RTX Corporation Q4 FY2025 earnings call

• Delivered strong sales, adjusted EPS, and free cash flow in Q4. Full-year adjusted sales were $88.6 billion, up $9 billion year over year or 11% organically. - Orders: Ended 2025 with a full year book to bill of 1.56, resulting in a record backlog of $268 billion. - Commercial: Driven by 10% growth in commercial OE, 18% in commercial aftermarket. Defense: 8% growth. - Utilized core operating system and digital solutions to drive execution, improve productivity, and increase output. - Made significant investments in capacity and technology in 2025, with plans to invest further in 2026.

Collins: In the fourth quarter, sales were $7.7 billion, up 3% on an adjusted basis and 8% organically. Driven by commercial OE and aftermarket strength. For the full year, Collins generated $30.2 billion of adjusted sales and $4.9 billion of adjusted operating profit, resulting in 9% organic sales growth and 30 basis points of year over year margin expansion. Pratt and Whitney: Sales of $9.5 billion were up 25% on both an adjusted and organic basis in the fourth quarter. Full-year adjusted sales were $32.9 billion and adjusted operating profit was $2.7 billion, with 17% organic sales growth and 20 basis points of year over year margin expansion. Raytheon: Q4 sales were $7.7 billion, up 7% on both an adjusted and organic basis. Full-year adjusted sales were $28 billion and adjusted operating profit was $3.2 billion, with 6% organic sales growth and 130 basis points of year over year margin expansion.

• 2026 expected adjusted sales between $92 billion and $93 billion with 5% to 6% organic growth. - Adjusted EPS expected between $6.60 and $6.80. - Free cash flow expected between $8.25 billion and $8.75 billion. - Segment-specific outlooks: Collins expects mid-single digit sales growth and margin expansion; Pratt and Whitney expects mid-single digit sales growth and margin expansion; Raytheon expects mid to high single digit sales growth and margin expansion.

• Risks related to supply chain bottlenecks that could impact production and margins. - Tariffs could affect profitability. - Uncertainties in defense spending and international relations could impact demand for defense products.

Q: How is RTX thinking about the executive order regarding defense capital deployment?

A: RTX understands the responsibility to deliver more and faster for national security. Committed to supporting the department's mandate, ramping production, and investing in capacity. Remains committed to dividends while accommodating investment needs.

Q: Why does Pratt commercial aftermarket growth slow to high single digits in 2026?

A: Includes headwinds from legacy engine retirements and steady shop visits for certain engines, but GTF aftermarket continues to grow with margin expansion expected.

Q: Give an update on casting's output ramp at Asheville.

A: Casting foundry investment is in build up phase, with yields being worked on, and impact expected more in 2028-2029.