Diversified conglomerate Textron Inc. (TXT) on Tuesday reiterated its cash outlook for 2009 and said it plans to further cut 2009 manufacturing production rates at its Cessna aircraft unit as well as its industrial business unit. The company also said it expects to achieve an $800 million reduction in finance receivables by the end of the first quarter, which it noted, is well ahead of plan.
The Providence, Rhode Island-based company, which makes Cessna jets, Bell helicopters and E-Z-GO golf carts, noted that most of its commercial markets continued to soften amid the economic downturn and credit markets at Textron Financial Corp. remained challenging. Textron has been hurt badly by the financial crisis and sharp declines in orders for business jets.
The company said it expects to achieve a reduction of at least $800 million in finance receivables by the end of the first quarter, which it noted, is well ahead of plan. In addition, the company noted that the sale of HR Textron to Woodward Governor Co. (WGOV), which is scheduled to close on April 2, 2009, will generate approximately $265 million in after-tax cash. Textron expects to end the first quarter with over $1.0 billion in cash.
Lewis Campbell Chairman and CEO of Textron, said, Despite the tough environment, the company's plan to generate cash from the combination of manufacturing operations and the collection of finance receivables at TFC is on track.
Textron also said it will update its financial outlook for fiscal year 2009 when it announces its financial results for the first quarter on April 29, 2009.
Electronic equipment and turbines maker Woodward Governor signed a definitive agreement in February 2009 to acquire Textron's critical motion control systems making unit HR Textron for about $365 million in cash.
HR Textron, which provides solutions to customers such as Bell, Boeing, Cessna, General Dynamics, Lockheed Martin, Raytheon and United Technologies, would become a wholly owned subsidiary of Woodward and be integrated into Woodward's Airframe Systems business segment. Textron had said at that time that the deal is expected to generate about $265 million in net after-tax cash proceeds, although it is expected to reduce its 2009 earnings by about $0.05 per share.
In December 2008, Textron announced its decision to exit nearly all of its commercial finance business, other than that portion of the business supporting the financing of customer purchases of Textron-manufactured products.
Previously, Textron had said that it would exit its Asset Based lending and Structured Capital segments, as well as some other business lines, totaling $2 billion in managed receivables.The revised plan now applies to about $7.9 billion of TFC's $11.4 billion managed receivable portfolio. In addition, the company said it expanded its previously announced overhead cost reduction, under which it would cut approximately 2,200 positions worldwide.
Also in December, Textron reported net loss for the fourth quarter of $209 million, or $0.87 per share, compared to net income of $256 million, or $1.00 per share, in the prior-year quarter. Revenues for the quarter were $3.6 billion, up slightly from the year-ago period.
At that time, the company forecast earnings per share from continuing operations for fiscal year 2009 in a range of $1.00-$1.50, excluding expected pre-tax restructuring charges of about $40 million. The company also foresees revenues for the year of approximately $12.5 billion.
Textron said in February that it has drawn $3 billion in credit to pay off debt and boost liquidity as it exits nearly all of its commercial financial business. In addition, the company slashed its quarterly dividend by 91% in a bid to conserve cash.
In Tuesday's regular trading session, TXT is trading at $5.93, up $0.40 or 7.23% on a volume of 1.85 million shares. The stock has been trading in a range of $3.57-$65.52 in the past 52 weeks.
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