Textron Aktie

Thank you for standing by. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Textron First Quarter 2026 Earnings Release. [Operator Instructions]

I would now like to turn the conference over to Scott Hegstrom, VP of Investor Relations. You may begin.

Thanks, Joel, and good morning, everyone. Before we begin, I'd like to mention that we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release.

On the call today, we have Lisa Atherton, our Chief Executive Officer; and David Rosenberg, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

With that, I'll turn the call over to Lisa.

Thank you, Scott. Good morning, everyone, and thank you for joining us. Today is an incredibly exciting and important day for Textron. Our first quarter results highlight a very strong start to the year. We generated $3.7 billion in revenue, representing 12% growth for the quarter. We also grew segment profit in the quarter by 10% to $320 million. This reflects strong performance across each of our A&D businesses, including robust commercial order activity at both Aviation and Bell. We also generated $1.45 of adjusted EPS, up 13% from a year ago.

Turning now to Slide 5. In addition to announcing our first quarter results today, we also announced our intent to separate our Industrial segment from our A&D businesses. This is a consequential and exciting step in our evolution, establishing new Textron as a pure-play A&D company aligned to its core franchises of Textron Aviation, Bell and Textron Systems. In terms of structure, we intend to explore multiple paths to affect this planned separation, including a sale of the Industrial businesses or a tax-free spin-off into a stand-alone publicly traded company. We will work through alternatives on the approach over the coming quarters and are targeting a completion of the separation within 12 to 18 months. In the interim, we will continue to operate in the normal course of business.

Turning to Slide 6. We believe these actions will drive long-term value for our shareholders. First and foremost, this establishes New Textron as a pure-play A&D company. Each of our A&D franchises are aligned with highly attractive end markets with tremendous opportunities in front of them. For New Textron, this separation also enhances clarity around our capital allocation and investments as well as our strategic flexibility. The MV-75 Cheyenne program is a perfect example. We are pulling forward our investment as we support the Army's acceleration of the program, which is aligned with our long-term growth strategy.

As for Industrial, these same principles apply. The business will benefit from a tailored capital allocation and new strategic flexibility. The investment in growth and opportunities such as Pentatonic, Allegro and PACE Technologies are good examples of this. While we've considered variations of this in the past, now is the right time as both our A&D and Industrial businesses are well positioned for the future.

In A&D, Textron Aviation is in a very strong position, having increased its backlog by more than 4x since pre-COVID from $1.7 billion in 2019 to $8 billion at the end of this quarter. Bell is advancing rapidly on the MV-75 Cheyenne and will soon move into prototype deliveries. And Textron Systems is also showing solid growth across programs of record, such as Ship-to-Shore and at ATAC.

In Industrial, Kautex continues to perform well and Textron Specialized Vehicles is operating from a stronger footing following last year's Powersports divestiture. So overall, Textron is well positioned to pursue the separation of our A&D and Industrial businesses.

Turning to Slide 7. New Textron would have approximately $12 billion in revenue and $1.2 billion in segment profit as a pure-play company. Aviation is a leader in each of these segments and continues to see healthy demand and utilization across its portfolio. Bell is at the forefront of an outsized growth stage as the MV-75 Cheyenne program ramps. The business is positioned to significantly increase its revenue as we move from development to production over the next few years and benefit from the Army's planned production run of over 25 years.

Systems has compelling growth drivers across several areas, including advanced materials for hypersonic applications, shipbuilding, manned and unmanned air, land and sea vehicles. The Trump administration's recently proposed fiscal year 2027 budget that calls for $1.5 trillion in defense spending would be a strong tailwind for the industry, providing increased visibility and stability across our defense offerings.

Moving to Slide 8. The separation significantly improves the financial profile for Textron. New Textron would have top line growth 150 basis points higher. Segment profit margin would be 120 basis points higher, and our strong backlog of $19.2 billion is 100% related to the A&D businesses.

On Page 9, we see New Textron's A&D franchises, each of which excel at turning advanced aerospace and defense capabilities into practical advantages for our customers and their missions. Some of these key offerings include the Citation Latitude, the #1 best-selling midsized business jet, the recently certified Citation Ascend and the upcoming Beechcraft Denali. The Beechcraft King Air franchise is the best-selling turboprop in history.

The MV-75 Cheyenne, flying twice as far and twice as fast is a fundamental step function for military aviation. The Ship-to-Shore connector, the ATAC programs of record and our unique advanced material capabilities, which were most recently seen in action with the Artemis mission around the moon are core to the Sentinel program. These all leverage our world-class engineering capabilities across design, test, certification and build with a long track record of innovation. Underlying these offerings, we have a large installed base, which supports a robust aftermarket business that has experienced steady growth over the last few years.

Textron Aviation has built approximately 250,000 aircraft in its history and has the largest installed base in general aviation, nearly 4x the next largest. Bell has an installed base of approximately 13,000 commercial and military aircraft. These significant installed bases drive an attractive aftermarket business that represents over 30% of New Textron revenue. We are very excited about how this positions New Textron to drive value going forward.

On the military side, Textron sits where aerospace precision meets defense urgency, and this is exactly where our future is being built. As we continue to scale the MV-75 Cheyenne program and move toward production lots, we expect that the revenue and margin profile will follow. Beyond MV-75, we are well positioned on new opportunities that can leverage significant technology from the MV-75, like the U.S. Marine Corps Future Attack Strike program and DARPA's X-76 X-plane. Flight School Next, a new program to train Army Aviators at Fort Rucker for which we are competing is also positioned as a potential growth opportunity for Bell, leveraging our proven 505 helicopter.

Systems is anchored by strong programs of record with the growth drivers to include Ship-to-Shore, ATAC and Sentinel. In addition, the ARV preproduction contract advances a future growth opportunity for the business. The defense spending environment provides a very favorable backdrop for the longer term where our offerings are very well positioned. As this relates to the Textron Aviation and Bell commercial businesses, we are in a great place with the investments we have made over the last decade. Our product portfolio is second to none. Textron Aviation has a proven track record of clean sheet development programs like the Latitude, the Longitude, SkyCourier and soon to be the Denali.

We have also been very successful at upgrades like the recent Gen2s and Ascend as well as the upcoming Gen3s for the light jets. And at Bell, the 525 will be the first commercial fly-by-wire helicopter. Our sizable backlog illustrates the market demand for our products is significant and continuing to grow. Looking ahead, we are focused on increasing our operational efficiency and performance to drive growth and enhance profitability. We will do this by reallocating some of our R&D investment into our supply chains and factories. To be clear, there are no silver bullets there, but it is where we will be putting our focus.

Turning now to Industrial on Slide 10. This is a $3-plus billion business with strong operations, well-established brands, leading market positions and real growth drivers. We believe it will thrive independent from New Textron. It is composed of Kautex and Specialized Vehicles. Kautex is a Tier 1 auto supplier. Its primary product line is fuel systems for the automotive industry. Kautex has also built a meaningful position in hybrid fuel tanks, which is a growing part of the industry. The pentatonic battery enclosure business supports EV and hybrid platforms, including the Rivian R1 and a major European OEM start of production planned for 2027.

Its Allegro cleaning systems is another growth platform focused on solutions to clean autonomous vehicle cameras and sensors. Specialized Vehicles is anchored by the E-Z-GO Golf Car business. E-Z-GO is one of the most recognizable brands in golf. Specialized Vehicles also includes personal transportation vehicles, Ransomes Jacobsen turf equipment, Cushman vehicles and TUG ground support equipment. This business stands to benefit from near-term growth driven by the lease renewal cycle and market recovery. Overall, our Industrial businesses have well-established brands, product offerings and strong market positions.

Before I turn it over to Dave to give you an update on our first quarter results, I'll quickly highlight a few of our achievements in the quarter, starting with Aviation on Slide 12. We got off to a strong start to the year with 37 jet deliveries and 35 commercial turboprop deliveries. These are both up nicely from a year ago as we continue to drive throughput in our factories. We also saw strong aftermarket performance, which resulted in 10% growth in aftermarket revenues.

In terms of market conditions, order activity continues to be healthy as we grew our backlog in the quarter while also delivering double-digit growth in jets and commercial turboprops. Some notable wins for the team include LUMINAIR, a European jet operator, placed a fleet order in the first quarter, which will bring its total to 9 Latitudes, supporting its charter operations across Europe and an order from Belgium's Special Operations Forces for 5 SkyCouriers, marking our first military order for the aircraft and highlighting the utility of the SkyCourier, not only in the commercial market, but also in defense and special missions applications.

From an industry perspective, Gama's recently released 2025 annual report underscores Textron Aviation's leadership in general aviation as we once again topped the industry in total business jet deliveries, total turbine aircraft deliveries and total turboprop deliveries.

Moving to Bell on Slide 13. The Army has announced the name of the MV-75 aircraft as the Cheyenne. This underscores the continued commitment by the Army and marks a pivotal moment for the program. All subsystem critical design reviews or CDRs have been executed with the exception of completing the weapon system CDR later this summer. The Army is preparing for tiltrotor technology with support from the V-22, helping the Army's 101st Airborne in training exercises to develop the tactics, techniques and procedures to take full advantage of the additional range and speed. Bell's progress is supported by a series of investments Textron is making to support successful development and acceleration of production.

As I mentioned earlier, the Trump administration's 2027 budget calls for a significant increase in defense spending. As this relates to the MV-75 Cheyenne, the Future Years Defense program, or FYDP, calls for $2.3 billion of funding for 2027, scaling to $3.8 billion in FY '31 across research, development, test and evaluation as well as procurement. The procurement budget also shows quantities of 8 units in FY '28, scaling to 12, then 20, then 27 in FY '31, consistent with the Secretary of the Army's direction to accelerate the program.

Regarding near-term funding for the MV-75 program, the Army has informed us that it is actively pursuing additional funding to support the acceleration profile for the remainder of the government fiscal year '26. This funding aligns with the Army's directive last summer to accelerate the program, which occurred after their FY '26 budget request was submitted. We remain confident in the Army's commitment to securing this funding as evidenced by the ongoing process and the strong funding request in the recently released FYDP.

During the quarter, Bell completed the critical design review on the DARPA X-Plane program, which is now called the X-76. Bell will now begin building a brand-new X-Plane with first-of-its-kind stop/fold technology. Bell was also recently down selected to the fourth and final phase of the Flight School Next competition. As part of this phase, Bell conducted flight simulator and digital twin demonstrations at Redstone Arsenal. We expect the Army to select a winner for the competition later this summer.

Turning to Slide 14. Systems also continues to grow its business. They generated double-digit growth in the quarter and continue to make progress on new pursuits. Earlier this month, Textron Systems received a preproduction development award from the U.S. Marine Corps for its Advanced Reconnaissance Vehicle or ARV program. This $450 million award will include delivery of 16 vehicles, 3 systems integration labs and 4 blast hulls. Textron Systems was also awarded a prototype agreement from the U.S. Army for the Low Altitude Stalking & Strike Ordnance program, or LASSO.

Under the prototype agreement, Systems will deliver a loitering munition system and demonstrate it to the Army. As you can see on Slide 15, both Kautex and Textron Specialized Vehicles are executing very well and generating improving financial results. The segment had positive organic growth in the quarter, and Kautex secured its largest award to date for its hybrid plastic fuel tank offering.

Overall, we had a very strong start to the year, and I'll now pass it over to Dave to provide some more details on the financials.

Thank you, Lisa, and good morning, everyone. Turning to Slide 18 of the earnings presentation. We had a strong start to the year with revenues in the quarter of $3.7 billion, up 12% or $389 million from last year's first quarter. Segment profit in the quarter was also strong at $320 million, up 10% or $30 million from the first quarter of 2025. During this year's first quarter, adjusted net income was $1.45 per share compared to $1.28 per share in last year's first quarter.

Manufacturing cash flow before pension contributions reflected a use of cash of $228 million compared to a use of $158 million in last year's first quarter. During the quarter, we repurchased approximately 1.8 million shares, returning $168 million in cash to shareholders.

Before we get into the segments, I'd like to remind you that we realigned the Textron eAviation segment's business across Textron Aviation, Textron Systems and Corporate at the beginning of this year, eliminating Textron eAviation as a separate reporting segment. The results here reflect that realignment for 2026 and for the 2025 comparison period on a recast basis.

Now let's review how each of the segments contributed, starting with Textron Aviation. On Slide 19, revenues at Textron Aviation of $1.5 billion were up $269 million or 22% from the first quarter of 2025. Aircraft revenue in the quarter was $954 million, up $221 million or 30% from a year ago. This was driven by volume and mix as we increased Citation jet deliveries from 31 to 37 and commercial turboprop deliveries from 30 to 35.

Aftermarket revenue in the quarter was $531 million, up $48 million or 10% from a year ago. Segment profit was $154 million in the quarter, up $32 million compared with the first quarter of 2025. This represents a profit margin of 10.4%. We also continued to see solid order flow and customer demand across our product lines, ending the quarter with $8 billion of backlog, up $276 million from the end of 2025.

Looking at Bell, revenues of $1.1 billion were up $87 million or 9% from the first quarter of 2025. Military revenues were $795 million, up $161 million or 25% driven by growth on the MV-75 Cheyenne program, partially offset by reduced revenue on V-22 production on our military sustainment programs.

Commercial revenues were $275 million, down $74 million, reflecting lower volume and mix. Segment profit of $72 million was down $18 million from a year ago, primarily reflecting an unfavorable impact from the mix of military programs and lower commercial volume and mix. Backlog in the segment ended the quarter at $7.6 billion.

At Textron Systems, we had a good start to the year with revenues of $338 million, up $39 million or 13% from last year's first quarter. Revenue growth was driven primarily by higher volume on the Ship-to-Shore program and military training programs provided by ATAC, partially offset by lower net volume on other programs. Backlog in the segment ended the quarter at $3.6 billion, an increase of $255 million in the quarter. Segment profit was $42 million in the first quarter, which generated strong segment profit margin of 12.4%.

Looking at Industrial, revenues were $786 million, down $6 million from last year's first quarter. Textron Specialized Vehicles revenue was $300 million, down $42 million, largely reflecting a $55 million impact from the divestiture of the Powersports business in 2025.

Kautex revenues were $486 million, up $36 million or 8% from a year ago, primarily due to a favorable impact of $20 million from foreign exchange rate fluctuations and higher volume and mix. On an organic basis, revenues at Industrial were up $29 million or 4%, given the first quarter of last year still included the Powersports business. Segment profit of $40 million was up $10 million from the first quarter of 2025, largely due to manufacturing efficiencies.

Finance segment revenues were $16 million and profit was $12 million in the first quarter of 2026 as compared to segment revenues of $16 million and profit of $10 million in the first quarter of 2025.

With that, I will turn it back to Lisa for closing remarks.

Thanks, Dave. And as we wrap up, Slide 21 just highlights a few of the many attributes that make New Textron a compelling pure-play aerospace and defense business. We have the best-in-class brands and best-in-class products with leading segment positions. But I also want to highlight that we have the people in place to maximize our future with a deep bench of technical expertise and a track record of innovation and execution at scale. This concludes our prepared remarks, and we are happy to open the line now for questions.

[Operator Instructions] Your first question comes from the line of Sheila Kahyaoglu of Jefferies.

Can you maybe -- the industrial separation has been a long time coming. Can you maybe provide a little bit more on what led to the decision? Why now? Was it just the growth in the MV-75 portfolio at the Cheyenne and how you see that, if you could elaborate?

Thanks, Sheila. Look, it's just -- it's the right answer for both of our A&D and Industrial businesses at this moment in time. And it provides clarity and simplification on our capital allocation and investments. And frankly, it also just aligns them both with their respective natural shareholder bases. And we're in a position, as you point out, like why now as compared to a few years ago, it's a result of all of the hard work and accomplishments that we've achieved over the last 10 years in order to position the various businesses to have the strength of their own to stand on their own. And we've won, we're scaling MV-75.

As I mentioned, we've added to and upgraded the aviation portfolio. We've got all these clean sheet programs like the Latitude, Longitude, SkyCourier, Denali upgrades on the Ascend, the Gen2s with systems and their key programs of record now scaling and a good pipeline, we just have the synergies and core context of all of those businesses to come together as a strong pure-play A&D. But what's different is that now with Kautex and TSV, both are very well run and their end markets are in a stronger place and in good positions right now.

With the progress Kautex has made with offerings on Pentatonic and Allegro and how it is gaining customer traction and growth as well as TSV being anchored by one of the most recognizable brands in golf with E-Z-GO. And candidly, the divestiture of Powersports just puts them in a better operating position. So we just believe that now is the right time in order to make this move, and we're excited to see what the future holds for it.

Your next question comes from the line of Myles Walton of Wolfe Research.

On Aviation, can you speak to the market environment for order activity and anything that's changing given the ongoing Middle East conflict? And then, Lisa, you mentioned repositioning some of your R&D funding into the supply chain. Could you just elaborate on what that means in the quantity?

Sure. Look, so regarding order activity, we had a very strong quarter of order activity across both Aviation and Bell. They had their best Q1 bookings in 4 years, frankly, since Q1 of 2022. So really strong orders for the folks out there. And Aviation, I highlighted the LUMINAIR and Belgium Special Forces in the prepared remarks. But as we see that strong order flow and ending the quarter with our backlog of up $8 billion for Aviation in particular, and we also have some pretty strong bookings that they're working forward to in Q2.

So Bell also is winning that new business in the commercial market. They had the quarter with purchase order of 7 407s from the National Transmission Company of South Africa. We talked about on the defense side of the booking orders, Bell was down selected to the final phase of Flight School Next. As I mentioned, the preproduction contract for the ARV and the Army's prototype agreement for the LASSO or that Low Altitude Stalking & Strike Ordnance.

So all of this kind of leads to that very strong order activity and that backlog of $19.2 billion that we highlighted across the business. When you ask about the repositioning of some of the funding towards the supply chain and factories, look, that's really the area that we need to focus across on our business. We're not -- what we're trying to signal here is we're not looking to increase investment. We're going to maintain the same levels of investment that we have across the business. But we're probably going to take a portion of that, and I'm not going to kind of go into the details of what ratio that is, but take a portion of that and focus on making our factories much more effective. There's a lot of tools and capabilities that are out there now that we need to enable our workforce to have a better, more streamlined factory flow. And so we're going to -- we're looking at that as we go through this strategic review, and you'll see us start investing in that. And hopefully, we'll see the yield of that of better production output.

Your next question comes from the line of Robert Stallard of Vertical Research.

A couple of questions for you on Aviation. First of all, I was wondering if you could give us an update on what you think the cadence of deliveries will be in this division through the year and whether you expect this aftermarket growth rate to be maintained? And then secondly, on the Aviation supply chain, did you see any improvement in that in the first quarter?

Dave, why don't you take the first and I'll hit the supply chain.

Robert, so as we look at Q1, this was expected that we're about 100 basis points below the midpoint of the guide. Just kind of the key factor there is some of the inefficiencies from last year are rolling through the income statement in Q1, and that's causing a little bit of headwinds. So as we kind of think about the cadence for the rest of the year, we would expect improvement sequentially each quarter with the margin peak being in Q4. You should expect deliveries to increase each quarter this year, and we'd also expect efficiencies to improve throughout the year, especially in the second half.

Robert, so on your supply chain question there, I mean, look, we continue to work with our key suppliers. It's mainly around engines, as we mentioned on the call last quarter that we continue to, I'll say, fight through every day to get those in. But I will say we're not seeing as many systemic supply chain issues as we have over the past several years. So we are seeing things start to improve. As we look at kind of what we call out-the-door statistics of some of our platforms, those are starting to improve. Things still get lumpy along the way.

We still have things pop up, but I would say we're starting to see a trend here of better performance writ large. But it's -- look, there's nothing easy. The teams are still fighting through the different little fires that pop up. But overall trends, we are starting to see improvement of on-time delivery from suppliers, and we're starting to see folks performing at better, higher quality.

Your next question comes from the line of Peter Arment of Baird.

Nice results. Lisa, maybe just quickly on [Technical Difficulty] margins, you start the year kind of a low point. Maybe just to give us a little -- the puts and takes you're thinking about for the year and just when you -- given your annual guidance, just how we should be thinking about from here, just given the volume that you're seeing on the MV-75?

Yes, I appreciate that. I think there's -- it was a good strong start to the year. I think it's a little early for us to start thinking about the guide. But if we continue to see strong performance, we'll evaluate that as we go forward for the back half of the year. I think on MV-75, I don't see us changing what we saw there. It's going to be flat kind of year-over-year of expected revenues. We do continue to see that acceleration pull from the Army, as we mentioned. And if they receive those additional funds, we'll see that kind of flow into the business, but we need to see the Army get those additional funds as they go through their procedures and processes to get those dollars.

Your next question comes from the line of Seth Seifman of JPMorgan.

This is Alex on for Seth speaking. Maybe I wanted to ask a follow-up on the industrial situation. As you guys are kind of evaluating your options here between either selling the business or spinning it off, curious if you guys have any initial thoughts on which option you think is more likely at this point? And then two, when we're thinking about the 2 businesses here between Kautex and Specialized Vehicles, is the expectation that those would be spun off or sold together? Or could they be kind of broken up into separate pieces?

Thanks, Alex. So look, I think you kind of outlined all the options that we're looking at. And I don't think we necessarily have a course of action just yet that we're ready to declare. We are going to do the process and work to explore all of those alternatives. And I think that when we look at the spin, we just know that, that's the certainty. It will be the longest path. We're going to do the work in order to prepare for that. But as we do that, we're exploring all avenues that you kind of outlined, selling them together or selling them apart. Those options are all on the table. And as the process evolves and folks are interested, we'll do what's in the best interest of our shareholders. So yes, I think we're -- we've got an exciting future ahead of us, but we'll keep you guys posted as we come along those decisions.

Your next question comes from the line of John Godyn of Citi.

Lisa, I just really wanted to think through the conflict in the Middle East and what that means for Textron, sort of to state the obvious. There's a lot of activity there and fuel prices have doubled. So on the aviation side, it's hard to believe that a doubling in fuel prices doesn't impact things. On the other hand, some of us on the call are old enough to remember the boom years in bizjet in '06, '07, which were positively correlated to oil prices and all the economic implications of that. And then in your defense exposures, anything kind of pivoting on the back of what's going on in the Middle East? Any imminent demand signals or anything like that, how the portfolio is expected to respond to that would be helpful.

Yes. Thanks. And I recall now I kind of missed that somebody asked a follow-on question on Iran. I didn't get that earlier as well. So look, to date, we have not seen a material impact on the ongoing conflict. We monitor the impact of those higher oil prices. And as you point out, has both positives and negatives to our various end markets. So -- and I think on the -- as you correctly stated, on the aviation and helicopter side, in particular, that's where we see some of that positive correlation. So we're watching that very closely. I think it's a little early days as folks use their capital there, but we will continue to monitor that and discuss that in future quarters.

With respect to the defense side of the business, on all of our programs, I think you're starting to see them continue to perform. I think when we see this investment across all of the defense portfolio from the Trump administration's most recent FYDP is a signal from them that they see an increased need in robusting, I'll call it, the magazines or the various platforms in order to be prepared. And so I would say it's a secondary correlation to it, but you're starting to see support broadly across all the defense business. Programs in particular, I wouldn't necessarily go into any specific programs on that -- in that way.

Your next question comes from the line of Noah Poponak of Goldman Sachs.

Two questions. Lisa, on Aviation, your discussion around investing in supply chain and manufacturing improvements suggests a view that supply should be higher. Curious how you -- when you look at the backlog and the coverage, how are you balancing you want to grow and you want to get customers' jets, but you also want to protect the downside nodes of cyclicality. Just how are you thinking about where you want supply over the medium term? And then, Dave, just on the Bell margin, if you could give us a little more color on the year-over-year change and how it progresses to get to the guidance for the year?

It's a great question. And you're exactly right. And when we look at the various type models, we want to make sure we don't disrupt this very strong backlog that we have. And so there are certain type models that if we put a little more investment, we could reduce the amount of time it takes to build those aircraft. Some of those type models are sold out for years. If we were to bring them in to, say, like 18 months or so as a lead time, I think that much more aligns with customers' expectations. And those are the areas in which we would do focused improvements on in both the factories and the supply chain.

So Noah, I'll take that question on Bell. So I mean, as a starting point, if we look at kind of Q1 of this year versus last year, we're obviously down on the margin percent as well as in dollars. So kind of 2 factors there to think about. We were off on commercial helicopter deliveries, some of that was just timing of deliveries and contract milestones. Some of that was just delays in finishing up the last couple of helicopters for the quarter.

We would expect on the commercial side for that to normalize out throughout the year, not too dissimilar to patterns you've seen in the last couple of years with a peak in Q4. We also had higher MV-75 revenue in the quarter, but the offset of that was some of our military legacy business was down. So net-net, that does result in overall lower margins. So I think what you could expect to see from a cadence perspective as we go through the next 3 quarters is you'd see overall improvement, particularly because you'll have higher volume on the commercial side, getting us to where we're currently at on the guide of between 8% and 9%.

Lisa, I guess just getting some of the -- getting -- if I took the entire portfolio to 18 months, it would imply pretty nicely over 200 total deliveries. I guess maybe you're saying it's not everything should be at 18 months. But is it -- do you think the equilibrium is 200 or 220 or hard to put a number to it.

No, I think you're hitting the right ballpark, right? I think the right number is right there around 200. I think that's accurate.

Your next question comes from the line of David Strauss of Wells Fargo.

This is [ Josh Cohen ] on for David. I wanted to ask, I think you were planning on taking that charge on MV-75 later this year or early next as the program ramps. Is there any change to your expectation in the size or timing of the charge?

No change in our expectation on the size, which was the cume catch-up was $60 million to $110 million. As we said when we announced it previously, it all depends on the timing of when the LRIP CLIN is exercised by the government, and there's no change in our expectation right now that, that could be as early as the second half of this year or possibly could flow into the first half of next year. And nothing's changed from our perspective, right, as we sit today.

Your next question comes from the line of Gavin Parsons of UBS.

Lisa, you mentioned Textron's considered strategic alternatives on Industrial in the past. I guess what are the hurdles to getting this done? And is there a minimum return threshold you're looking for to ensure it's not a dilutive transaction?

Look, it's a little early to comment specifically on the level of dilution. It's going to depend on what that structure and value, whatever proceeds we would get on that. But look, in addition to the benefits of clarity and flexibility, we just have different natural investor bases and different valuation frameworks inside those investor bases. And so we're going to have to leave it to the market to assess that valuation. But I do think that New Textron has higher growth and stronger margin, which should support stronger valuation over time.

And so I think on that side of it, it's going to prove out to be a very well-done alternative for us. So in terms of in the past, I think the ideas there were around where we were as far as strength of the end markets of the Industrial business. It just wasn't the right time. And as we see the positive growth and the positive performance out of both Kautex and Specialized Vehicles, now just makes the right time for us to do this.

Your next question comes from the line of Kristine Liwag of Morgan Stanley.

Lisa, post the Industrial spin and you'll have more time to allocate to the core aerospace defense. I was wondering, can you talk more about how you're thinking about potential capital allocation within that core business? Are there platforms or capabilities you would -- you plan to spend more time on focusing? And are there areas you're willing to lean in more versus potentially rationalize?

Look, I think we're -- our intent here is to lean in more versus rationalize on the A&D space. And in fact, I think what we would look to do is as we have this pure-play combination and how they are anchored across the commercial and military aircraft, leverage the engineering capabilities we have across the business. And then we would look to see where we could be additive to that portfolio, particularly probably in the areas around Systems and what it is that Systems does and how we could grow that area of our business much more strongly.

Super helpful. And then maybe a great follow-up on Systems. I mean the U.S. accelerates towards drone dominance. We're seeing a lot more nontraditional players, lower-cost competitors in this unmanned space where you have a fairly robust offering within Systems. Can you talk more about how you balance cost, speed, autonomy with the performance that the DoD wants today and also what that competitive dynamic is like and where you think Systems could leverage its strength in that industry?

Yes. Thanks, Kristine. So I think when we look at what the strengths are across Systems, not only is it decades and candidly, millions of hours of proven capabilities across the unmanned space across 3 domains. A lot of what our offerings are, I will say, are more of the complicated and technical aspects of unmanned. Some of the lower entrants, I think, are much more attritable where what we have are capabilities that the services want to use over and over again. So it requires a more robustness in design and durability of the platform.

So what you see in things like the RIPSAW platform that we are currently designing for the Marine Corps and what you see in our Aerosonde 4.7 and 4.8 that provides a loitering ISR capability for many hours up to 13 hours. So I think what we see there is still continued strong demand for those. But we're also having growth opportunities in our unmanned surface vehicles on the CUSV program and how they take their platform on the sea and put new capabilities, mine hunting capabilities into that platform. Systems is providing the systems integration pieces that are much more complex than maybe what we see in some of the other platforms. That said, we're also very open to working with folks and being partners in various entrants with various entrants, and you'll see Systems do that over time.

Your next question comes from the line of Ron Epstein of Bank of America.

Maybe 2 questions, just following up on some stuff that other folks asked. When you think about moving forward with an A&D focused business, how are you factoring AI and AI-driven autonomy into systems? And when I look at something like X-76, it seems like a platform that could generate a ton of interest. How are you thinking about that and the opportunity there? And one area where it does seem -- I don't want to say that Textron underperformed, but maybe could have done more given all the technologies the company has is in specifically aerial unmanned systems, given the prowess you all have in electronic propulsion and everything you've done in Textron Aviation and all the stuff in Systems. So I don't know, sort of a broad question, but...

Yes. So I'll try to tackle the second question upfront in the sense of what you're talking about there is collaboration and synergies across the businesses. And what I would like to drive, it's how we're able to combine the engineering technology and talent that we have across systems, Aviation and Bell in order to come up with those ideas and platforms and breakthroughs, if you will, because we have that deep talent, as you mentioned.

On the X-76, whether or not they would actually use AI autonomy in terms of the brain of the platform itself. Right now, the proving out of the X-76 is a stop/fold technology itself, and it will be an unmanned platform. And so I think as that program evolves, you'll see a lot of the expertise that we have on the -- or the MV-75 with the MOSA architecture will probably naturally follow into the X-76. So there is just a lot of capability across Textron that I think we can now really come together in this pure-play A&D space, and I plan to continue to drive that. I mean we've done it in the past. We've got examples of where we have helped each other between the various businesses, but really driving towards an A&D strategy amongst ourselves, I think, will generate what you're alluding to.

And then I mean, culturally, how do you achieve this, right? Because you have an organization, I guess, in some parts that's used to being more independent. I mean you're going to have a core A&D engineering group that will serve the whole company. I mean I don't know if you're there yet, but how do you think about shifting the culture to support it? I mean just to be blunt if you can't tell, I think this is a great idea. But in terms of executing it, how do you get the culture to buy into it?

Yes. I mean, as you know, culture takes a minute to evolve, but we are certainly on that journey. And part of my expectations is how we will continue to collaborate with each other. I mean things as simple as sharing each other's strategic business reviews with each other. And so we're just driving various different opportunities for the businesses to be exposed to what the other business is doing as a way for them to say, "Hey, that's a great idea. I've got somebody over in this area that can help with that." So I hope that you will see that continue to evolve over time, and I'm optimistic that the team is very excited about doing it.

Yes. And then maybe just one quick financial detail. On the Industrial business over the years, we heard that there'd be too much tax leakage to spin in or do whatever. I mean how should we think about that, the tax impact?

I mean, you obviously had -- you had in the different scenarios, 2 tax impacts. So you have the potential repatriation of cash, which would be -- we've thought about in terms of what the transaction expenses would be and then the tax leakage on the transaction itself. Both of those, we believe, would be manageable in whatever structure we end up doing. And as we mentioned in our release, we believe in a spin scenario, it would be done on a tax-free basis.

Your next question comes from the line of Doug Harned of Bernstein.

On Systems, I find this to be the most difficult business to really kind of look forward long term. ATAC, the Ship-to-Shore Connector, this has been going well. But if we think on more of a 5-year view, what do you see as the underlying differentiated capabilities there and the types of programs that you see you're best positioned for as you look longer term?

Yes. So I would say there's 2 stand out for me. First being the Sentinel program as that EMD program continues to mature into a production program. And as we are a key Tier 1 supplier to Northrop Grumman on that program, we will follow where that Sentinel program continues to grow. So I think that's a key aspect of the Systems portfolio. And then additionally, on the ground side of the business, the Armored Reconnaissance Vehicle as well as the XM30, which we haven't mentioned so far in this call, Textron Systems is competing in both of those, and those will both be decided in the coming 2 to 3 years. And I believe that you'll see us have a position on one or both of those programs. So I think those underpin the go forward on the Systems performance.

And then if you do the same -- sort of the same thing at Bell, when you look beyond MV-75, you mentioned the FSN program. Can you give us a sense at all of kind of the timing and scale of potential new opportunities over the next few years beyond what you're doing on MV-75?

Yes. So timing and scale. So the Flight School Next program will be decided by the end of next quarter. So we will know how that's going to impact the future of Bell's prospects here within the next 90 days or so. So there's -- when we see what that comes out, and I don't want to go into numbers right now because we are in, I'll say, active negotiations there of Phase 4, but it is a strong opportunity for Bell for the next candidly, 25 years for Flight School Next.

When you look at what the Marine Corps is doing with their H-1 program, and frankly, I mean, we focused on MV-75 and X-76, but there's still a lot of work going on, on the H-1 and the V-22 platforms and the sustainment of those platforms for the coming decades. So there's a lot of work going on both in the Nacelle Improvement Program for the V-22 as well as the structural improvement and electrical power upgrade program for the H-1. So they have upside on both of those programs. That's just on the defense side. On the commercial side, as the 525 platform reaches its certification and moves into the commercial backlog, we'll start to see strong growth on that towards the back end of this decade, beginning of next.

And your last question comes from the line of Gautam Khanna of TD Cowen.

Yes. Congratulations on the announcement. Wanted to ask if there are any dissynergies that you can point to? I know you talked a little bit about tax, but any sense of dissynergies early on from the separation?

So we've obviously, as part of this process, analyzed all those. There'd be a minimal level of stranded costs that we can -- we do strongly believe we can manage through. But otherwise, there is nothing of a significant nature from a dissynergy perspective. But the stranded costs are very minimal.

And Lisa, to Kristine's earlier question, I just wanted to understand better. Is that -- do you think this is kind of the end of the portfolio review? Or will there be parts of the A&D franchises that you're looking to maybe scale back and -- as part of this process?

Yes. So again, great question. And I would say I'm looking to lean in and grow versus scaling back.

With no further questions, that concludes our Q&A session, and this also concludes today's conference call. You may now disconnect.

Thank you for standing by, and welcome to the Textron Fourth Quarter 2025 Conference Call. [Operator Instructions] I'd now like to turn the call over to Scott Hegstrom, Vice President of Investor Relations and Treasurer. You may begin.

Thanks, Rob, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, our Executive Chairman; Lisa Atherton, our Chief Executive Officer; and David Rosenberg, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

With that, on the call over to Scott.

Thanks, Scott, and good morning, everyone. Extron closed out the year with another solid quarter, driven by significant revenue growth of 16% and segment profit growth of 34%, resulting in an adjusted EPS of $1.73. For the full year, Textron finished the year with revenue growth of 8% and segment profit growth of 14%, resulting in an adjusted EPS of $6.10. Looking at the segments. Aviation had a strong year with revenue up 36% for the fourth quarter and 13% for the full year, reflecting higher aircraft deliveries and increased aftermarket volume as we recovered from the strike in late 2024.

In the quarter, we continued to see solid order flow and customer demand across our portfolio, ending the year with $7.7 billion of backlog. In 2025, we delivered 171 jets, up from 151 last year and 146 commercial turboprops, up from 127 in 2024. Also in the quarter, we continued to upgrade the product portfolio, Citation Ascend, CJ3 Gen 2 and the M2 Gen 2 with autothrottles all receiving FFA certification and beginning deliveries.

During 2025, strong aircraft utilization within the Textron innovation product portfolio resulted in a 6% growth in aftermarket revenues. Also had a very strong year with revenue up 11% for the fourth quarter and 20% for the full year. With the acceleration of the MV-75 program, 2025 marks Bell's second consecutive year of 20% growth in military revenue. We've talked a lot about accelerating the MV-75 program in 2025. To provide some examples of our progress on this, we've completed over 90% of the engineering drawings put nearly 2,000 Tier 1 and Tier 2 suppliers on contract issuing 45,000 purchase orders, opened new manufacturing capacity in Wichita for the Fuselage and Fort Worth for the advanced manufacturing center to Drive Systems Test Lab and the Weapon Systems Integration lab, and we've begun manufacturing components for the first 6 aircraft.

So the acceleration is not just design work, it's establishing real production capacity as we pull forward production by a couple of years. Earlier this month, we hosted the Secretary of the Army and representatives from the MV-75 program office at our Wichita Assembly Center, where we are building the fuselage of the aircraft. During this visit, we were able to demonstrate our production capabilities and progress on the first 6 aircraft that are currently in work. Across Bell's other sites, we're seeing the results of our prior investments in manufacturing process development, which led to efficient manufacturing of major parts like our wing skins and bars.

On the commercial side, Bell continued to see strong order activity in 2025. For the year, Bell delivered 169 commercial helicopters compared to 172 in 2024. Moving to systems. The team also told revenue growth for both the quarter and the full year, with revenue up 4% in the quarter and slightly up for the full year. The team generated this revenue growth while facing headwinds that had to overcome including the challenging comparables resulting from the wind down of the Shadow program. The Ship-to-Shore Connector program has proven to be a real strength for the segment. We are now about 15 units into a 73-unit program record. The program has scaled up and is now running efficiently, and has received over $450 million of awards this year.

During the quarter, Systems received an IDIQ contract valued up to $200 million for its ATAC business to provide airborne standoff jamming services to the U.S. Navy and U.S. Marine Corps. This program will support Navy fleet customers with a wide variety of airborne threat simulation capabilities, the training, test and evaluate shipboard and aircraft weapon systems. In Industrial, the segment ended the epi year with a positive organic growth of about 1% in the fourth quarter. after streamlining the portfolio with the divestiture of the Powersports business.

In summary, 2025 was a strong year for Textron. We continue to execute on our growth strategy of ongoing investments in new products and programs to drive organic growth and margin expansion. As we wrap up 2025, this will be my earnings call I want to express my thanks for all your support over the years. I feel very good about where the business stands, the team that we have in place and the leadership that Lisa brings to the table.

With that, I'll hand off to her to talk about the business more broadly and our plans for 2026.

Thanks, Scott. And I want to extend my sincere gratitude for your exceptional leadership and your commitment to Textron over the years. And on behalf of the entire team, thank you for your many contributions and the lasting legacy that you leave, and we wish you all the very best. For those of you that may not know me, I graduated from the United States Air Force Academy. I was a contract officer and then a civilian contractor at the Director of requirements at Air Comback Command. I left ACC in 2007 and joined Textron holding various leadership positions within Textron Systems and Belt. I was fortunate enough to spend several years leading systems before my last position as CEO of Bell.

In these roles, I led numerous development and program activities, including the future long-range assault aircraft now the MV-75 program. When we look across Textron, I am very excited for the opportunities that lie ahead. Textron Aviation, our largest segment is a clear leader in general aviation with its Sesa and Beach Craft brands. It has a great product lineup, an unmatched installed base, driving a powerful aftermarket business and a world-class customers. 2025 was a very strong year for Aviation, and the business is well positioned for the future.

In addition to our successful certification efforts, we continue to progress on the beach Craft and ale development program. The Denali finished the year having logged over 3,200 hours of flight testing. On the Defense side, Textron Aviation entered a contract to deliver the first 2 Beechcraft T-6 to Japan's Air Self-Defense Force with additional contracts anticipated. Deliveries of the 2 aircraft are scheduled for 2029. We -- from a market perspective, the general aviation industry is very healthy.

The business has nearly an $8 billion backlog, and we continue to experience strong order flow. As a result of the team's continued product innovation and operational execution, we remain at the forefront of the industry. Turning to Bell. The MV-75 program continues to be a great success story. What began as internal research and development and turned into the [indiscernible] on the joint multi-role technology demonstrator program is now a core component of the Army's transformation initiative. Over the last year, we have worked closely with the Army as they accelerate the program.

Bell is now poised to begin testing on the first unit later this year, deliver EMD articles throughout 2027 and then transition into LRIP deliveries in 2028. Our military opportunities are not limited to just the MV-75 program. Earlier this month, that was notified of its selection to proceed to the next phase of the Flight School next competition. This would be a new program to train Army Aviators at Fort Rucker. This opportunity leverages our 505 helicopter and our expertise in flight training, where Bell currently trains nearly 2,000 pilots per year at the Bell Training Academy.

Because of our long-term investment strategy, our defense and commercial product mix and our agility in adapting to and embracing acceleration with a wartime metality we think Textron is demonstrating the characteristics valued by the Department of War in support of the arsenal freedom. As I mentioned, I previously ran Textron Systems as well and believe that this business has long been 1 of the cool kids in the defense industry. We developed and have been flying unmanned systems for over 25 years with more than 2 million flight hours on our platforms. We developed our first unmanned surface vehicle in 2007, we manufactured and fielded high-temperature materials that operate in hypersonic environments dating back to the 1960s.

We are currently on Mars as part of the first severance Rover. Our technology is being utilized on the heat shield for Orion as it prepares to travel to the moon, and we are developing the reentry vehicle system for Sentinel as well as working on various other hypersonic applications. We are also ramping our land offerings in support of the Ukraine with our MSF platform, which is part of the Commando family and continuing development on major opportunities like the armor connaissance vehicle and the [indiscernible]. We also have proven commercial business models that have demonstrated across multiple platforms, including Arison and ATAC, which are directly applicable to opportunities like flights go next. Thanks to our leading-edge capabilities and recent program wins, Textron Systems is well positioned to drive future growth.

Moving to Industrial. The teams at Kautex and TFV have done a good job executing and dealing with challenging end markets. At Kautex, the hybrid volumes continue to grow and due to our investments in the Pentatonic offerings, we are gaining more closure to pure electric vehicles. In fact, the pen atonic offerings present the opportunity for both fuel tank and battery enclosure revenue on hybrid platforms. At TFV, the team continues to introduce new ducts and work to address the cost structure. For example, TSB rolled out the Cushman Hauler XL with larger hauling capacity and an easy go, our PACE technology is expanding beyond golf into new markets.

Before we move to the outlook for 2026, I want to highlight that our $14.8 billion of revenue in 2025 is the highest we have ever had as a company. In 2026, we're injecting revenues of about $15.5 billion, up about of 4.5% from 2025 for Textron's 2026 year. We are projecting adjusted EPS in the range of $6.40 to $6.60 on Manufacturing cash flow before pension contributions is expected to be in the range of $700 million to $800 million. This cash flow outlook reflects approximately $350 million of higher CapEx and and long-lead material to support LRIP on the MB 75 program.

With that, I'll turn the call over to David to walk you through a recap of 2025 financials and the 2026 outlook.

Thank you, Lisa, and good morning, everyone. First, Scott, I would like to echo Lisa's comments and extend my gratitude to you as well. It has been a pleasure working with you over the years.

Turning to Slide 5 of the earnings presentation. Revenues in the quarter were $4.2 billion, up 16% or $562 million from last year's fourth quarter. Segment profit in the quarter was $380 million, up 34% or $97 million from the fourth quarter of 2024. During this year's fourth quarter, adjusted income from continuing operations was $1.73 per share compared to $1.34 per share in last year's fourth quarter. Manufacturing cash flow before pension contributions totaled $510 million in the quarter, up $24 million from last year's fourth quarter.

For the full year, revenues were $14.8 billion, up 8% or $1.1 billion from last year. In 2025, segment profit was $1.4 billion, up 14% or $163 million for 2024. Adjusted income from continuing operations was $6.10 per share. as compared to $5.48 per share in 2024. Manufacturing cash flow before pension contributions was $969 million, up $277 million from 2020.

Now on Slide 6, let's review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1.7 billion were up $467 million or 36% from the fourth quarter of 20 reflecting higher aircraft revenues of $400 million and higher aftermarket parts and service revenues of $67 million. The increase in aircraft revenues was primarily due to higher volume mix, largely reflecting higher Citation jet and commercial turboprop line as we recovered from the strike in 2024. We Segment profit was $208 million in the fourth quarter, up $108 million compared with the fourth quarter of 2024, largely due to higher volume and mix.

On a full year basis, Textron Aviation generated revenue of $6 billion, up 13% over the prior year and $694 million of segment profit, up 23% from 2024. Backlog in the segment ended the year at $7.7 billion. Revenues at Bell of $1.3 billion were up $128 million or 11% from the fourth quarter of 2024. The revenue increase in the quarter was driven by higher military revenues of $139 million. primarily due to higher volume on the U.S. Army's NB 75 program, partially offset by lower commercial revenues of $11 million reflecting the mix of aircraft sold in the period, offset in part by higher pricing. Segment profit of $11 million was down $9 million from a year ago.

On a full year basis, Bell generated revenues of $4.3 billion, up 20% over the prior year and $363 million of segment profit, down $7 million from 2024. Backlog in the segment ended the year at $7.8 billion, an increase of over $300 million from the prior year, reflecting growth in both military and commercial businesses. At Textron Systems, revenues of $323 million were up $12 million or 4% from last year's fourth quarter, primarily due to higher volume. Segment profit of $43 million was up $1 million from last year's fourth quarter. On a full year basis, systems generated revenue of $1.2 billion, up slightly over the prior year and $175 million of segment profit, up 14% from 2024.

Backlog in the segment ended the year at $3.3 billion, an increase of over $700 million from the prior year related to awards across multiple domains, including ATAC, marine systems and land systems. Industrial revenues were $821 million, down $48 million from last year's fourth quarter. Textron Specialized Vehicles revenues decreased $69 million, largely reflecting a $72 million impact from the divestiture of the Powersports business. Kautex revenues increased $21 million or 5%, largely due to a favorable impact from foreign exchange rate fluctuations. On an organic basis, Industrial revenues were up slightly from last year's fourth quarter.

Segment profit of $30 million was down $18 million from the fourth quarter of 2024, largely due to higher selling and administrative costs and lower volume and mix. On a full year basis, Industrial generated revenue of $3.2 billion, down 9% from the prior year or down 4% organically. -- and $145 million of segment profit, down $6 million from 2020. Textron Aviation line revenues were $7 million in the fourth quarter of 2025 as compared to $11 million in last year's fourth quarter, and segment loss was $15 million as compared to a segment loss of $22 million in the fourth quarter of 2024.

On a full year basis, eAviation generated revenue of $27 million and a segment loss of $63. Finance segment revenues were $18 million and profit was $13 million in the fourth quarter of 2025, and as compared to segment revenues of $11 million and profit of $5 million in the fourth quarter of 2024. The increase in revenues in segment profit included a $5 million gain on the disposition of non-captive assets in the fourth quarter of 2025. On a full year basis, the Finance segment generated revenue of $75 million and segment profit of $49 million.

Moving below segment profit. Corporate expenses were $44 million. Net interest expense for the manufacturing group was $31 million LIFO inventory provision was $84 million and intangible asset amortization was $8 million. and the nonservice component of pension and postretirement income were $66 million. During the quarter, we repurchased approximately 2.3 million shares, returning $187 million in cash to shareholders. For the full year, we repurchased approximately 10.7 million shares, returning $822 million to shareholders.

Turning now to our 2026 outlook on Slide 19. We're expecting adjusted earnings per share to be in the range of $6.40 to $6.60. We are also expecting manufacturing cash flow before pension contributions to be about $700 million to $800 million. As Lisa mentioned in her remarks, this cash flow outlook reflects investing approximately $350 million of higher CapEx and long-lead materials to support LRIP on the MV-75 program. Before we move to the segment outlook, as you may recall, Textron is eliminating Textron Aviation as a separate reporting segment, realigning the aviation business activities across Textron Aviation, Textron Systems and Corporate to leverage our existing sales, business development and engineering capabilities. Our segment level guidance for 2026 reflects this new operating structure.

In the earnings presentation that is posted on our website, we recast 2025, so you can see 2025 actuals and 2026 guidance on a comparable basis. Moving to segment outlook on Slide 20. And beginning with Textron Aviation, we're expecting revenues of about $6.5 billion, reflecting growth of approximately 9% over 2025. Segment margin is expected to be in the range of approximately 11% to 12%. The margin range compares to Textron Aviation's 2025 recasted margin of 11.1%. Looking to Bell, we expect revenues of about $4.4 billion, reflecting low single-digit growth over 2025. We're forecasting a margin in the range of about 8% to 9%.

As the MV-75 program continues to accelerate, we expect that we will be awarded the lot lead low-rate initial production, or LRIP phase of the contract in late 2026 or early 2027. Upon an award of the LRIP open, which is largely fixed price, we expect to record an unfavorable cumulative catch-up program adjustment, reflecting higher costs than originally anticipated when the program was bid in 2021 in the range of $60 million to $110 million. The overall MV-75 program will continue to generate a positive margin after the adjustment. In light of the uncertainty of the timing of the award, this has not been reflected in our guidance for the year.

At Systems, we're estimating revenues of $1.35 billion reflecting growth of approximately 7% over 2025. Segment margin is expected to be in a range of approximately 12% to 13%. At Industrial, we're expecting several revenues of about $3.2 billion. This reflects low single-digit growth when adjusting for the powersports divestiture in 2025. Segment margin is expected to be in the range of about 4.5% to 5.5%. At Finance, we are forecasting segment profit of about $20 million. Looking at Slide 21, we're projecting about $180 million of corporate expenses. We're also projecting about $140 million of net interest expense for the manufacturing group, $200 million of LIFO inventory provision, $30 million of intangible asset amortization and $280 million of nonservice pension income.

We expect the full year adjusted effective tax rate of approximately 20.5%. Turning to Slide 22. R&D is expected to be about $480 million, down from $521 million last year. As I mentioned, we are estimating higher CapEx on the MB 75 program. resulting in our 2026 CapEx to be about $650 million and $383 million in 2025. Our outlook assumes an average share count of about 175 million shares. So for 2026 company-wide, we expect to see revenue of approximately $15.5 billion and segment profit of approximately $1.5 billion. All of this rolls up to an adjusted EPS forecast in the range of $6.40 to $6.60.

That concludes our prepared remarks. So operator, we can open the line for questions.

[Operator Instructions] Your first question comes from the line of Sheila Kahyaoglu.

And Scott, congratulations on your career and building up Textron and handing the baton over to Lisa. Lisa, set congratulations to you as well. Maybe if you could talk about your top priorities for the company now that you're a CEO.

Thanks, Sheila. Look, as I outlined in the remarks, we are really starting from a very strong foundation -- and so as I look at my priorities, I think about them in 3 parts. First off, execution. Each business has to deliver on their commitments with that operational rigor and cash discipline and have the accountability to do so. I have a phrase that we have to do what we say we're going to do. And so we're going to hold each business to that.

Second will be a portfolio of focus, how we allocate that capital return opportunities across our A&D assets. We have to be very clear about where we lean in and equally clear about where we don't. An example here of how we've been leaning in is on the MV-75 long lead and factory investment to ensure success as the Army pulls that program forward. And lastly, we have to really keep building resilience. So that all of our businesses performed well across cycles. You think about this as investing in our manufacturability, investing in our supply chain and really investing in our talent.

So that's what we have to do. I think how we had to do it is with clarity. We have to very clearly define those execution goals clearly defined our allocation of our capital and that strategic focus across our business. I think having that rigor is going to result in us continuing to execute reliably while we make clear choices of what we invest in, what we protect and frankly, what we don't pursue is equally as important.

Got it. And maybe 1 for Dave. Dave, you're guiding to aviation revenues up 9%, but orders were down 3% over the last 12 months. Can you maybe just discuss how the buildup to aviation guidance and the cadence for Aviation throughout '26?

Sure. So our overall guide is $6.5 billion, up from $6 billion last year. Obviously implied to our guide, we expect higher deliveries in 2026. And I would expect similar aftermarket growth profile of around 6%, just like we had in 2025. When you think about the margin cadence, I think you'll see a similar level of seasonality as we had in 2025. So we'll probably be about 100 to 150 basis points below the midpoint of the guide at the start of the year. And I'd expect by the end of the year will be 100 to 150 basis points above the midpoint. And Q2 and Q3 will kind of be in between that.

Your next question comes from the line of Peter Arment from Baird.

Congrats, Lisa. And Scott, thanks for all your support, I can't believe you want to leave all these quarterly conference calls. But anyway Lisa, how should we be thinking about the in the near and medium term, just given the Army's push to accelerate this program. And obviously, you've been intimately involved and you've probably seen a lot of different versions of what the plans have been. But how should we think about the current setup?

Yes, sure. So I mean, I think the Army has been crystal clear about their desire to move faster. The mandate that came out from the secretary and the chief earlier in 2025. And with the Army Transformation Initiative, put this program as a centerpiece to what they want to execute for the war fighter in the really very near term. So as we mentioned in the prepared remarks, we had some exponential increase in the tangible output because of them kind of clearing the decks to allow the program team to work.

We've got the drawing releases out of tooling. We're building parts across the EMD aircraft. But equally as important, and you guys know this, sometimes just getting through the process is as cumbersome as building the product. And so the Army has kind of cleared the decks for the program team, and we've seen this in the program office in Huntsville. They have really accelerated speed of acquisition. And so that has helped us get to a position where we can push these aircraft into testing sooner. And so at a high level, what that does is it pulls the entire program forward by about 2.5, 3 years. And so what we'll do is deliver these aircraft on the EMD through 2027, move right into instead of having that gap, which the original program had, which we were going to kind of go into this testing phase and no production.

So we would have 2 years of nothing. Well, that now has been filled in. So within months after aircraft #8 is delivered, you'll see aircraft #9, followed by 10, et cetera. And so that acceleration of production in and of itself gets capability out to the Warfighter gets the Army training with this to rotor aspects and allows us to get to full rate production within about 5 to 6 years. So I think you're really seeing the Army lean in and we're right with them.

Your next question comes from the line of Kristine Liwag from Morgan Stanley.

Congrats, Scott and Lisa. Lisa, you highlighted your focus on the portfolio and being deliberate about your investments. When you look at the portfolio today, do you intend to grow or prune? Where do you see incremental opportunities?

Yes, I think, Chris. So I really don't see that management as a binary choice. I think we have to have this ongoing process -- and so while I won't necessarily comment on specific assets right now, we do have to evaluate every single business against that same criteria. They have to have the returns the cash generation and the strategic fit for our long-term porter. I certainly want to accelerate growth and scale in some high-quality aerospace and defense areas. But again, that's going to have to fit with the proper evaluation and strategic alliance to what we're doing in order to make sense.

So we've had really historic success with aspects like ATAC that we talked about. I mean it was a pretty small company when we acquired it. It was focused on some fleet exercises for the Navy. And now it's expanded into the Air Force Marines scope with the standoff Jammer and adding $450 million of backlog. So when we look at our assets, it doesn't necessarily have to be a big bang. It sometimes is these little assets that have really great long-term potential. So we'll look at that.

I think we also, as I mentioned, in the priorities, have to have some vertical integration efforts. We've seen a lot of success with that as we try to control our destiny when it comes to supply chain weakness, areas like actuators, interiors, key repair components that we have to have. And I think we need to really lean in and build on that to have that resilience that we need for the long term, and obviously, earlier in '25, we disposed of the Powersports business. I think that was the exact right move. And so stated from the beginning, whether it's to grow or prune, we really have to have demonstrated performance by the business that we either are acquiring or continue to have that performance internal to our portfolio to make sure it's relevant to the future.

That's super helpful. And if I could add a second question with your history at Textron Systems, I guess, Textron Systems has historically been a disruptor in autonomous systems. And when you look at capabilities today, I mean, you have 1 of the broadest set of capabilities with unmanned Ground Air, C, command and control software. Now we're seeing more new players wanting to enter this autonomous space. I was wondering, can you give us the lay of the land on how to think about your offering where you see your strengths are? And how you think this market evolves and where Textron is differentiated versus these new players?

Sure. I mean, look, I think 1 of our key differentiators is that we have decades of experience here. We know how to manufacture with high rate affordably for our customer. We've seen, as I mentioned, millions of hours of this across various aspects. We've got aircraft on the backs of ships right now. or performing ISR capabilities -- and so we know that in these austere environments, how to build products that are reliable for the war fighter -- and so I think because of that history and heritage, I'm pretty bullish on our opportunities there. And as you mentioned, we've done it not only on, I'll say, smaller unmanned drones in the air it's actually harder to do it on land and in the seed because of the terrain environment. So we've demonstrated that capability as well.

So look, I think as the government figures out the new way of war fighting, we need to be right there with our offerings and watching these entrants as they come in. in some cases, there might be partnerships. In some cases, it will be head-to-head competition. But I think Textron Systems has a strong offering to maintain as a key partner to the Army, Air Force and Marines in this.

Your next question comes from the line of Myles Walton from Wolfe Research.

Lisa, you just talked about investing in the supply chain, doing some verticalization. I guess the question I'd have on Aviation, is that still -- do you think you're limiting function to getting to higher production rates? And where are you in that recovery of supply chain control? And maybe how much cost extra is flowing through the numbers to facilitate your deliveries as you've otherwise planned by expediting supply?

Yes. So productivity, aviation is certainly a key focus for us as we go into 2026. And I think it's 2 parts, right? I mean it is continuing recovery of the supply chain. I think in large part, and we saw at Bell as well -- the majority of it, I think we have gotten that recovery, it's still those key components that continue to be head hurters -- and so I think we're starting to see recovery. We're starting to see folks responding to the needs and the demand. But I mean, candidly, engines just to call it a key component, which you have to have for these aircraft, has been a laggard for us and we have to keep working with our partners there in order to get the engines to our aircraft.

The other part, though, I think that we see is workforce. We've had a high attrition, I'll say, in the early workforce, folks that I would say, a year or 2 years into working with us. the response of the team there, we created an in-house training program to upskill the talent there to create more longevity and resiliency of our workforce. And so those 2 pieces together is what we really have to have in order to improve the efficiency on the factory floor. And I would say that is broader than just Aviation, that's also a belt. We saw the same type of things that we need to work on and fix.

So Look, I would say, it's both. I think the team has some good plans. And Dave, I don't know if you want to add any color there other than that we price that in. But I think there's a good progress and we'll hold them accountable to it.

Yes. I'd just add, if we look at 2025, we certainly saw a modern improvement in the supply chain. We earn more hours in the factory. Did we get all the efficiency and productivity we hope to get in the air now. So there's still opportunity to drive better efficiency in the factory. So that's still a slight headwind in our overall numbers, which, of course, are reflected in our guidance and it also represents a strong opportunity for us as we go forward. And as you see from our guidance, we do expect to be able to deliver more air lanes in 2026 than we did in 2025.

Okay. Quick follow-up, Dave, on the CapEx for '26. Is that spike expected to continue beyond '26 and...

As we've talked about over the last 6 months as acceleration too cold, essentially, we're moving about 2 years to the left in terms of investments. So you'll probably see the elevated level in 2026 and 2027, all driven really by the MB 75 program, simply moving investment that would have been in 2028 and 2029 to the last.

Your next question comes from the line of Robert Stallard from Vertical Research.

Congrats, Lisa, welcome to the call. I wonder if I ask a couple of questions about MV-75. You've given us the additional CapEx cost or pull forward CapEx cost you're going to see in '26 and '27 and there's this potential charge when you get the LRIP contract sorted out later this year. But what's the flip side of this? I mean how much could revenues go up by versus previous expectations as we look out to '27, '28, '29. And what could the returns be on those revenues versus what you might have expected before?

So I'll talk on the -- as we've described this program, ultimately, the opportunity is between 40 and 60 units per year. and you can average that out, it's going to be a significant increase on the overall revenue profile of the business. And we expect that, that would start rolling in later this decade, much quicker than originally expected. The other point I'd make, historically, in the past, Bell was a double-digit margin business.

And certainly, as we as the program matures and we get into the initial lots of production, our expectation would be that they would return to that. All these actions we're describing to you today means that's accelerated versus where it previously would have been, which they would have taken a longer time this decade.

Okay. And a quick follow-up, Dave. So if you take this charge later this year, where would it leave booking margins on the MV-75 going forward, they be like low single digit and then eventually move up to those low double-digit levels?

Yes. I mean as you know, Rob, we're treating this as 1 program from a booking rate as new contract line items get awarded. If you look, for example, in 2024 and Q4 of 2024, when the 2 let units got awarded, that resulted in us having to a [indiscernible] catch up and lowered our outlooking rate still in the low single digit margin.

And in Q3 of 2025, we added an additional point award that actually resulted in us raising the booking rates, again, still in that range. So this is still in the mid, low single digits as we go forward. And each time a new contract line item is awarded, we adjusted up and down. But this isn't the first time this has happened. And you can actually see that if you look at our EACs from Q4 or Q3 of 2025. But the program the port and emphasize that program will continue to be profitable as we expect it to be profitable as we go forward.

Your next question comes from the line of Seth Seifman from JPMorgan.

Congratulations to Scott and to Lisa. I wanted to ask with -- even with the CapEx that you're planning for this year, still have some cash to deploy no debt due this year, it seems from the release that the share count is down a bit. How do you think about using your cash here?

Yes. Look, I'll start, and Dave, you want to see if you want to pile on there, but we're going to continue to that as appropriate. We're going to make sure that we do copper research and development where it makes sense across the business and get ready, as we said, for the MV-75 acceleration, and we'll continue to do share buybacks as it makes sense. So...

Yes. Our expectation is we'll continue to deploy the relatively similar percentage that we've had in the past in our from our free cash flow, and we're really comfortable where we are currently on a debt level, our ratios, et cetera. We're good BBB rating, and that's where we expect to continue to be.

Excellent. Excellent. Very good. And then, Lisa, I bugged Scott with this question a couple of times in the past. But just with the acceleration of the program, maybe I can ask you since you've been so close to it, how do you think about concurrency risk with moving straight in LRIP -- and what gives you kind of confidence that we want future charges?

Yes. So we've been working on this program for 15 years. And so with the prototype and the over 200 hours of flight that we had on the demonstrator, the fact that we're seeing on the digital engineering yield that we have in these programs, I mentioned we've got parts that are already being built. We're having 100% first pass yield. What that means is the parts are coming out exactly as designed. And so the fact that we're seeing that kind of performance out of the program gives me the confidence that what we build is what we designed.

And so when we put that through a test, I mean certainly, we'll discover some things, but I mean I think there's -- we have high confidence that we have wrung out a lot of the concerns that you might have seen in older generation type development programs.

Your next question comes from the line of Noah Poponak from Goldman Sachs.

Congrats, Scott and Lisa. And Scott, thanks for all the time you spent with us over the years. I was hoping to talk more about the Aviation margins. We see the recast taking 60 basis points out of the reported. I guess, Dave, I don't know if you could just sort of tell us what the incremental was kind of fully adjusted in '25 and in your '26 guidance? And I guess the '25 guide had been 12% to 13%. If we take the 60 basis points out of that, the guidance for 26 is flat to down, I guess. So are we just recasting the Aviation margin? Or are we also resetting the Aviation margin expectation for some reason?

No, we're certainly just recasting. I mean I think if you look about -- you're correct, we guided last year at 12% to 13% and ended up slightly below that. I mean, I think that's largely around the volume story. While we did have higher volume year-over-year, we ended up with a little more a little less volume than we expected. But I mean, as you -- as we go forward, if you look at our incrementals this year, depending on where you end up in the range, I mean, we're probably between 15% to 20%. We've often said that this business should have incrementals of 20% to 25% and has not changed.

I think the key to us getting there is continuing to have efficiency and productivity improvements in the factory that will drive higher volume. And of course, where we've established the market over the last 5 years, pricing remains solid. So that the business should continue to convert 20% to 25% and also, I should mention with a very strong aftermarket business. We grew 6% last year. We expect to grow 6% this year. So it's certainly not a restatement of what we expect the margins to be. we feel comfortable where we're at and plan to continue to grow the business as we go forward.

Okay. And then, Dave, you've talked about holding Bell EBIT flat as you ramp MV-75 and grow revenue, but work through the margin. With what you're telling us today on the LRIP and once you take the charge, is that still a view? Or do we think about that differently?

That's still the view.

Okay. So this year, you're growing revenue and the guidance is for the margin to be flat. So that would grow EBIT. I guess, therefore, that implies the margin still goes down a little bit more before then eventually going back up?

I mean we're going to be probably going to be in a relatively steady state over the next couple of years. And then with the acceleration, you'll start seeing the benefit of that. I think I view this as a relatively steady state, which is consistent to the message we've been sharing.

Your next question comes from the line of John Godyn from Citi.

Lisa, I wanted to just sort of brainstorm the world of a much bigger budget, not necessarily $1.5 trillion, but obviously, kind of those sound bites are out there. What I'm trying to think through is between Bell and systems by the math, you guys have a lot of defense exposure. But more specifically, where do you think the points of leverage would be to the upside in a world where the budget was much higher?

Yes. Look, I think what you see is what the Department of War is trying to prepare for, I mean, we have aspects of our business across all of that. So particularly around the Sentinel program and what our team is doing at systems around hypersonics and the Thermo protective materials, I think there's points of leverage there with their emphasis on the XM30 and the Marine course armed reconnaissance vehicle and where those programs are in their terms of their development. I certainly think there's opportunity for growth and acceleration in those programs.

And then as we've stated multiple since already with the MV-75 and their continued push quickly into full rate production. And so that, along with the Ship-to-Shore program will be steady. I mean, we're producing those all through a program of record of 73. And so there's just, I'll say, continued foundation and solid support for the programs across all of our defense portfolio.

Got it. That's very helpful. And there was a bit of a discussion earlier about adding capabilities. In a world where the budget was higher, is that part of a guiding light for adding capabilities, accelerating growth in what you call high-quality areas of A&D. I just want to connect a dots there.

Yes, sure. So I mean particularly around the space side of things, I think the Department of Ware is also kind of leaning into that. And I would like to see us move into areas of the space side of hence either with assets that we have or as we look to the future. So I certainly think that, that is a key growth area we need to be focused on.

Your next question comes from the line of Gavin Parsons from UBS.

Also my congrats to Scott and Lisa. Does jet demand pretty strong overall, but it does seem like large cabin maybe is the strongest segment at the moment. Is there any opportunity there to add a larger aircraft to the [indiscernible] family?

Yes. Look, I think this year, we brought in 3 block point upgrades, and that wasn't necessarily the plan as we went into the year. I think that kind of all kind of jammed up towards the end of the year, which created a little bit of a lumpiness for us. I think our plan would be to try to do 1 of those at a time and do 1 clean sheet at a time and right now, the focus on the Denali and getting that entered into service is the focus for the team.

And then if I could just dig into the industrial margins a little bit light in '25, but expanding in '26?

Yes. I'll take that one. I mean I think that obviously, I think Kautex did a really good job year despite where the market is. And they've continued to see improvement in their own profitability. TFV still has some challenges kind of where the end market is. And they've absorbed a certain level of tariffs which has also been a headwind. But overall, we do see golf continues to be a pretty steady business and a lot of their cost reduction activities that they've been continuing to do. Those are kind of the combination of the 2 that are driving the improvement.

Your next question comes from the line of Ron Epstein from Bank of America.

Congratulations. Everybody, and Scott, hard to believe. It's been a while. So Thanks, nothing -- so yes, so maybe a couple of questions. Just first one, we haven't talked about much. On the MV-75, how are you all thinking about the logistics and support for the aircraft? Because once the aircraft on field logistics and support could be pretty profitable. And what's the model around that? And how are you thinking about that?

Yes, sure. So if we model it after what we've done with most of our programs on the military aircraft side, there's typically kind of a performance-based logistics type approach that the military works with us on. I think the Army in this approach also has been very intentional on how they have gone with basically their purpose rights. They want to have some organic capabilities themselves. So we will work with them to help them stand up that capability.

Obviously, service parts or payer, a lot of that will be probably station near where a lot of the center of their aircraft are they're likely going to be at for Campbell to begin with. So we'll be working with them to ramp that and how those spares packages would look as they lay that the program out into the various aspects of me. They're different than how we deal with the marines. The Marines have kind of 2 centers of location, the Army supports their aircraft where the Army is. And so we will have to support them in that in a more disparate way.

Got it. Got it. Got it. And then maybe just they're going to pull something out of the garage, and you know what I mean in a minute. It's something we should talk about a little bit and sort of faded away with Scorpion. And the reason I bring that up, not that maybe there's immediate demand for Scorpion, but you guys were ahead of the game doing something that was a lot of commercial on your own dime and at the time, the drop the ball and didn't get them, right? And I think you all would agree with this.

I think they should have -- you probably think they should have, but they didn't. Things have changed. And given that you've got this awesome toolkit of a lot of commercial parts and you're doing a bunch of good military stuff and commercial stuff at Bell, but really largely commercial but some military at Textron Aviation. Does environment come together for you guys to start doing something like a scorpion or whatever, again, where it can be largely commercial with the military applications at a cost point that's better is there receptivity for that with Scorpion just maybe a decade ahead of this time?

I think that's right. I mean I do think it was just a little bit ahead of its time. But when you look at what we're hearing in the last 8 months, it echoes exactly what we tried to do with Scorpion, which was take a commercial mentality, commercial practices off-the-shelf of parts and put together a low-cost, affordable platform that is beneficial to the war fighter. And so I think because of that being a part of our DNA, I think that's something that we would lean into. We do that, frankly, now with some of our aircraft at Textron Aviation defense and inside of belt.

We militarized Bell commercial aircraft that go into certain special missions around the globe. But as we look to where the government currently is leading us with this, I'll say, their new arsenal of freedom, that's what they've titled that as where we have aspects that we go into that, we certainly will. I think that, that's what they've asked of us, and I think we are well positioned to do that.

Got it. Got it. And then, sorry, just 1 last 1 quickly. could there be a new life for Scorpion? I mean the role that you built it for is still out there, right? -- the same?

Yes. I haven't heard of it yet, but certainly, if it comes out, you guys will be the first to hear about it because we'll be talking about it. But I think there's -- but look, I agree with the sentiment, right? There was opportunity here, and we are positioning the company that knows how to respond to that.

Congratulations.

Thank you.

And that concludes our question-and-answer session and also concludes today's conference call, an audio replay will be available approximately 2 hours following the conclusion of this call. To access the replay, please 770-2030 and enter conference ID 696 and 175 and pound key. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Textron Third Quarter 2025 Earnings Release. [Operator Instructions]

I would now like to turn the conference over to Scott Hegstrom. Please go ahead, sir.

Thanks, Rob, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release.

On the call today, we have Scott Donnelly, Textron's Chairman and CEO; and David Rosenberg, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

Revenues in the quarter were $3.6 billion, up 5% or $175 million from last year's third quarter. Segment profit in the quarter was $357 million, up 26% or $73 million from the third quarter of 2024. Adjusted income from continuing operations was $1.55 per share compared to $1.40 per share in last year's third quarter. Manufacturing cash flow before pension contributions totaled $281 million in the quarter compared to $147 million in last year's third quarter.

With that, I'll turn the call over to Scott.

Thanks, Scott. Good morning, everybody. Let me just start with yesterday's announcement. I'm sure you've all read by now that yesterday, we elected Lisa Atherton to become our new President and CEO, effective at the beginning of January. At that point in time, I'll transition to be the Executive Chair. This is the result of a long, thorough process that we worked with on the Board.

I think Lisa, who's been with our company for about 18 years is an outstanding leader. She's had a number of really important roles in the company over the years. She was the President and CEO of our Textron Systems business for about 5 years. Most recently, obviously, she's the President and CEO of Bell, where she's been very involved in both the capture, the win and now the execution of the ramp on MV-75. She's a fabulous leader. She knows the team. She's surrounded by a great team at the business level across the company. So we're proud of the fact that we had a great internal promotion, and I think she'll just do a fabulous job leading the company into the future.

So with that, let me go ahead and talk about the quarter. Overall, revenue was higher, driven by strong growth across our aerospace and defense businesses. Aviation had higher segment revenues and profit compared to the third quarter of last year. We delivered 42 jets and 39 commercial turboprops compared to 41 jets and 25 commercial turboprops in last year's third quarter. Textron Aviation's fleet utilization remained strong in the quarter, contributing to an aftermarket revenue growth of 5% as compared to last year's third quarter. Aviation backlog ended the third quarter at $7.7 billion as demand remains strong. Earlier this month, Textron Aviation completed the certification of the CJ3 Gen2 and autothrottles on the M2 Gen2.

Also this month, the Citation Ascend made a debut as it landed in Las Vegas for the NBAA exhibition. We are nearing completion of the certification process and continue to expect deliveries this quarter. During the quarter, the Latitude received FAA certification for new features of the Garmin 5000 avionics suite. These features include Synthetic Vision Guidance Systems and for improved approach capabilities down to 150 feet and a new taxiway routing feature. We continue to implement Starlink high-speed Internet connectivity onto our aircraft. With the recent announcement of the Latitude and Longitude supplemental type certifications, Starlink is now available on 14 platforms across Aviation's product portfolio.

On the defense side, Aviation announced a partnership with Leonardo to launch the Beechcraft M-346N as a solution for the United States Navy Undergraduate Jet Training System competition. Throughout the quarter, Aviation participated in a nationwide demo tour to highlight the capabilities of this aircraft.

At Bell, increased revenues were driven by higher military volume, reflecting the continued ramp and acceleration of the MV-75 program. In the quarter, Bell exceeded their 90% engineering release milestone, enabling continued fabrication and procurement activity for the prototype aircraft. Fabrication and assembly work on the program is continuing across numerous sites, including wing assembly at our Amarillo, Texas site, fuselage assembly at our Wichita, Kansas site, in addition to ongoing fabrication of critical rotor and drive system components in our Fort Worth operations.

On the commercial side of Bell, we delivered 30 helicopters, down from 44 in last year's third quarter. Bell continues to see strong demand across its commercial product portfolio. Bell announced a purchase agreement with Global Medical Response for 7 429s and an option for 8 additional helicopters with deliveries expected to begin in 2026.

Moving to Systems. Revenues were up as compared to last year. During the quarter, Systems received new contract awards for several programs, leading to an increase in backlog of about $1 billion in the quarter. These awards included ATAC awards for both the United States Navy and the United States Marine Corps, a new contract award for the U.S. Army to provide 65 mobile strike force vehicles in support of the Ukraine Security Systems Initiative and increased quantities for the Ship-to-Shore Connector program.

In the weapons business, Systems completed delivery of the first production lot of XM204 anti-vehicle terrain shaping systems to the U.S. Army in support of operations in Europe.

Moving to Industrial. We saw lower revenues, reflecting the divestiture of the Powersports business. At Aviation, we continue to make progress on several of our core development efforts. The team completed the Hover flight test envelope for the Nuuva V300 and set the stage for Air Vehicle 2 to enter the flight test program.

As disclosed in our 8-K filing, Textron will be eliminating the Textron Aviation segment as a separate reporting segment, realigning the eAviation business activities across Textron Aviation and Textron Systems to leverage our existing sales and business development capabilities. This change will be effective at the beginning of fiscal year 2026.

With that, I'll turn the call over to David.

Thank you, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1.5 billion were up 10% or $138 million from the third quarter of 2024, reflecting higher aircraft revenues of $116 million and higher aftermarket parts and service revenues of $22 million.

The increase in aircraft revenues were largely due to higher volume mix, which included higher Citation jet and commercial turboprop volume, partially offset by lower defense volume. Segment profit was $179 million in the third quarter, up 40% or $51 million from a year ago, largely due to higher volume and mix. Backlog in the segment ended the quarter at $7.7 billion.

Moving to Bell. Revenues were $1 billion, up 10% or $97 million from the third quarter of 2024. The revenue increase was driven by higher military revenues of $128 million, primarily due to higher volume from the U.S. Army's MV-75 program, partially offset by lower commercial volume of $31 million. Segment profit of $92 million was down $6 million from last year's third quarter. Backlog in the segment ended the quarter at $8.2 billion, an increase of $1.3 billion from the prior quarter, primarily reflecting the award for the prototype testing and evaluation phase of the MV-75 program.

At Textron Systems, revenues were $307 million, up 2% or $6 million from last year's third quarter, which included higher volume on the Ship-to-Shore Connector program. Segment profit of $52 million was up $13 million compared with the third quarter of 2024, largely due to a gain resulting from the early termination of a vendor contract. Backlog in the segment ended the quarter at $3.2 billion, an increase of $980 million from the prior quarter, reflecting new contract awards for the Ship-to-Shore Connector land vehicles in the adversary air business.

Industrial revenues were $761 million, down $79 million from last year's third quarter, driven by Textron Specialized Vehicles. This reflects $88 million in lower revenues related to the divestiture of the Powersports business. Segment profit of $31 million was down $1 million from the third quarter of 2024.

Textron eAviation segment revenues were $5 million in the third quarter of 2025 as compared to $6 million in last year's third quarter, and segment loss was $15 million as compared with a segment loss of $18 million in the third quarter of 2024.

Finance segment revenues were $26 million and profit was $18 million in the third quarter of 2025 as compared to segment revenues of $12 million and profit of $5 million in the third quarter of 2024. The increase in revenues and segment profit was largely due to gains on the disposition of noncaptive assets.

Moving below segment profit. Corporate expense were $26 million. Net interest expense for the manufacturing group was $26 million. LIFO inventory provision was $48 million. Intangible asset amortization was $8 million and the non-service components of pension and postretirement income were $67 million. As expected, our adjusted effective tax rate for the third quarter of 2025 was 25.5%, largely reflecting the impact of the One Big Beautiful Bill Act. We now expect our full year adjusted effective tax rate to be approximately 21%.

During the quarter, we repurchased approximately 2.6 million shares, returning $206 million in cash to shareholders. Year-to-date, we have repurchased approximately 8.4 million shares, returning $635 million to shareholders.

To wrap up with guidance, we are reiterating our expected full year adjusted earnings per share to be in the range of $6 to $6.20 and maintaining our expected full year manufacturing cash flow before pension contributions to be in the range of $900 million to $1 billion.

That concludes our prepared remarks. So operator, we can open the line for questions.

[Operator Instructions] And your first question today comes from the line of Peter Arment from Baird.

Congratulations, Scott. I appreciate all the help over the years. On the MV-75, could you guys give us -- there was an announcement by the Army here recently regarding accelerating the fielding of the Version 2. Just how that would impact any the cost profile? Or does it change anything?

It won't change anything in the near term, Peter. I mean, obviously, part of the strategy on the program, which has been there all along was to start with a very basic aircraft and focus on the critical parameters around speed and range and basic aerostructure. But as you know, part of the incorporation of MOSA in terms of the architecture of this aircraft allows you to do that and then build out variants and derivatives and capabilities in different variants going forward.

So our focus, obviously, right now is very much around the acceleration, getting the first prototype aircraft going. Those will be the first variant. So -- but there's already a lot of work clearly going on in the Army around what future capabilities they'll want to put on the aircraft, but that's enabled by the MOSA architecture. So it doesn't affect or impact the work that's going on around the basic aircraft today.

That's helpful. And then just a quick one on -- just on Aviation, you talked about the demand remains strong. Just maybe any highlights you would call out just regarding whether it's regionally or just in general on the biz jet market.

It's really across the whole portfolio, Peter. I mean we continue to see strong retail demand. People are flying. The end market industry remains robust, I would say, everywhere that we see it. The performance of the business is improving, obviously, as we talked about every quarter, improving margins. We had a lot of certification activity in the quarter. We would have originally planned probably to get the M2, the CJ3 and the Ascend in Q3. It's turned out.

Of course, we now have the M2 and the CJ3, but those happened right at the beginning of Q4. And Ascend, we should have wrapped up here by the end of the month. The FAA, despite the shutdown is supporting us in that effort, which is great. So I think the market is strong. Our product portfolio is in a good place. So we feel pretty good about where things are.

Your next question comes from the line of Sheila Kahyaoglu from Jefferies.

Congratulations, Scott, on a great run and promoting both Dave and Lisa internally. I think that says a lot. Maybe if I could follow up on the MV-75 question, if that's okay, for Peter. Can you provide additional color on like where -- what's the update on the program? You've completed 215 flight hours. I think you're scheduled to deliver 6 test articles over the next 1.5 years. What happens from there with the Army? And how do we think about a contract being signed on?

Sure. So I mean, the current program, it's -- Sheila, it's a good question. I think there are some misunderstandings about this program and sort of where it is and what's going on. I've heard a lot of people said, hey, is this going to be one of these programs as we've seen with a lot of defense contractors around these big fixed price programs. We're familiar with those. We had that, as you know, on Ship-to-Shore Connector. It's a healthy program today, but went through a very difficult phase given the nature of the fixed price development and production at the beginning.

As you know, we don't have that. This is a very large program, obviously. It's mostly cost-plus development. There are some fixed price elements. We've already put the fixed price LUT aircraft into our program estimates to complete. We will, at some point, add the LRIP 8 once that is exercised by the government. But I think that the program as it's laid out today covers all of that development, which is largely cost plus. It does have LUT as a fixed price. It does have LRIP as a fixed price. And that's kind of where that -- where the current program stops. So the discussions around acceleration are really bringing forward that LRIP. We collectively with the Army, believe this is something that we can do with low risk. That's in part by, as you referenced, the fact that we flew 200 and some 300 hours on the V-280.

The team is already building a lot of the key components and fabrications, getting ready to build the first prototype test aircraft. There will be 6 of those and then the 2 LUTs. So the risk of bringing that LRIP in rather than having a big gap is pretty minimal. People need to keep in mind that, that first LRIP aircraft is really sort of serial # 10, if you count the initial V-280 plus the 6 EMDs, which are cost plus and then those first 2 LUTs that are fixed price. So I think the team is doing a great job on executing. Obviously, we work very, very closely with the Army on the acceleration process. It's going very well. We're building wings. We're building fuselages. We're building gearboxes. It's all going quite well.

And again, I think there is a little bit of a misconception around how this works. It is a big performance obligation. We will -- as you guys saw last year, when we did the LUTs and added those to the mix, we took our booking rate down, and that will result in a [ cume catch ]. It did result in a cume catch that was a bad guy. On the other hand, this quarter, they exercised one of the large cleanse for the cost-plus side. We actually increased our booking rate and took a modest cume catch good guy. So this is something to expect through the course of the program. But unlike these big fixed-price development, fixed-price production programs, we certainly don't see this thing entering into lost territory. It will continue to book at a low margin, which we've said from the beginning. But I think we're, again, in a pretty good place, and it's a program, I think, that's executing well and obviously is hugely important to the future of the company.

Your next question comes from the line of Gavin Parsons from UBS.

This is João Santos on behalf of Gavin Parsons. You have talked before about improving Aviation profitability. What is the long-term margin target that you are aiming for? And what are the main levers to get there? Is it volume, pricing or more of mix?

Well, I mean, obviously, these dynamics are different in each one of the businesses. But generally speaking, across all of our product lines, we have good gross margins. So the biggest lever is around volume and what that does in terms of conversion to the bottom line in terms of performance. So that's -- most of the investments that we make around product are around making sure that we have products that have high demand and can command good volume and obviously, solid pricing, which, again, we've seen that in the last number of years where we've had very positive price feedback as well.

Great. And then in Aviation bookings have been fairly steady each quarter this year, even through the 2Q tariff uncertainty. Do you think long lead times are holding back new orders? And if production ramps, could that actually drive bookings higher?

Well, look, it's -- there is some connection between news. There's no doubt if you get out too far out in time line that it's difficult for people to make that commitment. But as you said, look, I think that the market demand remains strong. It has been pretty steady. We've guided a 1:1 book-to-bill through the course of the year. I still feel good about that. And certainly, we do have plans where you'll see incremental volume in 2026 as opposed to 2025. So we're not obviously quite ready to guide 2026 here, but we certainly expect, as manufacturing continues to ramp, we will see additional output in terms of the number of aircraft.

Your next question comes from the line of Robert Stallard from Vertical Research.

Congratulations, Scott, on the move up. But my first question is actually in relation to that and how you and Lisa expect to divide the role going forward because you will be Executive Chairman.

Sure, Robert. Look, I mean, this is, I think, a fairly standard transition in our business. I've been working with Lisa for a very long time in her capacity and key program jobs. She worked for me directly for the last 8 years running the Systems business and then the Bell business. So I want to be really clear, she becomes the President and CEO. She's running the company. That's -- and she's ready to do that, by the way.

So I'll be there to help with some of the processes that we just haven't gone through around regulatory stuff and closing out the year and things like that. But I fully expect she's ready to run the company, and she'll start doing that on January 4, and I'll be there to help and do whatever it is that she needs me to do and obviously run the Board. But I think it will be a normal transition. I expect it will be very, very smooth. Again, we've been working together for a very long time. So I'll be around, but no one should have any questions, she's going to be running the company.

Okay. And then as a follow-up on Aviation, we've seen some recent signs of biz jet activity actually picking up in terms of year-on-year growth. Are you starting to see this flow through in terms of your aftermarket activity?

Yes. We had a good quarter on the aftermarket side. There's no doubt utilization is strong. People are flying, which is a great indicator. Obviously, it's really important in terms of helping to continue to drive growth in the aftermarket side of the business. But I think it also bodes well just for demand for aircraft, which again, we're seeing the retail, the level of interest, inquiries, orders, bookings remain strong. So I think the industry right now probably is as healthy as we've ever seen it.

Your next question comes from the line of Myles Walton from Wolfe Research.

Scott, on the retirement or move to Executive Chairman. You're not retired yet. Work to do. On the Aviation side, can you comment on the supply chain and how that's coming along and whether or not that's an impediment to hitting the $6.1 billion rev placeholder within the forecast?

No, look, I mean, there are still supply chain issues as we've kind of talked about, it's not as many part numbers, for instance, as it used to be, but there are still some critical suppliers that are struggling. And yes, it does impact us on different models at different times. It continues to create a little more problem in just some production efficiencies and flow doing out-of-station work. Again, it's not as bad as it was. And so we are seeing improvements in that area.

But there's some critical things that are sort of a little bit of hand to mouth and that we keep a close eye on with a relatively small number of suppliers, but they're critical suppliers. So again, overall, it's improved, but it's one that we -- I mean the team works this stuff every day. There are still some problem children out there, and that's been the sort of the nature of where we are. But I don't believe -- just to be clear, I think everything we look at today, getting to that $6.1 billion, we clearly feel good about our path to get there.

Okay. Great. And then just a follow-up on Systems, great bookings. Is this the point of inflection for growth after a long time of relatively flat revenue?

Yes. Look, I think so. The bookings were very strong. You guys know we started the year with a bit of a challenge with things like RCV and FTUAS getting restructured and changed. I do still think there's opportunities there in our participation in those kinds of programs. There's a lot of interest in a lot of the technology we developed around FTUAS. And so that stuff will play out. But for sure, what you're seeing, despite not getting those bookings, the growth in the rest of the business has kind of overcome that.

Our ATAC business is just doing great. Those guys are performing really, really well. They've won a ton of new programs. Ship-to-Shore continues to grow. And as I said earlier, with Sheila, the program is healthy. Volumes are there. The team is executing really well. We continue to see growth in the Sentinel program.

So I think when you look across that business, despite some of the challenges around a couple of those programs, it's good growth. And absolutely, we feel good about sort of that inflection point you referred to. this business has been executing, performing really, really well for a number of years. The only thing that's lacked, as you guys know, is growth. And I do think we're hitting that inflection point where we'll start to see it growing here as we go forward.

Your next question comes from the line of Seth Seifman from JPMorgan.

Congratulations, Scott. Just wanted to ask, starting off about Aviation, and you just spoke to kind of the revenue. When we think about the margin, it's a pretty significant uptick in profitability in the fourth quarter and kind of what enables that.

Yes. I mean, look, I think as we've talked about, Seth, we expected to see a progression as we go through the course of the year. The fourth quarter will be strong on the volume side, which it normally is. I think we -- I mean, there are still challenges, but the team is performing better and better every quarter around getting flow. And largely, we'll see a nice significant bump in volume in the quarter, and that will drive good margin with it.

Okay. Okay. Excellent. And then maybe one more on MV-75. When we think about the LRIP units and bringing those forward, are there kind of additional contractual provisions that you can get to protect the company from concurrency risk?

Well, so the LRIP have always been laid in there. So I don't think there's anything that would change contractually on that. To be honest, we're not that worried about the risk of that. Again, the base configuration of the aircraft is really solid. Obviously, it's a derivative off of what we did on V-280. There are changes, but we know what those are. We are fabricating right now the first of the prototype aircraft. So again, by the time we are building that first LRIP aircraft, we will have built, obviously, the original V-280, but we will have built 8 aircraft, the 6 EMD aircraft and the 2 LUT aircraft.

So -- and certainly, there's an enormous amount of ground testing, component level testing, stuff that we already are fabricating and building parts. So I think we feel very good about the things we need to learn, any issues that we run into -- we're going to run into here on these initial EMD aircraft long before we get to where we're building that first LRIP aircraft.

Your next question comes from the line of Ron Epstein from Bank of America.

Yes. Maybe just circling back on Systems. How is the unmanned portfolio doing when you look across the -- you've got unmanned land system stuff and Shadow and Aerosonde and some other stuff. We've seen such kind of surging demand for unmanned stuff. Just curious how that's going for you guys? And do you have anything in the pipeline that you're working on developing to kind of expand in that market?

So I would say that, Ron, the Aerosonde program is going well, right? You know we went through a bit of a challenge as Afghanistan came out. We had a lot of aircraft that were deployed over there. Those have largely been redeployed to other theaters, other applications, a lot of marine applications. So that business is doing very well. That is where the next significant tranche really was going to be around FTUAS with that program not happening at least in the way it was envisioned. That was a hit.

But look, the reality is these brigades need ISR. And so what really changed on FTUAS is that you understandably frustrated over how long it was taking to get stuff out there has basically said, look, you got to take these systems directly to the brigades and they'll drive that demand. So that's what we're doing right now. And that's why I say, while FTUAS didn't happen as a program, I do think that we will see a number of opportunities as we go out and sell that technology directly out to the war fighter. So there's also been some international opportunities. There's things out there with customs and border patrol.

So in terms of our core platform today from Aerosonde and then transitioning into what was basically the FTUAS configuration, I believe we're going to start to see some nice growth in there. In terms of new platforms under development, part of what we did with the eAviation segment is that team in Pipistrel has been developing this unmanned cargo aircraft, what we call the Nuuva 300. That's now into flight test. We've already done the flight testing on Article 1. We're about to do the final build-out on Article 2, which has our own flight control fly-by-wire systems and such. And so part of the change here in the segment is that our Textron Systems business, which has always been the developer and sort of leading the business development on Aerosonde and Shadow and those other unmanned platforms, we will basically have responsibility to take that kind of product to market.

And so it's the Nuuva unmanned cargo. We also have a nice niche that we've -- Pipistrel has for a long time and in high altitude unmanned sort of long-duration surveillance products. That's a product we already have today. We have some new developments in process there for very long duration aircraft. And again, those will now start to largely go to market through our Textron Systems business, augmenting our strength in unmanned aircraft.

Your next question comes from the line of Kristine Liwag from Morgan Stanley.

Scott, congrats on your next chapter. I guess over the years, there's always been discussions and conversations with you about the broader Textron portfolio and if it should all belong together or if there are other ways to unlock shareholder value. At this point, all reporting segments are fairly stable. The balance sheet is very strong and the company generates solid free cash flow. I wanted to check with you to see if this management change also signals a reevaluation of the portfolio once again and how you think about it now?

Well, I don't know that we would say that the change is drive that. I do think we are always looking at the portfolio. I think to your point, look, we don't have a burning platform, but would we look at either disposing or acquiring? Of course, we would. So that's a process that has been ongoing for some time. Obviously, we just did the dispositions around the Powersports business earlier this year. That was something we thought we really needed to do and wanted to do to help position the company going forward. But we're -- we continue to look at other opportunities, and I expect we'll continue to do that regardless of the leadership change.

Your next question comes from the line of Doug Harned from Bernstein.

If you look at the mix of deliveries across business jets, it's been pretty stable over the last 2 years. I mean I would have expected more of a shift toward the Latitude and Longitude, although that might have been an incorrect assumption. Are you seeing demand shifts across your portfolio? Is that -- and is that -- is the mix in there constrained more by where demand is or where your capacity is?

Look, it is right now probably more of a capacity issue. I would say in terms of the end market demand, it has been steady, right? The demand or whether it's a Longitude or Latitude, whatever has been pretty stable, these things are often influenced by new products. So I would say, for instance, when we launched the new CJ4 Gen2, we saw a very strong spike in order activity, which kind of puts that lead time well out there because people were pretty excited in that piece of the market about that product. And we've seen the same things with things like the CJ3 Gen2s, certainly the Ascend.

So there's -- I would say the end market is stable. Demand is pretty strong across all the pieces of the product portfolio. Usually, you see some of these spikes of order activity demand that can be affected by the launch of new product, of which we've had quite a bit.

Yes. And then when you look -- you've talked a little bit today about the strength of the demand environment. But if you look back to the beginning of the year and then where you are today, how would you characterize demand mix in terms of corporate versus high net worth individuals? Have you seen any shift there? Because obviously, there's been a lot of -- it's been a very dynamic sort of economic outlook over the last 9 months.

Yes. It's actually pretty remarkable despite all of the noise of which there's plenty for sure, we're not seeing it impact that market. We haven't seen any piece or segment or interest that has changed because of what's going on. And I think part of that is the fact that you're out there, whether it's 18 months or 2 years, people are kind of looking beyond what current noise is in the marketplace, because they're not going to take delivery of that new aircraft for 18 months or so. So I think it's had a little bit of a muting effect on that. So -- but yes, remarkably, despite all of the noise that's going around, it's -- the demand is stable.

Ladies and gentlemen, this concludes the Textron Third Quarter 2025 Earnings Call. Thank you for joining us today. You may now disconnect.

Hello, everyone, and welcome to the Textron Second Quarter 2025 Earnings Call. My name is Emily, and I'll be moderating your call today. [Operator Instructions] I will now hand over to Scott Hegstrom, Vice President of Investor Relations and Treasurer, to begin. Please go ahead.

Thanks, Emily, and good morning, everyone. Before we begin, I'd like to mention that we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, Textron's Chairman and CEO; and David Rosenberg, our Chief Financial Officer.

Our earnings call presentation can be found in the Investor Relations section of our website. Revenues in the quarter were $3.7 billion, up 5.4% or $189 million from last year's second quarter.

Segment profit in the quarter was $346 million, up $3 million from the second quarter of 2024. Adjusted income from continuing operations was $1.55 per share compared to $1.54 per share in last year's second quarter.

Manufacturing cash flow before pension contributions totaled $336 million in the quarter compared to $320 million in last year's second quarter.

With that, I'll turn the call over to Scott.

Thanks, Scott, and good morning, everyone. Second quarter was a good quarter for Textron with revenue growth in both our commercial aircraft and helicopter businesses as well as in Bell's FLRAA program, which is now known as the MV-75. Aviation had segment revenues of $1.5 billion, up 2.8% from the second quarter of 2024, reflecting higher sales for both aircraft and aftermarket. And the factory operations continue to improve as we ramp production. We delivered 49 jets and 34 commercial turboprops compared to 42 jets and 44 commercial turboprops in last year's second quarter.

Aviation continued to see solid demand across all products with backlog ending the quarter at $7.85 billion. In the quarter, Aviation announced a purchase agreement with the customer in Mexico for 4 Citation jets and an option for 8 additional jets with deliveries expected to begin in 2026. Also during the quarter, the SkyCourier hit a number of important milestones, including the first delivery in South America, the first aero-medical order, which is also our first order in Africa and as we marked our fifth anniversary of the first flight.

On the new product front, we continue to make progress on certification for the M2 Gen2, CJ3 Gen 2 and the Ascend with deliveries of these aircraft expected to begin in the second half of this year.

Bell revenues were up $222 million or 28% compared to last year's second quarter, driven by growth in both the MV-75 program and our commercial helicopter business. On the military side, the U.S. Army announced its intention to accelerate the MV-75 program and also announced that the 101st Airborne will be the first division to operate the MV-75. In the quarter, Bell delivered 2 MV-75 virtual prototypes to the Army which are advanced simulators based on a digital twin of the MV-75. These simulators will be used to support training and development of tactics, techniques and procedures, leveraging the tiltrotor significant performance benefits in advance of fielding aircraft.

We continue to have ongoing dialogue with the Army on specifics related to the acceleration of the MV-75 program. This includes acceleration of the development program, pull forward of initial low rate production and rapid fielding of units to the warfighter. That was recently down selected as the sole company for the next phase of DARPA's Speed and Runway Independent Technologies X-Plane program. During this next phase, Bell will design, construct and perform ground testing of an X-Plane demonstrator.

On the commercial side of the business, revenues increased $73 million, primarily due to the mix of aircraft sold at Bell, as Bell delivered 32 helicopters in both the second quarter of '25 and '24. During the quarter, Bell received an order for 12 Bell 412EPX's from the Tunisian Air Force with deliveries expected to begin in early 2027. In June, Bell signed a 5-year contract with United Auto Workers for its operations in Fort Worth, Texas.

Moving to systems. Revenues in the quarter were slightly lower as compared to last year, while segment profit margin was 12.5%, up 170 basis points. Earlier this month, systems received a $354 million contract modification from the U.S. Navy to add 3 Ship-to-Shore Connector craft. In addition, the Ship-to-Shore Connector program received $300 million through the recently enacted reconciliation bill. During the quarter, the U.S. Army announced approval of Milestone B for the XM30 program and transition the program to the engineering and manufacturing development phase. Also in the second quarter, Systems sold the first TSUNAMI craft to the U.S. Navy. TSUNAMI is an attributable rapidly deployable autonomous unmanned surface vehicle.

Moving to Industrial. We saw lower revenues in the quarter compared to last year's second quarter, reflecting the impact of the disposition of Textron Specialized Vehicles power sports business and lower volume. At Kautex, we recently received a Pentatonic award from a leading European automotive OEM for a battery electric vehicle composite lower battery housing unit. This marks the second OEM platform for Pentatonic, and this win secures a major foothold on what is anticipated to become one of the leading global BEV platforms. Segment profit margin was 6.4%, up 180 basis points. Aviation, the Nuuva V300, a long-range large-capacity hybrid-electric VTOL unmanned aircraft continued its flight test program and made its debut at the Paris Air Show in June.

With that, I'll turn the call over to David.

Thank you, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1.5 billion were up $42 million from the second quarter of 2024, reflecting higher aircraft revenues of $35 million and higher aftermarket parts and service revenues of $7 million.

Segment profit was $180 million in the second quarter, down $15 million from a year ago, primarily due to the mix of aircraft sold and higher warranty costs, partially offset by the favorable impact of manufacturing efficiencies and higher pricing net of inflation. Backlog in the segment ended the quarter at $7.85 billion.

Moving to Bell, revenues were $1 billion, up $222 million from the second quarter of 2024. The revenue increase in the quarter was driven by higher military revenues of $149 million, primarily due to higher volume from MV-75 and higher commercial revenues of $73 million, primarily due to the mix of aircraft sold. Segment profit of $80 million was down $2 million from last year's second quarter primarily reflecting higher research and development costs, partially offset by higher volume and mix. Backlog in the segment ended the quarter at $6.9 billion.

At Textron Systems, revenues were $321 million, down $2 million from last year's second quarter. Segment profit of $40 million was up $5 million compared with the second quarter of 2024, primarily due to lower selling and administrative expense. Backlog in the segment ended the quarter at $2.2 billion. Industrial revenues were $839 million, down $75 million from last year's second quarter. Largely at Textron Specialized Vehicles, where revenues decreased $66 million reflecting the impact from the disposition of the Powersports business and lower volume primarily in Golf products. Segment profit of $54 million was up $12 million from the second quarter of 2024, primarily reflecting the impact from the disposition of the Powersports business and the benefit of cost reductions from restructuring activities, partially offset by lower volume and mix.

Textron eAviation segment revenues were $8 million in the second quarter of 2025 as compared to $9 million in last year's second quarter and segment loss was $16 million as compared with a segment loss of $18 million in the second quarter of 2024. Finance segment revenues were $15 million, and profit was $8 million in the second quarter of 2025 as compared to segment revenues of $12 million and profit of $7 million in the second quarter of 2024.

Moving below segment profit. Corporate expenses were $36 million. Net interest expense for the manufacturing group was $26 million. LIFO inventory provision was $38 million and intangible asset amortization was $8 billion. Net special charges were $4 million and the nonservice component of pension and postretirement income were $67 million.

Our adjusted effective tax rate for the second quarter of 2025 was 20%. During the quarter, we repurchased approximately 2.9 million shares, returning $214 million in cash to shareholders. Year-to-date, we have repurchased approximately 5.8 million shares, returning $429 million to shareholders.

To wrap up with guidance, we are reiterating our expected full year adjusted earnings per share to be in the range of $6 to $6.20. We are increasing our expected full year manufacturing cash flow before pension contributions to be in the range of $900 million to $1 billion, up from our previous range of $800 million to $900 million. This reiterated adjusted EPS outlook and increased cash outlook incorporates the estimated impact associated with recently enacted tax legislation.

The One Big Beautiful Bill Act that was signed into law includes several provisions that benefit cash flow and has some elements that impact our adjusted effective tax rate for the year. As a result, we now expect an adjusted effective tax rate in the range of 20% to 21% for the year. Our adjusted EPS outlook of $6 to $6.20 incorporates a higher adjusted effective tax rate.

That concludes our prepared remarks. So operator, we can open the line for questions.

[Operator Instructions] Our first question today comes from David Strauss With Barclays. Please go ahead.

Scott, I wanted to ask you about the potential acceleration on MV-75. What that could look like, what that could mean for your numbers? And if you could remind us of the contract structure as you move into LRIP.

Sure. So David, I mean, this is very much a work in process. I would say on the development side, we already have very good visibility around that, I suppose, in agreement with the Army on how to proceed on accelerating EMD. That's partly why you're seeing the increased EMD revenue here in 2025. And certainly, we will see an acceleration of that in 2026 as we try to get that first aircraft completed and turned over and ready for tests. So I think on the EMD front, it's pretty clear. We know what we've got to go do. And both we and the Army are working to execute against that.

In terms of the production acceleration, the -- you may recall the LRIP, which was 8 aircraft, which was bid in the initial contract production of that wouldn't have started until really triggering all milestones C. So that was going to reflect probably about an 18 month or so gap between the last of the EMD delivered aircraft and LRIP. We're now pulling that forward. And the intent is to basically be able to smoothly transition from that last EMD aircraft into the first of the LRIP. So that will probably pull in something on the order of 18 months and then we're also working on talking about what does the ramp look like. So it's not just going to be those 8, but what do you think about in terms of the next lot right behind that.

And so those discussions are still ongoing with the Army. I think what you're seeing primarily in the FY '26 budget ask is the increased dollars to support that acceleration of EMD, and you would expect to see increase in additional production dollars in the FY '27 budget ask to support what I just talked about an acceleration of that first lot but also lining up the second and the third lots of production.

And Dave, could you touch on maybe what some of the offsets were to the higher tax rate to hold the guidance? It seems like Bell is maybe coming in better than you expected?

So as we sit right now, the biggest offset is the timing of our share repurchase this year has been a little ahead of what we originally planned. So from an average share count perspective, we should be better than what we -- where we started the year at. So that, in essence, gave us the ability to hold the guide with the while at the same time taking this 200 to 300 basis point increase in the effective tax rate.

Our next question comes from Peter Arment with Baird.

Scott and Dave, nice results. Scott, could you maybe give us a little -- your thoughts around just kind of the margins at Aviation. I know that you had kind of talked to us about some of the pricing that was going to be lingering from last year flowing through. How do we think about that as we move forward in the second half?

Sure. Look, I think we're right on track with where we expected to be on Aviation as we guided at the beginning of the year with the recovery kind of coming off of the strike and some of those issues, as you mentioned, pricing of aircraft that moved into this year, we knew we would be a little more margin challenged in the first half than the second half. So I think we're right on track with that.

I think the production ramp is going well. King Airs is probably the only one where we've been a little behind. That's a tougher line to get going and picking back up. The good news is I think that's now running well. So we're certainly in line with what we expected, we'll see good jet deliveries in the back half of the year, but also much stronger turboprop deliveries in the back half of the year.

So in all those dynamics that we were kind of factoring into our plan are playing out exactly as we expected. So we certainly expect to see nice volume increases here through Q3 and Q4 with that margin step-ups that will put us right on our target for the full year.

I appreciate that color, Scott. And just maybe just as a follow-up and staying within Aviation. Just talk about, I guess, the demand environment continue to have very good bookings and just what you're seeing in terms of customer interest in the new models.

Yes. The demand has been strong. So we're seeing good order flow. I think customers are very excited about the Gen2s of both the M2 and the CJ3 coming out. Ascend also getting close to certification here, and we have a good backlog on that as well. So I think the aircraft portfolio is doing really well in the market.

Our next question comes from Sheila Kahyaoglu with Jefferies.

Maybe let's stick to Aviation, Scott, on that last point. Are you seeing any changes given the tariffs on competitors and yourselves, how are you thinking about tariffs? And what were the higher warranty costs you mentioned for the Aviation margins?

So we haven't really seen an impact yet on the tariff front. I would say that there are certainly some customers in, let's say, particularly in some Latin American countries that are concerned, but we'll see how that plays out. I guess our view of these things at the moment is to sort of not panic and give a little time to let things settle out. So we'll continue to kind of watch it and see. But we haven't certainly have not yet seen any kind of dramatic impact.

And as you know, Sheila, the bulk of our deliveries are U.S., the bulk of our manufacturing is U.S. So I think in the grand scheme of things, while the tariff stuff can create some concerns and some noise, I think we're actually pretty well positioned with our large North American manufacturing base and our largely North American-based delivery. So I think in that respect, we're in pretty good shape.

But on the warranty, there's always a few things moving around in there. We have had an issue that we've been dealing with probably for a couple of years that we feel like some of the work we're doing in the shops is coming in a little higher than what we originally expected, and we felt it was appropriate at this point just to sort of true up the reserves on that to make sure we can cover the balance of work that needs to be done there.

Got it. And maybe if I could ask one on Bell margins. They fell below 8% in the quarter. You called out R&D cost. How should we expect that to progress through the remainder of the year?

Well, look, I mean I do think we saw the -- as we talked about much higher revenue than we originally had in there on the EMD side of FLRAA, which is obviously a fantastic program for us, but a little more margin challenged. So I think we'll see the balance of the year up a little bit from where we are certainly this quarter. To be honest, given the fact that we're going to have probably higher than our revenue guide, largely driven by the EMV piece of FLRAA. We'll have higher revenues, but we'll probably be towards the lower end of the Bell range driven by that.

Our next question comes from Seth Seifman with JPMorgan.

Wanted to ask about Systems. And I think 2 of the competitions that you've been looking at for decisions this year programs either canceled or under review, but there's maybe some other opportunities emerging that you talked about. So how are you thinking about the systems outlook and the opportunities for growth there?

Yes, Seth, look, I think the -- obviously, we were surprised by the situation on RCV and FTUAS to see those programs be terminated in both those cases, I don't think it's the end. I mean certainly, the Army is going to continue to invest in robotics, and we will look for ways to participate in those future activities. The same is true on FTUAS, while the program, the FTUAS's itself program was terminated, the Army again, is putting more money into tactical UAS system. So it's going to be acquired in a different way, different competition.

And clearly, we will compete for our -- with our products in those opportunities. So it certainly impacted us in terms of what we would have expected timing of those programs, which we kind of had in the win column, but there's other opportunities that we'll pursue in both those spaces. What is happening in the year is that we're seeing nice growth and a number of big wins in other portions of the Systems portfolio that I think will effectively offset the terminations this year of RCV and FTUAS. So there's been a number of things, competitions that are already awarded. Obviously, the Ship-to-Shore Connector program continues to grow. The Sentinel program continues to grow and I think we'll see some nice wins in other pieces of the portfolio as well as we go through the balance of the year.

And then this was the -- I think this was probably the highest earnings quarter for industrial in a little while. Is there -- do you feel like there's potentially some upside there versus the initial outlook?

Well, look, it's -- we're probably not revising our guides at the time. But I think the industrial business, as you know, we've done a fair bit on post Powersports, taking cost out of the business and restructuring. This is a year where you have the cyclical low on the Golf side. That's a very -- that's actually a very predictable cycle and totally consistent with our plan. But I think the team is executing well here post Powersports and we're certainly feeling good about being in the range, despite taking the revenue loss on the disposition of the business.

Our next question comes from Robert Stallard with Vertical Research.

Scott, first of all, on FLRAA, which I should call MV-75. With the acceleration plan, would this require Textron to put in more capital to enable this 18-month acceleration?

Yes, Robert, I would say sure. I mean we've always had a capital plan that ties in with the production program and ramping that. So certainly, in terms of how we were thinking about the long term, this would accelerate those plans, let's say, on the order of around 18 months. So we've always anticipated that this was coming, but it's a manageable number, and it's something that we factor into our long-range plan. And that's -- that would be a fantastic outcome if we have to spend more capital sooner to ramp this program.

And secondly, on Aviation, you've seen some of your peers signing up to new big fleet purchases. Is this something you'd be interested in doing more of going forward?

Look, I think we're only interested in fleet business if it's good business. I mean, our demand continues to be strong. Our retail demand is strong. So we're always happy to look at fleet deals. As you know, we do some fleet deals, but it needs to make economic sense for us to participate in those. In the meantime, we're very happy with our retail business. The demand is there. The backlog is there. So we always look at every opportunity, whether it's a one-off aircraft or a fleet.

Our next question comes from Myles Walton with Wolfe Research.

Scott, I was wondering, given your experience in the Group 3 UAS market, is there any interest given the attention of the administration and the [ Sec Def ] on the smaller drone market for higher levels of investment at Textron more broadly?

Well, the Group 3 has obviously been our strong suit. So there are opportunities. There's R&D work going on, looking at some of the smaller classes or frankly, places where we might participate in some of these programs, but nothing that we would announce or specifically comment on at this time, I guess.

Good enough. And then I guess from a perspective of the 525. Is there any update you can offer on that certification? It does seem like the FAA maybe is moving along with things and maybe there's more adjudication that's being done.

Well, look, I mean, it's hard for us to comment. I mean, obviously, that's very much an FAA process at this stage of the game. I'd like to think we're in kind of the last stages here and obviously, a lot of documentation going back and forth and trying to get through final test criteria, and we're just going to continue to work that with the FAA.

Our next question comes from Ronald Epstein with Bank of America.

This is Samantha Stiroh on for Ron today. I just wanted to ask about capital deployment. You did about $200 million of share repurchases in the quarter. How are you thinking about that going forward and then M&A opportunities?

Sure. Look, as we've said, I think our primary focus on capital deployment is opportunistic share buyback. Obviously, that's certainly what we did in the first half of the year, and I would expect we will continue that through the second half of the year. From an acquisition standpoint, if something made sense, I think we have plenty of capacity to be able to do something like that.

So in the meantime, the most logical thing for us to do, and I think the best return for our shareholders in terms of where we are is to continue to focus capital in redeployment via share buyback.

Our next question comes from Doug Harned with Bernstein.

Going back to demand, you've talked about it, it looks strong. We've heard some of that from others. But when you consider your -- how -- could you describe your discussions with corporate customers? Because on one hand, they've got uncertainty in this environment, this tariff environment on when to make capital investments. On the other hand, you've got bonus depreciation. How do you see these different factors playing into those decisions at your corporate customers?

I think net of everything is positive. I think the corporate world is healthy right now. Sure, everybody -- obviously depending on companies have a lot of different exposures or not relative to the tariff situation, but the demand, the dialogues are good. flying is very strong, right, which helps to drive our aftermarket. So it's sure appears to us that the corporate world is flying and buying, and managing their fleets as you expect and pretty good times.

And then separately at Bell, you had higher R&D in the quarter. Where are you directing that? Is that connected at all to MV25? Or is that on the commercial side? What are you looking at in terms of investment there?

So MV25 is primarily contracted now, right? So that's all under the EMD phase. The R&D spending, obviously, it looked lighter, I mean, in the quarter. A year ago, that was largely because of the termination of the FLRAA program and sort of the close out of that contract and whatnot. But when you look at and think about the balance of our year, we will have higher R&D spending and the R&D spending on the commercial side is largely focused around the 525 and completing that program.

On the military side, it's really focused around the R&D programs that we need to execute to support the development of the high-speed VTOL program. So especially now with having been selected for the DARPA's SPRINT program. So that's sort of -- I would expect R&D to be fairly flat on a quarter-to-quarter, certainly up over last year, again, largely because of the increased spend on R&D associated with the high-speed VTOL program.

Our next question comes from Noah Poponak from Goldman Sachs.

On MV-75 when you put the pieces together of movement in timing of EMD and LRIP, does total program revenue grow each of the next few years or does it decline at any point in the window as you're shifting from development to LRIP in before you make it to full-rate production?

Well, we don't know the exact answer to that yet, Noah. I think we have to continue to work on what the production acceleration looks like. EMD clearly is up here in the next couple of years, the pull forward of the LRIP volumes would obviously add to that. So I mean, I guess, I feel fairly confident saying it's going to continue to grow over the next couple of years, but we've got to get that. I mean from an Army budgeting standpoint, this is very much a work in process, right, as they look at their '27, '28 and on program budget.

Certainly, what the Secretary and the chief would like to go do when they talk about the volumes and getting things delivered out to the 101st would drive incremental volume here for the next several years.

And Scott, the industry has had these other examples of programs that fixed the LRIP pricing at the time of the bid where by the time you get to LRIP, there's been cost creep, so your LRIPs are breakeven or loss making. Can you talk about where you see price cost right now on the LRIPs compared to when you bid?

Well, I'm not sure we go into that level of detail, no. I mean we expect -- and like you know, the 8 LRIP aircraft were bid at a fixed price as part of the original contract. And so you wouldn't expect margins to be very good there. I think part of what you see in our margin rates is pretty conservative assumptions on our part o have the appropriate amount of MR to support those programs.

But those haven't been definitized yet. Supplier pricing has been locked in. So I don't have specific numbers for you, but we would expect those and always have expected those to be pretty challenging for those first 8 aircraft.

And then just last one, I was hoping to ask you about Scott, just how you're thinking about setting supply and deliveries at Cessna for the rest of this year and into next year, just we've had this window with the strike and supply chain. It's a little tricky to sort of have a sense for where you think supply should be, I guess, on a run rate basis from here?

Yes. Well, look, I mean, obviously, as we got all the way back to the beginning of the year, we certainly have a production plan that has a ramp going through the course of the year. That's been well communicated to all of our suppliers, obviously. And as you know, we're probably -- a lot of our stuff is in that 2-year for some of that long cycle material. So certainly, those suppliers are understanding with where we are on the ramp this year and even out through 2026 as well.

So I think supplier communication and recognition of what that supply chain ramp needs to look like is pretty well understood. Not everybody is totally there, obviously, in the supply chain, I would say, is in much better condition than it was going back a couple of years ago, but you still have issues that pop up. And as we always say, it's good not to have too many supplier problems, but every supplier part is an important part, right?

So it's I think it's not because of a lack of understanding of what the ramp needs to be. It's execution. And obviously, we work through that every day.

Should we still be thinking about the 2019, just over 200 units being recovered in the medium term?

I'm not sure we're prepared to give guidance for 2026 just yet.

Our next question comes from Gautam Khanna with TD Cowen.

I was wondering if you could elaborate a little bit on commercial helicopter demand, how that's trending?

I'd say it's strong, actually across all the models, everything from 412s all the way down to the 505s. I think the commercial helicopter business is in good shape. We had strong delivery on a year-over-year basis here in Q1, Q2. Q3, Q4 was much stronger last year. So I think we'll have more comparable comps on a year-over-year basis. But certainly, for the total year, helicopter deliveries are looking good and order activity is very good. So I think that business is in good shape.

And just stepping back broadly, would you say that you haven't really seen much demand erosion due to tariffs and all the trade policy uncertainty across the portfolio? Or have you seen...

Not at this point. No, we have not seen evidence of that yet. I'm not saying it can't happen, but I think most customers are sort of -- taking sort of a wait and see with some of these things or just assuming that things are going to get resolved. And again, if you look at a lot of our stuff, particularly the fixed-wing world and business jets, we are largely North American. Anyway, a lot of our international helicopter things end up being either FMS or some foreign military and I think that, that activity, that order rate seems to be continuing despite a lot of the tariff dialogue.

Our next question comes from Kristine Liwag with Morgan Stanley.

Scott, maybe on tariffs and aviation. I mean tariffs are increasing the cost for your European and Brazilian competitors. As these things shake out and some of the tariffs stick, ultimately, they'll probably see an incremental higher cost for U.S. customers. So when we think about this shaking out in the next few years, do you see this as an opportunity to gain market share? Or is this an opportunity to get more price and also get more margin?

Well, look, Kristine, I think, again, I think we got to need to give this time and see where all the tariff dialogues settle out. So I'm a little reluctant to think about a year, 2 years, 3 years down the road on these things. But I mean, there are certainly cases where we have foreign competition that just has a lower cost basis and tends to be more aggressive on price.

And we kind of hold the line in there and they've tried to be focused on making sure we're running a profitable business and the business can afford to keep reinvesting in product lines, and we'll continue to do that. Does that do long-term tariffs start to play a little more of a normalizing in terms of some of the cost and pricing that we see? And that could be, but it's -- I'd say it's too early in the process to really know the answer to that question.

So maybe switching gears to eAviation. Earlier this year, you had the Nuuva V300 get its first flight. How has been the customer reception of this aircraft? And are you expecting this to enter into service this year? And should it enter into service this year, what kind of customer milestones or production rate are you thinking about for an aircraft like this?

So the flight test program continues. So there's a lot of work going on as we continue to fly regularly. It's obviously, we've done a fair bit of hover flying. We do need to go into conversion mode. And look, I think, Kristine, in terms of terms of certifications of aircraft of this class, that's just something I don't see in the near term.

I do think we see some interest on some military applications. I mean, given the range and the payload capability of this craft compared to others. I think we could have a real advantage there. And so -- but we're in early dialogues with those prospective customers as they start to see what this aircraft can really do from a performance standpoint. But I mean, right now, on a commercial basis, I see no pathway to how you certify these kinds of aircraft. So I certainly wouldn't expect something that could happen anywhere near this year or next year.

Our next question comes from Gavin Parsons with UBS.

I guess it's been kind of 4 quarters now that Aviation margins have been pretty disrupted. Is the second half of this year pretty normal? So as we think about going beyond '25, is that a good baseline?

Well, as I said, I think our progression of margin through the course of the year is playing out as we expected. And so I think the issues that we had around the impacts of the strike and what that meant to our shift in our production to the right and a lot of disruption and things of that nature are fairly well behind us. And so I think we're very much on plan to hit the guide numbers that we gave you guys.

And so certainly, with those disruptions behind us, you would expect to see good margins for the business as we go on into 2026. So we're not going to guide yet. But obviously, you guys will definitely see the kind of margins that we expected for the full year to come in well within that range that we guided.

So -- and look, I think considering all the disruptions and challenges from the strike and the holdover and ongoing supply chain issues to be posting about 12% margins. I think the business is doing pretty well. But certainly, we expect that margin rate to expand over the course of the year.

And then once you get through Denali, any categories where you see the opportunity for new aircraft in aviation?

Not that we are prepared to announce at this time.

Our next question comes from David Strauss with Barclays.

Scott, what's the outlook for King Air? I mean the volumes have come down a fair amount there. Where could that settle out for the year?

Sure, David. Look, I think the King Airline, as I commented earlier, is one of the more challenging lines. I mean it's just an older product line in terms of tooling and documentation. I mean, it's always been a great product, but it probably was impacted more than anything else in terms of just the challenges are going through the strike and all the COVID turnovers and all that kind of stuff.

I think that line has stabilized and is running much better than it was. And so look, I think we'll have strong deliveries in Q3 and Q4 on the King Airline. So as I said, it's probably the last line to recover from a lot of the disruptions. It is now flowing well. And like I say, I think it supports considerably higher deliveries in Q3 and Q4.

And Kautex, was that flat or maybe just down a little bit in the quarter?

It was down a little bit in the quarter, which, again, is what we expected. I think the global automotive markets are more or less behaving as had been inspected. And that team continues to do a nice job in terms of managing cost and capital deployment and all that kind of stuff. So I'd say on the positive side there, we've been investing, as you guys know, for a number of years around Pentatonic to make sure that we have a good play in the pure battery electric vehicle market.

We do continue to see nice momentum shift in hybrid, which is an important piece of the tank business for us and not just the tank piece but also the opportunity to participate in the battery portion of a hybrid vehicle and the win this past quarter with a major OEM on their EV platforms, I think, is encouraging for the future of that business.

And then last one, Dave, on the tax rate step up, is that -- is that fairly ratable Q3, Q4? Or is there a big catch-up in Q3?

You're right, David. It's going to be a big catch-up in Q3, reflecting the cumulative impact to date for the year. So the -- it will be Q3 skewed.

So I think on the tax thing, guys, everybody -- I mean, I know there's a dialogue with a lot of companies, right? The tax bill is a very good thing, right? I mean, it's going to give us a significant impact on cash for the next several years. The bonus depreciation is clearly positive for our customers who buy our large capital assets.

It's also good for us because we do deploy capital. So I think there's -- this is mostly good. We are going to take this near-term perturbation of a tax rate increase, which, as David said, is probably 200, 300 basis points that it is where it is. But I think net of everything, the tax bill is a good thing for our company.

Sorry, on the back of that, I got to ask one more. So on Section 174, I thought the benefit might be larger than the $100 million that you took cash flow up by. Is there any offset to that running through the numbers?

That's the way we see it right now. It's a relatively complicated bill. So we're continuing to evaluate it, and we'll continue to try to drive additional opportunity, but that's how we see the impact at least for this year at this point. But as Scott mentioned, overall, it's a significant positive on cash flow as we go forward.

Our next question comes from Pete Skibitski with Alembic Global.

Scott, just one quick one for me. In the second quarter, one of your engine suppliers, Williams International announced a pretty sizable, I think they're calling a $1 billion expansion into Florida and some of their other facilities as well. And obviously, they have other customers, but I was wondering if you could give us any color at all in terms of what that might mean for Citation and just the visibility to continue to grow maybe beyond the near term?

Well, I mean obviously, I won't comment on their particular expansion works. But look, Williams is a very important supplier to us. They've been a very good supplier to us. We deliver a great product. It has a history of delivering great performance. And it's a good relationship and one that I expect to see to continue to grow into the future. Williams does a great job of supporting our new product programs and expect they'll continue so in the future as well.

At this time, we have no further questions. And so this concludes our call. Thank you all for your participation. You may now disconnect your lines.