Earnings Call Insights: Textron Inc. (TXT) Q4 2025
Management View
- Executive Chairman Scott Donnelly stated that Textron closed out the year with “significant revenue growth of 16% and segment profit growth of 34%, resulting in an adjusted EPS of $1.73.” He highlighted the Aviation segment’s 36% revenue growth for the quarter and 13% for the full year, driven by higher aircraft deliveries and increased aftermarket volume following the late-2024 strike recovery. Donnelly underscored strong order flow and customer demand, ending the year with a $7.7 billion backlog and delivering 171 jets and 146 commercial turboprops in 2025.
- Donnelly also pointed to Bell’s “very strong year with revenue up 11% for the fourth quarter and 20% for the full year,” and emphasized the acceleration of the MV-75 program, noting, “We’ve completed over 90% of the engineering drawings, put nearly 2,000 Tier 1 and Tier 2 suppliers on contract, issuing 45,000 purchase orders, opened new manufacturing capacity… and we’ve begun manufacturing components for the first 6 aircraft.”
- CEO Lisa Atherton introduced herself and expressed optimism about Textron’s trajectory, citing a “very strong year for Aviation” and highlighting the Denali program, which “finished the year having logged over 3,200 hours of flight testing.” She pointed to the nearly $8 billion backlog in Aviation and strong order flow. Atherton described the MV-75 as “a great success story” and explained that Bell is “poised to begin testing on the first unit later this year.”
- Atherton discussed progress at Systems, including an IDIQ contract worth up to $200 million for the ATAC business, and highlighted the Ship-to-Shore Connector program, which received over $450 million in awards for the year. She also noted Industrial’s positive organic growth and successful divestiture of the Powersports business.
- CFO David Rosenberg stated, “Revenues in the quarter were $4.2 billion, up 16% or $562 million from last year’s fourth quarter. Segment profit in the quarter was $380 million, up 34% or $97 million from the fourth quarter of 2024.”
Outlook
- Atherton projected 2026 revenues of about $15.5 billion, up about 4.5% from 2025, and adjusted EPS in the range of $6.40 to $6.60. Manufacturing cash flow before pension contributions is expected between $700 million and $800 million, reflecting “approximately $350 million of higher CapEx and long-lead material to support LRIP on the MV-75 program.”
- Rosenberg added, “We’re expecting adjusted earnings per share to be in the range of $6.40 to $6.60. We are also expecting manufacturing cash flow before pension contributions to be about $700 million to $800 million.”
- Segment guidance includes Textron Aviation revenues of about $6.5 billion (approximately 9% growth), Bell revenues of about $4.4 billion (low single-digit growth), Systems revenues of $1.35 billion (about 7% growth), and Industrial segment revenues of about $3.2 billion (low single-digit growth). R&D is expected to be about $480 million, down from $521 million last year.
Financial Results
- Revenues for the quarter were $4.2 billion, segment profit was $380 million, and adjusted income from continuing operations was $1.73 per share. Manufacturing cash flow before pension contributions was $510 million in the quarter.
- Full-year revenues were $14.8 billion, up $1.1 billion from last year; segment profit was $1.4 billion, and adjusted income from continuing operations was $6.10 per share. Manufacturing cash flow before pension contributions totaled $969 million for 2025.
- Aviation segment quarterly revenues were $1.7 billion, with segment profit of $208 million. Bell revenues reached $1.3 billion, with segment profit of $101 million. Systems delivered $323 million in revenue and $43 million in segment profit. Industrial revenues were $821 million, and segment profit was $30 million. eAviation posted $7 million in revenues and a segment loss of $15 million. The Finance segment reported $18 million in revenue and $13 million in profit.
- The company repurchased approximately 2.3 million shares in the quarter, returning $187 million to shareholders, and 10.7 million shares for the full year, totaling $822 million.
Q&A
- Sheila Kahyaoglu, Jefferies LLC: Asked new CEO Lisa Atherton about her top priorities. Atherton responded, “First off, execution… Second will be a portfolio focus… And lastly, we have to really keep building resilience so that all of our businesses perform well across cycles.”
- Kahyaoglu asked about aviation revenue guidance versus order trends. Rosenberg explained, “Our overall guide is $6.5 billion, up from $6 billion last year… I would expect similar aftermarket growth profile of around 6%.”
- Peter Arment, Baird: Queried about MV-75 acceleration. Atherton detailed, “The Army has been crystal clear about their desire to move faster… that acceleration of production… pulls the entire program forward by about 2.5, 3 years.”
- Kristine Liwag, Morgan Stanley: Asked about portfolio growth versus pruning and autonomous systems. Atherton said, “We have to evaluate every single business against that same criteria… I certainly want to accelerate growth and scale in some high-quality aerospace and defense areas.”
- Myles Walton, Wolfe Research: Inquired about supply chain and production rates. Atherton noted, “Engines… has been a laggard for us… we’ve created an in-house training program to upskill the talent.”
- Robert Stallard, Vertical Research: Sought details on MV-75 revenue impact and margins. Rosenberg said, “Ultimately, the opportunity is between 40 and 60 units per year… Bell was a double-digit margin business.”
- Seth Seifman, JPMorgan: Asked about cash deployment and concurrency risk. Atherton cited, “We have high confidence that we have rung out a lot of the concerns that you might have seen in older generation type development programs.”
- Additional questions explored aviation margin recasts, Bell EBIT, defense budget leverage, large cabin jet opportunities, industrial margins, MV-75 logistics, and potential for reviving the Scorpion platform.
Sentiment Analysis
- Analysts pressed for details on execution priorities, MV-75 acceleration, aviation margins, and supply chain recovery, reflecting a slightly positive but probing tone, with general congratulatory remarks on leadership transition.
- Management maintained a confident tone during prepared remarks and Q&A, frequently emphasizing operational discipline and program acceleration. Atherton stated, “We have high confidence that we have rung out a lot of the concerns…”
- Compared to the previous quarter, analyst tone was more focused on program execution and growth prospects, while management shifted from transition planning to detailed operational outlook and strategic priorities.
Quarter-over-Quarter Comparison
- Guidance for 2026 is higher, with $15.5 billion in projected revenues (up 4.5%) and adjusted EPS of $6.40 to $6.60, compared to reiterated full-year adjusted EPS guidance of $6.00 to $6.20 in Q3.
- Leadership has transitioned from Scott Donnelly to Lisa Atherton as CEO, with a strong focus on execution and portfolio management.
- The MV-75 program has been further accelerated, with production timelines pulled forward by 2.5 to 3 years, and significant investment highlighted for 2026.
- Analysts in both quarters focused on growth, supply chain, and margin questions, but the current quarter saw more discussion on capital allocation and program risk mitigation.
- Management’s tone has remained confident, with increased emphasis on resilience, operational rigor, and capital discipline.
Risks and Concerns
- Supply chain constraints, especially engine availability, remain a headwind for Aviation.
- Workforce attrition and efficiency on the factory floor are ongoing challenges; management has implemented an in-house training program to address this.
- The accelerated MV-75 program introduces risk of cost overruns, with CFO Rosenberg noting a potential $60 million to $110 million cumulative catch-up program adjustment, though not currently reflected in guidance.
- Some margin compression at Bell is expected during the ramp of MV-75, but management expects a return to double-digit margins as production scales.
Final Takeaway
Textron concluded 2025 with record revenue and strong segment performance across Aviation, Bell, and Systems. The company projects further top-line and earnings growth for 2026, underpinned by accelerated defense programs, continued aftermarket momentum, and a disciplined approach to capital allocation. Management emphasized operational execution, resilience, and strategic investment, while highlighting ongoing efforts to address supply chain and workforce challenges. The transition to new CEO Lisa Atherton signals continuity and renewed focus on delivering on commitments and driving long-term shareholder value.