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Frank Connor

Thank you, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1.3 billion were down $242 million from the fourth quarter of 2023, reflecting lower volume and mix of $282 million, which was principally a result of production disruptions related to the strike.
Segment profit was $100 million in the fourth quarter, down $93 million from a year ago, primarily due to lower volume mix and manufacturing inefficiencies, which included idle facility costs and higher costs associated with the labor disruption resulting from the strike. Backlog in the segment ended the quarter at $7.8 billion, up $219 million from the prior quarter.
Moving to Bell. Revenues were $1.1 billion, up $58 million from last year's fourth quarter, reflecting higher military and support program revenues of $67 million, primarily due to higher volume on the FARA program partially offset by lower volume on the V-22 program. Segment profit of $110 million was down $8 million from a year ago, primarily driven by mix as lower volume on the V-22 program offset higher volume on the FLRAA program. Backlog in the segment ended the quarter at $7.5 billion.
At Textron Systems, revenues were $311 million, down $3 million from last year's fourth quarter. Segment profit of $42 million was up $7 million from last year's fourth quarter. Backlog in the segment ended the quarter at $2.6 billion.
Industrial revenues were $869 million, down $92 million from last year's fourth quarter, largely reflecting lower volume. Segment profit of $48 million was down $9 million from the fourth quarter of 2023, reflecting lower volume and mix and inflation, partially offset by manufacturing efficiencies and lower selling and administrative expense largely due to cost reduction activities.
Textron eAviation segment revenues were $11 million in the fourth quarter of 2024, with a segment loss of $22 million, largely associated with research and development expense on new products. Finance segment revenues were $11 million and the profit was $5 million in the fourth quarter of 2024.
Moving below segment profit. Corporate expenses were $17 million. Net interest expense for the manufacturing group was $21 million. LIFO inventory provision was $80 million. Intangible asset amortization was $8 million. And the non-service components of pension and postretirement income were $65 million.
In December, we announced a strategic review of our powersports product line within the Industrial segment that resulted in additional restructuring actions. With these actions, we recorded total pretax special charges of $53 million, an inventory valuation charge of $38 million in the fourth quarter.
Our manufacturing cash flow before pension contributions was $306 million in the quarter. For the year, manufacturing cash flow before pension contributions totaled $692 million, down $239 million from the prior year. In the quarter, we repurchased approximately 2.8 million shares, returning $232 million in cash to shareholders. For the full year, we repurchased approximately 12.9 million shares, returning $1.1 billion in cash to shareholders.
With that, I'll turn the call over to David.

David Rosenberg

Thank you, Frank. Turning now to our 2025 outlook on slide 7. We're expecting adjusted earnings per share to be in the range of $6 to $6.20. We're also expecting manufacturing cash flow before pension contributions to be about $800 million to $900 million.
Moving to segment outlook on slide 8 and beginning with Textron Aviation, we're expecting revenues of about $6.1 billion. Segment margin is expected to be in a range of 12% to 13%. Looking to Bell, we expect revenues of about $4 billion. We're forecasting a margin in a range of 8.5% to 9.5%.
At Systems, we're estimating revenues of about $1.3 billion with a margin in a range of 12% to 13%. At Industrial, we're expecting segment revenues of about $3.2 billion and margin to be in a range of about 4.5% to 5.5%. At eAviation, we expect revenues of $45 million and a segment loss of $70 million, reflecting our continued investment in sustainable aviation solutions.
At Finance, we are forecasting segment profit of about $25 million. Looking at slide 9, we're projecting about $160 million of corporate expense. We're also projecting about $130 million of net interest expense for the manufacturing group, $165 million of LIFO inventory provision, $35 million of intangible asset amortization and $265 million of non-service pension income. We expect a full year effective tax rate of approximately 18%.
Turning to slide 10. R&D is expected to be about $500 million, up from $491 million last year. We're estimating CapEx will be about $425 million, up from $364 million in 2024. Our outlook assumes an average share count of about 184 million shares in 2025.
That concludes our prepared remarks. So operator, we can open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
Sheila Kahyaoglu, Jefferies.

Sheila Kahyaoglu

Maybe, Scott, if you could start off with the Aviation guidance. Can we talk about the 2025 deliveries? I think it's implied around 190 deliveries versus 151 in 2024. Can you talk about the quarterly cadence of jet deliveries as well as maybe turboprops just given the Q4 delivery number.

Scott Donnelly

Well, I do think that the numbers obviously will ramp up through the course of the year, Sheila, we're recovering. I'd say the factories are getting back to towards full operation coming out of the strike. We will continue, as we have been for some time, expanding our production capacity as we go through the year, and that's largely driven by parts, which I think we're in fairly good shape, and ramping up the workforce.
And again, I would say early signs coming out of the contract agreement, we're seeing a little more stability in the workforce, which is good, and that should enable us to see that ramp on the -- over the course of the year.
As we talked about in the last call, we're probably going to see also a significant progression in terms of margins as we go through the year. We will have a lot of deliveries here in the first quarter that would have been 2024 delivery. So obviously, they're priced to 2024 levels. I would expect to see both volume and margin progress through the course of the year.

Sheila Kahyaoglu

Maybe if I could just follow up on the margin ramp. Can you talk about that bridge as we think about the 7.8% exit rate for Q4 for Aviation? How we think about that progressing and the contributors to that?

Scott Donnelly

Well, for sure, the 7.8 is an anomaly, right? I mean we had obviously unusually low volumes with the strike affecting 1/3 or more of the quarter. And certainly, we took an inefficient current period expense with all of our overhead that wasn't burdened.
We couldn't burden on volume. So the 7.8 is certainly an anomaly. I would expect as you think about us going through the year, it will see progression. If you look at the guide, obviously, we're probably 100 to 200 basis points probably below the guide and probably finishing up more like 100 to 200 basis above the guide as we progress through the year to get to that average.

Operator

Peter Arment, Baird.

Peter Arment

With your retirement. Thanks for all your help over the years. Could you talk a little bit about the -- Scott, just -- or David, maybe you want to weigh in on just the -- your outlook for cash flow for the year, just given the earnings you're projecting, which is obviously a pretty nice snapback. Just some of the moving parts, it seems maybe it was a little lower than we were estimating, but maybe we didn't have the inputs.

Scott Donnelly

Well, again, it will progress through the year. The cash was obviously in Q4 wider than we normally have, and that's largely reflective of a lot of inventory that was at Aviation for jets that didn't deliver in Q4. So we'll see our normal relatively light cash in Q1, and that will grow over the course of the year. But I think we're pretty confident we'll be in that $800 -- $900 million range, but as is normal, will be more back-end loaded.

Peter Arment

Okay. I appreciate that. And then maybe just, Scott, in general, I know Sheila talked about aviation. And maybe you can just talk about -- I mean, you obviously had very strong bookings in refreshed product lines, obviously, drawing a lot of new interest. Maybe just if you want to highlight just what you're seeing on the demand environment, whether it's broad based or any particular markets that are stronger than others?

Scott Donnelly

Thanks, Peter. Look, it's been pretty much across the product line. I think we feel like we're in pretty good shape. The demand and order activity across every model has been has been good. We saw some very strong demand, obviously, in that light jet with the Gen 3 announcements. So that was very well received by customers. So we, in particular, had a very strong quarter in sort of that CJ3, CJ4 product line.
But again, it's been pretty strong in most of the portfolio. And I think we -- again, just given where customers are and the level of activity and the level of dialogue, I think we'll continue to see sustained demand through the course of the year. Again, we're probably looking at a 1:1 book-to-bill just because we think that's about where things all to land given the lead times of where most availabilities are for our different products. So 1:1 is what we're baking into our basic plan.

Operator

Robert Stallard, Vertical Research.

Robert Stallard

Frank, best of luck for your retirement. It's been quite right. Let's start off with Bell. I was wondering if you could talk about what the risks and opportunities could be within that 2025 guidance, both for revenues and margin?

Scott Donnelly

Robert, I don't think there's a whole lot. I mean, this is all mostly backlog business. Obviously, the FLRAA program the ramp that we have baked into there is supported by what's in the sort of the pending '25 appropriations budgets and all the guidance we're receiving from the customers. So I don't think there's risk around that.
Most of the commercial business is well booked. Certainly, sustainment around V-22 in H-1 is a very predictable business and again, largely booked. So I think as we work our way through the course of the year, we're in -- I don't think there's a lot of risk to the downside of where we are on the Bell numbers.

Robert Stallard

Okay. And then as a follow-up, I was wondering if you've seen any sign of demand changing at Aviation or industrial since we've had the US election?

Scott Donnelly

No, we really didn't, Robert. It's actually kind of interesting. I mean, normally, we see more of a slowdown a little bit before the election just because people don't like a lot of uncertainty, I think probably largely in part as a result of the size of the backlog and the stuff that aircraft that are available well out past that period, obviously, that we didn't see quite the drop in that we often see around presidential election. So I would say it was relatively steady, and we really haven't seen any change that I'm aware of in the demand environment in terms of the industrial side.

Operator

Noah Poponak, Goldman Sachs.

Noah Poponak

Just back to the cash flow guidance, I guess, it would be lower than 2023 and the conversion from net income or the free cash margin, I think a little light of where you've talked about being over time. And I would have expected you'd be recovering some inventory from '24 that would help. So is there a net negative working capital assumption still in '25? Or what else are we all missing in that bridge?

Frank Connor

There's -- on the working capital side, there's a little bit of headwind associated with the timing of some military payments from an inventory standpoint. Obviously, we are -- we'll be ramping production through the year, as we talked about. So even though we had some higher inventory levels going into the end of '24 than we would have originally anticipated, we do need to have some higher inventory levels at the end of '25 for anticipated ramp.
So you won't see a lot of inventory benefit. There is some military payment timing, as I said, and then we are expecting higher capital expenditures relative to what you saw back in the '23 timeframe associated with just the growth of the business and in particular, kind of FLRAA prep activities at Bell.

Noah Poponak

Okay. That makes sense. And then I just was hoping to get a little more detail on the Bell margin. That's been quite resilient as you've ramped the early stages of FLRAA rapidly, which we had all anticipated would dilute that margin. But so far, it hasn't. So -- maybe just walk us through the pieces that would bring the Bell margin down that much in 2025?

Scott Donnelly

Well, I think if you look at the Bell through 2024, we were helped by a little bit of improvement on some of the H-1 side. Obviously, with the Nigerian deal that allowed us to maintain some more of that H-1 volume, which is better volume for us. But you're still at a macro level, not do have V-22 coming down, H-1 will start to come down. We did have strong aftermarket in 2024. I think we'll still have strong aftermarket in 2025, but it's going to be flatter from where it was in 2024. So you really see a ton of the growth coming from the FLRAA ramp and commercial OEM deliveries.
And as you know, commercial OEM deliveries tend to be dilutive to our margins. They generate a lot of aftermarket, so long term, very good for the business. But the two real growth drivers in 2025 are that ramp on FLRAA and increased commercial deliveries, both of which are obviously dilutive. So as we've said, we've always expected that this margin will come down somewhat based on that mix, but that we're trying to target not having that be a dilution or problem at the EPS level.
So I think we're still more or less in that range of holding the operating profit dollars. It's a little pressure year-over-year just because we sort of outperformed in 2024, and that kind of raises the bar on that 2025 target. But I still think we're going to be in that range of being able to at least hold not dollars even as we grow the revenue on lower margin business.

Noah Poponak

Okay. Great. I'll add my congrats to Frank and Dave on the retirement and the new appointments, and thanks very much for working with us over the years, Frank.

Operator

Seth Seifman, JPMorgan.

Seth Seifman

Just to maybe come at Bell from the other side. It was strong performance through most of the year and certainly at the high end relative to the initial guide. But I think the guide went up in Q3 to about 10.5% to 11%, I think, and came in slightly lower. Was there something that changed in Q4 at Bell that led to that shortfall?

Scott Donnelly

Well, I mean, we did have some program adjustments in Q4 that weren't favorable at Bell that largely had to do around FLRAA. I mean, we did exercise the limited user test that is a fixed price option that was exercised and as we would expect, the fixed price options are not a great margin. So that did create some dilution, which when you do the program accounting did put a little bit of a drag in Q4 for us.

Seth Seifman

Okay. And maybe to follow up, just at Aviation, the orders have been quite steady through the year. When we think about the composition of those orders in terms of net jets versus retail. Is that a pretty steady composition? Is it a pretty -- both in terms of how it's been trending versus itself and then how it's been trending versus the level of deliveries that we're seeing?

Scott Donnelly

Well, in general, it holds about flat, right? Because as you guys know, we put these into the backlog based on sort of a 12 year forward, not just put orders in, generally speaking, every month. It's usually fairly linear, but not always. And so there can be from quarter-to-quarter some variation based on how many deliveries we have to make in that quarter versus how many new exercises they happen to put. So it's not a perfectly linear process. But it generates a little bit of variability from quarter-to-quarter. But over the course of the year, it's been pretty stable.

Operator

Myles Walton, Wolfe Research.

Myles Walton

On R&D, I know you started off the year with a 550 number for R&D. It came at 490. I'm curious to the underrun there. And this would be, I don't know, a few years in a row of declines on the R&D front, I imagine much of it from Bell. It looks like you're looking for a stable outlook for '25 to 500. Is that a good number going forward? And also what was the cause of the underrun in '24?

Scott Donnelly

I think it's a good number going forward. Look, I think the Bell dynamic with the end of the FARA program is certainly what drove a significant change in R&D on a year-over-year basis as that program was wrapped up. And so I think on a go-forward basis, we'll see more normalized R&D spending at Bell as well as across the rest of the businesses.
So for sure, part of what drove the lower R&D in the year and drove some of the higher margin, frankly, at Bell was that we did see a step-down associated with the funding that we were having to put in net to the FARA program.

Noah Poponak

Okay. And then relative to systems, I know the decisions on TAS and maybe RCV are or kind of sort of dictate how the year goes and maybe how '26 goes. How sensitive to this year are the outcomes on those programs for your outlook for systems top line of $1.3 billion.

Scott Donnelly

I don't think there's a huge sensitivity to it. Obviously, the RCV program, we expect to be in the first half of 2025. FTUAS is probably more the second half later of the year. And of course, those programs have to ramp up. So in the early phases, they're not huge numbers. and particularly in the case of FTUAS, because it's late in the year, there's not a huge sensitivity to them. They're certainly much more important to us from a standpoint of what growth looks like as we go into '26 and beyond. So I guess I think of them as important milestones for us in the course of 2025, but not having a huge impact on revenue and margin in the year.

Operator

David Strauss, Barclays.

David Strauss

Scott, Aviation revenues in the fourth quarter that came in a little bit light, I assume it looks like maybe missed you relative to what you're in 10 to 15 get deliveries. What happened there? Was that supply chain? Or was that more on kind of your own in terms of getting the factory restarted post the strike?

Scott Donnelly

Well, certainly, versus our original guidance for the year, yes, it was probably more in that mid-teens of aircraft, and that was largely driven by the fact that -- I mean we didn't -- we really didn't get the factory running again until really the beginning of October. So -- I'm sorry, the beginning of November. So we really lost 1/3 of the quarter with having the workforce out. So -- as I said earlier, I think the good news is the folks are back. It's good to have a contract agreement in place for five years. And I think the workforce is pleased with the outcome. We're fine with the outcome. Everybody is ramping up. But we're really -- we did, for sure, lose 1/3 of the quarter with not having a production operation in place.

David Strauss

I was just looking at -- you took down the revenue forecast of 5.5%, and you were a little short of that. I guess just following up there, how do you feel about the Aviation supply chain in terms of the ramp you're looking at in terms of deliveries for 2025?

Scott Donnelly

Look, David, I think we feel good about it. I mean, that's where we're guiding where we are. I would say that the third-party parts supply chain pieces coming into the factory are certainly in a much better position than they were throughout the course of 2024. So that feels very good. The other critical part is obviously stability of our workforce and retention. And again, since the contract has been signed. We were very happy with the number of people that came back, even folks that have been with us for a very short period of time before the strike hung in there and came back once the agreement was put in place.
And the attrition numbers we're seeing are certainly improved from where they had been through the course of the rest of 2024. So I think the momentum is in the right direction. Now we've got a lot of work in front of us here to get deliveries that were supposed to be in '24 done and ramp it up.
But I'd say the early look in terms of aircraft coming out of the production lines, the tack times which clearly have to improve over the course of the year are operating as we would expect. And so I think we're, at this point, feeling pretty good that we're going to be able to make that ramp and deliver on the guide at the $6.1 billion.

David Strauss

Okay. And timing for SCEM certification, what are you looking at? And is the aviation guide sensitive at all to that timing?

Scott Donnelly

Well, I mean, obviously, we're expecting it to be in the course of the year. We've got to work this through the FAA. If there's not an issue or a problem. It's going well. But clearly, the actual certification is an FAA action. I think we feel great about the flight testing. The program is going very well. We do have a few aircraft in the year. So yes, it's part of our guide, but certainly not material. But we would certainly expect to get the first three aircraft delivered late this year.

Operator

Ron Epstein, Bank of America.

Ron Epstein

Is there anything, Scott, you've seen with maybe the change in administration that could be an added little tailwind for private aviation. So as an example, have you heard any discussion around some form of accelerated depreciation coming back or something like that, that historically has been a nice catalyst for private aviation?

Scott Donnelly

I don't know specifically that the accelerated depreciation impact, but I would have to say, Ron, I think in general, as you know, most of our customers are small to mid-sized businesses, entrepreneurial, high net wealth, I mean, it's a broad range of customers, obviously. But I think that in general, tax policy, regulatory policy is encouraging to them and therefore, they feel good about their businesses. Their businesses are likely to be successful and growing. And that certainly is nothing but helpful in terms of how they get their head around CapEx expenditures like new aircraft.
So I would say, I wouldn't point out one particular item. And it's -- obviously, it's quite early here and we don't know how all the tax stuff is going to work its way out. But I think in general, just the nature of our kinds of customers that they think the outlook for business is good, and that's good for the prospects of private aviation.

Ron Epstein

Yes. That makes a ton of sense. And if I can, a follow-up but change in direction is just a little bit. A while ago, right, you guys did Scorpion and I always thought that was kind of cool. And the DoD at the time didn't seem to have a big appetite for that. It does seem, however, there does maybe potentially seem to be a change in more -- maybe a push towards more commercial terms contracting, contractors taking more risk. Do you see any opportunities for you guys or maybe like a Scorpion 2.0 parenthetically, something like that with maybe the changing environment with potentially more commercial-type contracting?

Scott Donnelly

Well, I don't know about a specific around Scorpion, Ron. I will -- I would say that in this administration four years ago, eight years ago to four years ago, however you want to think about it, there was certainly a mindset that we have to find ways to go faster, right. And so our acquisition system, this was the OTAs and the MTAs and the Army's of things like Futures Command, that frankly, helped to accelerate and drive a lot of the things that we're working on today.
So again, it's very early, obviously. Everybody talks about acquisition reform, and I wouldn't say I expect huge things in terms of real change to policy, but expectations that what's good for the war fighter or good for the taxpayer is to figure out how to accelerate programs. And so again, it's early. We don't have any data yet, but I'm certainly hopeful that the incoming administration and within the building is interested in figuring out how to accelerate things.
Commerciality is certainly a part of that. But just frankly, how do you make the process run faster and get things out or better quicker. And I think we would clearly be a beneficiary of that. We have a bunch of great programs that I think the war fighter side of the military, we'd love to see them get out to the hands in the actual combating commands. And hopefully, we'll see some of that happen.

Operator

Gavin Parsons, UBS.

Gavin Parsons

Just maybe two questions on the Aviation margin. You mentioned still having some impact of the disrupted '24 deliveries, so the '25. Just was hoping you could give us some sense of how much of that excess cost you're absorbing in that 12% to 13% margin guide?

Scott Donnelly

Well, we're not. It was a big driver, Gavin, of the Q4 number because we did take an period expense, a lot of overhead, which otherwise would have been into our sort of base cost spread across aircraft deliveries. And given that we were light, we did take a pretty significant hit on period expense. But as we think about the go-forward number, we expect and have built a plan around margin rates and normal volumes of aircraft delivery. So I wouldn't expect to see any significant period expensing associated back with the lower volumes in 2024.

Gavin Parsons

And then anything that you can give us on what you're expecting on net price and performance for '25?

Scott Donnelly

No. Look, I mean, as I said, we certainly expect performance and factory efficiencies to be up significantly versus 2024. And that's a driver of a lot of where we think we'll end up with the margin that we have guided. In terms of price, look, price is still is still good in the industry, but there's also inflation out there. So as we've talked about before, I don't expect a huge spread on the net of that. I think most of our performance improvement, most of our margin improvement getting back to where we should be here in 2025 as a result of much better factory performance.

Operator

Pete Skibitski, Alembic Global.

Pete Skibitski

Congrats, Frank. Guys, this longer fiscal '25 continuing resolution, is that impacting your military programs at all?

Scott Donnelly

Pete, I have not seen it have a big impact. I mean, look, we hate the uncertainty of it. And I think our certainly, our customer hates it because they're constantly in -- I mean, they're trying to now do 2026 budgets when they haven't allowed to finalize 2025.
But I think the expectations, the customer appears to be executing to what they expect the 2025 budget to be and has sort of been appropriated and sitting on the shelf waiting for the final action. So it's very disruptive. I think it's a horrible process, obviously, and it takes a lot of time and energy away from the customer can be focused on other things.
But the good news is most of our programs are already funded programs. They're not new starts. There are some things, as you get further into the year, that will become new starts, but we certainly expect that the CR will be resolved have an actual budget before that becomes a problem.

Pete Skibitski

Got it. Okay. Just one last one for me. Across the whole company, in terms of the new administration, is there anything on your radar in terms of new regulations or policies or the tariff issue that could be either positive or negative for the business that's on your radar? I think maybe one thing in terms of if we get tariffs towards Canada. Does that impact Bell commercial at all? Just anything on your radar that you can share with us?

Scott Donnelly

Look, Peter. I think on the positive side, again, we talked about just sort of what our expectations are for the overall business climate, less regulation, probably a better tax resolution and maybe otherwise could have happened. So I think from an overall business environment standpoint, those -- that's very positive on the tax front, on the regulatory front, on the military front, as I said, I think we have an administration coming in that has in the past been pro, how do we figure out how to accelerate, how do we go faster, which would be, again, net good for us.
Look, the tariff is very much a wildcard. I mean, we don't know the specifics. Clearly, we have operations in Mexico. We have, as you noted, a pretty significant operation in Canada, particularly on the Bell commercial side, a lot of the value of the dollars are things that go over from the US into Canada and then back assume those don't get hit.
But we do have some big important suppliers like Pratt Canada that sell a lot of engines to us in both rotor and fixed wing, and we do have our Bell Mirabel operations on the commercial side of Bell. So -- look, it's an unknown. And so we're not really positioned one way on the other thing. We've got to see how this plays out. And Again, I think a lot of this is around negotiations and working on how do you deal with the free trade agreements on a go-forward basis. So we're just going to kind of hang in there and see how it plays out.

Operator

And ladies and gentlemen, that will bring us to the conclusion of today's Textron Q4 2024 earnings release call. We'd like to thank you all so much for joining us today and wish you all a great. Remainder of your day. Just a reminder, today's call will be available for replay beginning later today by calling 1 800-839-5125 or 402-220-1502. Again, thanks for joining us, everyone. We wish you all a great day. Goodbye.