Four takeaways from Textron Aviation’s second-quarter earnings report

Cessna Citation business jet deliveries in the second quarter of 2017 were right where Textron Inc. executives expected them to be, but turboprops delivered another quarter of disappointing results.

That was the message Wednesday from Textron CEO Scott Donnelly on a conference call with analysts to discuss financial results for the three-month period ended June 30.

The Providence, R.I.-based company said its Wichita-based Textron Aviation unit recorded profit of $54 million on revenue of $1.17 billion. That compared with $81 million in profit on revenue of $1.19 billion in the second quarter of 2016.

During the quarter, Textron Aviation delivered 46 jets compared with 45 in the same period last year.

But Beechcraft King Air deliveries totaled 19 compared with 23 in 2016’s second quarter. It was the second consecutive quarter in which King Air deliveries were lower from a year ago.

Here’s what Donnelly attributed to lower turboprop deliveries, as well as other key discussion points during the hour-long analyst call:

▪  Lower turboprop deliveries weren’t isolated to the twin-turboprop King Air. They were also lower in the quarter for the Cessna Caravan, a single-engine utility turboprop, though he didn’t say how much lower.

“The international market is still kind of tough,” Donnelly said, which is where demand for its turboprops is traditionally strongest.

He also said the combination of a strong U.S. dollar against foreign currencies, and Textron’s decision to hold firm on its business aircraft pricing is also hurting turboprop demand.

“We need to hold the line here (on pricing) in the near term,” he said.

▪  Deliveries of Beechcraft T-6 military trainers fell from 11 in the second quarter of 2016 to four. But the company “should see a little bit of uptick in the third and fourth quarters,” Donnelly said.

▪  Demand for business jets is “still very North America centric,” Donnelly said. “I haven’t seen any particular dynamics changing over the course of the year.”

▪  The super-midsize Longitude, expected to be certified in 2017, will be competitive for the company. In terms of the $23.9 million Longitude’s range, useful load and speed, “We have a better aircraft than are in the segment today,” Donnelly said. “I think we’ll do well from a performance and pricing standpoint. I think we’re in a good place.”

This story was originally published July 19, 2017 at 6:59 AM with the headline "Four takeaways from Textron Aviation’s second-quarter earnings report."