Textron Inc.

And welcome to the Q2 2021 Textron Earnings Release Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. If you should have questions during the call today, please press 1 followed by the 0. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Eric Salander, Vice President of Investor Relations.

Please go ahead. Thanks, Brad, 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, 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 $3.2 billion, essentially flat with last year's second quarter. Segment profit in the quarter was $303 million, up $14 million from the second quarter of 2021. During this year's second quarter, we reported net income of $1 per share compared to $0.81 per share in last year's second quarter. Manufacturing cash flow before pension contributions totaled $309 million in the quarter, down $200 million from the second quarter of 2021. With that, I'll turn the call over to Scott.

Thanks, Eric, and good morning, everyone. Aviation had another solid quarter with higher revenues and strong execution, resulting in a 12.1% segment profit margin. We continue to see strong demand, solid pricing, and increased deliveries for our citation jets, commercial turboprops, and higher aftermarket volume from increased aircraft utilization. We delivered 48 jets, up from 44 last year, and 35 commercial turboprops, up from 33 in last year's second quarter. Order activity was strong in the quarter, reflecting continued order momentum that generated $700 million backlog growth resulting in 5.8 billion of backlog at aviation at the end of the second quarter during the quarter aviation's defense business was awarded a 91 million dollar contract for at6 aircraft spares and related support services to tunisia also at texas aviation defense earlier this week the at6 wolverine received military type certification from the u.s air force paving the way for continued global sales of the light attack aircraft on the new product front we delivered the first cessna sky courier to our launch customer fedex and also delivered the first XLS Gen 2 aircraft. At Bell, revenues and segment profit were down in the quarter, primarily reflecting lower H1 program volume. On the commercial side of Bell, we delivered 34 helicopters, down from 47 in last year's second quarter. While commercial order activity was strong across all models, supply chain headwinds impacted Q2 results as several commercial helicopter deliveries slipped out of the quarter. Overall, the strength in commercial demand, which included South Korea selecting the Bell 505 aircraft for use as its next military trainer, contributed to an increase in Bell backlog of $500 million in the second quarter. During the quarter, Bell announced a contract award of $518 million to upgrade Canada's fleet of CH-146 Griffin aircraft. This upgrade program is expected to be completed by 2028. Moving to future vertical lift, we now expect a Florida contract announcement sometime in October following the AUSA conference. As a result, we anticipate continuing our investment on this program, which will be incremental to our original segment guidance. Moving to Textron Systems, revenues were down on the quarter on lower volume, primarily reflecting the impact of last year's withdrawal of the U.S. Army from Afghanistan on our paper service and aircraft support contracts. At ATAC, we continue to see increased flight activity on our U.S. Navy and Air Force adversary air contracts. During the quarter, we delivered LCAP 104 to the U.S. Navy and continue to progress through the build process of the remaining EMD craft on the ship-to-shore connector program. Last week, the U.S. Army announced that Systems was awarded a $354 million firm fixed-price contract for the production and delivery of the XM-204 top-of-type munition and anti-vehicle system. This is an IDIQ contract with an estimated completion date of 2027. Moving to industrial, we saw higher revenues in the quarter driven by higher pricing and volume in specialized vehicles, mainly in our personal transportation and golf product lines. At Caltechs, the auto market remains challenging as we again experienced order disruptions related to the global auto OEM supply chain shortages and COVID mandated factory shutdowns in China that continue to directly impact our production schedules. In April, we closed the acquisition of Pipistrel, pioneer and global leader in electrically powered aircraft. Beginning in the second quarter of 2022, Pipistrel became part of Textron E-Aviation, a new reporting segment that includes Pipistrel's operating results and R&D expenses related to the development of sustainable aviation solutions. In the quarter, we announced that Pipistrel Velas Electro received the UK Civil Aviation Authority certification. The Velas Electro remains the only type of certified electric aircraft in the world. Overall, it was a solid quarter with strong cash generation and growth in earnings. Our teams executed well in a difficult environment where we continue to experience supply chain disruptions, labor supply shortages, and COVID-related impacts across our businesses. While these challenges drove manufacturing inefficiencies and delayed product deliveries at many of our businesses, our financial performance demonstrates the resiliency of our operations. Looking forward, we anticipate these headwinds to continue through the remainder of the year. With that, I'll turn the call over to Frank.