Textron 10-Q 2025-06-28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

For the quarterly period ended June 28, 2025

OR

For the transition period from ______ to ______.

Commission File Number 1-5480

Textron Inc.

(Exact name of registrant as specified in its charter)

(401) 421-2800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of July 11, 2025, there were 178,205,295 shares of common stock outstanding.

TEXTRON INC.

Index to Form 10-Q

For the Quarterly Period Ended June 28, 2025

PART I. FINANCIAL INFORMATION

TEXTRON INC.

Consolidated Statements of Operations (Unaudited)

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Comprehensive Income (Unaudited)

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Balance Sheets (Unaudited)

See Notes to the Consolidated Financial Statements.

TEXTRON INC.

Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 28, 2025 and June 29, 2024, respectively

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Business Environment

Recent changes to the United States trade policy have resulted in new or higher tariffs on goods imported from numerous countries, and some countries have imposed retaliatory tariffs on imports from the United States. We are principally a North American manufacturer and 71% of our 2024 revenues were generated in the U.S. Our aircraft products, subassemblies, parts and components manufactured in Canada and Mexico are largely qualified under the rules of the United States-Mexico-Canada Agreement (USMCA) for preferential treatment on tariffs imposed by the U.S. on Canada and Mexico imports. In addition, our operations outside of North America primarily source materials and components from outside of North America and manufacture products for non-U.S. customers. Many of our businesses also source materials and components from outside of North America. These businesses have been – or could be in the future – impacted by these newly imposed U.S. tariffs. To date, we have not experienced a material adverse impact from these tariffs. We will continue to evaluate the potential impact of these tariffs and any further developments or changes in global tariff policies on our business and financial position.

Consolidated Results of Operations

An analysis of our consolidated operating results is set forth below. A more detailed analysis of our segments’ operating results is provided in the Segment Analysis section on pages 24 to 27.

Revenues

Revenues increased $189 million, 5%, in the second quarter of 2025, compared with the second quarter of 2024. The revenue increase primarily included the following factors:

• Higher Bell revenues of $222 million due to higher military aircraft and support programs revenues of $149 million, primarily for the Future Long Range Assault Aircraft (FLRAA) program, recently designated as MV-75 by the U.S. Army, and higher commercial revenues of $73 million.

• Higher Textron Aviation revenues of $42 million, largely reflecting higher aircraft revenues of $35 million.

• Lower Industrial revenues of $75 million, with $66 million at Textron Specialized Vehicles, reflecting the impact from the disposition of the Powersports business in April 2025, as discussed in Note 12 to the Consolidated Financial Statements and lower volume, primarily in golf products.

Revenues increased $360 million, 5%, in the first half of 2025, compared with the first half of 2024. The revenue increase primarily included the following factors:

• Higher Bell revenues of $478 million, due to higher military aircraft and support programs revenues of $303 million, primarily for the MV-75 program and for military sustainment programs, as well as higher commercial revenues of $175 million.

• Higher Textron Aviation revenues of $66 million, reflecting higher aftermarket parts and services revenues of $34 million and higher aircraft revenues of $32 million.

• Lower Industrial revenues of $175 million, with $128 million at Textron Specialized Vehicles, reflecting lower volume and mix, primarily in golf products, and the impact from the disposition. Kautex revenues decreased $47 million, largely due to lower volume.

• Lower Textron Systems revenues of $12 million, largely due to lower volume.

Manufacturing group revenues increased $186 million and $356 million in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024, reflecting an increase of $355 million and $694 million, respectively, in product revenues, partially offset by a decrease of $169 million and $338 million, respectively, in service revenues. The decrease in service revenues for both periods was largely related to the classification of revenues for the MV-75 program, which was service-related prior to the transition of the program to the Engineering and Manufacturing Development phase in the third quarter of 2024 when it became product-related.

Cost of Sales

Cost of sales includes cost of products and services sold for the Manufacturing group. Cost of sales increased $173 million, 6%, in the second quarter of 2025, compared with the second quarter of 2024, largely due to higher net volume and mix of $136 million and a $74 million impact from inflation and higher LIFO inventory provision, partially offset by the impact from the disposition of the Powersports business.

Cost of sales increased $375 million, 7%, in the first half of 2025, compared with the first half of 2024, largely due to higher net volume and mix of $258 million and a $133 million impact from inflation and higher LIFO inventory provision, partially offset by the impact from the disposition. Gross margin as a percentage of Manufacturing revenues decreased 130 basis points in the first half of 2025, primarily due to lower margin at the Bell and Textron Aviation segments.

Research and Development Costs

Research and development costs increased $32 million, 30%, in the second quarter of 2025, compared with the second quarter of 2024, largely due to an increase of $31 million at Bell, reflecting lower costs in 2024 due to the wind down of the Future Attack Reconnaissance Aircraft program.

Research and development costs increased $20 million, 8%, in the first half of 2025, compared with the first half of 2024, largely due to an increase of $31 million at Bell, reflecting lower costs in 2024 due to the wind down of the Future Attack Reconnaissance Aircraft program, partially offset by a $10 million decrease at the Textron Systems segment related to timing of project expenditures.

Selling and Administrative Expense

Selling and administrative expense increased $10 million, 3%, in the second quarter of 2025, compared with the second quarter of 2024, primarily due to higher share-based compensation expense.

Selling and administrative expense decreased $8 million, 1%, in the first half of 2025, compared with the first half of 2024, primarily due to lower share-based compensation expense, partially offset by a 2024 recovery of amounts that were previously written off related to one customer relationship in the Finance segment.

Interest Expense, Net

Interest expense, net includes interest expense for both the Finance and Manufacturing borrowing groups, with interest on intercompany borrowings eliminated, and interest income earned on cash and equivalents for the Manufacturing borrowing group. In the second quarter and first half of 2025, interest expense, net increased $6 million, 24%, and $15 million, 33%, respectively, compared with the corresponding periods of 2024, primarily reflecting lower interest income. Gross interest expense totaled $39 million and $36 million in the second quarter of 2025 and 2024, respectively, and $77 million and $74 million in the first half of 2025 and 2024, respectively.

Special Charges

Special charges largely include restructuring activities as discussed in Note 12 to the Consolidated Financial Statements on page 20.

Income Taxes

Our effective tax rate was 18.6% and 19.5% in the second quarter of 2025 and 2024, respectively, and 16.6% and 17.7% for the first half of 2025 and 2024, respectively. Our 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.

Backlog

Our backlog is summarized below:

Segment Analysis

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 is an important measure used for evaluating performance and for decision-making purposes. 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 operating costs used to derive segment profit for our manufacturing segments includes cost of sales, research and development costs and selling and administrative expense. The cost of sales discussed in this Segment Analysis section excludes the LIFO inventory provision and intangible asset amortization discussed above that are reported within Cost of products sold or Cost of services sold on the Consolidated Statements of Operations. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

In our discussion of comparative results for the Manufacturing group, material changes in revenues and segment profit for our commercial businesses typically are expressed in terms of product line revenues, including volume and mix and pricing; foreign exchange; acquisitions and dispositions; inflation; manufacturing efficiency; and changes in research and development costs and selling and administrative expense. For revenues, volume and mix represents changes in revenues from increases or decreases in the number of units delivered or services provided and the composition of products and/or services sold. For segment profit, volume and mix represents a change due to the number of units delivered or services provided and the composition of products and/or services sold at different profit margins. Pricing represents changes in unit pricing. Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from the prior period. Revenues generated by acquired businesses are reflected in Acquisitions for a twelve-month period, while reductions in revenues and segment profit from the sale of businesses are reflected as Dispositions. Inflation represents higher material, wages, benefits, pension service cost or other costs. Manufacturing efficiency includes changes in material, labor and overhead variances to standards, typically due to scrap rates, labor efficiency or inefficiencies, facility usage and other manufacturing productivity inputs.

Approximately 25% of our 2024 revenues were derived from contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program. For our segments that contract with the U.S. Government, material changes in revenues related to these contracts are expressed in terms of volume. Changes in segment profit for these contracts are typically expressed in terms of volume and mix and contract performance, which includes cumulative catch-up adjustments associated with a) revisions to the transaction price that may reflect contract modifications or changes in assumptions related to award fees and other variable consideration or b) changes in the total estimated costs at completion due to improved or deteriorated operating performance.

Textron Aviation

Textron Aviation’s revenues increased $42 million, 3%, in the second quarter of 2025, compared with the second quarter of 2024, reflecting higher aircraft revenues of $35 million and higher aftermarket parts and services revenues of $7 million. The increase in aircraft revenues was largely due to higher Citation jet and piston engine aircraft volume and higher pricing, partially offset by lower commercial turboprop volume. We delivered 49 Citation jets and 34 commercial turboprops in the second quarter of 2025, compared with 42 Citation jets and 44 commercial turboprops in the second quarter of 2024.

Textron Aviation’s revenues increased $66 million, 2%, in the first half of 2025, compared with the first half of 2024, reflecting higher aftermarket parts and services revenues of $34 million and higher aircraft revenues of $32 million. The increase in aircraft revenues was primarily due to higher pricing, partially offset by lower volume and mix. The decrease in volume and mix largely reflects the mix of Citation jets and commercial turboprops sold, partially offset by higher defense and piston engine aircraft volume. We delivered 80 Citation jets and 64 commercial turboprops in the first half of 2025, compared with 78 Citation jets and 64 commercial turboprops in the first half of 2024.

Textron Aviation’s cost of sales increased $52 million, 5%, in the second quarter of 2025, compared with the second quarter of 2024, largely reflecting inflation of $43 million and higher warranty costs, partially offset by a favorable impact from manufacturing efficiencies. Cost of sales increased $90 million, 4%, in the first half of 2025, compared with the first half of 2024, largely reflecting inflation of $78 million and higher warranty costs.

Textron Aviation's segment profit decreased $15 million, 8%, in the second quarter of 2025, compared with the second quarter of 2024, primarily due to the mix of aircraft sold and higher warranty costs, partially offset by a favorable impact from manufacturing efficiencies and higher pricing, net of inflation.

Textron Aviation's segment profit decreased $31 million, 9%, in the first half of 2025, compared with the first half of 2024, primarily due to lower net volume and mix described above and higher warranty costs, partially offset by higher pricing, net of inflation.

Bell

Bell’s military aircraft and support programs revenues increased $149 million, 30%, in the second quarter of 2025, compared with the second quarter of 2024, largely due to higher volume on the FLRAA program, recently designated as MV-75 by the U.S. Army. Commercial helicopters, parts and services revenues increased $73 million, 25%, in the second quarter of 2025, compared with the second quarter of 2024, primarily due to the mix of commercial helicopters sold as we delivered 32 commercial helicopters in both the second quarter of 2025 and 2024.

Bell’s military aircraft and support programs revenues increased $303 million, 31%, in the first half of 2025, compared with the first half of 2024, largely due to higher volume on the MV-75 program and on military sustainment programs. Commercial helicopters, parts and services revenues increased $175 million, 32%, in the first half of 2025, compared with the first half of 2024, primarily due to higher volume and mix as we delivered 61 commercial helicopters in the first half of 2025, compared with 50 commercial helicopters in the first half of 2024.

Bell’s cost of sales increased $192 million, 30%, and $430 million, 35%, in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024, primarily due to higher volume and mix described above.

Bell's research and development costs increased $31 million, 443%, and $31 million, 67%, in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024, largely reflecting lower costs in 2024 due to the wind down of the Future Attack Reconnaissance Aircraft program.

Bell’s segment profit decreased $2 million, 2%, in the second quarter of 2025, compared with the second quarter of 2024, primarily reflecting higher research and development costs described above, partially offset by higher volume and mix. Bell's profit margin decreased 240 basis points, largely reflecting the impact of the higher research and development costs and higher volume on lower margin MV-75 development activities, partially offset by favorable commercial aircraft volume and mix.

Bell's segment profit increased $8 million, 5%, in the first half of 2025, compared with the first half of 2024, while its profit margin decreased 220 basis points, largely reflecting the impact of the higher research and development costs and higher volume on lower margin MV-75 development activities, partially offset by favorable commercial aircraft volume and mix.

Textron Systems

Textron Systems’ revenues decreased $2 million, 1%, and $12 million, 2%, in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024, largely due to lower volume. The lower volume included the impact of the cancellation of the Shadow program and termination of certain U.S. Government development programs, offset by higher volume for the Ship-to-Shore Connector program.

Textron Systems’ research and development costs were unchanged in the second quarter of 2025, and decreased $10 million, 30%, in the first half of 2025, compared with the corresponding periods of 2024. The decrease in costs in the first half of 2025 was related to the timing of project expenditures.

Textron Systems’ segment profit increased $5 million, 14%, in the second quarter of 2025, compared with the second quarter of 2024, primarily due to lower selling and administrative expense. Segment profit increased $7 million, 10%, in the first half of 2025, compared with the first half of 2024, primarily due to lower research and development costs and selling and administrative expense, partially offset by lower volume.

Industrial

Industrial segment revenues decreased $75 million, 8%, in the second quarter of 2025, compared with the second quarter of 2024, largely at Textron Specialized Vehicles. Revenues decreased $66 million, 16%, at Textron Specialized Vehicles, reflecting the impact from the disposition of the Powersports business in April 2025, as discussed in Note 12 to the Consolidated Financial Statements, and lower volume, primarily in golf products.

Industrial segment revenues decreased $175 million, 10%, in the first half of 2025, compared with the first half of 2024, largely due to lower volume and mix and the impact from the disposition. Textron Specialized Vehicles' revenues decreased $128 million, 15%, reflecting lower volume and mix, primarily in golf products, and the impact from the disposition. Kautex revenues decreased $47 million, 5%, largely due to lower volume.

Industrial's cost of sales decreased $77 million, 10%, in the second quarter of 2025, compared with the second quarter of 2024, principally reflecting the impact from the disposition and lower volume described above. Cost of sales decreased $157 million, 10%, in the first half of 2025, compared with the first half of 2024, principally reflecting the impact of lower volume and mix described above and the impact from the disposition.

Industrial's selling and administrative expense decreased $12 million, 15%, in the second quarter of 2025, compared with the second quarter of 2024, primarily reflecting the impact from the disposition and lower compensation costs, which included the impact of headcount reductions from restructuring activities. Selling and administrative expense decreased $27 million, 16%, in the first half of 2025, compared with the first half of 2024, primarily reflecting lower compensation costs, which included the impact of headcount reductions from restructuring activities and the impact from the disposition.

Industrial's segment profit increased $12 million, 29%, in the second quarter of 2025, compared with the second quarter of 2024, primarily reflecting the impact from the disposition and cost reductions resulting from restructuring activities, partially offset by lower volume and mix described above.

Industrial's Segment profit increased $13 million, 18%, in the first half of 2025, compared with the first half of 2024, primarily reflecting cost reductions resulting from restructuring activities and the impact from the disposition, partially offset by lower volume and mix described above.

Textron eAviation

Textron eAviation segment revenues decreased $1 million in both the second quarter and first half of 2025, compared with the corresponding periods of 2024, and segment loss decreased $2 million and $3 million, respectively.

Finance

Finance segment revenues increased $3 million and $4 million in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024. Segment profit increased $1 million and decreased $7 million in the second quarter and first half of 2025, respectively, compared with the corresponding periods of 2024. Selling and administrative expense in the first half of 2024 included an $8 million recovery of amounts that were previously written off related to one customer relationship.

Liquidity and Capital Resources

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.

Key information that is utilized in assessing our liquidity is summarized below:

We believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of the capacity to add further leverage. We expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility.

Credit Facilities and Other Sources of Capital

Textron has a senior unsecured revolving credit facility for an aggregate principal amount of $1.0 billion, of which $100 million is available for the issuance of letters of credit. We may elect to increase the aggregate amount of commitments under the facility to up to $1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a majority of the commitments under the facility. At June 28, 2025 and December 28, 2024, there were no amounts borrowed against the facility and there were $9 million of outstanding letters of credit issued under the facility.

We also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities. 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%. On March 3, 2025, we repaid our $350 million 3.875% Notes due in 2025.

Manufacturing Group Cash Flows

Cash flows for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summarized below:

In the first half of 2025, cash flows from operating activities decreased $72 million to $281 million, compared with $353 million in the first half of 2024, largely due to changes in working capital, partially offset by $52 million in lower net tax payments.

Cash flows used in investing activities included $134 million and $140 million of capital expenditures in the first half of 2025 and 2024, respectively, partially offset by $57 million and $26 million of net proceeds from corporate-owned life insurance policies, respectively. In the first half of 2025, cash flows from investing activities also included $16 million of net proceeds from the disposition of the Powersports business as discussed in Note 12 to the Consolidated Financial Statements.

Cash flows used in financing activities in the first half of 2025 included $429 million of cash paid to repurchase an aggregate of 5.8 million shares of our common stock and $353 million of payments on long-term debt, partially offset by $495 million of net proceeds from the issuance of long-term debt. In the first half of 2024, cash flows used in financing activities included $675 million of cash paid to repurchase an aggregate of 7.7 million shares of our common stock and $359 million of payments on long-term debt.

Finance Group Cash Flows

Cash flows for the Finance group as presented in our Consolidated Statements of Cash Flows are summarized below:

The Finance group’s cash flows from investing activities included finance receivable originations of $111 million and $58 million in the first half of 2025 and 2024, respectively, and collections on finance receivables totaling $81 million and $78 million, respectively. In the first half of 2025, investing cash flows also included $59 million of proceeds from the disposition of leveraged leases. In the first half of 2025 and 2024, financing activities included payments on long-term and nonrecourse debt of $11 million and $15 million, respectively.

Consolidated Cash Flows

The consolidated cash flows after elimination of activity between the borrowing groups, are summarized below:

In the first half of 2025, cash flows from operating activities decreased $97 million to $264 million, compared with $361 million in the first half of 2024, largely due to changes in working capital and a net cash outflow of $33 million from captive financing activities, partially offset by $57 million in lower net tax payments.

Cash flows from investing activities in the first half of 2025 included $59 million of proceeds from the disposition of leveraged leases, $57 million of net proceeds from corporate-owned life insurance policies and $16 million of net proceeds from the disposition of the Powersports business, offset by $134 million of capital expenditures. In the first half of 2024, cash flows used in investing activities included $140 million of capital expenditures, partially offset by $26 million of net proceeds from corporate-owned life insurance policies.

Cash flows used in financing activities in the first half of 2025 included $429 million of cash paid to repurchase shares of our outstanding common stock and $364 million of payments on long-term and non-recourse debt, partially offset by $495 million of net proceeds from the issuance of long-term debt. In the first half of 2024, cash flows used in financing activities included $675 million of cash paid to repurchase shares of our outstanding common stock and $374 million of payments on long-term and non-recourse debt.

Captive Financing and Other Intercompany Transactions

The Finance group provides financing primarily to purchasers of new and pre-owned Textron Aviation aircraft and Bell helicopters manufactured by our Manufacturing group, otherwise known as captive financing. In the Consolidated Statements of Cash Flows, cash received from customers is reflected as operating activities when received from third parties. However, in the cash flow information provided for the separate borrowing groups, cash flows related to captive financing activities are reflected based on the operations of each group. For example, when product is sold by our Manufacturing group to a customer and is financed by the Finance group, the origination of the finance receivable is recorded within investing activities as a cash outflow in the Finance group’s statement of cash flows. Meanwhile, in the Manufacturing group’s statement of cash flows, the cash received from the Finance group on the customer’s behalf is recorded within operating cash flows as a cash inflow. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash flows at the time of the original financing. These captive financing activities, along with all significant intercompany transactions, are reclassified or eliminated from the Consolidated Statements of Cash Flows.

Reclassification adjustments included in the Consolidated Statements of Cash Flows on page 6 are summarized below:

Critical Accounting Estimates Update

Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements. The accounting estimates that we believe are most critical to the portrayal of our financial condition and results of operations are reported in Item 7 of our 2024 Annual Report on Form 10-K. The following section provides an update of the year-end disclosure.

Revenue Recognition

A substantial portion of our revenues is related to long-term contracts with the U.S. Government, including those under the U.S. Government-sponsored foreign military sales program, for the design, development, manufacture or modification of aerospace and defense products as well as related services. We generally use the cost-to-cost method to measure progress for these contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.

Changes in our estimate of the total expected cost or in the transaction price for a contract typically impact our profit booking rate. We utilize the cumulative catch-up method of accounting to recognize the impact of these changes on our profit booking rate for a contract. Under this method, the inception-to-date impact of a profit adjustment on a contract is recognized in the period the adjustment is identified. The impact of our cumulative catch-up adjustments on segment profit recognized in prior periods is presented below:

Forward-Looking Information

Certain statements in this Quarterly Report on Form 10-Q and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our 2024 Annual Report on Form 10-K under “Risk Factors,” among the factors that could cause actual results to differ materially from past and projected future results are the following:

• Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations;

• Changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries;

• Our ability to perform as anticipated and to control costs under contracts with the U.S. Government;

• The U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards;

• Changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products;

• Volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products;

• Volatility in interest rates or foreign exchange rates and inflationary pressures;

• Risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries;

• Our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables;

• Performance issues with key suppliers or subcontractors;

• Legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products;

• Our ability to control costs and successfully implement various cost-reduction activities;

• The efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs;

• The timing of our new product launches or certifications of our new aircraft products;

• Our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;

• Pension plan assumptions and future contributions;

• Demand softness or volatility in the markets in which we do business;

• Cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;

• Difficulty or unanticipated expenses in connection with integrating acquired businesses;

• The risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections;

• The impact of changes in tax legislation;

• The risk of disruptions to our business and the business of our suppliers, customers and other business partners due to unexpected events, such as pandemics, natural disasters, acts of war, strikes, terrorism, social unrest or other societal, geopolitical or macroeconomic conditions;

• Risks related to changing U.S. and foreign trade policies, including increased trade restrictions or tariffs; and

• The ability of our businesses to hire, train and retain the highly skilled personnel necessary for our businesses to succeed.

There has been no significant change in our exposure to market risk during the fiscal quarter ended June 28, 2025. For discussion of our exposure to market risk, refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained in Textron’s 2024 Annual Report on Form 10-K.

We performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 28, 2025. The evaluation was performed with the participation of senior management of each business segment and key Corporate functions, under the supervision of our Chairman, President and Chief Executive Officer (CEO) and our Executive Vice President and Chief Financial Officer (CFO). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were operating and effective as of June 28, 2025.

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 28, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Our business, financial condition and results of operations are subject to various risks. The Company is enhancing the risk factors previously disclosed in the 2024 Annual Report on Form 10-K for the year ended December 28, 2024 with the following risk factor.

We are subject to risks of doing business globally that could adversely impact our business.

Risks arising from uncertainty in global macroeconomic conditions may harm our business. Negative macroeconomic factors may have an adverse effect on our business, results of operations and financial condition, as well as on our distributors, customers, subcontractors and suppliers, and on activity in many of the industries and markets we serve. We cannot predict changes in worldwide or regional economic or political conditions and government policies as such factors are highly volatile and beyond our control. If current macroeconomic pressures, including from inflation and labor and supply chain challenges, continue or if global macroeconomic conditions deteriorate and remain at depressed levels for extended periods, our business, results of operations and financial condition could be materially adversely affected. In addition, changes in laws or policies governing the terms of foreign trade, including increased trade restrictions, tariffs or taxes on imports from countries where we manufacture or sell our products or from where we import products or raw materials (either directly or through our suppliers) could adversely impact our competitive position, business operations and financial results. In particular, recent changes to global tariff policies have created significant uncertainty with respect to trade policies, treaties and tariffs. These developments could adversely impact us, our distributors, customers, subcontractors or suppliers which could have a material adverse effect on our financial position, results of operations or cash flows. See Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion of the impact of these tariffs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following provides information about our second quarter of 2025 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

** These shares were purchased pursuant to a plan authorizing the repurchase of up to 35 million shares of Textron common stock that was approved on July 24, 2023 by our Board of Directors. This share repurchase plan has no expiration date.*

(c) None of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or adopted or terminated a “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408 of Regulation S-K) during the quarter ended June 28, 2025.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.