Lower IRAD costs with FLRAA helped Bell in third quarter

By Dan Schere  / October 26, 2023

Bell, a Textron subsidiary, spent less money in the third quarter on independent research and development for programs such as the Army's Future Long-Range Assault Aircraft, the company's CEO said during a Thursday earnings call.

Bell’s revenues of $754 million in the third quarter of this year were flat compared with the third quarter of 2022. But segment profit was up by $3 million in the quarter, compared with the third quarter of 2022. Lower R&D costs were a major factor in the segment profit increase, according to a company earnings statement.

Last year, Bell was locked in a competition with Sikorsky for the FLRAA contract and Textron CEO Scott Donnelly said at the time that the Army’s delay in announcing the winner would lead to a decrease in the company’s 2022 profits.

FLRAA, the eventual successor to the UH-60 Black Hawk helicopter, was awarded to Bell last December and a stop-work order was lifted in April following an unsuccessful protest from Sikorsky. The new aircraft are expected to be fielded in 2030, although the Army has said Black Hawks will remain in service well beyond that time.

Donnelly was more upbeat about Bell’s financial position during Thursday’s call.

“R&D is certainly a tailwind for us. And that's helping us on the performance line . . . largely driven by the fact that a year ago, we were still spending a good deal of our own IRAD money on programs like FLRAA, which are now in the fully funded category,” he said.

Donnelly also mentioned the delivery of the T901 Improved Turbine Engine to Bell this week for the company’s prototype in the Army’s Future Attack Reconnaissance Aircraft competition. After installation, the company plans to run an integration test, he said.

Textron executives said Thursday that the higher military volume for Bell has helped offset lower commercial helicopter volume compared with the same period last year. Supply chain issues are continuing to slow progress in the commercial aircraft market, Donnelly said.

“I think we're probably . . . certainly to a point where customers would like earlier delivery dates than what we can promise them but I think customers are getting accustomed to the fact that this is a couple-year kind of a timeline and they need to plan accordingly,” he said.

Textron’s Systems segment experienced increases in both revenue and segment profit in the third quarter, compared with the same period in 2022, according to the company. Contributing to this success, Donnelly noted, were a series of awards that included the Army selecting the company’s Aerosonde Hybrid Quad uncrewed aircraft system as one of two finalists to participate in the next phase of the Future Tactical UAS rapid prototyping effort.

“The two remaining competitors will work with the Army towards a critical design review, which includes establishing the final system design and initial product baseline,” he said.

Donnelly also noted Thursday that Textron was one of four companies the Army selected to build prototypes in the service’s Robotic Combat Vehicle competition. The company expects to deliver prototypes to the Army in 2024, he said.