RTX Corporation 2026 Q3 Earnings Call

Thank you, and good morning, everyone. Our continued execution and operational focus enabled us to deliver another very strong quarter of results across RTX. On the top line, adjusted sales were $25 billion, up 12% organically with double-digit growth across commercial OE, commercial aftermarket, and defense. Adjusted EPS of $2.26 was up $0.56, or 33% year-over-year, including $0.25 from IEEPA cost recovery. Free cash flow was again strong at $2.1 billion. Overall, we are very pleased with the continued momentum in our operational performance across the company in Q3. We also continue to see robust global demand for our products and services and are very well positioned to meet our growing customer needs across commercial aerospace and defense. RTX ended Q3 with another record backlog of $340 billion, up 36% year-over-year and 18% sequentially.

On the defense side, we booked nearly $59 billion of awards with a book-to-bill of 4.57, driven by approximately $23 billion for Tomahawk and over $14 billion for AMRAAM as we converted those framework agreements into multi-year production contracts at Raytheon. Earlier this month, we also signed multi-year contracts for SM-6 and SM-3 IB. We are very pleased with our collaboration with the Department of Defense on these contracts, which reinforce the need for our highly capable and proven systems, and they will be a significant revenue driver for Raytheon over the next decade. Neil will provide some more details in a few minutes. On the commercial side, we received over $22 billion of new orders in the quarter, representing over 60% year-over-year growth across both OE and aftermarket.

Most notably, Pratt announced significant GTF engine orders and commitments, including British Airways' selection of the GTF to power up to 63 aircraft, adding another new GTF operator to its expanding fleet. So far this year, we've received over 800 GTF orders and commitments and have a backlog of over 8,000 engines. Commercial orders at Collins were up over 20% year-over-year, driven by the growing installed base and breadth of its content offerings. So another strong quarter of awards across the company. Okay, let me shift to the current operating environment as we look to close out the year. In commercial aerospace, we continue to see positive trends with increasing OE production rates on key platforms, which is growing our installed base. For example, Collins' commercial installed base and Pratt's narrow-body powered fleet have grown mid-single digits year-over-year.

In Q3, commercial aftermarket also remained resilient with 16% organic growth despite global RPKs declining slightly year-over-year. Our MRO demand continued to be strong, and engine retirements were in line with our expectations. Additionally, we continue to see strength across business aviation with global business jet departures up year to date. As a reminder, about 60% of the Pratt Canada fleet has not yet seen a first shop visit. On the defense side, we remain exceptionally well-positioned to meet growing demand given our proven capabilities, regional partnerships, and ability to produce at scale. In the U.S., we're encouraged by the broad support for defense spending, including the need to expand munitions depth and integrated air and missile defense capabilities. Our ongoing discussions with the Department of War give us further confidence that our key programs will remain funding priorities.

Internationally, demand is also rising with defense budgets expected to grow across the European, Asia-Pacific, and MENA regions next year, including significant spending by Germany, Poland, and Japan. Across these regions, we have partnerships with local companies and suppliers that help support the production of key systems, including Patriot, GEM-T, Standard Missile, Coyote, and military engines. In Europe, for example, we have over 130 different suppliers that support our production work in that region. While the U.S. government is currently operating under a continuing resolution, our record backlog provides clear visibility to our sales expectations in the fourth quarter and throughout next year, so our focus remains squarely on execution. Overall, based on our performance to date, we're again raising our full-year outlook for adjusted sales, EPS, and free cash flow.

Neil will take you through the details of the third quarter and our updated outlook in a few minutes. But first, let me provide an update on our strategic priorities on slide four. I'll start with operational execution. We continue to leverage our core operating system to drive output and productivity across the company. At Pratt, we're making progress across key GTF initiatives. On the GTF fleet management plan, the financial and technical outlook remains on track. PW1100 MRO output was up over 35% year-over-year in the quarter, and is up over 30% year to date. Sequentially, AOGs were relatively stable as this MRO output largely offset the expected engine removals from the seasonally high utilization of the fleet during the summer months. We continue to expect AOG reductions in Q4.

We're also pleased that the first GTF Advantage-powered aircraft was delivered to United Airlines and entered into service earlier this month. As a reminder, the Advantage will double the time on wing performance, and we expect the production ramp to continue next year. We're also progressing certification of the Hot Section+ upgrade package that will bring 90%-95% of the Advantage time on wing benefit back to the installed base, and we will start incorporating this package into MRO visits early next year. Shifting to Collins, we're advancing structural cost actions to support further margin expansion. This includes consolidating operations, increasing manufacturing hours at best-cost locations, and reducing overhead layers. Enabled by these actions, Collins has delivered double-digit organic sales growth this year while reducing indirect labor headcount.

At Raytheon, we're increasing munitions output as we improve material flow across the supply chain and drive productivity in our operations. Year to date, output across our critical munitions is up over 90% year over year, with material receipts at Raytheon up double digits over the same period. Across RTX, we're also deploying AI and digital tools to improve speed and decision-making in our operations. For example, through a recent acquisition, Pratt is integrating AI-powered engine inspection software to accelerate borescope analytics. Already in use on legacy programs, this capability is being implemented across our MRO networks and has reduced overall inspection time by more than 30% where it's been deployed. Next is innovation and future growth. In Q3, we invested $2.8 billion in company and customer-funded research and development and CapEx to advance our technology roadmap and expand capacity.

On the technology front, we're innovating to meet our customers' evolving needs. We're continuing to develop products with AI and machine learning capabilities. For example, Collins is leveraging AI in certain products to assist air traffic controllers in making faster and smarter decisions. Raytheon has sensors deployed in the field that are using AI to identify objects and classify threats. Also in the quarter, Collins completed altitude testing of its next-generation Enhanced Power and Cooling System, known as EPACS. EPACS delivers a significant increase in cooling capacity across critical aircraft systems and is being offered to support technology upgrades on the F-35. It can also be used on other future defense and commercial aircraft platforms. Raytheon is progressing its composable weapon strategy to address the evolving needs of our customers.

This construct uses proven technologies from across our product portfolio as building blocks to develop new solutions that we can field at a faster scale. For example, we're developing a new effector where we're taking the rocket motor and steering control from one production program and combining it with a seeker from another program to cost-effectively meet a specific mission requirement on an accelerated timeline. On the capacity front, we continue to invest to support higher output levels. In the quarter, Raytheon completed a $50 million expansion of its manufacturing facility in Forest, Mississippi. This investment will support production ramps for the Next Generation Jammer program and other radar systems. In connection with the munitions contracts that I mentioned earlier, we're making incremental investments in our supply chain and operations to ramp capacity and support significantly higher production rates.

On the commercial side, Collins announced a new partnership with Etihad Engineering to expand MRO services in the Middle East. This agreement will double Collins' footprint for Nacelle services in the region and support growing A350 and 787 fleets. Pratt announced an expansion of precision parts manufacturing in Poland. This investment will increase capacity of complex component assembly for both commercial and military engines, including the GTF and F135. So we are pleased to see that our disciplined focus on our strategic priorities is delivering operational improvement and new capabilities for our customers. Finally, I want to acknowledge the leadership update we announced last month. As you saw, Shane Eddy has decided to retire from the company after more than 40 years in the aerospace and defense industry. Shane has been a great partner and teammate, and I want to thank him for his leadership at Pratt.

We are fortunate to have a very strong bench and are excited that Jill Albertelli is taking over as the President of Pratt & Whitney. Jill is currently the President of Military Engines and brings over three decades of experience across Pratt. Okay. With that, I will hand it over to Neil to take you through the third quarter results and our updated outlook in more detail.