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2015 Analyst Meeting Scott Ernest
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Forward-looking statement
Certain statements in today’s discussion will be forward-looking statements,
including those that discuss strategies, goals, outlook or other non-historical
matters; or project revenues, income, returns or other financial measures. These
forward-looking statements speak only as of the date on which they are made, and
we undertake no obligation to update or revise any forward-looking statements.
These forward-looking statements are subject to risks and uncertainties that may
cause actual results to differ materially from those contained in the statements,
including the risks and uncertainties set forth under our full disclosure located at
the end of this presentation and included in our SEC filings.
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Broadest product line in general aviation
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Textron Aviation
Senior Leadership Team
Russ Bartlett Military
Ron Draper ISC
Chris Hearne Jets
Doug May Pistons
Blake Meyen Legal
Dave Rosenberg Strategy & Integration
Eric Salander Finance & IT
Bill Schultz China Business
Development
Kriya Shortt Sales &
Marketing
Christi Tannahill Turboprops &
Special Missions
Michael
Thacker Engineering
Brad Thress Customer
Service
Jim Walters Human Resources
& Communications
Scott Ernest President & CEO
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Agenda
• 2015 Accomplishments
• Sales & marketing
• Market
• Product update
• Customer service
• Operations
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2015 Accomplishments
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2015 Accomplishments
• Integration execution
• Certification of Citation Latitude
• Longitude unveiling at NBAA
• Hemisphere announced at NBAA
• King Air Fusion entry into service
• Wheels Up exercised options for 35 King Air 350i turboprops
• Continued profit growth
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Financial performance
Margin expansion driven by synergies & manufacturing efficiencies
(In millions of dollars)
9 Months
ended Sep. 27,
2015
2014 Full year 2013 Full year
Revenues $3,334 $4,568 $2,784
Segment profit $262 $234 $(48)
Segment profit
margin 7.9% 5.1% -1.7%
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2015 YTD
2014 YTD
Light Jets 70 65
Midsize Jets 36 39
Turboprops 145 136
Pistons 189 171
T-6 30 16
Total Aircraft 470 427
2015 deliveries progressing as expected
Deliveries as of 10/3/15
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Integration
• Identified best practices and key talent
– Cessna product development process
– Beechcraft special mission business
• Synergy drivers
– Headcount reduction completed
– Sourcing productivity
– Negotiated combined union contract
• Hawker engagement program
• Utilize both companies’ technology for product
development
• Enhanced service offerings at company operated
centers
• Leverage current facility footprint to drive growth
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East campus transformation
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Customer support, delivery & flight ops
B94 – Today training center / IT servers 2015 Aftermarket large assemblies
Plant IV King Air / Baron / Bonanza 2015 / 2016 – Longitude Final Assembly
Plant III composite & metal bond 2015 / 2016 composite COE / experimental/Longitude Development
Paint facility
Plant I Fabrication
2016 / 2017 – Move to Pawnee
2017 - Experimental
T-6 Assembly
B89 - Today production warehouse
2015 Aftermarket warehouse
Employee flying club
B31 – Upgrades for experimental
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Strategic advantage
• Largest installed base
• Leading position in turboprops & jets
• Rapid product development &
certification
• Strong service network
• Size and scale
• Technical expertise
• Execution
• Productivity
• Product performance and reliability
• Low cost
Jets installed base
Over 9,000
Turboprops installed base
Over 8,500
Pistons installed base
Over 200,000
Textron Aviation strategic position & strengths
Leading the industry in certifications
Q2 certification
Citation Latitude
Citation X+
Citation Latitude
Citation Sovereign+
Citation CJ3+
Citation M2
King Air 350i Fusion
King Air 250 Fusion
Grand Caravan EX
Certifications 2012-2015
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Sales & Marketing
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Focused sales & marketing
• Global sales footprint worldwide
• Continue to invest in sales team
– 75% sales team growth since 2011
• Focused lead generation strategy
• Latitude global demo tour
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Wide industry coverage
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NBAA 2015
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Hawker customer engagement
• Continue relationship building to ensure
Hawker owners feel part of family
• Support Hawker aircraft at Textron Aviation
service centers
• ProAdvantage
• ProParts
• Leveraging customer input to support new
product development
• Latitude & Longitude ideal products for
Hawker customers
• Contacted 100% customers with aircraft
<10 years old
Installed base
Premier 280
Hawker 400 700
Hawker 987s 1450
Hawker 4000 70
Total 2,500
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Market
Industry deliveries
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Turboprops 2014
METP 129
SETP 155
Utility 138
Jets 2014
Super Midsize 104
Medium 92
Light 119
Light Entry 73
Very Light 12
Source: GAMA;
Demand has stabilized
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200
400
600
800
1000
1200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Jets Turboprop
For Sale (<10 Years)
For Sale (>10 Years)
Source: Amstat, Internal database; November 2015
PRE-OWNED
CITATIONS
PRE-OWNED
KING AIRS
PRE-OWNED
HAWKER
Aircraft available for sale improving
Significant improvement from 2008 downturn
Aircraft <10 Years Old
60% IMPROVEMENT
43% IMPROVEMENT
31% IMPROVEMENT
0
200
400
600
800
1000
2008 2015 2008 2015 2008 2015
CITATION KING AIR HAWKER PREMIERBEECHJET
<10 years >10 years
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Product Update
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Turboprop product line
King Air 350ER
King Air 350i
King Air 250
King Air C90GTx
Grand Caravan EX
Caravan
Multi-engine
Utility
New Single-engine
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1,000th King Air 350
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King Air Fusion upgrade
• Announced at EBACE 2015
• First delivery Q4 2015
• Touch screen 14 inch displays
• Integrated flight critical information
• Mandate ready
• Open and scalable architecture for
future upgrades
• Modern capabilities
State-of-the-art avionics and cost reduction
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Wheels Up
• 35th King Air 350i delivered in Q3
• 35 more 350i’s ordered in Q2
• Expect over 2000 members by year
end
• 15 pre-owned Excel & XLS in fleet
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Special Missions
Broadest Special Mission portfolio in general aviation
Air ambulance
Aerial survey Flight inspection
Training Utility
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• Caravan installed base increased by
40% since 2013
• Expect to deliver 20+ Caravans in
2015
• 20 Grand Caravan EX Amphibians
order by Joy Air in Q3
Turboprop success in China
Shijiazhuang factory
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Jet product line
Mustang
M2
CJ3+
CJ4
XLS+
Latitude
Sovereign+
X+
Hemisphere
Longitude
TEXTRON AVIATION
One Citation leads to another
2,700 nm Citation Latitude
EIS 2015
30 *Range with 4 passengers
CITATION LATITUDE
Performing better than promised
• Range
• Payload
• Operating cost
BEST IN CLASS
• Runway performance
• Fit and finish
• Lowest approach speeds
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TEXTRON AVIATION
One Citation leads to another
2,700 nm Citation Latitude
EIS 2015
3,400 nm Citation Longitude
EIS 2017
*Range with 4 passengers 32
CITATION LONGITUDE
Setting a new super midsize standard
Full Fuel Payload
1,500 lbs High Speed Cruise
476 kts Max Range
3,400 nm
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Longitude is segment leader
Citation
Longitude Challenger 350 Legacy 500
Range (M.80, 4-pax)
3,400 nm 3,233 2,900
HSC (max @ 43,000ft)
476kts 470kts 467kts
Baggage
allowance (in-flight accessible)
1,115 lbs 795 419
Leg room 30” 25” 27”
Cabin altitude (45,000 ft)
5,950 ft 7,850 6,000
Operating cost (per nm: 4-pax, M.80, 1,000nm)
$4.72 $4.98 $4.84
Sources: B&CA’s “Purchase Planning Handbook” (June 2015), Conklin & deDecker’s “The Aircraft Cost Evaluator” (2015, Vol II), OEM websites
CITATION LONGITUDE
Generous in size, equipped for comfort
15 large windows optimally located for viewing
Largest legroom in class
In-flight accessible baggage
Large galley for food prep 5,950ft cabin pressure at 45,000ft
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15_09_LONGITUDE_2335_fixed_reflections
CITATION LONGITUDE
Leveraging proven systems
Garmin G5000 avionics Honeywell HTF 7000-series engine, APU
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CITATION LONGITUDE
Timeline
2015 – AIRCRAFT DEBUT
Mid-2016 – FIRST FLIGHT
2017 – FIRST DELIVERIES
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TEXTRON AVIATION
One Citation leads to another
2,700 nm Citation Latitude
EIS 2015
3,400 nm Citation Longitude
EIS 2017
4,500 nm Citation Hemisphere
FIRST FLIGHT 2019
*Range with 4 passengers 38
CITATION HEMISPHERE
Expanding Citation reach
First flight 2019
4,500 nm
Max Range
102 in.
Diameter
Best in class
Ownership Cost
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Defense
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• T-6 trainer
– In-use with 20+ international air forces
– Sold 925 to date
– Sold out through 2016
– Marketing internationally
• AT-6 light attack
– Launch customer in-works
– Focused on international opportunities
T-6 Texan & AT-6 Wolverine
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Scorpion ISR/Light Strike Jet
• Scorpion 500+ hours to date
• Production version (P1) to fly Q2 2016
• Many customer demos executed
• Working with US government to certify
through Non-DOD Military Aircraft
Airworthiness Accreditation
– Industry-funded effort
– Process to commence in January
– “Not inventing a new process” - will
use standard USAF procedures
– 3 phase process (9 mo. to 2 yrs.)
– End state: “USAF Airworthiness
Accreditation”
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Customer Service
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Global installed fleet of over 17,500 turbine and 200,000 piston aircraft
Textron Aviation installed base
Panama
US/Canada
Jet 5,700+
Turboprop 5,000+
Piston ~103,000
Latin America
Jet 1,200+
Turboprop 1,650+
Piston ~22,000
EMEA
Jet 1,460+
Turboprop 1,490+
Piston ~55,000
China
Jet 50+
Turboprop 100+
Piston ~220
Asia-Pacific
Jet 300+
Turboprop 750+
Piston ~20,000
17,500
200,000
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60
2,900
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Turbine aircraft
Piston aircraft
Factory-owned service centers
Mobile service vehicles
Employees
Dedicated service aircraft
Combined service network
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• Enhancing global parts
distribution
• ProAdvantage for King Air
and Hawker
• Leveraging technology
• Interactive webinars
• E-commerce
• Single number phone
system
• Seamless customer
experience
Parts & programs
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ProOwnership
• Ensure smooth ownership transition
• Select and hire dedicated flight crew
• Complete maintenance oversight
• Total trip support & concierge
• Hangar selection
• Assistance with insurance and financing
• One monthly invoice to customer
Seamless transition into aircraft ownership
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Operations
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World class operations
• Workforce engagement & productivity
• Continue to drive costs down
• Maximize use of current facility footprint
• Factory of the future
• Investment in robotics
• Low-cost producer
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Transforming assembly through technology
• Digital factory
• Automation
• Vertical assembly tooling
• Reduced labor hours
• Faster learning curve
• Lower tooling spend
Sovereign Latitude
Manufacturing Labor
-25%
Lab
or
hou
rs
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Textron Aviation operational investments
Composite COE
Mobile robotics
Fabrication – 5 axis
machining
Integrated customer
spares warehouse
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Summary
• Market is stable
• Integration complete
• Industry’s largest installed base & global service network
• Low-cost focus creates ability to compete in all market conditions
• Expanding addressable segments with Longitude, Hemisphere & SETP
• Continued investment leveraging expertise & speed in product development
and certification
• Innovation leadership in aircraft design, manufacturing & selling
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Questions
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