A fixed rule set over this filing's XBRL figures and the number of high-severity risks found in it — no model judgement.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
TXT delivered 3% revenue growth to $3.827B and 1% net-income growth to $248M in Q2 FY2026, but manufacturing gross margin fell 100 basis points to 17.8% and Bell faces material MV-75 funding and contract-cost risks. Source: 10-Q Item 2 MD&A, p.21-24.
Revenue
$3.83B
+2.99% YoY
EPS (Diluted)
$1.42
+5.19% YoY
Filed · Source: SEC EDGAR 10-Q filing
Textron (TXT) reported Q2 FY2026 revenue of $3.83B, up 3.0% year over year. The company posted net income of $248M, up 1.2% from a year earlier, with diluted EPS of $1.42. TXT's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Q2 FY2026 revenue rose 3% to $3.827B and diluted EPS increased 5% to $1.42, while gross-margin pressure, lower year-to-date cash generation, and MV-75 funding uncertainty remain key issues. Source: 10-Q Item 2 MD&A, p.21-28.
Last 4 quarters: 4 beats
Q2 FY2026 revenue increased $111M, or 3%, to $3.827B. Bell contributed $58M of growth, principally from $47M higher military aircraft and support-program revenue; Textron Systems added $23M on higher volume, and Textron Aviation added $22M from aircraft and aftermarket growth. Source: 10-Q Item 2 MD&A, p.21.
Source: 10-Q Item 2 MD&A, p.21
Cost of sales rose 4% to $3.133B, faster than revenue growth, driven primarily by $67M of inflation and $44M of higher net volume and mix. Manufacturing gross margin declined 100 basis points to 17.8%, primarily due to lower margin at Bell, while R&D expense declined $21M, or 15%, to $116M. Source: 10-Q Item 2 MD&A, p.21.
Source: 10-Q Item 2 MD&A, p.21
Bell revenue grew 6% to $1.074B, including 7% growth in military aircraft and support programs, but segment profit declined 6% to $75M and margin fell to 7.0% from 7.9%. Management attributed the margin decline to unfavorable contract performance and military-program mix, partly offset by lower R&D costs. Source: 10-Q Item 2 MD&A, p.24.
Source: 10-Q Item 2 MD&A, p.24
Bell substantially exhausted available fiscal-2026 MV-75 funding in mid-July 2026 and continued work at its own risk. If an additional $350M funding request is not approved and obligated, TXT said it could record an unfavorable cumulative catch-up adjustment of up to approximately $120M and face an approximately $350M negative cash-flow impact; a later fixed-price LRIP award could also require a $60M-$110M unfavorable catch-up adjustment. Source: 10-Q Item 2 MD&A, p.24.
Source: 10-Q Item 2 MD&A, p.24
Consolidated operating cash flow for the first six months of FY2026 decreased to $187M from $264M, largely due to working-capital changes. Investing cash flow was a $193M outflow, including $228M of capital expenditures, versus $17M of inflow in the prior-year period; financing outflows included $377M of share repurchases. Source: 10-Q Item 2 MD&A, p.27-28.
Source: 10-Q Item 2 MD&A, p.27-28
Approximately 27% of 2025 revenue came from U.S. Government entities, and the MV-75 program represents a significant and growing portion of U.S. Government revenue and backlog. Bell had substantially exhausted available fiscal-2026 MV-75 funds after Q2 FY2026; if additional funding is not approved, the company could incur unreimbursed costs, an unfavorable cumulative catch-up adjustment, and adverse cash-flow effects.
Source: 10-Q Item 1A, p.31
TXT expects that award of the MV-75 low-rate initial production option in late 2026 or early 2027 could result in an unfavorable cumulative catch-up adjustment because anticipated costs are higher than when the program was bid. The MD&A estimates the potential charge at $60M-$110M, although management expects the overall program to remain profitable after the adjustment.
Source: 10-Q Item 2 MD&A, p.24
TXT is evaluating a sale, tax-free separation, or another transaction for its Industrial segment, but the structure, terms, timing, and completion of a transaction remain uncertain. Market conditions, financing conditions, or other external developments could delay or prevent a separation, result in less favorable terms, or impair the future operating performance of TXT or the separated Industrial business.
Source: 10-Q Item 1A, p.31
TXT's North American businesses source some materials and components from outside North America, exposing them to tariff-related cost and supply-chain effects. Although the company had not experienced a material adverse impact to date and received $21M of IEEPA tariff recoveries in Q2 FY2026, the U.S. decision not to extend USMCA for another 16-year term creates recurring annual renegotiation risk through 2036 and could jeopardize preferential tariff treatment.
Source: 10-Q Item 1A, p.31; 10-Q Item 2 MD&A, p.21 and p.25
The conflict has increased volatility in energy and commodity markets, shipping costs, and supply-chain disruption risk, and some direct or indirect suppliers have already experienced adverse effects. Sustained elevated energy costs could reduce aircraft and rotorcraft demand or utilization, while retaliatory cyberwarfare could increase attacks on the company as a U.S. defense supplier.
Source: 10-Q Item 1A, p.30-31
This analysis does not extract a guidance section. Companies issue revenue and EPS outlook in the 8-K press release and on the earnings call rather than in the 10-Q itself — though the filing's management discussion can contain forward-looking statements, which appear in the highlights above where they were material.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.83B | $3.72B | +2.99% |
Net Income | $248M | $245M | +1.22% |
EPS (Basic) | $1.43 | $1.36 | +5.15% |
EPS (Diluted) | $1.42 | $1.35 | +5.19% |
R&D Expense | $116M | $137M | -15.33% |
SG&A Expense | $311M | $303M | +2.64% |
TXT revenue increased 3% year over year to $3.827B in Q2 FY2026. The increase included $58M of higher Bell revenue, $23M at Textron Systems, and $22M at Textron Aviation. Source: 10-Q Item 2 MD&A, p.21.
Net income increased 1.2% to $248M and diluted EPS rose 5.2% to $1.42, but manufacturing gross margin declined 100 basis points to 17.8%. Bell revenue increased 6%, although its segment profit fell 6% to $75M because of contract-performance and program-mix pressure. Source: 10-Q Income Statement (XBRL); 10-Q Item 2 MD&A, p.21 and p.24.
The supplied filing data report diluted EPS of $1.42 and net income of $248M for Q2 FY2026. Analyst consensus estimates were not provided, so whether TXT beat, met, or missed estimates cannot be determined from this filing. Source: 10-Q Income Statement (XBRL).
Bell substantially exhausted available fiscal-2026 MV-75 program funding in mid-July 2026 and continued work at its own risk. If an additional $350M funding request is not approved, TXT said it could incur up to approximately $120M of unfavorable cumulative catch-up adjustments and approximately $350M of negative cash-flow impact. Source: 10-Q Item 2 MD&A, p.24.
For the six months ended July 4, 2026, TXT generated $187M of operating cash flow and spent $228M on capital expenditures, implying negative free cash flow of $41M. This is lower than positive $130M in the comparable prior-year period, calculated from $264M of operating cash flow less $134M of capital expenditures. Source: 10-Q Item 2 MD&A, p.27-28.
TXT reported Q1 FY2026 revenue of $3.70B, up 11.8% YoY, with net income rising 6.3% to $220M and diluted EPS of $1.25, though operating cash flow remained negative at -$117M.
TXT delivered solid FY2025 results with revenue growing 8.0% to $14.8B and net income rising 11.8% to $921M, supported by a 29.4% surge in operating cash flow to $1.3B.
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