텍스트론(TXT) 2026년 3분기 실적 발표회: 항공 매출 14% 증가에 가이던스 상향

핵심 요약

• 텍스트론의 2026년 3분기 매출은 38억 달러로, 전년 동기 대비 4% 증가했으며, 조정 EPS는 1.76달러로 (전년 동기 1.55달러 대비) 증가했다.
• 연금 출연 전 제조업 현금흐름은 4억 1,800만 달러로 (기존 2억 8,100만 달러에서) 늘었다. 텍스트론은 약 290만 주의 자사주를 2억 3,900만 달러에 매입했다.
• 텍스트론 에비에이션 매출은 14% 증가한 17억 달러를 기록했으며, 이는 시테이션 제트기 인도량 증가와 10%의 애프터마켓 매출 성장에 힘입은 것이다. 해당 사업부는 51대의 제트기와 32대의 상용 터보프롭기를 인도했다.
• 텍스트론 시스템즈 매출은 16% 증가한 3억 6,000만 달러를 기록했으며, 지상 장갑차와 ATAC 군사 훈련 및 지원 서비스가 성장을 견인했다.
• 경영진은 연간 조정 EPS 가이던스를 6.55~6.65달러로, 제조업 현금흐름 가이던스를 8억~9억 달러로 각각 상향 조정했다.
• 의회는 MV-75 프로그램을 위한 3억 5,000만 달러 규모의 ATR 요청을 승인했으며, 이 중 약 3억 달러가 이번 분기 중 집행되었다. 다만 2027 회계연도 자금 조달 및 LRIP(초기 저율 생산) 계약 시점은 여전히 불확실하다.

주요 재무 데이터

사업 및 영업 실적

텍스트론 에비에이션

항공기 매출은 1억 5,200만 달러 증가했으며, 부품 및 서비스(애프터마켓) 매출은 4,900만 달러 증가했다. 텍스트론은 51대의 제트기(전년 동기 42대에서 증가) 및 32대의 상용 터보프롭기(전년 동기 39대에서 감소)를 인도했다.

수요는 견조하게 유지되었으며, 에비에이션 부문은 2023년 이후 가장 높은 3분기 수주 실적을 기록했다. 경영진은 고금리나 지정학적 이슈와 관련해 고객의 구매 행태 변화를 관찰하지 못했다고 밝혔다.

회사는 가공, 판금, 착륙장치(랜딩기어), 날개 셀 자동화 및 툴링 개선에 투자하고 있다. 또한 이원화 조달을 확대하고 일부 공정을 자체 생산으로 전환하고 있다. 경영진은 엔진, 압출재, 스파 및 GPU를 남아 있는 4가지 주요 공급 제약 요인으로 지목했다.

데날리 프로그램은 4,200시간 이상의 비행 시험을 누적했다. 텍스트론의 3개 Gen3 경제트기 프로그램은 합계 1,200시간 이상의 비행 시험을 완료했으며, 경영진은 일부 Gen3 항공기가 2027년 상반기 중에 운항을 시작할 것으로 예상하고 있다.

벨

벨의 매출은 주로 MV-75의 군수 물량 감소와 상용 헬리콥터, 부품 및 서비스의 물량 감소 및 제품 믹스 악화로 인해 감소했다.

MV-75의 운영상 주요 성과로는 아마릴로 공장에서의 날개 3개 제작 완료, 첫 나셀 수령, 첫 날개-나셀 조립 완료, 위치타 조립 센터에서의 첫 동체 제작 완료 등이 포함된다. 경영진은 4분기에 첫 동체와 날개 조립체가 결합될 것으로 예상하고 있다.

벨은 이번 분기를 76억 달러의 수주 잔고로 마감했다. 회사는 또한 기어박스 및 로터 블레이드 소재에 대한 이원화 조달을 확대하고 있으며, 화학 처리, 도장 작업 및 복잡한 조립 공정을 위한 일부 자체 생산 능력을 확충하고 있다.

텍스트론 시스템즈

시스템즈 부문은 장갑차 물량 증가와 ATAC 군사 훈련 및 지원 서비스의 수혜를 입었다. 해당 부문은 2억 3,000만 달러 규모의 상륙정(Ship-to-Shore Connector) 2척 추가 계약 변경을 수주했다.

Ship-to-Shore Connector 연간 생산량은 4척에 달했다. 텍스트론은 18대를 총 73대 규모의 공식 사업 프로그램에 따라 인도했다. 기타 활동에는 3년에 걸쳐 우크라이나에 MSFV 65대를 인도하는 계획, 16대의 ARV 개발(2028년 인도 예정) 및 XM30 시제품 10대 (아메리칸 라인메탈 협력) 인도가 포함된다.

시스템즈 부문은 3분기를 35억 달러의 수주 잔고로 마감했다.

산업 부문

텍스트론 특수차량 매출은 9%(2,600만 달러) 증가했으며, 이는 물량, 제품 믹스 및 가격 상승에 기인한다. 카우텍스 매출은 5%(2,200만 달러) 감소했으며, 이는 주로 물량 감소 및 제품 믹스 악화 때문이다.

텍스트론은 인더스트리얼 부문 분할이 지난 4월 발표된 일정대로 진행 중이며, 완료 목표는 12~18개월 이내라고 밝혔다.

경영진 가이던스

경영진은 약 1억 달러의 2026년 예상 설비투자 감축이 현금흐름 가이던스 상향의 가장 큰 요인이라고 밝혔다. 항공 부문의 견조한 수주, 관련 선수금, 4분기로 예상되는 현금 창출도 이에 기여했다.

텍스트론 항공 부문의 경우, 경영진은 연간 영업이익률이 당초 제시한 범위인 11%~12%의 하단 수준에 머물 것으로 지속 전망하고 있다. 4분기 실적 개선은 주로 터보프롭 물량과 제품 조합(믹스) 개선에서 나올 것으로 예상되는 반면, 제트기 인도량은 비교적 유사한 흐름을 보일 것으로 예상된다.

경영진은 항공 부문의 운영 개선 과정을 약 12개월에 걸친 여정으로 설명하며, 2026년 4분기와 2027년 상반기까지 지속적인 진전이 있을 것으로 기대하고 있다.

리스크 및 주시 항목

• MV-75 프로그램은 미 국방 예산안 승인 시점에 여전히 영향을 받고 있다. 현재의 임시지출결의안(CR)은 12월 11일에 만료되며, 경영진은 2027 회계연도 예산안에 대해 보다 명확해지기를 기다리고 있다.
• MV-75 초기도입(LRIP) 계약 체결이 2027년으로 이월될 경우, 경영진은 프로그램 회계 처리 관련 잠재적 손실 비용이 1억 1,000만~1억 5,000만 달러로 증가할 수 있다고 밝혔다. 이는 이전에 논의된 6,000만~1억 1,000만 달러 범위를 상회하는 수준이다.
• 텍스트론은 3분기 중 2026년 2분기 MV-75 관련 손실 비용을 환입하지 않았다. 경영진은 남은 계약 변경 사항이 완료되는 대로 기존 누적 소급 조정 비용을 재평가할 예정이다.
• 제조 비효율성은 특히 터보프롭 부문을 중심으로 항공 사업부 수익성에 지속적으로 부담을 주고 있다.
• 엔진, 압출재, 스파, GPU(지상전원장치)는 여전히 주요 공급망 제약 요인이다. 경영진은 이원화 수급 및 내재화 추진을 통해 2027년 중 더 광범위한 개선 효과가 나타날 것으로 기대하고 있다.
• 인더스트리얼 부문 분할 실행은 포트폴리오 차원의 중요한 이정표로 남아 있다.

애널리스트 Q&A 하이라이트

• 항공 부문 수요: 경영진은 수주 믹스가 전반적으로 일관되게 유지되고 있다고 밝혔으며, 생산성 향상에 따라 인도 리드타임이 단축되면 추가 수주 활동을 뒷받침할 수 있을 것이라고 설명했다.
• 공급망 회복: 부품 수급은 대략 2021년 수준으로 회복되었으나 2019년 조건까지는 회복되지 않았다. 두 번째 스파 공급업체 인증이 완료되어 다음 분기에 초기 기여가 시작되고 2027년에는 더 큰 진전이 있을 것으로 예상된다.
• MV-75 자금 지원: 3억 5,000만 달러의 ATR(추가 기금 요청)은 정부가 추정한 3분기 필요 자금을 나타낸다. 확인된 실제 비용 충당을 위해 약 3억 달러가 계약에 반영되었으며, 2026 회계연도 지출 대상 항목에 추가 자금을 활용할 수 있다.
• 시스템 부문 수익성: 2026년 3분기 실적에는 약 900만 달러 규모의 리스 해지 관련 이익이 포함되었다. 경영진은 2025년 3분기의 비교 대상 항목 규모가 더 컸기 때문에 이번 분기 마진을 뒷받침했음에도 불구하고 전년 동기 대비로는 역풍 요인이 되었다고 언급했다.
• 자본 배분 및 M&A: 경영진은 우주 관련 열보호 소재를 포함한 항공우주 및 방산 자산과 부품 내재화를 평가하고 있다. 텍스트론은 시기와 대상 자산이 적합하다면 보조적 M&A와 대형 변혁적 거래 모두에 열린 자세를 유지하고 있다.
• 장기 생산 목표: 경영진의 운영 목표는 제트기, 터보프롭, 헬리콥터 생산량을 약 각 200대 인도, 이는 자본 투자, 설비 구축 및 인력 확충 노력을 통해 뒷받침됩니다. 다만 이는 공식적인 2027년 가이던스가 아닌 목표로 제시되었습니다.

실적 발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Thank you for standing by, and welcome to the Textron Third Quarter 2026 Earnings Release Conference Call. [Operator Instructions] Please note that today's call is being recorded and will be available for replay later today. I'd now like to turn the call over to Scott Hegstrom, Vice President, Investor Relations. You may begin.

Scott Hegstrom

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 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.

Lisa Atherton

Thanks, Scott, and good morning, everyone. Textron delivered a strong quarter with $3.8 billion of revenues and $1.76 in adjusted EPS as well as $418 million of manufacturing cash flow before pension contributions. Higher jet deliveries at Textron Aviation and program execution at Textron Systems drove double-digit revenue growth at each of these segments. Throughout the quarter, Bell continued to make significant operational progress on the MV-75 program. We continue to advance our separation process for the Industrial segment and remain on track to hit our time line.

Given our performance year-to-date and our expectations for the balance of the year, we are increasing our outlook for both adjusted EPS and manufacturing cash flow. Now I'll go into the segment details. During the quarter, Bell's primary focus was on operational continuity of the MV-75 program. The U.S. Army successfully received congressional approval for its ATR request related to the MV-75 Cheyenne program, mitigating the risks discussed on our last earnings call related to the government fiscal year 2026 funding.

From an operational perspective, the program has made significant progress on the aircraft build. Recent milestones for Bell and Team Cheyenne have included the completion of 3 wings in Amarillo, receipt of the first nacelles and completing the first wing and nacelle assembly process, completing the first fuselage at our Wichita Assembly Center, which is expected to be made with the wing assembly in the fourth quarter and advancing several critical components into test such as the first gearboxes. These gearboxes are part of the overall drive system, which was assembled in Bell's new MV-75 Drive System Test Lab in Grand Prairie, Texas.

We are very excited about the progress made on the program as the MV-75 remains a top priority for the U.S. military. Modern warfare is increasing the speed, complexity and lethality of the battlefield, making the ability to maneuver more important than ever. The MV-75 will fundamentally transform how the Army moves and projects combat power in that environment. In other areas of Bell's military business, Bell was awarded a contract for structural and power upgrades to the H1 fleet under the SPINE program, an important modernization program as H1s are essential to maintaining attack, strike and utility capabilities within the Marine Corps.

Operationally, Bell continues to focus on initiatives to strengthen the supply chain and improve production efficiency and output, including our ongoing certification of new suppliers and dual sourcing of critical raw materials needed to support gearboxes and rotor blades. This includes castings, rotor blade extrusions and various types of aerospace steel alloys. Selective capacity for our problematic assemblies to relieve suppliers and provide on-time delivery has also progressed. These are things like chemical processing, paint operations and complex assemblies. And we continue our focus on automation throughout the product lines.

At Aviation, we welcomed Brian Rohloff as President and CEO of the business. Brian is a proven leader with over 29 years of experience at Textron Aviation, who brings a deep understanding of our products, our customers and our industry. Brian has held numerous positions at the company, spanning customer support, sales, supply chain and quality throughout his career. Most recently, he led our customer support organization.

Moving over to the business. Textron Aviation revenues were up $201 million or 14% compared to last year's third quarter, reflecting higher revenue for both aircraft and aftermarket. We delivered 51 jets and 32 commercial turboprops in the quarter compared to 42 jets and 39 commercial turboprops in last year's third quarter. Textron Aviation's fleet utilization remained strong, contributing to aftermarket revenue growth of 10% compared to last year's third quarter. Demand across both jets and turboprops continued to be strong with Aviation experiencing its highest Q3 orders since 2023.

On the operational front at Aviation, our focus remains on improving productivity and converting strong customer demand into profitable growth. Moving forward, our priorities are clear as we make investments to drive productivity and profitability. Those investments in fabrication are focused on increasing capacity to improve parts availability on our production lines. This includes adding capacity in areas like machining, sheet metal and landing gear. Within the assembly, our investments are focused on increasing automation and manufacturing technologies. This includes expanding our wing cell automation for some of our light jets.

Our tooling investment will drive workflow productivity and support new programs such as the Gen3s and our existing platforms such as the King Air. A key project here relates to a significant market opportunity we have on the King Air. We are surging the digitization efforts of this platform, which will enable us to modernize the tooling and processes to build the aircraft more efficiently. We have significantly accelerated this phase of the effort, positioning us to begin capturing incremental benefits sooner. And like Bell, we are dual sourcing and in-sourcing challenging suppliers to improve quality, increase throughput and offset inflation.

An example here is dual sourcing spars, which have been a gating item in our production. In terms of product development efforts at Aviation, we continue to make progress on the Denali with over 4,200 flight hours test hours to date. Our 3 Gen3 light jet programs are also advancing towards certification with more than a combined 1,200 flight test hours and the rollout of the first production CJ4 Gen3 as the aircraft advances toward entry into service. Each aircraft features Garmin Emergency Autoland, while the CJ4 Gen3 also includes a significant avionics upgrade to the Garmin G3000 PRIME.

We continue to see significant demand for the SkyCourier program across freight, passenger, combi and special mission applications and have now introduced the SkyCourier UX concept aircraft, combining the proven SkyCourier platform with Merlin's aircraft-agnostic software solution for autonomous aviation. During the quarter, we celebrated 2 significant Citation milestones, the rollout of the 500th Citation Latitude, the world's best-selling midsized business jet and the 500th delivery of the Citation CJ4 Series as we prepare for the next chapter of that platform with the upcoming CJ4 Gen3.

Moving over to Systems. The segment continued its outstanding performance for the year with revenue growth of 16% in the quarter, driven by execution across its programs. In the quarter, we received a $230 million contract modification for 2 additional Ship-to-Shore Connector craft. Ship to Shore has now reached its full rate production level of 4 crafts per year with significant runway ahead as we have delivered 18 units out of a 73-unit program of record. ATAC also continues to execute well, driven by new contract wins and strong performance in its fleet exercise and adversary air operations.

Our land business has several platforms contributing to the segment. The FMS program or the MSFV is ramping with planned deliveries of 65 units to Ukraine over the next 3 years. The Marine Corps ARV program is scaling preproduction development efforts as we prepare for delivery of 16 units in 2028. And the Army's XM30, where we are partnered with American Rheinmetall is in the process of delivering 10 prototypes to the U.S. Army. At Industrial, our focus remains on supporting our customers, employees and business partners, while we continue to work toward a successful separation of the segment. During the quarter, TSV introduced its third generation of Samsung's battery technology, demonstrating the continued advancement of the E-Z-GO franchise.

Kautex has advanced its new technologies throughout the year. It is currently operating a pentatonic line in its Windsor, Canada facility while preparing to open new lines in Detroit and the Czech Republic to support new business. It is also ramping production on its Allegro offering to support the rollout of a robotaxi operator. Overall, across Textron, I am incredibly encouraged by the progress we are making. The underlying demand environment remains favorable. Our execution initiatives are beginning to gain traction, and we continue to advance strategic programs and technologies that we believe will create long-term value for our shareholders.

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

David Rosenberg

Thank you, Lisa, and good morning, everyone. Turning to Slide 11 of the earnings presentation. Revenues in the quarter of $3.8 billion were up 4% or $149 million from last year's third quarter. Segment profit in the quarter was $355 million compared to $360 million in the third quarter of 2025. During this year's third quarter, adjusted EPS was $1.76 per share compared to $1.55 per share in last year's third quarter. Manufacturing cash flow before pension contributions totaled $418 million, up from $281 million in last year's third quarter.

During the quarter, we repurchased approximately 2.9 million shares, returning $239 million in cash to shareholders. Now let's review how each of the segments contributed, starting with Textron Aviation. On Slide 12, revenues at Textron Aviation of $1.7 billion were up 14% or $201 million from last year's third quarter, reflecting higher aircraft revenues of $152 million and higher aftermarket parts and services revenues of $49 million. The increase in aircraft revenues was primarily due to higher volume and mix, largely reflecting higher Citation jet volume, partially offset by lower commercial turboprop volume. The increase in aftermarket revenues was due to higher volume and pricing.

Segment profit was $179 million in the third quarter, up $7 million from a year ago, primarily due to higher aircraft and aftermarket volume and mix, partially offset by an unfavorable impact from manufacturing inefficiencies. Backlog at the end of the second quarter was $8 billion. Looking at Bell, revenues of $933 million were down 9% or $93 million from the third quarter of 2025. The revenue decrease in the quarter was primarily driven by lower military revenues of $59 million, largely due to lower volume on the MV-75 program. Commercial helicopters, parts and services revenues decreased $34 million compared to the third quarter of 2025, largely due to lower volume and mix.

Segment profit of $76 million was down $16 million from last year's third quarter, primarily due to lower volume and mix. As Lisa mentioned, in the quarter, Congress approved the $350 million ATR request related to FY '26 funding for the MV-75 program. Subsequently, approximately $300 million was obligated to the program pursuant to contract modifications during the quarter. Throughout the third quarter, we maintained reduced spending levels to mitigate any funding challenges while continuing to advance the program. As a result of the ATR approval, modifications and contract changes received and reduced program spending levels, there was no related cumulative catch-up adjustments during the third quarter.

Backlog in the segment ended the third quarter at $7.6 billion. At Textron Systems, revenues of $360 million were up 16% or $50 million from the third quarter of 2025, largely due to higher volume on armored land vehicles and military training and support services provided by ATAC. Segment profit of $57 million was up $10 million compared with the third quarter of 2025, primarily due to higher volume, partially offset by higher selling and administrative expense, reflecting a net $10 million decrease in a gain associated with the early termination of a vendor contract in the third quarter of 2025.

Backlog in the segment ended the quarter at $3.5 billion. Looking at Industrial, revenues of $765 million were up 1% or $4 million from last year's third quarter. Textron Specialized Vehicles revenues increased $26 million or 9%, reflecting higher volume and mix and a favorable impact from pricing. Kautex's revenues decreased $22 million or 5%, largely reflecting lower volume and mix, partially offset by higher pricing. Segment profit of $38 million was up $7 million from the third quarter of 2025.

Finance segment revenues were $13 million and segment profit was $5 million in the third quarter of 2026 as compared to revenues of $26 million and segment profit of $18 million in the third quarter of 2025. The decrease in revenues and segment profit primarily reflects $11 million of gains recognized in the third quarter of 2025 from the disposition of non-captive assets. To wrap up guidance, we are raising our expected full year adjusted earnings per share to be in the range of $6.55 to $6.65 from our prior range of $6.40 to $6.60. We are also raising our expected full year manufacturing cash flow before pension contributions to be in the range of $800 million to $900 million, up from our prior range of $700 million to $800 million.

This concludes our prepared remarks, and we are happy to open the line for questions.

Operator

[Operator Instructions] Your first question today comes from the line of Robert Stallard from Vertical Research.

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Robert Stallard

Lisa, maybe we'll start it off with Aviation. I was wondering if you're seeing any changes in your customer buying behavior due to the increase in interest rates or any other of these geopolitical issues?

Lisa Atherton

No. Thanks, Rob. We have not seen any change to that. In fact, as we noted in the remarks, we have actually seen our highest booking of orders in almost 3 years. So we are continuing to see strong support for our products across the board. I think some of that is driven by some of the investments we've made in increased capabilities on the aircraft as well as folks wanting the demand for this. We see high demand in flying hours. So we continue to see strong support for the product.

Robert Stallard

That's great. And then just a follow-up on the defense side, with the MV-75, now that we've got this funding approved, Dave, I was wondering if you could walk us through what the financial profile for this program is going forward.

David Rosenberg

So as we talked about, we got the ATR approved in Q3, which covered our funding requirements for what we invested in the program in Q3. So as we go forward, we're obviously currently in a CR situation for at least the short and medium term. So we would expect kind of a steady state in Q4, which has already kind of been reflected in the guidance that we've shared with you. And then as we go forward into 2027, we'll just kind of wait and see what the funding profile looks like from going from a CR to what we expect will ultimately be an approved defense budget.

Robert Stallard

Okay. So we probably have to wait for appropriations of FY '27, therefore, to get more clarity on the situation?

Lisa Atherton

Yes, that's right, Rob. I mean we -- obviously, I think continuing resolutions has become a bit of standard operating procedures that we've seen over the past several years. So we're working closely with the Army with the funds that they have available. December 11 is when the CR expires. So we look forward to Congress approving a '27 budget. And as you guys have seen reflected previously, it's a very healthy budget for the program, reflecting about $2.3 billion for 2027 and supported across the 4 subcommittees. So I think we look forward to them approving that budget and continuing to move forward with the MV-75.

Operator

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

Myles Walton

David, on the free cash flow outlook raise, can you comment on the drivers to that? And also, were there any reserves from prior periods on the MV-75 where you're being more conservative that you actually ended up reversing? Or were there no changes whatsoever to the EAC on that?

David Rosenberg

I'll take the second part first. We didn't reverse anything prior. I mean that really just comes down to the timing of us going from the ATR approval to the contract mod phase. So we'll continue to evaluate that as we go forward. Looking overall from the cash flow perspective, the biggest driver in the increase was the lower expected CapEx spend this year by about $100 million. I will state overall, we saw really good, as Lisa had mentioned before, order activity at Aviation in Q3 and had corresponding deposits, and we expect to continue to have good cash flow performance in Q4. So the combination of those factors is what led us to the $100 million increase to $800 million to $900 million.

Myles Walton

Okay. And Lisa, any update you can provide on the industrial sales spin process?

Lisa Atherton

Yes. What I'd say, Myles, is that we're pleased with how the progress is going. We continue to be on our time line that we talked about back in April. And as soon as we make some progress there, we'll be sure to announce.

Operator

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

Gavin Parsons

I was hoping you could go into a little bit more on the supply chain detail. It's super helpful on all the internal initiatives, a little bit more on external status. And then what time frame we should expect to see improvement from the vertical integration and the multi-sourcing on those initiatives like spars you've talked about? Like when should we see that unlock higher deliveries? .

Lisa Atherton

Sure. So I'll -- I guess I'll go with the discrete on spars. We've qualified a second supplier. We are starting to see those come into play in the coming quarter. And then we expect that to really transition into progress going into FY '27. So discretely, as we're making all of those efforts across the various I'll say, supply chain in-sourcing, we should start to see progress with that, both at Bell and at Aviation throughout 2027. Our supply base has actually -- when we look at parts available on the factory floor, we are back to where we were in about the 2021 time frame.

We're not where we were in 2019, but we are getting closer to that parts availability that we saw several years ago. The thing that holds us up is probably 3 or 4 key supply issues, and it's largely engines, extrusions, spars and GPUs. And so we are putting a focused target on those 4 in order to make sure we can get them in and get the aircraft out the door. So where I would say we've made a lot of progress across the many thousands of suppliers that we have across the business. Those 4, we have put a severe focus on in order to get them in the door. But I would say roughly, I feel very good about where we're making progress on the supply chain.

Gavin Parsons

Okay. That's great. And Dave gave us a lot of color on maybe the margin impact last quarter, but maybe just thoughts on what drives the 4Q margin step up. I think it still needs to be pretty large to get into your guidance range.

David Rosenberg

Yes. So I mean, in Aviation, I would say it's going to be largely around the turboprop side. So you kind of could view that as a volume mix. Probably we'll see a relatively similar profile on jet deliveries. And those are kind of the key drivers in which get us to the higher margin performance overall in Q4, which gets us, as we previously talked about, to the low end of the guidance range of 11% to 12% for the total year.

Gavin Parsons

Okay. So that's the same, low end there?

David Rosenberg

Yes. Correct.

Operator

Your next question comes from the line of Gautam Khanna from TD Cowen.

Gautam Khanna

I was wondering if you could elaborate on the MV-75 accounting nuances. Because if I recall, last quarter, you guys did take a negative EAC related to the funding delay. It didn't sound like you reversed it this quarter. So I wanted to ask about that. And then also -- and if there is any learning curve lost from what already happened. And then on the -- when the LRIP 1 contract is ordered, is it still a $60 million to $110 million negative charge that you expect? Or did that number change at all?

David Rosenberg

I'll take the last part first. With the start of the fiscal year in a CR, we'd expect a possible push in the timing of the LRIP award. Previously, we were thinking Q4 into Q1 of next year. So as it goes beyond that, you would see just basically on how program accounting works that, that range will probably increase. So it'll probably go up to $110 million to $150 million if as we expect that award pushes into next year.

On the other question that you had, we did not reverse any of the charges that we took on our Q2 earnings related to the MV-75. The process on the ATR is Congress approved the ATR and then pieces of that get converted over time into contract mods. So as that happens, we recognize it. The key point is on Q3, we were able to recognize what our costs were in Q3 and cover those. And as timing continues to progress and the remaining contract mods take place, we will then be able to take a look at previous charges.

Operator

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

Sheila Kahyaoglu

Really great execution in the quarter. Aviation showed strong progress at 50 jet deliveries and margins were pretty steady at 10.7%. Maybe can you just -- you talked about it a little bit already, but can you talk us through your latest thinking about restoring some of the inefficiencies and the investments you're making into the supply chain and labor as we start thinking about '27.

Lisa Atherton

Absolutely. So look, I mean, this has been our theme throughout the year as we continue to put investment down on the factory floor, making sure that we're looking where we have jig blocks or where we have, I'll say, basic blocking and tackling, we need to have engineers on the floor next to the team in order to ensure that we can unlock some of the efficiencies that we've lost. So we are seeing good progress in several of the lines. We still have a couple of areas that we want to make sure that we focus on largely in the turboprop space. And what we have seen is requests for capital that you will see us start to invest in over the next year that will improve the production tooling that we have on the factory floor.

So that's our next big push is to put some good capital tooling out on the floor in order to have the work instructions be more commensurate with what this workforce would like to see. And so where we have our newer models and we have better work instructions and we have better tooling, we have better efficiency and better production. So we think that's a good model. So we're going to continue to push that back into our older models. We also saw some improved learning on some of our new block points that we put in earlier in the year. And so as we see those continue to progress and as we work through the new block points that you'll see come out next year with the Gen3s, we're going to work to get ahead of that to make sure we have good learnings and learning curves on those platforms through 2027.

Sheila Kahyaoglu

Okay. That's super helpful. Maybe if I could just ask on systems then, just a breakout quarter, 16% growth. I don't think I've seen that business grow 16% and really great margins as well. Can you call out what drove that performance and how we should expect that to continue as we progress through the end of this year and into next? .

Lisa Atherton

Yes, sure. So look, on Ship-to-Shore Connector is a large one. That one has been a tough program for many years, as you guys well know. And so that one has -- or to use upon is up on plane now. And so we're starting to see good progress, good productivity. The hours that it takes to build it through the various different stations have come down, and we're starting to see consistency from the government in terms of their order activity. And so for the first time, we're starting to see our ability to forecast out several years in their -- in the fight up, and that allows us to have better leverage with suppliers than when we're going out to order materials so we can get better costing on the supply base. So the ship-to-shore is something that leads us into, I'll say, good growth and productivity there.

On the land side, we mentioned it in the script there, the filling up with the factory floor with the Ukraine MSFVs, 65 vehicles there, 10 prototypes on the XM30 and then the 16 prototypes for the ARV. That's a lot of really great work and productivity that the team has got going on. And so those 2, in particular, have really led to good growth in the quarter. ATAC continues to perform well on their service side as well as we're seeing growth in our service -- fee-for-service, both on the Aerosonde still and then in our unmanned surface vehicles, on the TSUNAMI and [ awarded ] CUSV.

So look, across the board, I would say, Systems just really hit it out of the park this quarter. And so we have a lot of things out there for awards in the coming years, and I expect us to continue to see good growth.

Operator

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

Jamie Baker

This is Jamie on for Seth today. I just wanted to ask quickly about MV-75, the ATR, just to get a little bit of clarity. I know you said the $350 million was approved, I think, but only the $300 million obligated in the third quarter. So would it be safe to assume that the other $50 million would be obligated in the fourth quarter? Or is there more nuance there?

Lisa Atherton

Yes. So if I could, what the $350 million was the request of the estimate of what the government expected that we would need throughout the third quarter. So when those numbers were put together, it was before we had actually completed actuals. As we work through the quarter and then achieve those actuals, we work closely with the government once they receive their approvals. So the government was able to quickly put on contract mod, the $300 million to cover the actuals that we and our suppliers had accrued. And so now we're working through the process where they are -- they've completed those mods. We work through invoicing as supplier invoices continue to trickle in through this month and next month, we will continue to obligate against that. And yes, the government has additional funds at their discretion that goes up to the full ATR. And as those are required to cover that '26 spend, they will be able to utilize those. But at the moment, what we've been able to identify and communicate with them has been the $300 million.

David Rosenberg

And then if I could add to that, as we continue to go through that timing process, as Lisa described, that's the point when we can review the previous cume catch that we took in Q2 of 2026. So that's just really a timing process that we're going through.

Jamie Baker

Okay. Got it. That's super helpful. And then maybe just on the Aviation segment. So obviously, healthy growth year-over-year and sequentially for the aftermarket. I know you guys are a little bit less exposed to the large fleet operators, so -- which tend to have higher utilization. I was just wondering is there any differences or drivers between customer types or operator types that's sort of driving that growth in the aftermarket? Or is it more broad-based? .

Lisa Atherton

Yes, I think it's more broad-based. I mean we're just seeing high utilization across the board on the fleet operators as well as retail side. So I think we just see strong -- and frankly, our team's service and support, people want to come back through to us. And so we are seeing more folks return to our service and support team in order to have their aircraft managed and handled. And so I think it's just been a factor of higher hours flown and people rewarding the fact that we are great partners to them in the aftermarket space.

Operator

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

Noah Poponak

Can we expect the Aviation segment to have its normal incremental margin next year? Or are the additional investments and kind of operational volatility still occurring in the first half such that, that does not happen.

David Rosenberg

I think Lisa highlighted all the initiatives we're doing. So this is going to be, I think, a 12-month journey. So as we go throughout next year, you should see improvement throughout the year. We're obviously not ready yet to give guidance into 2027. But this is going to be, I think, a 12-month journey of improvement as we go forward into Q4 and then into the first half of next year.

Noah Poponak

Okay. And just back to that systems margin, is there anything onetime in that systems margin? Or is it clean? And what does that mean for the forward profitability in the segment?

David Rosenberg

It's one onetime item. It's related to actually in Q3 of 2025, we had a onetime -- well, it's really a two-time benefit related to an exit of a lease. There was a benefit in Q3 of '25. There is also a benefit in Q3 of '26. Now if you were to compare the 2 years, it's actually a headwind, but it did improve the margin somewhat in Q3 of 2026. It's about $9 million, if you want to look at that from a comparison perspective. So still very comfortably in the margin range of Textron Systems that we had given for guidance for the year.

Operator

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

Peter Arment

Nice results. Dave, maybe just a quick one, a clarification on MV-75. Just thinking about your fourth quarter is always typically really strong in terms of cash flow. What's assumed for any collections there? Any -- or are we waiting for budgets to be firmed up?

David Rosenberg

So obviously, our collection assumptions are embedded in our guidance. Q3 did have particular challenges relating to cash flow as the timing of the ATR obviously did not get approved until the end of the quarter. But keep in mind, and this is a credit to the entire team, we anticipated that and took actions in Q2 of 2025 to manage through those cash flow challenges. That, combined with really good performance from Textron Aviation drove the result. And as you can see, based on our cash flow guidance, we expect to have a very strong Q4 cash number.

Peter Arment

Got it. That's helpful. And then just, Lisa, just quickly, back to kind of Myles' question around the industrial separation. Are there milestone or time lines that you're thinking of? I know there's probably a lot you can't say, but just any color there, that would be helpful. .

Lisa Atherton

Yes. Unfortunately, I don't want to get into that too much just now. But I would just continue to iterate that I'm pleased with the progress, and I would say we're going to be able to stick to the time line that we messaged back in April of a 12-month to 18-month separation or spin.

Operator

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

Benjamin Tomick

This is Ben Tomick on for David. I was just wondering, any update on the Gen3 program time line in terms of certification and entry into service? Any milestones coming there? .

Lisa Atherton

Yes. So as I think I mentioned in the script there, we have progressed forward with all of the flight tests. We're in F&R. And I do believe in the first half of '27, we should start to see some of those entry into service.

Benjamin Tomick

Great. And then going over to defense. Are there any upcoming competitions worth flagging and any risk there?

Lisa Atherton

Or any risk there? No, I wouldn't say we have any risk -- the Textron Aviation Defense team is competing for the Navy Jet Training program. And so we expect that to be awarded mid next year. And so I do think that's a key one that we feel like we're in a pretty strong position for. And so I feel like we're in a pretty good stead on that one. And look, there's always a risk that you may not win something, but I feel pretty good about where we are with the program.

Operator

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

John Godyn

I wanted to just ask about aviation into next year. Completely appreciate that more detailed guidance is going to come out on 4Q. But we have a backdrop of strong demand. We've got what sounds like kind of improving supply chain issues. Is there anything you can offer just to level set us a little bit on what's possible with delivery growth. So we have some color. .

Lisa Atherton

Yes. I think it's a little early to start guiding in that regard. I would say that my by charter and ask across the business is that we continue to try to move ourselves to around the 200 delivery range for all of our turboprops, jets and our helicopters. And so you're seeing us implement strategies, capital and investment into our workforce in order to support -- and as Dave mentioned, it will be a journey on that over the next 12 months, but I feel like we're making the right steps in order to get there.

John Godyn

Okay. Fair enough. And Lisa, just changing gears, M&A strategy at large. A couple of quarters ago, I feel like it was a little bit more of a focal point. You had mentioned the possibility of acquiring space assets or other kind of on-stream assets. Maybe you could just kind of plug us into your latest thinking. .

Lisa Atherton

Yes, sure. So look, I I've got my game board that I make sure that I'm monitoring on what we would do in terms of acquiring certain assets. And as you, I'm sure, seen that some of the multiples on some of these -- the quality of assets out there, we just want to make sure that what we acquire makes good sense and -- but we have a very strong balance sheet. I think as we move more towards a pure-play A&D, you'll see us lean into that. But I want to be clear, I mean, this is across the board of what we're looking at, both in-sourcing suppliers that might be a good fit for us to make that more of a vertical asset to us as well as assets along the space side, which would be around thermoprotective materials that would be complementary to what we do up around our Wilmington business as well as areas that would complement into our -- the rest of the system. So I am so keen on that, and we're keeping our powder dry to make sure that when the right asset comes available, we'll be ready.

John Godyn

And is the concept largely bolt-ons? Or is there any appetite for something more transformational?

Lisa Atherton

Yes, and. So I would say I am open to something transformational. I do think that that's what we need to do in order to move Textron forward, but it's going to have to be at the right point in time, and it's going to have to be the right asset.

Operator

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

Kyle Benvenuto

This is Kyle Benvenuto on for Kristine. You indicated that approximately $100 million of lower CapEx is the largest driver of higher cash flow outlook. Is that primarily spending deferred into 2027 or a reduction in total investments required? And then with additional aviation tooling investment planned for next year, how should we think about 2027 CapEx? Does that lower 2026 spend change, the timing of any production or productivity improvements.

David Rosenberg

So we've been -- as we've discussed our CapEx view over the next couple of years, we've kind of indicated previously that we'd expect kind of steady-state CapEx in both 2026 and 2027. The $100 million lowering for 2026, I don't think changes our view for 2027. We have also expected to and continue to have to invest more in CapEx at Aviation to drive productivity projects, which obviously will lead to better delivery numbers down the road, which, of course, translates into better cash flow. So I would say the framework of how we've described CapEx investment here does not fundamentally change as a result of the low $100 million CapEx spend in 2026. .

Operator

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

Ronald Epstein

So maybe just a broad question. A lot of the details have been asked already. Lisa, you've been in the seat now for a couple of quarters. And as you sit back and kind of look at the mandate, the portfolio. What areas are you most excited about? And what areas potentially do you think are the most challenging that we'll have to deal with to get the business to where you want it to be? .

Lisa Atherton

Yes. Look, so -- not to speak a little bit, I often reflect on this. I think I'm now 9 months, 29 days and about 7.5 hours into the job. So -- it's -- I've had an opportunity to take a look at the portfolio. As you can see, we're reshaping that in order to move us forward into A&D. And I think that excites me the most. I think I understand where we need to go in terms of creating synergies across the business, the collaborations and opportunities that we have in a company that is so deep with engineering expertise, the fact that we could take some expertise out of our business up in Maryland with unmanned air and pair that with some things that we've got going down at Bell, do an unmanned SkyCourier. There's just a very exciting amount of collaboration that we can achieve across the entire company.

And so I think we have to continue to push into these enterprise initiatives. An exciting example of this is what just came out this month from the government with Project Agincourt. I think that we fit nicely in where they're trying to go with Project Agincourt. And I think that we can lean into that and show that we've got not only exciting new defense technology, but decades of experience in how to manufacture these and make these capable in a war-fighting scenario. And so it makes me excited. So from the challenges standpoint, look, I think the challenges just continue to pop up around suppliers. I think we're getting better in terms of workforce retention. Our retention rates are coming down to a more manageable level, kind of where we've seen around pre-COVID area, not all the way where we want it, but within a couple of percentage points of -- from attrition.

And so we'll continue to have to manage and watch that. And then not necessarily a challenge. But an exciting part is when we go do a meaningful acquisition and creating the synergies and the growth inside that. That always comes with a little bit of challenge, but I think it's a good challenge to have. And so I'm excited about that.

Ronald Epstein

Yes. Great. Great. And maybe just one last follow-on, if I may. Culturally, how is the company reacting to that, right? I mean this is a change for your workforce. How are they reacting to it? Are they welcoming it? And how do you bridge the cultural gap if there is one?

Lisa Atherton

Sure. So I want to take -- thank you for opening that because I want to take a moment to say take thanks to our team over on the industrial side. I mean I think they culturally accepted that this was the right answer for Textron at large, and they have been fantastic at continuing to work and manage their business and their customers and take care of each other through what is very challenging, as you guys know, as they're also facing dealing with a separation process.

So I think culturally, just welcoming that and the way that team has responded has been -- I'm very grateful for. And for the rest of the business, I think the rest of the business is very energized. We have leaned in on some collaboration ideas. The team has come up with ways to work together. I think it's -- they're excited about a new phase of Textron and I'll say, a new era. And so I've received a lot of positive feedback, and I'm constantly reminded that what my job is to manage people, not just numbers. And so I'm excited about doing that, and I think folks are responding to it.

Operator

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

Douglas Harned

On aviation, you had a really strong quarter for orders. But a couple of things. First, can you give us a sense if you're seeing any shift in mix with the new orders coming in across your product portfolio? And then also, you're still working to get that production rate up, trying to get up to that 200 number. But -- we've seen a lot of times when there are long delays between order and delivery, it slows order flow. Do you see the opportunity in your discussions with customers to take those order numbers up even more if you can get that production rate up?

Lisa Atherton

Yes, absolutely. I mean you've hit on it. That's -- if they can say I can get it inside a certain time frame instead of having to put a deposit down and wait for years, I mean, certainly, I think you're going to open up the order book even more. So that's exactly why we're leaning in on trying to increase production workflow and making sure that the material is available to the team on the floor so that they've got the material in order to put those products out the door. So these all play together. I think the more product we're able to put out there, the more you'll continue to see increased order book.

In terms of mix, I don't think we see a shift in mix. We're getting, I'll say, a pretty standard mix that we've seen in the past. So again, it's -- even in times where we're having, I'll say, less than optimal ways of getting it out the door, we're still seeing strong order delivery. If we can continue to improve that production, I think we'll continue to see even stronger orders. So it's self-fulfilling.

Douglas Harned

And then separately, on MV-75, you commented on the fit with the changing battlefield, and we're clearly seeing a rapidly changing battlefield. And with IOC out in 2030 and you look at that timing, there are a lot of other players out there looking at uncrewed aircraft, other options to go into this space over time. And some of them are willing to invest very large amounts of money to do it. How do you look out in that 2030 time frame and see the landscape, how MV-75 will fit in there? And you mentioned Project Agincourt, but what -- how do you see your role potentially changing either positively or with some threats?

Lisa Atherton

Yes. So I would submit that Team Cheyenne, led by Bell, we also have made significant investments in this technology and platform over the last 15 years. So I think we were leaning into that for some time now in order to make sure that this capability is available for the war fighter. Whenever you go into a war fighting scenario, you never go in with a single platform. All of these platforms have to work together. So that's why the fact that we are the first modular open systems architecture platform that's going to be out there for the Army, it's going to give it the capability to interact and interface with these other technologies that will also be available on the battlefield. So I see it going to be a key part of the future fight.

And look, in terms of threats, I'm not worried about that as much. I'm worried about making sure that we deliver what the war fighter needs on the time line that they need it and making sure it fits inside the plans that they have.

Operator

This concludes our question-and-answer session and today's conference call. An audio replay will be available approximately 2 hours following the conclusion of this call. To access the replay, please dial 1 (800) 770-2030 and enter conference ID 6969175 and press the pound key. Thank you for your participation. You may now disconnect.