Textron (NYSE:TXT) executives highlighted a strong start to 2026 and outlined a major strategic shift during the company’s first-quarter earnings call: an intended separation of its Industrial segment from its aerospace and defense (A&D) businesses. CEO Lisa Atherton said the company is targeting completion of the separation within 12 to 18 months and will explore multiple paths, including a sale of the industrial businesses or a tax-free spin-off into a standalone publicly traded company.
First-quarter results show revenue and profit growth
Atherton said Textron generated $3.7 billion in revenue in the first quarter, up 12% year over year, and grew segment profit 10% to $320 million. She added that adjusted earnings were $1.45 per share, up 13% from the prior year.
Rosenberg also reminded listeners that at the beginning of the year the company realigned Textron eAviation across Textron Aviation, Textron Systems, and Corporate, eliminating eAviation as a separate reporting segment; results were presented on a recast basis for comparability.
Planned Industrial separation aims to create a pure-play A&D Textron
Atherton described the planned separation as “a consequential and exciting step,” positioning “new Textron” as a pure-play A&D company anchored by Textron Aviation, Bell, and Textron Systems. She said the company will evaluate whether to pursue a sale, a spin-off, or other approaches over the coming quarters, and will continue to operate normally in the interim.
Management argued the separation could improve clarity around capital allocation and increase strategic flexibility for both businesses. Atherton cited accelerated investment to support the U.S. Army’s MV-75 Cheyenne program at Bell as an example of how a pure-play A&D structure could align investment with long-term growth priorities. For Industrial, she pointed to growth investments including “Pentatonic, Allegro, and PACE Technologies.”
On the call, Atherton said the timing reflects progress across the portfolio and stronger positioning in both A&D and Industrial end markets. “It’s the right answer for both of our A&D and industrial businesses at this moment in time,” she said, adding that the move also better aligns each business with “their respective natural shareholder bases.”
Atherton said “new Textron” would have approximately $12 billion in revenue and $1.2 billion in segment profit, and that the company’s $19.2 billion backlog is “100% related to the A&D businesses.” She said the separation would improve the financial profile, including higher top-line growth and segment profit margin versus the combined company.
Asked about potential transaction hurdles, Rosenberg said the company believes any stranded costs would be minimal and manageable. On taxes, he said there are multiple scenarios, and that in a spin-off structure Textron believes it could be completed on a tax-free basis.
Segment performance: Aviation grows on deliveries and aftermarket
Textron Aviation posted first-quarter revenue of $1.5 billion, up 22%, driven by increased deliveries and mix, Rosenberg said. Aircraft revenue rose 30% to $954 million, as Citation jet deliveries increased to 37 from 31 a year earlier and commercial turboprop deliveries rose to 35 from 30. Aftermarket revenue increased 10% to $531 million.
Segment profit at Aviation was $154 million, up $32 million, for a margin of 10.4%. Rosenberg said the Aviation backlog ended the quarter at $8 billion, up $276 million from year-end 2025.
Atherton cited specific order wins, including a fleet order from LUMINAIR that would bring the European operator’s total to nine Citation Latitudes, and an order from Belgium’s Special Operations Forces for five SkyCouriers, which she called the first military order for the aircraft.
On demand and the market environment, Atherton said Textron Aviation and Bell had their best first-quarter bookings in four years, dating back to the first quarter of 2022. She also told analysts the company is looking to reallocate a portion of existing R&D spending toward supply chain and factory effectiveness, without increasing overall investment levels. In response to a question on delivery capacity, Atherton said an equilibrium level for deliveries “is right there around 200.”
On supply chain conditions, Atherton said the company continues to work through engine-related constraints but is seeing improvement. “We’re not seeing as many systemic supply chain issues as we have over the past several years,” she said, adding that on-time delivery and quality trends are improving, even if disruptions remain “lumpy.”
Bell and Systems: MV-75 progress, new awards, and improving cadence expectations
Bell revenue increased 9% to $1.1 billion. Rosenberg said military revenue rose 25% to $795 million, driven by MV-75 Cheyenne growth, but was partially offset by reduced revenue from V-22 production and military sustainment programs. Commercial revenue fell to $275 million on lower volume and mix.
Bell segment profit was $72 million, down $18 million, primarily due to an unfavorable mix of military programs and lower commercial volume and mix, Rosenberg said. Bell backlog ended the quarter at $7.6 billion.
Atherton said the U.S. Army has named the MV-75 aircraft “Cheyenne,” and that subsystem critical design reviews have been completed except for the weapon system CDR expected later in the summer. She also referenced the Future Years Defense Program (FYDP), saying it calls for $2.3 billion of funding for 2027, scaling to $3.8 billion in fiscal 2031 across RDT&E and procurement, and outlined procurement quantities shown in the budget materials. She added that the Army has told Textron it is actively pursuing additional funding to support an accelerated profile for the remainder of government fiscal year 2026.
Rosenberg said Bell’s margin decline in the quarter reflected commercial delivery timing and the overall mix shift between MV-75 and legacy military business. He said the company expects normalization through the year, with a pattern similar to prior years and improvement toward the company’s guided range of 8% to 9% segment margin.
On potential accounting impacts tied to MV-75, Rosenberg said there was no change to expectations for a cumulative catch-up charge of $60 million to $110 million, which depends on timing of when the government exercises the LRIP CLIN. He said it could occur as early as the second half of 2026 or in the first half of next year.
Textron Systems revenue rose 13% to $338 million, driven by higher volume on the Ship-to-Shore Connector program and ATAC military training programs, Rosenberg said. Systems segment profit was $42 million for a margin of 12.4%, and backlog ended at $3.6 billion, up $255 million in the quarter.
Atherton highlighted a $450 million U.S. Marine Corps pre-production development award for the Advanced Reconnaissance Vehicle program, which includes delivery of 16 vehicles plus labs and blast holes. She also cited a prototype agreement from the U.S. Army for the Low Altitude Stalking and Strike Ordnance (LASSO) program. Looking longer term, Atherton pointed to Sentinel as a key growth driver for Systems and said the company is competing on both the Advanced Reconnaissance Vehicle and XM30 programs, which she said could be decided over the next two to three years.
During Q&A, Atherton said Textron has not seen a material impact to date from conflict in the Middle East, but is monitoring higher oil prices and their mixed implications for end markets. She also said the company continues to see broad support across defense spending priorities, referencing the administration’s proposed defense budget framework discussed on the call.
For Industrial, Rosenberg reported revenue of $786 million, down slightly year over year, with Kautex up 8% to $486 million and Textron Specialized Vehicles down, largely due to the prior-year divestiture of the Powersports business. Industrial segment profit rose to $40 million, up $10 million, which Rosenberg attributed largely to manufacturing efficiencies.
Atherton closed by reiterating that the company is focused on operational efficiency and performance improvements while it evaluates separation alternatives, and emphasized that management intends to “lean in and grow versus scaling back” in the A&D portfolio.
About Textron (NYSE:TXT)
Textron Inc is a global, multi-industry manufacturing company headquartered in Providence, Rhode Island. The company designs, manufactures and services a diverse range of products for the aerospace, defense and industrial markets. Textron operates through four primary business segments—Textron Aviation, Bell, Textron Systems and Industrial—each of which serves customers around the world.
Textron Aviation is known for its Cessna and Beechcraft branded business jets and turboprop aircraft, offering models that range from light jets and turboprops to larger cabin aircraft designed for corporate and charter use.
