What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-22 compared with 2025-04-22 · 305 added, 141 removed, 373 unchanged (54% of the section changed)

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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 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.

Throughout this Form 10-Q, when we refer to the quarters and six months ended June 30, 2025 and 2024 with respect to Raytheon, we are referring to their June 29, 2025 and June 30, 2024 fiscal quarter ends, respectively.

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

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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.

These disruptions impacted our ability to procure raw materials, including certain rare earth elements, 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 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.

Pratt & Whitney IAM Work Stoppage.

On May 27, 2025, the International Association of Machinists and Aerospace Workers (IAM) Local 1746 and Local 700 (District 26) voted to ratify a new contract with Pratt & Whitney, thereby ending the work stoppage initiated on May 5, 2025, which impacted production and aftermarket service of certain Pratt & Whitney commercial and military engine models, including the PW1100G-JM Geared Turbo Fan, and the F135.

The IAM work stoppage reduced engine deliveries during the second quarter of 2025.

Full production operations for all affected engine programs resumed in June 2025.

Economic Environment.

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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.

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

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 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.

The global trade environment is highly dynamic.

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.

government has imposed tariffs on imports from all countries with which the U.S.

engages in trade.

In response, China, the European Union, Canada and other countries have announced, and in some cases imposed, tariffs, and non-tariff countermeasures on goods that are imported from the U.S.

Our businesses and suppliers import goods subject to U.S.

imposed tariffs, as well as goods subject to counter tariffs imposed by other countries.

We continue to pursue available options to mitigate the impact of tariffs and countermeasures, 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.

Our results for the quarter ended June 30, 2025, reflect our best estimate of the impact of the tariffs then in effect.

As the duration and extent of the tariffs and counter tariffs remain uncertain, we are continuing to evaluate the potential future impacts of the imposition of the announced tariffs to our business and financial condition.

Based on current conditions, we do not believe that the tariffs announced by the U.S.

or counter tariffs or other actions taken by other countries will have a material adverse effect upon our results of operations, financial condition, or cash flows.

However, 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 and our suppliers’ 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.

Government’s Budget & Tax Legislation.

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

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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.

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

On July 4th, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H.

14” (the Act) was enacted.

The Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S.

taxation on international earnings.

We do not expect the new provisions of the Act to have a significant impact to tax expense and cash flows for 2025.

The Act also provides a supplementary $156.2 billion to the DoD for obligations through 2029.

Congress has also begun deliberations on the President’s budget request for fiscal year 2026.

Executive Order Regarding Modernizing Defense Acquisitions.

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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.

Executive Order Regarding the Iron Dome for America.

On January 27, 2025, the U.S.

government issued an executive order calling for the development and deployment of a next-generation missile defense shield.

On May 20, 2025, the DoD announced a draft architecture and implementation plan for the system and the Act allocates $24.4 billion to the DoD for the project.

With next generation technologies across all domains that build upon existing, proven defense capabilities, RTX’s portfolio is well-positioned to play a role to deliver reliable solutions for the Iron Dome for America initiative.

Whether this Executive Order or corresponding funding will have a material impact on our business or results or operations will depend on a variety of factors including award timelines, mission priorities, and future budget determinations.

Geopolitical Matters.

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The Russian government has implemented similar counter-sanctions and export controls targeting specific industries, entities, and individuals in the U.S.

and other jurisdictions in which we operate, including certain members of the Company’s management team and Board of Directors.

and other jurisdictions in which we operate, including certain

members of the Company’s management team and Board of Directors.

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.

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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.

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.

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 continuing tensions between Israel and the U.S.

with Iran, 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 we continue to reassess operations daily, based upon Israel directives and the local security situation.

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.

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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.

There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2025.

RESULTS OF OPERATIONS

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We believe that these non-Generally Accepted Accounting Principles (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.

The organic change in Net sales, Cost of sales, and Operating profit excludes acquisitions and divestitures, net, and the effect of foreign currency exchange rate translation fluctuations and other significant non-operational items and/or significant operational items that may occur at irregular intervals (Other).

Additionally, the organic change in Cost of sales and Operating profit excludes restructuring costs, the FAS/CAS operating adjustment, and costs related to certain acquisition accounting adjustments.

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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 March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

Net sales $ 21,581 $ 19,721 $ 41,887 $ 39,026

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

The factors contributing to the change year-over-year in total net sales for the quarter and six months ended June 30, 2025 are as follows:

(dollars in millions) Quarter Ended June 30, 2025 Six Months Ended June 30, 2025

$ 1,783 $ 3,304

Acquisitions and divestitures, net (30) (522)

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GAAP amounts is provided in the table above.

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.

Net sales increased $1.8 billion organically in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to higher organic net sales of $0.8 billion at Pratt & Whitney, $0.6 billion at Collins, and $0.4 billion at Raytheon.

Net sales increased $3.3 billion organically in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to higher organic net sales of $1.7 billion at Pratt & Whitney, $1.2 billion at Collins, and $0.6 billion at Raytheon.

The decrease in net sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 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 March 31, % of Total Net Sales

Quarter Ended June 30, % 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 $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.

Net products sales increased $1.0 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to increases in external products sales of $0.4 billion at Collins, $0.3 billion at Pratt & Whitney, and $0.3 billion at Raytheon.

Net services sales increased $0.9 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily due to increases in external services sales of $0.6 billion at Pratt & Whitney, $0.2 billion at Raytheon, and $0.1 billion at Collins.

Six Months Ended June 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

Products $ 30,142 $ 28,865 72.0 % 74.0 %

Services 11,745 10,161 28.0 % 26.0 %

Total net sales $ 41,887 $ 39,026 100 % 100 %

Net products sales increased $1.3 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily driven by increases in external products sales of $0.7 billion at Collins, $0.3 billion at Pratt & Whitney, and $0.3 billion at Raytheon.

Net services sales increased $1.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to increases in external services sales of $1.4 billion at Pratt & Whitney and $0.3 billion at Collins, partially offset by a decrease in external services sales of $0.1 billion at Raytheon, primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

Our sales to major customers were as follows:

Quarter Ended March 31, % of Total Net Sales

Quarter Ended June 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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

Six Months Ended June 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

Sales to the U.S.

government (1)

$ 16,005 $ 16,179 38.2 % 41.5 %

Foreign military sales through the U.S.

government 3,106 2,518 7.4 % 6.5 %

Foreign government direct commercial sales 2,785 2,379 6.6 % 6.1 %

Commercial aerospace and other commercial sales 19,991 17,950 47.7 % 46.0 %

Total net sales $ 41,887 $ 39,026 100 % 100 %

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

Cost of Sales

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

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Percentage of net sales 79.7 % 81.8 % 79.7 % 81.7 %

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

The factors contributing to the change year-over-year in total cost of sales for the quarter and six months ended June 30, 2025 are as follows:

(dollars in millions) Quarter Ended June 30, 2025 Six Months Ended June 30, 2025

$ 1,510 $ 2,579

Acquisitions and divestitures, net (23) (471)

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Acquisition accounting adjustments (18) (46)

Other (446) (667)

Total change $ 1,064 $ 1,510

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GAAP amounts is provided in the table above.

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.

The organic increase in total cost of sales of $1.5 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales decreased $0.4 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily driven by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the termination of a fixed price development contract with a foreign customer (herein referred to as “Raytheon Contract Termination”).

The organic increase in total cost of sales of $2.6 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

Other cost of sales decreased $0.7 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination 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 were no longer recoverable as a result of initiating alternative titanium sources.

The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.5 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024.

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 March 31, % of Total Net Sales

Quarter Ended June 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Total cost of sales $ 17,205 $ 16,141 79.7 % 81.8 %

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.

Net products cost of sales increased $0.4 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily driven by increases in external products cost of sales at Collins, Pratt & Whitney, and Raytheon, each driven by the products sales changes noted above.

The increase was partially offset by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination.

Net services cost of sales increased $0.7 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, primarily due to increases in external services cost of sales at Pratt & Whitney, Raytheon, and Collins, driven by the services sales changes noted above.

Six Months Ended June 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

Cost of sales

Products $ 25,272 $ 24,841 60.3 % 63.7 %

Services 8,123 7,044 19.4 % 18.0 %

Total cost of sales $ 33,395 $ 31,885 79.7 % 81.7 %

Net products cost of sales increased $0.4 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by increases in external products cost of sales at Collins, Pratt & Whitney, and Raytheon, each driven by the products sales changes noted above.

The increase was partially offset by a $0.5 billion charge recorded in the second quarter of 2024 at Raytheon related to the Raytheon Contract Termination and charges of $0.2 billion recorded in the first quarter of 2024 at Collins as a result of initiating alternative titanium sources.

Net services cost of sales increased $1.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to increases in external services cost of sales at Pratt & Whitney and Collins, driven by the services sales changes 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 March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 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- and customer- funded research and development expenses for the quarter ended March 31, 2025 were relatively consistent with the quarter ended March 31, 2024.

Company-funded research and development expenses for the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2024, respectively.

The increase in Customer- funded research and development expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by higher expenses on various military and commercial programs at Collins and increased spending at Pratt & Whitney on military development programs.

These increases were partially offset by lower customer-funded expenses at Raytheon primarily related to the Next Generation Interceptor (NGI) program.

Customer-funded research and development expenses for the six months ended June 30, 2025 were relatively consistent with the six months ended June 30, 2024.

Selling, General, and Administrative

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

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Percentage of net sales 7.3 % 7.3 % 7.2 % 7.3 %

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.

The increase in Selling, general, and administrative expenses of $0.1 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025.

The increase in Selling, general, and administrative expenses of $0.2 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025 and $0.1 billion of higher restructuring costs related to ongoing cost reduction efforts driven by various workforce reductions primarily initiated in the first half 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, Net

Quarter Ended March 31,

Other Income (Expense), Net

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

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.

Other income (expense), net $ 40 $ (896) $ 44 $ (524)

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 $0.9 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to the absence of a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

The increase in Other income (expense), net of $0.6 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the absence of a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters, partially offset by the absence of a $0.4 billion gain on sale of the CIS business net of transaction and other related costs, in the first quarter of 2024.

Operating Profit

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

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Operating profit margin 9.9 % 2.7 % 10.0 % 6.1 %

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 .

The increase in Operating profit of $1.6 billion for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily driven by the operating performance of our segments and the absence of charges recorded in the first half of 2024, including a $0.9 billion charge related to the Resolution of Certain Legal Matters and a $0.6 billion charge related to the Raytheon Contract Termination.

These increases were partially offset by a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy during the second quarter of 2025.

The increase in Operating profit of $1.8 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily driven by an increase in the operating performance of our segments of $0.7 billion and the absence of charges recorded in the first half of 2024, including a $0.9 billion charge related to the Resolution of Certain Legal Matters, a $0.6 billion charge related to the Raytheon Contract Termination, and charges of $0.2 billion at Collins as a result of initiating alternative titanium sources.

These items were partially offset by $0.1 billion of higher restructuring costs, a $0.1 billion charge at Pratt & Whitney related to a customer bankruptcy, and the absence of a $0.4 billion gain on sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Non-service Pension Income

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

Non-service pension income $ (351) $ (374) $ (717) $ (760)

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

The Non-service pension income in the quarter and six months ended June 30, 2025 was relatively consistent with the quarter and six months ended June 30, 2024, respectively.

Interest Expense, Net

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

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(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 $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,

Interest expense, net for the quarter and six months ended June 30, 2025 was relatively consistent with the quarter and six months ended June 30, 2024, respectively.

The increase in Interest expense of $0.1 billion for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the reversal of interest accruals as a result of the conclusion of certain tax audits recorded during the first half of 2024, partially offset by lower net interest expense on long-term debt and short-term borrowings in the first half of 2025.

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Effective income tax rate 15.4 % 59.1 % 16.2 % 15.8 %

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.

Our effective tax rate for the quarter and six months ended June 30, 2025 was 15.4% and 16.2%, respectively, as compared to 59.1% and 15.8% for the quarter and six months ended June 30, 2024.

The effective tax rate for the quarter ended June 30, 2025 includes a tax benefit of $33 million associated with the conclusion of the Internal Revenue Service (IRS) examination of RTX’s 2020 tax year.

The effective tax rate for the quarter ended June 30, 2024 includes the impact of the $918 million charge associated with the Resolution of Certain Legal Matters where no related tax benefit was recorded in the quarter.

The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 are relatively consistent.

However, the effective tax rate for the six months ended June 30, 2025 includes the impact from the IRS examination noted above and the effective tax rate for the six months ended June 30, 2024 includes a $275 million tax benefit recognized from the conclusion of the examination phases of the RTX and Rockwell Collins audits, a $143 million tax cost associated with the sale of the CIS business, and the impact of the $918 million charge associated with the Resolution of Certain Legal Matters.

Net Income Attributable to Common Shareowners

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

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

1 unchanged sentence

Diluted earnings per share $ 1.22 $ 0.08 $ 2.36 $ 1.36

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

Net income attributable to common shareowners for the quarter ended June 30, 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 $0.28.

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

• a 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 Raytheon Contract Termination, which had an unfavorable impact

on diluted EPS of $0.33;

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

Net income attributable to common shareowners for the six months ended June 30, 2025 includes the following:

• acquisition accounting adjustments of $0.7 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.55;

• restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.10.

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

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

• a charge related to the Resolution of Certain Legal Matters of $0.9 billion, which had an unfavorable impact

on diluted EPS of $0.69;

• acquisition accounting adjustments of $0.8 billion, net of tax, which had an unfavorable impact on diluted EPS of

• 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.

• a charge of $0.4 billion, net of tax, related to the 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 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.

SEGMENT REVIEW

9 unchanged sentences

Total net sales by segment were as follows:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

4 unchanged sentences

Eliminations and other (1)

(673) (591) (1,290) (1,074)

Consolidated $ 21,581 $ 19,721 $ 41,887 $ 39,026

2 unchanged sentences

Operating profit by segment was as follows:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Pratt & Whitney 492 542 1,072 954

805 127 1,483 1,123

Total segment 2,470 1,787 4,816 4,044

Eliminations and other (1)

24 (36) 36 (41)

Corporate expenses and other unallocated items (3)

(47) (930) (85) (1,026)

FAS/CAS operating adjustment 186 212 371 426

2 unchanged sentences

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

(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.

(2) Operating Profit and Margin includes a $0.6 billion charge in the second quarter of 2024 related to the 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,” respectively, within Item 1 of this Form 10-Q for additional information.

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

Included in segment Operating profit are 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.

3 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

Total net EAC adjustments $ (117) $ (62) $ (275) $ (224)

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

The change in net EAC adjustments of approximately $50 million for both the quarter and six months ended June 30, 2025 compared to the quarter and six months ended June 30, 2024 was primarily due to unfavorable changes in net EAC adjustments across our businesses.

The changes were spread across numerous programs and contracts, with no individual or common significant driver.

In addition to the amounts included in the table above, during the second quarter of 2024, Raytheon initiated the Raytheon Contract Termination and recognized a $0.6 billion charge related to its impact.

The charge included the write-off of remaining contract assets and the estimated settlement with the customer.

The Raytheon Contract Termination was completed, including the customer settlement, during the fourth quarter of 2024, in line with previously accrued amounts.

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

Backlog and Bookings.

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.

Total backlog was $236 billion and $218 billion as of June 30, 2025 and December 31, 2024, respectively.

Total backlog includes commercial backlog of $144 billion and $125 billion as of June 30, 2025 and December 31, 2024, and defense backlog of $92 billion and $93 billion as of June 30, 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 $9 billion and $11 billion for the quarters ended March 31, 2025 and 2024, respectively.

Defense bookings were approximately $12 billion and $11 billion for the quarters ended June 30, 2025 and 2024, respectively, and approximately $21 billion and $22 billion for the six months ended June 30, 2025 and 2024.

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

2 unchanged sentences

Collins Aerospace

Quarter Ended March 31,

(dollars in millions) 2025 2024 Change

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

Net sales $ 7,622 $ 6,999 9 % $ 14,839 $ 13,672 9 %

1 unchanged sentence

Operating profit margins 15.4 % 16.0 % 15.2 % 14.4 %

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

Quarter Ended June 30, 2025 Compared with Quarter Ended June 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

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 organic net sales increase of $0.6 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.3 billion, higher defense sales of $0.3 billion, and a slight increase in commercial aerospace OEM sales.

The increase in commercial aerospace aftermarket 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.

The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to higher defense operating profit of $0.1 billion, principally driven by higher volume and favorable mix.

Commercial aerospace operating profit in the quarter ended June 30, 2025 was slightly higher as compared to the prior year as the benefit of higher commercial aftermarket volume was mostly offset by unfavorable OEM mix including the impact of higher tariffs.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Net sales $ 1,223 $ (63) $ — $ 7 $ 1,167

Operating profit 278 (3) (134) 153 294

(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 $1.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.7 billion, higher defense sales of $0.5 billion and a slight increase in commercial aerospace OEM sales.

The increase in commercial aerospace aftermarket 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 profit increase of $0.3 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is primarily due to higher commercial aerospace operating profit of $0.2 billion principally driven by higher commercial aerospace aftermarket sales volume, partially offset by unfavorable OEM mix including the impact of higher tariffs.

Defense operating profit increased $0.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to the higher volume and favorable mix.

The increase in Other operating profit of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to the absence of $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.

The increase in restructuring costs in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 relates to ongoing cost reduction efforts driven by various workforce reductions primarily initiated in the first half of 2025.

Defense Bookings – In addition to a number of smaller bookings, in the six months ended June 30, 2025, Collins booked $358 million as the primary subcontractor for the U.S.

Navy's solution for engineering design and manufacturing of the Very Low Frequency communication subsystem, which is intended to provide secure and survivable communications to the U.S.

Pratt & Whitney

Quarter Ended March 31,

(dollars in millions) 2025 2024 Change

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

Net sales $ 7,631 $ 6,802 12 % $ 14,997 $ 13,258 13 %

1 unchanged sentence

Operating profit margins 6.4 % 8.0 % 7.1 % 7.2 %

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

Quarter Ended June 30, 2025 Compared with Quarter Ended June 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

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

The organic net sales increase of $0.8 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, reflects higher commercial aftermarket sales of $0.6 billion, primarily driven by higher volume in large commercial engines and higher commercial OEM sales of $0.2 billion driven by favorable mix within large commercial engines.

Military sales were flat driven by lower F135 volume, including the impact of contract award timing.

The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024 reflects higher commercial aerospace operating profit of $0.1 billion, driven by higher commercial aftermarket sales volume, and favorable large commercial OEM mix, partially offset by unfavorable aftermarket mix and the impact of higher tariffs.

Organic operating profit also benefited from lower research and development expenses.

The decrease in other operating profit of $0.1 billion in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily relates to a $0.1 billion charge related to a customer bankruptcy during the second quarter of 2025.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Net sales $ 1,741 $ — $ — $ (2) $ 1,739

Operating profit 242 — 15 (139) 118

(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 $1.7 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 reflects higher commercial aftermarket sales of $1.4 billion primarily driven by higher volume.

The increase also includes higher commercial OEM sales of $0.3 billion, primarily driven by higher volume and favorable mix within large commercial engines.

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, partially offset by the impact of contract award timing.

The organic profit increase of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was driven by higher commercial aerospace operating profit of $0.2 billion, primarily driven by higher commercial aftermarket volume, partially offset by lower commercial OEM operating profit, including higher tariff costs, driven by the higher volume discussed above, and unfavorable aftermarket mix.

Organic operating profit also benefited from lower research and development expenses.

Defense Bookings – In addition to a number of smaller bookings, in the six months ended June 30, 2025, Pratt & Whitney booked $541 million for F135 sustainment.

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

Net sales $ 7,001 $ 6,511 8 % $ 13,341 $ 13,170 1 %

Operating profit 805 127 534 % 1,483 1,123 32 %

Operating profit margins 11.5 % 2.0 % 11.1 % 8.5 %

Defense Bookings $ 9,399 $ 5,028 87 % $ 13,795 $ 13,150 5 %

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

Quarter Ended June 30, 2025 Compared with Quarter Ended June 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

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.

The organic net sales increase of $0.4 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to higher net sales of $0.4 billion from land and air defense systems programs primarily driven by higher net sales on international Patriot programs and international National Advanced Surface-to-Air Missile System (NASAMS) programs.

The increase in the quarter was also driven by higher net sales of $0.1 billion from naval power programs primarily due to higher net sales on Evolved SeaSparrow Missile (ESSM) programs and SPY-6 radar programs, partially offset by lower net sales of $0.1 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 June 30, 2025 compared to the quarter ended June 30, 2024 was driven by a favorable change in mix and other performance of approximately $50 million and higher volume of approximately $40 million.

The favorable change in mix and other performance was primarily due to increased production on international Patriot programs.

The increase in volume was primarily driven by the higher net sales discussed above.

The Other net sales and operating profit increases of $0.1 billion and $0.6 billion, respectively, in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was primarily due to a charge related to the Raytheon Contract Termination initiated in the second quarter of 2024.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Factors Contributing to Total Change

(dollars in millions) Organic (1)

Acquisitions /

Divestitures, net Restructuring

Costs Other Total Change

Net sales $ 561 $ (460) $ — $ 70 $ 171

Operating Profit 173 (34) 12 209 360

(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 $0.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to higher net sales of $0.7 billion from land and air defense systems programs primarily driven by higher net sales on international Patriot programs, international NASAMS programs, and Lower Tier Air and Missile Defense Sensor (LTAMDS) programs, and higher net sales of $0.2 billion from naval power programs primarily due to higher net sales on ESSM programs and SPY-6 radar programs.

These increases were partially offset by lower net sales of $0.3 billion driven by lower development program volume within air and space defense systems.

The organic operating profit increase of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to a favorable change in mix and other performance of $0.1 billion and higher volume of approximately $40 million.

The favorable change in mix and other performance was primarily driven by increased production on international Patriot programs .

The increase in volume was principally driven by the higher net sales discussed above.

In addition, favorable changes in net EAC adjustments were a modest contributor to the organic operating profit increase.

The decrease in net sales and operating profit due to acquisitions / divestitures, net in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily relates to the sale of the CIS business completed in the first quarter of 2024.

The other net sales and operating profit increases of $0.1 billion and $0.2 billion, respectively, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 were primarily due to a charge related to the Raytheon Contract Termination initiated in the second quarter of 2024, with the operating profit decrease partially offset by a gain on sale of the CIS business, net of transaction and other related costs, in the first quarter of 2024.

Defense Backlog and Bookings – Backlog was $64 billion as of June 30, 2025 and $63 billion as of December 31, 2024.

In addition to a number of smaller bookings, in the quarter ended June 30, 2025, Raytheon booked $1.1 billion for AIM-9X Sidewinder Block II short-range air-to-air missiles for the U.S.

Navy and international customers, $901 million to provide Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA), $647 million for a SPY-6 Hardware Production and Sustainment contract for the U.S.

Navy, $581 million for Next Generation Jammer Mid-Band (NGJ-MB) for the U.S.

Navy and the Royal Australian Air Force, $326 million for an advanced development program for the U.S.

government, $325 million for an Advanced Tactical Electro-Optical Infrared (EO/IR) system for the U.S.

Air Force, $322 million for SM-3 to the MDA and international customers, $314 million for various Multi-Spectral Targeting System-A (MTS-A) for the U.S.

Navy and international customers, $300 million to provide ESSM to the U.S.

Navy, and $1.8 billion on a number of classified contracts.

In addition to these bookings, in the six months ended June 30, 2025, Raytheon booked $529 million to provide Patriot systems for the Netherlands, $251 million to provide 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 March 31, Quarter Ended March 31,

Quarter Ended June 30, Quarter Ended June 30,

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Corporate expenses and other unallocated items — — (47) (930)

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.

The increase in eliminations and other net sales of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to an increase in intersegment eliminations, principally driven by Collins.

The change in eliminations and other operating profit of $0.1 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to a gain related to the increase in fair value on an investment recognized in the second quarter of 2025.

The change in corporate expenses and other unallocated items of $0.9 billion in the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024, was primarily due to a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

Net Sales Operating Profit

Six months ended June 30, Six months ended June 30,

(dollars in millions) 2025 2024 2025 2024

Eliminations and other $ (1,290) $ (1,074) $ 36 $ (41)

Corporate expenses and other unallocated items — — (85) (1,026)

The increase in eliminations and other sales of $0.2 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to an increase in intersegment eliminations, principally driven by Collins.

The change in eliminations and other operating profit of $0.1 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily due to a gain related to the increase in fair value on an investment recognized in the second quarter of 2025.

The change in Corporate expenses and other unallocated items of $0.9 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily due to a $0.9 billion charge recorded in the second quarter of 2024 related to the Resolution of Certain Legal Matters.

FAS/CAS operating adjustment

6 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

2 unchanged sentences

FAS/CAS operating adjustment $ 186 $ 212 $ 371 $ 426

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

The FAS/CAS operating adjustments in the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2025, respectively.

Acquisition accounting adjustments

2 unchanged sentences

The components of Acquisition accounting adjustments were as follows:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

4 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(dollars in millions) 2025 2024 2025 2024

5 unchanged sentences

Acquisition accounting adjustments $ (487) $ (504) $ (957) $ (1,004)

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

Acquisition accounting adjustments in the quarter and six months ended June 30, 2025 were relatively consistent with the quarter and six months ended June 30, 2024.

LIQUIDITY AND FINANCIAL CONDITION

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

(dollars in millions) June 30, 2025 December 31, 2024

Cash and cash equivalents $ 4,782 $ 5,578

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In addition to operating cash flows, other significant factors that affect our overall management of liquidity include:

capital expenditures, customer financing requirements, investments in and divestitures of businesses, dividends, common stock repurchases, pension funding, access to

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 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.

capital expenditures, customer financing requirements, investments in and divestitures of businesses, dividends, common stock repurchases, pension funding, access to 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 June 30, 2025, we had cash and cash equivalents of $4.8 billion, of which approximatel y 48% 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.

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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.

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

In June 2025, our S&P Global rating was affirmed and our outlook was revised from BBB+/negative to BBB+/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 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.

As of June 30, 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 June 30, 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 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.

As of June 30, 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 June 30, 2025, we had $1.4 billion of commercial paper borrowings outstanding.

At June 30, 2025, short-term commercial paper borrowings outstanding had a weighted-average interest rate of 4.7%.

We made the following repayment of long-term debt during the six months ended June 30, 2025:

Date Description of Notes Aggregate Principal Balance (in millions)

May 7, 2025 3 Month SOFR plus 1.225% term loan due 2025

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.

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Cash Flow - Operating Activities

Quarter Ended March 31,

Six Months Ended June 30,

(dollars in millions) 2025 2024

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$ 1,763 $ 3,075

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.

Included within Net income for the six months ended June 30, 2024, was 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 Raytheon Contract Termination, both of which had no effect on cash flow in that period.

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

Excluding the impact of these charges, the $1.3 billion decrease in cash flows provided by operating activities in the six months ended June 30, 2025 compared to in the six months ended June 30, 2024, was primarily driven by an increase in accounts receivable, including an increase in collaborator receivables, due to timing of collections, and higher tax payments in the six months ended June 30, 2025.

These changes were partially offset by higher net income after adjustments to reconcile to net cash 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.

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.

Factoring activity resulted in a $0.2 billion decrease in cash provided by operating activities during the six months ended June 30, 2025 compared to during the six months ended June 30, 2024.

We made tax payments, net of refunds of $0.7 billion and $0.2 billion in the six months ended June 30, 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.

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Cash Flow - Investing Activities

Quarter Ended March 31,

Six Months Ended June 30,

(dollars in millions) 2025 2024

Net cash flows (used in) provided by investing activities

Net cash flows used in investing activities

$ (1,187) $ (40)

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 $1.4 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.

The $1.1 billion change in cash flows used in investing activities in the six months ended June 30, 2025, compared to the six months ended June 30, 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 six months ended June 30, 2025 and 2024, other intangible assets increased by $0.2 billion and $0.3 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

Quarter Ended March 31,

Six Months Ended June 30,

(dollars in millions) 2025 2024

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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 $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.

The $2.2 billion change in cash flows used in financing activities in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily driven by an increase in issuance of commercial paper of $1.4 billion and lower 2025 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 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.

At June 30, 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.

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

Quarter Ended March 31,

Six Months Ended June 30,

(dollars in millions;

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

On May 1, 2025, the Board of Directors declared a dividend of $0.68 per share payable June 12, 2025 to shareowners of record at the close of business on May 23, 2025.

On June 27, 2025, the Board of Directors declared a dividend of $0.68 per share payable September 4, 2025 to shareowners of record at the close of business on August 15, 2025.

Quantitative and Qualitative Disclosures About Market Risk

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

There has been no significant change in our exposure to market risk during the six months ended June 30, 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