AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · F135 deployment, accumulated operating experience, follow-on production awards and contractual platform rights demonstrate meaningful barriers on established programs. This supports a narrow advantage without proving portfolio-wide superiority.
durability · 2/4 · Existing deployment, follow-on awards and aftermarket growth support persistence. Missing exclusivity durations, alternative parts sourcing and government termination rights prevent a stronger durability assessment.
customer dependency · 3/4 · F135 platform dependence and realized aftermarket volume provide strong indirect operating evidence of continuing customer reliance. No retention rate is inferred, and customers retain alternative parts sources.
erosion resilience · 2/4 · Aftermarket growth, additional awards and production milestones demonstrate persistence despite problems. Actual customer compensation and compliance settlements show material vulnerabilities; generic competitive risks alone are not treated as realized erosion.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · RTX discloses realized inflation pressure and an inability always to offset cost increases through contract value or pricing. This supports weak demonstrated pricing power. Recent aftermarket sales growth is primarily volume-driven; no quantified price contribution is supplied.
retention · 3/4 · Follow-on F135 production, increased aftermarket volume and additional established-program awards demonstrate repeat demand and switching friction indirectly. Backlog growth corroborates demand but does not itself establish customer retention or remove award-timing effects.
margin resilience · 2/4 · Reported 2025 adjusted profit and segment margin improvements and 2026 aftermarket profit growth demonstrate resilience. Inflation, OEM production costs and realized maintenance obligations offset that evidence. The adjusted results do not establish price-led margin protection.
contractual freedom · 1/4 · Firm fixed-price contracts place cost overruns on RTX, and disclosed pass-through constraints limit repricing. Government termination rights further constrain bargaining freedom. Platform dependence does not confer unrestricted control over terms.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 5.66
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.10
Financial strength36
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 46.09
- netDebtEbitGrade
- 34.48
- interestCoverageGrade
- 42.61
- currentRatioGrade
- 22.11
- Debt / FCF (x)
- 4.77
- Net debt / operating income (x)
- 3.28
- Current ratio (x)
- 1.03
- cashInterestPaid
- 1858.00
- cashInterestCoverage
- 5.69
Capital allocation82
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 6.59
- 3-year average dilution (%)
- -3.08
- 3-year average SBC / revenue (%)
- 0.58
- cashConversionGrade
- 100.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual 2025 operating cash generation, capital investment and debt repayment support discipline. The debt-financed $10 billion repurchase, realized quality payments and substantial contractual commitments make the record mixed. The passages do not establish the investment returns or intrinsic-value merits of repurchases.
incentive alignment · 2/4 · Adopted multiyear performance awards, an actual performance adjustment and disclosed ownership and hedging safeguards provide concrete alignment evidence. Financial-only annual incentive funding and permitted metric adjustments weaken the connection to unadjusted shareholder outcomes and quality performance. Personal ownership compliance is not established.
execution · 2/4 · Actual cash generation, increased AMRAAM production, LTAMDS production transition and aftermarket growth demonstrate delivery beyond management praise. Material quality compensation and maintenance obligations establish a mixed execution record. Demand growth and bookings alone are not attributed entirely to management.
governance · 2/4 · Disclosed independent committees, shareholder rights, compensation safeguards and related-person review support formal oversight. Actual settlement payments and an external compliance monitor demonstrate consequential historical control failures. Remediation is established, but durable effectiveness is not yet demonstrated.
Evidence
F135 engines are also used on all F-35 aircraft purchased by Joint Strike Fighter partner countries and other countries through foreign military sales arrangements.
Item 1, Business: international F135 deployment · Filed 06/02/2026
In 2025, Pratt & Whitney’s F135 engine surpassed one million engine flight hours, and the company was awarded a $2.8 billion undefinitized contract action (UCA) for production of Lot 18 and Lot 19 long lead funding for the F135 engines to power all three variants of the F-35 Lightning II aircraft.
Item 1, Business: F135 flight hours and production award · Filed 06/02/2026
Customer selections of aircraft engines, components, and systems can also have a significant impact on future sales of parts and services.
Competition: platform selections and subsequent parts and services · Filed 06/02/2026
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.
MD&A, Pratt & Whitney: first-half 2026 aftermarket sales growth · Filed 23/07/2026
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.
MD&A, Pratt & Whitney: F135 production growth and award timing · Filed 23/07/2026
government and other governments) may purchase parts from suppliers other than the original equipment manufacturer, which affects spare parts sales.
Competition: purchases from alternative parts suppliers · Filed 06/02/2026
Some competitors may offer substantial discounts and other financial incentives, performance and operating cost guarantees, and participation in financing arrangements in an effort to compete for the aftermarket associated with these products.
Competition: aftermarket discounts and financial incentives · Filed 06/02/2026
In both 2025 and 2024, we utilized $1.0 billion of the accrual through cash payments and credits issued to customers.
MD&A: powder-metal customer cash payments and credits in 2024 and 2025 · Filed 06/02/2026
The incremental costs to the business’s long-term maintenance contracts include the estimated cost of additional inspections, replacement of parts, and other related impacts.
Commitments and contingencies: additional long-term maintenance contract costs · Filed 06/02/2026
Our products and services are highly sophisticated and specialized, involve complex advanced technologies, are often integrated with third-party products and services, and are utilized for specific purposes that require precision, reliability, and durability.
Operational risks: specialized technologies and product integration · Filed 06/02/2026
We also have other contractual commitments to make payments to secure certain contractual rights to provide product on new aircraft platforms.
Note 16: payments securing rights on new aircraft platforms · Filed 23/07/2026
Payments made on these contractual commitments are included within intangible assets as exclusivity assets and are amortized over the term of underlying economic benefit.
Note 16: contractual payments recorded as exclusivity assets · Filed 23/07/2026
In 2025, Raytheon recorded $40 billion in defense bookings.
MD&A, Raytheon: 2025 defense bookings · Filed 06/02/2026
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.
MD&A, Raytheon: second-quarter 2026 Patriot interceptor award · Filed 23/07/2026
Transitioned Lower Tier Air and Missile Defense Sensor (LTAMDS) to production after achieving Milestone C.
Compensation discussion: LTAMDS transition to production · Filed 09/03/2026
Many of our competitors have substantial financial resources and significant technological capabilities.
Competition: competitor resources and technological capabilities · Filed 06/02/2026
For example, an increase in the use of contract structures that shift risk to the contractor (such as fixed-price development contracts and incentive-based fee arrangements), use of novel award fee criteria, evaluation of a bidder’s willingness to provide detailed competitively sensitive intellectual property (such as detailed RTX design, manufacturing and process information that would risk loss of competitively sensitive information), or requirements to transfer technology to domestic sources in connection with offset obligations, could adversely affect our profit rates, ability to preserve differentiated product offerings, maintain lower tier suppliers, or make it more difficult to win new 17 Table of Contents contracts.
Risk factors: procurement terms and potential technology transfer · Filed 06/02/2026
During the fourth quarter of 2024, the Company paid $384 million in the aggregate for DPA-1 and the SEC Administrative Order which was consistent with amounts accrued.
Note 16: realized DPA-1 and SEC settlement payments · Filed 23/07/2026
During the fourth quarter of 2024, the Company paid $580 million in the aggregate for DPA-2 and the FCA Settlement Agreement which was consistent with amounts accrued plus interest.
Note 16: realized DPA-2 and False Claims Act settlement payments · Filed 23/07/2026
A single independent compliance monitor was selected to oversee Raytheon Company’s and the Company’s compliance with their respective obligations under DPA-1, the SEC Administrative Order, and DPA-2 discussed in “DOJ Investigation and Contract Pricing Disputes” below, and that monitor was engaged in April 2026.
Note 16: independent compliance monitor engaged in April 2026 · Filed 23/07/2026
The inflationary environment has increased material and component prices, labor rates, and supplier costs and has negatively impacted our performance, including our productivity expectations.
MD&A: realized inflation and productivity pressure · Filed 06/02/2026
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.
MD&A: incomplete cost pass-through under customer contracts · Filed 06/02/2026
incentive (FPI) contracts. Under FFP contracts, we receive a fixed price irrespective of the actual costs we incur, and we therefore carry the burden of any cost overruns.
Government contract risks: firm fixed-price terms and cost-overrun burden · Filed 06/02/2026
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.
MD&A, Pratt & Whitney: aftermarket profit growth and OEM production-cost pressure · Filed 23/07/2026
Calio exhibited strong leadership driving RTX results, including: ● Exceeding the financial expectations we communicated to investors early in the year, despite tariff-related pressures and supplier challenges, which included: – Net sales growth of 9.7% (GAAP), 9.6% (adjusted) and organic sales growth of 11%, which includes organic sales growth at each business segment.(1) – Diluted EPS of $4.96 (GAAP) and $6.29 (adjusted).(1) – $10.6 billion in cash flow from operating activities and over $2.6 billion invested in capital expenditures, resulting in $7.9 billion in free cash flow.(1) – Adjusted operating profit increased by 12% year-over-year, with growth and margin expansion across all three segments.(1) ● Achieving record backlog of $268 billion, a 23% increase since the end of 2024.
2025 CEO performance discussion: sales, cash generation, capital expenditures and adjusted profit · Filed 09/03/2026
– Paying down $3.4 billion of debt.
2025 CFO performance discussion: debt repayment · Filed 09/03/2026
Pursuant to the ASR agreements, we made aggregate payments of $10 billion on October 26, 2023, and received initial deliveries of approximately 108.4 million shares of our common stock at a price of $78.38 per share, which, on that date, represented approximately 85% of the shares expected to be repurchased.
Note 18: actual accelerated share-repurchase payment · Filed 06/02/2026
We funded the payments with borrowings under a bridge credit agreement, which was repaid with the proceeds from term loan facilities, proceeds from issuances of long-term debt in the fourth quarter of 2023, and cash on hand.
Note 18: debt and cash financing of accelerated share repurchases · Filed 06/02/2026
We had commercial aerospace financing commitments and other contractual commitments of approximately $13 billion as of both June 30, 2026 and December 31, 2025, on a gross basis before reduction for our collaboration partners’ share.
Note 16: gross commercial aerospace financing and contractual commitments · Filed 23/07/2026
2025 PSUs will vest following the end of a three-year performance period, subject to Company performance relative to preestablished financial performance goals.
Compensation discussion: adopted 2025 PSU performance and vesting period · Filed 09/03/2026
(3) Performance Share Units includes an adjustment for actual performance achieved on the 2022 award of 86 thousand units.
Long-term incentive plans: actual performance adjustment to 2022 PSU award · Filed 06/02/2026
HOW ANNUAL INCENTIVE AWARDS ARE DETERMINED To align with the Company’s focus on achieving the financial commitments we make to our investors, the HCC Committee determined that, beginning in 2025, the funding formula for the AIP would be solely based on the financial performance of the Company and our business units, and would no longer consider non-financial performance measures (see page 6 for details on the HCC Committee’s decision).
Compensation discussion: annual incentive funding changed to financial measures · Filed 09/03/2026
These may include, in any given year, changes in tax laws, tariffs and accounting rules, restructuring costs, the impact of acquisitions and divestitures (including acquisition accounting adjustments, if applicable), and significant and/or nonrecurring items.
Compensation discussion: permitted adjustments to incentive financial metrics · Filed 09/03/2026
Effective Board oversight Board independence ● Highly qualified Board with diverse mix of perspectives, experience and tenures ● Regular Board review of strategic plans and priorities ● Regular Board and Committee review of significant risks, including product safety and cybersecurity risks ● Annual Board evaluation of CEO performance ● Regular CEO and senior management succession planning ● 9 out of 10 director nominees are independent ● Robust Independent Lead Director role, a position of authority with clearly defined responsibilities ● Independent directors meet regularly without management ● Fully independent Audit, Human Capital & Compensation and Governance Committees ● All directors are empowered to suggest additional agenda topics for the Board to consider Commitment to shareowner rights Board accountability ● Active and ongoing shareowner engagement ● Proxy access with customary terms ● Shareowners can act by written consent ● 15% of voting stock can call special meetings ● No charter provisions requiring more than a simple majority vote of shares ● Robust clawback policies ● No hedging, short sales or pledging of RTX securities by officers or directors ● Rigorous share ownership requirements for directors and senior management ● Annual Board, Committee and individual director evaluations ● Annual election of all directors ● Majority voting for directors in uncontested elections ● Ongoing attention to Board composition and refreshment ● No re-nomination of a director who has served for 15 years or reached age 75, unless waived by the Board ● Regular review of Committee assignments and leadership; objective to rotate chairs, members at least every five years ● Limits on outside public company board service ● Process for considering and approving new outside directorships and paid consulting/advisory engagements CODE OF CONDUCT Our Code of Conduct reinforces our values and high governance standards by: ● Explaining how our values of Safety, Trust, Respect, Accountability, Collaboration and Innovation must inform our actions ● Guiding the conduct of our employees, officers and directors with each other, our business partners and our communities ● Emphasizing the responsibility to conduct our business with integrity, to respect and protect human rights and to report violations of the Code without fear of retaliation We encourage you to visit the Corporate Governance section of our website (www.rtx.com) for more information about corporate governance at RTX and our Code of Conduct.
Governance overview: existing committees, shareholder rights and compensation safeguards; nominee independence · Filed 09/03/2026
Transactions with Related Persons. RTX has a written policy that requires the Governance Committee to review and determine whether to approve or ratify transactions exceeding $120,000 in which RTX or a subsidiary is a participant and in which a related person has a direct or indirect material interest.
Related-person transactions: review policy · Filed 09/03/2026
Doubled Advanced Medium-Range Air-to-Air Missile year-over-year production.
Raytheon operational accomplishments: AMRAAM production · Filed 09/03/2026
Backlog and Bookings. Total backlog was $289 billion and $268 billion as of June 30, 2026 and December 31, 2025, respectively.
MD&A: backlog at June 30, 2026 and December 31, 2025 · Filed 23/07/2026
Backlog, which is equivalent to our remaining performance obligations (RPO) for our sales contracts, represents the aggregate dollar value of firm orders for which products have not been provided or service has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (IDIQ) type contracts).
Business: backlog definition and exclusions · Filed 06/02/2026
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.
MD&A: factors affecting defense award timing · Filed 23/07/2026
U.S. government contracts are subject to termination by the government, either for convenience or for default in the event of our failure to perform under the applicable contract.
Government contract risks: termination for convenience or default · Filed 03/02/2025
High inflation increased material and component prices, labor rates and supplier costs, and put pressure on our margins.
2023 risk discussion: realized inflation pressure on margins · Filed 05/02/2024
