Textron Inc. (TXT) Earnings & Analysis

Latest quarter

Textron reported Q2 FY2026 revenue of $3.8 billion, which was $3.8 billion against the consensus, or 0.15% above it. The company reported adjusted EPS, as the consensus counts it, of $1.62, compared with the $1.52 consensus, a 6.58% difference.

The filing reported revenue of $3.8 billion, up 2.99% from $3.7 billion a year earlier. Textron’s filing attributed the quarterly increase to higher Industrial revenue, including higher Kautex revenue that was partly offset by lower Textron Specialized Vehicles revenue. The filing also reported higher revenue at Textron Aviation, Bell and Textron Systems, citing aircraft and aftermarket sales at Aviation, military-program volume and commercial pricing at Bell, and armored-vehicle and military-training volume at Systems.

Textron reported diluted EPS of $1.42, up 5.19% from $1.35 a year earlier. The filing reported gross margin of 18.1%, down −0.9 percentage points, primarily because of lower Bell margin, while operating margin was 6.98%, down −0.3 percentage points. Textron reported free cash flow of $189.0 million, down −40.6% from $318.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Lisa Atherton said customer demand remained in place across Textron Aviation’s jets and turboprops, while the company focused on making production more efficient. Atherton said Aviation is investing in workforce development, factory execution and supply-chain resiliency. She said employee attrition had returned toward normalized levels, but a newer workforce still needs experience on the factory floor.

Atherton said the company has added engineering production support, targeted capacity in areas including landing gear, milling and paint, and pursued dual sourcing for critical components. She said parts availability had improved, though certain supplier issues remained. When analysts asked about the timing of operational improvements, Atherton said the company would not provide exact dates, while describing expected productivity gains as the workforce gains experience.

Chief Financial Officer David Rosenberg said Aviation’s quarterly revenue increased on higher pricing, partly offset by lower aircraft volume and mix. He said Aviation’s segment profit declined because of manufacturing inefficiencies and lower aircraft volume and mix, partly offset by lower warranty costs. Rosenberg said third-quarter Aviation revenue cadence was expected to resemble the second quarter, while margin growth was not expected until later in the year.

Atherton said Bell continued work on the MV-75 Cheyenne program on a self-funded basis while the Army’s funding reprogramming process proceeds. In response to analyst questions on the funding process, Atherton said the company was managing supply-chain spending within the threshold it had expected from the reprogramming and was working with the Army on program execution. Rosenberg said the company used a conservative booking rate because the reprogramming had not yet been awarded.

Rosenberg said Industrial segment profit rose because of higher pricing net of inflation, partly offset by lower volume and mix. Atherton also said Textron had launched a process to pursue a sale of the Industrial segment while continuing work for a potential spin-off.

Guidance

Textron said it made no changes to its FY2026 guidance. David Rosenberg said the outlook assumes additional FY2026 funding for the MV-75 Cheyenne program; without that funding, Textron said adjusted EPS could be negatively impacted by $0.20 to $0.30 and cash flow by $150 to $250 million.