RTX Corporation
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ITEM 1. BUSINESS
General
RTX Corporation is an aerospace and defense company that provides advanced systems and services for commercial, military, and government customers worldwide. The terms “we,” “us,” “our,” the “Company”, and “RTX” mean RTX Corporation and its subsidiaries, unless the context indicates another meaning. We serve commercial and government customers in both the original equipment and aftermarket parts and services segments of the aerospace industry. Our defense business serves both domestic and international customers as a prime contractor or subcontractor on a broad portfolio of defense and related programs for military and government customers. RTX Corporation was incorporated in Delaware in 1934.
The following description of our business should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within Item 7 of this Form 10-K, including the information contained therein under the heading “Business Overview.”
Business Segments
Our operations are classified into three principal business segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon, with each segment comprised of groups of similar operations.
Collins Aerospace is a leading global provider of technologically advanced aerospace and defense products. Collins’ solutions include aftermarket services for civil and military aircraft manufacturers, commercial airlines, and regional, business, and general aviation, as well as for defense and commercial space operations. Aftermarket services include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, asset management services, and information management services. Collins designs, manufactures, and supplies electric power generation, management and distribution systems, environmental control systems, flight control systems, air data and aircraft sensing systems, engine control systems, engine components, engine nacelle systems, including thrust reversers and mounting pylons, interior and exterior aircraft lighting, aircraft cargo systems, evacuation systems, landing systems (including landing gear, wheels, and braking systems), communication, navigation, surveillance systems, fire and ice detection and protection systems, integrated avionics, and propeller systems. Collins also designs, manufactures, and supports complete cabin interiors, including seating, oxygen systems, food and beverage preparation, storage and galley systems, lavatory, and wastewater management systems. Collins’ solutions support human space exploration with environmental control and power systems and extravehicular activity suits. Collins also provides connected aviation solutions and services through worldwide voice and data communication networks, airport systems and integrations, and air traffic management solutions. Collins supports government and defense customer missions by providing systems solutions for connected battlespace, test and training range systems, crew escape systems, and simulation and training.
Collins sells aerospace and defense products and services to aircraft manufacturers, airlines, airports and other aircraft operators, the U.S. and foreign governments, defense contractors, maintenance, repair, and overhaul providers, and independent distributors around the world. Collins’ largest commercial customers are Boeing and Airbus with combined sales, prior to discounts and incentives, of 16%, 16%, and 19% of total Collins segment sales in 2025, 2024, and 2023, respectively.
In 2025, Collins was awarded a contract to deliver satellite communication systems to support survivable communications across multiple frequency bands. Collins was also awarded a contract by the Federal Aviation Administration (FAA) to support the Radar System Replacement program as part of the Department of Transportation’s Brand New Air Traffic Control System. Collins was selected to be the primary subcontractor for the U.S. Navy’s solution for engineering design and manufacturing of the Very Low Frequency communication subsystem, as well as mission command, control, and communications infrastructure, Advanced Extremely High Frequency and voice communications. In addition, Collins was awarded a follow-on contract from the FAA to continue support of the Standard Terminal Automation Replacement System (STARS) which is used to manage aircraft spacing and sequencing on approach. Collins secured over $4 billion in combined long-term agreements to provide new maintenance, repair and overhaul services, and long-term contracts to provide spare parts, for several airlines. Finally, Collins was selected by the European Union’s Clean Aviation Joint Undertaking (Clean Aviation) to collaborate with Pratt & Whitney Canada as well as other consortium members on multiple development projects aimed at increasing fuel efficiency for next-generation regional aircraft, most notably the Powerplant Hybrid Applications Regional Segment (PHARES) project. As part of the PHARES project, Pratt & Whitney Canada will lead the development of a hybrid-electric PW127XT-derivative engine, incorporating a Collins 250kW motor and integrated power controller. Collins will also develop an advanced propeller system for improved fuel efficiency and reduced noise for such engine as part of PHARES.
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Collins continues to invest in sustainable technologies, such as electrical power architectures, advanced composite materials, digital trajectory optimizers, highly efficient cooling systems, and numerous other technologies that provide lower weight, improved drag, and carbon footprint solutions on aircraft. Collins is also investing in higher efficiency build processes, that reduce chemical and power usage and increase the use of recycling. Collins’ thermoplastic and carbon structural technologies support optimization of the design of aircraft components and equipment to minimize weight, maximize energy efficiency, reduce fuel burn, and extend brake life. Collins works closely with numerous other industry organizations and airframers to explore alternative energy solutions such as sustainable aviation fuel, hydrogen, and hybrid electric power sources. Collins also continues to invest in operational capacity in strategic locations in the United States (including Puerto Rico), India, Mexico, Singapore, and the Philippines.
Pratt & Whitney is among the world’s leading suppliers of aircraft engines for commercial, military, business jet, and general aviation customers. Pratt & Whitney designs, manufactures, and services large engines for widebody, narrowbody, and large regional aircraft for commercial customers and for fighter, bomber, tanker, and transport aircraft for military customers. Pratt & Whitney also designs, manufactures, and services small engines powering regional airlines, general and business aviation, and helicopters. Pratt & Whitney produces, sells, and services military and commercial auxiliary power units. Pratt & Whitney provides fleet management services and aftermarket maintenance, repair, and overhaul services in all of these product segments.
Pratt & Whitney sells products and services principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies, and the U.S. and foreign governments. Pratt & Whitney’s largest commercial customer by sales is Airbus, with sales, prior to discounts and incentives, of 29%, 31%, and 48% of total Pratt & Whitney segment sales in 2025, 2024, and 2023, respectively.
Pratt & Whitney produces and services the PW1000G Geared Turbofan (GTF) engine family. GTF engine models have demonstrated a significant reduction in fuel burn and noise levels and lower environmental emissions compared to prior-generation engines. The GTF aftermarket network expanded to 21 facilities worldwide, increasing PW1100G-JM shop visit output by approximately 26% year over year in 2025.
The GTF family now powers more than 2,600 aircraft for over 90 operators across three aircraft platforms: Airbus A320neo family, Airbus A220, and Embraer E-Jets E2. In 2025, the GTF Advantage engine received FAA and European Union Safety Agency (EASA) certification for the Airbus A320 neo family and is expected to extend the benefits of the current GTF engine, increasing takeoff thrust by 4 to 8 percent and reducing fuel consumption by up to an additional 1 percent, maintaining the engine’s lead as the most efficient powerplant for the A320neo family.
Pratt & Whitney produces and sustains the F135 engine for the U.S. government’s F-35 Joint Program Office to exclusively power the single-engine F-35 Lightning II fifth generation aircraft (commonly known as the Joint Strike Fighter) produced by Lockheed Martin. F135 propulsion system configurations are used for the U.S. Air Force’s F-35A, the U.S. Marine Corps’ F-35B, and the U.S. Navy’s F-35C jets. F135 engines are also used on all F-35 aircraft purchased by Joint Strike Fighter partner countries and other countries through foreign military sales arrangements. In 2025, Pratt & Whitney’s F135 engine surpassed one million engine flight hours, and the company was awarded a $2.8 billion undefinitized contract action (UCA) for production of Lot 18 and Lot 19 long lead funding for the F135 engines to power all three variants of the F-35 Lightning II aircraft. Additionally, Pratt & Whitney continued design maturation and aircraft integration efforts for the F135 Engine Core Upgrade (ECU).
Significant activity continued on Pratt & Whitney’s military engine development programs, including the Next Generation Adaptive Propulsion (NGAP) program. In early 2025, Pratt & Whitney completed the Detailed Design Review of its XA103 engine for the U.S. Air Force’s NGAP, allowing it to begin procurement of hardware for the construction of the prototype ground demonstrator. Most recently, Pratt & Whitney announced accelerated XA103 engine development through the use of digital data packages, and continued progress toward the next major program milestone. Meanwhile, the B-21 Raider, which is powered by Pratt & Whitney engines, continued to progress its flight test program.
In 2025, Pratt & Whitney Canada was selected by the European Union's Clean Aviation to lead the PHARES project, marking the first time a Canadian company will participate in and lead a Clean Aviation program. As part of the PHARES consortium, Pratt & Whitney Canada will collaborate with Collins, ATR, Airbus, and technology research organizations to design and integrate a hybrid-electric propulsion demonstrator, targeting up to 20% improved fuel efficiency on regional aircraft missions. Finally, in 2025, Pratt & Whitney Canada’s PT6 E-Series™ engine family surpassed 500,000 engine flight hours since entering service.
The development of new engines and improvements to current production engines present important growth opportunities for Pratt & Whitney. In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which revenues, costs, and risks are shared with third parties. At December 31, 2025, the interests of third-party collaboration participants in Pratt & Whitney-directed jet engine programs ranged, in the aggregate per
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program, from 13% to 49%. See “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of this Form 10-K for a description of our accounting for collaboration arrangements. Pratt & Whitney also continues to enhance its programs through performance improvement measures and product base expansion, utilizing similar collaboration arrangements.
Raytheon is a leading provider of defensive and offensive threat detection, tracking and mitigation capabilities for U.S. and foreign government and commercial customers. Raytheon designs, develops, and provides advanced capabilities in integrated air and missile defense, smart weapons, missiles, advanced sensors and radars, interceptors, space-based systems, hypersonics, and missile defense across land, air, sea, and space. Raytheon provides air-to-air and air-to-ground sensors, command and control and weapons including the Advanced Medium Range Air-to-Air Missile (AMRAAM), StormBreaker smart weapon, Long Range Stand Off Weapon (LRSO), and the Early Warning Radar. Raytheon also provides advanced naval sensors, command and control and weapons including classified naval radars, the Next Generation Jammer (NGJ), shipboard missiles including the Tomahawk and Standard Missile 6 (SM-6), air-to-air missiles such as the AIM-9X SIDEWINDER missile, and integrated systems such as the SPY-6 radar. In addition, Raytheon provides advanced systems and products that span layered land and integrated air and missile defense, including the Patriot air and missile defense system, the Lower Tier Air and Missile Defense Sensor (LTAMDS), the National Advanced Surface-to-Air Missile System (NASAMS), Javelin, Excalibur, Stinger, and High-Energy Lasers. Raytheon also provides technologically advanced sensors, satellites, and interceptors, including the AN/TPY-2 radar, and Standard Missile 3 (SM-3). Raytheon delivers integrated space solutions including sensors, mission orchestration, satellite control, and software. Raytheon also focuses on the development and early introduction of next-generation technologies and systems, including hypersonics, counter-hypersonics, next-generation radars, sensor experimentation, and electro-optical/infrared (EO/IR) advancements, and aligns products that use shared technologies, including fire control radars, surveillance radars, EO/IR, space-qualified satellite components, and electronics.
Raytheon serves as a prime contractor or major subcontractor on numerous programs with the U.S. Department of War (DoW) (formerly referred to as the U.S. Department of Defense), including the U.S. Navy, U.S. Army, Missile Defense Agency, U.S. Air Force, and U.S. Space Force, as well as programs with U.S. federal civil customers, and other international and classified customers.
In 2025, Raytheon achieved key advancements in, or received contract awards for, the following programs: Patriot, LTAMDS, SM-3, AIM-9X, AMRAAM, Tomahawk, and certain advanced technologies, including classified programs and advanced development programs. Major new contracts awarded in 2025 include contracts to provide AMRAAM missiles to the U.S. Navy, U.S. Air Force and international customers; Guidance Enhanced Missiles (GEM-T) for the North Atlantic Treaty Organization (NATO) Support and Procurement Agency (NSPA) and an international customer; low-rate initial production of LTAMDS for the U.S. Army and Poland; Iron Dome Tamir production for an international customer; AIM-9X Sidewinder short-range air-to-air missiles for the U.S. Navy, U.S. Air Force, and international customers; SM-3 exoatmospheric missile defense interceptors to the Missile Defense Agency; AN/SPY-6 radars for the U.S. Navy; NASAMS to an international customer; Stinger missiles to the U.S. Army and an international customer; Next Generation Jammer Mid-Band (NGJ-MB) for the U.S. Navy and the Royal Australian Air Force; and Javelin guided munition for the U.S. Army and international customers. In 2025, Raytheon also continued to experience increased global demand for the combat-proven Coyote system, a low-cost, expendable, unmanned aircraft system with the capability of operating in autonomous swarms.
Sales and Customers
We have substantial U.S. government sales, which we conduct through all three of our business segments. In addition, as a global company, all three of our business segments have substantial international sales. See “Note 20: Segment Financial Data” within Item 8 of this Form 10-K for additional information.
U.S. Government Sales. Our U.S. government sales were as follows:
| (dollars in millions) | 2025 | 2024 | 2023 | ||||||||||||||
Sales to the U.S. government (1) | $ | 33,279 | $ | 32,246 | $ | 31,628 | |||||||||||
Sales to the U.S. government as a percentage of total net sales (1) (2) | 38 | % | 40 | % | 46 | % | |||||||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
BUSINESS OVERVIEW
We are a global premier systems provider of high technology products and services to the aerospace and defense industries.
Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries.
We operate in three segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Raytheon follows a fiscal calendar, while Collins and Pratt & Whitney use calendar quarter ends. Throughout this Form 10-Q, references to the quarters ended March 31, 2026 and 2025 for Raytheon correspond to its fiscal quarter ends of March 29, 2026 and March 30, 2025, respectively.
The current status of significant factors affecting our business environment in 2026 is discussed below. For additional discussion, refer to the “Business Overview” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in our 2025 Annual Report on Form 10-K.
Industry Considerations
Our worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. Our operations include original equipment manufacturer (OEM) and extensive related aftermarket parts and services related to our aerospace operations. Our defense business serves both domestic and international customers primarily as a prime contractor or subcontractor on a broad portfolio of defense and related programs for government customers. Our business mix also reflects the combination of shorter cycles in our commercial aerospace spares contracts and certain service contracts in our defense business, and longer cycles in our aerospace OEM and aftermarket maintenance contracts and on our defense contracts to design, develop, manufacture, or modify complex equipment. Our customers are in the public and private sectors, and our businesses reflect an extensive geographic diversification that has evolved with continued globalization.
Government legislation, policies, and regulations can impact our business and operations. Changes in environmental and climate change-related laws or regulations, including regulations on greenhouse gas emissions, carbon pricing, and energy taxes, could lead to new or additional investment in product designs and facility upgrades and could increase our operational and environmental compliance expenditures, including increased energy and raw materials costs and costs associated with manufacturing changes. In addition, government and industry-driven safety and performance regulations, restrictions on aircraft engine noise and emissions, government imposed travel restrictions, and government procurement practices can impact our businesses.
Collins and Pratt & Whitney serve both commercial and government aerospace customers. Revenue passenger miles (RPMs), available seat miles, and the general economic health of airline carriers and airframers, as well as the financial strength and performance of airframers, are key barometers for our commercial aerospace operations. Performance in the general aviation sector is closely tied to the overall health of the economy and is positively correlated to corporate profits. Many of our aerospace customers are covered under long-term aftermarket service agreements at both Collins and Pratt & Whitney, which are inclusive of both spare parts and services.
Our defense operations are affected by U.S. Department of War (DoW) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment. In addition, our defense businesses engage in both direct commercial sales, which generally require U.S. government licenses and approvals, as well as foreign military sales, which are government-to-government transactions initiated by and carried out at the direction of, the U.S. government. Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions.
Other Matters
Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions or priorities, including changes in DoW policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign
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currency exchange rates, sanctions, tariffs, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.
Legal Matters. As previously disclosed and described further in “Note 15: Commitments and Contingencies”, within Item 1 of this Form 10-Q under the headings “Thales-Raytheon Systems and Related Matters,” “DOJ Investigation and Contract Pricing Disputes,” and “Trade Compliance Matters”, in 2024 the Company resolved several outstanding legal matters.
Pratt & Whitney Powder Metal Matter. As described further in “Note 15: Commitments and Contingencies,” within Item 1 of this Form 10-Q, in 2023, Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft (A320neo) (herein referred to as the “Powder Metal Matter”).
Global Supply Chain. We are dependent on a global supply chain and have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance. These disruptions impacted our ability to procure raw materials, including certain rare earth elements, microelectronics, and certain commodities on a timely basis and/or at expected prices, and are driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs and export controls, are contributing to these issues. Furthermore, our suppliers and subcontractors have been impacted by these same issues. We have implemented actions and programs to mitigate some of the impacts but anticipate supply chain disruptions to continue.
Economic Environment. The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations. Due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we are not always able to offset cost increases by increasing our contract value or pricing, in particular on our fixed-price contracts. Increasing material, component, and labor prices could subject us to losses in our fixed price contracts in the event of cost overruns. In addition, higher interest rates have increased the cost of borrowing and tightened the availability of capital. Among other things, these effects can constrain our customers’ purchasing power and decrease orders for our products and services and impact the ability of our customers to make payments and our suppliers to perform. Moreover, changes in the macroeconomic environment, including volatility with respect to global trade policy, interest rates, and financial markets, can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain. We continue to pursue strategic and operational initiatives to help address these macroeconomic pressures, including our digital transformation, operational modernization, cost reduction, and advanced technology programs, and we apply our Customer Oriented Results and Excellence (CORE) operating platform to the execution of these initiatives. However, the impact of these pressures and corresponding initiatives is uncertain and subject to a range of factors and future developments.
The global trade environment is highly dynamic. Since February 2025, the U.S. government has imposed tariffs on imports from all countries with which the U.S. engages in trade. In response, certain countries have announced, and in some cases imposed, tariffs, and non-tariff countermeasures on goods that are imported from the U.S. Our businesses and suppliers import goods subject to U.S. imposed tariffs, as well as goods subject to counter tariffs imposed by other countries. In February 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on goods imported into the U.S. were unauthorized. The Company is the importer of record for certain products that were previously subject to tariffs under IEEPA and paid approximately $0.5 billion of IEEPA tariffs since their inception. The U.S. Court of International Trade (CIT) has ordered the U.S. Customs and Border Protection (CBP) to refund the collected IEEPA tariffs. The administrative process for seeking refunds of IEEPA tariffs previously paid remains under development and the CIT’s order may be subject to U.S. government challenge. Accordingly, there is uncertainty regarding our ability to obtain refunds for IEEPA tariffs previously paid, and as such we have not recorded an anticipated recovery of IEEPA tariffs paid as of March 31, 2026. We will continue to monitor developments, including actions by the CIT and CBP to establish and execute on a refund process and take appropriate actions when or if they become available. Further, following the Supreme Court’s ruling invalidating IEEPA tariffs, the U.S. government imposed new and revised tariffs under various available regimes.
We continue to pursue available options to mitigate the impact of tariffs and countermeasures, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, treaties or other statutory relief, (ii) evaluating operational and supply chain changes, and (iii) where feasible, increasing the prices of our goods and services. Our results for the quarter ended March 31, 2026, reflect our best estimate of the impact of the tariffs then in effect. As the duration, extent and enforceability of the tariffs and counter tariffs in effect remain uncertain, we are continuing to evaluate the potential future impacts of the imposition of tariffs to our business and financial condition. Based on current conditions, we do not believe that the tariffs announced by the U.S. or counter tariffs or other actions taken by other countries will have a material adverse effect upon our results of operations, financial condition, or cash flows. However, the actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs
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applied, the timing and duration of tariffs, the enforceability of tariffs and counter-tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our and our suppliers’ ability to mitigate the impacts of tariffs. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (EACs), and estimates supporting the recoverability of our inventories, contract fulfillment costs, deferred tax assets, intangible assets and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.
U.S. Government’s Budget, Tax Legislation and Executive Orders. On February 3, 2026, Congress passed and the President signed a spending package to end a U.S. government shutdown. The spending package funds the majority of the government through the end of the government’s fiscal year.
On July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H. Con. Res. 14” (the Act) was enacted. The Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S. taxation on international earnings.
The Act also provides a supplementary $156.2 billion to the DoW for obligations through 2029, which includes $24.4 billion for the Golden Dome for America project. The project, outlined in a January 27, 2025 Executive Order, calls for the development and deployment of a next-generation missile defense shield. On May 20, 2025, the DoW announced a draft architecture and implementation plan for the system. With next generation technologies across land, sea and space that build upon existing, proven defense capabilities, RTX’s portfolio is well-positioned to play a role in delivering reliable solutions for the Golden Dome for America initiative. Whether this Executive Order or corresponding funding will have a material impact on our business or results of operations will depend on a variety of factors, including actual awards, award timelines, mission priorities, and future budget determinations. The Act also includes $25.4 billion in funding to enhance DoW resources for munitions and supply chain resiliency. As a leading munitions manufacturer, RTX is strategically situated to play a key role in supporting this initiative.
The President has also issued multiple executive orders, including one intended to reform the DoW’s defense acquisition processes and promote expedited and streamlined acquisitions. Following issuance of those orders, the Secretary of War issued a memorandum and released the DoW’s Acquisition Transformation Strategy, which is aligned with the executive orders and seeks to overhaul the existing defense acquisition system through process changes that prioritize speed, flexibility, and rigorous execution. A subsequent executive order was issued that may limit corporate distributions, share repurchases, and executive compensation incentives during periods of defense contractor underperformance, insufficient prioritization, investment or production speed under their U.S. government contracts. We are monitoring how these executive orders and related actions will be implemented and any potential future impacts to our business. While those impacts are uncertain, a limitation on our ability to issue distributions or engage in share repurchases related to the defense contractor performance executive order could adversely affect the market price of our common stock.
Geopolitical Matters. In response to Russia’s invasion of Ukraine, the U.S. government and the governments of various jurisdictions in which we operate, have imposed broad economic sanctions and export controls targeting specific industries, entities, and individuals in Russia. The Russian government has implemented similar counter-sanctions and export controls, including targeting certain members of the Company’s management team and Board of Directors. Similarly, in February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX business segment which became part of the Raytheon business during the third quarter of 2023), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan. Since that time, China has announced additional sanctions against the Raytheon business and a Collins joint venture. We do not currently expect these measures to have a material adverse effect on our financial results, but we will continue to monitor future developments, including additional measures that could adversely affect the Company and/or our supply chain, business partners, or customers.
We have direct commercial sales contracts for products and services to certain foreign customers, for which U.S. government review and approval have been pending. The U.S. government’s approval of these sales is subject to a range of factors, including its foreign policies related to these customers, which are subject to continuing review and potential changes. Likewise, regulatory approvals previously granted for prior sales can be paused or revoked if the products and services have not yet been delivered to the customer. In addition, certain programs require approvals by foreign governments, and those approvals may not be obtained on a timely basis or at all or may be revoked. If we ultimately do not receive all of the regulatory approvals, or those approvals are revoked, it could have a material effect on our financial results.
We continue to closely monitor impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to the conflict in Iran and increased regional instability and tensions. RTX has employees, facilities, and operations in the Middle East and we reassess operations regularly, based upon the security situation. Our and our suppliers’ operations in the region have not been impacted in any material respect, although we could experience
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future delivery delays of certain products as the conflict continues. We also continue to monitor uncertainties related to energy costs and availability, and associated impacts to our commercial airline customers. Given the volatile nature of the situation, the potential impacts to RTX are subject to change.
See Part I, Item 1A, “Risk Factors” in our 2025 Annual Report on Form 10-K for further discussion of these items.
CRITICAL ACCOUNTING ESTIMATES
Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Management believes the most complex and sensitive judgments, because of their significance to the Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. See “Critical Accounting Estimates” within Item 7 and “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of our 2025 Annual Report on Form 10-K, which describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the quarter ended March 31, 2026.
RESULTS OF OPERATIONS
As described in our “Cautionary Note Concerning Factors That May Affect Future Results” of this Form 10-Q, our interim period results of operations and period-to-period comparisons of our results, particularly at a segment level, may not be indicative of our future operating results. The following discussions of comparative results among periods, including the discussion of segment results, should be viewed in this context.
We provide the organic change in Net sales and Cost of sales for our consolidated results of operations as well as the organic change in Net sales and Operating profit for our segments. We believe that these non-Generally Accepted Accounting Principles (non-GAAP) measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. The organic change in Net sales, Cost of sales, and Operating profit excludes acquisitions and divestitures, net, and the effect of foreign currency exchange rate translation fluctuations and other significant non-operational items and/or significant operational items that may occur at irregular intervals (Other). Additionally, the organic change in Cost of sales and Operating profit excludes restructuring costs, the FAS/CAS operating adjustment, and acquisition accounting adjustments. Restructuring costs generally arise from severance related to workforce reductions and facility exit costs. We are continuously evaluating our cost structure and implement restructuring actions in an effort to keep our cost structure competitive. The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of U.S. GAAP and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS), primarily related to our Raytheon segment. Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant, and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment, if applicable.
Net Sales
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Net sales | $ | 22,076 | $ | 20,306 | |||||||
The factors contributing to the change year-over-year in total net sales for the quarter ended March 31, 2026 are as follows:
| (dollars in millions) | Quarter Ended March 31, 2026 | ||||
Organic (1) | $ | 2,077 | |||
| Acquisitions and divestitures, net | (370) | ||||
| Other | 63 | ||||
| Total change | $ | 1,770 | |||
(1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above.
Net sales increased $2.1 billion organically in the quarter ended March 31, 2026, primarily due to higher organic net sales of $0.8 billion at Pratt & Whitney, $0.7 billion at Collins, and $0.6 billion at Raytheon.
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The decrease in net sales due to Acquisitions and divestitures, net of $0.4 billion for the quarter ended March 31, 2026 was driven by divestitures within our Collins segment of the actuation and flight control business and the Simmonds Precision Products business completed in 2025.
See “Segment Review” below for further information by segment.
| Quarter Ended March 31, | % of Total Net Sales | |||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||
| Net Sales | ||||||||||||||||||||||
| Products | $ | 15,765 | $ | 14,591 | 71.4 | % | 71.9 | % | ||||||||||||||
| Services | 6,311 | 5,715 | 28.6 | % | 28.1 | % | ||||||||||||||||
| Total net sales | $ | 22,076 | $ | 20,306 | 100 | % | 100 | % | ||||||||||||||
Refer to “Note 17: Segment Financial Data” within Item 1 of this Form 10-Q for the composition of external net sales by products and services by segment.
Net products sales increased $1.2 billion in the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 primarily due to increases in external products sales of $0.6 billion at Raytheon, $0.3 billion at Pratt & Whitney, and $0.3 billion at Collins.
Net services sales increased $0.6 billion in the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 primarily due to increases in external services sales of $0.6 billion at Pratt & Whitney.
Our sales to major customers were as follows:
| Quarter Ended March 31, | % of Total Net Sales | |||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||
Sales to the U.S. government (1) | $ | 7,970 | $ | 7,732 | 36.1 | % | 38.1 | % | ||||||||||||||
| Foreign military sales through the U.S. government | 1,781 | 1,471 | 8.1 | % | 7.2 | % | ||||||||||||||||
| Foreign government direct commercial sales | 1,547 | 1,352 | 7.0 | % | 6.7 | % | ||||||||||||||||
| Commercial aerospace and other commercial sales | 10,778 | 9,751 | 48.8 | % | 48.0 | % | ||||||||||||||||
| Total net sales | $ | 22,076 | $ | 20,306 | 100 | % | 100 | % | ||||||||||||||
(1) Excludes foreign military sales through the U.S. government.
Cost of Sales
| Quarter Ended March 31, | |||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||
| Total cost of sales | $ | 17,482 | $ | 16,190 | |||||||||||||||
| Percentage of net sales | 79.2 | % | 79.7 | % | |||||||||||||||
The factors contributing to the change year-over-year in total cost of sales for the quarter ended March 31, 2026 are as follows:
| (dollars in millions) | Quarter Ended March 31, 2026 | ||||||||
Organic (1) | $ | 1,590 | |||||||
| Acquisitions and divestitures, net | (326) | ||||||||
| Restructuring | (73) | ||||||||
| FAS/CAS operating adjustment | 12 | ||||||||
| Other | 89 | ||||||||
| Total change | $ | 1,292 | |||||||
(1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above.
Total cost of sales increased $1.6 billion organically for the quarter ended March 31, 2026, primarily driven by the organic net sales increases at Raytheon, Pratt & Whitney, and Collins noted above.
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The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.3 billion for the quarter ended March 31, 2026, was driven by the divestitures within our Collins segment of the actuation and flight control business and the Simmonds Precision Products business completed in 2025.
Other cost of sales increased $0.1 billion in the quarter ended March 31, 2026, primarily driven by unfavorable foreign exchange rate impacts.
The decrease in restructuring costs in the quarter ended March 31, 2026, relates primarily to higher workforce reductions initiated in the quarter ended March 31, 2025 at Collins.
For discussion on FAS/CAS operating adjustment, see the “FAS/CAS operating adjustment” subsection under the “Segment Review” section below. For discussion on Acquisition accounting adjustments, see the “Acquisition accounting adjustments” subsection under the “Segment Review” section below.
| Quarter Ended March 31, | % of Total Net Sales | |||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||
| Products | $ | 13,000 | $ | 12,283 | 58.9 | % | 60.5 | % | ||||||||||||||
| Services | 4,482 | 3,907 | 20.3 | % | 19.2 | % | ||||||||||||||||
| Total cost of sales | $ | 17,482 | $ | 16,190 | 79.2 | % | 79.7 | % | ||||||||||||||
Net products cost of sales increased $0.7 billion in the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, primarily driven by increases in external products cost of sales at Raytheon, Pratt & Whitney, and Collins, each driven by the products sales changes noted above.
Net services cost of sales increased $0.6 billion in the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, primarily due to increases in external services cost of sales at Pratt & Whitney, driven by the services sales changes noted above.
Research and Development
| Quarter Ended March 31, | |||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||
| Company-funded | $ | 627 | $ | 637 | |||||||||||||||
| Percentage of net sales | 2.8 | % | 3.1 | % | |||||||||||||||
Customer-funded (1) | $ | 1,228 | $ | 1,200 | |||||||||||||||
| Percentage of net sales | 5.6 | % | 5.9 | % | |||||||||||||||
(1) Included in Cost of sales in our Condensed Consolidated Statement of Operations.
Research and development spending is subject to the variable nature of program development schedules and, therefore, year-over-year fluctuations in spending levels are expected.
Selling, General, and Administrative
| Quarter Ended March 31, | |||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||
| Selling, general, and administrative | $ | 1,476 | $ | 1,448 | |||||||||||||||
| Percentage of net sales | 6.7 | % | 7.1 | % | |||||||||||||||
Selling, general, and administrative expenses increased for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, primarily driven by increased employee compensation costs, partially offset by lower restructuring costs.
Other Income, Net
| Quarter Ended March 31, | |||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||
| Other income, net | $ | 64 | $ | 4 | |||||||||||||||
Other income, net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.
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The increase in Other income, net of $0.1 billion in the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, was primarily due to gains related to the increase in fair value on investments in the quarter ended March 31, 2026.
Operating Profit
| Quarter Ended March 31, | |||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||||||||||
| Operating profit | $ | 2,555 | $ | 2,035 | |||||||||||||||
| Operating profit margin | 11.6 | % | 10.0 | % | |||||||||||||||
The increase in Operating profit of $0.5 billion for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 was primarily driven by an increase in the organic operating performance of our segments of approximately $0.4 billion and a decrease in restructuring charges of $0.1 billion.
Non-service Pension Income
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Non-service pension income | $ | (355) | $ | (366) | |||||||
Interest Expense, Net
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Interest expense | $ | 406 | $ | 502 | |||||||
| Interest income | (24) | (51) | |||||||||
Other non-operating expense (income) (1) | 8 | (8) | |||||||||
| Interest expense, net | $ | 390 | $ | 443 | |||||||
| Average interest expense rate | 4.5 | % | 4.5 | % | |||||||
(1) Primarily consists of the gains or losses on assets associated with certain of our nonqualified deferred compensation and employee benefit plans, the gains or losses on liabilities associated with certain of our nonqualified deferred compensation plans, and non-operating dividend income.
The decrease in Interest expense of $0.1 billion for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025, was primarily driven by long-term debt repayments.
Income Taxes
| Quarter Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Effective income tax rate | 14.4 | % | 17.0 | % | |||||||
The lower effective tax rate for the quarter ended March 31, 2026 compared to quarter ended March 31, 2025 was primarily driven by a higher tax benefit from stock based compensation in the current quarter as well as a lower forecasted annualized effective tax rate for 2026 principally due to a higher Foreign Derived Deduction Eligible Income (FDDEI) benefit from the U.S. tax legislation enacted in 2025.
Net Income Attributable to Common Shareowners
| Quarter Ended March 31, | |||||||||||
| (dollars in millions, except per share amounts) | 2026 | 2025 | |||||||||
| Net income attributable to common shareowners | $ | 2,059 | $ | 1,535 | |||||||
| Diluted earnings per share | $ | 1.51 | $ | 1.14 | |||||||
Net income attributable to common shareowners for the quarter ended March 31, 2026 includes the following:
•acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.27.
Net income attributable to common shareowners for the quarter ended March 31, 2025 includes the following:
•acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.27; and
•restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.07.
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SEGMENT REVIEW
Our operations, for the periods presented herein, are classified into three principal segments: Collins, Pratt & Whitney, and Raytheon. Segments are generally based on the management structure of the businesses and the grouping of similar operations, based on capabilities and technologies, where each management organization has general operating autonomy over diversified products and services. Total segment net sales and segment operating profit include intercompany sales and profit, which are ultimately eliminated within Eliminations and other, which also includes certain smaller non-reportable segments. Segment Operating Profit excludes certain acquisition accounting adjustments, the FAS/CAS operating adjustment, and certain corporate expenses, as further discussed below.
Given the nature of our business, we believe that total net sales and operating profit (and the related operating profit margin percentage), which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our segment performance, as described below.
We provide the organic change in Net sales and Operating profit for our segments as discussed above in “Results of Operations.” We believe that these non-GAAP measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. For Pratt & Whitney only, Other also includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada due to its significance to Pratt & Whitney’s overall operating results.
Total Net Sales. Total net sales by segment were as follows:
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Collins Aerospace | $ | 7,602 | $ | 7,217 | |||||||
| Pratt & Whitney | 8,173 | 7,366 | |||||||||
| Raytheon | 6,945 | 6,340 | |||||||||
| Total segment | 22,720 | 20,923 | |||||||||
Eliminations and other (1) | (644) | (617) | |||||||||
| Consolidated | $ | 22,076 | $ | 20,306 | |||||||
(1) Includes the operating results of certain smaller operations.
Operating Profit. Operating profit by segment was as follows:
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Collins Aerospace | $ | 1,307 | $ | 1,088 | |||||||
| Pratt & Whitney | 710 | 580 | |||||||||
| Raytheon | 841 | 678 | |||||||||
| Total segment | 2,858 | 2,346 | |||||||||
Eliminations and other (1) | 38 | 12 | |||||||||
| Corporate expenses and other unallocated items | (42) | (38) | |||||||||
| FAS/CAS operating adjustment | 172 | 185 | |||||||||
| Acquisition accounting adjustments | (471) | (470) | |||||||||
| Consolidated | $ | 2,555 | $ | 2,035 | |||||||
(1) Includes the operating results of certain smaller operations.
Included in segment Operating profit are EAC adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion. These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes. For a full description of our EAC process, refer to “Note 4: Changes in Contract Estimates at Completion” within Item 1 of this Form 10-Q. Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course.
35
We had the following net EAC adjustments for the periods presented:
| Quarter Ended March 31, | |||||||||||
| (dollars in millions) | 2026 | 2025 | |||||||||
| Total net EAC adjustments | $ | (162) | $ | (158) | |||||||
Significant EAC adjustments, when they occur, are discussed in each business segment’s discussion below.
Backlog and Bookings. Total backlog was $271 billion and $268 billion as of March 31, 2026 and December 31, 2025, respectively. Total backlog includes commercial backlog of $162 billion and $161 billion as of March 31, 2026 and December 31, 2025, and defense backlog of $109 billion and $107 billion as of March 31, 2026 and December 31, 2025, respectively.
We believe bookings are an important measure of future performance for our defense businesses. Our defense operations consist primarily of our Raytheon segment and operations in the defense businesses within our Collins and Pratt & Whitney segments. Defense bookings were approximately $14 billion and $9 billion for the quarters ended March 31, 2026 and 2025, respectively.
Bookings are impacted by the timing and amounts of awards in a given period, which are subject to numerous factors, including: the desired capability by the customer and urgency of customer needs, customer budgets and other fiscal constraints, political and economic and other environmental factors, the timing of customer negotiations, and the timing of customer and governmental approvals and notifications. In addition, due to these factors, quarterly bookings tend to fluctuate from period to period, particularly on a segment basis.
Collins Aerospace
| Quarter Ended March 31, | ||||||||||||||
| (dollars in millions) | 2026 | 2025 | Change | |||||||||||
| Net sales | $ | 7,602 | $ | 7,217 | 5 | % | ||||||||
| Operating profit | 1,307 | 1,088 | 20 | % | ||||||||||
| Operating profit margins | 17.2 | |||||||||||||
Next expected filings
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Recent SEC filings
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- 2025-02-03 10-K Annual Report
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