Textron (TXT) Financials

Textron’s latest quarter shows a company still profitable on an earnings basis, but with a notable cash flow setback and higher balance-sheet leverage compared with a year ago. In Q1 2026, revenue fell year over year, operating income improved modestly, and net income was stable. However, operating cash flow turned negative due to a large working-capital swing, while debt remains elevated and equity has been pressured by share repurchases and accumulated losses in AOCI.

• Revenue held up reasonably well versus recent quarters: Q1 2026 revenue was $3.70 billion, up from $3.31 billion in Q1 2025, though below the prior quarter’s $4.18 billion seasonal peak.
• Gross profit margin improved sequentially: gross profit of $672 million in Q1 2026 translated to a better margin than the prior quarter’s 16.7% and roughly in line with recent periods.
• Operating income remained solid: Textron posted $301 million in operating income in Q1 2026, showing the business is still generating meaningful operating earnings.
• EPS stayed healthy: diluted EPS came in at $1.25 in Q1 2026, down only slightly from $1.32 in Q4 2025 and above the $1.13 in Q1 2025.
• Liquidity remains strong: the company ended Q1 2026 with $1.61 billion in cash and equivalents, giving it a decent near-term cash cushion.
• Equity is still substantial: total common equity was $8.0 billion at the end of Q1 2026, slightly above Q3 2025 and Q1 2025 levels.
• Revenue trend is choppy but not collapsing: over the last year, quarterly revenue has generally ranged from about $3.3 billion to $4.2 billion, suggesting a mixed but still sizable top line.
• Share count has drifted down: weighted average diluted shares were 173.9 million in Q1 2026, below 180.5 million in Q1 2025, which supports EPS.
• Capital spending remains moderate: Q1 2026 capex was $133 million, broadly consistent with Textron’s recent quarterly spending pattern.
• Debt levels are still meaningful: short-term debt was $355 million and long-term debt was $3.45 billion in Q1 2026, so leverage remains an important factor to watch.
• Operating cash flow turned negative in Q1 2026: net cash from operating activities was negative $117 million, a sharp deterioration from positive $700 million in Q4 2025.
• Working capital was a major drag: changes in operating assets and liabilities reduced cash by $462 million in Q1 2026, which overwhelmed reported earnings.
• Net cash from all activities was negative: total net change in cash and equivalents was negative $415 million in Q1 2026.
• Inventory remains high: inventories were $4.56 billion at quarter-end, a large working-capital item that can pressure cash conversion.
• Debt has moved up versus 2024: long-term debt was $3.45 billion in Q1 2026 versus $3.16 billion in Q1 2024, while equity hasn’t grown at the same pace.
• AOCI has become more negative: accumulated other comprehensive income/loss was -$173 million in Q3 2025 and worsened to -$169 million in Q2 2025 / -$304 million in Q4 2024, indicating balance-sheet pressure from non-operating items.
• Buybacks continue to consume cash: Textron repurchased $168 million of stock in Q1 2026, adding another cash use during a quarter when operating cash flow was already negative.

Bottom line: Textron’s earnings engine is still functioning, but the latest quarter highlights a weaker cash conversion profile and a balance sheet that relies on continued operating performance. For retail investors, the key question is whether the company can turn earnings back into sustained free cash flow while managing inventory, debt, and working capital more efficiently.