Textron Q3 Earnings Call Highlights

Key Points

• Textron delivered solid third-quarter growth: Revenue rose 4% to $3.8 billion, adjusted EPS increased to $1.76, and manufacturing cash flow before pension contributions climbed to $418 million.
• Management raised its full-year outlook for adjusted EPS to $6.55–$6.65 and manufacturing cash flow to $800–$900 million, citing lower capital spending and stronger Textron Aviation customer deposits.
• Performance varied by segment: Textron Aviation revenue grew 14% on higher jet deliveries and aftermarket demand, while Textron Systems revenue rose 16%; Bell revenue declined 9% amid lower MV-75 volume and potential delays that could increase program charges.

Textron NYSE: TXT reported third-quarter 2026 revenue of $3.8 billion, up 4% from a year earlier, while adjusted earnings per share rose to $1.76 from $1.55. Manufacturing cash flow before pension contributions increased to $418 million from $281 million in the prior-year quarter.

Chief Executive Officer Lisa Atherton said higher jet deliveries at Textron Aviation and program execution at Textron Systems supported double-digit revenue growth in those businesses. The company also raised its full-year outlook for adjusted earnings and manufacturing cash flow.

“The underlying demand environment remains favorable, our execution initiatives are beginning to gain traction, and we continue to advance strategic programs and technologies,” Atherton said.

Outlook Raised as Cash Flow Improves

Chief Financial Officer David Rosenberg said Textron now expects full-year adjusted earnings per share of $6.55 to $6.65, compared with its previous range of $6.40 to $6.60. The company raised its forecast for manufacturing cash flow before pension contributions to $800 million to $900 million, from $700 million to $800 million previously.

Rosenberg said the largest driver of the higher cash-flow forecast was approximately $100 million of lower expected capital expenditures during 2026. Strong order activity and associated customer deposits at Textron Aviation also contributed to the improved outlook, he said.

Textron repurchased approximately 2.9 million shares during the quarter, returning $239 million in cash to shareholders.

Aviation Revenue Rises on Jet Deliveries and Aftermarket Demand

Textron Aviation generated $1.7 billion in quarterly revenue, a 14% increase from a year earlier. Aircraft revenue rose $152 million, while aftermarket parts and services revenue increased $49 million. Segment profit rose $7 million to $179 million, although higher volume and mix were partly offset by manufacturing inefficiencies.

The company delivered 51 jets and 32 commercial turboprops in the quarter, compared with 42 jets and 39 turboprops a year earlier. Aftermarket revenue increased 10%, supported by strong fleet utilization, Atherton said.

Atherton said Aviation recorded its highest third-quarter order activity since 2023 and has not seen changes in customer buying behavior tied to interest rates or geopolitical conditions. She said demand remained broad-based across aircraft operators and retail customers.

The company is investing in machining, sheet-metal and landing-gear capacity, along with automation and tooling intended to improve productivity. It is also working to address supply constraints through dual sourcing and selective insourcing. Atherton identified engines, extrusions, spars and auxiliary power units as key supply-chain constraints.

Textron qualified a second spar supplier, with parts expected to begin affecting production in the coming quarter and to contribute more substantially during 2027. Management said supply availability across its factories has returned to roughly 2021 levels, though it remains below 2019 levels.

Textron Aviation named Brian Rohloff president and CEO of the business. Rohloff has spent more than 29 years at Textron Aviation and most recently led its customer support organization.

On product development, Atherton said the Denali program has accumulated more than 4,200 flight-test hours. Textron’s three Gen3 light-jet programs have completed more than 1,200 combined flight-test hours, and the company expects some Gen3 aircraft to enter service in the first half of 2027.

MV-75 Funding Approval Supports Bell Program

Bell revenue declined 9% to $933 million and segment profit fell $16 million to $76 million, reflecting lower military volume on the MV-75 program as well as lower commercial helicopter, parts and services volume and mix.

Congress approved a $350 million Army Transfer Request related to fiscal 2026 funding for the MV-75 Cheyenne program. Rosenberg said approximately $300 million was subsequently obligated through contract modifications during the third quarter, covering actual costs incurred by Textron and suppliers.

Textron maintained reduced spending on the program during the quarter while awaiting funding approval. Rosenberg said there were no cumulative catch-up adjustments during the period and that the company did not reverse charges recorded in the second quarter related to the funding delay.

The company expects that a potential delay in the timing of the low-rate initial production award could increase the expected negative charge associated with that award. Rosenberg said the range could rise to $110 million to $150 million if the award shifts into next year, compared with a previously discussed range of $60 million to $110 million.

Bell reported progress on the MV-75 aircraft build, including completion of three wings in Amarillo, receipt of the first nacelles, completion of the first fuselage in Wichita and advancement of components such as gearboxes into testing. The first fuselage is expected to be mated with a wing assembly in the fourth quarter.

Textron Systems Posts Double-Digit Growth

Textron Systems revenue increased 16% to $360 million, led by armored land vehicles and military training and support services provided by ATAC. Segment profit increased $10 million to $57 million.

The segment received a $230 million contract modification for two additional Ship-to-Shore Connector craft. The program has reached a production rate of four craft annually, with 18 units delivered under a 73-unit program of record.

Atherton said progress on the Ship-to-Shore program has improved productivity and provided greater visibility into future government ordering. Other activity included plans to deliver 65 MSFV vehicles to Ukraine over three years, 10 XM30 prototypes to the U.S. Army through its partnership with American Rheinmetall, and 16 Marine Corps ARV units in 2028.

Textron’s Industrial segment, which the company is pursuing a separation or spin-off for, posted revenue of $765 million, up 1%, while profit increased $7 million to $38 million. Atherton said the company remains on the 12- to 18-month separation timeline communicated in April.

About Textron (NYSE:TXT)

Textron Inc NYSE: TXT is a diversified industrial company that develops and manufactures aircraft, helicopters, specialized vehicles, defense systems and other industrial products. Founded in 1923 by Royal Little, the company has grown through the development and acquisition of businesses serving commercial, government and consumer markets.

Textron Aviation produces business jets, turboprop aircraft and general aviation aircraft under the Cessna and Beechcraft brands. Bell designs and manufactures military and commercial helicopters, tiltrotor aircraft and related support services.

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