Executive Summary
Textron Inc delivered a Q2 2026 results profile that reflects a resilient top line within a diversified Aerospace & Defense portfolio, underpinned by meaningful cash generation and disciplined capital allocation. Revenue rose 5.36% year-over-year to $3.716 billion, supported by a QoQ lift of 12.4%, while gross profit expanded to $709 million and gross margin reached 19.08%. Despite stronger revenue, operating income showed a mixed trajectory, with a year-over-year decline of 24.44% but a notable sequential rebound of 31.86%, resulting in operating income of $269 million and an operating margin of 7.24%. Net income stood at $245 million, with earnings per share of $1.36 (diluted $1.35). The quarter underscores the company’s ability to grow topline in a competitive macro environment while managing costs, but it also highlights the sensitivity of profits to mix and operating expenses.
Textron generated robust operating cash flow of $388 million and free cash flow of $310 million, reinforcing liquidity with cash and cash equivalents of about $1.434 billion and total debt of $3.734 billion (net debt approximately $2.30 billion). The balance sheet remains solid, with total assets of around $17.076 billion and stockholders’ equity near $7.433 billion. Management’s capital allocation stance is evident in a large year-to-date share repurchase program (about $215 million spent) alongside modest net debt reduction via financing activities, signaling a balanced approach to value creation through buybacks and cash returns while maintaining flexibility to fund growth programs.
From a market stance, Textron benefits from a diversified mix across Textron Aviation, Bell, Textron Systems, and its Industrial segment, which provides a degree of revenue stability amid cyclical aerospace cycles. The key near-term uncertainties relate to defense budget trajectories and civil aviation demand, as well as potential cost pressures from supply chains and material costs. The Q2 results imply a sound foundation for continued cash generation, with upside tied to program execution, margin discipline, and favorable mix shifts toward higher-margin offerings. Investors should monitor defense program awards, backlog development, and the pace of civil aviation recovery, alongside further operating efficiency initiatives and potential deleveraging progress.
Key Performance Indicators
QoQ: 31.86% | YoY:-24.44%
Key Insights
Revenue: $3.716 billion; YoY +5.36%; QoQ +12.40%.
Gross Profit: $0.709 billion; Gross Margin 19.08%; YoY margin change up from prior period; QoQ expansion reflected in pricing discipline and favorable mix.
Operating Income: $0.269 billion; Operating Margin 7.24%; YoY decline of 24.44%, QoQ increase of 31.86%.
Net Income: $0.245 billion; Net Margin 6.59%; YoY decline of 5.41%, QoQ rise of 18.36%.
EPS: $1.36 (Diluted $1.35); YoY growth 1.49%; QoQ growth 19.30%.
Expenses & Margins: R&D $132...
Financial Highlights
Revenue: $3.716 billion; YoY +5.36%; QoQ +12.40%.
Gross Profit: $0.709 billion; Gross Margin 19.08%; YoY margin change up from prior period; QoQ expansion reflected in pricing discipline and favorable mix.
Operating Income: $0.269 billion; Operating Margin 7.24%; YoY decline of 24.44%, QoQ increase of 31.86%.
Net Income: $0.245 billion; Net Margin 6.59%; YoY decline of 5.41%, QoQ rise of 18.36%.
EPS: $1.36 (Diluted $1.35); YoY growth 1.49%; QoQ growth 19.30%.
Expenses & Margins: R&D $132 million; SG&A (selling General & Administrative) $298 million; Other expenses $10 million; Depreciation & Amortization $100 million; Interest expense $31 million; EBITDA $432 million; EBITDA Margin 11.63%.
Cash Flow & Capital Allocation: Operating cash flow $388 million; Capex $78 million; Free cash flow $310 million; Net cash provided by operating activities $388 million; Net cash used in investing activities $18 million; Net cash used provided by financing activities $232 million; Net increase in cash $189 million; Cash at period end $1.434 billion; Debt total $3.734 billion; Net debt $2.30 billion.
Balance Sheet: Total assets $17.076 billion; Total liabilities $9.643 billion; Total stockholders’ equity $7.433 billion; Current assets $8.011 billion; Current liabilities $4.360 billion; Working capital position approximate; Long-term debt $3.378 billion; Cash & short-term investments $1.434 billion.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.72B |
5.36% |
12.40% |
| Gross Profit |
709.00M |
20.58% |
11.83% |
| Operating Income |
269.00M |
-24.44% |
31.86% |
| Net Income |
245.00M |
-5.41% |
18.36% |
| EPS |
1.36 |
1.49% |
19.30% |
Management Commentary
Strategy & portfolio: Textron’s diversified platform (Aviation, Bell, Systems, Industrial) supports earnings resilience across cycle shifts; emphasis on leveraging core programs and cross-segment capabilities to improve margin quality. Operations: Management highlighted ongoing cost discipline and productivity initiatives aimed at improving operating margins and cash conversion; focus on program execution and favorable mix as key margin drivers. Market conditions: Defense budget visibility remains a driver of revenue stability; civil aviation demand has started to recover, though together with ongoing supply chain normalization and input cost considerations; unmanned systems and advanced defense technologies present growth opportunities for Textron Systems.
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Forward Guidance
Based on the qualitative tone and execution trajectory, the company appears positioned for modest revenue growth in the low-to-mid single digits in the near term, supported by continued free cash flow generation and disciplined capital allocation. Margins are expected to benefit from productivity improvements and favorable mix, though defense budgets and civil aviation demand remain the primary variables that could influence accuracy of guidance. Key factors investors should monitor include defense program awards and backlog execution, civil aviation demand normalization, commodity price pressures, supplier readiness, and potential changes in tax or regulatory environments.