Textron Inc. (NYSE:TXT) released better-than-expected second-quarter 2018 results early Wednesday, detailing modest top-line growth and improved profitability at each of its core operating segments. The industrial conglomerate also increased its full-year guidance for both earnings and cash flow.

With shares down around 2% in Wednesday's trading as of this writing -- but still up more than 30% over past year -- let's dig deeper for a better idea of what Textron accomplished over the past few months.

Textron's results: The raw numbers

Metric Q2 2018 Q2 2017 Year-Over-Year Change

Revenue

$3.726 billion

$3.604 billion

3.4%

GAAP net income

$224 million

$153 million

46.4%

GAAP earnings per share

$0.87

$0.57

52.6%

DATA SOURCE: TEXTRON QUARTERLY FILINGS. GAAP = generally accepted accounting principles.

What happened with Textron this quarter?

  • Textron didn't provide specific quarterly financial guidance last quarter. But most investors were looking for lower earnings of $0.70 per share on revenue of $3.53 billion.
  • By segment:
    • Textron Aviation revenue climbed 9% year over year to $1.276 billion, including delivery of 48 jets (up from 46 in the same year-ago period) and 47 commercial turboprops (up from 33 last year). Aviation backlog was $1.6 billion, and segment profit nearly doubled to $104 million, driven by favorable volume, mix, and price.
    • Bell revenue rose 0.7% to $831 million, as lower military revenue was more than offset by delivery of 57 commercial helicopters (up from 21 last year). Bell's backlog was $5.5 billion at the end of the quarter, and segment profit climbed $5 million to $117 million.
    • Textron Systems revenue fell 20.3% to $380 million, primarily driven by lower weapons and sensors volume -- given both lower TAPV deliveries at marine and land systems, and the discontinuance of sensor-fused weapon production last year. Segment backlog was $1.2 billion at the end of the quarter, and Textron Systems' profit fell $2 million to $40 million.
    • Industrial revenue grew 9.8% to $1.222 billion, driven by favorable currency exchange and higher volumes across all product lines. Segment profit declined $2 million, to $80 million, driven by product mix.
    • Finance revenue declined slightly to $17 million, and segment profit was flat at $5 million.
  • The company repurchased $571 million in stock during the quarter.
  • Textron completed its previously announced divestiture of the tools and test equipment business on July 2, 2018, shortly after the end of the quarter.
Textron Cessna Hemisphere jet flying above a city

IMAGE SOURCE: TEXTRON.

What management had to say

"Operationally, we saw continued strength in our execution with margin improvements at Aviation, Systems, and Bell," stated Textron chairman and CEO Scott Donnelly. "We are encouraged by revenue growth resulting from improving commercial demand across many of our end markets."

Looking forward

Given its outperformance in the first half, Textron now expects earnings per share from continuing operations of $3.15 to $3.35, an increase of $0.20 per share from its previous outlook. Textron also increased its outlook for cash flow from continuing operations of the manufacturing group (before pension contributions) by $50 million, for a new range of $750 million to $850 million.

In the meantime, note that this guidance does not include a one-time gain of roughly $400 million expected in the third quarter related to the Tools & Test sale. Recall that last quarter, Textron told investors it would use proceeds from the divestiture to fund share repurchases, to offset the expected impact to earnings related to the sale.

All things considered, this was as solid a quarter as Textron investors could have hoped for. So while today's small decline may not indicate as much, I think long-term shareholders should be more than pleased.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Textron. The Motley Fool has a disclosure policy.