Textron
Annual Report 2024

Plain-text annual report

202 4 ANNUAL REPORT TEXTRON AVIATION Textron Aviation is home to the Beechcraft® and Cessna® aircraft brands and is a leader in general aviation through two principal product lines: aircraft and aftermarket parts and services. Aircraft includes sales of business jets, turboprop aircraft, military trainer and defense aircraft and piston engine aircraft. Aftermarket parts and services includes commercial parts sales and maintenance, inspection and repair services, and advanced flight training devices. BELL Bell is a leading supplier of military and commercial helicopters, tiltrotor aircraft and related spare parts and services. Bell supplies advanced military helicopters and tiltrotors to the U.S. Government and non-U.S. military customers and commercially certified helicopters to corporate, private, law enforcement, utility, public safety, emergency medical helicopter operators, and U.S. and foreign governments. Bell provides support and service for an installed base of approximately 13,000 helicopters. INDUSTRIAL Our industrial segment designs and manufactures a variety of products within the Kautex and Textron Specialized Vehicles businesses. Kautex is a leader in designing and manufacturing plastic fuel systems for automobiles and light trucks, along with other automotive systems and components. Textron Specialized Vehicles products include golf cars, off-road utility vehicles, powersports products, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment and specialized turf-care vehicles. TEXTRON SYSTEMS Textron Systems’ businesses develop, manufacture and integrate products and services for U.S. and international military, government and commercial customers to support defense, homeland security, aerospace, infrastructure protection and other customer missions. Product and service offerings include electronic systems and solutions, advanced marine craft, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, unmanned aircraft systems and both manned and unmanned armored and specialty vehicles. TEXTRON eAVIATION Textron eAviation is focused on research and development initiatives related to sustainable aviation solutions and includes Pipistrel, a manufacturer of light aircraft. Pipistrel offers a family of light aircraft and gliders with both electric and combustion engines. Pipistrel’s Velis Electro is the world’s first, and currently only, electric aircraft to receive full type certification from the European Union Aviation Safety Agency and from the UK Civil Aviation Authority. In 2024, the FAA granted a light-sport aircraft airworthiness exemption for the Pipistrel Velis Electro, allowing flight training in an electric aircraft within the United States. FINANCE Our Finance segment, operated by Textron Financial Corporation (TFC), is a commercial finance business that provides financing solutions primarily to purchasers of new and pre-owned aircraft and Bell helicopters. For more than 60 years, TFC has played a key role for Textron customers around the globe. GLOBAL NETWORK OF BUSINESSES Textron is known around the world for its powerful brands of aircraft, defense and industrial products that provide customers with groundbreaking technologies, innovative solutions and first-class service. SELECTED YEAR-OVER-YEAR FINANCIAL DATA Textron 2024 Annual Report 1 (Dollars in Millions, Except Per Share Amounts) 2024 2023 Total Revenues $13,702 $13,683 Total Segment Profit1 1,200 1,327 Income from Continuing Operations—GAAP 825 922 Adjusted Income from Continuing Operations—Non-GAAP1 1,042 1,127 PER SHARE OF COMMON STOCK Common Stock Price at Year-End $ 77.21 $ 80.42 Diluted Income from Continuing Operations—GAAP 4.34 4.57 Adjusted Diluted Income from Continuing Operations—Non-GAAP1 5.48 5.59 COMMON SHARES OUTSTANDING (In Thousands) Diluted Average 190,307 201,774 Year-End 182,964 192,898 FINANCIAL POSITION Total Assets $16,838 $16,856 Manufacturing Group Debt 3,247 3,526 Finance Group Debt 341 348 Shareholders’ Equity 7,204 6,987 Manufacturing Group Debt-to-Capital (Net of Cash) 21% 17% Manufacturing Group Debt-to-Capital 31% 34% KEY PERFORMANCE METRICS Net Cash from Operating Activities of Continuing Operations for the Manufacturing Group—GAAP $ 1,008 $ 1,270 Manufacturing Cash Flow Before Pension Contributions—Non-GAAP1 692 931 1. Segment Profit, Adjusted Income from Continuing Operations, Adjusted Diluted Earnings Per Share and Manufacturing Cash Flow Before Pension Contributions are Non-GAAP Financial Measures. See page 7 for a Reconciliation to GAAP. Commercial 75% U.S. Government 25% 2024 TOTAL REVENUES BY CUSTOMER U.S. 71% Europe 9% Other International 20% 2024 TOTAL REVENUES BY REGION Textron Aviation 38.6% Bell 26.1% Industrial 25.6% Textron Systems 9.1% Finance 0.4% Textron eAviation 0.2% 2024 TOTAL REVENUES BY SEGMENT 2024 WAS A YEAR OF ACHIEVEMENTS AND CHALLENGES FOR OUR COMPANY. We saw strong demand for our commercial products at Textron Aviation and Bell and made progress on several important military programs, including achieving Milestone B approval on the Future Long Range Assault Aircraft (FLRAA) program. As a result of robust demand in our aerospace and defense businesses, we ended the year with a total company backlog of $17.9 billion, up $4 billion from 2023. We faced a strike at Textron Aviation and difficult end markets in our Industrial segment. While the strike was unfortunate and adversely impacted the business’s ability to meet its production and delivery schedules during the latter part of the year, we were able to continue to work with suppliers, resulting in improved parts flow that should improve plant efficiency in the future. We have reached agreement with our employee union on a new five-year contract. To address the challenges in our Industrial segment, we focused on our cost structure and began a strategic review of the powersports product line. DEVELOPING AND REFRESHING COMMERCIAL PRODUCTS Throughout the year, Textron Aviation continued to see strong demand across all product lines. Backlog grew throughout the year, ending at $7.8 billion, an increase of $676 million from 2023. Building upon a strategy of continually refreshing its product lineup, Textron Aviation announced planned Gen3 platform upgrades to its Citation M2, CJ3 and CJ4 models. All three Gen3 aircraft will include the revolutionary Garmin Emergency Autoland technology, bringing peace of mind to pilots and passengers in this single pilot operator segment. FELLOW SHAREHOLDERS, 2 Textron 2024 Annual Report First signed purchase agreement for Bell 525 FIRST QUARTER Pipistrel Velis Electro receives light-sport aircraft airworthiness exemption from FAA Foreign Military Sales award for production and delivery of 12 AH-1Z helicopters for the government of Nigeria SCOTT C. DONNELLY Chairman and Chief Executive Office SECOND QUARTER First deliveries of Multi- Engine Training Systems (METS) Beechcraft King Air 260 aircraft to the U.S. Navy Textron eAviation completes acquisition of Amazilia Aerospace Modernized Royal Canadian Air Force CH-146 Griffon helicopter makes first flight at Bell’s Commercial Centre of Excellence in Mirabel Textron 2024 Annual Report 3 Second Citation Ascend flight test article joins the program The Citation Ascend, a state-of-the-art business jet announced in 2023, added a second flight test article to the program as certification momentum builds for the aircraft. The flight test program logged more than 700 hours as the aircraft prepares for entry into service anticipated in 2025. The Beechcraft Denali has logged more than 2,500 hours of flight testing and began its certification flight test phase following the Federal Aviation Administration’s Type Inspection Authorization. Demonstrating its versatility, the first Cessna SkyCourier equipped with a Combi interior conversion option—the ability to transport passengers and cargo at the same time—was certified by the FAA and delivered to a customer in Alaska. Along with the passenger and freighter variants, the SkyCourier has become an ideal aircraft for customers around the world who serve a variety of missions. The SkyCourier also received type certifications from regulatory agencies in Australia, Canada and the Philippines, expanding the aircraft’s market. Bell saw steady order growth for its commercial aircraft across market segments. New commercial orders included the first order for the Bell 525 to Equinor, Norway’s state energy company, which signed an agreement to purchase 10 Bell 525 aircraft. The Bell 525 incorporates fly-by-wire flight controls and provides enhanced safety capabilities, reliability and optimized operation. Bell also announced the signed purchase agreement for the sale of 15 Bell 407GXis with IFR configuration kits to Global Medical Response, bringing its total fleet to 250 Bell helicopters. At Textron eAviation, we continued our investments in electric and hybrid aviation platforms. We made advancements in both our Nuuva hybrid-electric vertical takeoff and landing (VTOL) and Nexus electric vertical takeoff and landing (eVTOL) programs with the Nuuva’s first hover flight completed in January 2025. With the acquisition of Amazilia Aerospace, a respected developer of digital flight control, flight guidance and vehicle management systems for civil manned and unmanned aircraft, Textron eAviation enhanced its internal capabilities in these critical technologies. The SkyCourier has become an ideal aircraft for customers around the world who serve a variety of missions. 4 Textron 2024 Annual Report All-electric fleet of Jacobsen mowers maintain 2024 Summer Games golf course venue 400th delivery of Cessna Citation Latitude Bell delivers remaining five Bell 505 aircraft to the Royal Jordanian Air Force, completing order of 10 aircraft U.S. Army’s Milestone B decision officially establishes FLRAA as Program of Record THIRD QUARTER In March, Pipistrel was granted a light-sport aircraft airworthiness exemption by the FAA for its Velis Electro, which allows U.S. flight schools to use the lower-cost and more sustainable electric aircraft in their flight training programs. In July, Jacobsen maintained the golf course in Paris for the Summer Games with its fleet of ELiTE electric mowers. This marked the first all-electric fleet in use at the Games and the first time an all-electric fleet was used to maintain an entire course. The success of the ELiTE mowers was an opportunity to showcase our commitment to developing products that provide greener solutions for golf courses around the world. Kautex won new contracts with automotive OEM customers, successfully securing 10 contract awards for its hybrid electric fuel systems. MILITARY PROGRAM WINS AND KEY MILESTONES ACHIEVED The U.S. Army’s approval of Milestone B for the FLRAA program marked the beginning of the weapon system’s status as a Program of Record and transitioned the program to its Engineering and Manufacturing Development phase. Bell continued to make significant investments to support the future growth of the program, including the announcement to insource the fuselage assembly at our new Bell Wichita facility. Bell’s H-1 program entered a new chapter as the first AH-1Z arrived at the Bell Amarillo Assembly Center for the Structural Improvement Electrical Power Upgrade modification. The modifications will optimize the aircraft to improve mission capabilities, aircrew safety, and interoperability by increasing the electrical power capacity on the aircraft and support the integration of additional cabin capabilities. Bell also received a Foreign Military Sales contract award from the U.S. Department of Defense for the production and delivery of 12 AH-1Z helicopters for the government of Nigeria. In addition, Bell was downselected as one of two companies to develop a prototype High-Speed VTOL aircraft for the U.S. military as part of the DARPA Speed and Runway Independent Technologies (SPRINT) X-Plane program. Textron Aviation Defense delivered 11 Multi-Engine Training Systems (METS) Beechcraft King Air 260 aircraft to the U.S. Navy. The deliveries are part of a total Bell saw steady order growth for its commercial aircraft across market segments. of 62 aircraft currently contracted by Naval Air Systems Command, continuing our long-standing role in providing this training platform for Navy, Marine Corps and Coast Guard aviators. Textron Systems delivered the 12th Ship-to-Shore Connector (SSC) craft to the U.S. Navy and received an award from Naval Sea Systems Command for the next production lot of nine SSC craft with a total contracted value of $960 million. The Navy also awarded Textron Systems a contract for Mine Sweeping Payload Delivery Systems production, spares, and engineering services to support the Navy’s Mine Countermeasure Mission package. This award allows Textron Systems’ Common Unmanned Surface Vehicle (CUSV) to complete mine sweeping missions semi-autonomously and advance the CUSV system’s capabilities. Textron Systems advanced on key program pursuits. We completed Option 3 of the Army’s Future Tactical Uncrewed Aircraft Systems (FTUAS) program, and made significant progress on Option 4 by delivering a production representative Aerosonde® Mk. 4.8 VTOL system to the U.S. Army. During the year, the company announced the delivery of two RIPSAW® M3 prototype vehicles to the U.S. Army for the Robotic Combat Vehicle (RCV) Phase I: Platform Prototype competitive program. A rugged and reliable RCV platform, the vehicle is designed to meet Army requirements while preserving transportability and mission versatility. Working as part of Team Lynx, Textron Systems supported the Detailed Design and prototype phase of the XM30 program. PIECES IN PLACE FOR 2025 We concluded 2024 with a strong backlog and solid demand in our aerospace and defense businesses. Combined with our continued strategic investments in new product development, improved manufacturing capabilities and a talented workforce of 34,000 people, we are well positioned for a successful 2025. On behalf of Textron’s Board of Directors, we thank you for your continued support of our company. SCOTT C. DONNELLY Chairman and Chief Executive Officer Textron 2024 Annual Report 5 Two RIPSAW® M3 prototype vehicles delivered to the U.S. Army as part of the competitive RCV program Textron Systems delivers 12th SSC to the U.S. Navy Bell and Global Medical Response sign purchase agreement for 15 Bell 407GXis with option for nine additional aircraft Transport Canada Civil Aviation certifies Cessna SkyCourier Textron Aviation introduces Gen3 aircraft FOURTH QUARTER Textron Systems advanced on key program pursuits. SCOTT C. DONNELLY (1) Chairman, President and CEO Textron Inc. RICHARD F. AMBROSE (2) (4) Executive Vice President, Space (Retired) Lockheed Martin Corporation KATHLEEN M. BADER (2) (3) President and CEO (Retired) NatureWorks LLC R. KERRY CLARK (1) (2) (3) (5) Chairman and CEO (Retired) Cardinal Health, Inc. MICHAEL X. GARRETT (2) (3) General (Retired) U.S. Army DEBORAH LEE JAMES (1) (4) 23rd Secretary of the U.S. Air Force (Retired) THOMAS A. KENNEDY (2) (4) Executive Chairman (Retired) Raytheon Technologies LIONEL L. NOWELL III (1) (2) Senior Vice President and Treasurer (Retired) PepsiCo, Inc. JAMES L. ZIEMER (2) (4) President and CEO (Retired) Harley-Davidson, Inc. MARIA T. ZUBER (1) (3) Presidential Advisor for Science and Technology Policy Massachusetts Institute of Technology Numbers Indicate Committee Memberships: (1) Executive Committee: Chair, Scott C. Donnelly (2) Audit Committee: Chair, Lionel L. Nowell III (3) Nominating and Corporate Governance Committee: Chair, Maria T. Zuber (4) Organization and Compensation Committee: Chair, Deborah Lee James (5) Lead Director: R. Kerry Clark SCOTT C. DONNELLY Chairman, President and Chief Executive Officer Textron Inc. JULIE G. DUFFY Executive Vice President and Chief Human Resources Officer Textron Inc. E. ROBERT LUPONE Executive Vice President, General Counsel, Secretary and Chief Compliance Officer Textron Inc. DAVID ROSENBERG Executive Vice President and Chief Financial Officer Textron Inc. LISA M. ATHERTON President and CEO Bell RONALD DRAPER President and CEO Textron Aviation TOM HAMMOOR President and CEO Textron Systems ROBERT HOTALING President Textron Financial JÖRG RAUTENSTRAUCH President and CEO Industrial Segment and Kautex ROB SCHOLL President and CEO Textron Specialized Vehicles KRIYA SHORTT President and CEO Textron eAviation MARK S. BAMFORD Vice President and Corporate Controller Textron Inc. ROBERT D. EDGAR Vice President – Textron Audit Services Textron Inc. JANET S. FOGARTY Vice President and Deputy General Counsel Textron Inc. DANA L. GOLDBERG Vice President – Tax Textron Inc. SCOTT P. HEGSTROM Vice President – Investor Relations and Mergers & Acquisitions and Strategy Textron Inc. SHANNON H. HINES Senior Vice President – Government Affairs & Washington Operations Textron Inc. TODD A. KACKLEY Vice President and Chief Information Officer Textron Inc. LAWRENCE J. LA SALA Vice President and Deputy General Counsel – Litigation Textron Inc. ERIC SALANDER Vice President and Treasurer Textron Inc. BOARD OF DIRECTORS EXECUTIVE OFFICERS SEGMENT AND BUSINESS UNIT PRESIDENTS CORPORATE OFFICERS LEADERSHIP 6 Textron 2024 Annual Report FOOTNOTE TO SELECTED YEAR-OVER-YEAR FINANCIAL DATA (CONTINUED FROM PAGE 1) NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP Textron 2024 Annual Report 7 SEGMENT PROFIT Segment profit is an important measure used by our chief operating decision maker for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes the non-service components of pension and postretirement income, net; LIFO inventory provision; intangible asset amortization; interest expense, net for Manufacturing group; certain corporate expenses; gains/losses on major business dispositions; special charges; and an inventory valuation charge to write down production-related powersports inventory. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. ADJUSTED INCOME FROM CONTINUING OPERATIONS AND ADJUSTED DILUTED EARNINGS PER SHARE Adjusted income from continuing operations and adjusted diluted earnings per share exclude LIFO inventory provision, net of tax; intangible asset amortization, net of tax; special charges, net of tax; and gains/losses on major business dispositions, net of tax. LIFO inventory provision is excluded to improve comparability with other companies in our industry who have not elected to use the LIFO inventory costing method. Intangible asset amortization is excluded to improve comparability as the impact of such amortization can vary substantially from company to company depending upon the nature and extent of acquisitions, and exclusion of this expense is consistent with the presentation of non-GAAP measures provided by other companies within our industry. Management believes that it is important for investors to understand that these intangible assets were recorded as part of purchase accounting and contribute to revenue generation. We consider items recorded in special charges, such as enterprise-wide restructuring, certain asset impairment charges, and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. ADJUSTED INCOME FROM CONTINUING OPERATIONS AND ADJUSTED DILUTED EARNINGS PER SHARE GAAP TO NON-GAAP RECONCILIATION (Dollars in Millions, Except Per Share Amounts) 2024 2023 INCOME FROM CONTINUING OPERATIONS—GAAP $ 825 $ 922 Add: LIFO inventory provision, net of tax 133 81 Intangible asset amortization, net of tax 26 30 Special charges, net of tax 58 94 ADJUSTED INCOME FROM CONTINUING OPERATIONS—NON-GAAP $1,042 $1,127 DILUTED EARNINGS PER SHARE: INCOME FROM CONTINUING OPERATIONS—GAAP $ 4.34 $ 4.57 Add: LIFO inventory provision, net of tax 0.70 0.40 Intangible asset amortization, net of tax 0.14 0.15 Special charges, net of tax 0.30 0.47 ADJUSTED INCOME FROM CONTINUING OPERATIONS—NON-GAAP $ 5.48 $ 5.59 MANUFACTURING CASH FLOW BEFORE PENSION CONTRIBUTIONS Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following: • Deducts capital expenditures and includes proceeds from insurance recoveries and the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations; • Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations; • Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period. While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure. MANUFACTURING CASH FLOW BEFORE PENSION CONTRIBUTIONS GAAP TO NON-GAAP RECONCILIATION Millions) (In Millions) 2024 2023 NET CASH FROM OPERATING ACTIVITIES—GAAP $1,008 $1,270 Less: Capital expenditures (364) (402) Plus: Total pension contribution 44 45 Proceeds from sale of property, plant and equipment 4 18 MANUFACTURING CASH FLOW BEFORE PENSION CONTRIBUTIONS—NON-GAAP $ 692 $ 931 8 Textron 2024 Annual Report TEXTRON’S DIVERSE PRODUCT PORTFOLIO Citation Longitude® Citation Latitude® Beechcraft® Denali TEXTRON AVIATION E-Z-GO® RXV® ELiTE® Textron GSE TUG® Endurance® INDUSTRIAL Pipistrel Velis Electro Pipistrel Panthera Pipistrel Nuuva V300 TEXTRON eAVIATION Ship-to-Shore Connector Aerosonde® Mk. 4.8 VTOL UAS Cottonmouth® TEXTRON SYSTEMS Bell FLRAA Bell 429 BELL CMV-22 Osprey Kautex PentatonicTM Cell to Pack Battery Enclosure Textron 2024 Annual Report 1 (NT
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 Item 10. 71 Item 11. Business Risk Factors /nresolved Staff Comments Cybersecurity Properties Legal Proceedings Mine Safety Disclosures Market for RegistrantXs Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 5Reserved6 ManagementXs Discussion and Analysis of Financial Condition and Results of Operations +uantitative and +ualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes In and Disagreements 1ith Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Directors, Executive Officers and Corporate Governance Executive Compensation 71 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 71 Item 13. 71 Item 14. 71 #%T
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%eA=C@1eA At December 2, 2024, we employed approximately 34,000 employees worldwide, with approximately 0 located in the /.S. and the remainder located outside of the /.S. Approximately 7,400, or 2, of our /.S. employees, most of whom work for our Bell and Textron Aviation segments, are represented by unions under collective bargaining agreements, and certain of our non- /.S. employees are represented by organiQed works councils. From time to time, our collective bargaining agreements expire. "istorically, we have been successful in negotiating renewals to expiring agreements without any material disruption of operating activities however, on September 21, 2024, Textron AviationXs largest union reAected a proposed new contract and initiated a strike. The strike impacted approximately 5,000 of Textron AviationXs employees at its manufacturing, parts and distribution and service center facilities in 1ichita, Kansas. On October 20, 2024, Textron Aviation and the union reached an agreement and a new five-year labor contract was ratified. Our success is highly dependent upon our ability to hire, train and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers. 1e need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management. In order to attract and retain highly skilled employees, we offer comprehensive compensation and benefit programs, career opportunities and an engaging, inclusive environment where employees are treated with dignity and respect. -)l<0 )n, %).--lo8m-n< Our talent development programs are designed to prepare our employees at all levels to take on new career and growth opportunities at Textron. Leadership, professional and functional training courses are tailored for employees at each stage of their careers and include a mix of enterprise-wide and business unit-specific programs. Textron /niversity, an internal corporate function, provides (i) facilitated face-to-face professional and leadership development programs, (ii) web-based general and specialiQed functional and technical courses and (iii) an online portal to access advanced skills technical training, manage recertification of existing qualifications and other career planning tools and resources. The current and future talent needs of each of our businesses are assessed annually through a formal talent review process which enables us to develop leadership succession plans and provide our employees with potential new career opportunities. In addition, leaders from functional areas within each business belong to enterprise-wide councils that conduct annual talent reviews. These processes enable us to fill talent needs by matching employees who are ready to assume significant leadership roles with opportunities that best fit their career path, which may be in other businesses within the enterprise. 1e believe by employing highly talented employees who feel valued, respected and are able to contribute fully, we will improve performance, innovation, collaboration and talent retention, all of which contributes to stronger business results and reinforces our reputation as leaders in our industries and communities. For discussion of certain risks relating to human capital management, see the $is3s $-l)<-, a1e
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ur success is highly dependent on our aility to hire train and retain a *ualified wor$force. Our success is highly dependent upon our ability to hire, train and retain a workforce with the skills necessary for our businesses to develop and manufacture the products desired by our customers. 1e need highly skilled personnel in multiple areas including, among others, engineering, manufacturing, information technology, cybersecurity, flight operations, business development and strategy and management. Because many of our businesses experience cyclical market demand, they face challenges in maintaining their workforce at levels aligned with market demand which in the past has necessitated workforce reductions at some of our businesses as demand decreased. Conversely, our businesses sometimes need to increase the siQe of their workforce in order to keep pace with production needs due to increased customer demand. Furthermore, for our defense businesses the uncertainty of being awarded follow-on contracts and the related timing can also present difficulties in matching workforce siQe with contract needs. Such challenges in aligning the siQe of our businessesX workforces with current or future business needs have resulted and may, in the future result in increased costs, production delays or other adverse impacts on our business and results of operations. In addition, from time to time we face challenges that may impact employee retention, such as workforce reductions and facility consolidations and closures, and some of our most experienced employees are retirement-eligible which may adversely impact retention. To the extent that we lose experienced personnel through retirement or otherwise, it is critical for us to develop other employees, hire new qualified employees and successfully manage the transfer of critical knowledge. Competition for skilled employees is intense, and we may incur higher labor, recruiting and/or training costs in order to attract and retain employees with the requisite skills. 1e may not be successful in hiring or retaining such employees which could adversely impact our business and results of operations. he increasing costs of certain employee and retiree enefits could adversely affect our results. Our results of operations and cash flows may be adversely impacted by increasing costs and funding requirements related to our employee benefit plans. The obligation for our defined benefit pension plans is driven by, among other things, our assumptions of the expected long-term rate of return on plan assets and the discount rate used for future payment obligations. Additionally, as part of our annual evaluation of these plans, significant changes in our assumptions, due to changes in economic, legislative and/ or demographic experience or circumstances, or changes in our actual investment returns could negatively impact the funded status of our plans requiring us to substantially increase our pension liability with a resulting decrease in shareholdersX equity. Also, changes in pension legislation and regulations could increase the cost associated with our defined benefit pension plans. ur usiness could e adversely affected y stri$es or wor$ stoppages and other laor issues. Approximately 7,400, or 2, of our /.S. employees are represented by labor unions under various collective bargaining agreements with varying durations and expiration dates, and many of our non-/.S. employees are represented by organiQed councils. From time to time, our collective bargaining agreements expire and are subAect to renegotiation at that time. 1e may not be able to negotiate successor collective bargaining agreements upon expiration without experiencing labor disputes, including strikes or work stoppages, or we may be unable to renegotiate such contracts on favorable terms. For example, on September 21, 2024, Textron AviationXs largest union reAected a proposed new contract and engaged in a strike that had an adverse effect on Textron Aviations ability to meet its production and delivery schedules, and negatively impacted revenues and segment profit in 2024. If we experience any extended interruption of operations at any of our facilities as a result of labor disputes, strikes or other work stoppages, our business, financial condition or results of operations could be adversely affected. In addition, the workforces of many of our suppliers and customers are represented by labor unions. 1ork stoppages or strikes at the plants of our key suppliers could disrupt our manufacturing processes similar actions at the plants of our customers could result in delayed or canceled orders for our products. Any of these events could adversely affect our results of operations. tem

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=mme-:si/0< o. A*-:s-+=:ie@tieA On December 2, 2024, we operated a total of 56 plants located throughout the /.S. and 44 plants outside the /.S. 1e own 60 plants and lease the remainder for a total manufacturing space of approximately 23.6 million square feet. 1e consider the productive capacity of the plants operated by each of our business segments to be adequate. 1e also own or lease offices, warehouses, training and service centers and other space at various locations. In general, our facilities are in good condition, are considered to be adequate for the uses to which they are being put and are substantially in regular use. tem

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#@=1ee2i<5A 1e are subAect to actual and threatened legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions government contracts alleged lack of compliance with applicable laws and regulations disputes with suppliers, production partners or other third parties product liability patent and trademark infringement employment disputes and environmental, health and safety matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subAect to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. /nder federal government procurement regulations, certain claims brought by the /.S. Government could result in our suspension or debarment from /.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations. tem

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#la< September 29, 2024 T November 2, 2024 500  2.32 500 17,1 November 3, 2024 T November 30, 2024 1,475 4. 1,475 16,406 December 1, 2024 T December 2, 2024 20 0.60 20 15,56 Total 2,795  3.17 2,795  &0-s- s0):-s ?-:- 8=:+0)s-, 8=:s=)n< -, on =lA    *A o=: o):, o. i:-+6 The following graph compares the total return on a cumulative basis at the end of each year of 100 invested in our common stock on December 31, 2019 with the Standard  PoorXs (SP) 500 Stock Index, the SP 500 Aerospace  Defense (AD) Index and the SP 500 Industrials Index, all of which include Textron. The values calculated assume dividend reinvestment. Textron Inc. SP 500 SP 500 AD SP 500 Industrials 75.00 100.00 125.00 150.00 175.00 200.00             Textron Inc.  100.00  10.62  173.72  159.50  11.37  174.29 SP 500 100.00 11.40 152.39 124.79 157.59 199.99 SP 500 AD 100.00 3.94 95.03 111.54 119.09 13.1 SP 500 Industrials 100.00 111.06 134.52 127.15 150.20 17.3 tem

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&e1C@itieA The following provides information about our fourth quarter 2024 repurchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: 20 Textron 2024 Annual Report S Generated 1.0 billion of net cash from operating activities from our manufacturing businesses. S Invested 491 million in research and development proAects and 364 million in capital expenditures. S Returned 1.1 billion to our shareholders through the repurchase of 12.9 million shares of our common stock. For an overview of our business segments, including a discussion of our maAor products and services, refer to Item 1. Business. A discussion of our financial condition and operating results for 2024 compared with 2023 is provided below, while a discussion of 2023 compared with 2022 can be found in Item 7. ManagementXs Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 30, 2023. In November 2023, the Financial Accounting Standards Board issued Accounting Standard /pdate (AS/) No. 2023-07, %-/m-n< $-8o:-m-ne@ati=e@ati=meeee1ial
6a@5eA Special charges of 7 million and 126 million in 2024 and 2023, respectively, include restructuring activities and asset impairment charges as described in Note 15 to the Consolidated Financial Statements on page 62. N=<Ae@Di1e
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%eA=C@1eA Our financings are conducted through two separate borrowing groups. The Manufacturing group consists of Textron consolidated with its maAority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems, Industrial and Textron eAviation segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. 1e designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible products and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing groupXs activities, investors, rating agencies and analysts use different measures to evaluate each groupXs performance. To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements. AAeAAme Cash and equivalents  1,36  2,121 Debt 3,247 3,526 ShareholdersX equity 7,204 6,97 Capital (debt plus shareholdersX equity) 10,451 10,513 Net debt (net of cash and equivalents) to capital 21 17 Debt to capital 31 34 i Cash and equivalents  55  60 Debt 341 34 1e believe that our calculations of debt to capital and net debt to capital are useful measures as they provide a summary indication of the level of debt financing (i.e., leverage) that is in place to support our capital structure, as well as to provide an indication of our capacity to add further leverage. 1e expect to have sufficient cash to meet our needs based on our existing cash balances, the cash we expect to generate from our manufacturing operations and the availability of our existing credit facility. In addition to our manufacturing operating cash requirements, future material cash outlays include our contractual combined debt and interest payments for the Manufacturing group of 473 million in 2025, 457 million in 2026, 444 million in 2027 and 2.5 billion thereafter, and for the Finance group of 46 million in 2025, 20 million in 2026, 69 million in 2027 and 507 million thereafter. For the Manufacturing group, we also have purchase obligations that require material future cash outlays totaling 2.7 billion in 2025, 501 million in 2026 and 355 million thereafter. Purchase obligations include undiscounted amounts committed under contracts or purchase orders for goods and services with defined terms as to price, quantity and delivery dates, as well as property, plant and equipment. Approximately 2 of our purchase obligations represent purchase orders issued for goods and services to be delivered under firm contracts with the /.S. Government for which we have full recourse under customary contract termination clauses. i
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l=EA The cash flows from continuing operations for the Finance group as presented in our Consolidated Statements of Cash Flows are summariQed below: (In millions)       Operating activities    14  (7) Investing activities 3 11 100 Financing activities (16) (37) (216) The Finance groupXs cash flows from investing activities primarily included collections on finance receivables totaling 133 million and 169 million in 2024 and 2023, respectively, partially offset by finance receivable originations of 130 million and 160 million, respectively. Cash flows used in financing activities included payments on long-term and nonrecourse debt of 16 million and 37 million in 2024 and 2023, respectively. @e2it
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a>ital Textron has a senior unsecured revolving credit facility for an aggregate principal amount of 1.0 billion, of which 100 million is available for the issuance of letters of credit. 1e may elect to increase the aggregate amount of commitments under the facility to up to 1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a maAority of the commitments under the facility. At December 2, 2024 and December 30, 2023, there were no amounts borrowed against the facility and there were 9 million of outstanding letters of credit issued under the facility. 1e also maintain an effective shelf registration statement filed with the Securities and Exchange Commission that allows us to issue an unlimited amount of public debt and other securities. On March 1, 2024, we repaid our 350 million 4.30 Notes due March 2024. a
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l=EA Cash flows from continuing operations for the Manufacturing group as presented in our Consolidated Statements of Cash Flows are summariQed below: Textron 2024 Annual Report 27 (In millions)       Operating activities  1,015  1,267  1,490 Investing activities (24) (317) (447) Financing activities (1,454) (13) (1,091) Consolidated cash flows from operating activities were 1.0 billion in 2024, compared with 1.3 billion in 2023. The decrease of 252 million in cash flows was largely due to changes in working capital and lower earnings, partially offset by 161 million in lower net tax payments. Net income tax payments were 191 million and 352 million in 2024 and 2023, respectively. Pension contributions were 44 million and 45 million in 2024 and 2023, respectively. In 2024 and 2023, investing cash flows included capital expenditures of 364 million and 402 million, respectively, partially offset by net proceeds from corporate-owned life insurance policies of 5 million and 40 million, respectively. Cash flows used by financing activities in 2024 included 1.1 billion of share repurchases and payments on long-term debt of 377 million. In 2023, cash flows used by financing activities included 1.2 billion of share repurchases, partially offset by 34 million of net proceeds from the issuance of long-term debt. a>tiDe
ia o:-i/n +=::-n+A -@+0)n/- :is3 Foreign currency exchange contracts  (14)  (14)  31  1  1  30 In<-:-s< :)<- :is3 Debt (3,164) (2,99) (49) (3,520) (3,342) (54) i In<-:-s< :)<- :is3 Finance receivables 439 454 9 417 423 9 Debt (341) (311) U (34) (293) (1)  &0- >)l=- :-8:-s-n>lemeee@ati=e@
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A6a@e  4.33  4.56  4.01 See Notes to the Consolidated Financial Statements. =e@ati=@e6e@e6e@e6e Cash and equivalents  1,36  2,121 Accounts receivable, net 949 6 Inventories 4,071 3,914 Other current assets 67 57 T=tal
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e?CitG Common stock (14.0 million and 195.0 million shares issued, respectively, and 13.0 million and 192.9 million shares outstanding, respectively) 23 24 Capital surplus 1,960 1,910 Treasury stock (2) (165) Retained earnings 5,607 5,62 Accumulated other comprehensive loss (304) (644) T=tal
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a1tiDitieA Income from continuing operations AdAustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations: Non-cash items: Depreciation and amortiQation Deferred income taxes Asset impairments and powersports inventory charge Other, net Changes in assets and liabilities: Accounts receivable, net Inventories Other assets Accounts payable Other liabilities Income taxes, net Pension, net Captive finance receivables, net Other operating activities, net Net cash provided by operating activities of continuing operations Net cash used in operating activities of discontinued operations Net cash provided by operating activities aA6
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a1tiDitieA Income from continuing operations AdAustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations: Non-cash items: Depreciation and amortiQation Deferred income taxes Asset impairments and powersports inventory charge Other, net Changes in assets and liabilities: Accounts receivable, net Inventories Other assets Accounts payable Other liabilities Income taxes, net Pension, net Other operating activities, net Net cash provided by (used in) operating activities of continuing operations Net cash used in operating activities of discontinued operations Net cash provided by (used in) operating activities aA6
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i i              796  4  35  29  3  27 32 395 396 U U 1 (46) (1) (200) (2) (4) (20) 41  2 U U U 115 110 103 (13) (20) (9) (96) (9) (26) U U U (194) (359) (55) U U U 205 261 34 U 6 1 (69) 2 235 U U U 100 21 277 (5) (5) (7) (25) 5 1 (1) (1) U (225) (202) (165) U U U 24 2 7 U U U 1,00 1,270 1,461  14 (7) (1) (1) (2) U U U 1,007 1,269 1,459  14 (7) (364) (402) (354) U U U (13) (1) (202) U U U 5 40 23 U U U 4 1 22 U U U U U U 133 169 147 U U U (130) (160) (92) U U U U 2 45 (2) (345) (511) 3 11 100 (1) U (14) U U U U 34 U U U U (361) (7) (1) (16) (37) (216) (1,122) (1,16) (67) U U U  73 44 U U U (12) (16) (17) U U U (30) (6) (3) U U U (1,43) (776) (75) (16) (37) (216) (16) 10 (32) U U U (735) 15 41 (5) (12) (123) 2,121 1,963 1,922 60 72 195  1,36  2,121  1,963  55  60  72 38 Textron 2024 Annual Report N=teA
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leaAeA Other assets  360  371 Other current liabilities 55 55 Other liabilities 316 326 1eighted-average remaining lease term (in years) 10.0 10.3 1eighted-average discount rate 4.4 4.70 i 4.30 due 2024  U  350 3.75 due 2025 350 350 4.00 due 2026 350 350 3.65 due 2027 350 350 3.375 due 202 300 300 3.90 due 2029 300 300 3.00 due 2030 650 650 2.45 due 2031 500 500 6.10 due 2033 350 350 Other (weighted-average rate of 5.7 and 2.44, respectively) 97 26 Total Manufacturing group debt  3,247  3,526 Less: Current portion of long-term debt (357) (357) Total Long-term debt  2,90  3,169 i Variable-rate note due 2025 (weighted-average rate of 5.70 and 6.72, respectively)  25  25 Fixed-rate note due 2027 (4.40) 50 50 Floating Rate Junior Subordinated Notes due 2067 (6.52 and 7.3, respectively) 264 264 Other 2 9 Total Finance group debt  341  34 The following table shows required principal payments during the next five years on debt outstanding at December 2, 2024: (In millions)           Manufacturing group  357  355  355  375  301 Finance group 26 1 50 U U Total  33  356  405  375  301 Textron has a senior unsecured revolving credit facility for an aggregate principal amount of 1.0 billion, of which 100 million is available for the issuance of letters of credit. 1e may elect to increase the aggregate amount of commitments under the facility to up to 1.3 billion by designating an additional lender or by an existing lender agreeing to increase its commitment. The facility expires in October 2027 and provides for two one-year extensions at our option with the consent of lenders representing a maAority of the commitments under the facility. At December 2, 2024 and December 30, 2023, there were no amounts borrowed against the facility and there were 9 million of outstanding letters of credit issued under the facility. l=ati<5
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5@eeme Debt, excluding leases  (3,164)  (2,99)  (3,520)  (3,342) i Finance receivables, excluding leases 439 454 417 423 Debt (341) (311) (34) (293) Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2). The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2). Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utiliQing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowersX ability to make payments on a timely basis. N=te

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&t=19 1e have authoriQation for 15 million shares of preferred stock with a par value of 0.01 and 500 million shares of common stock with a par value of 0.125. Outstanding common stock activity is presented below: (In <0o=s)n,s)       Balance at beginning of year 192,9 206,161 216,935 Share repurchases (12,90) (16,169) (13,075) Share-based compensation activity 2,956 2,906 2,301 Balance at end of year 12,964 192,9 206,161 a@@e6e@e6eeee- in+om- (loss) ):- in+l=,-, in <0- +om8=<)@e6e-m-nital
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                Textron Aviation  4,624  4,542  136  13  13  164  160  152 Bell 2,992 2,69 122 119 0 6 9 90 Textron Systems 2,036 2,00 40 4 57 4 41 49 Industrial 2,37 2,520 62 91 7 70 9 93 Textron eAviation 26 27 4 4 1 7 7 2 Finance 60 661 U U U U U 1 Corporate 3,42 3,969 U 2 U 7 9 10 Total  16,3  16,56  364  402  354  32  395  397 At December 2, 2024 and December 30, 2023, 6 and 5, respectively, of our property, plant and equipment, net was located in the /nited States. N=te

%eDee Commercial  4,95  1,490  292  3,42  33  50  10,332 /.S. Government 299 2,09 949 33 U U 3,370 Total revenues  5,24  3,579  1,241  3,515  33  50  13,702 e=5@a>6i1
l=1ati=< /nited States  4,019  2,644  1,112  1,65  19  17  9,676 Europe 371 5 45 693 11 5 1,210 Other international 94 50 4 957 3 2 2,16 Total revenues  5,24  3,579  1,241  3,515  33  50  13,702   CAt=me@
tG>e Commercial  5,155  1,407  22  3,19  32  55  10,750 /.S. Government 21 1,740 953 22 U U 2,933 Total revenues  5,373  3,147  1,235  3,41  32  55  13,63 e=5@a>6i1
l=1ati=< /nited States  3,73  2,22  1,103  2,067  17  17  9,305 Europe 432 149 54 766 11 2 1,414 Other international 1,06 770 7 1,00 4 36 2,964 Total revenues  5,373  3,147  1,235  3,41  32  55  13,63   CAt=me@
tG>e Commercial  4,959  1,24  274  3,450  16  52  10,035 /.S. Government 114 1,07 9 15 U U 2,34 Total revenues  5,073  3,091  1,172  3,465  16  52  12,69 e=5@a>6i1
l=1ati=< /nited States  3,520  2,242  1,054  1,62  7  17  ,702 Europe 579 139 42 699 6 3 1,46 Other international 974 710 76 904 3 32 2,699 Total revenues  5,073  3,091  1,172  3,465  16  52  12,69 %emaieti=ti=e@i=2i1
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aAAetA Fair value of plan assets at beginning of year  ,413  7,943 Actual return on plan assets 06 32 Employer contributions 34 36 Benefits paid (454) (444) Foreign exchange rate changes and other (27) 46 Fair value of plan assets at end of year  ,772  ,413 Funded status at end of year  1,94  1,20  (121)  (136) Actuarial losses (gains) for 2024 and 2023 were largely the result of changes in the discount rate utiliQed. Amounts recogniQed in our balance sheets are as follows: #ee@i=2i1
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6a@5eA Special charges recorded in 2024 and 2023 by segment and type of cost are as follows: (In millions) &eDe@a<1e =AtA =ai@mea1t Defined benefits under salaried plans are based on salary and years of service. "ourly plans generally provide benefits based on stated amounts for each year of service. Our funding policy is consistent with applicable laws and regulations. In 2025, we expect to contribute approximately 50 million to our pension plans. Benefit payments provided below reflect expected future employee service, as appropriate, and are expected to be paid, net of estimated participant contributions. These payments are based on the same assumptions used to measure our benefit obligation at the end of 2024. 1hile pension benefit payments primarily will be paid out of qualified pension trusts, we will pay postretirement benefits other than pensions out of our general corporate assets. Benefit payments that we expect to pay on an undiscounted basis are as follows: Textron 2024 Annual Report 63 (In millions) &eDe@a<1e =AtA =-s s-l.ins=:-, li)*ili>leme=@t
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">i=@ti<5 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, proAections of any evaluation of effectiveness to future periods are subAect to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst  3oung LLP Boston, Massachusetts February 6, 2025 We have audited Textron Inc.’s internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), (the COSO criteria). In our opinion, Textron, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Balance Sheets of the Company as of December 28, 2024 and December 30, 2023, and the related Consolidated Statements of Operations, Comprehensive Income, Shareholders' Equity and Cash Flows for each of the three years in the period ended December 28, 2024, and the related notes and the financial statement schedule listed in the Index at Item 8 of the Company and our report dated February 6, 2025 expressed an unqualified opinion thereon. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Textron 2024 Annual Report 71 (a) As previously announced, Mr. Frank Connor will retire effective February 2, 2025 after having served as our CFO for fifteen years. During his tenure Mr. Connor has made significant contributions across Textron to drive financial and operational excellence. As part of his 2025 duties, Mr. Connor will oversee the completion of the CompanyXs post year-end financial reporting and related activities and will effect an orderly transition of the CFO role to Mr. Rosenberg and other succession planning within the finance organiQation. On February 5, 2025, the OrganiQation and Compensation Committee approved Mr. ConnorXs 2025 compensation to be set at 1,000,000, taking into account Mr. ConnorXs expected duties through his retirement. Mr. ConnorXs 2024 total target compensation was 6,300,000.W (b) None of our directors or executive officers adopted or terminated a VRule 10b5-1 trading arrangementW or adopted or terminated a Vnon-Rule 10b5-1 trading arrangementW (as such terms are defined in Item 40 of Regulation S-K) during the quarter ended December 2, 2024. tem

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T@ae<2e<1e The information appearing under VCORPORATE GOVERNANCE T Director IndependenceW and VEXEC/TIVE COMPENSATION T Transactions with Related PersonsW in the Proxy Statement for our 2025 Annual Meeting of Shareholders is incorporated by reference into this Annual Report on Form 10-K. tem

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