RTX Raises 2026 Outlook as Q3 Organic Sales Rise 12%

RTX Corporation (NYSE: RTX) raised its 2026 adjusted sales, adjusted earnings and free-cash-flow outlook after third-quarter organic sales increased 12% and adjusted segment operating profit rose 39%, supported by growth across its commercial aerospace and defense businesses and the recovery of costs related to the International Emergency Economic Powers Act, or IEEPA.

The aerospace and defense company now expects 2026 adjusted sales of $97.0 billion to $97.5 billion, up from its prior range of $95.0 billion to $96.0 billion. It projects organic sales growth of 10% to 11%, compared with 8% to 9% previously.

RTX also increased its adjusted earnings forecast to $7.65 to $7.75 per share from $7.10 to $7.25 and raised its free-cash-flow outlook to $9.0 billion to $9.2 billion from $8.50 billion to $8.75 billion. The company said the revised outlook reflects operational performance and IEEPA cost recovery.

Third-quarter sales and earnings rise

Third-quarter reported sales increased 11% to approximately $25.0 billion from $22.5 billion a year earlier, while organic sales grew 12%. Commercial original-equipment sales rose 10%, commercial aftermarket sales increased 16%, and defense sales advanced 10%, excluding acquisitions, divestitures and foreign-exchange or other effects.

GAAP diluted earnings increased 34% to $1.89 per share from $1.41. Adjusted diluted earnings rose 33% to $2.26 per share, including about $0.25 from IEEPA cost recovery. Adjusted segment operating profit grew 39%, and the corresponding margin expanded 310 basis points to 15.2%. IEEPA recovery contributed approximately 160 basis points to the margin expansion.

Free cash flow totaled $2.12 billion, compared with $2.9 billion in the prior-year period, and included approximately $300 million of IEEPA recovery. Operating cash flow was $2.87 billion, while capital expenditures were $749 million.

RTX ended the period with a $340 billion backlog, up 36%, after securing more than $81 billion of new awards. Those awards included approximately $37 billion of multi-year contracts for Tomahawk and AMRAAM production.

Collins benefits from commercial volume and cost recovery

Collins Aerospace generated third-quarter sales of $8.38 billion, up 10% on a reported basis and 12% organically. Commercial original-equipment sales increased 23%, commercial aftermarket sales rose 9%, and defense sales grew 7%, excluding acquisitions, divestitures and foreign-exchange or other effects.

Adjusted operating profit climbed 50% to $1.79 billion, lifting adjusted operating margin to 21.3% from 15.7%. RTX attributed the increase to higher commercial volume, a favorable commercial mix and approximately $250 million of IEEPA recovery. The company is also advancing structural cost actions at Collins to support further margin expansion.

Collins and Etihad Airways Engineering announced a joint venture to provide nacelle and thrust-reverser maintenance, repair and overhaul services for Airbus A350 and Boeing 787 fleets. The facility is expected to begin operating in early 2027 and more than double Collins’ nacelle MRO footprint in the Middle East.

RTX now expects Collins’ full-year adjusted sales to increase by a high-single-digit percentage and organic sales to rise by a low-double-digit percentage. Adjusted operating profit is projected to increase by $925 million to $975 million from the prior year.

Pratt aftermarket growth offsets weaker commercial OE

Pratt & Whitney reported sales of $9.23 billion, up 10% on both a reported and organic basis. Commercial aftermarket sales increased 21% and military sales rose 2%, while commercial original-equipment sales declined 5%.

Adjusted operating profit increased 29% to $968 million, and adjusted operating margin rose to 10.5% from 8.9%. Higher commercial aftermarket volume and approximately $160 million of IEEPA recovery supported the result, while unfavorable commercial OE and aftermarket mix and higher selling, general and administrative expenses were offsets.

GAAP operating profit declined to $608 million from $751 million. The quarter’s reconciliation included a $363 million customer-bankruptcy adjustment.

The company said PW1100 maintenance, repair and overhaul output improved by more than 35% from a year earlier. The first aircraft powered by Pratt & Whitney GTF Advantage engines, delivered to United Airlines in the second quarter, entered service in October.

For 2026, RTX expects Pratt & Whitney adjusted and organic sales to increase by high-single-digit percentages. Adjusted operating profit is projected to rise by $475 million to $525 million from the prior year.

Raytheon gains from defense production and major awards

Raytheon sales increased 14% to $8.03 billion on both a reported and organic basis, driven by higher volume on naval programs and land and air defense systems. Adjusted operating profit rose 32% to $1.13 billion, while adjusted operating margin expanded to 14.1% from 12.2%, reflecting improved net productivity, higher volume and favorable program mix, including Patriot programs.

The segment’s backlog reached $130 billion, with a quarterly book-to-bill ratio of 6.54 and a rolling 12-month ratio of 2.90. Awards included approximately $23 billion for Tomahawk, supporting annual production above 1,000 units, and $14.3 billion for AMRAAM, supporting a production ramp to 1,900 units per year. Raytheon also received a $3.1 billion British Army training-system award and $3.0 billion of classified awards.

RTX expects Raytheon’s full-year adjusted and organic sales to grow by low-teen percentages. Adjusted operating profit is forecast to increase by $800 million to $850 million from the prior year.

The company invested $2.8 billion during the quarter in company- and customer-funded research and development and capital expenditures to develop technologies and expand capacity. It also continued to ramp critical munitions production and advance Raytheon’s composable-weapons strategy.

RTX’s outlook remains subject to risks including changes in government defense spending and policy, contract execution and cost control, supply-chain disruptions, tariffs and other trade restrictions, aerospace-industry conditions, production changes at major customers, product quality issues and the previously disclosed powder-metal condition affecting parts used in certain Pratt & Whitney engines. The company also cautioned that forward-looking non-GAAP measures cannot generally be reconciled with GAAP measures without unreasonable effort because excluded items may be volatile and difficult to predict.