Q3 2025 Textron Inc Earnings Call
Speaker #4: Good morning , ladies and gentlemen , and welcome to the Textron . Third quarter , 2025 Earnings Release . At this time , all participants are in a listen only mode .
Speaker #4: You will have the opportunity to ask questions during the question and answer portion of this call . You may register for a question at any time by pressing star , followed by one on your telephone keypad .
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Speaker #4: The star , followed by zero . I would now like to turn the conference over to Scott Hegstrom . Please go ahead sir .
Speaker #5: Thanks, Rob, 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.
Speaker #5: 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 , chairman and CEO .
Speaker #5: And Segment profit in the quarter was 357 million , up 26% , or 73 million , from the third quarter of 2020 . For adjusted income from continuing operations was $1.55 per share , compared to $1.40 per share in last year's third quarter .
Speaker #5: 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 .
Speaker #5: 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.
Speaker #5: 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 .
Speaker #5: At that point in time , I'll transition to be the executive chair . This is the result of a of a long , thorough process that we worked with on the on the board .
Speaker #5: 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 .
Speaker #5: She was the president and CEO of our Textron Systems business for about five 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 75 .
Speaker #5: She's a fabulous leader. She knows the teams. 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.
Speaker #5: 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.
Speaker #5: 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 .
Speaker #5: 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 .
Speaker #5: Aviation backlog ended the third quarter at 7.7 billion , as demand remains strong . Earlier this month , Textron Aviation completed the certification of the three Gen two and auto throttles on the M-2 .
Speaker #5: Gen two. Also this month, the Citation Ascend made its debut as it landed in Las Vegas for the NBA exhibition. We are nearing completion of the certification process and continue to expect deliveries this quarter.
Speaker #5: 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 approved for improved approach capabilities down to 150ft , and a new taxiway routing feature .
Speaker #5: 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.
Speaker #5: On the defense side , aviation announced a partnership with Leonardo to launch the Beechcraft M-346 Zen as its solution for the United States Navy undergraduate jet training system .
Speaker #5: 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 exceeded their 90% engineering release milestone , enabling continued fabrication and procurement activity for the prototype aircraft .
Speaker #5: Fabrication and assembly work of the program is continuing across numerous sites , including wing assembly at our Amarillo , Texas site . Fuselage assembly at our Wichita , Kansas site .
Speaker #5: 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 .
Speaker #5: They'll continue to see strong demand across its commercial product portfolio . Elements to purchase agreement with global medical response for seven four , two nine and an option for eight additional helicopters with deliveries expected to begin in 2026 .
Speaker #5: 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 .
Speaker #5: These awards included attack awards for both the United States Navy and United States Marine Corps , a new contract award for the US Army to provide 65 Mobile Strike Force vehicles in support of the Ukraine Security Assistance Initiative , and increased quantities for the ship to shore Connector program in the weapons business .
Speaker #5: Systems . Completed delivery of the first production lot of XM 204 Anti-vehicle terrain Shaping systems to the US Army in support of operations in Europe .
Speaker #5: 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 .
Speaker #5: The team completed the Hover flight test envelope for the new three 300 and set the stage for Air Vehicle two 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 aviation business activities across Textron Aviation and Textron Systems to leverage our existing sales and business development capabilities .
Speaker #5: 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 .
Speaker #6: 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 2020 .
Speaker #6: For 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 and mix , which included higher citation jet and commercial turboprop volume , partially offset by lower defense volume .
Speaker #6: 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 .
Speaker #6: Revenues were 1 billion , up 10% , or 97 million from the third quarter of 2020 . For . The revenue increase was driven by higher military revenues of 128 million , primarily due to higher volume from the US Army's MV 75 program .
Speaker #6: 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 .
Speaker #6: System 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 and the adversary air business .
Speaker #6: 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 Power sports business segment .
Speaker #6: Profit of $31 million was down $1 million from the third quarter of 2020 for Textron Aviation. 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 the segment loss of $18 million in the third quarter of 2020.
Speaker #6: For 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 in profit of 5 million in the third quarter of 2020 .
Speaker #6: The increase in revenues in segment profit was largely due to gains on the disposition of non-captive assets moving below segment profit. Corporate expenses were $26 million.
Speaker #6: 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 .
Speaker #6: 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 .
Speaker #6: 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 .
Speaker #6: Year to date , we have repurchased approximately 8.4 million shares , returning 635 million to shareholders . To wrap up with guidance , we 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 .
Speaker #6: That concludes our prepared remarks. Operator, we can open the line for questions.
Speaker #4: Thank you , sir . Ladies and gentlemen , at this time , we will begin the question and answer session . If you have a question , please press star one on your telephone keypad .
Speaker #4: If you find your question has already been asked and you would like to be removed from the queue , you may press star one again .
Speaker #4: One moment please . For the first question . And your first question today comes from the line of Peter Arment from Baird . Your line is open .
Speaker #7: Yeah . Hey , thanks . Good morning . Scott . Dave . Congratulations , Scott . Appreciate it . Appreciate all the help over the years .
Speaker #7: Hey , on on the MV 75 , could you give us . There was an announcement by the by the army here recently regarding the accelerating the fielding of the version two .
Speaker #7: Just how that would impact , you know , any the cost profile or does it change anything ?
Speaker #5: 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 , you know , and , you know , focus on the critical parameters around speed and range and , you know , basic air structure .
Speaker #5: But, as you know, part of the incorporation of Mosa, in terms of the architecture of this aircraft, allows you to do that.
Speaker #5: And then , you know , build out variants and derivatives and , capabilities in different variants going forward . So , you know , our focus obviously right now is very much around the acceleration , getting the first prototype aircraft going .
Speaker #5: You know , those will be the , you know , the 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 .
Speaker #5: But that's enabled by the most architecture. So it doesn't, it doesn't affect or impact the work that's going on around the basic aircraft today.
Speaker #7: That's helpful . Thanks for that . And then just a quick one on just on aviation , you talked about the demand remains strong .
Speaker #7: Just maybe any highlights you would you would call out just regarding whether it's regionally or just in general on the on the the jet market .
Speaker #5: It's really across the whole portfolio , Peter . I mean , we continue to see strong retail demand . You know , people are flying the , you know , the end market industry remains robust .
Speaker #5: I would say everywhere that that we see it , you know , the the performance of the business is , is is improving .
Speaker #5: Obviously , as we talked about , you know , every quarter improving margins . We had a lot of certification activity in , you know , in the quarter we you know , we would have originally planned probably to get the M2 , the CX three and the ascend in Q3 .
Speaker #5: It's turned out, of course, we now have the M2 and the CX-3, but those happen right at the beginning of Q4 and ascend.
Speaker #5: We should have , you know , wrapped up here by by the end of the month , the FAA , despite the shutdown , is supporting us in that in that effort , which is great .
Speaker #5: So I think the , you know , the market is strong . Our product portfolio is in a good place . So we feel pretty good about where things are .
Speaker #7: Appreciate it . Thanks , Scott .
Speaker #4: Your next question comes from a line of Sheila Kahyaoglu from Jefferies . Your line is open .
Speaker #8: Good morning. And congratulations, Scott, on a great run and on promoting both Dave and Lisa internally. I think that says a lot.
Speaker #8: 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 the update on the program you've completed 215 flight hours ?
Speaker #8: I think you're scheduled to deliver six test articles over the next year and a half . What happens from there with the Army , and how do we think about a contract being signed on ?
Speaker #5: Sure . So , I mean , the current program , it's actually it's a good question . I think there are some misunderstandings about this program and sort of where where it is and what's going on .
Speaker #5: You know , I've heard a lot of people say , hey , is this is this going to be one of these programs ?
Speaker #5: 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 .
Speaker #5: 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 .
Speaker #5: You know , as you know , we don't have that . This is a this is a very large program . Obviously , it's mostly cost plus development .
Speaker #5: There are some fixed price elements . We've already put the fixed price LUT aircraft . You know , into our program estimates to complete .
Speaker #5: We will at some point add the the eight . You know , once that is exercised , you know , by the government .
Speaker #5: But I think that the program is laid out today covers all of that development , which is largely cost . Plus it does have a lot as a fixed price .
Speaker #5: It does have as a fixed price . And that's kind of where that where the current program , you know , stops . So the discussions around acceleration are really bringing forward that .
Speaker #5: We we collectively with the Army believe this is something that we can do . You know , with low risk . That's in part by , as you referenced , the fact that we flew , you know , 207 , 300 hours on the on the V2 , 80 , the team is already building a lot of the key components and fabrications , getting ready to build the first prototype test aircraft .
Speaker #5: There will be six of those . And then the two . Lutz . So , you know , the risk of bringing that Lvedp in rather than having a big gap is pretty minimal .
Speaker #5: You know , keep people keep in mind that that first aircraft is really sort of serial number ten , if you count the initial V2 80 plus , the six emds , which are cost plus , and then those first two Lutz that are fixed price .
Speaker #5: So , you know , I think the team is doing a great job on executing . Obviously , you know , we work very , very closely with the Army on the acceleration process .
Speaker #5: It's going very well . We're building wings . We're building fuselages , we're building gearboxes . It's all it's all it's all going quite well .
Speaker #5: And again , I think there is a little bit of a misconception around , you know how this works . It is a big performance obligation .
Speaker #5: We will as you guys saw last year when we did the Lutz and added those to the mix . You know , we took our booking rate down and that will result in a catch .
Speaker #5: It did result in a catch that was a bad guy . On the other hand , this quarter they exercised one of the large cleanse for cost plus side .
Speaker #5: We actually increased our booking rate and took a modest catch . Good guy . So this is something to expect through the course of the program .
Speaker #5: But unlike these big fixed price development , fixed priced , you know , production programs , you know , we certainly don't , you know , see this thing entering into lost territory .
Speaker #5: It will continue to book at a low margin , which we've said from the beginning . But I think we're , you know , again , in a pretty good place .
Speaker #5: And it's a it's a program . I think that's executing well . And obviously is , you know , hugely important to the future of the company .
Speaker #8: Thanks for the additional color. I'll leave it there.
Speaker #4: Your next question comes from the line of Gavin Parsons from UBS . Your line is open .
Speaker #9: Hi , this is Joel on behalf of Gavin Parsons . Good morning . Thank you for taking my question . You have talked before about improving aviation profitability .
Speaker #9: What is the long-term margin target you are aiming for, and what are the main levers to get there? Volume, pricing, or more of a mix?
Speaker #5: Well , I mean obviously these dynamics are different in each one of the businesses . But you know , generally speaking , across all of our product lines , we have good gross margins .
Speaker #5: So , you know , the biggest lever is around volume . And what that does in terms of conversion to the bottom line , in terms of of performance .
Speaker #5: So that's , you know , most of the investments that we make around product are around making sure that we have products that are , have have high demand and can command , you know , good volume .
Speaker #5: And obviously solid pricing , which again , we've seen that in the last , you know , a number of years where we've had very positive price feedback as well .
Speaker #9: Great . And any aviation bookings have you have been fairly steady each quarter this year even through the to Q tariff uncertainty . Do you think long lead times are holding back new orders ?
Speaker #9: And if production ramps could that actually drive bookings higher ?
Speaker #5: Well look it's I there is some connection between these . There's no doubt if you get out too far out in timeline that it's difficult for people to , you know , to make that commitment .
Speaker #5: But as you said , look , I think the the market demand remains strong . It has been pretty steady . You know , we've guided a 1 to 1 , you know , book to bill through the course of the year .
Speaker #5: I still feel good about that . And certainly we do have plans . You know , where you'll see incremental you know , volume in 2026 as opposed to 2025 .
Speaker #5: So we're not obviously quite ready to guide 2026 year , but we certainly expect , you know , as manufacturing continues to ramp that , we will see , you additional output in terms of the number of aircraft .
Speaker #10: Thank you .
Speaker #4: Your next question comes from the line of Robert Stallard from Vertical Research . Your line is open .
Speaker #11: Thanks so much . Good morning .
Speaker #5: Robert .
Speaker #11: Congratulations , Scott , on the the move up . But as the 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 .
Speaker #5: Sure . Robert . Look , I mean , this is , I think , a fairly standard transition , you know , in our business , I've been working with Lisa for a very long time .
Speaker #5: You know , in her capacity and , you know , key program jobs . She worked for me directly for the last eight years running the systems business .
Speaker #5: And then the Bell business . So , you know , I , you know , I want to be really clear . She becomes the president and CEO .
Speaker #5: She's running the company . You know , that's us . And she's ready to do that , by the way . So , you know , I'll be there to , you know , help with some of the processes .
Speaker #5: Just haven't gone through , you know , around regulatory stuff and , you know , closing out the year and , and things like that .
Speaker #5: But I fully expect she's ready to run the company and she'll start doing that on on January 4th . And , and I'll be there to help and do whatever it is that she needs me to do .
Speaker #5: And obviously , you know , run the board . But I think it'll be a normal transition . I expect it'll be very , very smooth .
Speaker #5: Again , we've been working together for a very long time , so I'll be around , but no one should have any question .
Speaker #5: She's going to be running the company okay .
Speaker #11: And then as a follow up on aviation , we've seen some recent signs of a bizjet activity actually picking up in terms of year on year growth .
Speaker #11: Are you starting to see this flow through in terms of your aftermarket activity ?
Speaker #5: Yeah , we had a good quarter on the aftermarket side . There's no doubt utilization is is strong . People are flying , which is a great indicator .
Speaker #5: Obviously it's a really important in terms of helping to , you know , continue to drive growth in the aftermarket side of the business .
Speaker #5: But I think it also bodes well just for demand for aircraft , which , again , we're seeing the retail , the level of interest inquiries , you know , orders , bookings , you know , remain strong .
Speaker #5: So I think the industry right now probably is as healthy as we've ever seen it .
Speaker #11: Okay . That's great . Thank you very much .
Speaker #4: Your next question comes from the line of Myles Walton from Wolfe Research . Your line is open .
Speaker #12: Thanks . Good morning . And congrats , Scott on the retirement or move to executive chairman . You're not retired yet . The you got work to do on the aviation side .
Speaker #12: Can you comment on the supply chain and how that's coming along and whether or not that's an impediment to hitting the the 6.1 billion replace older within the forecast ?
Speaker #5: Well , look , I mean there are there are still supply chain issues as we've kind of talked about . It's not it's not as many , you know , part numbers for instance , as it used to be .
Speaker #5: But there are still some critical suppliers that are struggling . And yes , it does impact us on on different models at different times .
Speaker #5: It continues to create a little more , you know , problem in just in production efficiencies and , you know , flow doing attestation work .
Speaker #5: 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 , you know , sort of a little bit of hand to mouth .
Speaker #5: And you know , that we keep a close eye on with this , with a relatively small number of suppliers , you know , but they're critical suppliers .
Speaker #5: So , you know , again , overall , it's improved . But it's one that we , you know , we I mean the team works the stuff every day .
Speaker #5: There are there are still some problem . Children out there . And that's you know , that's been the sort of the nature of where we are .
Speaker #12: Okay .
Speaker #5: But I don't believe just just to be clear , I think , you know , everything we look at today , you know , getting to that 6.1 , you know , we clearly , you know , feel good about our path to get there .
Speaker #12: 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 .
Speaker #5: Yeah . Look I think so . You know the bookings were very strong . You know you guys know we started the year with a bit of a challenge with things like Rkv and Ftx.us , you know , getting restructured and changed .
Speaker #5: I do still think there's opportunities there . You know , in our participation in those kinds of programs . You know , there's there's there's a lot of interest in a lot of the technology we developed around Ftx.us .
Speaker #5: 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 .
Speaker #5: Our attack business is just doing great . Those guys are performing really , really well . They've won a ton of new , you know , programs ship to shore , continues to grow .
Speaker #5: And as I said earlier with Sheila , the program is healthy . Volumes are are there . The team is executing really well .
Speaker #5: We continue to see growth , you know , in the Sentinel program . So I think , you know , when you look across that that business , you know , you know , despite some of the challenges around a couple of those programs , it's it's good growth and absolutely , we feel good about sort of that inflection point .
Speaker #5: You refer to . You know , this this business has been executing , performing really , really well for a number of years .
Speaker #5: The only thing it'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 .
Speaker #12: All right. Great. Thanks.
Speaker #4: Your next question comes from the line of Seth Seifman from JP Morgan . Your line is open .
Speaker #5: Hey , Seth , you might be on mute .
Speaker #13: Yeah , thanks . Good morning . And yeah , congratulations , Scott . Just wanted to ask , starting off about aviation . And , you know , you just spoke to kind of the revenue .
Speaker #13: When we think about the margin, it's a pretty significant uptick in profitability in the fourth quarter. And kind of what enables that?
Speaker #5: Yeah , I mean , look , I think as we've talked about Seth , we expected to see a progression , you know , as we go through the course of the year , the fourth quarter will be strong on the volume side , which it normally is .
Speaker #5: I think , you know , we you know , I mean , there are still challenges , but the team is , you performing better and better every quarter around getting flow and and largely you know , we'll see a nice significant bump in in volume in the quarter .
Speaker #5: And that will drive good margin with it .
Speaker #13: Right okay okay . Excellent . And then maybe one more on on MV 75 . When we think about the LRP units and bringing those forward , are there kind of additional contractual provisions that you can get to protect the company from concurrency risk .
Speaker #5: Well, so the LRP have always been late in there. So, I don't think there's anything that would change contractually on that.
Speaker #5: You know , to be honest , we're not that worried about the risk of that . Again , the base configuration of the aircraft is really solid .
Speaker #5: Obviously it's a derivative off of what we did on V2 80 . There are changes , but you know , we know what those are .
Speaker #5: You know , we are fabricating right now . The first , you know , of the of the prototype aircraft . So you know , again , by the time we are building that first aircraft , you know , we will have built obviously , you know , the original V2 80 , but we will have built eight aircraft , you know , the six MD aircraft and the two light aircraft .
Speaker #5: So and , you know , certainly there's an enormous amount of ground testing , component level testing , you know , stuff that's , you know , we already are , are fabricating and building parts .
Speaker #5: So , you know , I think we feel very good about the , the things we need to learn any , any issues that we run into .
Speaker #5: You know , we're going to run into here on these initial MD aircraft long before we get to where we're building that first aircraft .
Speaker #13: Great . Thanks . That's very helpful .
Speaker #4: Your next question comes from the line of Ron Epstein from Bank of America . Your line is open .
Speaker #14: Hey, good morning, guys.
Speaker #5: Ron .
Speaker #14: Yeah , maybe just circling back on systems . How is the unmanned portfolio doing when you look across the you've got , you know , unmanned land system stuff and shadow and Aerosonde and some other stuff you've seen such kind of surging demand for unmanned stuff .
Speaker #14: 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 , you know , expand in that market ?
Speaker #5: So I would say that , you know , Ron , the the Aerosonde program is going well , right ? You know , we went through a bit of a challenge as Afghanistan came out .
Speaker #5: We had a lot of aircraft that were deployed over there . Those have largely been redeployed to other theatres . Other applications . A lot of marine applications .
Speaker #5: So that that business is doing very well . That is where , you know , the next significant tranche really was going to be around Ftos with that program not happening , at least in the in the way it was envisioned .
Speaker #5: You know , that that was a hit . But look , the reality is , you know , these brigades need ISR . And so what really changed on Ftos is the chief understandably frustrated over how long it was taking to get stuff out there , has basically said , look , you got to take these systems .
Speaker #5: You know , directly to to the brigades and they'll drive that demand . So that's what we're doing right now . And that's why I say , well , ftos didn't happen as a program .
Speaker #5: I do think that we will see a number of opportunities as we go out and , you know , sell that technology directly out to the warfighter .
Speaker #5: So there's also been some international opportunities . There's things out there with Customs and Border Patrol . So , you know , in terms of our core platform today from Aerosonde and then transitioning into what was basically the FCA's configuration , I believe we're going to start to see some nice growth in there in terms of new platforms under development .
Speaker #5: But part of what we did with the aviation segment is , you know , that team in Pipistrel has been developing this unmanned cargo aircraft , what we call the Nuva 300 , that's now into flight test .
Speaker #5: We've already done the flight testing on article one . We're about to do the final build out on on article two , which has our own flight control fly by wire systems and such .
Speaker #5: 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 SHADO and those other unmanned platforms will basically have responsibility to take that kind of product to market .
Speaker #5: And so it's the unmanned cargo . We also have a nice niche that we've , you know , Pipistrel has for a long time and in high altitude , unmanned , you know , sort of long duration surveillance products , you know , that's a product we already have today .
Speaker #5: 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 .
Speaker #14: Got it. Got it. Yeah. Thank you very much.
Speaker #4: Your next question comes from the line of Christine Liwag from Morgan Stanley . Your line is open .
Speaker #15: Hey , good morning everyone . And Scott , you know , congrats on your next chapter . I guess , you know , over the years there's always been discussions and conversations with you about the broader Textron portfolio and efficient all belong together .
Speaker #15: 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.
Speaker #15: I wanted to check with you to see if this management change also signals a reevaluation of the portfolio. Once again, how do you think about it?
Speaker #15: Now .
Speaker #5: 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 .
Speaker #5: I think to your point , we don't have a burning platform , but would we look at , you know , either disposing or acquiring .
Speaker #5: Of course we would . So , you know , that's a process that has been , you know , ongoing for some time .
Speaker #5: Obviously , you know , we've just did the dispositions around the powersports business earlier this year . That was something we thought we we really needed to do and wanted to do to help position the company going forward .
Speaker #5: But we're we continue to look at , you know , other opportunities . And I expect we'll continue to do that . You know , regardless of the leadership change .
Speaker #15: Great . Thanks , Scott .
Speaker #16: Sure .
Speaker #4: Your next question comes from the line of Douglas Harned from Bernstein . Your line is open .
Speaker #17: Good morning . Thank you . If you if you look at the mix of deliveries across business jets , it's been pretty stable over the last two years .
Speaker #17: I mean , I would have expected more of a shift toward the latitude and longitude , although that might have been an incorrect assumption .
Speaker #17: 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?
Speaker #5: 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 .
Speaker #5: The , you know , the demand for whether it's a longitude , latitude , you know , whatever has been pretty stable . These things are often influenced by , you know , new products .
Speaker #5: So I would say , for instance , when we launched the new Cj4 , you know , Gen two , we saw a very strong spike in order activity , which kind of puts that lead time , you know , well out there because people were pretty excited in that piece of the market about that product .
Speaker #5: And we've seen the same thing with things like the RC3 Gen two . Certainly the ascend . So , you know , there's I would say the end market is , is , is stable .
Speaker #5: 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 products, of which we've had quite a bit.
Speaker #17: And then when you look , you've talked , 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 net worth individuals ?
Speaker #17: Have you seen any shifts there ? Because obviously there's been a lot of it's been a very dynamic sort of economic outlook over the last nine months .
Speaker #5: Yeah , it's actually pretty remarkable . Despite all of the noise of which there plenty for sure . You know , we're we're not seeing it impact that market .
Speaker #5: 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 , you know , whether it's 18 months or two years , you know , people are kind of looking beyond what current noise is , is in the marketplace because they're not going to take delivery of that new aircraft for 18 months or so .
Speaker #5: So I think it's had a little bit of a muting , you know , effect on that . So but yeah , remarkably , despite all of the of the noise that's going around , it's the demand is is stable .
Speaker #17: Very good . Thank you .
Speaker #4: Ladies and gentlemen this concludes the Textron third quarter 2020 earnings call . Thank you for joining us today . You may now disconnect .