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Item 2. Management’s Discussion and Analysis

2025-04-22 compared with 2024-10-22 · 198 added, 396 removed, 316 unchanged (65% of the section changed)

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Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries.

References to “Raytheon Company” mean Raytheon Company, which became a wholly owned subsidiary of RTX on April 3, 2020 during an all-stock merger transaction between United Technologies Corporation and Raytheon Company (the surviving company of which is RTX Corporation).

Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end.

Throughout this Form 10-Q, when we refer to the quarters and nine months ended September 30, 2024 and 2023 with respect to Raytheon, we are referring to their September 29, 2024 and October 1, 2023 fiscal quarter ends, respectively.

Throughout this Form 10-Q, when we refer to the quarters ended March 31, 2025 and 2024 with respect to Raytheon, we are referring to their March 30, 2025 and March 31, 2024 fiscal quarter ends, respectively.

The current status of significant factors affecting our business environment in 2025 is discussed below.

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Collins and Pratt & Whitney serve both commercial and government aerospace customers.

Revenue passenger miles (RPMs), available seat miles, and the general economic health of airline carriers and airframers are key barometers for our commercial aerospace operations.

In particular, the ongoing work stoppages at a major airframer customer, may adversely impact our business.

Revenue passenger miles (RPMs), available seat miles, and the general economic health of airline carriers and airframers, as well as the financial strength and performance of airframers, are key barometers for our commercial aerospace operations.

Performance in the general aviation sector is closely tied to the overall health of the economy and is positively correlated to corporate profits.

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government licenses and approvals for sales, the risk of sanctions, or other restrictions.

Refer to “U.S.

Government’s Continuing Resolution” below for additional information.

Other Matters

Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, geopolitical conflicts and strained intercountry relations, U.S.

tax law changes, foreign currency exchange rates, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.

Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S.

government policy positions, including changes in DoD policies or priorities, geopolitical conflicts and strained intercountry relations, U.S.

tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses.

Legal Matters.

The Company has resolved several outstanding legal matters, herein referred to as “Resolution of Certain Legal Matters.” The Company entered into a deferred prosecution agreement (DPA) with the Department of Justice (DOJ) and the Company settled an administrative proceeding with the Securities and Exchange Commission (SEC) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012 (Thales-Raytheon Systems and

Related Matters).

As previously announced, in 2024 the Company resolved several outstanding legal matters, herein referred to as “Resolution of Certain Legal Matters.” The Company entered into a deferred prosecution agreement (DPA) (DPA-1) with

the Department of Justice (DOJ) and the Company settled an administrative proceeding with the Securities and Exchange Commission (SEC) (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012 (Thales-Raytheon Systems and Related Matters).

The Company also entered into a DPA and a False Claims Act (FCA) settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017 (DOJ Investigation and Contract Pricing Disputes).

In addition, the Company resolved certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a consent agreement with the Department of State (DOS) (Trade Compliance Matters).

As a result, we recorded a combined pre-tax charge of $918 million during the second quarter of 2024, which included an accrual of $269 million related to the DOJ Investigation and Contract Pricing Disputes (in addition to amounts previously accrued), an accrual of $364 million related to Thales-Raytheon Systems and Related Matters (in addition to amounts previously accrued), and an accrual of $285 million related to Trade Compliance Matters.

See “Note 16:

Commitments and Contingencies” within Item 1 of this Form 10-Q for additional information.

Under these DPAs and the SEC Administrative Order, Raytheon Company and the Company are required to retain, among other things, an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged).

The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under the DPAs and the SEC Administrative Order.

The DPAs further provide that, in the event the DOJ, in its sole discretion, determines during the period of deferral of prosecution that Raytheon Company or the Company have violated any provision of either DPA, Raytheon Company or the Company may be subject to prosecution for any federal criminal violation, including the charges against Raytheon Company in the relevant DPA.

The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the SEC Administrative Order and institute proceedings against the Company.

In the event of any such determination or breach, the Company may face additional adverse impacts.

In addition, the Company resolved certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a Consent Agreement (CA) with the Department of State (DOS) (Trade Compliance Matters).

The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s International Traffic in Arms Regulations (ITAR) compliance program.

The CA also requires appointment of an external, independent Special Compliance Officer (SCO).

The Company appointed its SCO on September 27, 2024.

For further discussion of DPA-1, DPA-2, the SEC Administrative Order, and the CA, see “Note 16:

Commitments and Contingencies,” within Item 1 of this Form 10-Q.

Pratt & Whitney Powder Metal Matter.

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Global Supply Chain.

We are dependent on a global supply chain and in recent years have experienced supply chain disruptions that resulted in delays and increased costs which adversely affected our performance.

These disruptions impacted our ability to procure raw materials, microelectronics, and certain commodities on a timely basis and/or at expected prices, and have been driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.

Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, continue to contribute to these issues.

We are dependent on a global supply chain and have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance.

These disruptions impacted our ability to procure raw materials, microelectronics, and certain commodities on a timely basis and/or at expected prices, and are driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages.

Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, such as tariffs, are contributing to these issues.

Furthermore, our suppliers and subcontractors have been impacted by these same issues.

As a result of the Canadian government’s imposition of sanctions in February 2024, including those imposed on U.S.- and German-based Russian-owned entities from which we source titanium for use in our Canadian operations, we recorded charges of $175 million in the first quarter of 2024 within our Collins segment.

These charges are primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that are no longer recoverable as a result of initiating alternative titanium sources.

These charges were primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources.

We have implemented actions and programs to mitigate some of the impacts but anticipate supply chain disruptions to continue.

Economic Environment.

High inflation levels have increased material and component prices, labor rates, and supplier costs and have negatively impacted our operating profit and margin, including the impact on productivity expectations.

The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations.

Due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we are not always able to offset cost increases by increasing our contract value or pricing, in particular on our fixed-price contracts.

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In addition, higher interest rates have increased the cost of borrowing and tightened the availability of capital.

Among other things, these effects can constrain our customers’ purchasing power and decrease orders for our products and services and impact the ability of our customers to make payments and of our suppliers to perform.

Moreover, volatility in interest rates and financial markets can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain.

We continue to pursue strategic and operational initiatives to help address these macroeconomic pressures, including our digital transformation, operational modernization, cost reduction, and advanced technology programs, and we apply our Customer Oriented Results Excellence (CORE) operating platform to the execution of these initiatives.

Moreover, changes in the macroeconomic environment, including volatility with respect to global trade policy, interest rates, and financial markets, can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain.

Customer Oriented Results and Excellence (CORE) operating platform to the execution of these initiatives.

However, the impact of these pressures and corresponding initiatives is uncertain and subject to a range of factors and future developments.

Government’s Continuing Resolution.

On September 26, 2024, President Biden signed a continuing resolution that funds federal agencies through December 20, 2024.

A continuing resolution authorizes federal agencies to operate generally at the same funding levels from the prior year, but typically does not authorize new spending initiatives during this period.

If Congress is unable to enact formal fiscal year 2025 appropriation bills by December 20, 2024, it may pass another continuing resolution.

However, if Congress fails to pass the formal appropriations bills or a continuing resolution, then the U.S.

government would shut down during which federal agencies would cease all non-essential functions.

In the event of a U.S.

government shutdown, our business, program performance and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations, including risks relating to the funding of certain programs, stop work orders, as well as delays in contract awards, new program starts, payments for work performed, and other actions.

We also may experience similar impacts in the event of an extended period of continuing resolutions.

Generally, the significance of these impacts will primarily be based on the length of the continuing resolution or shutdown.

Furthermore, under the Fiscal Responsibility Act of 2023, which imposes limits on discretionary spending for defense and non-defense programs in exchange for the lifting of the debt ceiling in June 2023, if Congress fails to enact appropriation bills by April 30,

2025, then the budget caps will be reduced and corresponding automatic reductions to agency budget accounts will be enforced through sequestration.

Since February 2025, the U.S.

government has issued several executive orders imposing tariffs on imports from most countries with whom the U.S.

engages in trade (the Tariff EOs).

In response to the Tariff EOs, China, the European Union and Canada have announced, and in some cases imposed, counter tariffs on goods that are imported from the U.S.

Our businesses import goods subject to tariffs from many countries covered by the Tariff EOs and they also import goods into countries which have announced counter tariffs and other actions.

We are pursuing a variety of actions to mitigate the potential impact of tariffs, including (i) utilizing available exemptions or exclusions to tariffs, such as trade agreements, treaties or other statutory relief, (ii) evaluating operational and supply chain changes, and (iii) where feasible, increasing the prices of our goods and services.

The uncertainties created by these changes in global trade policy and the imposition of tariffs, counter tariffs and non-tariff countermeasures by countries subject to U.S.

tariffs may adversely affect our previously issued 2025 outlook with respect to our results of operations and cash flows.

If the imposition of current tariff levels is sustained, we expect our profitability, cash flows and estimates inherent in our financial statements to be negatively affected.

The actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S.

tariffs, and our ability to mitigate the impacts of tariffs.

Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (EACs), and estimates supporting the recoverability of our inventories, contract fulfillment costs, deferred tax assets, intangible assets and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.

Government’s Budget.

On March 15, 2025, the President signed a continuing resolution (CR) under which U.S.

government Departments and Agencies will continue to operate through September 30, 2025, the end of the government fiscal year.

The CR funds the government at fiscal year 2024 levels with certain exceptions, including the addition of approximately $6 billion to the DoD budget.

Although Congress provided guidelines to the Executive Branch, the CR generally permits individual Departments and Agencies to determine the areas and programs to fund.

As a result, the impact of the CR on RTX ultimately will depend on those funding decisions, however RTX currently does not expect that the CR will materially impact our business or results of operations.

Executive Order Regarding Modernizing Defense Acquisitions .

On April 9, 2025, the U.S.

government issued an executive order requiring, among other things, a DoD review of its Major Defense Acquisition Programs to identify those that are 15% behind schedule, 15% over budget, unable to meet key performance parameters, or unaligned with the Secretary of Defense’s mission priorities for potential cancellation.

Although RTX does not, at this time, believe the Executive Order will have a material impact on our business or results of operations, the longer-term ramifications, if any, to RTX will depend on a variety of factors including the formulation and implementation of the review criteria in the order, the review timeline, the Secretary of Defense’s mission priorities, and future budget determinations based on the results of such review.

Geopolitical Matters.

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These government measures, among other limitations, restrict transactions involving various Russian banks and financial institutions and impose enhanced export controls limiting transfers of various goods, software, and technologies to and from Russia, including broadened export controls specifically targeting the aerospace sector.

These measures have adversely affected, and could continue to adversely affect, the Company and/or our supply chain, business partners, or customers, including as discussed above in Global Supply Chain;

These measures have adversely affected, and could continue to adversely affect, the Company and/or our supply chain, business partners, or customers;

however, based on information available to date, we do not currently expect these issues will have a material adverse effect on our financial results.

We will continue to monitor future developments, including additional sanctions and other measures, that could adversely affect the Company and/or our supply chain, business partners, or customers.

In February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX Corporation (RTX) business segment which became part of Raytheon during the third quarter of 2023), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan.

In February 2023, China announced sanctions against Raytheon Missiles & Defense (RMD) (a former RTX business segment which became part of the Raytheon business during the third quarter of 2023), and previously announced it may take measures against RTX, in connection with certain foreign military sales to Taiwan.

The Chinese sanctions against RMD included a fine equal to twice the value of the arms that RMD sold to Taiwan since September 2020.

In addition, in September 2022, China indicated that it decided to sanction our Chairman and former Chief Executive Officer, Gregory Hayes, in connection with another foreign military sale to Taiwan involving RTX products and services.

In January 2024, China announced sanctions against Data Link Solutions LLC, a Collins joint venture and, most recently, in May 2024, China announced sanctions against Raytheon Missile Systems and the Javelin Joint Venture between Raytheon and Lockheed Martin.

Since that time, China has announced additional sanctions against the Raytheon business and a Collins joint venture.

If China were to impose additional sanctions, enforce announced sanctions, or take other regulatory action against RTX, our suppliers, affiliates, or partners, it could potentially disrupt our business operations.

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We have direct commercial sales contracts for products and services to certain foreign customers, for which U.S.

government review and approval has been pending.

government review and approval have been pending.

government’s approval of these sales is subject to a range of factors, including its foreign policies related to these customers, which are subject to continuing review and potential changes.

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If we ultimately do not receive all of the regulatory approvals, or those approvals are revoked, it could have a material effect on our financial results.

In particular, during the third quarter of 2024, we received a critical license required to restart work under certain contracts with a Middle East customer.

In order to perform under these contracts, significant actions are required, including obtaining additional regulatory approvals, and therefore we have not recognized revenue on these contracts to date.

Should the remaining uncertainties be resolved, we do not expect these contracts to have a significant impact on our future financial results.

As of September 30, 2024, our Contract liabilities include approximately $430 million of advance payments received in connection with these contracts, which may become refundable to the customer if the contracts are ultimately terminated .

We continue to closely monitor potential impacts from the war in Gaza and the recent escalation of conflict in the region on RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and elsewhere.

To date, the impacts to RTX have been minimal, though a number of countries have imposed restrictions on exports to or imports from Israel.

We continue to closely monitor potential impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to renewed violence in Gaza, resumed Houthi missile attacks against Israel, and uncertainty related to regime change in Syria.

RTX’s commercial manufacturing facilities in Israel remain open and operational and have continued exporting products and importing critical items and raw materials.

RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, though we could experience future delivery delays of certain products because of the current situation.

Given the volatile nature of the situation, the potential impacts to RTX are subject to change.

RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, although we could experience future delivery delays of certain products if further escalations arise.

To date, the overall impacts to RTX from this situation have been minimal;

however, given the volatile nature of the situation, the potential impacts to RTX are subject to change.

See Part I, Item 1A, “Risk Factors” in our 2024 Annual Report on Form 10-K for further discussion of these items.

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Basis of Presentation and Summary of Accounting Principles” within Item 8 of our 2024 Annual Report on Form 10-K, which describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements.

results in these areas could differ from management’s estimates.

There have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2024.

Actual results in these areas could differ from management’s estimates.

There have been no significant changes in our critical accounting estimates during the quarter ended March 31, 2025.

RESULTS OF OPERATIONS

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Restructuring costs generally arise from severance related to workforce reductions and facility exit costs.

We are continuously evaluating our cost structure and have implemented restructuring actions in an effort to keep our cost structure competitive.

We are continuously evaluating our cost structure and implement restructuring actions in an effort to keep our cost structure competitive.

The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of U.S.

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Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant, and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment, if applicable.

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

Net sales $ 20,306 $ 19,305

The factors contributing to the change year-over-year in total net sales for the quarter and nine months ended September 30, 2024 are as follows:

(dollars in millions) Quarter Ended September 30, 2024 Nine Months Ended September 30, 2024

$ 1,555 $ 5,589

The factors contributing to the change year-over-year in total net sales for the quarter ended March 31, 2025 are as follows:

(dollars in millions) Quarter Ended March 31, 2025

Acquisitions and divestitures, net (492)

Other 5,500 5,395

Total change $ 1,001

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GAAP amounts is provided in the table above.

Net sales increased $1.6 billion organically in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily due to higher organic net sales of $0.9 billion at Pratt & Whitney, $0.4 billion at Collins, and $0.3 billion at Raytheon.

Other sales increased $5.5 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily driven by the absence of the net sales charge of $5.4 billion associated with the Powder Metal Matter recorded in the third quarter of 2023.

Net sales increased $5.6 billion organically in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to higher organic net sales of $3.2 billion at Pratt & Whitney, $1.6 billion at Collins, and $1.0 billion at Raytheon.

Other sales increased $5.4 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily driven by the absence of the net sales charge of $5.4 billion associated with the Powder Metal Matter recorded in the third quarter of 2023.

The decreases in net sales due to Acquisitions and divestitures, net of $0.4 billion and $0.9 billion for the quarter and nine months ended September 30, 2024 compared to the quarter and nine months ended September 30, 2023, respectively, were primarily driven by the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment completed in the first quarter of 2024.

Net sales increased $1.5 billion organically in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to higher organic net sales of $0.9 billion at Pratt & Whitney, $0.6 billion at Collins, and $0.1 billion at Raytheon.

The decrease in net sales due to Acquisitions and divestitures, net of $0.5 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily driven by the sale of our Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment completed in the first quarter of 2024.

See “Segment Review” below for further information by segment.

Quarter Ended September 30, % of Total Net Sales

Quarter Ended March 31, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Segment Financial Data” within Item 1 of this Form 10-Q for the composition of external net sales by products and services by segment.

Net products sales increased $6.1 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily due to the absence of the net sales charge of $5.3 billion associated with the Powder Metal Matter recorded in the third quarter of 2023, and increases in external products sales of $0.3 billion at Pratt & Whitney, $0.3 billion at Collins, and $0.2 billion at Raytheon.

Net services sales increased $0.5 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily due to increases in external services sales of $0.6 billion at Pratt & Whitney and $0.1 billion at Collins, and the absence of net sales charge of $0.1 billion associated with the Powder Metal Matter recorded in the third quarter of 2023, partially offset by a decrease in external services sales of $0.3 billion at Raytheon, primarily driven by the sale of our CIS business completed in the first quarter of 2024.

Nine Months Ended September 30, % of Total Net Sales

(dollars in millions) 2024 2023 2024 2023

Products $ 43,573 $ 34,813 73.7 % 71.1 %

Services 15,542 14,180 26.3 % 28.9 %

Total net sales $ 59,115 $ 48,993 100 % 100 %

Net products sales increased $8.8 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily driven by the absence of the net sales charge of $5.3 billion associated with the Powder Metal Matter and increases in external products sales of $1.9 billion at Pratt & Whitney, $1.1 billion at Collins, and $0.5 billion at Raytheon.

Net services sales increased $1.4 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to increases in external services sales of $1.4 billion at Pratt & Whitney and $0.3 billion at Collins, and the absence of the net sales charge of $0.1 billion associated with the Powder Metal Matter recorded in the third quarter of 2023, partially offset by a decrease in external services sales of $0.4 billion at Raytheon, primarily driven by the sale of our CIS business completed in the first quarter of 2024.

Net products sales increased $0.3 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to increases in external products sales of $0.3 billion at Collins and $0.1 billion at Pratt & Whitney, partially offset by a decrease in external products sales of $0.1 billion at Raytheon.

Net services sales increased $0.7 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily due to increases in external services sales of $0.8 billion at Pratt & Whitney and $0.1 billion at Collins, partially offset by a decrease in external services sales of $0.3 billion at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Our sales to major customers were as follows:

Quarter Ended September 30, % of Total Net Sales

(dollars in millions) 2024 2023 2024 2023

Sales to the U.S.

government (1)

$ 7,996 $ 7,678 39.8 % 57.0 %

Foreign military sales through the U.S.

government 1,502 1,317 7.5 % 9.8 %

Foreign government direct commercial sales 1,218 1,020 6.1 % 7.6 %

Commercial aerospace and other commercial sales (2)

9,373 3,449 46.7 % 25.6 %

Total net sales $ 20,089 $ 13,464 100 % 100 %

(1) Excludes foreign military sales through the U.S.

(2) 2023 includes the reduction in sales from the Powder Metal Matter.

Nine Months Ended September 30, % of Total Net Sales

Quarter Ended March 31, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Commercial aerospace and other commercial sales 9,751 8,721 48.0 % 45.2 %

27,323 18,867 46.2 % 38.5 %

Total net sales $ 20,306 $ 19,305 100 % 100 %

(1) Excludes foreign military sales through the U.S.

(2) 2023 includes the reduction in sales from the Powder Metal Matter.

Cost of Sales

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

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Percentage of net sales 79.7 % 81.6 %

The factors contributing to the change year-over-year in total cost of sales for the quarter and nine months ended September 30, 2024 are as follows:

(dollars in millions) Quarter Ended September 30, 2024 Nine Months Ended September 30, 2024

$ 1,164 $ 4,505

The factors contributing to the change year-over-year in total cost of sales for the quarter ended March 31, 2025 are as follows:

(dollars in millions) Quarter Ended March 31, 2025

Acquisitions and divestitures, net (448)

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Acquisition accounting adjustments (28)

Other 2,513 3,152

Total change $ 446

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GAAP amounts is provided in the table above.

The organic increase in total cost of sales of $1.2 billion for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales increased $2.5 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact.

The organic increase in total cost of sales of $4.5 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales increased $3.2 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact, a $0.5 billion charge related to the anticipated Raytheon Contract Termination in the second quarter of 2024, and $0.2 billion of charges recorded in the first quarter of 2024 at Collins related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that are no longer recoverable as a result of initiating alternative titanium sources.

The above items were partially offset by the absence of $0.1 billion of charges at Pratt & Whitney related to a customer insolvency recorded in the second quarter of 2023.

The decreases in total cost of sales due to Acquisitions and divestitures, net of $0.4 billion and $0.8 billion for the quarter and nine months ended September 30, 2024 compared to the quarter and nine months ended September 30, 2023, respectively, were primarily driven by the sale of our CIS business within our Raytheon segment completed in the first quarter of 2024.

The organic increase in total cost of sales of $1.1 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.4 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Other cost of sales decreased $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily driven by the absence of $0.2 billion of charges recorded in the first quarter of 2024 at Collins related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources.

Restructuring actions relate to ongoing cost reduction efforts including workforce reductions and the consolidation of facilities.

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For discussion on Acquisition accounting adjustments, see the “Acquisition accounting adjustments” subsection under the “Segment Review” section below.

Quarter Ended September 30, % of Total Net Sales

(dollars in millions) 2024 2023 2024 2023

Cost of sales

Products $ 12,336 $ 9,289 61.4 % 69.0 %

Services 3,719 3,461 18.5 % 25.7 %

Total cost of sales $ 16,055 $ 12,750 79.9 % 94.7 %

Net products cost of sales increased $3.0 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact and increases in external products cost of sales at Pratt & Whitney, Collins, and Raytheon, each driven by the products sales changes noted above.

Net services cost of sales increased $0.3 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, primarily due to increases in external services cost of sales at Pratt & Whitney and Collins, partially offset by a decrease in external services cost of sales at Raytheon, each driven by the services sales changes noted above.

Nine Months Ended September 30, % of Total Net Sales

Quarter Ended March 31, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Total cost of sales $ 16,190 $ 15,744 79.7 % 81.6 %

Net products cost of sales increased $6.1 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the absence of the Powder Metal Matter charge recorded in the third quarter of 2023, which resulted in a $2.5 billion net reduction in cost of sales primarily reflecting our partners’ 49% share of the impact.

In addition, net product cost of sales includes increases in external products cost of sales at Pratt & Whitney, Collins, and Raytheon all driven by the products sales changes noted above, a $0.5 billion charge related to the anticipated Raytheon Contract Termination in the second quarter of 2024, and charges of $0.2 billion at Collins as a result of initiating alternative titanium sources recorded in the first quarter of 2024.

Net services cost of sales increased $0.9 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to increases in external services cost of sales at Pratt & Whitney and Collins, partially offset by a decrease in external services cost of sales at Raytheon, all driven by the services sales changes noted above.

Net products cost of sales increased $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily driven by increases in external products cost of sales at Collins and Pratt & Whitney, partially offset by a decrease in external products cost of sales at Raytheon, each driven by the products sales changes noted above.

The increase was also partially offset by the absence of charges recorded during the first quarter of 2024 at Collins as a result of initiating alternative titanium sources.

Net services cost of sales increased $0.4 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, primarily due to an increase in external services cost of sales at Pratt & Whitney, driven by the services sales change noted above, partially offset by a decrease in external services cost of sales at Raytheon, primarily driven by the sale of the CIS business completed in the first quarter of 2024.

Research and Development

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

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Research and development spending is subject to the variable nature of program development schedules and, therefore, year-over-year fluctuations in spending levels are expected.

Company-funded research and development expenses in the quarter ended September 30, 2024 were relatively consistent with the quarter ended September 30, 2023.

The increase in customer-funded research and development expenses of $0.1 billion for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily driven by increased spending at Pratt & Whitney on military

programs and higher expenses on defense and commercial programs at Collins, partially offset by lower expenses on development programs at Raytheon.

The increase in c ompany- funded research and development expenses of $0.1 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by increased spending on commercial program development at Pratt & Whitney and Collins, partially offset by lower expenses on development programs at Raytheon.

The increase in customer-funded research and development expenses of $0.2 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by higher expenses on commercial and defense programs at Collins and increased spending at Pratt & Whitney on military programs, partially offset by lower expenses on various development programs at Raytheon.

Company- and customer- funded research and development expenses for the quarter ended March 31, 2025 were relatively consistent with the quarter ended March 31, 2024.

Selling, General, and Administrative

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

1 unchanged sentence

Percentage of net sales 7.1 % 7.2 %

Selling, general, and administrative expenses in the quarter ended September 30, 2024 were relatively consistent with the quarter ended September 30, 2023.

Selling, general, and administrative expenses decreased $0.1 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the absence of a $0.1 billion charge at Pratt & Whitney related to a customer insolvency recorded in the second quarter of 2023.

The increase in Selling, general, and administrative expenses of $0.1 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by higher restructuring related costs as a result of actions initiated in the first quarter of 2025 at Collins.

We are continuously evaluating our cost structure and have implemented restructuring actions in an effort to keep our cost structure competitive.

Therefore, the amounts reflected above include the beneficial impact of previous restructuring actions on Selling, general, and administrative expenses.

Other Income (Expense), Net

Quarter Ended September 30, Nine Months Ended September 30,

Other Income, Net

Quarter Ended March 31,

(dollars in millions) 2025 2024

Other income (expense), net $ 134 $ 3 $ (390) $ 116

Other income (expense), net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.

The increase in Other income (expense), net of $0.1 billion for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024, partially offset by a net unfavorable year-over-year impact of foreign exchange gains and losses.

Refer to “Note 11:

Income Taxes” within Item 1 of this Form 10-Q for additional information on the indemnity receivable and the offsetting impacts to Income tax expense.

The decrease in Other income (expense), net of $0.5 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to a $0.9 billion charge during the second quarter of 2024 related to the Resolution of Certain Legal Matters, the absence of a gain on the sale of land during the first quarter of 2023, and the reversal of certain tax related indemnity receivables associated with the conclusion of the examination phase of certain tax audits in the first quarter of 2024.

The above items were partially offset by a $0.4 billion gain on the sale of Raytheon’s CIS business, net of transaction costs, in the first quarter of 2024 and a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.

Refer to “Note 11:

Income Taxes” within Item 1 of this Form 10-Q for additional information on the indemnity receivable and the offsetting impacts to Income tax expense.

Operating Profit (Loss)

Quarter Ended September 30, Nine Months Ended September 30,

Other income, net $ 4 $ 372

Other income, net includes equity earnings in unconsolidated entities, royalty income, foreign exchange gains and losses, and other ongoing and non-recurring items.

The decrease in Other income, net of $0.4 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily due to the absence of a $0.4 billion gain on sale of the CIS business in the first quarter of 2024, which was partially offset by an adjustment to certain tax related indemnity receivables recorded in the same quarter.

Operating Profit

Quarter Ended March 31,

(dollars in millions) 2025 2024

Operating profit (loss) $ 2,028 $ (1,396) $ 4,427 $ 1,784

Operating profit (loss) margin 10.1 % (10.4) % 7.5 % 3.6 %

The increase in Operating profit (loss) of $3.4 billion for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily driven by the absence of the $2.9 billion of charges associated with the Powder Metal Matter recorded in the third quarter of 2023, the increased operating performance of our segments of approximately $0.4 billion, and a $0.2 billion benefit related to an indemnity receivable recorded in the third quarter of 2024.

Refer to “Note 11:

Income Taxes” within Item 1 of this Form 10-Q for additional information on the indemnity receivable and the offsetting impacts to Income tax expense.

The increase in Operating profit (loss) of $2.6 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by the absence of the $2.9 billion of charges associated with the Powder Metal Matter in the third quarter of 2023.

In addition, the increase in Operating profit was driven by the increased operating performance of our segments of approximately $1.0 billion, a $0.4 billion gain on sale of the CIS business recorded in the first quarter of 2024, net of transaction and other related costs, and a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.

The above items were partially offset by a $0.9 billion charge in the second quarter of 2024 related to the Resolution of Certain Legal Matters, a $0.6 billion charge in the second quarter of 2024 related to the anticipated Raytheon Contract Termination, and the change in our FAS/CAS operating adjustment which is described below in “Segment Review.” Refer to “Note 11:

Income Taxes” within Item 1 of this Form 10-Q for additional information on the indemnity receivable and the offsetting impacts to Income tax expense.

Operating profit $ 2,035 $ 1,870

Operating profit margin 10.0 % 9.7 %

The increase in Operating profit of $0.2 billion for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by the operating performance of our segments of $0.4 billion, the absence of $0.2 billion of charges at Collins as a result of initiating alternative titanium sources during the first quarter of 2024, and the absence of the $0.1 billion reversal of certain tax related indemnity receivables recorded in the first quarter of 2024.

These increases were partially offset by the absence of a $0.4 billion gain on sale of the CIS business recorded in the first quarter of 2024 and an increase in restructuring charges of $0.1 billion .

Non-service Pension Income

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

Non-service pension income $ (366) $ (386)

The changes in Non-service pension income of $0.1 billion and $0.2 billion for the quarter and nine months ended September 30, 2024 compared to the quarter and nine months ended September 30, 2023, respectively, were primarily driven by the decrease in the recognized actuarial net (gain) loss as a result of the merger of the remaining Raytheon Company qualified pension plans into the RTX Consolidated Pension Plan at December 31, 2023.

The Non-service pension income for the quarter ended March 31, 2025 was relatively consistent with the quarter ended March 31, 2024.

Interest Expense, Net

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

2 unchanged sentences

Other non-operating expense (income) (1)

(7) (3) (5) (39)

Interest expense, net $ 443 $ 405

1 unchanged sentence

(1) Primarily consists of the gains or losses on assets associated with certain of our nonqualified deferred compensation and employee benefit plans, the gains or losses on liabilities associated with certain of our nonqualified deferred compensation plans, and non-operating dividend income.

Interest expense, net increased $0.1 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily due to an increase in Interest expense as a result of long-term debt issuances in 2023.

Interest expense, net increased $0.4 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in Interest expense as a result of long-term debt issuances in 2023, partially offset by the reversal of interest accruals as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits in the first quarter of 2024.

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Interest expense, net increased $38 million in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024.

The increase in Interest expense is primarily due to the reversal of interest accruals as a result of the conclusion of certain tax audits recorded during the first quarter of 2024, partially offset by lower interest expense on long-term debt in the first quarter of 2025.

Quarter Ended March 31,

Effective income tax rate 17.0 % 5.8 %

The change in the effective tax rate for the quarter ended September 30, 2024, as compared to the quarter ended September 30, 2023, is driven in part by the $2.9 billion Powder Metal Matter charge and the associated deferred tax benefit of $663 million recorded in the quarter ended September 30, 2023.

Additionally, in the quarter ended September 30, 2024, the Company recorded a $138 million deferred tax benefit associated with legal entity reorganizations and a $56 million tax benefit in response to favorable U.S.

Tax Court rulings issued to unrelated taxpayers, but with facts similar to ours.

The nature of the tax item in the rulings is subject to a tax matters agreement entered into with Carrier and Otis in connection with the separation of those businesses in 2020, and therefore we recorded a pre-tax charge of $32 million for their respective indemnified amounts.

The quarter ended September 30, 2024 also includes a $212 million tax charge related to U.S.

federal income taxes now owed by the Company resulting from a favorable non-U.S.

tax ruling Otis received in the quarter impacting pre-separation tax years.

This tax ruling results in a reduction of U.S.

foreign tax credits previously claimed by the Company in pre-separation tax years for which Otis must indemnify us.

The Company currently expects to receive approximately $300 million from Otis in connection with the reduction to the foreign tax credits claimed and resulting indemnification obligation.

The Company recorded a pre-tax benefit of $212 million representing a portion of the indemnity owed by Otis pursuant to the tax matters agreement and will record the remaining amount owed upon receipt.

Additionally, the Company is indemnified for associated interest of $31 million as of September 30, 2024.

In addition to items described above, the effective tax rate for the nine months ended September 30, 2024 also includes a $275 million tax benefit recognized in the first quarter of 2024 resulting from the conclusion of the examination phases of the U.S.

federal income tax audits for RTX 2017 and 2018 tax years and Rockwell Collins 2016, 2017, and 2018 tax years, a $143 million tax cost associated with the sale of the CIS business, and the effective tax rate impact of the $918 million charge associated with the Resolution of Certain Legal Matters accrued during the second quarter of 2024 where no tax benefit has been recorded.

Net Income (Loss) Attributable to Common Shareowners

Quarter Ended September 30, Nine Months Ended September 30,

Our effective tax rate for the quarter ended March 31, 2025 was 17.0% as compared to 5.8% for the quarter ended March 31, 2024.

The effective tax rate for the quarter ended March 31, 2024 included tax benefits of $275 million recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins Internal Revenue Service (IRS) audits, which was partially offset by the tax cost of $143 million associated with the sale of the CIS business.

Net Income Attributable to Common Shareowners

Quarter Ended March 31,

(dollars in millions, except per share amounts) 2025 2024

Net income (loss) attributable to common shareowners $ 1,472 $ (984) $ 3,292 $ 1,769

Diluted earnings (loss) per share $ 1.09 $ (0.68) $ 2.45 $ 1.21

Net income attributable to common shareowners for the quarter ended September 30, 2024 includes the following:

• acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings (loss) per share (EPS) of $0.31.

Net loss attributable to common shareowners for the quarter ended September 30, 2023 includes the following:

• charge associated with the Powder Metal Matter of $2.2 billion, net of tax and partner share, which had an unfavorable impact on diluted EPS of $1.53;

• acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.28.

Net income attributable to common shareowners for the nine months ended September 30, 2024 includes the following:

Net income attributable to common shareowners $ 1,535 $ 1,709

Diluted earnings per share $ 1.14 $ 1.28

Net income attributable to common shareowners for the quarter ended March 31, 2025 includes the following:

• acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.27;

• restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.07.

Net income attributable to common shareowners for the quarter ended March 31, 2024 includes the following:

• acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.29;

• charge related to the Resolution of Certain Legal Matters of $0.9 billion, which had an unfavorable impact on diluted EPS of $0.68;

• a charge of $0.4 billion, net of tax, related to the anticipated Raytheon Contract Termination, which had an unfavorable impact on diluted EPS of $0.33;

• benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits of $0.3 billion, net of tax, which had a favorable impact on diluted EPS of $0.21;

• a benefit recognized as a result of the conclusion of the examination phases of the RTX and Rockwell Collins tax audits of $0.3 billion, net of tax, which had a favorable impact on diluted EPS of $0.21;

• a gain on sale of the CIS business, net of transaction and other related costs, of $0.2 billion, net of tax, which had a favorable impact on diluted EPS of $0.18;

• charges related to initiating alternative titanium sources at our Collins segment of $0.2 billion, which had an unfavorable impact on diluted EPS of $0.13.

Net income attributable to common shareowners for the nine months ended September 30, 2023 includes the following:

• charge associated with the Powder Metal Matter of $2.2 billion, net of tax and partner share, which had an unfavorable impact on diluted EPS of $1.52;

• acquisition accounting adjustments of $1.2 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.80;

• charges on our contract assets and customer financing assets related to a customer insolvency of $0.1 billion, net of tax and noncontrolling interest, which had an unfavorable impact on diluted EPS of $0.08.

SEGMENT REVIEW

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Segment Total net sales and Operating profit include intercompany sales and profit, which are ultimately eliminated within Eliminations and other, which also includes certain smaller non-reportable segments.

Segment results exclude certain acquisition accounting adjustments, the FAS/CAS operating adjustment, and certain corporate expenses, as further discussed below.

Given the nature of our business, we believe that total net sales and operating profit (loss) (and the related operating profit (loss) margin percentage), which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our segment performance, as described below.

We provide the organic change in Net sales and Operating profit (loss) for our segments as discussed above in “Results of Operations.” We believe that these non-GAAP measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability.

Segment Operating Profit excludes certain acquisition accounting adjustments, the FAS/CAS operating adjustment, and certain corporate expenses, as further discussed below.

Given the nature of our business, we believe that total net sales and operating profit (and the related operating profit margin percentage), which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our segment performance, as described below.

We provide the organic change in Net sales and Operating profit for our segments as discussed above in “Results of Operations.” We believe that these non-GAAP measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability.

For Pratt & Whitney only, Other also includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada due to its significance to Pratt & Whitney’s overall operating results.

1 unchanged sentence

Total net sales by segment were as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

1 unchanged sentence

Pratt & Whitney 7,366 6,456

7,239 926 20,497 11,857

Raytheon 6,340 6,659

1 unchanged sentence

Eliminations and other (1)

(611) (563) (1,685) (1,461)

Consolidated $ 20,306 $ 19,305

(1) Includes the operating results of certain smaller operations.

(2) 2023 includes the impacts of the Powder Metal Matter.

Operating Profit (Loss).

Operating profit (loss) by segment was as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Operating Profit.

Operating profit by segment was as follows:

Quarter Ended March 31,

(dollars in millions) 2025 2024

1 unchanged sentence

Pratt & Whitney 580 412

557 (2,482) 1,511 (1,837)

647 560 1,770 1,775

Total segment 2,346 2,257

Eliminations and other (1)

(14) (69) (55) (34)

Corporate expenses and other unallocated items (38) (96)

100 (63) (926) (165)

FAS/CAS operating adjustment 185 214

2 unchanged sentences

(1) Includes the operating results of certain smaller operations.

(2) 2023 includes the impacts of the Powder Metal Matter.

(3) Includes a $0.6 billion charge in the second quarter of 2024 related to the anticipated Raytheon Contract Termination and a $0.4 billion gain, net of transaction and other related costs, in the first quarter of 2024 related to the sale of our CIS business.

Changes in Contract Estimates at Completion” and “Note 2:

Acquisitions and Dispositions” within Item 1 of this Form 10-Q, respectively, for additional information.

(4) Includes a $0.9 billion charge in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

Basis of Presentation” within Item 1 of this Form 10-Q for additional information.

Included in segment Operating profit (loss) are Estimate at Completion (EAC) adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion.

(2) The quarter ended March 31, 2024 includes a $0.4 billion gain, net of transaction and other related costs, related to the sale of the CIS business.

Acquisitions and Dispositions” within Item 1 of this Form 10-Q for additional information.

Included in segment Operating profit are Estimate at Completion (EAC) adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion.

These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes.

2 unchanged sentences

Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course.

We had the following aggregate EAC adjustments for the periods presented:

Quarter Ended September 30, Nine Months Ended September 30,

We had the following net EAC adjustments for the periods presented:

Quarter Ended March 31,

(dollars in millions) 2025 2024

Gross favorable $ 260 $ 247 $ 803 $ 851

Gross unfavorable (351) (526) (1,118) (1,284)

Total net EAC adjustments $ (158) $ (162)

The change in net EAC adjustments of $0.2 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to the absence of a $0.1 billion unfavorable impact recorded at Pratt & Whitney in the third quarter of 2023 as a result of increased cost to our aftermarket contracts resulting from the Powder Metal Matter.

The change in net EAC adjustments of $0.1 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to favorable changes in net EAC adjustments at Pratt & Whitney, as discussed above, and Raytheon, partially offset by unfavorable changes in net EAC adjustments at Collins.

In addition to the amounts included in the table above, during the second quarter of 2024, Raytheon initiated the termination of a fixed price development contract with a foreign customer.

As a result of this action, Raytheon recognized a $0.6 billion charge related to the estimated impact of this termination.

This charge includes the write-off of remaining contract assets and our best estimate of the expected settlement in conjunction with this termination.

Total net EAC adjustments in the quarter ended March 31, 2025 were relatively consistent with the quarter ended March 31, 2024.

Significant EAC adjustments, when they occur, are discussed in each business segment’s discussion below.

Backlog and Bookings.

Total backlog was $221 billion and $196 billion as of September 30, 2024 and December 31, 2023, respectively.

Total backlog includes commercial backlog of $131 billion and $118 billion as of September 30, 2024 and December 31, 2023, respectively, and defense backlog of $90 billion and $78 billion as of September 30, 2024 and December 31, 2023, respectively.

In the quarter ended March 31, 2024, Raytheon backlog was reduced by $1.1 billion as a result of the sale of the CIS business.

Total backlog was $217 billion and $218 billion as of March 31, 2025 and December 31, 2024, respectively.

Total backlog includes commercial backlog of $125 billion as of both March 31, 2025 and December 31, 2024, and defense backlog of $92 billion and $93 billion as of March 31, 2025 and December 31, 2024, respectively.

We believe bookings are an important measure of future performance for our defense businesses.

Our defense operations consist primarily of our Raytheon business and operations in the defense businesses within our Collins and Pratt & Whitney segments.

Defense bookings were approximately $25 billion and $12 billion for the quarters ended September 30, 2024 and 2023, respectively, and approximately $47 billion and $37 billion for the nine months ended September 30, 2024 and 2023, respectively.

Defense bookings were approximately $9 billion and $11 billion for the quarters ended March 31, 2025 and 2024, respectively.

Bookings are impacted by the timing and amounts of awards in a given period, which are subject to numerous factors, including:

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Collins Aerospace

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2024 2023 Change 2024 2023 Change

Quarter Ended March 31,

(dollars in millions) 2025 2024 Change

Net sales $ 7,217 $ 6,673 8 %

1 unchanged sentence

Operating profit margins 15.1 % 12.7 %

Quarter Ended September 30, 2024 Compared with Quarter Ended September 30, 2023

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Net sales $ 387 $ — $ — $ 59 $ 446

Operating profit 54 — 52 53 159

(1) See “Segment Review” above for definition of organic.

A reconciliation of these measures to reported U.S.

GAAP amounts is provided in the table above.

The organic net sales increase of $0.4 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily relates to higher defense sales of $0.3 billion due to higher volume across multiple programs and higher commercial aerospace aftermarket sales of $0.2 billion principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased volume.

This increase was partially offset by lower commercial aerospace OEM sales of $0.1 billion driven by lower volume on certain narrowbody aircraft.

The increase in Other net sales in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to the absence of a $0.1 billion charge related to a litigation matter in the third quarter of 2023.

The organic operating profit increase of $0.1 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to higher defense operating profit of $0.1 billion, principally driven by the higher sales volume discussed above.

Commercial aerospace operating profit in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was relatively flat as higher commercial aftermarket volume was offset by the lower commercial OEM volume discussed above and unfavorable OEM mix.

The organic operating profit increase was also partially offset by higher research and development costs.

The increase in Other operating profit in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to the absence of a charge related to the litigation matter discussed above.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Quarter Ended March 31, 2025 Compared with Quarter Ended March 31, 2024

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

The organic net sales increase of $1.6 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily relates to higher commercial aerospace aftermarket sales of $0.8 billion, higher defense sales of $0.5 billion, and higher commercial aerospace OEM sales of $0.2 billion.

The increase in commercial aerospace sales was

principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased volume.

The defense sales increase was primarily due to higher volume across multiple programs.

The increase in Other net sales in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to the absence of a $0.1 billion charge related to a litigation matter in the third quarter of 2023.

The organic operating profit increase of $0.5 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to higher commercial aerospace operating profit of $0.4 billion, principally driven by the higher aftermarket and OEM sales volume discussed above, partially offset by unfavorable OEM mix.

Defense operating profit increased $0.1 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to the higher volume discussed above, partially offset by higher space program costs.

The above increases were partially offset by $0.1 billion of higher research and development costs.

The decrease in Other operating profit of $0.2 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by $0.2 billion of charges in the first quarter of 2024, primarily related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that are no longer recoverable as a result of initiating alternative titanium sources, partially offset by the absence of a charge related to the litigation matter discussed above.

Basis of Presentation” within Item 1 of this Form 10-Q for additional information on Russia sanctions.

Defense Bookings – In addition to a number of smaller bookings, in the quarter ended September 30, 2024, Collins booked $470 million for Federal Aviation Administration air traffic control automation system sustainment.

In addition to these bookings, in the nine months ended September 30, 2024, Collins booked $1.9 billion to support the U.S.

Air Force’s next-generation Survivable Airborne Operations Center and $254 million for F-35 landing gear Lots 18 and 19.

The organic net sales increase of $0.6 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.3 billion, higher defense sales of $0.2 billion, and a modest increase in commercial aerospace OEM sales.

The increase in commercial aerospace sales was principally driven by continued growth in commercial air traffic, which has resulted in an increase in flight hours and increased volume.

The increase in defense sales was primarily due to higher volume across multiple programs and platforms .

The organic operating profit increase of $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily due to higher commercial aerospace operating profit of $0.2 billion, principally driven by the higher aftermarket sales volume discussed above.

Defense operating profit increased $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 due to the higher sales volume discussed above.

The increase in other operating profit of $0.2 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily driven by the absence of $0.2 billion of charges recorded in the first quarter of 2024 related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs that were no longer recoverable as a result of initiating alternative titanium sources.

The increase in restructuring costs during the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 relates primarily to workforce reductions initiated in the quarter ended March 31, 2025.

Defense Bookings – In addition to a number of smaller bookings, in the quarter ended March 31, 2025, Collins booked $358 million for the U.S.

Navy's solution for engineering design and manufacturing of the Very Low Frequency subsystem.

Pratt & Whitney

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2024 2023 Change 2024 2023 Change

Net sales $ 7,239 $ 926 682 % $ 20,497 $ 11,857 73 %

Operating profit (loss) 557 (2,482) NM 1,511 (1,837) NM

Operating profit (loss) margins 7.7 % (268.0) % 7.4 % (15.5) %

NM = Not Meaningful

Quarter Ended September 30, 2024 Compared with Quarter Ended September 30, 2023

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Quarter Ended March 31,

(dollars in millions) 2025 2024 Change

Net sales $ 7,366 $ 6,456 14 %

Operating profit (loss) 178 — (6) 2,867 3,039

(1) See “Segment Review” above for definition of organic.

A reconciliation of these measures to reported U.S.

GAAP amounts is provided in the table above.

The organic net sales increase of $0.9 billion in the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023, reflects higher commercial aftermarket sales of $0.4 billion, primarily driven by higher volume.

The increase also includes higher commercial OEM sales of $0.1 billion, primarily driven by favorable mix within large commercial engines.

Military sales were up $0.4 billion primarily driven by higher sustainment volume across multiple platforms and higher F135 development volume.

The Other net sales increase of $5.4 billion in the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023 reflects the absence of a charge recognized in the third quarter of 2023 related to the Powder Metal Matter.

The organic operating profit increase of $0.2 billion in the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023 reflects higher commercial aerospace aftermarket operating profit of $0.1 billion, driven by the commercial aftermarket sales volume discussed above, while the favorable OEM mix and benefit of lower volume was offset by higher production costs.

The increase in military operating profit was $0.1 billion, driven by the sales volume discussed above.

The Other operating profit increase of $2.9 billion in the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023, reflects the absence of a charge recognized in the third quarter of 2023 related to the Powder Metal Matter.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Operating profit 580 412 41 %

Operating profit margins 7.9 % 6.4 %

Quarter Ended March 31, 2025 Compared with Quarter Ended March 31, 2024

Factors Contributing to Total Change

4 unchanged sentences

Net sales $ 930 $ — $ — $ (20) $ 910

Operating profit (loss) 273 — 5 3,070 3,348

Operating profit 163 — 8 (3) 168

(1) See “Segment Review” above for definition of organic.

1 unchanged sentence

GAAP amounts is provided in the table above.

The organic net sales increase of $3.2 billion in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 reflects higher commercial OEM sales of $1.2 billion primarily driven by favorable mix on higher volume and higher commercial aftermarket sales of $1.0 billion primarily driven by higher volume.

Military sales increased $1.0 billion, primarily due to higher sustainment volume across multiple platforms.

The Other net sales increase of $5.4 billion in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 primarily relates to the absence of a charge recognized in the third quarter of 2023 related to the Powder Metal Matter.

The organic operating profit increase of $0.3 billion in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 reflects higher commercial aerospace operating profit of $0.2 billion as the benefit from favorable large commercial OEM mix and higher commercial aftermarket volume was partially offset by the unfavorable impact from higher large commercial OEM volume, higher production costs, as well as, the absence of two favorable contract matters totaling approximately $0.1 billion during the nine months ended September 30, 2023.

Additionally, the increase in military operating profit of $0.2 billion, driven by the higher sales volume discussed above, as well as favorable mix, was partially offset by higher production costs.

The increases described above were also partially offset by higher research and development and selling, general and administrative expenses of $0.1 billion.

The increase in Other operating profit of $3.1 billion in the nine months ended September 30, 2024, compared to in the nine months ended September 30, 2023, primarily relates to the absence of a $2.9 billion charge recognized in the third quarter of 2023 related to the Powder Metal Matter and the absence of a $0.2 billion charge related to a customer insolvency during the second quarter of 2023.

Defense Bookings – In addition to a number of smaller bookings, in the quarter ended September 30, 2024, Pratt & Whitney booked $2.3 billion for F117, $1.3 billion for F135 Engine Core Upgrade development and $455 million for F135 sustainment.

In addition to these bookings, in the nine months ended September 30, 2024, Pratt & Whitney booked $381 million for F135 sustainment and $302 million for F135 production.

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2024 2023 Change 2024 2023 Change

The organic net sales increase of $0.9 billion in the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, reflects higher commercial aftermarket sales of $0.8 billion, primarily driven by higher volume and favorable mix.

The increase also includes higher commercial OEM sales of $0.1 billion, primarily driven by higher volume.

Military sales increased $0.1 billion, primarily due to higher engine deliveries on the tanker program and higher volume on the F135 Engine Core Upgrade.

The organic operating profit increase of $0.2 billion in the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024 reflects higher commercial aerospace operating profit of $0.2 billion, primarily driven by higher commercial aftermarket sales volume and favorable mix, partially offset by lower commercial OEM operating profit driven by the sales volume discussed above.

Defense Bookings – In addition to a number of smaller bookings, in the quarter ended March 31, 2025, Pratt & Whitney booked $552 million for the development phase of the Next Generation Adaptive Propulsion (NGAP) program and $541 million for F135 sustainment.

Quarter Ended March 31,

(dollars in millions) 2025 2024 Change

Net sales $ 6,340 $ 6,659 (5) %

2 unchanged sentences

Defense Bookings $ 4,396 $ 8,122 (46) %

Quarter Ended September 30, 2024 Compared with Quarter Ended September 30, 2023

Quarter Ended March 31, 2025 Compared with Quarter Ended March 31, 2024

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

The organic net sales increase of $0.3 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to higher net sales of $0.4 billion from land and air defense systems programs driven by higher net sales on certain international Patriot programs, certain international National Advanced Surface-to-air Missile System (NASAMS) programs, and Counter-Unmanned Aircraft Systems (C-UAS) programs.

Also contributing to the increases were higher net sales of $0.1 billion from advanced technology programs primarily driven by higher volume on classified

programs and on an advanced development program.

These increases were partially offset by lower net sales of $0.2 billion from air and space defense systems programs primarily due to the completion of certain programs.

The organic operating profit increase of $0.1 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was driven by a favorable change in mix and other performance of approximately $40 million primarily due to increased production on international Patriot programs, an improvement in net EAC adjustments of approximately $30 million, and higher volume of approximately $30 million primarily driven by the net sales increases noted above.

The change in net EAC adjustments was spread across numerous programs and included an unfavorable EAC adjustment of $53 million in the third quarter of 2024 related to cost increases on a classified program.

The decrease in net sales and operating profit due to acquisitions / divestitures, net in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 primarily relates to the sale of the CIS business completed in the first quarter of 2024.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Net sales $ 1,016 $ (862) $ — $ (62) $ 92

Operating Profit 234 (46) 3 (196) (5)

(1) See “Segment Review” above for definition of organic.

A reconciliation of this measure to the reported U.S.

GAAP amount is provided in the table above.

The organic net sales increase of $1.0 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by higher net sales of $1.0 billion from land and air defense systems programs driven by higher net sales on certain international Patriot programs, C-UAS programs, certain international NASAMS programs, and the Stinger program.

Also contributing to the increases were higher net sales of $0.4 billion from advanced technology programs primarily driven by higher volume on classified programs and on an advanced development program.

These increases were partially offset by lower net sales of $0.4 billion from air and space defense systems programs primarily due to the completion of certain programs, and the timing of a prior year program award.

The organic operating profit increase of $0.2 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to an improvement in net EAC adjustments of approximately $110 million and higher volume of approximately $100 million primarily driven by the net sales increases noted above.

The change in net EAC adjustments was spread across numerous programs and benefited from the absence of a $51 million unfavorable adjustment in the nine months ended September 30, 2023 related to significant contract options exercised, which was offset by a $53 million unfavorable EAC adjustment in the third quarter of 2024 related to cost increases on a classified program.

The decrease in net sales and operating profit due to acquisitions / divestitures, net in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily relates to the sale of the CIS business completed in the first quarter of 2024.

The Other net sales and operating profit decreases of $0.1 billion and $0.2 billion, respectively in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 were primarily due to an impact to net sales and operating profit of $0.1 billion and $0.6 billion, respectively, related to the anticipated Raytheon Contract Termination initiated in the second quarter of 2024, with the operating profit decrease partially offset by a $0.4 billion gain on the sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Defense Backlog and Bookings – Backlog was $60 billion as of September 30, 2024 and $52 billion as of December 31, 2023.

Included in the change in backlog was a $1.1 billion reduction related to the sale of the CIS business discussed above.

In addition to a number of smaller bookings, in the quarter ended September 30, 2024, Raytheon booked $1.9 billion for low-rate initial production (LRIP) of Lower Tier Air and Missile Defense System (LTAMDS) for the U.S.

Army and Poland, $1.3 billion to provide Standard Missile III (SM-3) to the U.S.

Navy and international customers, $1.2 billion to provide Patriot Air Defense systems to Germany, $1.2 billion to provide advanced medium-range air-to-air missile (AMRAAM) to the U.S.

Air Force and international customers, $737 million to provide AIM-9X Sidewinder short-range air-to-air missiles for the U.S.

Air Force, and international customers, $599 million to provide Guidance Enhanced Missiles (GEM-T) for NATO Support and Procurement Agency (NSPA), $538 million to provide Javelin for the U.S.

Army and international customers, $530 million to provide Patriot launchers for Poland, $526 million to provide Evolved SeaSparrow Missile (ESSM) for the U.S.

Navy and international consortium partners, $479 million to provide GEM-T for an international customer, $473 million for Irst Capable Raptor Unrivaled Supremacy (ICARUS) production for the U.

Air Force, $453 million to provide GEM-T for an international customer, $272 million for Standard Missile II (SM-2) provisioned items and ordered spares for the U.S.

and $1.2 billion on a number of classified contracts.

In addition to these bookings, in the nine months ended September 30, 2024, Raytheon booked $1.2 billion to provide Patriot Air Defense systems to Germany, $818 million to provide GEM-T for NSPA, $639 million to produce AN/SPY-6(V) radars for the U.S.

Navy, $623 million to provide GEM-T for an international customer, $393 million to design and build the Landsat Next Instrument Suite (LandIS) for NASA, $282 million to provide NASAMS for Ukraine, $251 million to provide GEM-T for an international customer and $2.6 billion on a number of classified contracts.

The organic net sales increase of $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was primarily due to higher net sales of $0.3 billion from land and air defense systems programs primarily driven by higher net sales on international Patriot programs and Lower Tier Air and Missile Defense Sensor (LTAMDS) programs,

partially offset by lower net sales of $0.2 billion driven by lower development program volume within air and space defense systems.

The organic operating profit increase of $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was driven by a favorable change in mix and other performance of approximately $70 million primarily due to increased production on international Patriot programs with the remaining increase spread across numerous programs with no individual or common significant driver.

In addition, favorable changes in net EAC adjustments and volume were modest contributors to the organic operating profit increase.

The decrease in net sales and operating profit due to acquisitions / divestitures, net in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily relates to the sale of the Cybersecurity, Intelligence and Services (CIS) business completed in the first quarter of 2024.

The other operating profit change of $0.4 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 is primarily due to the absence of the $0.4 billion gain on sale of the CIS business, net of transaction and other related costs, recorded in the first quarter of 2024.

Defense Backlog and Bookings – Backlog was $61 billion as of March 31, 2025 and $63 billion as of December 31, 2024.

In addition to a number of smaller bookings, in the quarter ended March 31, 2025, Raytheon booked $529 million to provide Patriot systems for the Netherlands, $251 million to provide Evolved SeaSparrow Missile (ESSM) for Japan, and $651 million on a number of classified contracts.

Corporate and Eliminations and other

2 unchanged sentences

Net Sales Operating Profit

Quarter Ended September 30, Quarter Ended September 30,

(dollars in millions) 2024 2023 2024 2023

Eliminations and other $ (611) $ (563) $ (14) $ (69)

Corporate expenses and other unallocated items — — 100 (63)

The increase in eliminations and other net sales of $48 million in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, was primarily due to an increase in intersegment eliminations, principally driven by Collins.

The change in eliminations and other operating profit of $55 million in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was primarily due to the absence of the impact of an Internal Revenue Service (IRS) notice issued in September 2023 related to the research and experimental expenditures capitalization.

The change in Corporate expenses and other unallocated items of $0.2 billion in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, was primarily due to a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.

Refer to “Note 11:

Income Taxes” within Item 1 of this Form 10-Q for additional information on the indemnity receivable and the offsetting impacts to Income tax expense.

Net Sales Operating Profit

Nine months ended September 30, Nine months ended September 30,

Quarter Ended March 31, Quarter Ended March 31,

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Corporate expenses and other unallocated items — — (38) (96)

The increase in eliminations and other net sales of $0.2 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, was primarily due to an increase in intersegment eliminations, principally driven by Collins.

Eliminations and other operating profit in the nine months ended September 30, 2024 was relatively consistent with the nine months ended September 30, 2023.

The change in Corporate expenses and other unallocated items of $0.8 billion in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, was primarily due to a $0.9 billion charge related to the Resolution of Certain Legal Matters recorded in the second quarter of 2024, partially offset by a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024, as discussed above.

The increase in eliminations and other net sales of $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily due to an increase in intersegment eliminations, principally driven by Collins.

Eliminations and other operating profit in the quarter ended March 31, 2025 was relatively consistent with the quarter ended March 31, 2024.

The change in corporate expenses and other unallocated items of $0.1 billion in the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024, was primarily due to an adjustment to reduce certain tax related indemnity receivables recorded in the first quarter of 2024.

FAS/CAS operating adjustment

6 unchanged sentences

The components of the FAS/CAS operating adjustment were as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

2 unchanged sentences

FAS/CAS operating adjustment $ 185 $ 214

The changes in our FAS/CAS operating adjustment of $0.1 billion and $0.2 billion in the quarter and nine months ended September 30, 2024 compared to the quarter and nine months ended September 30, 2023, respectively, were driven by a decrease in CAS expense, primarily due to the recognition of historical CAS gain/loss experience.

The FAS/CAS operating adjustment in the quarter ended March 31, 2025 was relatively consistent with the quarter ended March 31, 2024.

Acquisition accounting adjustments

2 unchanged sentences

The components of Acquisition accounting adjustments were as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

4 unchanged sentences

Acquisition accounting adjustments related to acquisitions in each segment were as follows:

Quarter Ended September 30, Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

5 unchanged sentences

Acquisition accounting adjustments $ (470) $ (500)

Acquisition accounting adjustments for the quarter and nine months ended September 30, 2024 were relatively consistent with the quarter and nine months ended September 30, 2023, respectively.

Acquisition accounting adjustments for the quarter ended March 31, 2025 were relatively consistent with the quarter ended March 31, 2024.

LIQUIDITY AND FINANCIAL CONDITION

(dollars in millions) September 30, 2024 December 31, 2023

(dollars in millions) March 31, 2025 December 31, 2024

Cash and cash equivalents $ 5,157 $ 5,578

8 unchanged sentences

the commercial paper markets, adequacy of available bank lines of credit, redemptions of debt, and the ability to attract long-term capital at satisfactory terms.

At September 30, 2024, we had cash and cash equivalents of $6.7 billion, of which approximatel y 30% was held by RTX’s foreign subsidiaries.

At March 31, 2025, we had cash and cash equivalents of $5.2 billion, of which approximatel y 38% was held by RTX’s foreign subsidiaries.

We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed.

3 unchanged sentences

Our ability to access global debt markets and the related cost of these borrowings depends on the strength of our credit rating and market conditions.

Our S&P Global credit rating remains at BBB+/negative, and our Moody’s Investors Service outlook is Baa1/negative.

Our S&P Global credit rating remains at BBB+/negative.

In March 2025, our Moody’s Investors Service outlook improved from Baa1/negative to Baa1/stable.

Though the Company expects to continue having adequate access to funds, declines in our credit ratings or Company outlook could result in higher borrowing costs.

As of September 30, 2024, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion, which expires in August 2028.

As of September 30, 2024, there were no borrowings outstanding under this agreement.

As of March 31, 2025, we had a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion, which expires in August 2028.

As of March 31, 2025, there were no borrowings outstanding under this agreement.

From time to time, we use commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments, and repurchases of our common stock.

The commercial paper notes have original maturities of not more than 364 days from the date of issuance.

As of September 30, 2024, our maximum commercial paper borrowing limit was $5.0 billion as the commercial paper is backed by our $5.0 billion revolving credit agreement.

At September 30, 2024, we had no commercial paper borrowings outstanding.

We made the following repayments of long-term debt during the nine months ended September 30, 2024:

Date Description of Notes Aggregate Principal Balance (in millions)

May 7, 2024 3 Month SOFR plus 1.225% Term Loan due 2025

April 17, 2024 3 Month SOFR plus 1.225% Term Loan due 2025

April 4, 2024 3 Month SOFR plus 1.225% Term Loan due 2025

March 15, 2024 3.200% notes due 2024

As of March 31, 2025, our maximum commercial paper borrowing limit was $5.0 billion as the commercial paper is backed by our $5.0 billion revolving credit agreement.

At March 31, 2025, we had no commercial paper borrowings outstanding.

We have an existing universal shelf registration statement, which we filed with the SEC on September 22, 2022, for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.

The Company offers voluntary supply chain finance (SCF) programs with global financial institutions which enables our suppliers, at their sole discretion, to sell their receivables from the Company to the financial institutions at a rate that leverages our credit rating, which might be beneficial to them.

Our suppliers’ participation in the SCF programs does not impact or change our terms and conditions with those suppliers, and therefore, we have no economic interest in a supplier’s decision to participate in the programs.

In addition, we do not pay for any of the costs of the programs incurred by those suppliers that choose to participate, and have no direct financial relationship with the financial institutions, as it relates to sales of receivables made by those suppliers.

As such, the SCF programs do not impact our working capital, cash flows, or overall liquidity.

We believe our cash on hand and future operating cash flows will be sufficient to meet our future operating cash needs.

1 unchanged sentence

Cash Flow - Operating Activities

Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

1 unchanged sentence

$ 1,305 $ 342

Net income for the nine months ended September 30, 2024 included a $0.9 billion charge related to the Resolution of Certain Legal Matters and a $0.4 billion, net of tax, charge related to the anticipated Raytheon Contract Termination, both of which did not have a significant impact on cash flow in the period.

These charges also had the effect of increasing Other accrued liabilities by $1.3 billion in the nine months ended September 30, 2024.

Net income for the nine months ended September 30, 2023

included a $2.2 billion charge related to the Powder Metal Matter, net of tax, which had no effect on cash flow in that period.

This charge also had the effect of increasing Other accrued liabilities by $2.8 billion in the nine months ended September 30, 2023.

Excluding the impact of these charges, the $3.0 billion change in cash flows provided by operating activities in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was driven by a favorable impact from accounts receivable driven by increased sales volume and timing of collections, including the related impact of factoring as discussed below, a favorable change in accounts payable driven by timing of payments and an increase in material purchases, and lower tax payments year-over-year including a tax refund received in the second quarter of 2024.

These favorable changes were partially offset by the net change in contract assets and contract liabilities due to the timing of collections, and a decrease in Other accrued liabilities due to utilization of the Powder Metal Matter accrual as a result of customer compensation.

The $1.0 billion increase in cash flows provided by operating activities in the quarter ended March 31, 2025 compared to in the quarter ended March 31, 2024, was primarily driven by the net change in contract assets and contract liabilities due to timing of collections and higher billings and a favorable change in accounts payable and accrued liabilities driven by timing of collaborator payables.

These changes were partially offset by an increase in accounts receivable driven by timing of collections, partially offset by increased factoring activity as discussed below.

Higher net income after adjustments for depreciation and amortization, deferred income tax provision (benefit), stock compensation cost, net periodic pension and other postretirement income, share-based matching 401(k) contributions, and gain on sale of business also contributed to the increase in net cash flows provided by operating activities.

The Company enters into various factoring agreements with third-parties to sell certain of its receivables, primarily related to customer facilitated programs.

The activity in these agreements is generally dependent on underlying delivery volumes within our commercial OEM programs.

During the nine months ended September 30, 2024, factoring activity resulted in an increase of approximately $0.9 billion in cash provided by operating activities, compared to an increase of approximately $0.4 billion in cash provided by operating activities during the nine months ended September 30, 2023.

Factoring activity includes amounts factored on certain aerospace receivables at the customer’s request for which we may be compensated by the customer.

We made net tax payments of $0.6 billion and $1.3 billion in the nine months ended September 30, 2024 and 2023, respectively.

Factoring activity resulted in a $0.5 billion increase in cash provided by operating activities during the quarter ended March 31, 2025 compared to during the quarter ended March 31, 2024.

We made net tax payments of $145 million and $129 million in the quarters ended March 31, 2025 and 2024, respectively.

While the timing of cash flows are subject to a number of variables, for the Powder Metal Matter we estimate the accrual for expected customer compensation to be utilized consistent with the timing of execution of the fleet management plan, the period of increased aircraft on ground levels, and contractual terms with customers.

We currently estimate a full year 2024 cash impact related to the Powder Metal Matter of approximately $1.0 billion.

Additionally, we currently estimate full year 2024 cash payments of approximately $1.0 billion related to the Resolution of Certain Legal Matters and approximately $0.5 billion for the Raytheon Contract Termination executed subsequent to September 30, 2024.

We currently estimate a full year 2025 cash impact related to the Powder Metal Matter of approximately $1.1 billion to $1.3 billion, which includes the impact of cash paid, customer credits applied, and the timing of partner recovery.

Cash Flow - Investing Activities

Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

Net cash flows used in investing activities

Net cash flows (used in) provided by investing activities

$ (678) $ 693

Our investing activities primarily include capital expenditures, cash investments in customer financing assets, investments in and dispositions of businesses, payments related to our collaboration intangible assets and contractual rights to provide product on new aircraft platforms, and settlements of derivative contracts not designated as hedging instruments.

The $1.3 billion change in cash flows used in investing activities in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily related to the sale of our CIS business within our Raytheon segment for proceeds of approximately $1.3 billion in cash.

During the nine months ended September 30, 2024 and 2023, we increased other intangible assets by $0.4 billion and $0.5 billion, respectively, primarily related to collaboration payment commitments made under our 2012 agreement to acquire Rolls-Royce’s collaboration interests in International Aero Engines AG (IAE) and exclusivity payments made on contractual commitments included within intangible assets.

The $1.4 billion change in cash flows (used in) provided by investing activities in the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primarily related to the sale of the CIS business during the quarter ended March 31, 2024 for proceeds of approximately $1.3 billion in cash.

During the quarters ended March 31, 2025 and 2024, other intangible assets increased by $0.1 billion and $0.2 billion, respectively, primarily related to collaboration payments made under our 2012 agreement to acquire Rolls-Royce’s collaboration interests in International Aero Engines AG (IAE) and exclusivity payments made on contractual commitments included within intangible assets.

Cash Flow - Financing Activities

Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions) 2025 2024

2 unchanged sentences

Our financing activities primarily include the issuance and repayment of commercial paper and other short-term and long-term debt, payment of dividends, and stock repurchases.

The $2.8 billion change in cash flows used in financing activities in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily driven by prior year long-term debt issuances of $3.0 billion, an increase in long-term debt repayments of $1.5 billion, and lower issuances of commercial paper, net, of $0.5 billion, partially offset by lower year-over-year share repurchases of $2.2 billion.

The $1.0 billion decrease in cash flows used in financing activities in the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primarily driven by a decrease in long-term debt repayments of $0.9 billion.

Refer to “Note 9:

Borrowings and Lines of Credit” within Item 1 of this Form 10-Q for additional information on debt issuances and repayments and commercial paper.

At September 30, 2024, management had remaining authority to repurchase approximately $0.7 billion of our common stock under the October 21, 2023 share repurchase program.

Under the 2023 program, shares may be purchased on the open market,

in privately negotiated transactions, under accelerated share repurchase programs, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock and as required under our employee savings plan.

Borrowings and Lines of Credit” within Item 1 of this Form 10-Q for additional information on debt repayments.

At March 31, 2025, management had remaining authority to repurchase approximately $0.6 billion of our common stock under the October 21, 2023 share repurchase program.

Under the 2023 program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs, and under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

We may also reacquire shares outside of the program in connection with the surrender of shares to cover taxes on vesting of restricted stock.

Our ability to repurchase shares is subject to applicable law.

Our share repurchases, which include shares reacquired outside of our share repurchase program, were as follows:

Nine Months Ended September 30,

Quarter Ended March 31,

(dollars in millions;

2 unchanged sentences

$ 50 396 $ 56 616

ASR Tranche 1 settlement - shares received (2)

ASR Tranche 2 settlement - financing cash paid (2) (3)

Total shares of common stock repurchased $ 394 1,756 $ 2,587 29,397

(1) Amounts relate to share repurchases that were settled in cash during the period.

(2) Includes the settlement of the ASR first and second tranches in the third quarter of 2024.

Refer to “Note 17:

Equity” within Item 1 of this Form 10-Q for additional information.

(3) Excludes the change in fair value of the stock price from trade date to settlement date of $3 million, which is classified as an operating cash flow in our Condensed Consolidated Statement of Cash Flows.

Our Board of Directors authorized the following cash dividends:

Nine Months Ended September 30,

(dollars in millions, except per share amounts) 2024 2023

Dividends paid per share of common stock $ 1.850 $ 1.730

Total dividends paid $ 2,415 $ 2,472

On October 9, 2024, the Board of Directors declared a dividend of $0.63 per share payable December 12, 2024 to shareowners of record at the close of business on November 15, 2024.

Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the nine months ended September 30, 2024.

There has been no significant change in our exposure to market risk during the quarter ended March 31, 2025.

For discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our 2024 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis