Download - Cowen 02 05-15 final
Cowen Aerospace & Defense pConferenceFrank Connor
February 5 2015
Frank ConnorEVP & CFO
February 5, 2015
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Forward-Looking Information
Certain statements in today’s discussion will be forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These 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 made, and we undertake no obligation to update or revise any forward looking statements.
These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements including the risks and uncertainties set forth under our full statements, including the risks and uncertainties set forth under our full disclosure located at the end of this presentation and included in our SEC filings.
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T tTextron
i iBell
TextronLeading Branded Businesses
Industrial FinanceTextronAviation33%
Bell
30%
Industrial
24%
Finance
1%Systems12%
Cessna AircraftBeechcraftHawker
Bell Helicopter Specialized VehiclesTools & TestJacobsen
Textron FinancialWeapon & Sensor SystemsUnmanned Systems Jacobsen
KautexMarine & Land SystemsTRU Simulation + Training
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2014 Revenue $13.9B2014 Revenue $13.9B
Commitment to Future Growth
Scorpion Hybrid ISR/Strike Aircraft Cessna Citation Latitude
Douglas Equipment & TUG TechnologiesBell 525 Relentless
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Investing for future growth organically and through acquisitions
Douglas Equipment & TUG Technologiese 5 5 e e t ess
Financial Highlights• 2014 Year-End Gross Manufacturing Debt: $2.8 billion2014 Year End Gross Manufacturing Debt: $2.8 billion
• Gross Manufacturing Debt/2014 EBITDA ~ 2 times
• 2014 Share Repurchases: 8.9 million shares
• 2014 Manufacturing cash flow before pension contributions: $753 million
• S&P Credit Rating upgraded to BBB/A-2 from BBB-/A-3
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Capital available for value creating acquisitions and opportunistic share buyback
Ai ft S l
Textron Aviation$4.6 Billion (2014 Revenue)
Aircraft Sales 30% Aftermarket70%
6Broader selection of products, larger service footprint
Textron Aviation JetsMustang
TurbopropKing Air 350
Piston172S Skyhawk SP
33%
MustangM2CJ2+/CJ3+/CJ4XLS+
King Air 350
King Air 250
King Air C90
172S Skyhawk SP
J182 Turbo Skylane JT-A
Cessna TTxXLS+LatitudeSovereign+
Caravan
Grand Caravan EX
T 6/AT 6
T206H Turbo Stationair
Baron
BCitation X+ T-6/AT-6 Bonanza
Installed BaseOver 9,000
Installed BaseOver 9,000
Installed BaseOver 180,000
7Broad product offering with large installed base
Citation Latitude• State of the art cockpit
• Garmin G5000
• Largest Citation cabinLargest Citation cabin
• 72” height
• Flat floor
• Clarity cabin connectivity
• Speed – 440 knots
O t t di h t fi ld f 3 668 ft
Expected EIS 2015
• Outstanding short field performance – 3,668 ft
• Range – 2,700 nautical miles
• Industry’s best cabin value - $16.2M y $
• Redefines space between XLS+ and Sovereign+
• NetJets purchase agreement – up to 150 units
• Granted Type Inspection Authorization (TIA) by FAA in May ‘14
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Scorpion ISR/Strike Jet• Designed for air defense,
irregular warfare, border patrol, maritime surveillance, emergency relief and counter-e e ge cy e e a d cou tenarcotics mission sets
• Targeting operating cost under $3 000/hr$3,000/hr
• 260+ flight hours complete, across 100+ flights
• Completed Transatlantic flight to attend Farnborough and RIAT air showsRIAT air shows
• Participated in National Guard’s emergency response training
iexercise
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I d t i lIndustrial$3.3 Billion (2014 Revenue)
Tools & Test$495 million
Kautex$1,975 million
Specialized Vehicles & Jacobsen$868 million
1010
$868 million
Focused on new products, cost productivity and geographic expansion
I d t i l D i i G th b Industrial – Driving Growth by Investing in New Products
Jacobsen TurfCat
1111
Mower
New products drive growth and profitability
I d t i l Addi N P d t & Industrial – Adding New Products & Markets through Acquisitions & JV’s
Douglas Equipment Secolo JVSherman & Reilly HD Electric
Douglas Equipment Secolo, JV
Tug Technologies Dixie Chopper Endura JV
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Leveraging distribution, adding new products and achieving cost synergies
Tug Technologies Dixie Chopper Endura, JV
T t S t
Marine &
Textron Systems$1.6 Billion (2014 Revenue)
Weapon & 25%Unmanned
Systems
Marine & Land
Systems
49%10%
16%p
Sensor Systems
25% Simulation, Training & Other
Tactical Wh l d
Electronic SystemsUnmanned
S t
Air-to-Ground
WTRU Wheeled Vehicles
Systems Weapons
Unattended G d
CUSV
TRU Simulation + Training
Marine Lycoming EnginesGeospatial Solutions
& Advanced Command & Intelligent Networked
Ground Sensors
1313Expand global presence and customer base worldwide
Information Solutions
Control Technologies
Networked Ground Systems
Unmanned Systems
Unmanned Systems– Shadow® M2– Shadow– Aerosonde™– CUSV
Command and Control Stations
O S ® G d – One System® Ground Control Station (GCS)
– One System Remote Video TerminalTerminal
– Universal GCS– iCommand™
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Marine & Land Systems
Land• COMMANDO™ Family of
Vehicles
Maritime• Ship-to-Shore Connector• Landing Craft, Air Cushion
• Survivable Combat Tactical Vehicle™
• Motor Life Boat
Canadian TAPV Navy Ship-to-Shore Connector
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Connector
Weapon & Sensor Systems
Protection Systems• Reentry Vehicles
Advanced Weapons• BattleHawk™ Loitering
MunitionS F d W (SFW)
Area Weapons• Sensor Fuzed WeaponCL A W
Munition• Guided CLean Area
Weapons
Sensor Fuzed Weapon (SFW)
• CLean Area Weapon
Area Denial• Spider• Scorpion• Scorpion
Sensors• Unattended Ground Sensors• MicroObserver®
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MicroObserver® Battlehawk™
TRU Simulation + Training
Training Centers and Services
Air Transport Simulation
Mission & Maintenance Training
Business & Military Simulation
B-1B Weapon System TrainerMechtronix FFS X™ CJ3 Flight Simulator
2014 Significant Win – Boeing 737 MAX
Selected by Boeing to develop the Full
p yMechtronix FFS X CJ3 Flight Simulator
Selected by Boeing to develop the Full Flight Simulator training suite for 737 MAX
624 planned 737 MAX deliveries per year
~24 Simulators/year
~$200M annual opportunity
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New business established in 2013 to pursue attractive growth market
B ll H li t
MilitaryCommercial
Bell Helicopter$4.2 Billion (2014 Revenues)
MilitaryCommercial~$2.6 Billion; 62%~$1.6 Billion; 38%
206L4 V-22 – Osprey429 AH-1Z - Viper
407412
Installed Base: ~3 000Installed Base: ~10 000
Huey II UH-1Y - Venom
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Installed Base: ~3,000Installed Base: ~10,000
Executing on Balanced Growth
Customer Service and SupportBell is the Industry standard for support#1 in Customer Support
• 20 years in a row – ProPilot• 9 years in a row AIN
Spares
• 9 years in a row – AIN
Largest support network• Over 100 customer service facilities Spares
AccessoriesCompletionsRepair & Overhaul
in 34 countries• Well positioned to support our
customers wherever they operateRepair & OverhaulTraining AcademyField ServicesDepot Maintenance
Supporting installed base of ~13,000
Strategically co-locating with
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Electronic LogbookTextron Aviation
#1 Ranked Global Customer Support
• New “Super Medium” category
• Best‐in‐class payload range capability
Bell 525 “Relentless”
• Best‐in‐class payload range capability
• Best‐in‐class cabin and cargo volumes coupled with flexible cabin layout options
• Best‐in‐class crew visibility
• First commercial helicopter with proven fly-by-wire flight controlsproven fly by wire flight controls
• First helicopter with Garmin G5000H avionics
A ionics fl b i e and c e
525 with ARC HorizonCockpit System
• Avionics, fly-by-wire and crew visibility comprise new “ARC Horizon” Cockpit System resulting in unparalleled overall situational awareness increasing safety margins
Speed 155 KnotsRange 500+ NMMGW 19,300+ LbsUseful Load 7,400+ Lbs awareness increasing safety marginsPassengers up to 20
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Bell 505 Jet Ranger X• Cost-competitive, entry-
level aircraft level aircraft
• Best‐in‐class awareness with fully integrated glass cockpit and superb exterior visibility
• Flat cabin floor with 5 forward-facing seats
• Safety enhancing design features to reduce pilot workload, improve situational awareness,
Performance TargetsSpeed 125 knots,
and deliver superior auto rotation capabilities
• First flight achieved in November 2014
pRange 360 to 420 nmUseful Load 1,500 lbsCeiling 11,000 ft
November 2014
> 4,400 Bell JetRangers in service today21
H 1 P Hi hli htH-1 Program Highlights• 147 aircraft delivered thru end of
20142014
• 108 UH-1Y
• 39 AH-1Z
• Pursuing FMS opportunities
• 84% logistics commonality
• Exceptional performance in-theatertheater
• AH-1Z – widest array of ordnance for any attack helicopter
22Versatile Capable, Rotorcraft
V-22 Program Highlights• Strong performance in-
theatertheater– Iraq and Afghanistan– Air Force Special
Operations Operations • Over 250,000 total flight
hoursP i FMS t iti• Pursuing FMS opportunities
• MYP II approved – 99 total aircraft: option p
for 23 additional units» 2 exercised to-date
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Strong Program Execution and Operational Performance
• Third Generation Tiltrotor
• Army’s Joint Multi Role/Future
Bell V-280 Valory /
Vertical Lift (FVL) Technology Demonstrator (JMR/TD) program– Awarded Technology Investment
Agreement in October ’13Agreement in October 13
– Awarded Technology Demonstrator phase in August ’14
• First Flight Expected in 2017g
• Leading Aerospace Companies Comprise Team
– Lockheed Martin - Meggitt• Speed - 280 KTAS
Mock-up on display at AUSA Conference
– General Electric - Eaton
– Moog - Astronics
– GKN - Lord
– Spirit - AGC Composites
p• Combat Range - 500-800nm• Non-rotating, fixed engines• Passengers – 4 crew + 11 troops
Spirit AGC Composites
Unmatched Speed, Range, Payload, and Value24
Finance Segment(1% of 2014 Textron Revenues)
4Q14• Finance receivables: $1.3B
• Shareholder’s Equity: $224M
25Supporting purchases of Textron-manufactured products
Summary• Strong brands, solid top-line growth outlook
• Investing in new product development and innovation to support growth
• Advance execution and operational performance
• Strong cash flow generation and improving profitability
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F d L ki I f tiForward-Looking InformationCertain statements in this presentation 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 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;h i f i ilit f di i iti b d t t i t d d t i ti h i t l tichanges 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 inconnection 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; p q y ; p y pp ;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; increases in pension expense or employee and retiree medical benefits; continued demand softness or volatility in the markets in which we do business; difficulty or unanticipated expenses in connection with integrating acquired businesses;
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the markets in which we do business; difficulty or unanticipated expenses in connection with integrating acquired businesses; and the risk that anticipated synergies and opportunities as a result of acquisitions will not be realized or the risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue projections.