Bell Textron achieved a healthy uptick in revenues in the fourth quarter, largely driven by increasing numbers of helicopter deliveries. The U.S. group's revenues for the three months ending on December 31 reached $1.1 billion, marking a substantial increase of $255 million from the same period a year earlier.
Commercial aviation revenues soared by $171 million, largely due to increased helicopter deliveries. Additionally, military revenues saw an increase of $84 million, closely associated with advancements in the Pentagon's FLRAA (Future Long-Range Assault Aircraft) program.
Bell’s revenues for the full year in 2023 were nearly $3.15 billion, up from about $3.09 billion in 2022. The segment’s profit totaled $320 million last year, compared with $282 million in 2022.
Bell achieved a significant milestone in helicopter deliveries, with 91 commercial helicopters delivered in the quarter, up from 71 in the previous year's corresponding period. This increase in volume and improved product mix contributed an additional $39 million, resulting in a segment profit of $118 million, a $55 million rise from the year-ago quarter.
Throughout 2023, Bell delivered a total of 171 commercial helicopters, slightly lower than the 179 helicopters delivered in 2022. Despite this marginal decrease, the year-end backlog for Bell stood at $4.8 billion.
For commercial aircraft delivered, 160 were light helicopters (seventy-seven 505s, fifty-three 407s, and thirty 429s) and 11 medium (the 412). Bell delivered eight H-1s and eight V-22s to the U.S. in 2023—almost half the number of military aircraft delivered in 2022.
Looking ahead to 2024, Bell anticipates revenue growth driven by higher military revenues from the FLRAA program and an increase in commercial deliveries. “We expect revenues of about $3.5 billion. We're forecasting a margin in the range of 9.5 to 10.5%,” Frank Connor, CFO, stated during Textron’s earnings call this week.
Significant developments in Bell's operations include the installation of the ITEP (Improved Turbine Engine Program) engine on the 360 Invictus, with ongoing preparations for initial ground runs in 2024. Moreover, Bell has been actively ramping up resources and engaging with key suppliers for the FLRAA program since April 2023.
Textron did not provide updates on the expected timeline for type certification of the Bell 525.
In response to inquiries during the earnings call, Scott Donnelly, chairman, president, and CEO of Textron, highlighted the company's strategic cost management initiatives. He said that restructuring has markedly improved margin rates at Bell. “We anticipate the restructuring plan will be substantially completed in the first half of 2024, resulting in annualized cost savings of approximately $75 million,” the company said in a statement.
Part of why the company took that action to restructure was “to control cost and manage our way as we reduce the volume in some of these historic military production programs,” Donnelly remarked.
R&D expenses at Bell have seen a shift, with a decrease in internally funded R&D expenses, owing to the transition of the FLRAA program into a full-blown contract. This shift represents a strategic reallocation of resources towards contractually supported development activities.
Addressing supply chain challenges, Donnelly commented, “We had some pretty significant impacts at Bell in the earlier part of the year around a very small number of suppliers.” However, these challenges were addressed by either improving supplier health or bringing production in-house. This approach allowed Bell to resolve critical supply issues, according to Donnelly, who added, “As a result, Q4 had a pretty strong delivery number on a year-over-year basis…I think we did resolve a couple of critical issues in the latter part of the year at Bell that enabled those higher deliveries.”