Textron Inc. has recently released its 10-Q report, providing a detailed insight into its operations and financial performance. Textron operates in the aircraft, defense, industrial, and finance sectors through six segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation, and Finance. In the third quarter of 2024, Textron reported revenues of $3,427 million, reflecting a 3% increase compared to the same period in 2023. The cost of sales increased by 6% to $2,935 million, leading to a gross margin of 14.1% of manufacturing revenues, down from 16.5% in the previous year. Selling and administrative expenses decreased by 7% to $282 million. Interest expense, net, increased by 37% to $26 million, and the company reported special charges of $2 million.
Textron's revenues increased by $84 million in the third quarter of 2024, primarily driven by higher Bell revenues of $175 million, reflecting increased military volume related to the Future Long Range Assault Aircraft (FLRAA) program and higher commercial volume and mix. However, Textron Aviation revenues remained essentially unchanged, as higher pricing was offset by lower volume and mix. The Industrial segment experienced lower revenues due to decreased volume and mix, particularly in the Specialized Vehicles product line. In the first nine months of 2024, Textron's revenues increased by $298 million, with higher Bell and Textron Aviation revenues partly offset by lower Industrial revenues.
Cost of sales for the Manufacturing group increased by 6% in the third quarter and 4% in the first nine months of 2024, primarily due to higher net volume and mix and inflation. Gross margin as a percentage of Manufacturing revenues decreased in both periods, primarily due to lower margins in the Textron Aviation and Industrial segments, and at the Bell segment. Selling and administrative expenses decreased by 7% in the third quarter and 1% in the first nine months of 2024, compared to the corresponding periods of 2023.
Interest expense, net, increased by 37% in the third quarter and 22% in the first nine months of 2024, primarily due to an increase in the weighted-average interest rate of Textron's debt. The company reported an effective tax rate of 11.5% for the third quarter of 2024, lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and foreign tax credits.
Textron's backlog increased to $15.993 billion as of September 28, 2024, with Bell's backlog increasing by $1.7 billion, mainly due to orders in excess of revenues recognized and deliveries. This increase was driven by the U.S. Army's approval of the FLRAA program, resulting in a $2.5 billion contract awarded to Bell in the third quarter of 2024.
In its segment analysis, Textron reported that approximately 21% of its 2023 revenues were derived from contracts with the U.S. Government. The company operates in six segments and evaluates performance using segment profit. Textron Aviation's segment profit decreased by 20% in the third quarter of 2024, largely due to lower volume and mix, while Bell's segment profit increased by 27%, driven by higher military aircraft and support program revenues.
The Textron Aviation segment faced challenges in the third quarter of 2024 due to a strike by the International Association of Machinists and Aerospace Workers (IAM), impacting approximately 5,000 employees and resulting in delayed aircraft deliveries and manufacturing inefficiencies. However, Textron Aviation and IAM reached an agreement in October 2024.
Textron's 10-Q report provides a comprehensive overview of its financial condition and operational performance, offering insights into the company's revenues, expenses, and segment-wise analysis. Today the company's shares have moved -6.7% to a price of $81.07. For the full picture, make sure to review Textron's 10-Q report.