Textron Inc. Q3 FY2025 earnings call

• Leadership Transition: Lisa Atherton was elected as new President and CEO effective January, with Scott Donnelly transitioning to Executive Chair. Lisa has extensive experience in the company, including roles at Textron Systems and Bell.
• Aviation Segment: Strong growth in aerospace and defense. Textron Aviation had higher segment revenues and profit, with 42 jets and 39 commercial turboprops delivered. Aftermarket revenue grew 5%. Aviation backlog was $7.7 billion. Certifications and debuts of various aircraft models, partnership with Leonardo for Beechcraft M-346N, and Starlink connectivity implementation on aircraft.
• Bell Segment: Increased revenues driven by higher military volume (MV-75 program ramp) and strong commercial demand. Bell exceeded 90% engineering release milestone for MV-75, with fabrication and assembly work ongoing.
• Systems Segment: Revenues up due to new contract awards, leading to a $1 billion increase in backlog. Included ATAC awards, contract for U.S. Army mobile strike force vehicles, and completion of XM204 anti-vehicle terrain shaping systems delivery.
• Industrial Segment: Lower revenues due to divestiture of Powersports business

Textron Aviation: Revenues were $1.5 billion, up 10% or $138 million from the third quarter of 2024, contributing approximately 41.67% to total revenue. Segment profit was $179 million, up 40% or $51 million from a year ago.

Bell: Revenues were $1 billion, up 10% or $97 million from the third quarter of 2024, accounting for approximately 27.78% of total revenue. Segment profit was $92 million, down $6 million from last year's third quarter.

Textron Systems: Revenues were $307 million, up 2% or $6 million from last year's third quarter, making up approximately 8.53% of total revenue. Segment profit was $52 million, up $13 million compared with the third quarter of 2024.

Industrial: Revenues were $761 million, down $79 million from last year's third quarter, representing approximately 21.14% of total revenue. Segment profit was $31 million, down $1 million from the third quarter of 2024.

Textron eAviation: Revenues were $5 million in the third quarter of 2025 as compared to $6 million in last year's third quarter. Segment loss was $15 million as compared with a segment loss of $18 million in the third quarter of 2024.

Finance: Revenues were $26 million and profit was $18 million in the third quarter of 2025 as compared to segment revenues of $12 million and profit of $5 million in the third quarter of $2024

• Reiterates expected full year adjusted earnings per share to be in the range of $6 to $6.20.
• Maintains expected full year manufacturing cash flow before pension contributions to be in the range of $900 million to $1 billion

• Supply chain issues still exist with some critical suppliers struggling, impacting production efficiencies and flow

Q: On the MV-75, there was an announcement by the Army regarding accelerating the fielding of Version 2. Just how that would impact any the cost profile? Or does it change anything?

A: It won't change anything in the near term. The program's strategy was to start with a basic aircraft and use MOSA architecture to build out variants. The focus is on accelerating to get the first prototype aircraft going, and the MOSA architecture enables future capabilities without affecting current basic aircraft work Q: 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 biz jet market?

A: It's really across the whole portfolio. Strong retail demand, end market industry remains robust. There was a lot of certification activity in the quarter, and the market is strong with the product portfolio in a good place Q: Can you provide additional color on like where -- what's the update on the MV-75 program? You've completed 215 flight hours. I think you're scheduled to deliver 6 test articles over the next 1.5 years. What happens from there with the Army? And how do we think about a contract being signed on?

A: The current program is mostly cost-plus development with some fixed price elements. The discussions around acceleration are bringing forward the LRIP. The program covers development, LUT as fixed price, and LRIP as fixed price. The risk of bringing LRIP in is minimal due to ongoing component building and prototype work Q: What is the long-term margin target that you are aiming for? And what are the main levers to get there? Is it volume, pricing or more of mix?

A: Generally, across product lines, good gross margins. The biggest lever is volume, with investments in products to have high demand and good volume, along with solid pricing Q: Do you think long lead times are holding back new orders? And if production ramps, could that actually drive bookings higher?

A: There is some connection between lead times and orders. Market demand remains strong and has been steady. Expect incremental volume in 2026 as manufacturing ramps Q: On the retirement or move to Executive Chairman. You're not retired yet. Work to do. On 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 $6.1 billion rev placeholder within the forecast?

A: There are still supply chain issues with some critical suppliers struggling, impacting production efficiencies. But overall, improvements are seen, and the team feels good about the path to reach the $6.1 billion Q: On Systems, how is the unmanned portfolio doing when you look across the -- you've got unmanned land system stuff and Shadow and Aerosonde and some other stuff. We've seen such kind of surging demand for unmanned stuff. Just curious how that's going for you guys? And do you have anything in the pipeline that you're working on developing to kind of expand in that market?

A: The Aerosonde program is going well. FTUAS didn't happen as envisioned, but direct sales to war fighters and international opportunities exist. The Nuuva 300 unmanned cargo aircraft is in flight test, and there are new developments in high altitude long-duration surveillance products for the Systems business Q: 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?

A: The change isn't driven by portfolio reevaluation. The company is always looking at the portfolio, considering disposing or acquiring, and the Powersports business was disposed of earlier this year with other opportunities still being evaluated Q: If you look at the mix of deliveries across business jets, it's been pretty stable over the last 2 years. I mean I 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?

A: Right now, more of a capacity issue. End market demand is steady. Demand for different models is influenced by new product launches, and there have been spikes in order activity with new product launches Q: 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 shift there? Because obviously, there's been a very dynamic sort of economic outlook over the last 9 months.

A: The demand mix hasn't been impacted by economic noise. Demand is stable across different segments as people look beyond current market noise when taking delivery of new aircraft in 18 months or so