Textron Inc (TXT) Q1 2026 Earnings Report

Textron Inc. reported a solid-margin quarter in Q1 2026 but saw a year-over-year and sequential revenue decline. Revenue stood at $3.306 billion, down 6.3% YoY and 8.5% QoQ, with gross margin at 19.2% and operating margin at 6.17%, signaling continued operating discipline and product mix strength despite top-line headwinds. Net income reached $207 million and diluted EPS was $1.13, down 14.9% YoY but up 50.0% QoQ, reflecting a favorable mix and some one-off or timing effects that moderated profit growth YoY while enabling a meaningful sequential improvement in profitability. Near-term cash flow remained pressured by working capital dynamics, as cash from operating activities was negative at $-124 million and free cash flow delivered $-180 million. The working capital swing was a primary driver, with a substantial negative change in working capital of about $442 million, contributing to the cash flow headwinds despite a robust balance sheet and modest capital expenditures (~$56 million). Textron finished the period with cash and cash equivalents of $1.245 billion and total debt of $3.734 billion, yielding a net debt position of approximately $2.489 billion and a net debt to adjusted EBITDA that is reasonably manageable in the low- to mid-single-digit range on an annualized basis. Strategically, the portfolio remains well-positioned across Textron’s three core segments—Textron Aviation, Bell, and Textron Systems—supported by a diversified end-market exposure (commercial aviation, defense, unmanned systems, and industrial equipment). While near-term cash flow and revenue momentum face pressure from cyclicality in certain end-markets and working capital dynamics, the company benefits from a resilient earnings framework, moderate leverage, and the potential for defense spending to stabilize or expand backlog in the medium term. Investors should monitor backlog evolution, defense budget trajectories, and the pace at which Textron can convert its operating profits into positive free cash flow as working capital normalizes.