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. We operate in three segments: Collins Aerospace (Collins), Pratt & Whitney, and Raytheon. Raytheon follows a fiscal calendar, while Collins and Pratt & Whitney use calendar quarter ends. Throughout this Form 10-Q, references to the quarters and six months ended June 30, 2026 and 2025 for Raytheon correspond to its fiscal quarter ends of June 28, 2026 and June 29, 2025, respectively. The current status of significant factors affecting our business environment in 2026 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 2025 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 War (DoW) 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 or priorities, including changes in DoW policies or priorities, geopolitical conflicts and strained intercountry relations, U.S. and non-U.S. tax law changes, foreign 31 Table of Contents 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 disclosed and described further in “Note 16: Commitments and Contingencies”, within Item 1 of this Form 10-Q under the headings “Thales-Raytheon Systems and Related Matters,” “DOJ Investigation and Contract Pricing Disputes,” and “Trade Compliance Matters”, in 2024 the Company resolved several outstanding legal matters. 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 goods subject to U.S. imposed tariffs, as well as goods subject to counter tariffs imposed by other countries. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on goods imported into the United States were unauthorized. The Company is the importer of record for certain products that were previously subject to IEEPA tariffs and has paid approximately $0.5 billion of such tariffs since their inception. The U.S. Court of International Trade (CIT) has ordered U.S. Customs and Border Protection (CBP) to refund the collected IEEPA tariffs. On April 20, 2026, CBP established an online portal through which companies can submit certain IEEPA tariff refund requests. On June 2, 2026, the U.S. government appealed the CIT’s order to issue refunds, however, the precise basis and scope of this appeal is currently unknown. As of June 30, 2026, the Company has submitted refund claims and has received and recognized an immaterial amount of refunds. The Company expects to submit additional refund claims and will recognize refunds if and when approved. Following the Supreme Court’s ruling invalidating IEEPA tariffs, the U.S. government imposed new and revised tariffs under various available regimes which may apply to certain products for which the Company is the importer of record. 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 six months ended June 30, 2026, 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 in effect remain uncertain, we are continuing to evaluate the potential future impacts of the imposition of 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 32 Table of Contents 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 recoverability and timing of refunds, 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 and Executive Orders. On February 3, 2026, Congress passed and the President signed a spending package providing full-year funding for most federal agencies through September 30, 2026. On April 21, 2026, the President’s proposed Fiscal Year 2027 defense budget seeking $1.5 trillion was released, consisting of $1.15 trillion in base discretionary budget and $350 billion of mandatory funding through reconciliation. The President submitted a separate supplemental funding request to Congress on June 24, 2026, with approximately $67 billion of the request intended for defense spending, including $21 billion for munitions replenishment. We are closely monitoring the movement of the requests through Congress. 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 DoW for obligations through 2029, which includes $24.4 billion for the Golden 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. RTX’s portfolio is well-positioned to deliver key solutions for the project. 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 actual awards, award timelines, mission priorities, and future budget determinations. The Act also includes $25.4 billion in funding to enhance DoW 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. The President has also issued multiple executive orders, including one intended to reform the DoW’s defense acquisition processes and promote expedited and streamlined acquisitions. Following issuance of those orders, the Secretary of War issued a memorandum and released the DoW’s Acquisition Transformation Strategy, which is aligned with the executive orders and seeks to overhaul the existing defense acquisition system through process changes that prioritize speed, flexibility, and rigorous execution. A subsequent executive order was issued that may limit corporate distributions, share repurchases, and executive compensation incentives during periods of defense contractor underperformance, insufficient prioritization, investment or production speed under their U.S. government contracts. We are monitoring how these executive orders and related actions will be implemented and any potential future impacts to our business. While those impacts are uncertain, a limitation on our ability to issue distributions or engage in share repurchases related to the defense contractor performance executive order could adversely affect the market price of our common stock. 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, including targeting certain members of the Company’s management team and Board of Directors. Similarly, 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. Since that time, China has announced additional sanctions against the Raytheon business and a Collins joint venture. We do not currently expect these measures to have a material adverse effect on our financial results, but we will continue to monitor future developments, including additional measures that could adversely affect the Company and/or our supply chain, business partners, or customers. 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. 33 Table of Contents We continue to closely monitor impacts to RTX’s business, customers, suppliers, employees, and operations in Israel, the Middle East, and the region at large due to the conflict in Iran and increased regional instability and tensions. RTX has employees, facilities, and operations in the Middle East and we reassess operations regularly, based upon the security situation. Our and our suppliers’ operations in the region have not been impacted in any material respect, although we could experience future delivery delays of certain products as the conflict continues. We also continue to monitor uncertainties related to energy costs and availability, and associated impacts to our commercial airline customers. 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 2025 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 2025 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 six months ended June 30, 2026. 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 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 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. 34 Table of Contents Net Sales Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Net sales $ 24,708 $ 21,581 $ 46,784 $ 41,887 The factors contributing to the change year-over-year in total net sales for the quarter and six months ended June 30, 2026 are as follows: (dollars in millions) Quarter Ended June 30, 2026 Six Months Ended June 30, 2026 Organic (1) $ 3,511 $ 5,588 Acquisitions and divestitures, net (391) (761) Other 7 70 Total change $ 3,127 $ 4,897 (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 $3.5 billion organically in the quarter ended June 30, 2026, primarily due to higher organic net sales of $1.3 billion at Pratt & Whitney, $1.3 billion at Raytheon, and $1.0 billion at Collins. Net sales increased $5.6 billion organically in the six months ended June 30, 2026, primarily due to higher organic net sales of $2.0 billion at Pratt & Whitney, $1.8 billion at Raytheon, and $1.7 billion at Collins. The decrease in net sales due to Acquisitions and divestitures, net of $0.4 billion and $0.8 billion for the quarter and six months ended June 30, 2026, respectively, was driven by divestitures within our Collins segment of the actuation and flight control business and the Simmonds Precision Products business completed in 2025. See “Segment Review” below for further information by segment. Quarter Ended June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Net Sales Products $ 17,944 $ 15,551 72.6 % 72.1 % Services 6,764 6,030 27.4 % 27.9 % Total net sales $ 24,708 $ 21,581 100 % 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 $2.4 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 primarily due to increases in external products sales of $1.3 billion at Raytheon, $0.5 billion at Pratt & Whitney, and $0.5 billion at Collins. Net services sales increased $0.7 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 primarily due to increases in external services sales of $0.7 billion at Pratt & Whitney and $0.1 billion at Collins, partially offset by a decrease in external service sales of $0.1 billion at Raytheon. Six Months Ended June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Net Sales Products $ 33,709 $ 30,142 72.1 % 72.0 % Services 13,075 11,745 27.9 % 28.0 % Total net sales $ 46,784 $ 41,887 100 % 100 % Net products sales increased $3.6 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by increases in external products sales of $1.9 billion at Raytheon, $0.8 billion at Pratt & Whitney, and $0.8 billion at Collins. 35 Table of Contents Net services sales increased $1.3 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by increases in external services sales of $1.3 billion at Pratt & Whitney and $0.1 billion at Collins, partially offset by a decrease in external service sales of $0.1 billion at Raytheon. Our sales to major customers were as follows: Quarter Ended June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Sales to the U.S. government (1) $ 9,298 $ 8,273 37.6 % 38.3 % Foreign military sales through the U.S. government 2,020 1,635 8.2 % 7.6 % Foreign government direct commercial sales 1,718 1,433 7.0 % 6.6 % Commercial aerospace and other commercial sales 11,672 10,240 47.2 % 47.4 % Total net sales $ 24,708 $ 21,581 100 % 100 % (1) Excludes foreign military sales through the U.S. government. Six Months Ended June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Sales to the U.S. government (1) $ 17,268 $ 16,005 36.9 % 38.2 % Foreign military sales through the U.S. government 3,801 3,106 8.1 % 7.4 % Foreign government direct commercial sales 3,265 2,785 7.0 % 6.6 % Commercial aerospace and other commercial sales 22,450 19,991 48.0 % 47.7 % Total net sales $ 46,784 $ 41,887 100 % 100 % (1) Excludes foreign military sales through the U.S. government. Cost of Sales Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Total cost of sales $ 19,575 $ 17,205 $ 37,057 $ 33,395 Percentage of net sales 79.2 % 79.7 % 79.2 % 79.7 % The factors contributing to the change year-over-year in total cost of sales for the quarter and six months ended June 30, 2026 are as follows: (dollars in millions) Quarter Ended June 30, 2026 Six Months Ended June 30, 2026 Organic (1) $ 2,716 $ 4,306 Acquisitions and divestitures, net (355) (681) Restructuring (4) (77) FAS/CAS operating adjustment 15 27 Acquisition accounting adjustments (13) (13) Other 11 100 Total change $ 2,370 $ 3,662 (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. Total cost of sales increased $2.7 billion and $4.3 billion organically for the quarter and six months ended June 30, 2026, respectively, primarily driven by the organic net sales increases at Pratt & Whitney, Raytheon, and Collins noted above. The decrease in total cost of sales due to Acquisitions and divestitures, net of $0.4 billion and $0.7 billion for the quarter and six months ended June 30, 2026, respectively, was driven by divestitures within our Collins segment noted above. The decrease in restructuring costs in the six months ended June 30, 2026, was primarily due to lower severance related costs recognized in 2026 at Collins . The increase in Other cost of sales in the six months ended June 30, 2026, was primarily driven by unfavorable foreign exchange rate impacts. 36 Table of Contents 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 June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Cost of sales Products $ 14,802 $ 12,989 59.9 % 60.2 % Services 4,773 4,216 19.3 % 19.5 % Total cost of sales $ 19,575 $ 17,205 79.2 % 79.7 % Net products cost of sales increased $1.8 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025, primarily driven by increases in external products cost of sales at Raytheon, Pratt & Whitney, and Collins, each driven by the products sales changes noted above. Net services cost of sales increased $0.6 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025, primarily driven by increases in external services cost of sales at Pratt & Whitney and Collins, each driven by the services sales changes noted above. Six Months Ended June 30, % of Total Net Sales (dollars in millions) 2026 2025 2026 2025 Cost of sales Products $ 27,802 $ 25,272 59.4 % 60.3 % Services 9,255 8,123 19.8 % 19.4 % Total cost of sales $ 37,057 $ 33,395 79.2 % 79.7 % Net products cost of sales increased $2.5 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by increases in external products cost of sales at Raytheon, Pratt & Whitney, and Collins, each driven by the products sales changes noted above. Net services cost of sales increased $1.1 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by increases in external products cost of sales at Pratt & Whitney and Collins, each driven by the products sales changes noted above. Research and Development Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Company-funded $ 726 $ 697 $ 1,353 $ 1,334 Percentage of net sales 2.9 % 3.2 % 2.9 % 3.2 % Customer-funded (1) $ 1,278 $ 1,247 $ 2,506 $ 2,447 Percentage of net sales 5.2 % 5.8 % 5.4 % 5.8 % (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. 37 Table of Contents Selling, General, and Administrative Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Selling, general, and administrative $ 1,658 $ 1,573 $ 3,134 $ 3,021 Percentage of net sales 6.7 % 7.3 % 6.7 % 7.2 % Selling, general, and administrative expenses increased for the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025, primarily driven by higher compensation and other costs across the businesses, partially offset by the absence of a charge related to a customer bankruptcy recorded at Pratt & Whitney in 2025. Selling, general, and administrative expenses increased for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by higher compensation and other costs across the businesses, partially offset by the absence of a charge related to a customer bankruptcy recorded at Pratt & Whitney in 2025 and lower restructuring costs in 2026 as compared to 2025 as a result of ongoing cost reduction efforts driven by various workforce reductions at Collins. Other Income, Net Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Other income, net $ 62 $ 40 $ 126 $ 44 Other income, 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, net in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, was primarily due to higher gains related to the increase in fair value on investments in 2026 and favorable foreign exchange impacts, partially offset by the impact of a litigation matter in 2026. Operating Profit Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Operating profit $ 2,811 $ 2,146 $ 5,366 $ 4,181 Operating profit margin 11.4 % 9.9 % 11.5 % 10.0 % The increase in Operating profit of $0.7 billion for the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 was primarily driven by an increase in the organic operating profit of our segments of approximately $0.5 billion and the absence of a charge related to a customer bankruptcy recorded at Pratt & Whitney in 2025. The increase in Operating profit of $1.2 billion for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by an increase in the organic operating profit of our segments of approximately $0.9 billion, the absence of a charge related to a customer bankruptcy recorded at Pratt & Whitney in 2025, and lower restructuring costs in 2026 as compared to 2025. Non-service Pension Income Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Non-service pension income $ (348) $ (351) $ (703) $ (717) 38 Table of Contents Interest Expense, Net Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Interest expense $ 428 $ 480 $ 834 $ 982 Interest income (33) (28) (57) (79) Other non-operating expense (income) (1) 22 5 30 (3) Interest expense, net $ 417 $ 457 $ 807 $ 900 Average interest expense rate 4.4 % 4.5 % 4.5 % 4.5 % (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. The decrease in Interest expense for the quarter and six months ended June 30, 2026 compared to the quarter and six months ended June 30, 2025, was primarily driven by long-term debt repayments. Income Taxes Quarter Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Effective income tax rate 18.0 % 15.4 % 16.3 % 16.2 % The effective tax rate for the quarter ended June 30, 2026 is higher compared to June 30, 2025. The effective tax rate for the quarter ended June 30, 2025 included a tax benefit associated with the conclusion of the Internal Revenue Service (IRS) examination of RTX’s 2020 tax year as well as a higher tax benefit from stock based compensation as compared to the quarter ended June 30, 2026. The effective tax rate for the quarter ended June 30, 2026 includes a net benefit associated with legal entity reorganizations. The effective tax rate for the six months ended June 30, 2026 and June 30, 2025 are relatively consistent. However, the effective tax rate for the six months ended June 30, 2026 includes a higher tax benefit from stock based compensation, a lower forecasted annualized effective tax rate for 2026 principally due to a higher Foreign Derived Deduction Eligible Income benefit resulting from the U.S. tax legislation enacted in 2025, and a net tax benefit for certain legal entity reorganizations. In addition, the effective tax rate for the six months ended June 30, 2025 includes the impact from the IRS examination noted above. Net Income Attributable to Common Shareowners Quarter Ended June 30, Six Months Ended June 30, (dollars in millions, except per share amounts) 2026 2025 2026 2025 Net income attributable to common shareowners $ 2,139 $ 1,657 $ 4,198 $ 3,192 Diluted earnings per share $ 1.57 $ 1.22 $ 3.08 $ 2.36 Net income attributable to common shareowners for the quarter ended June 30, 2026 includes the following: • acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted earnings per share (EPS) of $0.27. Net income attributable to common shareowners for the quarter ended June 30, 2025 includes the following: • acquisition accounting adjustments of $0.4 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.28. Net income attributable to common shareowners for the six months ended June 30, 2026 includes the following: • acquisition accounting adjustments of $0.7 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.54. Net income attributable to common shareowners for the six months ended June 30, 2025 includes the following: • acquisition accounting adjustments of $0.7 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.55; • restructuring charges of $0.1 billion, net of tax, which had an unfavorable impact on diluted EPS of $0.10. 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 39 Table of Contents products and services. Total segment net sales and segment 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 June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Collins Aerospace $ 8,210 $ 7,622 $ 15,812 $ 14,839 Pratt & Whitney 8,889 7,631 17,062 14,997 Raytheon 8,269 7,001 15,214 13,341 Total segment 25,368 22,254 48,088 43,177 Eliminations and other (1) (660) (673) (1,304) (1,290) Consolidated $ 24,708 $ 21,581 $ 46,784 $ 41,887 (1) Includes the operating results of certain smaller operations. Operating Profit. Operating profit by segment was as follows: Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Collins Aerospace $ 1,306 $ 1,173 $ 2,613 $ 2,261 Pratt & Whitney 738 492 1,448 1,072 Raytheon 1,042 805 1,883 1,483 Total segment 3,086 2,470 5,944 4,816 Eliminations and other (1) 98 24 136 36 Corporate expenses and other unallocated items (70) (47) (112) (85) FAS/CAS operating adjustment 171 186 343 371 Acquisition accounting adjustments (474) (487) (945) (957) Consolidated $ 2,811 $ 2,146 $ 5,366 $ 4,181 (1) Includes the operating results of certain smaller operations. 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. 40 Table of Contents We had the following net EAC adjustments for the periods presented: Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Total net EAC adjustments $ (66) $ (117) $ (228) $ (275) Significant EAC adjustments, when they occur, are discussed in each business segment’s discussion below. Backlog and Bookings. Total backlog was $289 billion and $268 billion as of June 30, 2026 and December 31, 2025, respectively. Total backlog includes commercial backlog of $170 billion and $161 billion as of June 30, 2026 and December 31, 2025, and defense backlog of $119 billion and $107 billion as of June 30, 2026 and December 31, 2025, respectively. We believe bookings are an important measure of future performance for our defense businesses. Our defense operations consist primarily of our Raytheon segment and operations in the defense businesses within our Collins and Pratt & Whitney segments. Defense bookings were approximately $23 billion and $12 billion for the quarters ended June 30, 2026 and 2025, respectively, and approximately $37 billion and $21 billion for the six months ended June 30, 2026 and 2025, respectively. 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. 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, (dollars in millions) 2026 2025 Change 2026 2025 Change Net sales $ 8,210 $ 7,622 8 % $ 15,812 $ 14,839 7 % Operating profit 1,306 1,173 11 % 2,613 2,261 16 % Operating profit margins 15.9 % 15.4 % 16.5 % 15.2 % Quarter Ended June 30, 2026 Compared with Quarter Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 981 $ (404) $ — $ 11 $ 588 Operating profit 146 (21) (25) 33 133 (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 $1.0 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 primarily relates to higher commercial aerospace OEM sales of $0.5 billion, higher commercial aerospace aftermarket sales of $0.3 billion, and higher defense sales of $0.2 billion. The increase in commercial OEM sales was primarily driven by higher volume on narrowbody and widebody programs and the increase in commercial aftermarket sales was driven by higher volume across all aftermarket sales channels. The increase in defense sales was primarily due to higher volume across multiple programs and platforms . The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 was due to higher commercial aerospace operating profit of $0.2 billion driven by the higher sales volume discussed above. Defense operating profit decreased slightly, principally driven by the impact of mix that more than offset the higher sales volume discussed above. Operating profit was also impacted by higher selling, general and administrative expenses. The decrease in net sales and operating profit due to acquisitions / divestitures, net in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 relates to the divestitures of the actuation and flight control business and the Simmonds Precision Products business completed in 2025. 41 Table of Contents Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,709 $ (787) $ — $ 51 $ 973 Operating profit 253 (54) 97 56 352 (1) See “Segment Review” above for definition of organic. A reconciliation of these measures to reported U.S. GAAP amounts is provided in the table above. The organic net sales increase of $1.7 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily relates to higher commercial aerospace OEM sales of $0.8 billion, higher commercial aerospace aftermarket sales of $0.5 billion, and higher defense sales of $0.4 billion. The increase in commercial OEM sales was primarily driven by higher volume on narrowbody and widebody programs and the increase in commercial aftermarket sales was driven by higher volume across all aftermarket sales channels. The increase in defense sales was primarily due to higher volume across multiple programs and platforms. The organic operating profit increase of $0.3 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to higher commercial aerospace operating profit of $0.2 billion primarily due to the volume increases discussed above, partially offset by the impact of higher tariffs. Defense operating profit in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 increased $0.1 billion as the benefit of higher volume was partially offset by mix. Operating profit was also impacted by higher selling, general and administrative expenses. The decrease in net sales due to acquisitions / divestitures, net in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 relates to the divestitures of the actuation and flight control business and the Simmonds Precision Products business completed in 2025. The decrease in restructuring costs in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to lower severance related costs recognized in 2026. Defense Bookings – In the quarter and six months ended June 30, 2026, Collins recorded $2 billion and $5 billion, respectively, in defense bookings, comprised of a number of smaller individual bookings under $0.5 billion. Pratt & Whitney Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 Change 2026 2025 Change Net sales $ 8,889 $ 7,631 16 % $ 17,062 $ 14,997 14 % Operating profit 738 492 50 % 1,448 1,072 35 % Operating profit margins 8.3 % 6.4 % 8.5 % 7.1 % Quarter Ended June 30, 2026 Compared with Quarter Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,274 $ — $ — $ (16) $ 1,258 Operating profit 121 — 6 119 246 (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 $1.3 billion in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, was driven by a $0.9 billion increase in commercial aftermarket sales, primarily reflecting higher volume. Military sales increased $0.5 billion primarily due to higher F135 production volume, which includes the benefit from the Q3 2025 contract award timing. These increases were partially offset by lower commercial OEM sales of $0.1 billion as higher volume was more than offset by mix in large commercial engines. The organic operating profit increase of $0.1 billion in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025 was primarily driven by higher commercial aerospace operating profit of $0.1 billion. This increase resulted from higher commercial aftermarket volume as discussed above, partially offset by lower commercial OEM operating profit contribution due to the volume and mix discussed above. Organic operating profit also benefited from higher military operating profit of 42 Table of Contents $0.1 billion driven by the sales volume discussed above and favorable mix. These increases were partially offset by higher selling, general, and administrative expenses of $0.1 billion. The increase in other operating profit of $0.1 billion in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, primarily relates to the absence of a $0.1 billion charge related to a customer bankruptcy in 2025. Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 2,044 $ — $ — $ 21 $ 2,065 Operating profit 232 — 15 129 376 (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 six months ended June 30, 2026 compared to the six months ended June 30, 2025, was driven by higher commercial aftermarket sales of $1.6 billion, primarily reflecting higher volume. The increase also includes higher military sales of $0.6 billion due to higher F135 production volume which includes the benefit from the Q3 2025 contract award timing. These increases were partially offset by a $0.2 billion decrease in commercial OEM sales as higher volume was more than offset by mix in large commercial engines. The organic operating profit increase of $0.2 billion in the six months ended June 30, 2026, compared to the six months ended June 30, 2025 was primarily driven by higher commercial aerospace profit of $0.2 billion. The increase was primarily driven by higher commercial aftermarket volume as discussed above, partially offset by lower commercial OEM operating profit contribution driven by the higher volume and mix, including higher production costs, as discussed above. Organic operating profit also included higher military operating profit of $0.1 billion, driven by F135 production sales discussed above as well as favorable mix. These increases were partially offset by an increase in selling, general, and administrative expenses of $0.1 billion. The increase in other operating profit of $0.1 billion in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily relates to the absence of a $0.1 billion charge related to a customer bankruptcy in 2025. Defense Bookings – In the quarter ended June 30, 2026, Pratt & Whitney recorded $1 billion in defense bookings, comprised of a number of smaller individual bookings under $0.5 billion. In the six months ended June 30, 2026, Pratt & Whitney recorded $5 billion in defense bookings. In addition to a number of smaller individual bookings, Pratt & Whitney booked $3.8 billion for F135 production. Raytheon Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 Change 2026 2025 Change Net sales $ 8,269 $ 7,001 18 % $ 15,214 $ 13,341 14 % Operating profit 1,042 805 29 % 1,883 1,483 27 % Operating profit margins 12.6 % 11.5 % 12.4 % 11.1 % Defense Bookings $ 19,898 $ 9,399 112 % $ 26,533 $ 13,795 92 % Quarter Ended June 30, 2026 Compared with Quarter Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,256 $ — $ — $ 12 $ 1,268 Operating Profit 232 — 3 2 237 (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 $1.3 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 was primarily due to higher net sales of $0.5 billion from land and air defense systems programs driven by higher net sales on Patriot programs, higher net sales of $0.4 billion from naval power programs primarily driven by higher volume on Standard Missile programs, and higher net sales of $0.2 billion on air and space defense systems programs principally due to higher volume on advanced medium-range air-to-air missile (AMRAAM) programs. 43 Table of Contents The organic operating profit increase of $0.2 billion in the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 was primarily due to higher volume of approximately $0.1 billion, and a favorable change in mix and other performance of approximately $0.1 billion. The increase in volume was principally driven by the higher net sales discussed above. The favorable change in mix and other performance was primarily driven by increased production on Patriot programs including the timing of contract awards received in the quarter. Operating profit also benefited from a favorable change in net EAC adjustments spread across numerous programs. Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025 Factors Contributing to Total Change (dollars in millions) Organic (1) Acquisitions / Divestitures, net Restructuring Costs Other Total Change Net sales $ 1,844 $ — $ — $ 29 $ 1,873 Operating Profit 404 — (1) (3) 400 (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 $1.8 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to higher net sales of $1.0 billion from land and air defense systems programs driven by higher net sales on Patriot programs, higher net sales of $0.6 billion from naval power programs primarily driven by higher volume on Standard Missile programs, and higher net sales of $0.2 billion on air and space defense systems programs principally due to higher volume on AMRAAM programs. The organic operating profit increase of $0.4 billion in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to higher volume of approximately $0.2 billion and a favorable change in mix and other performance of approximately $0.2 billion. The increase in volume was principally driven by the higher net sales discussed above. The favorable change in mix and other performance was primarily driven by increased production on Patriot programs including the timing of contract awards received in the second quarter of 2026. Operating profit also benefited from a favorable change in net EAC adjustments spread across numerous programs. Defense Backlog and Bookings – Backlog was $86 billion as of June 30, 2026 and $75 billion as of December 31, 2025. In the quarter ended June 30, 2026, Raytheon recorded $20 billion in defense bookings. In addition to a number of smaller individual bookings, Raytheon booked $3.7 billion to provide Patriot GEM-T interceptors for Ukraine, $1.1 billion to provide AIM-9X Sidewinder Block II short-range air-to-air missiles for U.S. and international customers, $1.1 billion to provide AMRAAM to the U.S. Air Force and international customers, $988 million to provide Patriot GEM-T interceptors to Poland through the North Atlantic Treaty Organization (NATO) Support and Procurement Agency (NSPA), $833 million for Evolved SeaSparrow Missiles (ESSM) for the U.S. Navy and international customers, $827 million to provide Lower Tier Air and Missile Defense Sensors (LTAMDS) to the U.S. Army, $821 million for National Advanced Surface-to-Air Missile Systems (NASAMS) for an international customer, $658 million to provide StormBreaker to the U.S. Air Force, U.S. Navy, and international customers, $542 million for Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA), and $4.1 billion on a number of classified and confidential contracts. In the six months ended June 30, 2026, Raytheon recorded $27 billion in defense bookings. In addition to these bookings above, Raytheon booked $628 million to provide Patriot systems for the Netherlands and $1.6 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 consist 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 June 30, Quarter Ended June 30, (dollars in millions) 2026 2025 2026 2025 Eliminations and other $ (660) $ (673) $ 98 $ 24 Corporate expenses and other unallocated items — — (70) (47) 44 Table of Contents Net Sales Operating Profit Six months ended June 30, Six months ended June 30, (dollars in millions) 2026 2025 2026 2025 Eliminations and other $ (1,304) $ (1,290) $ 136 $ 36 Corporate expenses and other unallocated items — — (112) (85) The increase in eliminations and other operating profit of in the quarter and six months ended June 30, 2026 compared to the quarter and six months ended June 30, 2025 was primarily due to higher gains related to the increase in fair value on investments. 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 . The components of the FAS/CAS operating adjustment were as follows: Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 FAS service cost (expense) $ (29) $ (30) $ (57) $ (60) CAS expense 200 216 400 431 FAS/CAS operating adjustment $ 171 $ 186 $ 343 $ 371 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 June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Amortization of acquired intangibles $ (480) $ (498) $ (959) $ (978) Amortization of property, plant, and equipment fair value adjustment (9) (8) (17) (17) Amortization of customer contractual obligations related to acquired loss-making and below-market contracts 15 19 31 38 Acquisition accounting adjustments $ (474) $ (487) $ (945) $ (957) Acquisition accounting adjustments related to acquisitions in each segment were as follows: Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Collins Aerospace $ (203) $ (203) $ (405) $ (403) Pratt & Whitney (84) (81) (167) (147) Raytheon (187) (203) (373) (407) Total segment (474) (487) (945) (957) Eliminations and other — — — — Acquisition accounting adjustments $ (474) $ (487) $ (945) $ (957) 45 Table of Contents LIQUIDITY AND FINANCIAL CONDITION (dollars in millions) June 30, 2026 December 31, 2025 Cash and cash equivalents $ 8,305 $ 7,435 Total debt 37,383 37,904 Total equity 68,116 67,102 Total capitalization (total debt plus total equity) 105,499 105,006 Total debt to total capitalization 35 % 36 % 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 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, 2026, we had cash and cash equivalents of $8.3 billion, of which approximatel y 27% 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 May 2026, our S&P Global rating was affirmed and our outlook was revised from BBB+/stable to BBB+/positive. In February 2026, our Moody’s Investors Service outlook improved from Baa1/stable to Baa1/positive. 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, 2026, 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, 2026, there were no borrowings outstanding under this agreement. From time to time, we use commercial paper borrowings for general corporate purposes, including short-term funding related to 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, 2026, 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, 2026, we had no commercial paper borrowings outstanding. We made the following repayment of long-term debt during the six months ended June 30, 2026: Date Description of Notes Aggregate Principal Balance (in millions) February 27, 2026 5.000% notes due 2026 $ 500 We have an existing universal shelf registration statement, which we filed with the Securities and Exchange Commission (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 Six Months Ended June 30, (dollars in millions) 2026 2025 Net cash flows provided by operating activities $ 5,402 $ 1,763 Cash flows provided by operating activities increased by $3.6 billion for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to higher net income after adjustments to reconcile to net cash provided by operating activities driven by our segment performance and favorable changes in net working capital. 46 Table of Contents The favorable changes in net working capital were primarily driven by a decrease in accounts receivable and an increase in accounts payable and accrued liabilities, partially offset by an increase in net contract assets and contract liabilities. The decrease in accounts receivable was primarily due to timing of collections, including factoring, as a result of increased sales volume, as discussed below. The increase in accounts payable and accrued liabilities was driven by the timing of payments and higher material purchases. The change in net contract assets and contract liabilities resulted from higher sales in excess of billings in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily at Pratt & Whitney. 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 $1.5 billion increase in cash provided by operating activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. We made tax payments, net of refunds of $0.7 billion in both the six months ended June 30, 2026 and 2025. 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 2026 cash impact related to the Powder Metal Matter of approximately $0.7 billion, which includes the impact of customer credits applied and the timing of partner recovery. Cash Flow - Investing Activities Six Months Ended June 30, (dollars in millions) 2026 2025 Net cash flows used in investing activities $ (1,552) $ (1,187) 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 used in investing activities in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily related to increased capital expenditures of $0.2 billion and lower receipts from settlements of derivative contracts of $0.1 billion. Cash Flow - Financing Activities Six Months Ended June 30, (dollars in millions) 2026 2025 Net cash flows used in financing activities $ (2,909) $ (1,409) Our financing activities primarily include the issuance and repayment of commercial paper and other short-term and long-term debt, payment of dividends, and stock repurchases. The $1.5 billion change in cash flows used in financing activities in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily driven by the absence of proceeds from commercial paper borrowings of $1.4 billion in the six months ended June 30, 2025. Refer to “Note 9: Borrowings and Lines of Credit” within Item 1 of this Form 10-Q for additional information on borrowings and lines of credit. At June 30, 2026, 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. On April 30, 2026, the Board of Directors declared a dividend of $0.73 per share payable June 11, 2026 to shareowners of record at the close of business on May 22, 2026. On June 26, 2026, the Board of Directors declared a dividend of $0.73 per share payable September 3, 2026 to shareowners of record at the close of business on August 14, 2026. 47 Table of Contents Item 3. 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, 2026. For discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our 2025 Form 10-K.