What happened

Shares of Textron (NYSE:TXT) fell 10% on Thursday morning after the industrial conglomerate reported first-quarter results that came in well short of expectations. Investors knew the COVID-19 pandemic would significantly affect operations, but that impact was even more severe than imagined.

So what

On Thursday morning, Textron reported first-quarter adjusted earnings of $0.35 per share on revenue of $2.78 billion, short of the analyst consensus for $0.47 per share in earnings on revenue of $3 billion. Revenue was down $332 million, or 10%, year over year, largely due to the pandemic.

"Our team is meeting the unprecedented challenges presented by this pandemic with a commitment to the health and safety of our employees and communities while meeting customer commitments," CEO Scott C. Donnelly said in a statement. "We have taken measures to reduce cost and conserve cash, including temporary plant shutdowns and employee furloughs at many of our commercial businesses."

A Bell 525 helicopter.

Textron's Bell 525 helicopter. Image source: Textron.

Textron, a manufacturer of a diverse set of products including business jets, helicopters, snowmobiles, and military vehicles, saw aviation sales fall 23% year over year. Orders also fell, leading to an aviation book-to-bill ratio of 0.64. Companies aim to have a book-to-bill of at least 1.0, which means they have as much business coming in as they have products going out the door.

The Bell helicopter division continues to be the standout for Textron, with sales up 11% year over year on strong military volume.

Now what

COVID-19 is creating problems for a wide range of companies, but Textron is less likely to get the benefit of the doubt than most due to the company's recent history of posting underwhelming results. Even before the pandemic, this was a stock that had been underperforming the broader market averages, and was in desperate need of a spark to get momentum going in the right direction.

In the earnings release, Donnelly said Textron is "well-positioned to handle this period of uncertainty" thanks to its solid balance sheet and diversified revenue streams. He is correct that the company is in no danger of not making it through the downturn. But it is still not clear what is on the horizon to get the stock moving higher.

Textron's best hope for a catalyst is in its growing defense business, in particular two helicopter competitions with combined award values of more than $60 billion. But with those awards years away, there is not much reason for Textron shareholders to get excited right now.