RTX Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
RTX Corp reported strong Q3 2025 results, driven by robust demand in both commercial and defense sectors, and raised its full-year outlook for adjusted sales and EPS while maintaining its free cash flow outlook. Key topics included financial performance, segment results, strategic priorities, and updated guidance.
Key Financial Results:
Adjusted sales were $22.5 billion, up 12% on an adjusted basis and 13% organically.
Adjusted segment operating profit increased by 19% year-over-year to $2.8 billion, with margin expansion across all three segments.
Adjusted earnings per share (EPS) was $1.70, a 17% increase from the prior year.
Free cash flow was strong at $4 billion for the quarter.
The company is raising its full-year adjusted sales outlook to a range of $86.5 billion to $87 billion.
Full-year organic sales growth is now expected to be between 8% and 9%.
Adjusted EPS is now projected to be between $6.10 and $6.20 for the full year.
Free cash flow outlook is maintained at between $7 billion and $7.5 billion for the year.
Business Segment Results:
Collins' sales were $7.6 billion, up 8% on an adjusted basis and 11% organically. Adjusted operating profit was $1.2 billion.
Pratt & Whitney's sales were $8.4 billion, up 16% on both an adjusted and organic basis. Adjusted operating profit was $751 million.
Raytheon's sales were $7 billion, up 10% on both an adjusted and organic basis. Adjusted operating profit was $859 million.
Collins expects sales to grow mid-single digits year-over-year on an adjusted basis and high-single digits organically.
Pratt & Whitney expects sales to grow low- to mid-teens on an adjusted and organic basis.
Raytheon continues to expect sales to grow low-single digits year-over-year on an adjusted basis and mid-single digits organically.
Capital Allocation:
Over $900 million was returned to shareowners through dividends in the quarter.
$2.9 billion of debt was paid down in the quarter.
The company completed the sale of the actuation business and Collins' Simmonds Precision Products business for $765 million.
Industry Trends and Dynamics:
Passenger air travel has remained resilient, with global RPKs on track for approximately 5% growth this year.
Positive OE production trends drove a significant increase in production at Collins and a 6% growth in large commercial engine deliveries at Pratt.
Commercial aftermarket remained strong, supported by a large and growing installed base.
Aircraft retirements have remained low, with only 1.5% of the V2500 fleet retired so far this year.
Pratt Canada has seen over 15% growth year-to-date in commercial aftermarket.
Growing needs of US and international customers, particularly in munitions and integrated air and missile defense.
Growth Opportunities and Strategies:
Continued focus on driving performance improvements through the CORE operating system.
Increasing critical manufacturing capacity to support growth, including investing over $600 million this year in expansion projects.
Pratt Canada was selected by the EU's Clean Aviation Program to design and integrate a hybrid electric propulsion demonstrator for regional aircraft.
Collins is nearing final certification of its next-generation braking system for the A321XLR aircraft.
Raytheon demonstrated effector technology achievements, including the longest-ever air-to-air shot from a fifth-generation fighter.
Developing and deploying data analytics and AI tools to improve productivity and decision-making.
Financial Guidance and Outlook:
Raising full-year adjusted sales outlook to a range of $86.5 billion to $87 billion.
Organic sales growth for the year is expected to be between 8% and 9%.
Commercial aftermarket sales are expected to grow mid-teens year-over-year.
Commercial OE sales are expected to grow around 10% for the year.
Defense sales are expected to grow mid-single digits.
Increasing adjusted earnings per share to a new range of between $6.10 and $6.20 for the full year.
Free cash flow outlook is maintained at between $7 billion and $7.5 billion for the year.
Expect another quarter of strong operational performance at the segment level in Q4, with segment profit up around 10% year-over-year, excluding the impact of tariffs and recent divestitures at Collins.
Orders and Backlog:
Book-to-bill in the quarter was 1.63, resulting in a backlog of $251 billion, up 13% year-over-year.
$37 billion of new awards in the quarter, with $23 billion of defense and $14 billion of commercial orders.
Commercial book-to-bill this year is 1.71, and backlog has grown 18% since the end of 2024.
Raytheon booked over $8 billion of orders for munitions.
Raytheon's backlog was a record $72 billion.
