Earnings call transcript: Textron Q3 2025 sees EPS beat, stock dips

Textron Inc. (TXT) reported its third-quarter 2025 earnings, showcasing a strong financial performance with an adjusted EPS of $1.55, surpassing the forecast of $1.46. However, revenues fell short of expectations at $3.6 billion against a forecasted $3.7 billion. Despite the EPS beat, the stock experienced a pre-market decline of 1.65%, closing at $81.22, reflecting investor concerns over the revenue miss.

Key Takeaways

• Textron’s Q3 EPS exceeded expectations, marking a positive earnings surprise.
• Revenue missed forecasts, leading to a negative market reaction.
• Stock price decreased by 1.65% in pre-market trading.
• Strong performance in aviation and defense sectors.
• Leadership transition announced with Lisa Atherton set to become CEO.

Company Performance

Textron demonstrated robust performance in Q3 2025, with revenues increasing by 5% year-over-year to $3.6 billion. The company reported a segment profit of $357 million, a 26% rise from the previous year. Textron’s aviation segment delivered 42 jets and 39 commercial turboprops, and its systems segment secured new contracts worth approximately $1 billion.

Financial Highlights

• Revenue: $3.6 billion, up 5% year-over-year
• Earnings per share: $1.55, up from $1.40 in the previous year
• Manufacturing cash flow before pension contributions: $281 million, up from $147 million last year
• Segment profit: $357 million, up 26% year-over-year

Earnings vs. Forecast

Textron’s Q3 EPS of $1.55 outperformed the forecast of $1.46, resulting in a 6.16% earnings surprise. The revenue, however, came in at $3.6 billion, missing the forecast by 2.7%. This mixed performance contributed to the cautious investor sentiment.

Market Reaction

Following the earnings release, Textron’s stock fell by 1.65% in pre-market trading, closing at $81.22. The stock’s decline reflects concerns over the revenue shortfall, despite the positive EPS surprise. Currently, the stock trades near its 52-week low of $57.70, well below its high of $89.28, indicating potential market apprehension.

Outlook & Guidance

Textron provided a full-year adjusted EPS guidance of $6.00 to $6.20, with expected manufacturing cash flow before pension contributions ranging from $900 million to $1 billion. The company anticipates incremental volume increases in 2026, highlighting a positive outlook for future growth.

Executive Commentary

Scott Donnelly, CEO, remarked, "The industry right now probably is as healthy as we’ve ever seen it." On leadership changes, he stated, "She becomes the president and CEO. She’s running the company," referring to Lisa Atherton’s upcoming transition. Donnelly also emphasized continued growth opportunities, saying, "We continue to look at other opportunities, and I expect we’ll continue to do that regardless of the leadership change."

Risks and Challenges

• Revenue misses could affect future investor confidence.
• Market volatility may impact stock performance.
• Leadership transition could bring strategic shifts.
• Supply chain disruptions remain a potential risk.
• Economic conditions could influence demand across segments.

Q&A

During the earnings call, analysts inquired about the MV-75 program acceleration and contract specifics. Discussions also covered the sustained demand in the aviation market and potential expansion in the unmanned aircraft portfolio, reflecting strategic growth areas for Textron.

Full transcript - Textron (TXT) Q3 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Textron Third Quarter twenty twenty five Earnings Release. At this time, all participants are in a listen only mode. You will have the opportunity to ask questions during the question and answer portion of this call. I would now like to turn the conference over to Scott Hegstrom. Please go ahead, sir.

Scott Hegstrom, Investor Relations, Textron: Thanks, Rob, and good morning, everyone. Before we begin, I’d like to mention we will be discussing future estimates and expectations during our call today. These forward looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today’s press release. On the call today, we have Scott Donnelly, Tetragon’s Chairman and CEO and David Rosenberg, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

Revenues in the quarter were 3,600,000,000 up 5% or $175,000,000 from last year’s third quarter. Segment profit in the quarter was $357,000,000 up 26% or $73,000,000 from the 2024. Adjusted income from continuing operations was $1.55 per share compared to 1.4 per share in last year’s third quarter. Manufacturing cash flow before pension contributions totaled $281,000,000 in the quarter compared to $147,000,000 in last year’s third quarter.

Scott Donnelly, Chairman and CEO, Textron: With that, I’ll turn the call over to Scott. Thanks, Scott. Good morning, everybody. Let me just start with yesterday’s announcement. I’m sure you’ve all read by now that yesterday, we elected Lisa Atherton to become our new President and CEO, effective at the January.

At that point in time, I’ll transition to be the executive chair. This is the result of a of a long thorough process that we worked with on the on the board. I think Lisa, who’s been with our company for about eighteen years, is an outstanding leader. She’s had a number of really important roles in the company over the years. She was the President and CEO of our Textron Systems business for about five years.

Most recently, obviously, she’s the President and CEO of Bell, where she’s been very involved in in both the capture, the win, and now the execution of the ramp on m v seventy five. She’s a fabulous leader. She knows the teams. She’s surrounded by a great team, at the business level across the company. So we’re proud of the fact that we had a great internal promotion and I think she’ll just do a fabulous job leading the company into the future.

So with that, let me go ahead and talk about the quarter. Overall, revenue was higher driven by strong growth across our aerospace and defense businesses. Aviation had higher segment revenues and profit compared to the third quarter of last year. We delivered 42 jets and 39 commercial turboprops compared to 41 jets and 25 commercial turboprops in last year’s third quarter. Techland Aviation fleet utilization remained strong in the quarter contributing to an aftermarket revenue growth of 5% as compared to last year’s third quarter.

Aviation backlog ended the third quarter at $7,700,000,000 as demand remained strong. Earlier this month, Textron Aviation completed the certification of the CJ3 Gen two and auto throttles on the M2 Gen two. Also this month, the Citation Ascend made its debut as it landed in Las Vegas for the NBOA exhibition. Are nearing completion of certification process and continue to expect deliveries this quarter. During the quarter, the Latitude received FAA certification for new features of the Garmin 5,000 avionic suite.

These features include synthetic vision guidance systems and approved for improved approach capabilities down to 150 feet and a new taxiway routing feature. We continue to implement Starlink high speed Internet connectivity onto our aircraft. With the recent announcement of the Latitude and Longitude supplemental type certifications, Starlink is now available on 14 platforms across aviation’s product portfolio. On the defense side, aviation announced a partnership with Leonardo to launch the Beechcraft M346N as a solution for the United States Navy undergraduate jet training system competition. Throughout the quarter, participated in a nationwide demo tour to highlight the capabilities of this aircraft.

At Bell, increased revenues were driven by higher military volume, reflecting the continued ramp and acceleration of the MV75 program. In the quarter, Bell exceeded their 90% engineering release milestone, enabling continued fabrication and procurement activity for the prototype aircraft. Fabrication and assembly work of the program has continued across numerous sites, including wing assembly at our Amarillo, Texas site, fuselage assembly at our Wichita, Kansas site, in addition to ongoing fabrication of critical rotor and drive system components in our Fort Worth operations. On the commercial side of Bell, we delivered 30 helicopters down from 44 in last year’s third quarter. Bell continues to see strong demand across its commercial product portfolio.

Bell announced a purchase agreement with Global Medical Response for seven 429s and an option for eight additional helicopters with deliveries expected to begin in 2026. Moving to systems, revenues were up as compared to last year. During the quarter, systems received new contract awards for several programs leading to an increase in backlog of about $1,000,000,000 in the quarter. These awards included ATAC awards for both the United States Navy and United States Marine Corps, a new contract award for the US Army to provide 65 Mobile Strike Force vehicles in support of the Ukraine Security Assistance Initiative, and increased quantities for the Ship to Shore Connector Program. In the weapons business, systems completed delivery of the first production lot of XM204 anti vehicle terrain shaping systems to the US Army in support of operations in Europe.

Moving to industrial, we saw lower revenues reflecting the divestiture of the powersports business. At Aviation, we continue to make progress on several of our core development efforts. The team completed the hover flight test envelope for the Nuva V300 and set the stage for Air Vehicle two to enter the flight test program. As disclosed in our eight ks filing, Textron will be eliminating the Textron Aviation segment as a separate reporting segment, realign the Eovation business activities across Textron Aviation and Textron Systems to leverage our existing sales and business development capabilities. This change will be effective at the beginning of fiscal year twenty twenty six.

With that, I’ll turn the call over to David.

David Rosenberg, Chief Financial Officer, Textron: Thank you, Scott, and good morning, everyone. Let’s review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1,500,000,000 were up 10% or $138,000,000 from the 2024, reflecting higher aircraft revenues of $116,000,000 and higher aftermarket parts and service revenues of 22,000,000 The increase in aircraft revenues were largely due to higher volume mix, which included higher Citation jet and commercial turboprop volume, partially offset by lower defense volume. Segment profit was $179,000,000 in the third quarter, up 40% or $51,000,000 from a year ago, largely due to higher volume and mix. Backlog in the segment ended the quarter at $7,700,000,000 Moving to Bell, revenues were $1,000,000,000 up 10% or $97,000,000 from the 2024.

The revenue increase was driven by higher military revenues of $128,000,000 primarily due to higher volume from the U. S. Army’s MV75 program, partially offset by lower commercial volume of 31,000,000 Segment profit of $92,000,000 was down $6,000,000 from last year’s third quarter. Backlog in the segment ended the quarter at $8,200,000,000 an increase of $1,300,000,000 from the prior quarter, primarily reflecting the award for the prototype testing and evaluation phase of the MV75 program. At Textron Systems, revenues were $3.00 $7,000,000 up 2% or $6,000,000 from last year’s third quarter, which included higher volume on the ship to shore connector program.

Segment profit of $52,000,000 was up $13,000,000 compared with the 2024, largely due to a gain resulting from the early termination of a vendor contract. Backlog in the segment ended the quarter at $3,200,000,000 an increase of $980,000,000 from the prior quarter, reflecting new contract awards for the ship to shore connector, land vehicles and the adversary air business. Industrial revenues were $761,000,000 down $79,000,000 from last year’s third quarter, driven by Textron Specialized Vehicles. This reflects $88,000,000 in lower revenues related to the divestiture of the Power Sports business. Segment profit of $31,000,000 was down $1,000,000 from the 2024.

Textron E Aviation segment revenues were $5,000,000 in the 2025 as compared to $6,000,000 in last year’s third quarter and segment loss was $15,000,000 as compared with a segment loss of $18,000,000 in the 2024. Finance segment revenues were $26,000,000 and profit was $18,000,000 in the 2025 as compared to segment revenues of $12,000,000 and profit of $5,000,000 in the 2024. The increase in revenues and segment profit was largely due to gains disposition of non captive assets. Moving below segment profit, corporate expense were $26,000,000 net interest expense for the manufacturing group was $26,000,000 LIFO inventory provision was 48,000,000 intangible asset amortization was $8,000,000 and the non service components of pension and postretirement income were $67,000,000 As expected, our adjusted effective tax rate for the 2025 was 25.5%, largely reflecting the impact of the One Big Beautiful Bill Act. We now expect our full year adjusted effective tax rate to be approximately 21%.

During the quarter, we repurchased approximately 2,600,000.0 shares returning $2.00 $6,000,000 in cash to shareholders. Year to date, we have repurchased approximately 8,400,000.0 shares returning $635,000,000 to shareholders. To wrap up with guidance, we are reiterating our expected full year adjusted earnings per share to be in the range of $6 to $6.2 and maintaining our expected full year manufacturing cash flow before pension contributions to be in the range of $900,000,000 to $1,000,000,000 That concludes our prepared remarks. So operator, we can open the line for questions.

Speaker 4: Thank you,

Conference Operator: And your first question today comes from the line of Peter Arment from Baird. Your line is open.

Peter Arment, Analyst, Baird: Yes. Hey, thanks. Good morning, Scott, Dave. Congratulations, Scott. Appreciate all the help over the years.

Hey. On on the MB 75, could you give us, there was announcement by the by the army here recently, regarding accelerating the fielding of version two. Just how that would impact, you know, any, any cost profile or or does it change anything?

Scott Donnelly, Chairman and CEO, Textron: It won’t change anything in the near term, Peter. I mean, obviously, the part of the strategy on the program, which is has been there all along, was to start with a very basic aircraft, you know, and, you know, focus on the critical parameters around speed and range and, you know, basic air structure. But as you know, part of the incorporation of most in terms of the architecture of this aircraft allows you to do that and then, you know, build out variants and derivatives and and capabilities and different variance going forward. So, you know, our focus obviously right now is very much around the acceleration, getting the first prototype aircraft going. You know, those will be the, you know, the the first variant.

So but there’s already a lot of work clearly going on in the army around what future capabilities they want to put on the aircraft, but that’s enabled by the most architecture. So it doesn’t affect or impact the work that’s going on around the basic aircraft today.

Peter Arment, Analyst, Baird: That’s helpful. Thanks for that. And then just a quick one on just on Aviation. You talked about the demand remains strong. Just maybe any highlights you would call out just regarding whether it’s regionally or just in general on the mid jet market?

Scott Donnelly, Chairman and CEO, Textron: It’s really across the whole portfolio, Peter. I mean, we continue to see strong retail demand. People are flying. The end market industry remains robust, would say, everywhere that we see it. The performance of the business is improving obviously as we talked about every quarter improving margins.

We had a lot of certification activity in the quarter. We would have originally planned probably to get the M2, the CJ3 and the Ascend in Q3. It’s turned out, of course, we now have the M2 and the CJ3, but those happened right at the beginning of Q4. And Ascend, we should have wrapped up here by the end of the month. The FAA, despite the shutdown, is supporting us in that effort, which is great.

So I think the market is strong. Our product portfolio is in a good place. So we feel pretty good about where things are.

Peter Arment, Analyst, Baird: Appreciate the detail. Thanks, Scott.

Conference Operator: Your next question comes from the line of Sheila Kahyaoglu from Jefferies. Your line is open.

Sheila Kahyaoglu, Analyst, Jefferies: Good morning and congratulations, Scott, on a great run and promoting both Dave and Lisa internally. I think that says a lot. Maybe if I could follow-up on the NV75 question, if that’s okay for Peter. Can you provide additional color on like where what’s the update on the program? You completed two fifteen flight hours.

I think you’re scheduled to deliver success articles over the next year and a half. What happens from there with army? And how do we think about a contract being signed on?

Scott Donnelly, Chairman and CEO, Textron: Sure. So the I mean, the the current program, it’s actually Michelle, it’s a good question. I I think there are some misunderstandings about this program and sort of where where it is and and what’s going on. You know, I’ve heard a lot of people, you know, said, hey. Is this is this gonna be one of these programs as we’ve seen with a lot of defense contractors around these big freight fixed price, you know, programs?

We’re familiar with those. We had that, as you know, one shift to short connector. It’s a healthy program today, but went through a very difficult phase given the nature of the the fixed price development and production at the beginning. You know, as you know, we don’t have that. Alright.

This is a this is a very large program, obviously. It’s mostly plus plus development. There are some fixed price elements. We’ve already put the fixed price LUT aircraft, you know, into our program estimates to complete. We will at some point add LRIP eight, you know, once that is exercised, you know, by the government.

But I think that the program as it’s laid out today covers all of that development, which is largely cost plus. It does have LUT as a fixed price. It does have LRIP as a fixed price. And that’s kind of where that where the current program you know, stops. So the discussions around acceleration are really bringing forward that LRIP.

We we collectively with the army believe this is something that we can do, you know, with low risk. That’s in part by, as you referenced, the fact that we flew, you know, two hundred and some three hundred hours on the on the v two eighty. The team is already building a lot of the key components and fabrications, getting ready to build the prototype test aircraft. There will be six of those and then the two LUTs. So, you know, the risk of bringing that LRIP in rather than having a big gap is pretty minimal.

That, you know, keep the ability to keep in mind that that first LRIP aircraft is really sort of serial number 10. If you count the initial v two eighty plus the six EMDs, which are cost plus, and then those first two LUTs that are fixed price. So, you know, I think the team is doing a great job on executing. Obviously, you know, we work very, very closely with the army on the acceleration process. It’s going very well.

We’re building wings. We’re building fuselages. We’re building gearboxes. It’s all it’s all it’s all going quite well. And, again, I think there is a little bit of a misconception around, you how this works.

It is a big performance obligation. We will, as you guys saw last year when we did the LUTs and added those to the mix, we took our booking rate down, and that will result in a Cube Catch. It did result in a Cube Catch that was a bad guy. On the other hand, this quarter, they exercised one of the large cleanse for the cost plus side. We actually increased our booking rate and took a modest Cube Catch good guy.

So this is something to expect through the course of the program. But unlike these big fixed price development, fixed price production programs, we certainly don’t see this thing entering into lost territory. It will continue to book a low margin, which we’ve said from the beginning. But I think we’re, again, in a pretty good place, and it’s a program I think that’s executed well and obviously is hugely important to the future of the company.

Sheila Kahyaoglu, Analyst, Jefferies: Thanks for the additional color. I’ll leave it there.

Conference Operator: Your next question comes from the line of Gavin Parsons from UBS. Your line is open.

Speaker 4: Hi, this is Joel Santos on behalf of Gavin Parsons. Good morning. Thank you for taking my question. You have talked before about improving aviation profitability. What is the long term margin target that you were aiming for?

And what are the main levers together? Volume, pricing or more of a mix?

Scott Donnelly, Chairman and CEO, Textron: Well, mean, obviously, these dynamics are different in each one of the businesses. But generally speaking, across all of our product lines, we have good gross margins. So the biggest lever is around volume and what that does in terms of conversion to the bottom line in terms of performance. So that’s most of the investments that we make around product or around making sure that we have products that have high demand and can command good volume and obviously solid pricing, which again, we’ve seen that in the last number of years where we’ve had very positive price feedback as well.

Speaker 4: Great. And any aviation bookings have been fairly steady each quarter this year even through the 2Q tariff uncertainty. Do you think long lead times are holding back new orders? And if production ramps, could that actually drive bookings higher?

Scott Donnelly, Chairman and CEO, Textron: Well, look, it’s I I’m there is some connection between users. No doubt if you get up too far out in timeline, then it’s difficult for people to, you know, to make that commitment. But as you said, look, I think that the market demand remains strong. It has been pretty steady. We’ve guided a one to one book to bill through the course of the year.

I still feel good about that. And certainly, we do have plans where you’ll see incremental volume in 2026 as opposed to 2025. So we’re not obviously quite ready to guide 2026 here, but we certainly expect as manufacturing continues to ramp that we will see additional output in terms of the number of aircraft.

Speaker 7: Thank you.

Conference Operator: Your next question comes from the line of Robert Stallard from Vertical Research. Your line is open.

Robert Stallard, Analyst, Vertical Research: Thanks so much. Good morning.

Scott Donnelly, Chairman and CEO, Textron: Good morning, Robert.

Robert Stallard, Analyst, Vertical Research: Congratulations, Scott, on the move up. But first question is actually in relation to that and how you and Lisa expect to divide the role going forward because you will be Executive Chairman.

Scott Donnelly, Chairman and CEO, Textron: Sure, Robert. Look, I mean, is I think a fairly standard transition in our business. I’ve been working with Lisa for a very long time, you know, in her capacity and, you know, key program jobs. She worked for me directly for the last eight years running the systems business and then the Bell business. So, you know, I, you know, I wanna be really clear.

She becomes the president and CEO. She’s running the company. You know, that’s and she and she’s ready to do that, by the way. So, you know, I’ll be there to, you know, help with some of the processes that we just haven’t gone through, you know, around regulatory stuff and, you know, closing out the year and and things like that. But I fully expect she’s ready to run the company, and she’ll start doing that on on January 4, and and I’ll be there to help and and do whatever it is that she needs me to do and, obviously, you know, run the board.

But I think it’ll be a normal transition. I expect it’ll be very, very smooth. Again, we’ve been working together for a very long time. So I’ll be around, but no one should have any questions. She’s going be running the company.

Robert Stallard, Analyst, Vertical Research: Okay. And then as a follow-up on aviation, we’ve seen some recent signs of a big jet activity actually picking up in terms of year on year growth. Are you starting to see this flow through in terms of your aftermarket activity?

Scott Donnelly, Chairman and CEO, Textron: Yes. We had a good quarter on the aftermarket side. There’s no doubt utilization strong. People are flying, which is a great indicator. Obviously, it’s really important in terms of helping to continue to drive growth in the aftermarket side of the business.

But I think it also bodes well just for demand for aircraft, which again we’re seeing. The retail, the level of interest, inquiries, orders, bookings remain strong. So I think the industry right now probably is as healthy as we’ve ever seen it.

Robert Stallard, Analyst, Vertical Research: Okay. That’s great. Thank you very much.

Conference Operator: Your next question comes from the line of Myles Walton from Wolfe Research. Your line is open.

Myles Walton, Analyst, Wolfe Research: Thanks. Good morning and congrats Scott on the retirement or move to Executive Chairman. You’re not retired The you have work to do. The Aviation side, can you comment on the supply chain and how that’s coming along and whether or not that’s an impediment to hitting the $6,100,000,000 rev placeholder within the forecast?

Scott Donnelly, Chairman and CEO, Textron: Well, look, I mean, there are still supply chain issues as we’ve kind of talked about. It’s not as many part numbers, for instance, as it used to be, but there are still some critical not as bad as it was, and so we are seeing improvements in that area. But there’s some critical things that are sort of a little bit of hand to mouth that we keep a close eye on with relatively small number of suppliers, but they’re critical suppliers. So know, again, overall, it’s improved, but it’s one that we, you know, we I mean, the team works this stuff every day. There are there are still some problem children out there, and that’s, you know, that’s been the sort of the nature of where we are.

But I don’t believe just to be clear, I think everything we look at today, getting to that 6.1%, we clearly feel good about our path to get there.

Myles Walton, Analyst, Wolfe Research: Okay, great. And then just a follow-up on systems, great bookings. Is this the point of inflection for growth after a long time of relatively flat revenue?

Scott Donnelly, Chairman and CEO, Textron: Yes. Look, I think so. The bookings were very strong. You guys know we started the year with a bit of a challenge with things like RCV and FTUS getting restructured and changed. I do still think there’s opportunities there in our participation in those kinds of programs.

There’s a lot of interest in a lot of the technology we developed around FTUS, and so that stuff will play out. But for sure, what you’re seeing, despite not getting those bookings, the growth in the rest of the business has kind of overcome that. Our ATAC business is just doing great. Those guys are performing really, really well. They’ve won a ton of new programs.

Ship to Shore continues to grow. And as I said earlier with Chill, the program is healthy. Volumes are there. The team is executing really well. We continue to see growth in the Sentinel program.

So I think when you look across that business, despite some of the challenges around a couple of those programs, it’s good growth. Absolutely, we feel good about sort of that inflection point you referred to. This business has been executing, performing really, really well for a number of years. The only thing that’s lacked, as you guys know is growth. And I do think we’re hitting that inflection point where we’ll start to see it growing here as we go forward.

Scott Hegstrom, Investor Relations, Textron0: All right.

Robert Stallard, Analyst, Vertical Research: Great. Thanks.

Conference Operator: Your next question comes from the line of Seth Seifman from JPMorgan. Your line is open.

Scott Donnelly, Chairman and CEO, Textron: Hey, Seth, you might be on mute.

Speaker 7: Yes. Thanks. Good morning, and yes, congratulations, Scott. Just wanted to ask starting off about Aviation and you just spoke to kind of the revenue. When we think about the margin it’s a pretty significant uptick in profitability in the fourth quarter and kind of what enables that?

Scott Donnelly, Chairman and CEO, Textron: Yes. I mean, I think as we’ve talked about Seth, we expected to see a progression as we go through the course of the year. The fourth quarter will be strong on the volume side, which it normally is. I think we I mean, are still challenges, but the team is performing better and better every quarter around getting flow. And largely, we’ll see a nice significant bump in volume in the quarter and that will drive good margin with it.

Speaker 7: Okay. Excellent. And then maybe one more on M and P 75. When we think about the LRIP units and bringing those forward, are are there kind of additional contractual provisions that you can get to protect the company from concurrency risk?

Scott Donnelly, Chairman and CEO, Textron: Well, so the the LRIP have always been laid in there, so I don’t I don’t think there’s anything would change contractually on that. You know, to be honest, we’re not that worried about the risk of that. Again, the the base configuration of the aircraft is really solid. Obviously, it it’s a it’s a derivative off of what we do on V two eighty. There are changes, but, you know, we know what those are.

You know, we are fabricating right now the first, you know, of the of the prototype aircraft. So, know, you again, by the time we are building that first LRIP aircraft, you know, we will have built, obviously, you know, the original V-two 80, but we will have built eight aircraft, you know, the six EMD aircraft and the two LUT aircraft. So and and and, you know, certainly, there’s an enormous amount of ground testing, component level testing, you know, stuff that sort you know, we already are are fabricating and building parts. So, you know, I think we we we feel very good about the things we need to learn, any issues that we run into we’re going to run into here on these initial EMD aircraft long before we get to where we’re building that first LRIP aircraft.

Speaker 7: Great. Thanks. That’s very helpful.

Conference Operator: Your next question comes from the line of Ron Epstein from Bank of America. Your line is open.

Scott Hegstrom, Investor Relations, Textron0: Hey, good morning, guys. Hi, Ron. Yes. Maybe just circling back on systems. How’s the unmanned portfolio doing when you look across the, you’ve got, you know, unmanned land system stuff and shadow and aerosol and some other stuff.

You’re seeing such kind of surging demand for unmanned stuff. Just curious how that’s going for you guys. And and do you have anything in the pipeline that you’re working on developing to kind of expand in that market?

Scott Donnelly, Chairman and CEO, Textron: So I would say that, know, Ron, the the aerosol program is going well. Right? You know, we went through a a bit of a challenges as as Afghanistan came out. We had a lot of aircraft that were deployed over there. Those have largely been redeployed to other theaters, other applications, a lot of marine applications.

So that business is doing very well. That is where the next significant tranche really was going to be around FTOS. With that program not happening, at least the way it was envisioned, you know, that that was a hit. But but, like, the reality is, you know, these brigades need ISR. And so what really changed on FTUS is that you’ve understandably frustrated over how long it was taking to get stuff out there, has basically said, look, you gotta take these systems, directly to the brigades and they’ll drive that demand.

So that’s what we’re doing right now. And that’s why I say, well, FTUS didn’t happen as a program. I do think that we will see a number of opportunities as we go out and sell that technology directly out to the war fighter. So there’s also been some international opportunities. There’s things out there with Customs and Border Patrol.

So in terms of our core platform today from Aerosonde and then transitioning into what was basically the F2ES configuration, I believe we’re going to start to see some nice growth in there. In terms of new platforms under development, a part of what we did with the E Aviation segment is you know, that team in Pipistrol has been developing this unmanned cargo aircraft, what we call the Nuva 300. That’s now in the flight test. We’ve already done the flight testing on Article one. We’re about to do the final build out on Article two, which has our own flight control fly by wire systems and such.

And so part of the change here in segment is that our Textron Systems business, which has always been the developer and sort of leading the business development on Ericsson and Shadow and those other unmanned platforms will basically have responsibility to take that kind of product to market. And so it’s the Nuva unmanned cargo. We also have a nice niche that we’ve you know, the Pivotal has for a long time in high altitude unmanned, you know, sort of long duration surveillance products. You know, that’s probably we already have today. We have some new developments in process there for very long duration aircraft.

And again, those will now start to largely go to market through our Textron Systems business, augmenting our strength in unmanned aircraft.

Speaker 7: Got it. Got it. Yeah. Thank you very much.

Conference Operator: Your next question comes from the line of Christine Lewag from Morgan Stanley. Your line is open.

Scott Hegstrom, Investor Relations, Textron1: Hey, good morning everyone. And Scott, congrats on your next chapter. I guess over the years there’s always been discussions and conversations with you about the broader Textron portfolio and if it should all belong together or if there are other ways to unlock shareholder value. At this point all reporting segments are fairly stable, the balance sheet is very strong and the company generates solid free cash flow. I wanted to check with you to see if this management change also signals a reevaluation of the portfolio once again and how you think about it now?

Scott Donnelly, Chairman and CEO, Textron: Well, I don’t know that we would say that the change is drive that. I do think we are always looking at the portfolio. I think your point, we don’t have a burning platform, but would we look at either disposing or acquiring? Of course, we would. So that’s a process that has been ongoing for some time.

Obviously, we just did the dispositions around the powersports business earlier this year. That was something we thought we really needed to do and wanted to do to help position the company going forward. But we continue to look at other opportunities, and I expect we’ll continue to do that regardless of the leadership change.

Sheila Kahyaoglu, Analyst, Jefferies: Great. Thanks, Scott.

Conference Operator: Sure. Your next question comes from the line of Doug Harned from Bernstein. Your line is open.

Scott Hegstrom, Investor Relations, Textron2: Good morning. Thank you. If you look at the mix of deliveries across business jets, it’s been pretty stable over the last two years. I mean, would have expected more of a shift toward the latitude and longitude, although that might have been an incorrect assumption. Are you seeing demand shifts across your portfolio?

Is that and is that is the mix in there constrained more by where demand is or where your capacity is?

Scott Donnelly, Chairman and CEO, Textron: Look, it is right now probably more of a capacity issue. I would say in terms of the end market demand, it has been steady, right? The demand or whether it’s a longitude or latitude, whatever has been pretty stable. These things are often influenced by new products. So I would say, for instance, when we launched the new CG4 Gen two, we saw a very strong spike in order activity, which kind of puts that lead time well out there because people are pretty excited in that piece of the market about that product.

And we’ve seen the same things with things like the CJ3 Gen2s, certainly the Ascend. So there’s I would say the end market is stable. Demand is pretty strong across all the pieces of the product portfolio. Usually, you see some of these spikes of of order activity demand that can be affected by the launch of new product, of which we’ve had quite a bit.

Scott Hegstrom, Investor Relations, Textron2: Yeah. And and then when you look, you’ve talked a little bit today about the strength of the demand environment. But if you look back to the beginning of the year and then where you are today, how would you characterize demand mix in terms of corporate versus high net worth individuals? Have you seen any shifts there? Because obviously there’s been a lot of it’s been a very dynamic sort of economic outlook over the last nine months.

Scott Donnelly, Chairman and CEO, Textron: Yes. It’s actually pretty remarkable despite all of the noise of which there’s plenty for sure. We’re not seeing it impact that market. We haven’t seen any piece or segment or interest that has changed because of what’s going on. And I think part of that is the fact that you’re out there you know, whether it’s eighteen months or or two years, you know, people are kinda looking beyond what current noise is is in the marketplace because they’re not gonna take delivery of that new aircraft for eighteen months or so.

So I think it’s had a little bit of a muting effect on that. But yes, remarkably, all of the noise that’s going around, it’s the demand is stable.

Scott Hegstrom, Investor Relations, Textron2: Very good. Thank you.

Conference Operator: Ladies and gentlemen, this concludes the Textron third quarter twenty twenty five earnings call. Thank you for joining us today. You may now disconnect.

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