What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-21 compared with 2025-07-22 · 250 added, 208 removed, 470 unchanged (49% 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 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.

Throughout this Form 10-Q, when we refer to the quarters and nine months ended September 30, 2025 and 2024 with respect to Raytheon, we are referring to their September 28, 2025 and September 29, 2024 fiscal quarter ends, respectively.

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

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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

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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).

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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.

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.

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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.

In response, certain 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

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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.

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

As the duration, extent and enforceability 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.

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 enforceability of tariffs and counter-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.

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Government’s Budget & Tax Legislation.

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.

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.

On September 30, 2025, the continuing resolution (CR) allowing U.S.

government Departments and Agencies to operate through the end of the government fiscal year expired and the U.S.

government shut down.

As a result of the U.S.

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

We may also experience similar impacts in the event of a series of short-term continuing resolutions rather than full-year fiscal year 2026 appropriations.

Generally, the significance of these impacts will primarily be based on the length of the shutdown and timing of passage of a new CR or a full budget.

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

14” (the Act) was enacted.

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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.

The Act also provides a supplementary $156.2 billion to the DoD for obligations through 2029, which includes $24.4 billion for the Iron Dome for America project.

The project, outlined in a January 27, 2025 Executive Order, calls 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.

With next generation technologies across land, sea and space 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 of operations will depend on a variety of factors, including award timelines, mission priorities, and future budget determinations.

The Act also includes $25.4 billion in funding to enhance DoD resources for munitions and supply chain resiliency.

As a leading munitions manufacturer, RTX is strategically situated to play a key role in supporting this initiative.

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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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.

We will continue to monitor future

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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 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.

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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 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 six months ended June 30, 2025.

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

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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government Cost Accounting Standards (CAS), primarily related to our Raytheon segment.

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 June 30, Six Months Ended June 30,

Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant, and

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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,

(dollars in millions) 2025 2024 2025 2024

Net sales $ 22,478 $ 20,089 $ 64,365 $ 59,115

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

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

(dollars in millions) Quarter Ended September 30, 2025 Nine Months Ended September 30, 2025

$ 2,618 $ 5,922

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GAAP amounts is provided in the table above.

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.

Net sales increased $2.6 billion organically in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily due to higher organic net sales of $1.2 billion at Pratt & Whitney, $0.8 billion at Collins, and $0.7 billion at Raytheon.

Net sales increased $5.9 billion organically in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to higher organic net sales of $2.9 billion at Pratt & Whitney, $2.0 billion at Collins, and $1.2 billion at Raytheon.

The decrease in net sales due to Acquisitions and divestitures, net of $0.3 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 reflects the sale of the actuation and flight control business within our Collins segment completed in the third quarter of 2025 and the sale of the Goodrich Hoist & Winch business within our Collins segment in the fourth quarter of 2024.

The decrease in net sales due to Acquisitions and divestitures, net of $0.8 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, reflects the sale of the actuation and flight control business within our Collins segment, the sale of the Cybersecurity, Intelligence and Services (CIS) business within our Raytheon segment completed in the first quarter of 2024, and the sale of the Goodrich Hoist & Winch business within our Collins segment completed in the fourth quarter of 2024.

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

Quarter Ended June 30, % of Total Net Sales

Quarter Ended September 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 $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

Net products sales increased $1.6 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily due to increases in external products sales of $0.6 billion at Pratt & Whitney, $0.5 billion at Raytheon, and $0.4 billion at Collins.

Net services sales increased $0.8 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily due to increases in external services sales of $0.5 billion at Pratt & Whitney, $0.2 billion at Raytheon, and $0.1 billion at Collins.

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Nine Months Ended September 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Total net sales $ 64,365 $ 59,115 100 % 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.

Net products sales increased $2.8 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by increases in external products sales of $1.1 billion at Collins, $1.0 billion at Pratt & Whitney, and $0.7 billion at Raytheon.

Net services sales increased $2.4 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to increases in external services sales of $1.9 billion at Pratt & Whitney, $0.4 billion at Collins, and $0.1 billion at Raytheon.

Our sales to major customers were as follows:

Quarter Ended June 30, % of Total Net Sales

Quarter Ended September 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

Nine Months Ended September 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Cost of Sales

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

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Percentage of net sales 79.6 % 79.9 % 79.7 % 81.1 %

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

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

(dollars in millions) Quarter Ended September 30, 2025 Nine Months Ended September 30, 2025

$ 2,048 $ 4,627

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GAAP amounts is provided in the table above.

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.

The organic increase in total cost of sales of $2.0 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024, was primarily driven by the organic net sales increases at Pratt & Whitney, Collins, and Raytheon noted above.

The organic increase in total cost of sales of $4.6 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 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 $0.2 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 reflects the sale of the actuation and flight control business within our Collins segment completed in the third quarter of 2025.

The decrease in total costs of sales due to Acquisitions and divestitures, net for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, reflects the sale of the actuation and flight control business within our Collins segment, the sale of the CIS business within our Raytheon segment completed in the first quarter of 2024, and the sale of the Goodrich Hoist & Winch business within our Collins segment in the fourth quarter of 2024.

Other cost of sales decreased $0.6 billion in the nine months ended September 30, 2025 compared to the nine months ended September 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”) 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.

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 June 30, % of Total Net Sales

Quarter Ended September 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Total cost of sales $ 17,898 $ 16,055 79.6 % 79.9 %

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

Net products cost of sales increased $1.3 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024, primarily driven by 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 $0.6 billion in the quarter ended September 30, 2025 compared to the quarter ended September 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.

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Nine Months Ended September 30, % of Total Net Sales

(dollars in millions) 2025 2024 2025 2024

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Total cost of sales $ 51,293 $ 47,940 79.7 % 81.1 %

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.

Net products cost of sales increased $1.7 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by increases in external products cost of sales at Pratt & Whitney, Collins, and Raytheon, each driven by the products sales changes noted above.

The increase was partially offset by the absence of 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 $1.7 billion in the nine months ended September 30, 2025 compared to the nine months ended September 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.

Research and Development

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 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-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.

The decrease in Company-funded research and development expenses of $0.1 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily driven by lower spending on commercial programs at Collins.

The decrease in Company-funded research and development expenses of $0.1 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily driven by lower spending on commercial and defense programs at Collins and Pratt & Whitney, partially offset by higher expenses on various development programs at Raytheon.

The increase in Customer-funded research and development expenses of $0.1 billion for the quarter and nine months ended September 30, 2025 compared to the quarter and nine months ended September 30, 2024 was primarily driven by higher development spend 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 spending on customer-funded expenses at Raytheon on military development programs, specifically related to the Next Generation Interceptor (NGI) program in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Selling, General, and Administrative

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

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Percentage of net sales 6.4 % 6.9 % 6.9 % 7.2 %

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.

The Selling, general, and administrative expenses in the quarter ended September 30, 2025 were relatively consistent with the quarter ended September 30, 2024.

The increase in Selling, general, and administrative expenses of $0.2 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily driven by $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.

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

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Other Income (Expense), Net

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

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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.

The decrease in Other income (expense), net of $0.1 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily due to the absence of a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024, partially offset by a $0.1 billion gain from the sale of the actuation and flight control business in the third quarter of 2025.

The increase in Other income (expense), net of $0.5 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to a $0.1 billion gain from the sale of the actuation and flight control business in the third quarter of 2025 and the absence of 2024 items, including a $0.9 billion charge related to the Resolution of Certain Legal Matters and the reversal of certain tax related indemnity receivables associated with the conclusion of the examination phase of certain tax audits, partially offset by the absence of prior year benefits of a $0.4 billion gain on sale of the CIS business net of transaction and other related costs, and a $0.2 billion benefit from a tax related indemnity receivable.

Operating Profit

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Operating profit margin 11.2 % 10.1 % 10.4 % 7.5 %

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.

The increase in Operating profit of $0.5 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily driven by an increase in the organic operating performance of our segments of approximately $0.5 billion and a $0.1 billion gain on sale of the actuation and flight control business in the third quarter of 2025, partially offset by the absence of a $0.2 billion benefit related to a tax related indemnity receivable recorded in the third quarter of 2024 .

The increase in Operating profit of $2.3 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily driven by an increase in the organic operating performance of our segments of $1.2 billion, a $0.1 billion gain on sale of the actuation and flight control business in the third quarter of 2025, and the absence of 2024 charges, 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 increases were partially offset by higher restructuring costs of $0.1 billion, a customer bankruptcy charge of $0.1 billion at Pratt & Whitney, and the absence of prior year benefits which included a $0.4 billion gain on sale of the CIS business, net of transaction and other related costs, and a $0.2 billion benefit from a tax related indemnity receivable.

Non-service Pension Income

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

Non-service pension income $ (364) $ (374) $ (1,081) $ (1,134)

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.

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

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Interest Expense, Net

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

5 unchanged sentences

(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 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,

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

The decrease in Interest expense of $0.1 billion for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily driven by lower interest accruals.

Quarter Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Effective income tax rate 17.7 % 19.5 % 16.8 % 17.5 %

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.

Our effective tax rate for the quarter and nine months ended September 30, 2025 was 17.7% and 16.8%, respectively, as compared to 19.5% and 17.5% for the quarter and nine months ended September 30, 2024, respectively.

The lower effective tax rate for the quarter ended September 30, 2025 compared to September 30, 2024 was primarily driven by the absence of a $0.2 billion tax charge related to U.S.

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

tax ruling Otis received in the quarter ending September 30, 2024 impacting pre-separation tax years.

The lower effective tax rate also included additional tax expense in the quarter ended September 30, 2025 due to the sale of the Collins actuation and flight control business and higher taxes for 2025, principally driven by the enactment of “An Act to Provide for Reconciliation Pursuant to Title II of the H.

14” on July 4, 2025.

Both periods also included tax benefits associated with certain legal entity reorganizations.

The effective tax rates for the nine months ended September 30, 2025 and 2024 were relatively consistent.

In addition to the items noted above, the effective tax rate for the nine months ended September 30, 2024 included a $0.3 billion benefit from the impact of the conclusion of the examination phases of the RTX and Rockwell Collins audits, that was more than offset by an unfavorable impact for the tax cost associated with the sale of the CIS business and the impact of the Resolution of Certain Legal Matters accrued during the second quarter of 2024, in which no tax benefit was recorded.

Net Income Attributable to Common Shareowners

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

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

1 unchanged sentence

Diluted earnings per share $ 1.41 $ 1.09 $ 3.77 $ 2.45

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

Net income attributable to common shareowners for the quarter ended September 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 $0.29.

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;

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 EPS of $0.31.

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

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

• acquisition accounting adjustments of $1.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.84;

• restructuring charges of $0.2 billion net of tax, which had an unfavorable impact on diluted EPS of $0.12.

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;

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

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• acquisition accounting adjustments of $1.2 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.89;

• 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.

• 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;

• 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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

7 unchanged sentences

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

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Operating Profit.

Operating profit by segment was as follows:

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

21 unchanged sentences

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

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

Total net EAC adjustments $ (35) $ (91) $ (310) $ (315)

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.

The change in net EAC adjustments of approximately $0.1 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily due to favorable changes in net EAC adjustments at Raytheon.

Total net EAC adjustments in the nine months ended September 30, 2025 were relatively consistent with the nine months ended September 30, 2024.

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.

3 unchanged sentences

Backlog and Bookings.

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.

Total backlog was $251 billion and $218 billion as of September 30, 2025 and December 31, 2024, respectively.

Total backlog includes commercial backlog of $148 billion and $125 billion as of September 30, 2025 and December 31, 2024, and defense backlog of $103 billion and $93 billion as of September 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 $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.

Defense bookings were approximately $23 billion and $25 billion for the quarters ended September 30, 2025 and 2024, respectively, and approximately $44 billion and $47 billion for the nine months ended September 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:

the desired capability by the customer and urgency of customer needs, customer budgets and other fiscal constraints, political and economic and other environmental factors, the timing of customer negotiations, and the timing of customer and governmental approvals and notifications.

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governmental approvals and notifications.

In addition, due to these factors, quarterly bookings tend to fluctuate from period to period, particularly on a segment basis.

Collins Aerospace

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

2 unchanged sentences

Operating profit margins 16.5 % 15.0 % 15.7 % 14.6 %

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

Quarter Ended September 30, 2025 Compared with Quarter Ended September 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 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 organic net sales increase of $0.8 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $0.4 billion, higher commercial aerospace OEM sales of $0.3 billion and higher defense sales of $0.1 billion.

The increase in commercial aftermarket sales was driven by higher volume across all aftermarket sales channels, and the increase in commercial OEM sales was primarily driven by higher volume on narrowbody programs.

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

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

The organic operating profit increase of $0.1 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily due to higher commercial aerospace operating profit of $0.1 billion, principally driven by the higher sales volume discussed above partially offset by unfavorable commercial OEM mix and the impact of higher tariffs.

Defense operating profit increased slightly in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily driven by the higher sales volume discussed above.

Operating profit also benefited from lower research and development expenses.

The decrease in net sales due to acquisitions / divestitures, net in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 primarily relates to the sale of the actuation and flight control business completed in the third quarter of 2025.

The increase in other operating profit of $0.1 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was primarily driven by the gain on the sale of the actuation and flight control business completed in the third quarter of 2025.

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Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

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 organic net sales increase of $2.0 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily relates to higher commercial aerospace aftermarket sales of $1.1 billion, higher defense sales of $0.6 billion and higher commercial aerospace OEM sales of $0.3 billion.

The increase in commercial aerospace sales was driven by higher volume across all sales channels.

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.

The organic operating profit increase of $0.4 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to higher commercial aerospace operating profit of $0.2 billion, principally driven by the higher sales volume discussed above partially offset by unfavorable commercial OEM mix and the impact of tariffs.

Defense operating profit increased $0.2 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to higher sales volume and favorable mix.

Operating profit also benefited from lower research and development expenses.

The decrease in net sales due to acquisitions / divestitures, net in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily relates to the sale of the actuation and flight control business completed in the third quarter of 2025 and the sale of the Goodrich Hoist & Winch business completed in the fourth quarter of 2024.

The increase in other operating profit of $0.2 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to 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 are no longer recoverable as a result of initiating alternative titanium sources and a $0.1 billion gain on the sale of our actuation and flight control business completed in the third quarter of 2025.

The increase in restructuring costs in the nine months ended September 30, 2025 compared to the nine months ended September 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 quarter ended September 30, 2025, Collins booked $454 million for Program D-X to deliver satellite communication systems to support survivable communications across multiple frequency bands.

In addition to these bookings, in the nine months ended September 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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

2 unchanged sentences

Operating profit margins 8.9 % 7.7 % 7.8 % 7.4 %

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

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

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

The organic net sales increase of $0.8 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

The organic net sales increase of $1.2 billion in the quarter ended September 30, 2025, compared to the quarter ended September 30, 2024, reflects higher commercial aftermarket sales of $0.8 billion and higher commercial OEM sales of

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$0.1 billion.

The increase in commercial aftermarket sales of $0.8 billion was primarily driven by higher volume.

The increase in commercial OEM sales was driven by higher volume in large commercial engines and favorable mix at Pratt & Whitney Canada.

Military sales increased $0.3 billion primarily driven by higher volume on the F135 program, including the impact of the Lot 18 contract award in the quarter ended September 30, 2025.

The organic operating profit increase of $0.1 billion in the quarter ended September 30, 2025, compared to the quarter ended September 30, 2024 reflects higher commercial aerospace operating profit of $0.1 billion, driven by the commercial aftermarket sales volume increase discussed above, partially offset by lower commercial OEM operating profit primarily driven by higher large commercial engines volume and the impact of higher tariffs.

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

These increases were partially offset by higher selling, general administrative expenses of $0.1 billion.

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

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,

The organic net sales increase of $2.9 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 reflects higher commercial aftermarket sales of $2.1 billion primarily driven by higher volume.

Also contributing to the organic net sales increase was higher commercial OEM sales of $0.4 billion driven by higher volume and favorable mix.

Military sales increased $0.4 billion, primarily due to higher production volume on the F135 and tanker programs.

The organic operating profit increase of $0.4 billion in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 reflects higher commercial aerospace operating profit of $0.4 billion primarily driven by higher commercial aftermarket volume, partially offset by lower commercial OEM operating profit, including higher tariff and production costs, driven by the higher volume discussed above.

The increase in military operating profit of $0.1 billion was driven by the higher sales volume discussed above, as well as favorable mix.

Increased selling, general and administrative expenses of $0.1 billion were partially offset by lower research and development expenses.

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

Defense Bookings – In the quarter ended September 30, 2025, Pratt & Whitney booked $2.9 billion for F135 production and $248 million for F135 sustainment.

In addition to these bookings, in the nine months ended September 30, 2025, Pratt & Whitney booked $541 million for F135 sustainment and a number of smaller bookings.

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 Change 2025 2024 Change

3 unchanged sentences

Defense Bookings $ 15,870 $ 16,551 (4) % $ 29,665 $ 29,701 — %

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

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

Factors Contributing to Total Change

8 unchanged sentences

GAAP amounts is provided in the table above.

The organic net sales increase of $0.4 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 organic net sales increase of $0.7 billion in the quarter ended September 30, 2025 compared to the quarter ended September 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.

The increase in the quarter was also driven by higher net sales of $0.2 billion from naval power programs primarily due to higher net sales on certain classified programs, Standard Missile-6 (SM-6) programs, and Evolved SeaSparrow Missile (ESSM) programs.

The organic operating profit increase of $0.2 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was driven by a favorable change in mix and other performance of approximately $0.1 billion, a favorable change in net EAC adjustments of approximately $0.1 billion, and higher volume of approximately $0.1 billion.

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

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

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

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Factors Contributing to Total Change

8 unchanged sentences

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.

The organic net sales increase of $1.2 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to higher net sales of $1.1 billion from land and air defense systems programs primarily driven by higher net sales on international Patriot programs, international National Advanced Surface-to-Air Missile System (NASAMS) programs, and Lower Tier Air and Missile Defense Sensor (LTAMDS) programs, and higher net sales of $0.4 billion from naval power programs primarily due to higher net sales on ESSM programs, SPY-6 radar programs, and certain classified 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 organic operating profit increase of $0.4 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to a favorable change in mix and other performance of $0.2 billion, higher volume of approximately $0.1 billion and a favorable change in net EAC adjustments of $0.1 billion.

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.

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

The increase in other net sales and operating profit of $0.1 billion and $0.2 billion, respectively, in the nine months ended September 30, 2025 compared to the nine months ended September 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 $72 billion as of September 30, 2025 and $63 billion as of December 31, 2024.

In addition to a number of smaller bookings, in the quarter ended September 30, 2025, Raytheon booked $2.5 billion on several contracts to provide Guidance Enhanced Missiles (GEM-T) and Patriot launchers for international customers and the U.S.

Army, $2.1 billion to provide advanced medium-range air-to-air missile (AMRAAM) to the U.S.

Air Force, U.S.

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international customers, $1.5 billion for low-rate initial production (LRIP) of LTAMDS for the U.S.

Army and Poland, $517 million to provide Stinger missiles to the U.S.

Army and international customers, $484 million to provide precision munitions systems to the U.S.

Navy, $327 million to provide Javelin to the U.S.

Army, $263 million to provide the Low, slow, small, unmanned aircraft Integrated Defeat System (LIDS), a Counter-Unmanned Aircraft System (C-UAS), to the U.S.

Army, $259 million to provide Standard Missile-2 (SM-2) for the U.S.

Navy, and $2.5 billion on a number of classified contracts.

In addition to these bookings, in the nine months ended September 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.

Navy and the Royal Australian Air Force, $529 million to provide Patriot systems for the Netherlands, $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.

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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.

Navy, $251 million to provide ESSM for Japan, and $2.5 billion on a number of classified contracts.

Corporate and Eliminations and other

2 unchanged sentences

Net Sales Operating Profit

Quarter Ended June 30, Quarter Ended June 30,

Quarter Ended September 30, Quarter Ended September 30,

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Corporate expenses and other unallocated items — — (25) 100

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.

The change in corporate expenses and other unallocated items of $0.1 billion in the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024, was primarily due to the absence of a $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.

Net Sales Operating Profit

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

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

(dollars in millions) 2025 2024 2025 2024

1 unchanged sentence

Corporate expenses and other unallocated items — — (110) (926)

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.

The increase in eliminations and other sales of $0.2 billion in the nine months ended September 30, 2025 compared to the nine months ended September 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 nine months ended September 30, 2025 compared to the nine months ended September 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 $0.8 billion in the nine months ended September 30, 2025 compared to the nine months ended September 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 $0.2 billion benefit from a tax related indemnity receivable recorded in the third quarter of 2024.

FAS/CAS operating adjustment

5 unchanged sentences

Collins and Pratt & Whitney generally record pension and PRB expense on a FAS basis .

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

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

2 unchanged sentences

FAS/CAS operating adjustment $ 199 $ 210 $ 570 $ 636

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.

The FAS/CAS operating adjustments in the quarter and nine months ended September 30, 2025 were relatively consistent with the quarter and nine months ended September 30, 2024.

Acquisition accounting adjustments

2 unchanged sentences

The components of Acquisition accounting adjustments were as follows:

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

(dollars in millions) 2025 2024 2025 2024

5 unchanged sentences

Acquisition accounting adjustments $ (507) $ (534) $ (1,464) $ (1,538)

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.

Acquisition accounting adjustments in the quarter ended September 30, 2025 were relatively consistent with the quarter ended September 30, 2024.

The change in acquisition accounting adjustments of $0.1 billion in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, was primarily driven by a decrease in acquired intangibles amortization at Raytheon.

LIQUIDITY AND FINANCIAL CONDITION

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

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

Cash and cash equivalents $ 5,966 $ 5,578

6 unchanged sentences

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 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.

capital expenditures, customer financing

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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 September 30, 2025, we had cash and cash equivalents of $6.0 billion, of which approximatel y 43% 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.

6 unchanged sentences

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 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.

As of September 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 September 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 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:

As of September 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 September 30, 2025, we had no commercial paper borrowings outstanding.

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

Date Description of Notes Aggregate Principal Balance (in millions)

August 18, 2025 3.950% notes due 2025

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

3 unchanged sentences

Cash Flow - Operating Activities

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions) 2025 2024

1 unchanged sentence

$ 6,402 $ 5,598

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.

Included within Net income for the nine months ended September 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 nine months ended September 30, 2024.

Excluding the impact of these charges, the $0.8 billion increase in cash flows provided by operating activities in the nine months ended September 30, 2025 compared to in the nine months ended September 30, 2024, was primarily driven by higher net income after adjustments to reconcile to net cash provided by operating activities driven by our segment performance, the benefit of lower inventory growth, and an increase in accounts payable and accrued liabilities driven by the timing of collaborator payables.

These increases were partially offset by an increase in accounts receivable due to higher volume and timing of collections, and higher tax payments in the nine months ended September 30, 2025.

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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 $0.2 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.

Factoring activity resulted in a $1.0 billion increase in cash provided by operating activities during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

We made tax payments, net of refunds of $0.9 billion and $0.6 billion in the nine months ended September 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.

1 unchanged sentence

Cash Flow - Investing Activities

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions) 2025 2024

2 unchanged sentences

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 $1.1 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.

The change in cash flows provided from investing activities in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily related to higher receipts from settlements of derivative contracts of $0.2 billion.

This was partially offset by a $0.1 billion change in net proceeds received from divestitures.

In the nine months ended September 30, 2025, we received $1.2 billion from the actuation and flight control business divestiture as compared to $1.3 billion from the CIS divestiture in the nine months ended September 30, 2025.

During the nine months ended September 30, 2025 and 2024, other intangible assets increased by $0.3 billion and $0.4 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

Six Months Ended June 30,

Nine Months Ended September 30,

(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 $2.2 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.

The $0.6 billion change in cash flows used in financing activities in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily driven by higher long-term debt repayments of $0.6 billion in the nine months ended September 30, 2025.

Refer to “Note 9:

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

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.

Additionally, lower share repurchases were more than offset by higher dividends paid in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

At September 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 (ASR) 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.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in millions;

2 unchanged sentences

$ 50 396 $ 136 1,365

ASR Tranche 1 settlement - shares received (2)

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

Total shares of common stock repurchased $ 50 396 $ 394 1,756

(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.

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

(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.

Pursuant to the ASR agreements entered into in 2023, the shares associated with the remaining portion of the aggregate purchase price have been settled over two tranches.

In July 2024, the first tranche was settled upon final delivery to us of approximately 0.4 million shares of common stock.

In September 2024, with respect to the second tranche, we owed approximately 2.2 million shares of common stock that we elected to cash settle for $261 million.

The cash payment required as a result of the second tranche settlement was due to the significant increase in the price of our common stock during the ASR term.

The final average price under the ASR was $94.28 per share.

Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the six months ended June 30, 2025.

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