Textron's Q2 2026 revenue rose 3% to $3.83B and EPS 5% to $1.42, but segment profit was flat at $353M only thanks to a $21M tariff refund, Citation jet deliveries fell to 40 from 49, and Bell's MV-75 program ran out of fiscal 2026 funding in July.
Revenue
$3.8B
+3.0% YoY
Net income
$248M
+1.2% YoY
Diluted EPS
$1.42
+5.2% YoY
Operating margin
9.2%
Headline: sales up 3%, but profit held flat only because of a one-time tariff refund, and Bell's MV-75 funding is now at risk
Textron's second quarter of 2026 (the three months ended July 4, 2026) brought in $3.83 billion of revenue, up 3%, and net income of $248 million, up 1%. Diluted earnings per share (EPS, profit divided by the number of shares) rose faster, 5% to $1.42, mainly because Textron kept buying back its own stock, so the profit was split across fewer shares.
The headline growth hides an uneven quarter. The business jet unit (Textron Aviation, maker of Cessna and Beechcraft) delivered 9 fewer Citation jets than a year ago and its profit slipped. Bell's profit margin shrank as more of its revenue came from lower-margin military development work. Combined segment profit was $353 million versus $352 million. Segment profit is Textron's own measure of what the operating businesses earn before corporate costs, interest, pension items and some accounting adjustments. That flat result includes $21 million of tariffs refunded to the Industrial segment after the U.S. Supreme Court ruled in February 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized. The refund is a one-off.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$3,827M
$3,716M
+3.0%
Segment profit (all segments)
$353M
$352M
+0.3%
Segment profit margin
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Gross margin (share of manufacturing revenue left after production costs)
17.8%
18.8%
-1.0 pts
Net income
$248M
$245M
+1.2%
Diluted EPS (GAAP)
$1.42
$1.35
+5.2%
Adjusted diluted EPS (company's non-GAAP measure)
$1.62
$1.55
+4.5%
Citation business jets delivered
40
49
-18%
Commercial turboprops delivered
44
34
+29%
Bell commercial helicopters delivered
36
32
+13%
Total backlog (signed orders not yet delivered)
$18.9B (Jul 4, 2026)
$18.8B (Jan 3, 2026)
+0.5% vs. year-end
Manufacturing operating cash flow
$235M
$395M
-41%
Segment profit margin is segment profit divided by total revenue. Adjusted EPS excludes the LIFO inventory provision (an accounting charge from valuing inventory at the most recent, higher costs), amortization of acquired intangible assets and special charges. Backlog is compared with the fiscal year-end because that is the comparison the 10-Q gives.
For the first half of 2026, revenue was $7.52 billion (+7%), net income $468 million (+3.5%) and diluted EPS $2.67, compared with $2.48.
Segment by segment
Segment
Q2 2026 revenue
YoY
Q2 2026 segment profit
YoY
Margin (2026 vs 2025)
Textron Aviation
$1,544M
+1%
$165M
-3%
10.7% vs 11.2%
Bell
$1,074M
+6%
$75M
-6%
7.0% vs 7.9%
Textron Systems
$347M
+7%
$44M
+10%
12.7% vs 12.3%
Industrial
$848M
+1%
$59M
+9%
7.0% vs 6.4%
Finance
$14M
-7%
$10M
+25%
n/a
Starting in 2026, Textron closed its separate eAviation segment. Most of it, including the electric-aircraft maker Pipistrel, moved into Textron Aviation, and its military products moved into Textron Systems. The 2025 figures above have been restated to match.
Textron Aviation: price increases made up for fewer jets
Aircraft revenue rose $17 million to $1,032 million. The 10-Q attributes the increase to "higher pricing, partially offset by lower volume and mix," with "lower Citation jet and defense volume, partially offset by higher commercial turboprop volume." Textron delivered 40 Citation jets (versus 49) and 44 turboprops (versus 34). A turboprop is a propeller plane powered by a turbine engine and sells for much less than a business jet, so replacing jets with turboprops lowers revenue per aircraft. Aftermarket parts and services, the steadier business of servicing aircraft already flying, grew 1% to $512 million.
Segment profit fell $5 million to $165 million, "primarily due to an unfavorable impact from manufacturing inefficiencies and lower aircraft volume and mix, partially offset by lower warranty costs." Inflation added $47 million to the segment's cost of sales. Over the first half as a whole, Aviation's results were stronger: revenue rose 11% and profit 9%, because Q1 delivered more units. In the release, CEO Lisa Atherton said "healthy demand drove strong order activity." The Aviation backlog supports that: it rose to $8.03 billion from $7.72 billion at year-end, so the company booked more new orders than it delivered.
Bell: military sales grew, but at thinner margins
Military revenue rose 7% to $695 million, "largely due to higher volume on H-1 production and the MV-75 program." The MV-75 Cheyenne is the Army's new tiltrotor aircraft, which takes off like a helicopter and flies like a plane. It is still in development, and development contracts typically earn lower margins than mature production programs. Commercial helicopter revenue rose 3% to $379 million on higher pricing, and deliveries rose to 36 helicopters from 32.
Segment profit fell 6% to $75 million and the margin fell 0.9 points to 7.0%, "primarily due to an unfavorable impact from contract performance and from the mix of military programs," partly offset by an $11 million cut in R&D spending. Bell's backlog fell to $7.54 billion from $7.80 billion at year-end, which means Bell delivered more work than it booked in the half.
Textron Systems: its profit growth came from spending less on R&D
Revenue rose 7% to $347 million on higher volume from armored land vehicles and from military training services provided by the ATAC subsidiary. Profit rose $4 million to $44 million. The filing gives the reason as "primarily due to lower research and development costs": R&D fell $6 million, from $16 million to $10 million. So the higher profit came from reduced development spending, not from stronger underlying earnings on the extra sales. Backlog was $3.35 billion.
Industrial: the $21 million tariff refund accounts for the whole profit increase
Industrial combines Kautex (automotive fuel systems) and Textron Specialized Vehicles (E-Z-GO golf carts and utility vehicles). Kautex revenue rose 4% to $500 million, with $8 million of that from favorable exchange rates. Specialized Vehicles revenue fell 2% to $348 million on lower volume and mix. Segment profit rose $5 million to $59 million, "primarily due to higher pricing, net of inflation," which the 10-Q says "includes $21 million of tariffs recovered in the second quarter of 2026." Without the $21 million refund, Industrial's profit would have been about $38 million, below the $54 million it earned a year earlier.
Textron announced on April 30, 2026 that it intends to separate the Industrial segment, either by selling it or by spinning it off as a separate public company. It is targeting completion within 12 to 18 months of the announcement, and the earnings release says a sale process has begun.
The MV-75 funding gap
The biggest near-term risk is disclosed in the MD&A, not in the income statement. After the quarter ended, "in mid-July 2026, Bell substantially exhausted all available fiscal 2026 program funding and has continued performing work at its own risk." The government is asking Congress to approve moving an extra $350 million to the program (an "Above Threshold Reprogramming," or ATR, request), but the 10-Q says approval "is not guaranteed." If the money does not arrive, Textron says it could record a charge of up to about $120 million and take a cash hit of about $350 million.
A separate charge is expected in any case. When the program's next phase is awarded (low-rate initial production, which Textron expects in late 2026 or early 2027 and which is largely fixed-price), Textron expects to book an unfavorable adjustment of $60 million to $110 million, "reflecting higher costs than originally anticipated from when the program was bid." Management says it still expects the overall program to earn a positive profit margin after that adjustment.
Takeaway: Textron's operating profit did not grow this quarter once a one-time $21 million tariff refund is removed: segment profit would have been about $332 million, down roughly 6% from $352 million. The growth that remains is concentrated in Bell's MV-75, a program with thin development-stage margins, a funding gap that Bell is currently covering itself, and a separate cost-overrun charge of $60 million to $110 million already expected.
Cash, debt and buybacks
The manufacturing group's operating cash flow was $235 million in the quarter, down from $395 million. For the first half it was $128 million, down from $281 million, "largely due to changes in working capital" (cash tied up in inventory and receivables).
Capital spending nearly doubled in the first half, to $228 million from $134 million.
Textron spent $209 million on share buybacks in Q2 and $377 million in the first half (4.1 million shares). This is why EPS grew about 5% while net income grew about 1%.
Manufacturing cash fell to $1.44 billion from $1.94 billion at year-end. Net debt to capital, a measure of how much of the business is financed by borrowing, rose to 20% from 17%. The $1.0 billion credit facility remained undrawn.
The effective tax rate was 18.4%, compared with 18.6% a year ago, so taxes did not move the comparison much.
Outlook
Management's guidance (reiterated July 28, 2026): full-year 2026 GAAP EPS of $5.39 to $5.59, adjusted EPS of $6.40 to $6.60, and manufacturing cash flow before pension contributions of $700 million to $800 million. That guidance assumes the extra MV-75 funding is approved. If it is not, Textron says adjusted EPS could be $0.20 to $0.30 lower and cash flow $150 million to $250 million lower.
Our read: First-half GAAP EPS was $2.67, so reaching the guidance range requires $2.72 to $2.92 in the second half. That is achievable, since Textron's deliveries usually peak in the fourth quarter. Manufacturing cash flow before pension contributions was $154 million in Q2 (versus $336 million a year ago), and first-half operating cash flow was only $128 million, so the $700 million to $800 million target depends heavily on the second half. The key things to watch in Q3 (usually reported in late October) are whether the $350 million MV-75 reprogramming is approved or Textron books the up-to-$120 million charge, whether Citation jet deliveries recover to match the growing Aviation backlog, and what Industrial earns without another tariff refund. The Industrial separation could also change what the reported "Textron" consists of: a pure aerospace and defense company where Bell's military work carries more weight.
Source: Textron Form 10-Q for the quarter ended July 4, 2026 (filed July 28, 2026); guidance and adjusted EPS from the Q2 2026 earnings release (Form 8-K Exhibit 99.1, same date).