Core Viewpoint - Northrop Grumman outperformed its peers in a challenging earnings season for defense stocks, reporting better-than-expected earnings and sales growth, leading to a rise in its stock price [1][2]. Financial Performance - Northrop Grumman reported an adjusted profit of $7.23 per share for Q4, exceeding the expected $6.96, while GAAP earnings reached $9.99 per share [2]. - The company achieved quarterly sales of $11.7 billion, slightly above the forecast of $11.6 billion, and experienced a 10% year-over-year sales growth in Q4 [3][2]. - For the full year, Northrop's sales grew by 2% to $42 billion, with earnings per share increasing by 3% [3]. Cash Flow and Valuation - Free cash flow for Q4 surged by 84% to $2.2 billion, and for the year, it rose by 27% to $3.3 billion [4]. - Northrop Grumman's full-year net profit was reported at $4.2 billion, translating to $29.08 per diluted share, while its price-to-earnings ratio stands at 24.4x and price-to-free cash flow ratio at 30.5 [4]. Future Guidance - The company forecasts approximately 4% sales growth in 2026, projecting sales of $43.8 billion and adjusted earnings of about $27.65 per share, both of which fall short of analyst expectations [6]. - Free cash flow is expected to remain steady at around $3.3 billion in 2026, indicating limited growth potential due to a book-to-bill ratio of 1.0 in 2025 [7].

Backlog and Demand - Textron Aviation's backlog at the end of 2025 was $7,724 million, a slight decrease from $7,845 million in 2024[36] - Bell's backlog increased to $7,795 million in 2025 from $7,469 million in 2024, indicating strong demand for military and commercial helicopters[36] - Textron Systems' backlog rose significantly to $3,304 million in 2025, up from $2,594 million in 2024, reflecting growth in defense and security contracts[36] Revenue Sources - Approximately 27% of Textron's consolidated revenues in 2025 were generated from U.S. Government contracts, primarily in the Bell and Textron Systems segments[38] Product Development and Innovation - The Beechcraft Denali turboprop aircraft is expected to enter service in 2026, featuring an engine certified to be up to 20% more efficient than similar engines[16] - Textron Aviation plans to launch the next generation of light jets, including the Citation M2 Gen3, CJ3 Gen3, and CJ4 Gen3, expected to enter service in 2027[15] - The Pipistrel Velis Electro, the world's first electric aircraft to receive full type certification, received a light-sport aircraft airworthiness exemption from the FAA in 2024[33] Financial Performance - Textron's Finance segment made payments of $183 million in 2025 and $109 million in 2024 to finance the sale of Textron-manufactured products[35] - The notional amount of outstanding foreign currency exchange contracts was $477 million as of January 3, 2026, compared to $464 million on December 28, 2024[186] - The company had interest rate swap agreements with a total notional amount of $264 million at January 3, 2026, down from $289 million at December 28, 2024[186] - The fair value of foreign currency exchange contracts showed a sensitivity of $34 million to a 10% change as of January 3, 2026[189] - The fair value of debt was $(3,459) million as of January 3, 2026, with a sensitivity of $(66) million to a 10% change[189] Workforce and Talent Management - Textron employed approximately 34,000 employees worldwide as of January 3, 2026, with 29% of U.S. employees represented by unions[43] - The company assesses current and future talent needs annually through a formal talent review process to develop leadership succession plans[48] - The company offers comprehensive compensation and benefit programs to attract and retain highly skilled employees[45] - The company aims to improve performance, innovation, collaboration, and talent retention through a highly skilled workforce[49] - The company provides various training programs through Textron University to enhance employee skills and career development[47] Safety and Compliance - The injury rate reduction goal is a performance metric tracked and reported to senior leadership and the Audit Committee of the Board of Directors[46] Intellectual Property - The company does not believe that any existing patent or intellectual property right is of such importance that its loss would materially affect the business[50]

Core Insights - Aerospace and defense sectors are currently performing well, with Textron (TXT) nearing a 52-week high, indicating strong market interest [1] - The business jet segment is expected to have another successful year, suggesting continued growth potential in this area [1] Company Analysis - Textron is highlighted as a key player in the aerospace and defense sectors, benefiting from favorable market conditions [1] - Despite the positive outlook for the bizjet business, there is a noted lack of enthusiasm regarding Textron's overall performance at this time [1]

Core Insights - Aerospace and defense sectors are currently performing well, with Textron (TXT) nearing a 52-week high, indicating strong market interest [1] - The business jet segment is expected to have another successful year, suggesting continued growth potential in this area [1] Company Analysis - Textron is highlighted as a key player in the aerospace and defense sectors, but there is a noted lack of enthusiasm regarding its current valuation and performance outlook [1] - The company’s business jet division is projected to contribute positively to its overall performance in the upcoming year [1]

Core Insights - Kautex Textron GmbH & Co. KG achieved an A score for Climate Change and a B score for Water Security in the 2025 CDP assessment, indicating significant progress in environmental performance [1][5][6] Group 1: CDP Assessment - The CDP is an internationally recognized system that evaluates companies on their environmental impact and management practices, helping stakeholders understand how organizations address climate and water-related risks [2][3] - Only about 4% of companies achieved an A score in the latest disclosure cycle, highlighting the high standards for environmental leadership [4] Group 2: Company Achievements - The A score for Climate Change reflects Kautex's commitment to integrating climate action into its core business strategy, setting science-based targets, and demonstrating best practices in governance and emissions reduction [5] - The improvement to a B score for Water Security from last year's C rating acknowledges Kautex's efforts in identifying water-related risks and implementing management systems for sustainable water use [6] Group 3: Continuous Improvement Initiatives - Kautex has advanced initiatives such as expanding renewable energy use, strengthening water management programs in high-risk regions, and aligning with regulatory frameworks like the Corporate Sustainability Reporting Directive [8] - The company emphasizes that sustainability is a core part of its operations and innovation, aiming to create long-term value for customers, employees, and the planet [9]

Core Viewpoint - Cristina Méndez has been elected to Textron's Board of Directors, effective February 15, 2026 [1] Company Summary - Cristina Méndez's election to the Board of Directors signifies a strategic move for Textron as it prepares for future leadership and governance [1]

Core Insights - Textron reported fourth-quarter 2025 results that met earnings expectations and exceeded revenue forecasts, but shares fell 8% intra-day due to weaker-than-expected guidance for 2026 [1] Group 1: Financial Performance - Adjusted earnings were $1.73 per share on revenue of $4.2 billion, matching earnings consensus and topping revenue expectations of $4.1 billion [1] - Revenue rose 16% year over year, with full-year revenue increasing 8% to $14.8 billion [1] Group 2: Segment Performance - Textron Aviation recorded a 36% revenue increase to $1.7 billion, delivering 49 jets during the quarter compared to 32 a year earlier, as operations rebounded from a late-2024 strike [2] - Bell helicopter revenue climbed 11% to $1.3 billion, driven by higher military deliveries tied to the U.S. Army's MV-75 program [2] Group 3: Future Guidance - For fiscal 2026, Textron forecast adjusted earnings of $6.40 to $6.60 per share on revenue of approximately $15.5 billion, below the analyst consensus of $6.84 [3] - Manufacturing cash flow before pension contributions is expected to range between $700 million and $800 million [3]

Core Insights - Textron Inc. (TXT) reported fourth-quarter 2025 adjusted earnings of $1.73 per share, slightly missing the Zacks Consensus Estimate of $1.74 by 0.8%, but showing a significant increase of 29.1% from $1.34 in the same quarter last year [1] - The company achieved total revenues of $4.18 billion, exceeding the Zacks Consensus Estimate of $4.14 billion by 0.8%, and reflecting a 15.7% increase from $3.61 billion in the prior year [2] - For the full year 2025, adjusted earnings were reported at $6.10 per share, up from $5.48 in 2024, while total revenues reached $14.8 billion compared to $13.7 billion in the previous year [1][2] Segment Performance - Textron Aviation segment revenues surged 36% year over year to $1.7 billion, driven by higher deliveries of Citation jets and commercial turboprops, with a total of 49 jets and 43 turboprops delivered [3] - The Bell segment reported revenues of $1.3 billion, an 11% increase from the previous year, attributed to higher volume on the U.S. Army's MV-75 program, despite a slight decline in commercial revenues [4] - Textron Systems generated revenues of $323 million, up $12 million from the prior year, while the Industrial segment saw a decline of $48 million to $821 million due to the divestiture of the Powersports business [5] Financial Overview - As of January 3, 2026, Textron's cash and cash equivalents stood at $1.94 billion, an increase from $1.39 billion a year earlier, with cash generated from operating activities amounting to $1.33 billion compared to $1.01 billion in 2024 [8] - Capital expenditures for the year totaled $383 million, up from $364 million in the previous year, while long-term debt increased to $3.53 billion from $2.89 billion [8] Guidance - Textron anticipates revenues of approximately $15.5 billion for 2026, with adjusted earnings expected to be in the range of $6.40 to $6.60 per share, compared to the Zacks Consensus Estimate of $6.67 per share [9]

Financial Data and Key Metrics Changes - Textron reported a revenue growth of 16% in Q4 2025, totaling $4.2 billion, and a full-year revenue increase of 8% to $14.8 billion [4][20] - Segment profit for Q4 2025 was $380 million, up 34% year-over-year, and for the full year, it reached $1.4 billion, a 14% increase [19][20] - Adjusted EPS for Q4 was $1.73, compared to $1.34 in the previous year, and for the full year, it was $6.10, up from $5.48 [20] Business Line Data and Key Metrics Changes - Textron Aviation saw a revenue increase of 36% in Q4, totaling $1.7 billion, and a full-year revenue growth of 13% to $6 billion [21][22] - Bell's revenue grew by 11% in Q4 to $1.3 billion, with a full-year increase of 20% to $4.3 billion, although segment profit decreased by $9 million year-over-year [23][24] - Textron Systems reported a 4% revenue increase in Q4 to $323 million, with a full-year revenue of $1.2 billion, slightly up from the previous year [24] Market Data and Key Metrics Changes - Textron Aviation ended the year with a backlog of $7.7 billion, while Bell's backlog increased to $7.8 billion [22][24] - The general aviation industry remains healthy, with Textron Aviation experiencing strong order flow and a nearly $8 billion backlog [11][12] Company Strategy and Development Direction - The company is focused on executing its growth strategy through ongoing investments in new products and programs to drive organic growth and margin expansion [8] - Lisa Atherton emphasized the importance of operational rigor, capital allocation, and building resilience across all business lines [36][37] - Textron plans to eliminate the eAviation segment as a separate reporting entity to better leverage existing capabilities across its businesses [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance of Textron Aviation and the MV-75 program, which is expected to accelerate production and revenue growth [11][12][45] - The company anticipates 2026 revenues of approximately $15.5 billion, reflecting a 4.5% increase from 2025, with adjusted EPS projected between $6.40 and $6.60 [17][33] Other Important Information - Manufacturing cash flow before pension contributions for 2025 was $969 million, up $277 million from 2024 [20] - The company repurchased approximately 10.7 million shares in 2025, returning $822 million to shareholders [27] Q&A Session Summary Question: What are the top priorities for the company now that Lisa is CEO? - Lisa Atherton outlined three priorities: execution, portfolio focus, and building resilience across the business [36][37] Question: How should we think about the MV-75 program in the near and medium term? - Lisa Atherton stated that the Army's push for acceleration has allowed for significant progress, with production timelines moved forward by 2.5 to 3 years [45] Question: Will Textron focus on growing or pruning its portfolio? - Lisa Atherton indicated that the company will evaluate each business for returns and strategic fit, aiming to accelerate growth in high-quality aerospace and defense areas [50][52] Question: How is Textron managing supply chain challenges? - Lisa Atherton mentioned ongoing recovery efforts in the supply chain, particularly with key components like engines, and emphasized workforce training initiatives [59][60] Question: What is the outlook for aviation margins? - David Rosenberg confirmed that the company expects to maintain a margin range of 20%-25% as efficiency and productivity improve [88]

Financial Data and Key Metrics Changes - Textron reported a revenue growth of 16% in Q4 2025, totaling $4.2 billion, and an 8% increase for the full year, reaching $14.8 billion [4][20] - Segment profit for Q4 2025 was $380 million, up 34% year-over-year, and for the full year, it was $1.4 billion, up 14% [19][20] - Adjusted EPS for Q4 was $1.73, compared to $1.34 in the previous year, and for the full year, it was $6.10, up from $5.48 [20] Business Line Data and Key Metrics Changes - Textron Aviation saw a revenue increase of 36% in Q4, totaling $1.7 billion, and a 13% increase for the full year, reaching $6 billion [21][22] - Bell's revenue grew by 11% in Q4 to $1.3 billion, and for the full year, it increased by 20% to $4.3 billion [23] - Textron Systems reported a 4% revenue increase in Q4, totaling $323 million, and a slight increase for the full year, reaching $1.2 billion [24] - Industrial segment revenues decreased by 5.5% in Q4 to $821 million, primarily due to the divestiture of the Powersports business [25] Market Data and Key Metrics Changes - Textron Aviation ended the year with a backlog of $7.7 billion, while Bell's backlog was $7.8 billion, reflecting growth in both military and commercial sectors [22][23] - The general aviation industry remains healthy, with Textron Aviation experiencing strong order flow and a nearly $8 billion backlog [11][12] Company Strategy and Development Direction - The company is focused on executing its growth strategy through ongoing investments in new products and programs to drive organic growth and margin expansion [8] - Textron plans to continue its investment in the MV-75 program, which is central to the Army's Transformation Initiative, and aims to accelerate production [12][14] - The company is also looking to enhance its supply chain resilience and vertical integration to mitigate risks and improve efficiency [36][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong position and future opportunities, particularly in Textron Aviation and the MV-75 program [11][12] - The outlook for 2026 includes projected revenues of approximately $15.5 billion, reflecting a 4.5% increase from 2025, and adjusted EPS in the range of $6.40-$6.60 [17][33] - The company anticipates manufacturing cash flow before pension contributions to be between $700 million and $800 million [28] Other Important Information - The company repurchased approximately 2.3 million shares in Q4 2025, returning $187 million to shareholders, and a total of 10.7 million shares for the year, returning $822 million [27] - Textron is eliminating the Textron eAviation segment as a separate reporting entity to realign its business activities [28] Q&A Session Summary Question: What are the top priorities for the company now that Lisa is CEO? - Lisa outlined three priorities: execution, portfolio focus, and building resilience across the business [36] Question: How should we think about the MV-75 program in the near and medium term? - Lisa indicated that the Army's push for acceleration has allowed for significant progress, with production timelines moved forward by 2.5-3 years [44] Question: Will Textron grow or prune its portfolio? - Lisa emphasized the need for ongoing evaluation of each business against performance criteria, aiming for growth in high-quality aerospace and defense areas [50][52] Question: How is Textron managing supply chain challenges? - Lisa noted that while recovery is ongoing, key components like engines remain a challenge, and efforts are being made to upskill the workforce [60] Question: What is the expected revenue impact from the MV-75 program? - David mentioned that the program could yield between 40 and 60 units per year, significantly increasing overall revenue [71]