FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 30
Table of Contents
SEGMENT RESULTS OF OPERATIONS
Operating profit, as presented below, is net sales less cost of sales and other operating expenses, excluding interest
expense, equity-based compensation expense, non-service pension expense and other corporate expenses. Cost of
sales and other operating expenses are directly identifiable to the respective segment or allocated on the basis of
sales, manpower or profit. Operating profit is reconciled to earnings before income taxes in Note 21, Segments, of
Item 8, Financial Statements and Supplementary Data of this report.
Aircraft Controls
(dollars in millions)
Net sales - military aircraft
Net sales - commercial aircraft
Operating profit
Operating margin
2021
782
379
$ 1,161
$
97
8.3 %
$
2020
721
485
$ 1,206
$
35
2.9 %
$
2019
622
681
$ 1,303
$ 123
9.4 %
$
2021 vs. 2020
$
%
Variance
Variance
$
61
8%
(105)
(22%)
$
(45)
(4%)
$
62
179%
2020 vs. 2019
$
%
Variance
Variance
$
99
16%
(196)
(29%)
$
(97)
(7%)
$
(88)
(72%)
Aircraft Controls' net sales decreased in 2021 as compared to 2020 due to the continued impacts of the global
COVID-19 pandemic adversely affecting commercial OEM and aftermarket programs.
Across our commercial aircraft programs, the COVID-19 pandemic greatly reduced airline traffic and orders for new
aircraft. Our airframe customers refined their production forecasts and worked down their inventory levels during the
second half of 2020. During the second half of 2021, U.S. domestic commercial air traffic began to recover; however,
international travel has remained muted and wide-body production rates have remained pressured. In 2021 compared
to 2020, commercial OEM sales declined $97 million and commercial aftermarket sales declined $8 million as the
impacts of the COVID-19 pandemic affected all of our programs. Partially offsetting the declines was a $61 million
sales increase across our military programs, driven by higher activity on funded development programs, higher
quantities for the F-35 program and acquired sales from Genesys.
Operating margin increased in 2021 compared to 2020 due to the absence of last year's $57 million in COVID-19
related impairment and restructuring charges. Excluding these charges, adjusted operating margin in 2020 was 7.6%.
In 2021 operating margin was higher than the adjusted operating margin in 2020 due to a more favorable sales mix
from higher levels of military OEM sales, including foreign military, and the addition of Genesys. In addition, 2021
included an increase of $10 million in research and development expenses from continued investment in military
programs and the newly acquired Genesys, which partially offset the margin increase.
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