$88.6B Revenue and Record $268B Backlog Signal Sustained Ramp (RTX Q4 2025 Earnings Call)

By Dr. Graph | Updated on Apr 10, 2026 | earnings

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RTX closed fiscal 2025 with a performance that validated the thesis behind its three-segment structure: simultaneous commercial aerospace and defense demand creating a diversified growth engine with expanding margins. The company delivered $88.6 billion in adjusted sales on 11% organic growth, generated $7.9 billion in free cash flow, and ended the year with a record $268 billion backlog. Management guided 2026 to accelerate from here, projecting $92 to $93 billion in sales with continued margin expansion across all three segments.

11% Organic Growth Produces $6.29 EPS on $7.9B Free Cash Flow

RTX reported full-year adjusted sales of $88.6 billion, up $9 billion year over year, driven by 10% commercial OE growth, 18% commercial aftermarket expansion, and 8% defense growth. Adjusted EPS of $6.29 rose 10% on operating leverage from higher sales. Free cash flow reached $7.9 billion, up $3.4 billion year over year, absorbing approximately $1 billion of GTF powder metal compensation and $600 million in tariff impacts. The fourth quarter alone delivered $24.2 billion in adjusted sales (up 14% organically) and $3.2 billion in free cash flow. Full-year book-to-bill reached 1.56, producing a record backlog of $268 billion with $161 billion in commercial orders and $107 billion in defense awards. Raytheon's international backlog mix climbed to 47%, up three points from 2024.

2026 Guide: $6.60-$6.80 EPS with $8.25-$8.75B Free Cash Flow

CEO Chris Calio outlined a 2026 outlook of $92 to $93 billion in adjusted sales representing 5% to 6% organic growth, with commercial OE and defense each growing mid-single digits and commercial aftermarket up high single digits. Adjusted EPS is guided to $6.60 to $6.80, driven by approximately $0.59 in segment profit growth and $0.06 from lower interest expense, partially offset by $0.13 in lower pension income and a $0.05 headwind from higher share count. Free cash flow guidance of $8.25 to $8.75 billion reflects $1.1 billion in operational improvement, a $300 million tailwind from lower powder metal payments, offset by $500 million of incremental CapEx. The company plans to invest $10.5 billion in combined CapEx and R&D for 2026, including $3.1 billion in CapEx alone.

GTF AOGs Down 20% from Peak as MRO Output Surges 26%

Pratt & Whitney posted record full-year revenues of $32.9 billion on 17% organic growth, with commercial aftermarket up 21% on heavier content mix and military engines surging 30% on F135 production and sustainment volumes. The GTF fleet management plan remains on track both financially and technically. PW1100 AOGs declined over 20% from their 2025 highs, supported by MRO output growth of 26% for the full year, including a 39% surge in Q4 with 16% turnaround time reduction. Calio confirmed the GTF Advantage engine received EU certification in Q4, with aircraft certification and entry into service expected later in 2026 alongside the hot section plus upgrade package for MRO customers. Collins Aerospace delivered $30.2 billion in adjusted sales with 9% organic growth, while Raytheon generated $28 billion with 130 basis points of margin expansion and $157 million in improved net productivity.

Calio Positions RTX for Golden Dome as Munitions Output Rises 20%

Raytheon increased output by 20% across critical programs including GEMT for Patriot, AMRAAM, and Coyote counter-UAS systems, with management expecting further significant increases in 2026 on SM-6 and Tomahawk. When asked about the Department of War's transformation mandate, Calio emphasized constructive engagement with the department on accelerating production and strengthening the industrial base, noting RTX is well-positioned to bring a commercial approach to defense transformation. On Golden Dome, Calio described the initiative as a "real opportunity" across RTX's multilayered architecture of effectors and sensors, including undisclosed space capabilities. CFO Neil Mitchill confirmed Raytheon margins are approaching 12% and indicated no reason they cannot exceed that level, supported by a backlog composition weighted toward mature, core-competency products with 85% of 2026 sales already sitting in backlog.

Frequently Asked Questions

What is the current status of the GTF fleet management plan?

CEO Chris Calio confirmed the plan remains on track both financially and technically. PW1100 AOGs declined over 20% from peak levels, supported by 26% MRO output growth for the full year with Q4 output up 39%. The GTF Advantage engine received EU certification in Q4, with aircraft certification and entry into service expected later in 2026.

How much is RTX investing in capacity expansion for 2026?

RTX plans $10.5 billion in combined CapEx and R&D for 2026, including $3.1 billion in CapEx alone, up $500 million from 2025. Key investments include Raytheon capacity in Tucson and Andover for munitions and sensors, Collins expansion in Richardson, Texas, and Pratt forging production in Columbus, Georgia.

What is RTX's exposure to the Golden Dome missile defense initiative?

CEO Calio described Golden Dome as a 'real opportunity' across RTX's product suite, citing solutions at every layer of the multilayered defense architecture including Patriot, GEMT, Spy Six, Coyote, and undisclosed space-based capabilities. The company is identifying long lead materials and expanding capacity to be ready when awards materialize.

How much powder metal compensation remains outstanding?

RTX expects approximately $700 million in powder metal compensation payments for 2026, down from $1 billion in 2025. Cumulative payments through 2026 will reach $2.8 billion against a total expected headwind of approximately $3 billion, leaving only a couple hundred million remaining.