RTX Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations BUSINESS OVERVIEW We are a global premier systems provider of high technology products and services to the aerospace and defense industries. Unless the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” and “RTX” mean RTX Corporation and its subsidiaries. References to “Raytheon Company” mean Raytheon Company, which became a wholly owned subsidiary of RTX on April 3, 2020 during an all-stock merger transaction between United Technologies Corporation and Raytheon Company (the surviving company of which is RTX Corporation). Raytheon follows a 4-4-5 fiscal calendar while Collins Aerospace (Collins) and Pratt & Whitney use a quarter calendar end. Throughout this Form 10-Q, when we refer to the quarters and nine months ended September 30, 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. For additional discussion, refer to the “Business Overview” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in our 2024 Annual Report on Form 10-K. Industry Considerations Our worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. Our operations include original equipment manufacturer (OEM) and extensive related aftermarket parts and services related to our aerospace operations. Our defense business serves both domestic and international customers primarily as a prime contractor or subcontractor on a broad portfolio of defense and related programs for government customers. Our business mix also reflects the combination of shorter cycles in our commercial aerospace spares contracts and certain service contracts in our defense business, and longer cycles in our aerospace OEM and aftermarket maintenance contracts and on our defense contracts to design, develop, manufacture, or modify complex equipment. Our customers are in the public and private sectors, and our businesses reflect an extensive geographic diversification that has evolved with continued globalization. Government legislation, policies, and regulations can impact our business and operations. Changes in environmental and climate change-related laws or regulations, including regulations on greenhouse gas emissions, carbon pricing, and energy taxes, could lead to new or additional investment in product designs and facility upgrades and could increase our operational and environmental compliance expenditures, including increased energy and raw materials costs and costs associated with manufacturing changes. In addition, government and industry-driven safety and performance regulations, restrictions on aircraft engine noise and emissions, government imposed travel restrictions, and government procurement practices can impact our businesses. Collins and Pratt & Whitney serve both commercial and government aerospace customers. Revenue passenger miles (RPMs), available seat miles, and the general economic health of airline carriers and airframers, as well as the financial strength and performance of airframers, are key barometers for our commercial aerospace operations. Performance in the general aviation sector is closely tied to the overall health of the economy and is positively correlated to corporate profits. Many of our aerospace customers are covered under long-term aftermarket service agreements at both Collins and Pratt & Whitney, which are inclusive of both spare parts and services. Our defense operations are affected by U.S. Department of Defense (DoD) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment. In addition, our defense businesses engage in both direct commercial sales, which generally require U.S. government licenses and approvals, as well as foreign military sales, which are government-to-government transactions initiated by, and carried out at the direction of, the U.S. government. Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions. Other Matters Global, economic, and political conditions, changes in raw material and commodity prices and supply, labor availability and costs, inflation, interest rates, potential changes in U.S. government policy positions, including changes in DoD policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign currency exchange rates, sanctions, tariffs, energy costs and supply, levels of air travel, the financial condition of commercial airlines, and the impact from natural disasters and weather conditions create uncertainties that could impact our businesses. Legal Matters. 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 32 Tabl e o f Contents the Department of Justice (DOJ) and the Company settled an administrative proceeding with the Securities and Exchange Commission (SEC) (the SEC Administrative Order) to resolve the previously disclosed criminal and civil government investigations into payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012 (Thales-Raytheon Systems and Related Matters). The Company also entered into a DPA and a False Claims Act (FCA) settlement agreement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017 (DOJ Investigation and Contract Pricing Disputes). Under these DPAs and the SEC Administrative Order, Raytheon Company and the Company are required to retain, among other things, an independent compliance monitor satisfactory to the DOJ and the SEC (for a term ending three years from the date on which the monitor is engaged) and are required to undertake certain cooperation and disclosure obligations (for a term commencing on the effective date of DPA-1 and the SEC Administrative Order, as applicable, and ending three years from the date on which the monitor is engaged). The compliance monitor will oversee Raytheon Company’s and the Company’s compliance with their respective obligations under the DPAs and the SEC Administrative Order. The DPAs further provide that, in the event the DOJ, in its sole discretion, determines during the period of deferral of prosecution that Raytheon Company or the Company have violated any provision of either DPA, Raytheon Company or the Company may be subject to prosecution for any federal criminal violation, including the charges against Raytheon Company in the relevant DPA. The SEC Administrative Order further provides that, in the event of a breach of the SEC Administrative Order, the SEC may vacate the SEC Administrative Order and institute proceedings against the Company. In the event of any such determination or breach, the Company may face additional adverse impacts. In addition, the Company resolved certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a Consent Agreement (CA) with the Department of State (DOS) (Trade Compliance Matters). The CA, which has a three-year term, requires the Company to implement remedial compliance measures and to conduct an external audit of the Company’s International Traffic in Arms Regulations (ITAR) compliance program. The CA also requires appointment of an external, independent Special Compliance Officer (SCO). The Company appointed its SCO on September 27, 2024. For further discussion of DPA-1, DPA-2, the SEC Administrative Order, and the CA, see “Note 16: Commitments and Contingencies,” within Item 1 of this Form 10-Q. Pratt & Whitney Powder Metal Matter. As described further in “Note 16: Commitments and Contingencies,” within Item 1 of this Form 10-Q, in 2023, Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts requires accelerated inspection of the PW1100G-JM (PW1100) Geared Turbofan (GTF) fleet, which powers the A320neo family of aircraft (A320neo) (herein referred to as the “Powder Metal Matter”). Global Supply Chain. We are dependent on a global supply chain and have experienced supply chain disruptions that resulted in delays and increased costs and adversely affected our performance. These disruptions impacted our ability to procure raw materials, 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 and export controls, 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. Economic Environment. The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations. Due to the nature of our government and commercial aerospace businesses, and their respective customer and supplier contracts, we are not always able to offset cost increases by increasing our contract value or pricing, in particular on our fixed-price contracts. Increasing material, component, and labor prices could subject us to losses in our fixed price contracts in the event of cost overruns. In addition, higher interest rates have increased the cost of borrowing and tightened the availability of capital. Among other things, these effects can constrain our customers’ purchasing power and decrease orders for our products and services and impact the ability of our customers to make payments and our suppliers to perform. 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. However, the impact of these pressures and corresponding initiatives is uncertain and subject to a range of factors and future developments. The global trade environment is highly dynamic. Since February 2025, the U.S. government has imposed tariffs on imports from all countries with which the U.S. engages in trade. 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 33 Tabl e o f Contents 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 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 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. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (EACs), and estimates supporting the recoverability of our inventories, contract fulfillment costs, deferred tax assets, intangible assets and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid. U.S. Government’s Budget & Tax Legislation. 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. Con. Res. 14” (the Act) was enacted. The Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S. taxation on international earnings. 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. On April 9, 2025, the U.S. government issued an executive order requiring, among other things, a DoD review of its Major Defense Acquisition Programs to identify those that are 15% behind schedule, 15% over budget, unable to meet key performance parameters, or unaligned with the Secretary of Defense’s mission priorities for potential cancellation. Although RTX does not, at this time, believe the Executive Order will have a material impact on our business or results of operations, the longer-term ramifications, if any, to RTX will depend on a variety of factors including the formulation and implementation of the review criteria in the order, the review timeline, the Secretary of Defense’s mission priorities, and future budget determinations based on the results of such review. Geopolitical Matters. In response to Russia’s invasion of Ukraine, the U.S. government and the governments of various jurisdictions in which we operate, have imposed broad economic sanctions and export controls targeting specific industries, entities, and individuals in Russia. 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. These government measures, among other limitations, restrict transactions involving various Russian banks and financial institutions and impose enhanced export controls limiting transfers of various goods, software, and technologies to and from Russia, including broadened export controls specifically targeting the aerospace sector. These measures have adversely affected, and could continue to adversely affect, the Company and/or our supply chain, business partners, or customers; 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 34 Tabl e o f Contents 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. The Chinese sanctions against RMD included a fine equal to twice the value of the arms that RMD sold to Taiwan since September 2020. Since that time, China has announced additional sanctions against the Raytheon business and a Collins joint venture. If China were to impose additional sanctions, enforce announced sanctions, or take other regulatory action against RTX, our suppliers, affiliates, or partners, it could potentially disrupt our business operations. Any impact of these or other potential sanctions or other actions by China, is uncertain. We have direct commercial sales contracts for products and services to certain foreign customers, for which U.S. government review and approval have been pending. The U.S. government’s approval of these sales is subject to a range of factors, including its foreign policies related to these customers, which are subject to continuing review and potential changes. Likewise, regulatory approvals previously granted for prior sales can be paused or revoked if the products and services have not yet been delivered to the customer. In addition, certain programs require approvals by foreign governments, and those approvals may not be obtained on a timely basis or at all or may be revoked. 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 continued regional instability and tensions. RTX’s defense programs’ ability to receive components from Israel has not been impacted in any material respect, although we could experience future delivery delays of certain products if further escalations arise. To date, the overall impacts to RTX from this situation have been minimal; however, given the volatile nature of the situation, the potential impacts to RTX are subject to change. See Part I, Item 1A, “Risk Factors” in our 2024 Annual Report on Form 10-K for further discussion of these items. CRITICAL ACCOUNTING ESTIMATES Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Management believes the most complex and sensitive judgments, because of their significance to the Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. See “Critical Accounting Estimates” within Item 7 and “Note 1: Basis of Presentation and Summary of Accounting Principles” within Item 8 of our 2024 Annual Report on Form 10-K, which describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2025. RESULTS OF OPERATIONS As described in our “Cautionary Note Concerning Factors That May Affect Future Results” of this Form 10-Q, our interim period results of operations and period-to-period comparisons of our results, particularly at a segment level, may not be indicative of our future operating results. The following discussions of comparative results among periods, including the discussion of segment results, should be viewed in this context. We provide the organic change in Net sales and Cost of sales for our consolidated results of operations as well as the organic change in Net sales and Operating profit for our segments. We believe that these non-Generally Accepted Accounting Principles (non-GAAP) measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. The organic change in Net sales, Cost of sales, and Operating profit excludes acquisitions and divestitures, net, and the effect of foreign currency exchange rate translation fluctuations and other significant non-operational items and/or significant operational items that may occur at irregular intervals (Other). Additionally, the organic change in Cost of sales and Operating profit excludes restructuring costs, the FAS/CAS operating adjustment, and costs related to certain acquisition accounting adjustments. Restructuring costs generally arise from severance related to workforce reductions and facility exit costs. We are continuously evaluating our cost structure and implement restructuring actions in an effort to keep our cost structure competitive. The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of U.S. GAAP and our pension and PRB expense under U.S. 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 35 Tabl e o f Contents 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. Net Sales 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 nine months ended September 30, 2025 are as follows: (dollars in millions) Quarter Ended September 30, 2025 Nine Months Ended September 30, 2025 Organic (1) $ 2,618 $ 5,922 Acquisitions and divestitures, net (255) (777) Other 26 105 Total change $ 2,389 $ 5,250 (1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. 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 September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Net Sales Products $ 16,264 $ 14,708 72.4 % 73.2 % Services 6,214 5,381 27.6 % 26.8 % Total net sales $ 22,478 $ 20,089 100 % 100 % Refer to “Note 18: 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 $1.6 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. 36 Tabl e o f Contents Nine Months Ended September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Net Sales Products $ 46,406 $ 43,573 72.1 % 73.7 % Services 17,959 15,542 27.9 % 26.3 % Total net sales $ 64,365 $ 59,115 100 % 100 % 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 September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Sales to the U.S. government (1) $ 8,409 $ 7,996 37.4 % 39.8 % Foreign military sales through the U.S. government 1,867 1,502 8.3 % 7.5 % Foreign government direct commercial sales 1,477 1,218 6.6 % 6.1 % Commercial aerospace and other commercial sales 10,725 9,373 47.7 % 46.7 % Total net sales $ 22,478 $ 20,089 100 % 100 % (1) Excludes foreign military sales through the U.S. government. Nine Months Ended September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Sales to the U.S. government (1) $ 24,414 $ 24,175 37.9 % 40.9 % Foreign military sales through the U.S. government 4,973 4,020 7.7 % 6.8 % Foreign government direct commercial sales 4,262 3,597 6.6 % 6.1 % Commercial aerospace and other commercial sales 30,716 27,323 47.7 % 46.2 % Total net sales $ 64,365 $ 59,115 100 % 100 % (1) Excludes foreign military sales through the U.S. government. Cost of Sales Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Total cost of sales $ 17,898 $ 16,055 $ 51,293 $ 47,940 Percentage of net sales 79.6 % 79.9 % 79.7 % 81.1 % 37 Tabl e o f Contents 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 Organic (1) $ 2,048 $ 4,627 Acquisitions and divestitures, net (217) (688) Restructuring (19) 38 FAS/CAS operating adjustment 15 73 Acquisition accounting adjustments (27) (73) Other 43 (624) Total change $ 1,843 $ 3,353 (1) See “Results of Operations” for definition of organic. A reconciliation of this measure to reported U.S. GAAP amounts is provided in the table above. 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. For discussion on FAS/CAS operating adjustment, see the “FAS/CAS operating adjustment” subsection under the “Segment Review” section below. For discussion on Acquisition accounting adjustments, see the “Acquisition accounting adjustments” subsection under the “Segment Review” section below. Quarter Ended September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Cost of sales Products $ 13,593 $ 12,336 60.5 % 61.4 % Services 4,305 3,719 19.2 % 18.5 % Total cost of sales $ 17,898 $ 16,055 79.6 % 79.9 % 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. 38 Tabl e o f Contents Nine Months Ended September 30, % of Total Net Sales (dollars in millions) 2025 2024 2025 2024 Cost of sales Products $ 38,865 $ 37,177 60.4 % 62.9 % Services 12,428 10,763 19.3 % 18.2 % Total cost of sales $ 51,293 $ 47,940 79.7 % 81.1 % 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 September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Company-funded $ 684 $ 751 $ 2,018 $ 2,126 Percentage of net sales 3.0 % 3.7 % 3.1 % 3.6 % Customer-funded (1) $ 1,262 $ 1,205 $ 3,709 $ 3,627 Percentage of net sales 5.6 % 6.0 % 5.8 % 6.1 % (1) Included in Cost of sales in our Condensed Consolidated Statement of Operations. 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. 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 September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Selling, general, and administrative $ 1,436 $ 1,389 $ 4,457 $ 4,232 Percentage of net sales 6.4 % 6.9 % 6.9 % 7.2 % 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. 39 Tabl e o f Contents We are continuously evaluating our cost structure and have implemented restructuring actions in an effort to keep our cost structure competitive. Therefore, the amounts reflected above include the beneficial impact of previous restructuring actions on Selling, general, and administrative expenses. Other Income (Expense), Net Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Other income (expense), net $ 63 $ 134 $ 107 $ (390) 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 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 September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Operating profit $ 2,523 $ 2,028 $ 6,704 $ 4,427 Operating profit margin 11.2 % 10.1 % 10.4 % 7.5 % 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 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 nine months ended September 30, 2025 was relatively consistent with the quarter and nine months ended September 30, 2024. 40 Tabl e o f Contents Interest Expense, Net Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Interest expense $ 483 $ 548 $ 1,465 $ 1,456 Interest income (46) (45) (125) (75) Other non-operating expense (income) (1) 12 (7) 9 (5) Interest expense, net $ 449 $ 496 $ 1,349 $ 1,376 Average interest expense rate 4.5 % 4.6 % 4.5 % 4.6 % (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 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. Income Taxes 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 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. Con. Res. 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 September 30, Nine Months Ended September 30, (dollars in millions, except per share amounts) 2025 2024 2025 2024 Net income attributable to common shareowners $ 1,918 $ 1,472 $ 5,110 $ 3,292 Diluted earnings per share $ 1.41 $ 1.09 $ 3.77 $ 2.45 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 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 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 nine months ended September 30, 2024 includes the following: 41 Tabl e o f Contents • acquisition accounting adjustments of $1.2 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.89; • 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; and • 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 Our operations, for the periods presented herein, are classified into three principal segments: Collins, Pratt & Whitney, and Raytheon. Segments are generally based on the management structure of the businesses and the grouping of similar operations, based on capabilities and technologies, where each management organization has general operating autonomy over diversified products and services. Segment Total net sales and Operating profit include intercompany sales and profit, which are ultimately eliminated within Eliminations and other, which also includes certain smaller non-reportable segments. Segment Operating Profit excludes certain acquisition accounting adjustments, the FAS/CAS operating adjustment, and certain corporate expenses, as further discussed below. Given the nature of our business, we believe that total net sales and operating profit (and the related operating profit margin percentage), which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our segment performance, as described below. We provide the organic change in Net sales and Operating profit for our segments as discussed above in “Results of Operations.” We believe that these non-GAAP measures are useful to investors because they provide transparency to the underlying performance of our business, which allows for better year-over-year comparability. For Pratt & Whitney only, Other also includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada due to its significance to Pratt & Whitney’s overall operating results. Total Net Sales. Total net sales by segment were as follows: Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Collins Aerospace $ 7,621 $ 7,075 $ 22,460 $ 20,747 Pratt & Whitney 8,423 7,239 23,420 20,497 Raytheon 7,045 6,386 20,386 19,556 Total segment 23,089 20,700 66,266 60,800 Eliminations and other (1) (611) (611) (1,901) (1,685) Consolidated $ 22,478 $ 20,089 $ 64,365 $ 59,115 (1) Includes the operating results of certain smaller operations. 42 Tabl e o f Contents Operating Profit. Operating profit by segment was as follows: Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Collins Aerospace $ 1,260 $ 1,062 $ 3,521 $ 3,029 Pratt & Whitney 751 557 1,823 1,511 Raytheon (2) 859 647 2,342 1,770 Total segment 2,870 2,266 7,686 6,310 Eliminations and other (1) (14) (14) 22 (55) Corporate expenses and other unallocated items (3) (25) 100 (110) (926) FAS/CAS operating adjustment 199 210 570 636 Acquisition accounting adjustments (507) (534) (1,464) (1,538) Consolidated $ 2,523 $ 2,028 $ 6,704 $ 4,427 (1) Includes the operating results of certain smaller operations. (2) Operating Profit and Margin includes a $0.6 billion charge in the second quarter of 2024 related to the Raytheon Contract Termination and a $0.4 billion gain, net of transaction and other related costs, in the first quarter of 2024 related to the sale of our CIS business. See “Note 5: Changes in Contract Estimates at Completion” and “Note 2: Acquisitions and Dispositions,” respectively, within Item 1 of this Form 10-Q for additional information. (3) Includes a $0.9 billion charge in the second quarter of 2024 related to the Resolution of Certain Legal Matters. Included in segment Operating profit are EAC adjustments, which relate to changes in Operating profit and margin due to revisions to total estimated revenues and costs at completion. These changes may reflect improved or deteriorated operating performance, as well as changes in facts and assumptions related to contract options, contract modifications, incentive and award fees associated with program performance, customer activity levels, and other customer-directed changes. For a full description of our EAC process, refer to “Note 5: Changes in Contract Estimates at Completion” within Item 1 of this Form 10-Q. Given that we have thousands of individual contracts, and given the types and complexity of the assumptions and estimates we must make on an on-going basis, and the nature of the work required to be performed under our contracts, we have both favorable and unfavorable EAC adjustments in the ordinary course. We had the following net EAC adjustments for the periods presented: 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 $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. The charge included the write-off of remaining contract assets and the estimated settlement with the customer. The Raytheon Contract Termination was completed, including the customer settlement, during the fourth quarter of 2024, in line with previously accrued amounts. Significant EAC adjustments, when they occur, are discussed in each business segment’s discussion below. Backlog and Bookings. Total backlog was $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 $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 43 Tabl e o f Contents 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 September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 Change 2025 2024 Change Net sales $ 7,621 $ 7,075 8 % $ 22,460 $ 20,747 8 % Operating profit 1,260 1,062 19 % 3,521 3,029 16 % Operating profit margins 16.5 % 15.0 % 15.7 % 14.6 % Quarter Ended September 30, 2025 Compared with Quarter Ended September 30, 2024 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 783 $ (263) $ — $ 26 $ 546 Operating profit 123 2 (5) 78 198 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $0.8 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 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. 44 Tabl e o f Contents Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 2,006 $ (326) $ — $ 33 $ 1,713 Operating profit 401 (1) (139) 231 492 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $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 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. Navy. Pratt & Whitney Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 Change 2025 2024 Change Net sales $ 8,423 $ 7,239 16 % $ 23,420 $ 20,497 14 % Operating profit 751 557 35 % 1,823 1,511 21 % Operating profit margins 8.9 % 7.7 % 7.8 % 7.4 % Quarter Ended September 30, 2025 Compared with Quarter Ended September 30, 2024 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,180 $ — $ — $ 4 $ 1,184 Operating profit 148 — 13 33 194 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $1.2 billion in the 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 45 Tabl e o f Contents $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 (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 2,921 $ — $ — $ 2 $ 2,923 Operating profit 390 — 28 (106) 312 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $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. Raytheon Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 Change 2025 2024 Change Net sales $ 7,045 $ 6,386 10 % $ 20,386 $ 19,556 4 % Operating profit 859 647 33 % 2,342 1,770 32 % Operating profit margins 12.2 % 10.1 % 11.5 % 9.1 % Defense Bookings $ 15,870 $ 16,551 (4) % $ 29,665 $ 29,701 — % 46 Tabl e o f Contents Quarter Ended September 30, 2025 Compared with Quarter Ended September 30, 2024 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 659 $ — $ — $ — $ 659 Operating Profit 211 — 14 (13) 212 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $0.7 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. Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,220 $ (460) $ — $ 70 $ 830 Operating Profit 384 (34) 26 196 572 (1) See “Segment Review” above for definition of organic. A reconciliation of this measure to the reported U.S. GAAP amount is provided in the table above. The organic net sales increase of $1.2 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 $0.4 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. 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 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. Navy, and 47 Tabl e o f Contents 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, $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. Air Force, $322 million for SM-3 to the MDA and international customers, $314 million for various Multi-Spectral Targeting System-A (MTS-A) for the U.S. Navy and international customers, $300 million to provide ESSM to the U.S. Navy, $251 million to provide ESSM for Japan, and $2.5 billion on a number of classified contracts. Corporate and Eliminations and other Eliminations and other reflects the elimination of sales, other income, and operating profit transacted between segments, as well as the operating results of certain smaller operations. Corporate expenses and other unallocated items consists of costs not considered part of management’s evaluation of reportable segment operating performance, including certain unallowable costs and reserves. Net Sales Operating Profit Quarter Ended September 30, Quarter Ended September 30, (dollars in millions) 2025 2024 2025 2024 Eliminations and other $ (611) $ (611) $ (14) $ (14) Corporate expenses and other unallocated items — — (25) 100 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 Nine months ended September 30, Nine months ended September 30, (dollars in millions) 2025 2024 2025 2024 Eliminations and other $ (1,901) $ (1,685) $ 22 $ (55) Corporate expenses and other unallocated items — — (110) (926) 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 We present a FAS/CAS operating adjustment outside of segment results, which represents the difference between the service cost component of our pension and PRB expense under the FAS requirements of U.S. GAAP and our pension and PRB expense under U.S. government CAS, primarily related to our Raytheon segment. While the ultimate liability for pension and PRB costs under FAS and CAS is similar, the pattern of cost recognition is different. Over time, we generally expect to recover the related Raytheon pension and PRB liabilities through the pricing of our products and services to the U.S. government. Collins and Pratt & Whitney generally record pension and PRB expense on a FAS basis . 48 Tabl e o f Contents The components of the FAS/CAS operating adjustment were as follows: Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 FAS service cost (expense) $ (30) $ (34) $ (90) $ (103) CAS expense 229 244 660 739 FAS/CAS operating adjustment $ 199 $ 210 $ 570 $ 636 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 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. These adjustments are not considered part of management’s evaluation of segment results. The components of Acquisition accounting adjustments were as follows: Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Amortization of acquired intangibles $ (518) $ (541) $ (1,496) $ (1,563) Amortization of property, plant, and equipment fair value adjustment (8) (12) (25) (35) Amortization of customer contractual obligations related to acquired loss-making and below-market contracts 19 19 57 60 Acquisition accounting adjustments $ (507) $ (534) $ (1,464) $ (1,538) Acquisition accounting adjustments related to acquisitions in each segment were as follows: Quarter Ended September 30, Nine Months Ended September 30, (dollars in millions) 2025 2024 2025 2024 Collins Aerospace $ (202) $ (210) $ (605) $ (626) Pratt & Whitney (101) (95) (248) (225) Raytheon (204) (229) (611) (687) Total segment (507) (534) (1,464) (1,538) Eliminations and other — — — — Acquisition accounting adjustments $ (507) $ (534) $ (1,464) $ (1,538) 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) September 30, 2025 December 31, 2024 Cash and cash equivalents $ 5,966 $ 5,578 Total debt 39,059 41,261 Total equity 66,359 61,923 Total capitalization (total debt plus total equity) 105,418 103,184 Total debt to total capitalization 37 % 40 % We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities and the timing of such activities. Our principal source of liquidity is cash flows from operating activities. In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, customer financing 49 Tabl e o f Contents 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. The Company intends to repatriate certain undistributed earnings of its international subsidiaries that have been previously taxed in the U.S. Taxes associated with the future remittance of these earnings have been recorded. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, RTX will continue to permanently reinvest these earnings. Our ability to access global debt markets and the related cost of these borrowings depends on the strength of our credit rating and market conditions. In March 2025, our Moody’s Investors Service outlook improved from Baa1/negative to Baa1/stable. In June 2025, our S&P Global rating was affirmed and our outlook was revised from BBB+/negative to BBB+/stable. Though the Company expects to continue having adequate access to funds, declines in our credit ratings or Company outlook could result in higher borrowing costs. As of 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 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 $ 1,500 May 7, 2025 3 Month SOFR plus 1.225% term loan due 2025 750 We have an existing universal shelf registration statement, which we filed with the SEC on September 18, 2025, for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement. We believe our cash on hand and future operating cash flows will be sufficient to meet our future operating cash needs. Further, we continue to have access to the commercial paper markets and our existing credit facilities, and our ability to obtain debt or equity financing, as well as the availability under committed credit lines, provides additional potential sources of liquidity should they be required or appropriate. Cash Flow - Operating Activities Nine Months Ended September 30, (dollars in millions) 2025 2024 Net cash flows provided by operating activities $ 6,402 $ 5,598 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. 50 Tabl e o f Contents 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 $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. We currently estimate a full year 2025 cash impact related to the Powder Metal Matter of approximately $1.1 billion to $1.3 billion, which includes the impact of cash paid, customer credits applied, and the timing of partner recovery. Cash Flow - Investing Activities Nine Months Ended September 30, (dollars in millions) 2025 2024 Net cash flows used in investing activities $ (716) $ (755) 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 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 Nine Months Ended September 30, (dollars in millions) 2025 2024 Net cash flows used in financing activities $ (5,332) $ (4,749) 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 $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. 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. 51 Tabl e o f Contents Our share repurchases, which include shares reacquired outside of our share repurchase program, were as follows: Nine Months Ended September 30, 2025 2024 (dollars in millions; shares in thousands) $ Shares $ Shares Shares of common stock repurchased (1) $ 50 396 $ 136 1,365 ASR Tranche 1 settlement - shares received (2) — — — 391 ASR Tranche 2 settlement - financing cash paid (2) (3) — — 258 — 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. (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. Item 3. Quantitative and Qualitative Disclosures About Market Risk There has been no significant change in our exposure to market risk during the nine months ended September 30, 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.