10-Q · April 30, 2026
Textron reported strong Q1 2026 results, with revenues of $3.695 billion, up 12% from the prior year, and diluted EPS of $1.25. The company experienced growth in its aviation and military segments but faced challenges…
Earnings analysis · 10-Q
TXT earnings analysis
Filed July 28, 2026 · Our reading of the company's report
The latest report
Textron delivered modest Q2 growth, with revenue up 3% to $3.827 billion and GAAP EPS up 5% to $1.42, but gross margin contracted 100 basis points to 17.8%. Growth at Bell and Textron Systems was offset by weaker Bell…
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Textron delivered modest Q2 growth, with revenue up 3% to $3.827 billion and GAAP EPS up 5% to $1.42, but gross margin contracted 100 basis points to 17.8%. Growth at Bell and Textron Systems was offset by weaker Bell profitability, while Textron Aviation profit declined 3% despite revenue growth. Liquidity remains adequate with $1.436 billion of manufacturing cash and an undrawn $1.0 billion revolver, but first-half operating cash flow fell to $128 million and the MV-75 funding situation is a significant near-term downside risk.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.42
What stood out
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Revenue and GAAP EPS grew
Q2 revenue rose 3% year over year to $3.827 billion, up $111 million, and increased 3.4% sequentially from $3.700 billion in Q1 2026. Diluted GAAP EPS was $1.42, up 5% from $1.35 a year ago and 14% from $1.25 in Q1.
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Textron Systems expanded profit
Textron Systems was the strongest operating segment: revenue increased 7% to $347 million and segment profit rose 10% to $44 million, with margin expanding 40 basis points to 12.7%.
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Industrial benefited from tariff refunds
Industrial segment profit increased 9% to $59 million on revenue growth of 1% to $848 million. Profit included $21 million of IEEPA tariff recoveries received during Q2.
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Backlog increased modestly
Total backlog increased to $18.914 billion at July 4, 2026 from $18.823 billion at January 3, 2026. Aviation backlog grew $304 million to $8.028 billion and Systems backlog grew $44 million to $3.348 billion.
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Revolver remains fully available
Manufacturing debt declined $73 million from year-end to $3.466 billion, with no borrowings outstanding under the $1.0 billion revolving credit facility at July 4, 2026.
What to watch
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MV-75 funding gap creates material exposure
Bell substantially exhausted available fiscal-2026 MV-75 funding in mid-July while continuing work at its own risk. If the requested $350 million is not approved and obligated, Textron could incur up to a $120 million unfavorable cumulative catch-up adjustment and approximately $350 million of negative cash-flow impact.
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Bell mix and execution pressured margins
Consolidated gross margin declined 100 basis points year over year to 17.8%, while Bell segment margin fell 90 basis points to 7.0% on adverse contract performance and military-program mix. Bell segment profit declined 6% to $75 million despite 6% revenue growth.
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Government funding concentration risk
The new risk disclosure identifies customer concentration and future defense-budget exposure: 27% of 2025 revenue came from U.S. Government entities, while the fiscal-2027 MV-75 funding indication is $2.3 billion but remains subject to future budget and program decisions.
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Working capital and capex reduced cash flow
Manufacturing operating cash flow declined $153 million year over year to $128 million in the first half, driven largely by working-capital changes. Capital expenditures increased to $228 million from $134 million, resulting in first-half manufacturing operating cash flow less capex of negative $100 million.
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USMCA review adds tariff uncertainty
A new macro/trade risk disclosure notes that USMCA entered annual reviews after July 1, 2026 and could expire on July 1, 2036 if not extended. Loss of preferential tariff treatment could raise costs and disrupt the supply chain.
Management's outlook
The 10-Q does not provide formal consolidated EPS or revenue guidance. Management disclosed MV-75 contingencies: absent $350 million of additional fiscal-2026 funding, Bell could recognize up to a $120 million unfavorable catch-up adjustment and approximately $350 million of adverse cash flow; an expected LRIP award in late 2026 or early 2027 could result in a further $60 million to $110 million unfavorable catch-up adjustment.
Earlier filings 4
10-K · February 11, 2026
Textron reported record full-year 2025 revenues of $14.8 billion with backlog rising to $18.8 billion at January 3, 2026. Backlog gains were driven by Bell and Textron Systems while free cash flow improved (sum of…
10-Q · October 23, 2025
Textron reported Q3 2025 revenue of $3,602 million (up $175 million or +5.1% vs Q3 2024) and diluted EPS from continuing operations of $1.31 (up $0.13 vs $1.18 a year ago). Gross margin held near 18.2% and operating…
10-Q · April 24, 2025
Textron reported Q1 revenues of $3,306 million, up $171 million (+5.5%) versus Q1 2024, and diluted EPS of $1.13, up $0.10 (+9.7%) year-over-year. Growth was driven primarily by Bell (revenues $983M, +$256M YoY) while…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.