million in the second quarter of 2019. Manufacturing cash flow before pension contributions totaled $215 million, up $113 million from last year's second quarter. With that, I'll turn the call over to Scott. Great.

Thanks, Eric, and good morning, everybody. Overall, given the difficult underlying market conditions, second quarter results were solid with strong cash performance and positive adjusted earnings. Our defense businesses performed extremely well with revenue growth and strong operating performance at both Bell and Textron systems. Our commercial businesses implemented aggressive cost mitigation efforts, including employee furloughs, temporary manufacturing shutdowns, and reduced discretionary spending to offset the impact of revenue declines in the quarter. At Bell, we had a very strong quarter with higher revenues and a 14.4% operating margin driven by increased military volume. On the commercial side of Bell, we delivered 27 helicopters, down from 53 in last year's second quarter, largely driven by lower demand for the 505 Jet Ranger X model, and to a lesser extent, delivery delays due to COVID-19 travel restrictions. During the quarter, we achieved a number of milestones on the V-22 program, including delivery of the 400th V-22, the first delivery to the U.S. Navy of the CMV variant for the carrier onboard delivery mission, and the first international V-22 delivery to Japan. Textron Systems revenues were up primarily due to higher volume in our unmanned systems product line. Also within unmanned, Textron Systems was awarded two FMS contracts for a total of five aerosol systems, including initial spares, new equipment training, and logistics support, totaling $44 million. Together, these and other awards, along with the definitization of the first ship-to-shore connector production contract, resulted in an increase in backlog of $505 million in the second quarter. In the quarter, Textile and Marine and Land Systems successfully completed both builders and acceptance trials for the next ship to shore connector, Craft 101. We expect delivery of this unit to the U.S. Navy in Q3. Also at Systems, our Airborne Tactical Advantage Company was recently selected for two task orders on the U.S. Air Force CAP-CAS program, worth up to $240 million, covering a period of performance over the next 54 months. Authorities under these task orders are expected to commence in the fall of 2020, utilizing our fleet of F-1 Mirage aircraft. On the commercial side of systems, we've seen a substantial decline in demand and order cancellations for flight simulators in light of the expected long-term impact of the pandemic on the commercial air transport business. As a result, we previously announced the second quarter restructuring plan, which impacts our simulation business by ceasing manufacturing at our commercial air transport simulator facility in Montreal. In aviation, revenues are down in the quarter as expected due to the effects of COVID-19 on new aircraft deliveries, and aftermarket demand. We delivered 23 jets, down from 46 last year, and 15 commercial turboprops, down from 34 in last year's second quarter. Entering the second quarter, we'd already begun to temporarily shut down our manufacturing operations by furloughing employees in response to the effect of the pandemic on demand. In the quarter, we formalized our plans to align our cost structure with the demand outlook, initiating direct and indirect workforce reductions as part of our restructuring plan. And we have since restarted most manufacturing operations. Looking at aftermarket, revenues were down 31% compared to last year's second quarter due to lower overall aircraft utilization, which has steadily trended in a positive direction from a low point in April. Our special missions group remained very active in the quarter and closed several King Air orders, including two 350s to the Royal Flying Doctor Service of Australia, two 350s to the Ministry of Health in Greece, and two 350 ERs to the U.S. Customs and Border Patrol agencies. On the new product front, the Cessna Skycar completed a significant milestone with its first flight test in May. Testing of the aircraft's performance, stability, control, and key systems has gone well through 60 hours of flight testing to date. Moving to industrial, revenues were down from last year's second quarter related to the temporary closures of our manufacturing facilities across the globe. At Caltechs, we exited the second quarter with a run rate of our global manufacturing operations at about 75% of planned performance levels as auto manufacturers reopened their factories. At Textron Specialized Vehicles, our announced restructuring includes plans to streamline operations, consolidate facilities, and reduce the overall cost structure across several of our product lines. Golf and PTV retail demand remains strong throughout the quarter. In the outdoor power sports, we've seen the market rebound in the quarter with retail sales ahead of prior year for the month of June. With that, I'll turn the call over to Frank.