TEXTRON INC

Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative products and services around the world. Through 2025, the company conducted its business through six operating segments: Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation, which represent its manufacturing businesses, and Finance, which represents its captive finance business. Total revenues for 2025 were $14.8 billion ¹. Contracts with the U.S. Government, including contracts under the U.S. Government-sponsored foreign military sales program, generated approximately 27% ² of consolidated revenues in 2025, primarily in the Bell and Textron Systems segments. During 2025, the company derived approximately 31% ³ of its revenues from international business, including U.S. exports.

Textron Aviation is a leader in general aviation, manufacturing, selling and servicing Cessna and Beechcraft aircraft, and servicing the Hawker brand of business jets. Bell is a leading worldwide supplier of military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. The company's defense businesses operate in highly competitive markets in which they participate in rigorous, increasingly competitive bidding processes against other defense companies for U.S. government business. The company's backlog at the end of 2025 was $18.823 billion ⁴, compared to $17.908 billion ⁵ at the end of 2024.

The company generates revenue through the manufacture and sale of aircraft, defense systems, industrial products, and through its captive finance business. For the manufacturing segments, revenue is recognized either at a point in time (e.g., upon delivery) or over time (e.g., as the company performs under the contract). The Finance segment provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters, and its revenues primarily include interest on finance receivables, finance lease earnings and portfolio gains/losses. A substantial number of the originations in the finance receivable portfolio are cross-border transactions for aircraft sold outside of the U.S.

Textron Aviation manufactures, sells and services Cessna and Beechcraft aircraft, with two principal product lines: aircraft and aftermarket parts and services. Aircraft includes sales of business jets, turboprop aircraft, military trainer and defense aircraft and piston engine aircraft. Aftermarket parts and services includes commercial parts sales and maintenance, inspection and repair services, and advanced flight training devices. Textron Aviation's business jets include the Cessna Citation M2 Gen2, Citation CJ3 Gen2, Citation CJ4 Gen2, Citation Ascend, Citation Latitude and the Citation Longitude. Textron Aviation's turboprop aircraft include the Beechcraft King Air 260, King Air 360ER and King Air 360, and the Cessna Caravan, Grand Caravan EX and SkyCourier. Textron Aviation's military trainer and defense aircraft include the Beechcraft T-6 trainer and the AT-6 light attack military aircraft. Textron Aviation's piston engine aircraft include the Cessna Skyhawk, Skylane, Turbo Skylane and the Turbo Stationair HD. In 2025, Textron Aviation delivered 171 ⁶ Citation jets and 146 ⁷ commercial turboprops, compared with 151 ⁸ Citation jets and 127 ⁹ commercial turboprops in 2024. Bell is a leading worldwide supplier of military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. Bell's primary U.S. Government programs are for the development of a next generation tiltrotor aircraft for the U.S. Army's Future Long Range Assault Aircraft program, now designated as the MV-75 program, and the production and support of the V-22 tiltrotor aircraft and H-1 helicopters. Bell produces a variety of commercial aircraft types, including light single- and twin-engine helicopters and medium twin-engine helicopters. The commercial helicopters currently offered by Bell include the 429, 407GXi, 412EPX and 505 Jet Ranger X. Bell delivered 169 ¹⁰ commercial helicopters in 2025, compared with 172 ¹¹ commercial helicopters in 2024. Bell operates a global network of eight ¹² Company-operated service centers and four ¹³ global parts distribution centers. The Textron Systems segment develops, manufactures and integrates a variety of products and services for U.S. and international military, government and commercial customers, including electronic systems and solutions, advanced marine craft, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, unmanned aircraft systems and both manned and unmanned armored and specialty vehicles. The Industrial segment designs and manufactures a variety of products within the Kautex and Textron Specialized Vehicles businesses. Kautex is a leader in designing and manufacturing plastic fuel systems for automobiles and light trucks, and operates over 30 ¹⁴ plants in 13 ¹⁵ countries. Textron Specialized Vehicles businesses manufacture and sell products under the E-Z-GO, TUG Technologies, Douglas Equipment, Premier, Safeaero, Ransomes, Jacobsen and Cushman brands. The Textron eAviation segment has been focused on research and development initiatives related to sustainable aviation solutions and includes Pipistrel, a manufacturer of light aircraft. The Finance segment, or the Finance group, is a commercial finance business that consists of Textron Financial Corporation (TFC) and its consolidated subsidiaries.

In 2025, the company generated $1.3 billion ¹⁶ of net cash from operating activities from its manufacturing businesses. The company invested $521 million ¹⁷ in research and development projects and $383 million ¹⁸ in capital expenditures. The company returned $822 million ¹⁹ to its shareholders through the repurchase of 10.7 million ²⁰ shares of its common stock. On October 31, 2025, the company issued $500 million ²¹ of SEC-registered fixed-rate notes due in March 2036 with an annual interest rate of 4.95% ²², and on February 13, 2025, the company issued $500 million ²³ of SEC-registered fixed-rate notes due in May 2035 with an annual interest rate of 5.50% ²⁴. On December 31, 2025, the company repaid its $350 million ²⁵ 4.00% ²⁶ notes due in March 2026, and on March 3, 2025, the company repaid its $350 million ²⁷ 3.875% ²⁸ Notes due in March 2025. On October 16, 2025, Textron entered into a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion ²⁹, of which $100 million ³⁰ is available for the issuance of letters of credit. The company also disposed of its Powersports business in April 2025.

In 2025, Textron's revenues increased 8% ³¹, compared with 2024, reflecting the impact of higher volume on the MV-75 program at the Bell segment and higher aircraft and aftermarket parts and services revenues at the Textron Aviation segment. Segment profit increased 14% ³², compared with 2024, largely reflecting higher volume and mix at Textron Aviation. Total revenues for 2025 were $14.799 billion ³³, compared to $13.702 billion ³⁴ in 2024. Net income for 2025 was $921 million ³⁵, compared to $824 million ³⁶ in 2024. Diluted earnings per share from continuing operations were $5.12 ³⁷ in 2025, compared to $4.34 ³⁸ in 2024.

The company expects that upon award of the Low-Rate Initial Production (LRIP) option for the MV-75 program, which is largely fixed price, it will record an unfavorable cumulative catch-up program adjustment, reflecting higher costs than originally anticipated from when the program was bid, in the range of $60 million ³⁹ to $110 million ⁴⁰. The overall MV-75 program will continue to generate a positive profit margin after the adjustment. The LRIP phase is expected to be awarded in late 2026 or early 2027.

The MV-75 program at Bell represents a significant and growing portion of U.S. Government revenues and backlog. Bell has significantly increased and will continue to increase its investments in the resources, facilities and personnel applied to the MV-75 program. New orders in 2025 included a $1.3 billion ⁴¹ award for the prototype testing and evaluation phase of the MV-75 program. The Textron Systems segment's backlog increased $710 million ⁴², 27% ⁴³, in 2025, reflecting orders in excess of revenues recognized and deliveries, including $480 million ⁴⁴ for additional units on the Ship-to-Shore Connector program and $475 million ⁴⁵ for a five-year contract for ATAC's U.S. Navy Fighter Jet Services.

Textron Aviation announced its next generation of light jets, the Citation M2 Gen3, CJ3 Gen3 and CJ4 Gen3, which are expected to enter into service in 2027 ⁴⁶. The Beechcraft Denali, a high-performance single engine turboprop aircraft under development, is expected to enter into service in 2026 ⁴⁷. The engine that powers the Denali was certified by the FAA in February 2025 and is expected to be up to 20% ⁴⁸ more efficient than similarly sized engines. The Textron eAviation segment has been developing both hybrid and electric propulsion aircraft, including Pipistrel's Nuuva V300, a long-range, large-capacity hybrid-electric vertical takeoff and landing unmanned aircraft. Effective at the beginning of the 2026 fiscal year, a significant part of Textron eAviation, including Pipistrel, will become part of the Textron Aviation segment, and Textron eAviation's manned and unmanned products for military applications and related research and development activities will be included in the results of the Textron Systems segment.

The company's effective tax rate for 2025 was 18.8% ⁴⁹, lower than the U.S. federal statutory tax rate of 21% ⁵⁰, largely due to the favorable impact of research and development credits. The company's cost of sales increased $904 million ⁵¹, 8% ⁵², in 2025 compared with 2024, largely due to higher net volume and mix and a $281 million ⁵³ impact from inflation, partially offset by the impact from the disposition of the Powersports business. The company's research and development costs increased $30 million ⁵⁴, 6% ⁵⁵, in 2025 compared with 2024. The company's selling and administrative expense increased $17 million ⁵⁶, 1% ⁵⁷, in 2025 compared with 2024.

The company's capital expenditures were $383 million ⁵⁸ in 2025, compared with $364 million ⁵⁹ in 2024. The company invested $521 million ⁶⁰ in research and development projects in 2025. On February 11, 2026, pursuant to a delegation by its Board of Directors, Textron's Audit Committee approved a program for the repurchase of up to 25 million ⁶¹ shares of its common stock. The new repurchase program has no expiration date and replaced the prior 2023 share repurchase program that had 3.9 million ⁶² shares remaining available for repurchase. Dividend payments to shareholders totaled $18 million ⁶³ and $12 million ⁶⁴ in 2025 and 2024, respectively.

The company's aircraft products, subassemblies, parts and components manufactured in Canada and Mexico are largely qualified under the rules of the United States-Mexico-Canada Agreement (USMCA) for preferential treatment on tariffs imposed by the U.S. on imports from Canada and Mexico. In 2026, the USMCA is subject to a mandatory six-year joint review. The termination of the agreement or renegotiation with terms less favorable could result in the loss or reduction of preferential tariff treatment which could increase costs and create compliance and supply-chain disruption risks. The company's businesses have been and will continue to be impacted by imposed U.S. tariffs, and the company has been managing pricing and supply chain optimization strategies to mitigate these impacts. The company's aircraft businesses are working through the tariff reconciliation and refund process with the U.S. Government to recover tariff costs that were previously paid related to materials and components that were subsequently determined to be USMCA compliant. To date, the company has not experienced a material adverse impact from these tariffs.

The company faces risks related to global macroeconomic conditions, including inflation and labor and supply chain challenges. The company's businesses are experiencing and may continue to experience manufacturing inefficiencies and production delays as a result of shortages and delays of critical components for its products and other issues related to its direct or indirect suppliers. The company has experienced, and may continue to experience, cost increases for certain materials and components which, along with increased energy and shipping costs and other inflationary pressures, have negatively impacted, and may continue to negatively impact, its profitability. The company also faces risks related to changes in U.S. and foreign trade policies, including increased trade restrictions or tariffs.

The company derives approximately 27% ⁶⁵ of its revenues from the U.S. Government, and a material reduction or delay in funding of the MV-75 program could have a material adverse effect on cash flows, results of operations and financial condition. The company faces risks related to its fixed-price contracts with the U.S. Government, where it absorbs any costs in excess of the fixed price, and cost overruns due to inflation, labor shortages, supply chain challenges, or other factors could adversely affect results. The company's Finance segment has a finance receivable portfolio of $593 million ⁶⁶ at January 3, 2026, with 73% ⁶⁷ distributed internationally, and difficulty collecting on these receivables, particularly cross-border transactions, could adversely affect financial performance. The company is subject to cybersecurity threats, and while attacks to date have not been material, the possibility of future material incidents cannot be completely mitigated. The company's success is highly dependent on its ability to hire, train and retain a qualified workforce, and approximately 7,700 ⁶⁸, or 29% ⁶⁹, of its U.S. employees are represented by unions, and a strike at Textron Aviation in 2024 negatively impacted revenues and segment profit.

Management's message emphasizes that in 2025, Textron's revenues increased 8% ⁷⁰, compared with 2024, reflecting the impact of higher volume on the MV-75 program at the Bell segment and higher aircraft and aftermarket parts and services revenues at the Textron Aviation segment. Segment profit increased 14% ⁷¹, compared with 2024, largely reflecting higher volume and mix at Textron Aviation. The company's backlog increased 5% ⁷² in 2025 to $18.8 billion ⁷³, which included a $710 million ⁷⁴ increase at the Textron Systems segment and a $326 million ⁷⁵ increase at the Bell segment. Financial highlights for 2025 also include generating $1.3 billion ⁷⁶ of net cash from operating activities from the manufacturing businesses, investing $521 million ⁷⁷ in research and development projects and $383 million ⁷⁸ in capital expenditures, and returning $822 million ⁷⁹ to shareholders through the repurchase of 10.7 million ⁸⁰ shares of common stock. Management notes that the company expects to have sufficient cash to meet its needs based on its existing cash balances, the cash it expects to generate from its manufacturing operations and the availability of its existing credit facility.