Item 1. Financial Statements

TEXTRON INC.

Consolidated Statements of Operations (Unaudited)

						Three Months Ended
(In millions, except per share amounts)									March 29, 2025			March 30, 2024
Revenues
Manufacturing product revenues									$	2,771		$	2,432
Manufacturing service revenues									519			688
Finance revenues									16			15
Total revenues									3,306			3,135
Costs, expenses and other
Cost of products sold									2,277			1,925
Cost of services sold									395			545
Research and development costs									132			144
Selling and administrative expense									298			316
Interest expense, net									29			20
Special charges									—			14
Non-service components of pension and postretirement income, net									(66)			(66)
Total costs, expenses and other									3,065			2,898
Income before income taxes									241			237
Income tax expense									34			36
Net income									$	207		$	201
Earnings per share
Basic									$	1.14		$	1.04
Diluted									$	1.13		$	1.03

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Comprehensive Income (Unaudited)

						Three Months Ended
(In millions)									March 29, 2025			March 30, 2024
Net income									$	207		$	201
Other comprehensive income (loss), net of tax
Pension and postretirement benefits adjustments, net of reclassifications									—			1
Foreign currency translation adjustments									40			(33)
Deferred losses on hedge contracts, net of reclassifications									(1)			(5)
Other comprehensive income (loss)									39			(37)
Comprehensive income									$	246		$	164

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Balance Sheets (Unaudited)

(Dollars in millions)			March 29, 2025			December 28, 2024
Assets
Manufacturing group
Cash and equivalents			$	1,194		$	1,386
Accounts receivable, net			940			949
Inventories			4,270			4,071
Other current assets			829			687
Total current assets			7,233			7,093
Property, plant and equipment, less accumulated depreciation and amortization of $5,564 and $5,471, respectively			2,503			2,529
Goodwill			2,297			2,288
Other assets			4,230			4,248
Total Manufacturing group assets			16,263			16,158
Finance group
Cash and equivalents			51			55
Finance receivables, net			610			603
Other assets			18			22
Total Finance group assets			679			680
Total assets			$	16,942		$	16,838
Liabilities and shareholders’ equity
Liabilities
Manufacturing group
Current portion of long-term debt			$	356		$	357
Accounts payable			1,117			943
Other current liabilities			2,916			3,094
Total current liabilities			4,389			4,394
Other liabilities			1,840			1,945
Long-term debt			3,038			2,890
Total Manufacturing group liabilities			9,267			9,229
Finance group
Other liabilities			60			64
Debt			340			341
Total Finance group liabilities			400			405
Total liabilities			9,667			9,634
Shareholders’ equity
Common stock			23			23
Capital surplus			2,005			1,960
Treasury stock			(299)			(82)
Retained earnings			5,811			5,607
Accumulated other comprehensive loss			(265)			(304)
Total shareholders’ equity			7,275			7,204
Total liabilities and shareholders’ equity			$	16,942		$	16,838
Common shares outstanding (in thousands)			180,578			182,964

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 29, 2025 and March 30, 2024, respectively

			Consolidated
(In millions)			2025			2024
Cash flows from operating activities
Net income			$	207		$	201
Adjustments to reconcile net income to net cash used in operating activities:
Non-cash items:
Depreciation and amortization			92			88
Deferred income taxes			(22)			(16)
Other, net			41			33
Changes in assets and liabilities:
Accounts receivable, net			16			(34)
Inventories			(183)			(350)
Other assets			(136)			100
Accounts payable			171			121
Other liabilities			(282)			(159)
Income taxes, net			39			39
Pension, net			(59)			(56)
Captive finance receivables, net			(13)			22
Other operating activities, net			5			4
Net cash used in operating activities			(124)			(7)
Cash flows from investing activities
Capital expenditures			(56)			(66)
Net proceeds from corporate-owned life insurance policies			31			3
Proceeds from sale of property, plant and equipment			—			3
Finance receivables repaid			9			8
Finance receivables originated			—			(11)
Other investing activities, net			15			—
Net cash used in investing activities			(1)			(63)
Cash flows from financing activities
Net proceeds from long-term debt			495			—
Principal payments on long-term debt and nonrecourse debt			(355)			(365)
Purchases of Textron common stock			(215)			(317)
Proceeds from options exercised			6			63
Dividends paid			(3)			(4)
Other financing activities, net			(6)			(14)
Net cash used in financing activities			(78)			(637)
Effect of exchange rate changes on cash and equivalents			7			(8)
Net decrease in cash and equivalents			(196)			(715)
Cash and equivalents at beginning of period			1,441			2,181
Cash and equivalents at end of period			$	1,245		$	1,466

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited) (Continued)

For the Three Months Ended March 29, 2025 and March 30, 2024, respectively

			Manufacturing Group						Finance Group
(In millions)			2025			2024			2025			2024
Cash flows from operating activities
Net income			$	199		$	187		$	8		$	14
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Non-cash items:
Depreciation and amortization			92			88			—			—
Deferred income taxes			(23)			(16)			1			—
Other, net			42			44			(1)			(11)
Changes in assets and liabilities:
Accounts receivable, net			16			(34)			—			—
Inventories			(183)			(350)			—			—
Other assets			(136)			100			—			—
Accounts payable			171			121			—			—
Other liabilities			(276)			(153)			(6)			(6)
Income taxes, net			38			35			1			4
Pension, net			(59)			(56)			—			—
Other operating activities, net			5			4			—			—
Net cash provided by (used in) operating activities			(114)			(30)			3			1
Cash flows from investing activities
Capital expenditures			(56)			(66)			—			—
Net proceeds from corporate-owned life insurance policies			31			3			—			—
Proceeds from sale of property, plant and equipment			—			3			—			—
Finance receivables repaid			—			—			29			47
Finance receivables originated			—			—			(33)			(28)
Other investing activities, net			15			—			—			—
Net cash provided by (used in) investing activities			(10)			(60)			(4)			19
Cash flows from financing activities
Net proceeds from long-term debt			495			—			—			—
Principal payments on long-term debt and nonrecourse debt			(352)			(352)			(3)			(13)
Purchases of Textron common stock			(215)			(317)			—			—
Proceeds from options exercised			6			63			—			—
Dividends paid			(3)			(4)			—			—
Other financing activities, net			(6)			(25)			—			11
Net cash used in financing activities			(75)			(635)			(3)			(2)
Effect of exchange rate changes on cash and equivalents			7			(8)			—			—
Net increase (decrease) in cash and equivalents			(192)			(733)			(4)			18
Cash and equivalents at beginning of period			1,386			2,121			55			60
Cash and equivalents at end of period			$	1,194		$	1,388		$	51		$	78

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Notes to the Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries. We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information. Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 28, 2024. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

Contract Estimates

For contracts where revenue is recognized over time, we recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

In the first quarter of 2025 and 2024, our cumulative catch-up adjustments increased segment profit by $17 million and $13 million, respectively, and net income by $13 million and $10 million, respectively ($0.07 and $0.05 per diluted share, respectively).

Note 2. Accounts Receivable and Finance Receivables

Accounts Receivable

Accounts receivable is composed of the following:

(In millions)			March 29, 2025			December 28, 2024
Commercial			$	792		$	738
U.S. Government contracts			167			230
			959			968
Allowance for credit losses			(19)			(19)
Total accounts receivable, net			$	940		$	949

Finance Receivables

Finance receivables are presented in the following table:

(In millions)			March 29, 2025			December 28, 2024
Finance receivables			$	629		$	622
Allowance for credit losses			(19)			(19)
Total finance receivables, net			$	610		$	603

Finance Receivable Portfolio Quality

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors. Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan. These three categories are performing, watchlist and nonaccrual.

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful. In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful. Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain. All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

We measure delinquency based on the contractual payment terms of our finance receivables. In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due. If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

(Dollars in millions)			March 29, 2025			December 28, 2024
Performing			$	626		$	612
Nonaccrual			3			10
Nonaccrual as a percentage of finance receivables			0.48%			1.61%
Current and less than 31 days past due			$	623		$	609
31-60 days past due			6			13
60+ days contractual delinquency as a percentage of finance receivables			—%			—%

At March 29, 2025, 40% of our performing finance receivables were originated since the beginning of 2023 and 25% were originated from 2020 to 2022 with the remainder prior to 2020. For finance receivables categorized as nonaccrual, 100% were originated prior to 2020.

On a quarterly basis, we evaluate individual larger balance accounts for impairment. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. Our impaired finance receivables were insignificant at March 29, 2025 and December 28, 2024.

Note 3. Inventories

Inventories are composed of the following:

(In millions)			March 29, 2025			December 28, 2024
Finished goods			$	1,164		$	1,138
Work in process			1,954			1,769
Raw materials and components			1,152			1,164
Total inventories			$	4,270		$	4,071

Note 4. Accounts Payable and Warranty Liability

Accounts Payable

Supplier Financing Arrangement

We have a financing arrangement with one of our suppliers for a maximum amount of $200 million that extends payment terms for up to 190 days from the receipt of goods and provides for the supplier to be paid by a financial institution earlier than maturity. This financing arrangement expires in April 2027. At March 29, 2025 and December 28, 2024, the amount due under the supplier financing arrangement was $91 million and $50 million, respectively.

Warranty Liability

Changes in our current and non-current warranty liability are as follows:

			Three Months Ended
(In millions)			March 29, 2025			March 30, 2024
Beginning of period			$	173		$	172
Provision			17			17
Settlements			(16)			(18)
Adjustments*			(1)			(1)
End of period			$	173		$	170

** Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.*

Note 5. Leases

We primarily lease certain manufacturing plants, offices, warehouses, training and service centers at various locations worldwide that are classified as either operating or finance leases. Our leases have remaining lease terms up to 24 years, which include options to extend the lease term for periods up to 20 years when it is reasonably certain the option will be exercised.

Operating lease cost totaled $18 million in both the first quarter of 2025 and 2024. Cash paid for operating leases approximated the lease cost and is classified in cash flows from operating activities. Noncash transactions related to operating leases totaled $7 million and $25 million in the first quarter of 2025 and 2024, respectively, reflecting new or extended leases. Finance lease, variable and short-term lease costs were not significant.

Balance sheet and other information related to our leases is as follows:

(Dollars in millions)			March 29, 2025			December 28, 2024
Operating leases:
Other assets			$	355		$	360
Other current liabilities			54			55
Other liabilities			313			316
Weighted-average remaining lease term (in years)			9.9			10.0
Weighted-average discount rate			4.89%			4.84%
Finance leases:
Property, plant and equipment, less accumulated amortization of $11 million and $9 million, respectively			$	97		$	95
Long-term debt, including current portion			99			97
Weighted-average remaining lease term (in years)			6.8			5.9
Weighted-average discount rate			6.65%			6.72%

At March 29, 2025, maturities of our operating lease liabilities on an undiscounted basis totaled $53 million for the remainder of 2025, $59 million for 2026, $49 million for 2027, $46 million for 2028, $41 million for 2029 and $222 million thereafter.

Note 6. Debt

Under our shelf registration statement, on February 13, 2025, we issued $500 million of SEC-registered fixed-rate notes due in May 2035 with an annual interest rate of 5.50%. The net proceeds of the issuance totaled $495 million, after deducting underwriting discounts, commissions and offering expenses.

Note 7. Derivative Instruments and Fair Value Measurements

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates. We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility. These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. At March 29, 2025 and December 28, 2024, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $683 million and $464 million, respectively. At March 29, 2025, the fair value amounts of our foreign currency exchange contracts were a $6 million asset and a $16 million liability. At December 28, 2024, the fair value amount of our foreign currency exchange contracts were a $5 million asset and a $19 million liability.

Our Finance group enters into interest rate swap agreements to mitigate certain exposures to fluctuations in interest rates. By using these contracts, we are able to convert floating-rate cash flows to fixed-rate cash flows. These agreements are designated as cash flow hedges. The fair value of our interest rate swap agreements is determined using values published by third-party leading financial news and data providers. These values are observable data that represent the value that financial institutions use for contracts entered into at that date, but are not based on actual transactions, so they are classified as Level 2. The fair value of our outstanding interest rate swap agreements was a $4 million and an $8 million asset at March 29, 2025 and December 28, 2024, respectively.

At March 29, 2025 and December 28, 2024, our Finance group had interest rate swap agreements related to our Floating Rate Junior Subordinated Notes for an aggregate notional amount of $264 million that effectively converts the variable-rate interest for these Notes to a weighted-average fixed rate of 5.20%. These agreements have maturities ranging from August 2025 to August 2029. At March 29, 2025 and December 28, 2024, we also had a swap agreement related to these Notes with a notional amount of $30 million and a weighted-average fixed rate of 5.10% that has a forward start date of August 15, 2025 and matures on August 15, 2030.

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

			March 29, 2025						December 28, 2024
			Carrying			Estimated			Carrying			Estimated
(In millions)			Value			Fair Value			Value			Fair Value
Manufacturing group
Debt, excluding leases			$	(3,313)		$	(3,176)		$	(3,164)		$	(2,989)
Finance group
Finance receivables, excluding leases			452			466			439			454
Debt			(340)			(317)			(341)			(311)

Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

Note 8. Shareholders’ Equity

A reconciliation of Shareholders’ equity is presented below:

(In millions)			Common Stock			Capital Surplus			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Three months ended March 29, 2025
Beginning of period			$	23		$	1,960		$	(82)		$	5,607		$	(304)		$	7,204
Net income			—			—			—			207			—			207
Other comprehensive income			—			—			—			—			39			39
Share-based compensation activity			—			45			—			—			—			45
Dividends declared			—			—			—			(3)			—			(3)
Purchases of common stock, including excise tax*			—			—			(217)			—			—			(217)
End of period			$	23		$	2,005		$	(299)		$	5,811		$	(265)		$	7,275
Three months ended March 30, 2024
Beginning of period			$	24		$	1,910		$	(165)		$	5,862		$	(644)		$	6,987
Net income			—			—			—			201			—			201
Other comprehensive loss			—			—			—			—			(37)			(37)
Share-based compensation activity			1			102			—			—			—			103
Dividends declared			—			—			—			(4)			—			(4)
Purchases of common stock, including excise tax*			—			—			(319)			—			—			(319)
End of period			$	25		$	2,012		$	(484)		$	6,059		$	(681)		$	6,931

*Includes amounts accrued for excise tax imposed on common share repurchases that totaled $2 million for both the first quarter of 2025 and 2024.

Dividends per share of common stock were $0.02 for both the first quarter of 2025 and 2024.

Earnings Per Share

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.

The weighted-average shares outstanding for basic and diluted EPS are as follows:

						Three Months Ended
(In thousands)									March 29, 2025			March 30, 2024
Basic weighted-average shares outstanding									182,378			192,800
Dilutive effect of stock options									1,290			2,060
Diluted weighted-average shares outstanding									183,668			194,860

In the first quarter of 2025 and 2024, stock options to purchase 2.1 million and 1.0 million shares, respectively, of common stock were excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive loss are presented below:

(In millions)			Pension and Postretirement Benefits Adjustments			Foreign Currency Translation Adjustments			Deferred Gains (Losses) on Hedge Contracts			Accumulated Other Comprehensive Loss
Balance at December 28, 2024			$	(179)		$	(120)		$	(5)		$	(304)
Other comprehensive income before reclassifications			—			40			(2)			38
Reclassified from Accumulated other comprehensive loss			—			—			1			1
Balance at March 29, 2025			$	(179)		$	(80)		$	(6)		$	(265)
Balance at December 30, 2023			$	(598)		$	(49)		$	3		$	(644)
Other comprehensive loss before reclassifications			—			(33)			(5)			(38)
Reclassified from Accumulated other comprehensive loss			1			—			—			1
Balance at March 30, 2024			$	(597)		$	(82)		$	(2)		$	(681)

The before and after-tax components of Other comprehensive income (loss) are presented below:

			March 29, 2025									March 30, 2024
(In millions)			Pre-Tax Amount			Tax (Expense) Benefit			After-tax Amount			Pre-Tax Amount			Tax (Expense) Benefit			After-tax Amount
Three Months Ended
Pension and postretirement benefits adjustments:
Amortization of net actuarial gain*			$	(2)		$	—		$	(2)		$	(1)		$	—		$	(1)
Amortization of prior service cost*			2			—			2			2			—			2
Pension and postretirement benefits adjustments, net			—			—			—			1			—			1
Foreign currency translation adjustments			40			—			40			(33)			—			(33)
Deferred losses on hedge contracts:
Current deferrals			(3)			1			(2)			(7)			2			(5)
Reclassification adjustments			2			(1)			1			(1)			1			—
Deferred losses on hedge contracts, net			(1)			—			(1)			(8)			3			(5)
Total			$	39		$	—		$	39		$	(40)		$	3		$	(37)

*These components of other comprehensive income (loss) are included in the computation of net periodic pension cost (income). See Note 14 of our 2024 Annual Report on Form 10-K for additional information.

Note 9. Segment Financial Information

We operate in, and report financial information for, the following six operating segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation and Finance. Segment profit for the manufacturing segments excludes the non-service components of pension and postretirement income, net; LIFO inventory provision; intangible asset amortization; interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

Our revenues and expenses by segment are provided below:

(In millions)			Textron Aviation			Bell			Textron Systems			Industrial			Textron eAviation			Finance			Total
Three months ended March 29, 2025
Revenues			$	1,212		$	983		$	296		$	792		$	7		$	16		$	3,306
Costs and expenses:
Cost of sales			929			803			219			678			6			—			2,635
Research and development costs			57			39			8			14			14			—			132
Selling and administrative expense			99			51			29			70			4			2			255
Interest expense, net			—			—			—			—			—			4			4
Segment profit (loss)			$	127		$	90		$	40		$	30		$	(17)		$	10		$	280
Three months ended March 30, 2024
Revenues			$	1,188		$	727		$	306		$	892		$	7		$	15		$	3,135
Costs and expenses:
Cost of sales			891			565			222			758			6			—			2,442
Research and development costs			52			39			18			20			15			—			144
Selling and administrative expense			102			43			28			85			4			(8)			254
Interest expense, net			—			—			—			—			—			5			5
Segment profit (loss)			$	143		$	80		$	38		$	29		$	(18)		$	18		$	290

A reconciliation of segment profit to income before income taxes, is presented below:

															Three Months Ended
(In millions)																		March 29, 2025			March 30, 2024
Segment profit																		$	280		$	290
Unallocated amounts:
Corporate expenses and other, net																		(43)			(62)
Interest expense, net for Manufacturing group																		(25)			(15)
LIFO inventory provision																		(29)			(20)
Intangible asset amortization																		(8)			(8)
Special charges																		—			(14)
Non-service components of pension and postretirement income, net																		66			66
Income before income taxes																		$	241		$	237

Other information by segment is provided below:

									Capital Expenditures												Depreciation and Amortization
						Three Months Ended									Three Months Ended
(In millions)									March 29, 2025			March 30, 2024									March 29, 2025			March 30, 2024
Textron Aviation									$	25		$	27								$	37		$	36
Bell									15			19									22			19
Textron Systems									5			8									12			11
Industrial									10			11									17			18
Textron eAviation									1			1									2			2
Corporate									—			—									2			2
Total									$	56		$	66								$	92		$	88

Our assets by segment are summarized below:

(In millions)																		March 29, 2025			December 28, 2024
Textron Aviation																		$	4,795		$	4,624
Bell																		3,073			2,992
Textron Systems																		2,045			2,036
Industrial																		2,413			2,378
Textron eAviation																		294			286
Finance																		679			680
Corporate																		3,643			3,842
Total assets																		$	16,942		$	16,838

Note 10. Revenues

Disaggregation of Revenues

Our revenues disaggregated by major product type are presented below:

						Three Months Ended
(In millions)									March 29, 2025			March 30, 2024
Aircraft									$	729		$	732
Aftermarket parts and services									483			456
Textron Aviation									$	1,212		$	1,188
Military aircraft and support programs									634			480
Commercial helicopters, parts and services									349			247
Bell									$	983		$	727
Textron Systems									$	296		$	306
Fuel systems and functional components									450			488
Specialized vehicles									342			404
Industrial									$	792		$	892
Textron eAviation									$	7		$	7
Finance									$	16		$	15
Total revenues									$	3,306		$	3,135

Our revenues for our segments by customer type and geographic location are presented below:

(In millions)			Textron Aviation			Bell			Textron Systems			Industrial			Textron eAviation			Finance			Total
Three months ended March 29, 2025
Customer type:
Commercial			$	1,143		$	361		$	70		$	785		$	7		$	16		$	2,382
U.S. Government			69			622			226			7			—			—			924
Total revenues			$	1,212		$	983		$	296		$	792		$	7		$	16		$	3,306
Geographic location:
United States			$	912		$	682		$	269		$	408		$	3		$	4		$	2,278
Europe			86			56			12			164			3			—			321
Other international			214			245			15			220			1			12			707
Total revenues			$	1,212		$	983		$	296		$	792		$	7		$	16		$	3,306
Three months ended March 30, 2024
Customer type:
Commercial			$	1,155		$	239		$	72		$	884		$	7		$	15		$	2,372
U.S. Government			33			488			234			8			—			—			763
Total revenues			$	1,188		$	727		$	306		$	892		$	7		$	15		$	3,135
Geographic location:
United States			$	950		$	559		$	274		$	460		$	4		$	4		$	2,251
Europe			62			23			13			198			2			5			303
Other international			176			145			19			234			1			6			581
Total revenues			$	1,188		$	727		$	306		$	892		$	7		$	15		$	3,135

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenues in future periods when we perform under the contracts. These remaining obligations exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At March 29, 2025, we had $17.2 billion in remaining performance obligations of which we expect to recognize revenues of approximately 78% through 2026, an additional 18% through 2028, and the balance thereafter.

Contract Assets and Liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At March 29, 2025 and December 28, 2024, contract assets totaled $478 million and $345 million, respectively, and contract liabilities totaled $1.9 billion at both dates, reflecting timing differences between revenues recognized, billings and payments from customers. We recognized revenues of $340 million and $327 million in the first quarter of 2025 and 2024, respectively, that were included in the contract liability balance at the beginning of each year.

Note 11. Share-Based Compensation

Under our share-based compensation plan, we have authorization to provide awards to selected employees and non-employee directors in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards. Compensation expense included in net income for our share-based compensation plans is as follows:

			Three Months Ended
(In millions)			March 29, 2025			March 30, 2024
Compensation expense			$	34		$	77
Income tax benefit			(8)			(19)
Total compensation expense included in net income			$	26		$	58

Compensation expense included stock option expense of $13 million and $15 million in the first quarter of 2025 and 2024, respectively. We typically grant stock appreciation rights to selected non-U.S. employees. At March 29, 2025, outstanding stock appreciation rights totaled 446,753 with a weighted-average exercise price of $66.21 and a weighted-average remaining contractual life of 6.6 years; these units had an intrinsic value of $4 million, compared with $14 million at March 30, 2024.

Stock Options

Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. Stock option compensation cost is calculated under the fair value approach using the Black-Scholes option-pricing model to determine the fair value of options granted on the date of grant. The expected volatility used in this model is based on historical volatilities and implied volatilities from traded options on our common stock. The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

We grant options annually on the first day of March. The assumptions used in our option-pricing model for these grants and the weighted-average fair value for these options are as follows:

			March 1, 2025			March 1, 2024
Fair value of options at grant date			$	22.01		$	27.69
Dividend yield			0.1%			0.1%
Expected volatility			25.1%			27.2%
Risk-free interest rate			4.1%			4.3%
Expected term (in years)			4.8			4.8

The stock option activity during the first quarter of 2025 is provided below:

(Options in thousands)			Number of Options			Weighted- Average Exercise Price
Outstanding at December 28, 2024			6,649			$	61.70
Granted			995			74.73
Exercised			(158)			(46.73)
Forfeited or expired			(21)			(79.48)
Outstanding at March 29, 2025			7,465			$	63.71
Exercisable at March 29, 2025			5,354			$	57.77

At March 29, 2025, our outstanding options had an aggregate intrinsic value of $87 million and a weighted-average remaining contractual life of 6.0 years. Our exercisable options had an aggregate intrinsic value of $87 million and a weighted-average remaining contractual life of 4.8 years at March 29, 2025. The total intrinsic value of options exercised during the first quarter of 2025 and 2024 was $4 million and $60 million, respectively.

Restricted Stock Units

We issue restricted stock units that include the right to receive dividend equivalents and are settled in either cash or stock. Grants of restricted stock units vest in full on the third anniversary of the grant date. Compensation cost is determined using the fair value of these units based on the trading price of our common stock. For units payable in stock, we use the trading price on the grant date, while units payable in cash are remeasured using the price at each reporting period date.

The activity for restricted stock units during the first quarter of 2025 is provided below:

			Units Payable in Stock									Units Payable in Cash
(Shares/Units in thousands)			Number of Shares			Weighted- Average Grant Date Fair Value						Number of Units			Weighted- Average Grant Date Fair Value
Outstanding at December 28, 2024, nonvested			331			$	75.50					631			$	77.75
Granted			96			74.73						244			74.87
Vested			(81)			(71.07)						(192)			(71.07)
Forfeited			—			—						(8)			(77.79)
Outstanding at March 29, 2025, nonvested			346			$	76.32					675			$	78.61

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

			Three Months Ended
(In millions)			March 29, 2025			March 30, 2024
Fair value of awards vested			$	20		$	41
Cash paid			14			33

Performance Share Units

The activity for our performance share units during the first quarter of 2025 is as follows:

(Units in thousands)			Number of Units			Weighted- Average Grant Date Fair Value
Outstanding at December 28, 2024, nonvested			394			$	80.81
Granted			199			74.73
Outstanding at March 29, 2025, nonvested			593			$	78.77

Cash paid under these awards totaled $16 million and $35 million in the first quarter of 2025 and 2024, respectively.

Note 12. Retirement Plans

We provide defined benefit pension plans and other postretirement benefits to eligible employees. The components of net periodic benefit (income) cost for these plans are as follows:

						Three Months Ended
(In millions)									March 29, 2025			March 30, 2024
Pension Benefits
Service cost									$	16		$	17
Interest cost									94			90
Expected return on plan assets									(162)			(159)
Amortization of net actuarial loss									—			1
Amortization of prior service cost									2			2
Net periodic benefit income*									$	(50)		$	(49)
Postretirement Benefits Other Than Pensions
Interest cost									$	2		$	2
Amortization of net actuarial gain									(2)			(2)
Net periodic benefit (income) cost									$	—		$	—

** Excludes the cost associated with the defined contribution component, included in certain of our U.S.-based defined benefit pension plans, that totaled $3 million and $4 million for the first quarter of 2025 and 2024, respectively.*

Note 13. Special Charges

In the first quarter of 2024, we recognized special charges of $14 million related to a 2023 restructuring plan. There were no special charges recorded in the first quarter of 2025.

Our restructuring reserve activity is summarized below:

(In millions)			Severance Costs			Contract Terminations and Other			Total
Balance at December 28, 2024			$	37		$	34		$	71
Cash paid			(7)			(12)			(19)
Foreign currency translation			1			—			1
Balance at March 29, 2025			$	31		$	22		$	53

Note 14. Income Taxes

Our effective tax rate for the first quarter of 2025 and 2024 was 14.1% and 15.2%, respectively. In the first quarter of 2025, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the favorable impact of research and development credits and tax deductions for foreign-derived intangible income. In the first quarter of 2024, the effective tax rate was lower than the U.S. federal statutory rate of 21%, largely due to the recognition of excess tax benefits related to share-based compensation, the favorable impact of research and development credits, and tax deductions for foreign-derived intangible income.

Note 15. Commitments and Contingencies

We are subject to actual and threatened legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; disputes with suppliers, production partners or other third parties; product liability; patent and trademark infringement; employment disputes; and environmental, health and safety matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.

Note 16. Subsequent Event

Within the Industrial segment, we have completed the previously announced strategic review of the Powersports product line. On April 23, 2025, we closed on the sale of the Powersports business, including the Arctic Cat brand and its operations. The proceeds and estimated after-tax gain on this transaction will be reported in the second quarter of 2025 and are not expected to be material.