Textron (NYSE:TXT) reported second-quarter revenue growth of 3% to $3.8 billion, while adjusted earnings rose to $1.62 per share from $1.55 a year earlier. The company maintained its full-year adjusted earnings outlook of $6.40 to $6.60 per share and manufacturing cash flow guidance of $700 million to $800 million before pension contributions.
Chief Executive Officer Lisa Atherton said the company’s manufacturing segments each contributed to first-half revenue growth of $500 million, or 7%, compared with the prior-year period. She pointed to healthy commercial and military demand, including aviation backlog and defense budget support for Textron’s military franchises.
Aviation demand remains strong, while factory efficiency weighs on profit
Textron Aviation generated $1.5 billion in second-quarter revenue, up 1% from a year earlier, as higher aircraft pricing and aftermarket revenue offset lower aircraft volume and mix. The segment delivered 40 jets and 44 commercial turboprops, compared with 49 jets and 34 commercial turboprops in the prior-year quarter. Backlog ended the quarter at $8 billion.
Segment profit declined 3% to $165 million, primarily due to manufacturing inefficiencies and lower aircraft volume and mix, partly offset by lower warranty costs.
Atherton said Aviation is investing in workforce development, factory capacity and engineering support to improve producibility. Attrition has returned to more normalized levels following an earlier spike, but the company has a relatively new manufacturing workforce. About 50% of the workforce has less than five years of experience, compared with less than 30% in 2019, she said.
The company is also adding targeted capacity in landing gear, milling and paint, while expanding dual sourcing for critical supplies. Atherton said supply-chain conditions have improved substantially, though some components remain problematic.
Chief Financial Officer David Rosenberg said Aviation’s productivity opportunity is worth roughly $150 million in incremental profit, or about 200 basis points of margin improvement, over the medium term. He said the opportunity is split roughly evenly between internal productivity actions and supply-chain improvements.
Rosenberg expects third-quarter Aviation revenue to have a similar profile to the second quarter, with margin expansion expected in the fourth quarter. Atherton said the company expects workforce learning curves to improve next year and is targeting improvement in overall product deliveries toward the middle to latter part of 2027.
Textron Aviation’s development programs continued to advance. The CJ4 Gen3 and M2 Gen3 are in flight testing, while the CJ3 Gen3 is expected to make its first flight in the third quarter. All three are expected to enter service next year. The Denali is in final flight testing and remains on pace to enter service in 2027.
Bell revenue rises as company self-funds MV-75 work
Bell revenue increased 6% to $1.1 billion, driven by higher military revenue from H-1 production and the MV-75 program, as well as higher commercial pricing. Segment profit fell 6% to $75 million, reflecting program performance and military-program mix, partly offset by lower research and development costs. Bell’s backlog totaled $7.5 billion at quarter-end.
The company said the U.S. Army is pursuing an above-threshold reprogramming request for an additional $350 million of fiscal 2026 funds for the MV-75 Cheyenne program. Textron expects Congress to complete the process during the third quarter, but has elected to continue program work on a self-funded basis while awaiting the funding decision.
Rosenberg said Textron is managing spending through the next several weeks to remain within the $350 million threshold while maintaining program momentum. He described the reprogramming need as a “unique one-off” related to a schedule acceleration that occurred after the Army submitted its fiscal 2026 budget.
Textron’s full-year outlook assumes it receives the additional funding. Without it, adjusted earnings per share could be reduced by $0.20 to $0.30 and manufacturing cash flow could decline by $150 million to $250 million, the company said.
Bell completed its first two MV-75 wing structures during the quarter. Atherton said the first wing required 90% fewer labor hours than the initial V-22 wing build, while the second required an additional 40% reduction from the first wing. Bell also delivered 36 commercial helicopters, up from 32 a year earlier.
Systems growth and Industrial sale process
Textron Systems revenue rose 7% to $347 million, helped by armored land vehicle volume and military training and support work at Airborne Tactical Advantage Company, or ATAC. Segment profit increased 10% to $44 million, primarily due to lower research and development expense. Systems backlog was $3.3 billion.
During the quarter, Systems began producing Mobile Strike Force Vehicles in Louisiana for delivery of 65 units to Ukraine. The Advanced Reconnaissance Vehicle program completed its systems functional review and continued design work following a $450 million Marine Corps pre-production development award earlier this year.
Industrial revenue was $848 million, up $9 million, while segment profit increased 9% to $59 million. Kautex benefited from pricing and foreign-exchange effects, while Textron Specialized Vehicles faced lower volume and mix and the impact of the powersports business disposition. Rosenberg said the segment received a gross refund of $21 million in previously imposed IEEPA tariffs, with an approximately $18 million net effect on results.
Textron has initiated a sale process for its Industrial segment while continuing work needed for a potential spinoff. Atherton said the company has received significant inbound interest and is evaluating interest in the segment as a whole as well as in separate businesses. The effort is part of Textron’s stated plan to become a pure-play aerospace and defense company.
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.
