RTX released its quarterly earnings today, beating Wall Street expectations. Fourth-quarter revenues exceeded industry estimates, coming in at $24.24 billion, above the $22.65 billion estimate. Earnings per share were $1.55 for the quarter, exceeding consensus estimates of $1.47, with return on equity of 13.28% and a net margin on $7.67%. Full year adjusted revenues for RTX were $88.6 billion, with an adjusted EPS of $6.29 and free cash flow of $7.9 billion.
Strong Guidance for 2026
RTX provided strong guidance for 2026, with a record backlog and orders continuing to grow. Backlog at year-end was $268 Billion, resulting in a 1.56 book-to-bill ratio. The company reported 1,500 GTF orders and more than 2,000 PW Canada orders during the year. Full year 2026 guidance includes sales of $92-93 billion, adjusted EPS of $6.60 to $6.80, and free cash flow of $8.25-8.75 billion.
GTF – Light at the End of the Tunnel
The GTF repair issues will continue through 2026, but AOGs are down from the 2025 peak, and MRO output rose 26% in 2025. Cash outflows from the GTF issues were near $1 billion in 2025, with outflows expected to decline to $700 million in 2026. Cumulative expenses from GTF issues are expected to reach $2.8 billion by the end of 2026.
The Bottom Line – Three Strong Business Units
Overall, the three major business units – Collins, Raytheon, and Pratt & Whitney – appear to each be well positioned for growth in 2026, with Collins seeing strong aftermarket, Raytheon well positioned in the defense build-up and potential missile defense, and Pratt & Whitney seeing light at the end of the powdered metal issues with the GTF, with strong orders. Despite continuing headwinds for the GTF program, guidance for a stronger 2026 bodes well for the firm.
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