Textron CEO not currently worried about CR impact on defense contracts

Textron CEO Scott Donnelly said today that he isn't currently worried about the impact of the continuing resolution on the company's defense contracts, unless it were to drag out to a full year.

Congress last week voted to pass another two-tiered stopgap funding measure that extends funding through March 8 in the case of the Defense Department.

Donnelly, during a company earnings call Wednesday, said he thinks major contracts such as the Future Long Range Assault Aircraft (FLRAA), the contract for the eventual Black Hawk replacement, won’t suffer in the near term due to the CR.

“I think the Army probably has . . . backup plans, they're trying to work in terms of how they would move money around. Obviously FLRAA is a very high priority, very important program to them as well. So, this thing would be a heck of a lot easier if Congress would just pass a budget, for sure. But right now, I think we're OK unless it really goes to a full year,” he said.

Bell, a subsidiary of Textron, was selected by the Army for the FLRAA contract in December 2022 over competitor Sikorsky. However, a protest from Sikorsky delayed work on the program until April 2023.

Donnelly told investors Wednesday that he expects growth in military revenues for Bell in 2024 as work progresses on FLRAA.

“As we ramped after the contract, it’s gone really well. So, I would expect a number closer to the $900 million range in 2024,” he said.

In addition to FLRAA, Donnelly touted other recent company wins in defense, such as being chosen as one of two finalists for the Army’s Future Tactical UAS prototyping effort, as one of four companies chosen by the Army to proceed in the service’s Robotic Combat Vehicle competition and the company’s participation in the Marine Corps’ Advanced Reconnaissance Vehicle competition.

Donnelly said 2023 was a significant year for the company when it came to downselects from various military services.

“We'll execute on those, and they're not big growth programs, so they don't really have a CR impact I’m too concerned about. And they're virtually all programs that will have their next significant contractual award downselect in 2025,” he said.