Textron (TXT -1.77%), the aerospace and defense group behind Cessna and Bell, reported its second quarter earnings on July 24, 2025. The main headlines were a beat on both earnings and revenue expectations, with the company posting adjusted (non-GAAP) earnings per share of $1.55 compared to an analyst estimate of $1.45. Revenue (GAAP) also exceeded forecasts, coming in at $3.70 billion against the expected $3.64 billion, rising 5.4% from the prior year (GAAP). While overall results were positive in terms of growth and cash generation, profitability was challenged in core segments due to product mix, higher warranty costs, and research and development spending. Management raised its cash flow outlook but kept full-year earnings guidance steady, reflecting both confidence and ongoing cost pressures this period.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.55 | $1.45 | $1.54 | 0.6% |
| EPS (GAAP) | $1.35 | $1.35 | 0.0 % | |
| Revenue | $3.72 billion | $3.64 billion | $3.53 billion | 5.4 % |
| Manufacturing Cash Flow Before Pension Contributions (Non-GAAP) | $336 million | $320 million | 5.0 % | |
| Net Income | $245 million | $259 million | -5.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Textron: Business Overview and Recent Focus
Textron is a diversified industrial company with a strong focus on aviation, defense, and industrial products. It builds business jets and turboprops under the Cessna and Beechcraft brands, supplies helicopters through its Bell segment, delivers defense systems, and has a growing stake in sustainable and electric aviation technologies.
Key to its recent performance are five areas: leadership in general aviation through Textron Aviation, defense growth via Bell's rotorcraft and U.S. Army programs, a steady defense business in the Textron Systems unit, innovation in sustainable aircraft within eAviation, and a stable flow of revenue from long-term government contracts. Success depends on maintaining a high-value backlog, winning new contracts, delivering on major programs like the MV-75 helicopter, and improving product and service mix while expanding in future-facing technologies.
Quarter Highlights: Revenue Growth, Segment Mix, and Cost Pressures
Consolidated revenue rose 5.4% year over year, driven by growth in the Bell segment. Adjusted earnings per share rose modestly, but Net income (GAAP) was slightly lower than the prior year, mainly due to mix and rising expenses in key segments.
Textron Aviation, the company's business jet and turboprop line, posted revenue gains on higher jet deliveries (49 delivered, up from 42 last year). and increased aftermarket parts sales. However, Turboprop deliveries slipped to 34 from 44. Segment profit fell, weighed down by a less favorable product mix and higher warranty expenses, despite improving manufacturing efficiency and pricing. The backlog ended robust at $7.85 billion, giving visibility for future deliveries.
Bell, responsible for both military and commercial helicopters like the MV-75 and V-22 tiltrotor aircraft, reported GAAP revenue growth of $222 million year over year. Military program sales, especially the MV-75 (previously FLRAA), contributed the most. Profit in the segment, however, dipped slightly as research and development investment increased -- a typical pattern for major defense programs during their build-up phase. Bell’s backlog was $6.9 billion at the end of the period, reflecting major contract wins and government demand stability.
Textron Systems, which delivers unmanned aircraft and armored vehicles, stabilized revenue despite a minor decline from the prior year. The unit’s margin improved from reduced selling and administrative costs, but growth depends on landing large new defense contracts, which tend to be unpredictable and “lumpy.” Backlog for this segment was steady at $2.2 billion at the end of the period, indicating ongoing demand in its defense programs.
The Industrial segment saw revenues fall by $75 million to $839 million, following the sale of the Arctic Cat (Powersports) business and reduced volume. Despite this, profit at Industrial improved, helped by restructuring actions and the portfolio change. The Textron eAviation arm, focused on electric and hybrid aircraft such as the Pipistrel Velis Electro, registered minimal revenue but narrowed its loss modestly. -- typical for a unit still deep in research and development.
On the financial side, Manufacturing cash flow before pension contributions (non-GAAP) rose 5.0% compared to Q2 2024. The operating cash flow gain and a higher share buyback ($214 million, $429 million year to date) show a focus on capital discipline.
On dividends, the payout remained steady and unchanged. The company returned $4 million to shareholders as dividends.
Forward View: Guidance and What to Watch
Looking ahead, management reiterated guidance for adjusted (non-GAAP) earnings per share of $6.00 to $6.20 for FY2025 and manufacturing cash flow before pension contributions (non-GAAP) is expected to be between $900 million and $1.0 billion for FY2025. The cash flow forecast was lifted by $100 million. Management also maintained the GAAP earnings per share range at $5.19 to $5.39 for FY2025.
Investors watching Textron should keep an eye on key factors: ability to improve segment margins as the year progresses, progress in ramping up major projects within Bell and Textron Aviation, and key risks highlighted by management include margin pressure from product mix in Aviation and R&D spend in Bell, the potential impact from future government budget cycles, and the timing of new contract awards for Textron Systems. The dividend was not changed for the quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
