UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 29, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ______ to ______.
Commission File Number 1-5480
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip code) | |||||||
(401 ) 421-2800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol (s) | Name of each exchange on which registered | ||||||
New York Stock Exchange ( | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
| þ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
| Smaller reporting company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of April 11, 2025, there were 180,538,799 shares of common stock outstanding.
TEXTRON INC.
Index to Form 10-Q
For the Quarterly Period Ended March 29, 2025
| Page | ||||||||
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TEXTRON INC.
Consolidated Statements of Operations (Unaudited)
| Three Months Ended | ||||||||
| (In millions, except per share amounts) | March 29, 2025 | March 30, 2024 | ||||||
| Revenues | ||||||||
| Manufacturing product revenues | $ | $ | ||||||
| Manufacturing service revenues | ||||||||
| Finance revenues | ||||||||
| Total revenues | ||||||||
| Costs, expenses and other | ||||||||
| Cost of products sold | ||||||||
| Cost of services sold | ||||||||
| Research and development costs | ||||||||
| Selling and administrative expense | ||||||||
| Interest expense, net | ||||||||
| Special charges | ||||||||
| Non-service components of pension and postretirement income, net | ( | ( | ||||||
| Total costs, expenses and other | ||||||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Earnings per share | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
See Notes to the Consolidated Financial Statements.
3
TEXTRON INC.
Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Net income | $ | $ | ||||||
| Other comprehensive income (loss), net of tax | ||||||||
| Pension and postretirement benefits adjustments, net of reclassifications | ||||||||
| Foreign currency translation adjustments | ( | |||||||
| Deferred losses on hedge contracts, net of reclassifications | ( | ( | ||||||
| Other comprehensive income (loss) | ( | |||||||
| Comprehensive income | $ | $ | ||||||
See Notes to the Consolidated Financial Statements.
4
TEXTRON INC.
Consolidated Balance Sheets (Unaudited)
| (Dollars in millions) | March 29, 2025 | December 28, 2024 | ||||||
| Assets | ||||||||
| Manufacturing group | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
Property, plant and equipment, less accumulated depreciation and amortization of $ | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total Manufacturing group assets | ||||||||
| Finance group | ||||||||
| Cash and equivalents | ||||||||
| Finance receivables, net | ||||||||
| Other assets | ||||||||
| Total Finance group assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and shareholders’ equity | ||||||||
| Liabilities | ||||||||
| Manufacturing group | ||||||||
| Current portion of long-term debt | $ | $ | ||||||
| Accounts payable | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Other liabilities | ||||||||
| Long-term debt | ||||||||
| Total Manufacturing group liabilities | ||||||||
| Finance group | ||||||||
| Other liabilities | ||||||||
| Debt | ||||||||
| Total Finance group liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity | ||||||||
| Common stock | ||||||||
| Capital surplus | ||||||||
| Treasury stock | ( | ( | ||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| Common shares outstanding (in thousands) | ||||||||
See Notes to the Consolidated Financial Statements.
5
TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 29, 2025 and March 30, 2024, respectively
| Consolidated | ||||||||
| (In millions) | 2025 | 2024 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Non-cash items: | ||||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ( | ( | ||||||
| Other, net | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | ( | |||||||
| Inventories | ( | ( | ||||||
| Other assets | ( | |||||||
| Accounts payable | ||||||||
| Other liabilities | ( | ( | ||||||
| Income taxes, net | ||||||||
| Pension, net | ( | ( | ||||||
| Captive finance receivables, net | ( | |||||||
| Other operating activities, net | ||||||||
| Net cash used in operating activities | ( | ( | ||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures | ( | ( | ||||||
| Net proceeds from corporate-owned life insurance policies | ||||||||
| Proceeds from sale of property, plant and equipment | ||||||||
| Finance receivables repaid | ||||||||
| Finance receivables originated | ( | |||||||
| Other investing activities, net | ||||||||
| Net cash used in investing activities | ( | ( | ||||||
| Cash flows from financing activities | ||||||||
| Net proceeds from long-term debt | ||||||||
| Principal payments on long-term debt and nonrecourse debt | ( | ( | ||||||
| Purchases of Textron common stock | ( | ( | ||||||
| Proceeds from options exercised | ||||||||
| Dividends paid | ( | ( | ||||||
| Other financing activities, net | ( | ( | ||||||
| Net cash used in financing activities | ( | ( | ||||||
| Effect of exchange rate changes on cash and equivalents | ( | |||||||
| Net decrease in cash and equivalents | ( | ( | ||||||
| Cash and equivalents at beginning of period | ||||||||
| Cash and equivalents at end of period | $ | $ | ||||||
See Notes to the Consolidated Financial Statements.
6
TEXTRON INC.
Consolidated Statements of Cash Flows (Unaudited) (Continued)
For the Three Months Ended March 29, 2025 and March 30, 2024, respectively
| Manufacturing Group | Finance Group | |||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
| Non-cash items: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Deferred income taxes | ( | ( | ||||||||||||
| Other, net | ( | ( | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable, net | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Other assets | ( | |||||||||||||
| Accounts payable | ||||||||||||||
| Other liabilities | ( | ( | ( | ( | ||||||||||
| Income taxes, net | ||||||||||||||
| Pension, net | ( | ( | ||||||||||||
| Other operating activities, net | ||||||||||||||
| Net cash provided by (used in) operating activities | ( | ( | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Net proceeds from corporate-owned life insurance policies | ||||||||||||||
| Proceeds from sale of property, plant and equipment | ||||||||||||||
| Finance receivables repaid | ||||||||||||||
| Finance receivables originated | ( | ( | ||||||||||||
| Other investing activities, net | ||||||||||||||
| Net cash provided by (used in) investing activities | ( | ( | ( | |||||||||||
| Cash flows from financing activities | ||||||||||||||
| Net proceeds from long-term debt | ||||||||||||||
| Principal payments on long-term debt and nonrecourse debt | ( | ( | ( | ( | ||||||||||
| Purchases of Textron common stock | ( | ( | ||||||||||||
| Proceeds from options exercised | ||||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Other financing activities, net | ( | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ( | ( | ||||||||||
| Effect of exchange rate changes on cash and equivalents | ( | |||||||||||||
| Net increase (decrease) in cash and equivalents | ( | ( | ( | |||||||||||
| Cash and equivalents at beginning of period | ||||||||||||||
| Cash and equivalents at end of period | $ | $ | $ | $ | ||||||||||
See Notes to the Consolidated Financial Statements.
7
TEXTRON INC.
Notes to the Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 28, 2024. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.
Use of Estimates
We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.
Contract Estimates
For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.
Note 2. Accounts Receivable and Finance Receivables
Accounts Receivable
Accounts receivable is composed of the following:
| (In millions) | March 29, 2025 | December 28, 2024 | ||||||
| Commercial | $ | $ | ||||||
| U.S. Government contracts | ||||||||
| Allowance for credit losses | ( | ( | ||||||
| Total accounts receivable, net | $ | $ | ||||||
8
Finance Receivables
Finance receivables are presented in the following table:
| (In millions) | March 29, 2025 | December 28, 2024 | ||||||
| Finance receivables | $ | $ | ||||||
| Allowance for credit losses | ( | ( | ||||||
| Total finance receivables, net | $ | $ | ||||||
Finance Receivable Portfolio Quality
We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors. Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.
We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.
We measure delinquency based on the contractual payment terms of our finance receivables. In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.
Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:
| (Dollars in millions) | March 29, 2025 | December 28, 2024 | ||||||
| Performing | $ | $ | ||||||
| Nonaccrual | ||||||||
| Nonaccrual as a percentage of finance receivables | ||||||||
| Current and less than 31 days past due | $ | $ | ||||||
| 31-60 days past due | ||||||||
| 60+ days contractual delinquency as a percentage of finance receivables | ||||||||
At March 29, 2025, 40 % of our performing finance receivables were originated since the beginning of 2023 and 25 % were originated from 2020 to 2022 with the remainder prior to 2020. For finance receivables categorized as nonaccrual, 100 % were originated prior to 2020.
On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. Our impaired finance receivables were insignificant at March 29, 2025 and December 28, 2024.
9
Note 3. Inventories
Inventories are composed of the following:
| (In millions) | March 29, 2025 | December 28, 2024 | ||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials and components | ||||||||
| Total inventories | $ | $ | ||||||
Note 4. Accounts Payable and Warranty Liability
Accounts Payable
Supplier Financing Arrangement
We have a financing arrangement with one of our suppliers for a maximum amount of $200 million that extends payment terms for up to 190 days from the receipt of goods and provides for the supplier to be paid by a financial institution earlier than maturity. This financing arrangement expires in April 2027. At March 29, 2025 and December 28, 2024, the amount due under the supplier financing arrangement was $91 million and $50 million, respectively.
Warranty Liability
Changes in our current and non-current warranty liability are as follows:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Beginning of period | $ | $ | ||||||
| Provision | ||||||||
| Settlements | ( | ( | ||||||
| Adjustments* | ( | ( | ||||||
| End of period | $ | $ | ||||||
* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.
Note 5. Leases
We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our leases have remaining lease terms up to 24 years, which include options to extend the lease term for periods up to 20 years when it is reasonably certain the option will be exercised.
Operating lease cost totaled $18 7 million and $25 million in the first quarter of 2025 and 2024, respectively, reflecting new or extended leases. Finance lease, variable and short-term lease costs were not significant.
Balance sheet and other information related to our leases is as follows:
| (Dollars in millions) | March 29, 2025 | December 28, 2024 | ||||||
| Operating leases: | ||||||||
| $ | $ | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | ||||||||
| Finance leases: | ||||||||
of $ | $ | $ | ||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | ||||||||
10
Note 6. Debt
Note 7. Derivative Instruments and Fair Value Measurements
We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.
Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At March 29, 2025 and December 28, 2024, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $683 million and $464 million, respectively. At March 29, 2025, the fair value amounts of our foreign currency exchange contracts were a $6 million asset and a $16 million liability. At December 28, 2024, the fair value amount of our foreign currency exchange contracts were a $5 million asset and a $19 million liability.
Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. The fair value of our interest rate swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2. The fair value of our outstanding interest rate swap agreements was a $4 million and an $8 million asset at March 29, 2025 and December 28, 2024, respectively.
At March 29, 2025 and December 28, 2024, our Finance group had interest rate swap agreements related to our Floating Rate Junior Subordinated Notes for an aggregate notional amount of $264 5.20 30 5.10
11
Assets and Liabilities Not Recorded at Fair Value
The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:
| March 29, 2025 | December 28, 2024 | |||||||||||||
| Carrying | Estimated | Carrying | Estimated | |||||||||||
| (In millions) | Value | Fair Value | Value | Fair Value | ||||||||||
| Manufacturing group | ||||||||||||||
| Debt, excluding leases | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| Finance group | ||||||||||||||
| Finance receivables, excluding leases | ||||||||||||||
| Debt | ( | ( | ( | ( | ||||||||||
Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.
Note 8. Shareholders’ Equity
A reconciliation of Shareholders’ equity is presented below:
| (In millions) | Common Stock | Capital Surplus | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders' Equity | ||||||||||||||
| Three months ended March 29, 2025 | ||||||||||||||||||||
| Beginning of period | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||
| Share-based compensation activity | — | — | — | — | ||||||||||||||||
| Dividends declared | — | — | — | ( | — | ( | ||||||||||||||
| Purchases of common stock, including excise tax* | — | — | ( | — | — | ( | ||||||||||||||
| End of period | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Three months ended March 30, 2024 | ||||||||||||||||||||
| Beginning of period | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ||||||||||||||
| Share-based compensation activity | — | — | — | |||||||||||||||||
| Dividends declared | — | — | — | ( | — | ( | ||||||||||||||
| Purchases of common stock, including excise tax* | — | — | ( | — | — | ( | ||||||||||||||
| End of period | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
*Includes amounts accrued for excise tax imposed on common share repurchases that totaled $2
Dividends per share of common stock were $0.02
12
Earnings Per Share
We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.
The weighted-average shares outstanding for basic and diluted EPS are as follows:
| Three Months Ended | ||||||||
| (In thousands) | March 29, 2025 | March 30, 2024 | ||||||
| Basic weighted-average shares outstanding | ||||||||
| Dilutive effect of stock options | ||||||||
| Diluted weighted-average shares outstanding | ||||||||
In the first quarter of 2025 and 2024, stock options to purchase 2.1 million and 1.0 million shares, respectively, of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.
Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive loss are presented below:
| (In millions) | Pension and Postretirement Benefits Adjustments | Foreign Currency Translation Adjustments | Deferred Gains (Losses) on Hedge Contracts | Accumulated Other Comprehensive Loss | ||||||||||
| Balance at December 28, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| Other comprehensive income before reclassifications | ( | |||||||||||||
| Reclassified from Accumulated other comprehensive loss | ||||||||||||||
| Balance at March 29, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| Balance at December 30, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||
| Other comprehensive loss before reclassifications | ( | ( | ( | |||||||||||
| Reclassified from Accumulated other comprehensive loss | ||||||||||||||
| Balance at March 30, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
The before and after-tax components of Other comprehensive income (loss) are presented below:
| March 29, 2025 | March 30, 2024 | |||||||||||||||||||
| (In millions) | Pre-Tax Amount | Tax (Expense) Benefit | After-tax Amount | Pre-Tax Amount | Tax (Expense) Benefit | After-tax Amount | ||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| Pension and postretirement benefits adjustments: | ||||||||||||||||||||
| Amortization of net actuarial gain* | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||
| Amortization of prior service cost* | ||||||||||||||||||||
| Pension and postretirement benefits adjustments, net | ||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ||||||||||||||||||
| Deferred losses on hedge contracts: | ||||||||||||||||||||
| Current deferrals | ( | ( | ( | ( | ||||||||||||||||
| Reclassification adjustments | ( | ( | ||||||||||||||||||
| Deferred losses on hedge contracts, net | ( | ( | ( | ( | ||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | $ | ( | ||||||||||||
13
Note 9. Segment Financial Information
We operate in, and report financial information for, the following six
Our revenues and expenses by segment are provided below:
| (In millions) | Textron Aviation | Bell | Textron Systems | Industrial | Textron eAviation | Finance | Total | ||||||||||||||||
| Three months ended March 29, 2025 | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Research and development costs | |||||||||||||||||||||||
| Selling and administrative expense | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Segment profit (loss) | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||
| Three months ended March 30, 2024 | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Research and development costs | |||||||||||||||||||||||
| Selling and administrative expense | ( | ||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Segment profit (loss) | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||
A reconciliation of segment profit to income before income taxes, is presented below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Segment profit | $ | $ | ||||||
| Unallocated amounts: | ||||||||
| Corporate expenses and other, net | ( | ( | ||||||
| Interest expense, net for Manufacturing group | ( | ( | ||||||
| LIFO inventory provision | ( | ( | ||||||
| Intangible asset amortization | ( | ( | ||||||
| Special charges | ( | |||||||
| Non-service components of pension and postretirement income, net | ||||||||
| Income before income taxes | $ | $ | ||||||
14
Other information by segment is provided below:
| Capital Expenditures | Depreciation and Amortization | |||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | March 29, 2025 | March 30, 2024 | ||||||||||
| Textron Aviation | $ | $ | $ | $ | ||||||||||
| Bell | ||||||||||||||
| Textron Systems | ||||||||||||||
| Industrial | ||||||||||||||
| Textron eAviation | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
Our assets by segment are summarized below:
| (In millions) | March 29, 2025 | December 28, 2024 | ||||||
| Textron Aviation | $ | $ | ||||||
| Bell | ||||||||
| Textron Systems | ||||||||
| Industrial | ||||||||
| Textron eAviation | ||||||||
| Finance | ||||||||
| Corporate | ||||||||
| Total assets | $ | $ | ||||||
Note 10. Revenues
Disaggregation of Revenues
Our revenues disaggregated by major product type are presented below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Aircraft | $ | $ | ||||||
| Aftermarket parts and services | ||||||||
| Textron Aviation | $ | $ | ||||||
| Military aircraft and support programs | ||||||||
| Commercial helicopters, parts and services | ||||||||
| Bell | $ | $ | ||||||
| Textron Systems | $ | $ | ||||||
| Fuel systems and functional components | ||||||||
| Specialized vehicles | ||||||||
| Industrial | $ | $ | ||||||
| Textron eAviation | $ | $ | ||||||
| Finance | $ | $ | ||||||
| Total revenues | $ | $ | ||||||
15
Our revenues for our segments by customer type and geographic location are presented below:
| (In millions) | Textron Aviation | Bell | Textron Systems | Industrial | Textron eAviation | Finance | Total | ||||||||||||||||
| Three months ended March 29, 2025 | |||||||||||||||||||||||
| Customer type: | |||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| U.S. Government | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Geographic location: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Europe | |||||||||||||||||||||||
| Other international | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Three months ended March 30, 2024 | |||||||||||||||||||||||
| Customer type: | |||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| U.S. Government | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Geographic location: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Europe | |||||||||||||||||||||||
| Other international | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Remaining Performance Obligations
Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At March 29, 2025, we had $17.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 78 % through 2026, an additional 18 % through 2028, and the balance thereafter.
Contract Assets and Liabilities
Note 11. Share-Based Compensation
Under our share-based compensation plan, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards. Compensation expense included in net income for our share-based compensation plans is as follows:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Compensation expense | $ | $ | ||||||
| Income tax benefit | ( | ( | ||||||
| Total compensation expense included in net income | $ | $ | ||||||
Compensation expense included stock option expense of $13 million and $15 million in the first quarter of 2025 and 2024, respectively. We typically grant stock appreciation rights to selected non-U.S. employees. At March 29, 2025, outstanding stock appreciation rights totaled 446,753 with a weighted-average exercise price of $66.21 and a weighted-average remaining contractual life of 6.6 years; these units had an intrinsic value of $4 million, compared with $14 million at March 30, 2024.
16
Stock Options
Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. Stock option compensation cost is calculated under the fair value approach using the Black-Scholes option-pricing model to determine the fair value of options granted on the date of grant. The expected volatility used in this model is based on historical volatilities and implied volatilities from traded options on our common stock. The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.
We grant options annually on the first day of March. The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:
| March 1, 2025 | March 1, 2024 | |||||||
| Fair value of options at grant date | $ | $ | ||||||
| Dividend yield | ||||||||
| Expected volatility | ||||||||
| Risk-free interest rate | ||||||||
| Expected term (in years) | ||||||||
The stock option activity during the first quarter of 2025 is provided below:
| (Options in thousands) | Number of Options | Weighted- Average Exercise Price | ||||||
| Outstanding at December 28, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ( | ||||||
| Forfeited or expired | ( | ( | ||||||
| Outstanding at March 29, 2025 | $ | |||||||
| Exercisable at March 29, 2025 | $ | |||||||
At March 29, 2025, our outstanding options had an aggregate intrinsic value of $87 million and a weighted-average remaining contractual life of 6.0 years. Our exercisable options had an aggregate intrinsic value of $87 million and a weighted-average remaining contractual life of 4.8 years at March 29, 2025. The total intrinsic value of options exercised during the first quarter of 2025 and 2024 was $4 million and $60 million, respectively.
Restricted Stock Units
We issue restricted stock units that include the right to receive dividend equivalents and are settled in either cash or stock. Grants of restricted stock units vest in full on the third anniversary of the grant date. Compensation cost is determined using the fair value of these units based on the trading price of our common stock. For units payable in stock, we use the trading price on the grant date, while units payable in cash are remeasured using the price at each reporting period date.
The activity for restricted stock units during the first quarter of 2025 is provided below:
| Units Payable in Stock | Units Payable in Cash | ||||||||||||||||
| (Shares/Units in thousands) | Number of Shares | Weighted- Average Grant Date Fair Value | Number of Units | Weighted- Average Grant Date Fair Value | |||||||||||||
| Outstanding at December 28, 2024, nonvested | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Vested | ( | ( | ( | ( | |||||||||||||
| Forfeited | ( | ( | |||||||||||||||
| Outstanding at March 29, 2025, nonvested | $ | $ | |||||||||||||||
17
The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Fair value of awards vested | $ | $ | ||||||
| Cash paid | ||||||||
Performance Share Units
The activity for our performance share units during the first quarter of 2025 is as follows:
| (Units in thousands) | Number of Units | Weighted- Average Grant Date Fair Value | ||||||
| Outstanding at December 28, 2024, nonvested | $ | |||||||
| Granted | ||||||||
| Outstanding at March 29, 2025, nonvested | $ | |||||||
Cash paid under these awards totaled $16 million and $35 million in the first quarter of 2025 and 2024, respectively.
Note 12. Retirement Plans
We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit (income) cost for these plans are as follows:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Pension Benefits | ||||||||
| Service cost | $ | $ | ||||||
| Interest cost | ||||||||
| Expected return on plan assets | ( | ( | ||||||
| Amortization of net actuarial loss | ||||||||
| Amortization of prior service cost | ||||||||
| Net periodic benefit income* | $ | ( | $ | ( | ||||
| Postretirement Benefits Other Than Pensions | ||||||||
| Interest cost | $ | $ | ||||||
| Amortization of net actuarial gain | ( | ( | ||||||
| Net periodic benefit (income) cost | $ | $ | ||||||
Note 13. Special Charges
In the first quarter of 2024, we recognized special charges of $14 million related to a 2023 restructuring plan. There were no special charges recorded in the first quarter of 2025.
Our restructuring reserve activity is summarized below:
| (In millions) | Severance Costs | Contract Terminations and Other | Total | ||||||||
| Balance at December 28, 2024 | $ | $ | $ | ||||||||
| Cash paid | ( | ( | ( | ||||||||
| Foreign currency translation | |||||||||||
| Balance at March 29, 2025 | $ | $ | $ | ||||||||
18
Note 14. Income Taxes
Note 15. Commitments and Contingencies
We are subject to actual and threatened legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; disputes with suppliers, production partners or other third parties; product liability; patent and trademark infringement; employment disputes; and environmental, health and safety matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.
Note 16. Subsequent Event
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Environment
Recent changes to the United States trade policy have resulted in new or higher tariffs on goods imported from numerous countries, and some countries have imposed retaliatory tariffs on imports from the United States. We are principally a North American manufacturer and 71% of our 2024 revenues were generated in the U.S. Our aircraft products and components manufactured in Canada and Mexico are largely exempt from newly imposed tariffs on Canadian and Mexican imports as USMCA (United States-Mexico-Canada Agreement) compliant. In addition, our operations outside of North America primarily source materials and components from outside of North America and manufacture products for non-U.S. customers. Many of our businesses also source materials and components from outside of North America. These businesses have been – or could be in the future – impacted by these newly imposed U.S. tariffs. To date, we have not experienced a material adverse impact from these tariffs. We will continue to evaluate the potential impact of these tariffs and any further developments or changes in global tariff policies on our business and financial position.
Consolidated Results of Operations
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues | $ | 3,306 | $ | 3,135 | 5% | ||||||
| Cost of sales | 2,672 | 2,470 | 8% | ||||||||
| Gross margin as a % of Manufacturing revenues | 18.8% | 20.8% | |||||||||
| Research and development costs | $ | 132 | $ | 144 | (8)% | ||||||
| Selling and administrative expense | 298 | 316 | (6)% | ||||||||
| Interest expense, net | 29 | 20 | 45% | ||||||||
| Special charges | — | 14 | (100)% | ||||||||
| Non-service components of pension and postretirement income, net | 66 | 66 | —% | ||||||||
An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 21 to 24.
Revenues
Revenues increased $171 million, 5%, in the first quarter of 2025, compared with the first quarter of 2024. The revenue increase primarily included the following factors:
•Higher Bell revenues of $256 million, due to higher military volume of $154 million, primarily for the U.S. Army's Future Long Range Assault Aircraft (FLRAA) program and for military sustainment programs, and higher commercial revenues of $102 million.
•Higher Textron Aviation revenues of $24 million, largely reflecting higher aftermarket parts and services revenues of $27 million.
•Lower Industrial revenues of $100 million, with $62 million at Textron Specialized Vehicles, reflecting lower volume and mix, primarily in the golf products, and $38 million at Kautex, largely due to lower volume.
•Lower Textron Systems revenues of $10 million, primarily due to lower volume.
Manufacturing group revenues increased $170 million in the first quarter of 2025, compared with the first quarter of 2024, reflecting a $339 million increase in product revenues, partially offset by a $169 million decrease in service revenues. The decrease in service revenues was largely related to the classification of revenues for the FLRAA program, which was service-related prior to the transition of the program to the Engineering and Manufacturing Development phase in the third quarter of 2024 when it became product-related.
Cost of Sales
Cost of sales includes cost of products and services sold for the Manufacturing group. Cost of sales increased $202 million, 8%, in the first quarter of 2025, compared with the first quarter of 2024, largely due to higher net volume and mix of $122 million and a $59 million impact from inflation and higher LIFO inventory provision. Gross margin as a percentage of Manufacturing revenues decreased 200 basis points in the first quarter of 2025, primarily due to lower margin at the Bell segment.
Research and Development Costs
Research and development costs decreased $12 million, 8%, in the first quarter of 2025, compared with the first quarter of 2024, largely reflecting a $10 million decrease at the Textron Systems segment related to timing of project expenditures.
20
Selling and Administrative Expense
Selling and administrative expense decreased $18 million, 6%, in the first quarter of 2025, compared with the first quarter of 2024, primarily due to lower share-based compensation expense, partially offset by a 2024 recovery of amounts that were previously written off related to one customer relationship in the Finance segment.
Interest Expense, Net
Interest expense, net includes interest expense for both the Finance and Manufacturing borrowing groups, with interest on intercompany borrowings eliminated, and interest income earned on cash and equivalents for the Manufacturing borrowing group. In the first quarter of 2025, interest expense, net increased $9 million, 45%, compared with the first quarter of 2024, reflecting lower interest income. Gross interest expense totaled $38 million in both the first quarter of 2025 and 2024.
Special Charges
Special charges include restructuring activities as discussed in Note 13 to the Consolidated Financial Statements on page 18.
Income Taxes
Our effective tax rate for the first quarter of 2025 and 2024 was 14.1% and 15.2%, respectively. In the first quarter of 2025, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income. In the first quarter of 2024, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the recognition of excess tax benefits related to share-based compensation, the favorable impact of research and development credits, and tax deductions for foreign-derived intangible income.
Backlog
Our backlog is summarized below:
| (In millions) | March 29, 2025 | December 28, 2024 | ||||||
| Textron Aviation | $ | 7,868 | $ | 7,845 | ||||
| Bell | 7,052 | 7,469 | ||||||
| Textron Systems | 2,322 | 2,594 | ||||||
| Total backlog | $ | 17,242 | $ | 17,908 | ||||
Segment Analysis
We operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes the non-service components of pension and postretirement income, net; LIFO inventory provision; intangible asset amortization; interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The operating costs used to derive segment profit for our manufacturing segments includes cost of sales, research and development costs and selling and administrative expense. The cost of sales discussed in this Segment Analysis section excludes the LIFO inventory provision and intangible asset amortization discussed above that are reported within Cost of products sold or Cost of services sold on the Consolidated Statement of Operations. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.
In our discussion of comparative results for the Manufacturing group, material changes in revenues and segment profit for our commercial businesses typically are expressed in terms of product line revenues, including volume and mix and pricing; foreign exchange; acquisitions and dispositions; inflation; manufacturing efficiency; and changes in research and development costs and selling and administrative expense. For revenues, volume and mix represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions. Inflation represents higher material, wages, benefits, pension service cost or other costs. Manufacturing efficiency includes changes in material, labor and overhead variances to standards, typically due to scrap rates, labor efficiency or inefficiencies, facility usage and other manufacturing productivity inputs.
Approximately 25% of our 2024 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program. For our segments that contract with the U.S. Government, material changes in revenues related to these contracts are expressed in terms of volume. Changes in segment profit for these contracts are typically expressed in terms of volume and mix and contract performance, which includes cumulative catch-up adjustments associated with
21
a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.
Textron Aviation
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues: | |||||||||||
| Aircraft | $ | 729 | $ | 732 | —% | ||||||
| Aftermarket parts and services | 483 | 456 | 6% | ||||||||
| Total revenues | 1,212 | 1,188 | 2% | ||||||||
| Cost of sales | 929 | 891 | 4% | ||||||||
| Research and development costs | 57 | 52 | 10% | ||||||||
| Selling and administrative expense | 99 | 102 | (3)% | ||||||||
| Segment profit | $ | 127 | $ | 143 | (11)% | ||||||
| Profit margin | 10.5% | 12.0% | |||||||||
Textron Aviation’s revenues increased $24 million, 2%, in the first quarter of 2025, compared with the first quarter of 2024, largely reflecting higher aftermarket parts and services revenues of $27 million. Aircraft revenues were relatively unchanged reflecting the mix of aircraft sold, which included lower Citation jet volume and higher defense and commercial turboprop volume, and higher pricing. We delivered 31 Citation jets and 30 commercial turboprops in the first quarter of 2025, compared with 36 Citation jets and 20 commercial turboprops in the first quarter of 2024.
Textron Aviation’s cost of sales increased $38 million, 4%, in the first quarter of 2025, compared with the first quarter of 2024, largely reflecting inflation of $35 million, partially offset by lower net volume and mix discussed above.
Textron Aviation's segment profit decreased $16 million, 11%, in the first quarter of 2025, compared with the first quarter of 2024, largely reflecting lower net aircraft volume and mix, partially offset by higher aftermarket volume.
Bell
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues: | |||||||||||
| Military aircraft and support programs | $ | 634 | $ | 480 | 32% | ||||||
| Commercial helicopters, parts and services | 349 | 247 | 41% | ||||||||
| Total revenues | 983 | 727 | 35% | ||||||||
| Cost of sales | 803 | 565 | 42% | ||||||||
| Research and development costs | 39 | 39 | —% | ||||||||
| Selling and administrative expense | 51 | 43 | 19% | ||||||||
| Segment profit | $ | 90 | $ | 80 | 13% | ||||||
| Profit margin | 9.2% | 11.0% | |||||||||
Bell’s military and support programs revenues increased $154 million, 32%, in the first quarter of 2025, compared with the first quarter of 2024, primarily due to higher volume on the U.S. Army's FLRAA program and on military sustainment programs. Commercial helicopters, parts and services revenues increased $102 million, 41%, in the first quarter of 2025, compared with the first quarter of 2024, primarily due to higher volume and mix as we delivered 29 commercial helicopters in the first quarter of 2025, compared with 18 commercial helicopters in the first quarter of 2024.
Bell’s cost of sales increased $238 million, 42%, in the first quarter of 2025, compared with the first quarter of 2024, primarily due to higher volume and mix described above.
Bell’s segment profit increased $10 million, 13%, in the first quarter of 2025, compared with the first quarter of 2024, while its profit margin decreased 180 basis points, largely reflecting the impact of higher volume on lower margin FLRAA development activities and the mix of commercial helicopters, along with an $8 million increase in selling and administrative expense.
22
Textron Systems
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues | $ | 296 | $ | 306 | (3)% | ||||||
| Cost of sales | 219 | 222 | (1)% | ||||||||
| Research and development costs | 8 | 18 | (56)% | ||||||||
| Selling and administrative expense | 29 | 28 | 4% | ||||||||
| Segment profit | $ | 40 | $ | 38 | 5% | ||||||
| Profit margin | 13.5% | 12.4% | |||||||||
Textron Systems’ revenues decreased $10 million, 3%, in the first quarter of 2025, compared with the first quarter of 2024, largely due to lower volume, which included the impact of the cancellation of the Shadow program in 2024, partially offset by higher volume for the Ship-to-Shore Connector program.
Textron Systems’ research and development costs decreased $10 million, 56%, in the first quarter of 2025, compared with the first quarter of 2024, related to the timing of project expenditures.
Textron Systems’ segment profit increased $2 million, 5%, in the first quarter of 2025, compared with the first quarter of 2024, primarily due to the lower research and development costs, partially offset by lower volume.
Industrial
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues: | |||||||||||
| Kautex | $ | 450 | $ | 488 | (8)% | ||||||
| Textron Specialized Vehicles | 342 | 404 | (15)% | ||||||||
| Total revenues | 792 | 892 | (11)% | ||||||||
| Cost of sales | 678 | 758 | (11)% | ||||||||
| Research and development costs | 14 | 20 | (30)% | ||||||||
| Selling and administrative expense | 70 | 85 | (18)% | ||||||||
| Segment profit | $ | 30 | $ | 29 | 3% | ||||||
| Profit margin | 3.8% | 3.3% | |||||||||
Industrial segment revenues decreased $100 million, 11%, in the first quarter of 2025, compared with the first quarter of 2024, largely due to lower volume and mix. Textron Specialized Vehicles' revenues decreased $62 million, 15%, reflecting lower volume and mix, primarily in the golf products. Kautex revenues decreased $38 million, 8%, largely due to lower volume.
Industrial's cost of sales decreased $80 million, 11%, in the first quarter of 2025, compared with the first quarter of 2024, principally reflecting the impact of lower volume and mix described above.
Industrial's selling and administrative expense decreased $15 million, 18%, in the first quarter of 2025, compared with the first quarter of 2024, primarily reflecting lower compensation costs, which included the impact of headcount reductions from restructuring activities.
Segment profit for the Industrial segment was essentially unchanged in the first quarter of 2025, compared with the first quarter of 2024 as lower volume and mix was mostly offset by cost reductions resulting from restructuring activities.
23
Textron eAviation
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 29, 2025 | March 30, 2024 | % Change | ||||||||
| Revenues | $ | 7 | $ | 7 | —% | ||||||
| Cost of sales | 6 | 6 | —% | ||||||||
| Research and development costs | 14 | 15 | (7)% | ||||||||
| Selling and administrative expense | 4 | 4 | —% | ||||||||
| Segment loss | $ | (17) | $ | (18) | (6)% | ||||||
Textron eAviation segment revenues were unchanged and segment loss decreased $1 million in the first quarter of 2025, compared with the first quarter of 2024.
Finance
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Revenues | $ | 16 | $ | 15 | ||||
| Selling and administrative expense | 2 | (8) | ||||||
| Interest expense, net | 4 | 5 | ||||||
| Segment profit | $ | 10 | $ | 18 | ||||
Finance segment revenues increased $1 million and segment profit decreased $8 million in the first quarter of 2025, compared with the first quarter of 2024. Selling and administrative expense in the first quarter of 2024 included an $8 million recovery of amounts that were previously written off related to one customer relationship.
Liquidity and Capital Resources
Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.
Key information that is utilized in assessing our liquidity is summarized below:
| (Dollars in millions) | March 29, 2025 | December 28, 2024 | ||||||
| Manufacturing group | ||||||||
| Cash and equivalents | $ | 1,194 | $ | 1,386 | ||||
| Debt | 3,394 | 3,247 | ||||||
| Shareholders’ equity | 7,275 | 7,204 | ||||||
| Capital (debt plus shareholders’ equity) | 10,669 | 10,451 | ||||||
| Net debt (net of cash and equivalents) to capital | 23% | 21% | ||||||
| Debt to capital | 32% | 31% | ||||||
| Finance group | ||||||||
| Cash and equivalents | $ | 51 | $ | 55 | ||||
| Debt | 340 | 341 | ||||||
We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of the capacity to add further leverage. We expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility.
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Credit Facilities and Other Sources of Capital
Textron has a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At March 29, 2025 and December 28, 2024, there were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility.
We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities. On February 13, 2025, we issued $500 million of SEC-registered fixed-rate notes due in May 2035 with an annual interest rate of 5.50%. On March 3, 2025, we repaid our $350 million 3.875% Notes due in 2025.
Manufacturing Group Cash Flows
Cash flows for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Operating activities | $ | (114) | $ | (30) | ||||
| Investing activities | (10) | (60) | ||||||
| Financing activities | (75) | (635) | ||||||
In the first quarter of 2025, the net cash outflow from operating activities was $114 million, compared with a net cash outflow of $30 million in the first quarter of 2024. The $84 million increase in cash outflows was largely due to changes in working capital. We expect positive cash flows from operating activities for the full year.
Cash flows used in investing activities included $56 million and $66 million of capital expenditures in the first quarter of 2025 and 2024, respectively. In the first quarter of 2025, cash flows from investing activities also included $31 million of net proceeds from corporate-owned life insurance policies.
Cash flows used in financing activities in the first quarter of 2025 included $352 million of payments on long-term debt and $215 million of cash paid to repurchase an aggregate of 2.9 million shares of our common stock, largely offset by $495 million of net proceeds from the issuance of long-term debt. In the first quarter of 2024, cash flows used in financing activities included $352 million of payments on long-term debt and $317 million of cash paid to repurchase an aggregate of 3.6 million shares of our common stock.
Finance Group Cash Flows
Cash flows for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Operating activities | $ | 3 | $ | 1 | ||||
| Investing activities | (4) | 19 | ||||||
| Financing activities | (3) | (2) | ||||||
The Finance group’s cash flows from investing activities included collections on finance receivables totaling $29 million and $47 million in the first quarter of 2025 and 2024, respectively, and finance receivable originations of $33 million and $28 million, respectively.
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Consolidated Cash Flows
The consolidated cash flows after elimination of activity between the borrowing groups, are summarized below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Operating activities | $ | (124) | $ | (7) | ||||
| Investing activities | (1) | (63) | ||||||
| Financing activities | (78) | (637) | ||||||
In the first quarter of 2025, the net cash outflow from operating activities was $124 million, compared with a net cash outflow of $7 million in the first quarter of 2024. The $117 million increase in cash outflows was largely due to changes in working capital and a net cash outflow of $35 million from captive financing activities.
Cash flows used in investing activities included $56 million and $66 million of capital expenditures in the first quarter of 2025 and 2024, respectively. In the first quarter of 2025, cash flows from investing activities also included $31 million of net proceeds from corporate-owned life insurance policies.
Cash flows used in financing activities in the first quarter of 2025 included $355 million of payments on long-term debt and $215 million of cash paid to repurchase shares of our outstanding common stock, largely offset by $495 million of net proceeds from the issuance of long-term debt. In the first quarter of 2024, cash flows used in financing activities included $365 million of payments on long-term debt and $317 million of cash paid to repurchase shares of our outstanding common stock.
Captive Financing and Other Intercompany Transactions
The Finance group provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters manufactured by our Manufacturing group, otherwise known as captive financing. In the Consolidated Statements of Cash Flows, cash received from customers is reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities are reflected based on the operations of each group. For example, when product is sold by our Manufacturing group to a customer and is financed by the Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance group’s statement of cash flows. Meanwhile, in the Manufacturing group’s statement of cash flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the Consolidated Statements of Cash Flows.
Reclassification adjustments included in the Consolidated Statements of Cash Flows on page 6 are summarized below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Reclassification adjustments from investing activities to operating activities: | ||||||||
| Finance receivable originations for Manufacturing group inventory sales | $ | (33) | $ | (17) | ||||
| Cash received from customers | 20 | 39 | ||||||
| Total reclassification adjustments from investing activities to operating activities | $ | (13) | $ | 22 | ||||
Critical Accounting Estimates Update
Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations are reported in Item 7 of our 2024 Annual Report on Form 10-K. The following section provides an update of the year-end disclosure.
Revenue Recognition
A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.
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Changes in our estimate of the total expected cost or in the transaction price for a contract typically impact our profit booking rate. We utilize the cumulative catch-up method of accounting to recognize the impact of these changes on our profit booking rate for a contract. Under this method, the inception-to-date impact of a profit adjustment on a contract is recognized in the period the adjustment is identified. The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below:
| Three Months Ended | ||||||||
| (In millions) | March 29, 2025 | March 30, 2024 | ||||||
| Gross favorable | $ | 27 | $ | 43 | ||||
| Gross unfavorable | (10) | (30) | ||||||
| Net adjustments | $ | 17 | $ | 13 | ||||
Forward-Looking Information
Certain statements in this Quarterly Report on Form 10-Q and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our 2024 Annual Report on Form 10-K under “Risk Factors,” among the factors that could cause actual results to differ materially from past and projected future results are the following:
•Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations;
•Changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries;
•Our ability to perform as anticipated and to control costs under contracts with the U.S. Government;
•The U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards;
•Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products;
•Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products;
•Volatility in interest rates or foreign exchange rates and inflationary pressures;
•Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries;
•Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables;
•Performance issues with key suppliers or subcontractors;
•Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products;
•Our ability to control costs and successfully implement various cost-reduction activities;
•The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs;
•The timing of our new product launches or certifications of our new aircraft products;
•Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;
•Pension plan assumptions and future contributions;
•Demand softness or volatility in the markets in which we do business;
•Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;
•Difficulty or unanticipated expenses in connection with integrating acquired businesses;
•The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections;
•The impact of changes in tax legislation;
•The risk of disruptions to our business and the business of our suppliers, customers and other business partners due to unexpected events, such as pandemics, natural disasters, acts of war, strikes, terrorism, social unrest or other societal, geopolitical or macroeconomic conditions;
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•Risks related to changing U.S. and foreign trade policies, including increased trade restrictions or tariffs; and
•The ability of our businesses to hire, train and retain the highly skilled personnel necessary for our businesses to succeed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no significant change in our exposure to market risk during the fiscal quarter ended March 29, 2025. For discussion of our exposure to market risk, refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained in Textron’s 2024 Annual Report on Form 10-K.
Item 4. Controls and Procedures
We performed an evaluation of the effectiveness of our disclosure controls and procedures as of March 29, 2025. The evaluation was performed with the participation of senior management of each business segment and key Corporate functions, under the supervision of our Chairman, President and Chief Executive Officer (CEO) and our Executive Vice President and Chief Financial Officer (CFO). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of March 29, 2025.
There were no changes in our internal control over financial reporting during the fiscal quarter ended March 29, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1A. Risk Factors
Our business, financial condition and results of operations are subject to various risks. The Company is enhancing the risk factors previously disclosed in the 2024 Annual Report on Form 10-K for the year ended December 28, 2024 with the following risk factor.
We are subject to risks of doing business globally that could adversely impact our business.
Risks arising from uncertainty in global macroeconomic conditions may harm our business. We are sensitive to global macroeconomic conditions. Negative macroeconomic factors may have an adverse effect on our business, results of operations and financial condition, as well as on our distributors, customers, subcontractors and suppliers, and on activity in many of the industries and markets we serve. We cannot predict changes in worldwide or regional economic or political conditions and government policies as such factors are highly volatile and beyond our control. If current macroeconomic pressures, including from inflation and labor and supply chain challenges, continue or if global macroeconomic conditions deteriorate and remain at depressed levels for extended periods, our business, results of operations and financial condition could be materially adversely affected. In addition, changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture or sell our products or from where we import products or raw materials (either directly or through our suppliers) could adversely impact our competitive position, business operations and financial results. In particular, recent changes to global tariff policies have created significant uncertainty with respect to trade policies, treaties and tariffs. These developments could adversely impact us, our distributors, customers, subcontractors or suppliers which could have a material adverse effect on our financial position, results of operations or cash flows. See Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion of the impact of these tariffs.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following provides information about our first quarter of 2025 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:
Period (shares in thousands) | Total Number of Shares Purchased * | Average Price Paid per Share (excluding commissions) | Total Number of Shares Purchased as part of Publicly Announced Plan * | Maximum Number of Shares that may yet be Purchased under the Plan | ||||||||||
| December 29, 2024 – February 1, 2025 | 525 | $ | 77.82 | 525 | 15,061 | |||||||||
| February 2, 2025 – March 1, 2025 | 1,210 | 74.14 | 1,210 | 13,851 | ||||||||||
| March 2, 2025 – March 29, 2025 | 1,140 | 73.82 | 1,140 | 12,711 | ||||||||||
| Total | 2,875 | $ | 74.69 | 2,875 | ||||||||||
* These shares were purchased pursuant to a plan authorizing the repurchase of up to 35 million shares of Textron common stock that was approved on July 24, 2023 by our Board of Directors. This share repurchase plan has no expiration date.
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Item 5. Other Information
(c) None of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or adopted terminated
Item 6. Exhibits
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 32.2 | |||||
| 101 | The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2025, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements. | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TEXTRON INC. | |||||||||||
| Date: | April 24, 2025 | /s/ Mark S. Bamford | |||||||||
| Mark S. Bamford Vice President and Corporate Controller (principal accounting officer) | |||||||||||
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