Diversified U.S. conglomerate Textron Inc. (TXT) announced first quarter 2012 operating earnings of 41 cents per share versus 10 cents per share in the year-ago quarter, reflecting a substantial growth of 310.0%. The first quarter results surpassed the Zacks Consensus Estimate by a nickel.

Textron reported GAAP earnings for the first quarter of 2012 of 40 cents per share, versus 9 cents per share in the year-ago quarter.

The difference between GAAP and operating earnings, during the first quarter, was owing to a 1 cent per share impact from discontinued operations.

Total Revenue

Textron’s total operating revenues for the first quarter 2012 were $2.86 billion versus $2.48 billion reported in the year-ago quarter, up 16.4%. The top line was ahead of the Zacks Consensus Estimate of $2.70 billion.

The year-over-year upsurge was attributable to strong performance from its Finance division and across all manufacturing units except Textron Systems.

Segmental Revenue

Cessna: Revenues from this division during the first quarter 2012 increased to $669 million from $556 million in the year-ago quarter. The year-over-year growth of $113 million was due to increased delivery of Citation jets and higher aftermarket volumes.

Bell: Revenues from this division during the first quarter 2012 were $994 million versus $749 million in the year-ago quarter, which reflected an increase of 32.7%. The year-over-year growth was due to higher revenues generated from deliveries of V-22 and H-1 to the government. Revenues were also boosted by higher commercial aircraft sales compared to the prior-year quarter.

Industrial: Revenues from this division increased $52 million during the quarter to $755 million from $703 million in the year-ago quarter. The division benefited from higher volumes across all businesses.

Textron Systems: Revenues from this division during the first quarter 2012 were $377 million versus $445 million in the year-ago quarter, reflecting a decline of $68 million. The decline in revenues was attributable to lower volumes.

Finance: Revenues from this division were $61 million versus $26 million in the year-ago quarter.

Financial Condition

Cash and cash equivalents of the company, as of March 31, 2012 were $628 million versus $871 million as of December 31, 2011.

Capital expenditure during the quarter was $73 million versus $78 million in the year-ago quarter.

Long-term debts of the company as of March 31, 2012 were $2.01 billion, reflecting a decline of $300 million from year-end 2011 levels.

Guidance

Textron not only confirmed its guidance for 2012, but is more confident on achieving the same. Textron’s confidence stems from the increasing demand for its commercial aircrafts and industrial products with the first quarter of the fiscal setting the trend.

Textron confirmed its total revenue guidance for 2012 of $12.5 billion and earnings per share from continuing operations in a band of $1.80 to $2.00 per share.

Textron expects its manufacturing free cash flow before pension contribution for 2012 to be in the range of $700 million to $750 million.The company anticipates planned pension contributions of about $200 million.

Peer Comparison

United Technologies Corp. (UTX), which competes with Textron Inc., is expected to report first quarter earnings before the market opens on April 24, 2012. The Zacks Consensus Estimates for its first quarter and fiscal 2012 are currently pegged at $1.19 and $5.56, respectively.

Our Take

Textron continues to enjoy a strong backlog at its Cessna and Bell divisions. These business wings were able to secure a few important contracts during the quarter. The most noticeable among them were the agreement to develop the Chinese general aviation market. Overall, the company kicked off 2012 with a good show, in the first quarter, except for the decline in volumes at Textron Systems. We believe the company is on track to meet its financial targets for the fiscal year.

Textron currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.

Based in Providence, Rhode Island, Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components and industrial tools.

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