Executive Summary
RTX delivered $88.6 billion in total revenue for 2025, up 10% year-over-year, with operating profit margin expanding to 10.5% from 8.1% as all three business segments posted organic growth and improved profitability. Operating cash flow reached $10.6 billion, supported by strengthening commercial aerospace demand and defense bookings of $61 billion.
What happened
RTX reported total revenue of $88.6 billion in 2025, up 10% from $80.7 billion in 2024, with organic revenue growth of $8.9 billion partially offset by $1.2 billion in divestitures including the actuation and flight control business and Simmonds Precision Products. Operating profit reached $9.3 billion, representing a 10.5% margin compared to 8.1% in 2024. The improvement reflected stronger segment operational performance and the absence of 2024 charges totaling $1.5 billion related to legal settlements and a contract termination at Raytheon. Net income attributable to common shareowners increased to $6.7 billion ($4.96 per diluted share) from $4.8 billion ($3.55 per diluted share) in 2024. Operating cash flow increased to $10.6 billion from $7.2 billion, driven by higher net income and improved working capital management. The company returned capital through $2.8 billion in dividends and $50 million in share repurchases. At December 31, 2025, total debt stood at $37.9 billion, down from $41.3 billion, with the debt-to-total-capitalization ratio improving to 36% from 40%. The company completed long-term debt repayments totaling $3.4 billion during the year. Pratt & Whitney continued to address the Powder Metal Matter, utilizing $1.0 billion of the accrual through cash payments and customer credits, with an estimated $0.7 billion cash impact expected in 2026.
Why it matters for investors
The 10% revenue growth and 240-basis-point margin expansion demonstrate operational leverage as commercial aerospace markets recover and defense programs ramp. Organic revenue growth of $8.9 billion across all three segments indicates broad-based demand strength, with commercial aerospace aftermarket revenue at Pratt & Whitney up $2.9 billion and Collins up $1.4 billion, reflecting sustained flight hour recovery. The operating cash flow improvement to $10.6 billion from $7.2 billion signals strengthening cash generation even while absorbing $1.0 billion in Powder Metal Matter costs. Backlog growth to $268 billion provides multi-year revenue visibility, with the $36 billion increase split between $36 billion in commercial and $14 billion in defense, supported by $61 billion in defense bookings. The debt reduction of $3.4 billion and deleveraging to 36% from 40% debt-to-capitalization improves financial flexibility. However, capital intensity remains elevated as Pratt & Whitney scales production and manages the PW1100 fleet actions, with expected 2026 cash impact of $0.7 billion for Powder Metal Matter. The company's exposure to government contract risks was highlighted by $1.5 billion in payments related to legal settlements and contract termination in 2024, though these were non-recurring. Segment margin expansion—particularly Raytheon improving to 11.5% from 9.7%—indicates execution improvements on development programs and production mix shifts.
Bullish points
Commercial aerospace aftermarket revenue grew significantly with Pratt & Whitney up $2.9 billion and Collins up $1.4 billion, driven by higher flight hours and installed base growth, demonstrating recovery in high-margin recurring revenue streams that support long-term profitability.
Total backlog increased to $268 billion from $218 billion, with commercial backlog up to $161 billion from $125 billion, providing strong multi-year revenue visibility as OEM production rates stabilize and aftermarket demand strengthens across both segments.
Defense bookings reached $61 billion for the second consecutive year, with Raytheon securing $40 billion including major awards for Patriot systems, AMRAAM, and LTAMDS programs, supporting defense backlog growth to $107 billion and long-term program stability.
Operating margin expanded 240 basis points to 10.5% driven by volume leverage and favorable mix, with Raytheon margins improving to 11.5% from 9.7% due to production program ramp and development program completion, and Collins margins reaching 16.3% from 14.6% on higher aftermarket sales.
Operating cash flow increased to $10.6 billion from $7.2 billion, demonstrating improved cash generation even while absorbing $1.0 billion in Powder Metal Matter costs, with strong working capital management as accounts receivable and inventory growth moderated.
Bearish points
Pratt & Whitney Powder Metal Matter continues to require significant cash utilization, with $1.0 billion paid in both 2025 and 2024, and an estimated $0.7 billion expected in 2026, pressuring cash flow and requiring elevated aircraft on ground levels to remain through 2026 under the fleet management plan.
Net EAC adjustments remained negative at $386 million in 2025 following $473 million in 2024, reflecting ongoing cost pressures and estimate changes on fixed-price development contracts across segments, with unfavorable adjustments spread across numerous programs indicating execution challenges.
The company faces significant regulatory compliance burdens including three-year deferred prosecution agreements, SEC administrative order, and consent agreement with the Department of State, all requiring independent compliance monitors and potentially constraining strategic flexibility including divestitures.
Supply chain disruptions, inflation, and tariff impacts continued to pressure costs, with Collins noting unfavorable tariff impacts on commercial aerospace operating profit and the company highlighting ongoing procurement challenges for raw materials, microelectronics, and commodities with no near-term resolution expected.
Company-funded research and development remained elevated at $2.8 billion (3.2% of sales) with customer-funded R&D at $4.9 billion (5.5% of sales), reflecting high capital intensity required to develop next-generation technologies across commercial aerospace and defense programs without guaranteed returns.
Key highlights
RTX generated $88.6 billion in revenue for 2025, representing 10% growth year-over-year, with all three segments delivering organic revenue increases. Operating profit margin improved to 10.5% from 8.1%, driven by segment operational performance and the absence of $1.5 billion in prior-year charges. Operating cash flow reached $10.6 billion, up from $7.2 billion, as improved earnings and working capital management more than offset $1.0 billion in Powder Metal Matter cash utilization. The company reduced total debt by $3.4 billion to $37.9 billion, improving the debt-to-total-capitalization ratio to 36% from 40%. Backlog grew to $268 billion from $218 billion, with commercial backlog increasing to $161 billion and defense backlog to $107 billion, supported by $61 billion in defense bookings. Collins Aerospace delivered $30.2 billion in revenue (up 7%) with 16.3% operating margin, Pratt & Whitney achieved $32.9 billion in revenue (up 17%) with 7.9% margin, and Raytheon generated $28.0 billion in revenue (up 5%) with 11.5% margin. The company returned $2.8 billion to shareowners through dividends and completed $3.4 billion in debt repayments. Net income attributable to common shareowners totaled $6.7 billion, or $4.96 per diluted share, compared to $4.8 billion, or $3.55 per diluted share in 2024. The company completed divestitures of the actuation and flight control business and Simmonds Precision Products for combined proceeds of $1.9 billion.
Management commentary
Management highlighted broad-based organic revenue growth of $8.9 billion across all segments, with commercial aerospace aftermarket leading growth at Pratt & Whitney (up $2.9 billion) and Collins (up $1.4 billion) as flight hours continue to recover. The company noted that operating profit margin improvement to 10.5% reflected higher volume, favorable mix, and operational execution, though partially offset by inflation, supply chain constraints, and tariff impacts. Management emphasized that backlog growth to $268 billion provides strong multi-year visibility, with defense bookings of $61 billion for the second consecutive year supporting program stability. On the Powder Metal Matter, management stated that the company utilized $1.0 billion of the accrual in 2025 and currently estimates a $0.7 billion cash impact in 2026, with aircraft on ground levels expected to remain elevated through 2026 as the fleet management plan executes. The company disclosed that assumptions around the Powder Metal Matter—including timing of shop visits, inspection results, turnaround time, parts availability, and customer negotiations—remain subject to variability and could materially affect future results. Management noted that supply chain disruptions, inflation, and labor shortages continue to impact procurement and production, with no near-term resolution expected, though the company is pursuing mitigation strategies. The company stated that it resolved certain legal matters in 2024 through deferred prosecution agreements and settlements, resulting in three-year compliance monitoring requirements and potential constraints on strategic transactions. Management emphasized continued investment in digital transformation, cost reduction initiatives, and next-generation technologies across commercial aerospace and defense programs to maintain competitive positioning.
What to watch next
Investors should monitor:
Powder Metal Matter cash utilization and aircraft on ground level progression through 2026, with management estimating $0.7 billion in cash impact for the year and fleet management plan execution subject to assumptions around shop visit timing, inspection results, parts availability, and customer negotiations that could materially change.
Commercial aerospace aftermarket revenue growth trajectory at Pratt & Whitney and Collins, which drove significant margin expansion in 2025, as flight hours continue recovering and the PW1100 fleet actions impact shop visit volume and mix dynamics through 2026.
Defense program execution and margin progression at Raytheon, particularly on fixed-price development contracts where net EAC adjustments have been negative, with margin improvement to 11.5% indicating potential for further expansion as programs transition from development to production.
Compliance with deferred prosecution agreements and regulatory consent requirements, including independent monitor assessments, which impose three-year terms and could impact strategic flexibility for potential divestitures or other transactions under management's stated strategic plan.
Supply chain stabilization and tariff impact mitigation efforts, as management noted continued disruptions with no near-term resolution expected, while the company pursues operational changes, supplier diversification, and where feasible, price increases to offset cost pressures.
This summary is based solely on excerpts from the company's Form 10-K filing.