RTX Corporation (RTX) FY2025 10-K and Q3 FY2026 10-Q Summary

Business

From the FY2025 10-K, accession 0000101829-26-000006, with current-quarter mix from the Q3 2026 10-Q, accession 0000101829-26-000031.

RTX is one of the largest aerospace and defense companies in the world. It sells aircraft engines, aircraft systems and their aftermarket parts and services to airlines, aircraft makers and lessors, and it sells missiles, air and missile defense systems, radars, sensors and other defense equipment to the U.S. government and allied governments. Revenue comes from both original equipment (OE) and a large, recurring aftermarket. In 2025 net sales were $88.6 billion. Sales to the U.S. government were $33.3 billion, or 38% of the total, excluding foreign military sales routed through the U.S. government. International sales were $41.3 billion, or 47%. In the third quarter of 2026, commercial aerospace and other commercial sales were $12.2 billion of $25.0 billion in total sales. The rest went to the U.S. government ($8.9 billion), to foreign governments through U.S. foreign military sales ($2.1 billion) and to foreign governments directly ($1.7 billion).

The company has about 180,000 employees, including about 54,000 engineering professionals. About 69% of them are in the U.S. It manufactures and services its products in about 225 facilities in about 25 countries. RTX operates three segments:

• Collins Aerospace ($30.2 billion of 2025 segment sales; 16.3% segment operating margin). Collins makes aircraft systems and components: electric power, environmental control, flight controls, avionics, engine controls, nacelles, landing gear, wheels and brakes, propellers, cabin interiors, seating and lighting. It also sells aftermarket spares, repair and overhaul, connected-aviation and air-traffic-management services, and defense communications and training systems. Boeing and Airbus together accounted for 16% of Collins segment sales in 2025, before discounts and incentives.
• Pratt & Whitney ($32.9 billion of 2025 segment sales; 7.9% margin). Pratt & Whitney makes and services large commercial engines, military engines, and small engines for regional, business and general aviation and helicopters. Its main programs are the PW1000G Geared Turbofan (GTF), which powers more than 2,600 aircraft for over 90 operators on the Airbus A320neo family, the A220 and the Embraer E2, and the F135 engine, the sole engine for the F-35. Airbus accounted for 29% of the segment's 2025 sales. Many engine programs are shared with collaboration partners, whose interests ranged from 13% to 49% per program at the end of 2025. About 40% of RTX's total remaining performance obligations are long-term commercial maintenance contracts at Pratt & Whitney, generally realized over up to 20 years.
• Raytheon ($28.0 billion of 2025 segment sales; 11.5% margin). Raytheon makes air and missile defense systems and munitions, including Patriot, LTAMDS, NASAMS, the Standard Missile family (SM-3, SM-6), AMRAAM, AIM-9X, Tomahawk, StormBreaker, Javelin, Stinger and Coyote. It also makes radars such as SPY-6 and AN/TPY-2, the Next Generation Jammer, space systems, and classified and advanced-development programs, including hypersonics. Most of its work is as a prime contractor or major subcontractor to the U.S. Department of War (formerly the Department of Defense) and to international customers. In the third quarter of 2026, 60% of Raytheon's external sales ($4.8 billion of $8.0 billion) came from fixed-price contracts.

Backlog, which equals remaining performance obligations, was $268 billion at December 31, 2025, up from $218 billion a year earlier. Of that, $161 billion was commercial and $107 billion defense. By segment it was Collins $42 billion, Pratt & Whitney $151 billion and Raytheon $75 billion. The company expected about 25% of backlog to convert to revenue within 12 months.

RTX sources raw materials worldwide and depends heavily on foreign sources for cobalt, tantalum, chromium, rhenium, nickel and titanium. For some components it relies on single-source suppliers.

Risk factors

From Item 1A of the FY2025 10-K, accession 0000101829-26-000006. The Q3 2026 10-Q, accession 0000101829-26-000031, reports no material changes to these risk factors.

The risks below are the ones most specific to RTX's economics.

• U.S. defense budget and appropriations. A large share of sales depends on U.S. defense programs that are funded one fiscal year at a time. Shutdowns, continuing resolutions and shifts in priorities can delay awards, new program starts and payments, or stop programs.
• Contract type and cost control. RTX absorbs cost overruns on firm fixed-price contracts, and above the ceiling price on fixed-price incentive contracts. This risk is highest on fixed-price development programs and on programs moving from development into production. The government is using more Other Transaction Authority agreements and undefinitized contract actions, which it can definitize on its own terms. That adds uncertainty about price and terms. RTX has recently taken large undefinitized munitions awards.
• Pratt & Whitney powder metal matter. In 2023 Pratt & Whitney found a rare condition in powder metal used to make certain engine parts. This forced accelerated inspections of the PW1100G-JM GTF fleet that powers the A320neo family. The company expects aircraft-on-ground levels to stay elevated through 2026, with significant customer compensation and shop-visit costs. The estimate depends on shop-visit timing, inspection findings, parts availability, overhaul capacity and customer negotiations. Other engine models also contain parts made from the affected powder metal.
• Commercial aerospace cycle and customer concentration. Results depend on airline traffic, airline finances, fuel prices and the production health of Airbus and Boeing. Customers can reschedule or cancel firm orders.
• Supply chain. Shortages of rare earth elements, microelectronics and other commodities, together with inflation, tariffs and export controls, have delayed production and raised costs. The company expects these problems to continue.
• International, geopolitical and export-control exposure. International sales are exposed to offset and in-country industrial participation obligations, currency moves (Pratt & Whitney Canada in particular), and export licence timing. China has sanctioned Raytheon and a Collins joint venture over sales to Taiwan, and Russian counter-sanctions name members of RTX management and its board.
• Legal and compliance overhang. In October 2024 Raytheon Company entered two deferred prosecution agreements with the DOJ, and RTX became subject to an SEC administrative order. These resolved the Thales-Raytheon Systems Middle East payments matter and defective pricing on certain legacy Raytheon contracts. RTX also signed a three-year Consent Agreement with the State Department over ITAR violations. A breach could lead to prosecution, fines, or suspension or debarment from government contracting. During their terms, the agreements also restrict how and when RTX can complete divestitures.
• Capital return limits. Under a January 7, 2026 Executive Order, the Secretary of War could seek to limit RTX's dividends and share repurchases if the Secretary finds the company underperformed on, or did not sufficiently prioritize or invest in, its U.S. government contracts.
• Cybersecurity and product safety. RTX is a target of nation-state and criminal cyber attacks. A product or system failure in engines or defense systems could cause injury or death, recalls, liability and lasting damage to its reputation.
• Debt, estimates and intangibles. Debt taken on for the $10 billion accelerated share repurchase of 2023–2024 limits financial flexibility. Long-term contract accounting relies heavily on estimates. Goodwill and intangible assets are a large share of total assets and could be impaired.
• Talent. The business depends on scarce engineering and security-cleared staff and on unionized labor, and labor costs remain high.

Management's discussion, fiscal 2025

From Item 7 of the FY2025 10-K, accession 0000101829-26-000006.

Net sales in 2025 were $88.6 billion, up 10% from $80.7 billion in 2024. Organic growth contributed $8.9 billion: $4.8 billion at Pratt & Whitney, $2.6 billion at Collins and $1.7 billion at Raytheon. Divestitures reduced sales by $1.2 billion. The two Collins sales completed in 2025 were the actuation and flight control business in the third quarter, for $1.8 billion gross proceeds, and Simmonds Precision Products in the fourth quarter. Operating profit rose to $9.3 billion (10.5% margin) from $6.5 billion (8.1%). The increase came from $1.5 billion of organic segment improvement, gains on the two divestitures, and the absence of 2024 charges: $0.9 billion for legal matters, $0.6 billion for a terminated Raytheon contract, and $0.2 billion at Collins for switching titanium sources. Net income attributable to common shareowners was $6.7 billion, or $4.96 per diluted share, compared with $4.8 billion, or $3.55, in 2024. 2025 included a $0.3 billion pension settlement charge for an annuity buy-out that transferred about $2.5 billion of pension obligations to Prudential.

By segment:

• Collins. Sales were $30.2 billion and operating profit $4.9 billion. Organic sales grew $2.6 billion: commercial aftermarket +$1.4 billion, defense +$0.7 billion and commercial OE +$0.5 billion. Tariffs and unfavorable OE mix partly offset the gain in commercial profit.
• Pratt & Whitney. Sales were $32.9 billion and operating profit $2.6 billion. Organic sales grew $4.8 billion: commercial aftermarket +$2.9 billion, military +$1.0 billion (mainly F135 production) and commercial OE +$0.9 billion. Profit growth was held back by unfavorable aftermarket mix, tariffs, higher production costs and a $0.1 billion customer bankruptcy charge.
• Raytheon. Sales were $28.0 billion and operating profit $3.2 billion. Organic sales grew $1.7 billion, led by Patriot, NASAMS, LTAMDS and naval programs (ESSM, SPY-6). Margin improved on Patriot production mix and better net estimate-at-completion adjustments. Raytheon's backlog reached $75 billion, and its 2025 defense bookings were $40 billion.

Defense bookings across the company were about $61 billion in 2025, the same as in 2024. Operating cash flow rose $3.4 billion to $10.6 billion. Free cash flow (non-GAAP) was $7.9 billion, per the fourth-quarter 2025 earnings release furnished on January 27, 2026. Customer compensation for the powder metal matter used $1.0 billion of the accrual in 2025, leaving $0.7 billion at year-end. The company expected the matter to cost about $0.7 billion in cash in 2026. Year-end cash was $7.4 billion. There were no borrowings under the $5.0 billion revolving credit facility and no commercial paper outstanding. About $0.6 billion of repurchase authority remained under the October 2023 program.

Current quarter, Q3 2026

From the Q3 2026 10-Q, accession 0000101829-26-000031, and the Q3 2026 earnings release, Exhibit 99 to Form 8-K, accession 0000101829-26-000030.

Results. Third-quarter sales were $24.97 billion, up 11% from $22.48 billion. Organic growth (non-GAAP) was 12%. All three segments grew organically: Raytheon +$1.0 billion, Collins +$0.9 billion and Pratt & Whitney +$0.8 billion. Operating profit rose to $3.34 billion (13.4% margin) from $2.52 billion (11.2%). Net income attributable to common shareowners was $2.58 billion, up 35%, and diluted EPS was $1.89 versus $1.41. Three unusual items affected the quarter's net income:

• IEEPA tariff refunds. RTX recorded about $0.4 billion pre-tax of approved refunds of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), worth about $0.25 per share after tax. The Supreme Court ruled in February 2026 that those tariffs were unauthorized. RTX had paid about $0.5 billion of them, and about $0.3 billion of the approved refunds had been received by September 30. The government has appealed the trade court's refund order, but refunds have continued.
• Customer bankruptcy charge. Pratt & Whitney took a charge of about $0.4 billion pre-tax ($363 million in segment results), or about $0.20 per share after tax, for a customer bankruptcy. The filing does not name the customer. The charge mainly covers contract-asset exposure.
• Investment gains. RTX recorded $159 million pre-tax of fair-value gains on investments.

Adjusted EPS (non-GAAP) was $2.26, up 33%. That figure includes the tariff recovery.

For the nine months, sales were $71.7 billion, up 11.5%. Diluted EPS was $4.96 versus $3.77.

Segments in the quarter:

• Collins. Sales were $8.38 billion, up 10%. Operating profit was $1.79 billion, a 21.3% margin compared with 16.5%. Organic growth of 12% came from commercial OE +23%, commercial aftermarket +9% and defense +7%. Profit rose on commercial volume and mix plus about $0.2 billion of tariff refunds. Prior-year profit had included the gain on the actuation divestiture.
• Pratt & Whitney. Sales were $9.23 billion, up 10%. Commercial aftermarket rose 21%, mainly on GTF volume. Commercial OE fell 5% on large-engine mix. Operating profit fell to $608 million (6.6% margin) from $751 million because of the bankruptcy charge. Excluding that charge, adjusted operating profit (non-GAAP) was $968 million, which includes about $160 million of tariff recovery.
• Raytheon. Sales were $8.03 billion, up 14%, driven by naval programs (Standard Missile, Tomahawk), Patriot and AMRAAM. Operating profit was $1.13 billion, a 14.1% margin compared with 12.2%, on better net productivity, volume and Patriot mix.

Backlog and the munitions awards. Backlog reached a record $340 billion, compared with $289 billion at June 30 and $268 billion at year-end 2025. Commercial backlog was $176 billion and defense $164 billion. Defense bookings were about $59 billion in the quarter, against $23 billion a year earlier, and about $96 billion for the nine months. Raytheon booked $52 billion in the quarter, and its backlog rose to $130 billion from $75 billion at year-end. Its largest Q3 bookings were:

• Tomahawk for the U.S. Navy: $23 billion
• AMRAAM for the U.S. Air Force: $14.3 billion
• Army Collective Training Systems for the United Kingdom, with 15 years of training: $3.1 billion
• SPY-6 production and sustainment: $1.8 billion
• Classified contracts: $3.0 billion

The Tomahawk and AMRAAM awards were two of four multi-year undefinitized contract actions the Department of War awarded Raytheon in the third and early fourth quarters of 2026 to increase munitions production sharply:

• Tomahawk: seven years, up to about $23 billion
• AMRAAM: up to $20.7 billion
• SM-6: up to $24.4 billion
• SM-3 Block IB: up to $6.3 billion

The AMRAAM, SM-6 and SM-3 Block IB awards are each five-year awards with two one-year options. Funding for all four depends on annual congressional appropriations. RTX is investing in capacity, hiring and long-term supplier agreements to support the higher production rates.

Budget and policy backdrop. Congress passed full-year fiscal 2026 funding on February 3, 2026. A continuing resolution signed September 2, 2026 extends that funding through December 11, 2026. The President's fiscal 2027 request seeks $1.5 trillion for defense. A June 24, 2026 supplemental request includes about $67 billion for defense, of which $21 billion is for munitions replenishment. The 2025 reconciliation act provides $156.2 billion of additional defense funding, including $24.4 billion for the Golden Dome missile-defense initiative and $25.4 billion for munitions and supply-chain resilience. The Middle East conflict has raised jet fuel prices for airline customers. Management says sustained high fuel costs could reduce air travel demand and strain weaker carriers, particularly low-cost airlines.

Powder metal. The customer-compensation accrual fell to $0.2 billion at September 30, 2026 from $0.7 billion at year-end, mostly through credits issued to customers. The company still expects a cash impact of about $0.7 billion for 2026.

Cash and balance sheet.

• Cash flow. Third-quarter operating cash flow was $2.87 billion, down from $4.64 billion a year earlier, and free cash flow (non-GAAP) was $2.12 billion. The Q3 cash flow statement shows a $0.98 billion outflow from contract liabilities, compared with a $0.99 billion inflow a year earlier. Nine-month operating cash flow was $8.27 billion, up $1.9 billion, and free cash flow was $6.31 billion. Management attributes the nine-month working-capital drag to lower advances at Raytheon and lower billings relative to revenue at Pratt & Whitney.
• Cash and debt. Cash was $9.2 billion and total debt $37.4 billion, of which $5.7 billion of long-term debt is due within a year. The only notes repaid in 2026 were $500 million of 5.000% notes in February.
• Liquidity and ratings. In August 2026 RTX renewed its $5.0 billion revolving credit facility through August 2031. Nothing was drawn and no commercial paper was outstanding. S&P revised its outlook to BBB+/positive in May 2026, and Moody's revised its outlook to Baa1/positive in February 2026.
• Shareholder returns. RTX has repurchased no shares in 2026, and $615 million of authorization remains. Dividends paid were $2.88 billion for the nine months.

Portfolio. On June 19, 2026 RTX agreed to sell Raytheon's Blue Canyon Technologies business for about $0.6 billion ($620 million per the Q2 release). As of the 10-Q filing date the sale was still awaiting regulatory approvals.

Legal and regulatory.

• Navy administrative agreement. On September 21, 2026 Raytheon Company and RTX signed a three-year administrative agreement with the Navy's Acquisition Integrity Office. The Navy concluded that suspension or debarment was not needed, so the companies remain eligible for U.S. government contracts. The independent compliance monitor engaged in April 2026 under the DOJ and SEC resolutions also serves as monitor under this agreement.
• DCMA claims against Pratt & Whitney. The Defense Contract Management Agency claims about $1.7 billion plus interest, and a second $1.1 billion plus interest, alleging that Pratt & Whitney's allocation of independent research and development costs did not comply with Cost Accounting Standards. Pratt & Whitney is contesting both claims.
• Powder metal litigation and SEC inquiry. A dismissed securities class action over the powder metal disclosures is on appeal, and an SEC investigation of the same disclosures is ongoing.

Outlook (non-GAAP). With the third-quarter release RTX raised its full-year 2026 outlook for the third time this year. Adjusted sales guidance is now $97.0–97.5 billion, compared with $92.0–93.0 billion in January. Adjusted EPS guidance is now $7.65–7.75, compared with $6.60–6.80 in January.

Subsequent events

From the Q3 2026 10-Q, accession 0000101829-26-000031, and the Q3 2026 earnings release, accession 0000101829-26-000030.

The 10-Q has no separate subsequent-events note. The following developments, after September 30, 2026 unless noted, are disclosed in it or in the earnings release:

• SM-6 and SM-3 Block IB munitions awards (third or early fourth quarter 2026). These two awards complete the four critical-munitions contract actions described above: SM-6 valued at up to $24.4 billion and SM-3 Block IB at up to $6.3 billion, each a five-year undefinitized contract action with two one-year options. The 10-Q says the four awards came in the third quarter and early fourth quarter of 2026. The earnings release names only Tomahawk and AMRAAM as awarded in the third quarter, and neither filing dates the SM-6 and SM-3 Block IB awards more precisely. Funding depends on congressional appropriations.
• Blue Canyon Technologies sale still pending. The approximately $0.6 billion sale had not closed as of the October 20, 2026 filing date and remained subject to regulatory approvals.
• No new financing disclosed. Neither filing reports any debt issuance, borrowing, acquisition or completed divestiture after quarter-end. Federal funding runs under a continuing resolution through December 11, 2026.