RTX Corporation

Company Overview

Business Model: RTX Corporation is a global aerospace and defense company that provides advanced systems and services to commercial, military, and government customers worldwide. The Company operates in both the original equipment manufacturer and aftermarket parts and services segments of the aerospace industry. Its defense business serves domestic and international customers as a prime contractor or subcontractor on a broad portfolio of defense and related programs.

Market Position: RTX Corporation operates in highly competitive industries, competing on factors such as price, delivery schedule, past performance, reliability, customer service, innovation, and technology.

• Collins Aerospace is a leading global provider of technologically advanced aerospace and defense products.
• Pratt & Whitney is among the world’s leading suppliers of aircraft engines for commercial, military, business jet, and general aviation customers.
• Raytheon is a leading provider of defensive and offensive threat detection, tracking, and mitigation capabilities for U.S. and foreign government and commercial customers. The Company faces competition from numerous U.S. and foreign businesses, some of which have substantial financial resources, technological capabilities, and government assistance. Customer selections of aircraft engines, components, and systems significantly impact future sales.

Recent Strategic Developments:

• Collins Aerospace: Awarded contracts for satellite communication systems, Federal Aviation Administration Radar System Replacement program, U.S. Navy’s Very Low Frequency communication subsystem, and a follow-on contract for the Standard Terminal Automation Replacement System. Secured over $4 billion in long-term agreements for maintenance, repair, and overhaul services and spare parts for several airlines. Selected by the European Union’s Clean Aviation Joint Undertaking to collaborate on the Powerplant Hybrid Applications Regional Segment (PHARES) project, focusing on fuel efficiency for next-generation regional aircraft, including developing an advanced propeller system. The segment continues to invest in sustainable technologies (e.g., electrical power architectures, advanced composite materials, digital trajectory optimizers, highly efficient cooling systems) and higher efficiency build processes. Operational capacity investments are ongoing in the United States (including Puerto Rico), India, Mexico, Singapore, and the Philippines.
• Pratt & Whitney: The Geared Turbofan (GTF) aftermarket network expanded to 21 facilities worldwide, increasing PW1100G-JM shop visit output by approximately 26% year over year in 2025. The GTF Advantage engine received Federal Aviation Administration and European Union Safety Agency certification for the Airbus A320neo family, expected to increase takeoff thrust by 4-8% and reduce fuel consumption by up to an additional 1%. The F135 engine surpassed one million engine flight hours, and the Company was awarded a $2.8 billion undefinitized contract action for Lot 18 and Lot 19 long lead funding. Significant activity continued on military engine development programs, including the Next Generation Adaptive Propulsion (NGAP) program, with the Detailed Design Review of the XA103 engine completed in early 2025. Pratt & Whitney Canada was selected to lead the PHARES project, collaborating on a hybrid-electric propulsion demonstrator targeting up to 20% improved fuel efficiency. The PT6 E-Series™ engine family surpassed 500,000 engine flight hours.
• Raytheon: Achieved key advancements and received contract awards in 2025 for programs including Patriot, Lower Tier Air and Missile Defense Sensor (LTAMDS), Standard Missile 3, AIM-9X, Advanced Medium Range Air-to-Air Missile (AMRAAM), and Tomahawk. Major new contracts include AMRAAM missiles, Guidance Enhanced Missiles (GEM-T), low-rate initial production of LTAMDS, Iron Dome Tamir production, AIM-9X Sidewinder missiles, Standard Missile 3 exoatmospheric missile defense interceptors, AN/SPY-6 radars, National Advanced Surface-to-Air Missile System, Stinger missiles, Next Generation Jammer Mid-Band, and Javelin guided munition. The Company continued to experience increased global demand for the Coyote system. Raytheon is positioned to play a role in the "Golden Dome for America" initiative and supports the U.S. Department of War's munitions and supply chain resiliency initiative.

Geographic Footprint: RTX Corporation operates globally with employees in 52 countries, 69% of whom are located in the U.S. The Company has approximately 225 manufacturing, production, or overhaul facilities in approximately 25 countries, with 70% of its significant property square footage in the U.S. In 2025, U.S. government sales (excluding foreign military sales through the U.S. government) were $33,279 million, representing 38% of total net sales. Total international sales were $41,312 million, representing 47% of total net sales.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 20.1%
• Operating Margin: 10.5%
• Net Margin: 8.0%

Investment in Growth:

• R&D Expenditure: $2,807 million (3.2% of revenue) (Company-funded)
• Capital Expenditures: $2,627 million
• Strategic Investments: RTX Corporation is investing in sustainable technologies, higher efficiency build processes, operational capacity expansion, new engine development, military engine development programs, next-generation technologies (including hypersonics, counter-hypersonics, next-generation radars, sensor experimentation, electro-optical/infrared advancements), digital transformation, and structural cost reduction initiatives.

Business Segment Analysis

Collins Aerospace

Financial Performance:

• Revenue: $30,196 million (+7.0% YoY organic)
• Operating Margin: 16.3%
• Key Growth Drivers: The organic net sales increase was primarily driven by higher commercial aerospace aftermarket sales ($1.4 billion) across all channels, higher defense sales ($0.7 billion) across multiple programs, and higher commercial original equipment manufacturer sales ($0.5 billion) due to increased widebody and narrowbody volume. Operating profit benefited from higher commercial aerospace and defense sales volume, partially offset by the impact of tariffs and unfavorable commercial original equipment manufacturer mix. Product Portfolio: Collins Aerospace provides a broad range of technologically advanced aerospace and defense products and services. This includes aftermarket services (spare parts, overhaul, repair, engineering support, training, fleet management, asset management, information management), electric power generation and distribution systems, environmental control systems, flight control systems, engine control systems, engine components, nacelle systems, aircraft lighting, cargo systems, evacuation systems, landing systems, communication, navigation, surveillance systems, fire and ice detection/protection systems, integrated avionics, propeller systems, and complete cabin interiors. The segment also supports human space exploration with environmental control and power systems and extravehicular activity suits, and offers connected aviation solutions and government/defense mission systems. Recent product developments include satellite communication systems, Radar System Replacement program support, U.S. Navy Very Low Frequency communication subsystem, and an advanced propeller system for the PHARES project. Market Dynamics: The segment's largest commercial customers are The Boeing Company and Airbus, which combined accounted for 16% of total Collins Aerospace segment sales in 2025. Key customer types include aircraft manufacturers, airlines, airports, U.S. and foreign governments, defense contractors, maintenance, repair, and overhaul providers, and independent distributors. The segment is actively investing in sustainable technologies and exploring alternative energy solutions.

Pratt & Whitney

Financial Performance:

• Revenue: $32,916 million (+17.3% YoY organic)
• Operating Margin: 7.9%
• Key Growth Drivers: The organic net sales increase was primarily driven by higher commercial aftermarket sales ($2.9 billion) due to increased volume, higher commercial original equipment manufacturer sales ($0.9 billion) from favorable mix and volume, and increased military sales ($1.0 billion) primarily from higher F135 program production volume. Operating profit reflects higher commercial aerospace operating profit ($0.5 billion) and higher military operating profit ($0.2 billion), driven by sales volume and favorable mix, partially offset by higher production costs and selling and general administrative expenses. Product Portfolio: Pratt & Whitney is a leading supplier of aircraft engines for commercial, military, business jet, and general aviation customers, offering large engines for widebody, narrowbody, and large regional aircraft, and small engines for regional airlines, general aviation, business jets, and helicopters. The segment also produces and services military and commercial auxiliary power units, and provides fleet management and aftermarket maintenance, repair, and overhaul services. Key products include the PW1000G Geared Turbofan (GTF) engine family (powering over 2,600 aircraft), the GTF Advantage engine, and the F135 engine for the F-35 Lightning II aircraft. The segment is also developing the F135 Engine Core Upgrade and the XA103 engine for the Next Generation Adaptive Propulsion program. Market Dynamics: Airbus was Pratt & Whitney’s largest commercial customer by sales, accounting for 29% of total Pratt & Whitney segment sales in 2025. The segment sells products and services to aircraft manufacturers, airlines, aircraft leasing companies, and the U.S. and foreign governments. Pratt & Whitney engages in collaboration arrangements for new engine development, sharing revenues, costs, and risks with third parties, whose interests range from 13% to 49% in aggregate per program.

Raytheon

Financial Performance:

• Revenue: $28,043 million (+5.0% YoY organic)
• Operating Margin: 11.5%
• Key Growth Drivers: The organic net sales increase was primarily due to higher sales from land and air defense systems programs ($1.6 billion), driven by Patriot, international National Advanced Surface-to-Air Missile System, and Lower Tier Air and Missile Defense Sensor programs. Naval power programs also contributed higher sales ($0.7 billion) from Evolved SeaSparrow Missile, SPY-6 radar, and classified programs. Operating profit increased due to a favorable change in mix and other performance ($0.3 billion), favorable net Estimate at Completion adjustments ($0.2 billion), and higher volume ($0.1 billion). Product Portfolio: Raytheon provides advanced capabilities in integrated air and missile defense, smart weapons, missiles, advanced sensors and radars, interceptors, space-based systems, hypersonics, and missile defense across land, air, sea, and space. Key products include AMRAAM, StormBreaker smart weapon, Long Range Stand Off Weapon, Early Warning Radar, classified naval radars, Next Generation Jammer, Tomahawk, Standard Missile 6, AIM-9X SIDEWINDER missile, SPY-6 radar, Patriot air and missile defense system, LTAMDS, NASAMS, Javelin, Excalibur, Stinger, High-Energy Lasers, AN/TPY-2 radar, Standard Missile 3, and integrated space solutions. The segment also focuses on developing next-generation technologies such as hypersonics and counter-hypersonics. Market Dynamics: Raytheon serves as a prime contractor or major subcontractor for the U.S. Department of War (including the U.S. Navy, U.S. Army, Missile Defense Agency, U.S. Air Force, and U.S. Space Force), U.S. federal civil customers, and other international and classified customers. The segment experienced increased global demand for the Coyote system in 2025.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: RTX Corporation repurchased $50 million of common stock (396 thousand shares) in 2025.
• Dividend Payments: Total dividend payments were $3,574 million in 2025. The Board of Directors declared a dividend of $0.68 per share payable March 19, 2026.
• Future Capital Return Commitments: As of December 31, 2025, approximately $0.6 billion remained authorized under the $11 billion share repurchase program approved on October 21, 2023. Share repurchases and dividends are subject to Board discretion and various factors, including a potential Executive Order that may limit distributions during periods of defense contractor underperformance.

Balance Sheet Position:

• Cash and Equivalents: $7,435 million
• Total Debt: $37,904 million
• Net Cash Position: -$30,469 million
• Credit Rating: In March 2025, Moody’s Investors Service improved its outlook from Baa1/negative to Baa1/stable. In June 2025, S&P Global affirmed its BBB+/negative rating and revised its outlook to BBB+/stable.
• Debt Maturity Profile: The average maturity of long-term debt was approximately 12 years as of December 31, 2025. Principal payments on long-term debt are $3,412 million in 2026, $2,928 million in 2027, $3,490 million in 2028, $922 million in 2029, and $1,593 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $10,567 million
• Free Cash Flow: $7,940 million (Operating Cash Flow less Capital Expenditures)
• Cash Conversion Metrics: Not explicitly detailed.

Operational Excellence

Production & Service Model: RTX Corporation manufactures and services its products in approximately 225 facilities across approximately 25 countries. The Company employs its Customer Oriented Results and Excellence (CORE) operating system to drive continuous improvement in processes and facilities. Strategic initiatives include structural cost reduction, aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities (including digital initiatives and automation), and consolidating facilities.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials & Components: RTX Corporation is dependent on a global supply chain for a wide range of raw materials, commodities, components, and services. In some instances, the Company relies on single sources of supply or participates in commodity markets with limited supplies. Foreign sources are critical for certain raw materials (e.g., cobalt, tantalum, chromium, rhenium, nickel, and titanium) and some single-source components.
• Manufacturing Partners: The Company utilizes subcontractors and third-party manufacturing suppliers.
• Technology Partners: Collaborations include the European Union’s Clean Aviation Joint Undertaking (with Collins Aerospace, Pratt & Whitney Canada, ATR, Airbus, and technology research organizations) and various collaboration arrangements for new engine development at Pratt & Whitney.

Facility Network:

• Manufacturing: Approximately 225 manufacturing, production, or overhaul facilities in approximately 25 countries.
• Research & Development: Dedicated R&D centers focus on enhancing existing products and developing future technologies.
• Distribution: Not explicitly detailed, but implied by global supply chain operations.

Operational Metrics:

• The Pratt & Whitney GTF aftermarket network expanded to 21 facilities worldwide, increasing PW1100G-JM shop visit output by approximately 26% year over year in 2025.
• The F135 engine surpassed one million engine flight hours in 2025.
• Pratt & Whitney Canada’s PT6 E-Series™ engine family surpassed 500,000 engine flight hours in 2025.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: RTX Corporation engages in direct sales to aircraft manufacturers, airlines, airports, other aircraft operators, the U.S. and foreign governments, defense contractors, maintenance, repair, and overhaul providers, and independent distributors.
• Channel Partners: The Company partners with international subcontractors, partners, and suppliers for international programs.
• Digital Platforms: Digital transformation initiatives are underway to leverage digital capabilities across business operations and product/service delivery.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Major customers include The Boeing Company and Airbus (for Collins Aerospace and Pratt & Whitney), and the U.S. Department of War (including the U.S. Navy, U.S. Army, Missile Defense Agency, U.S. Air Force, and U.S. Space Force) for Raytheon.
• Strategic Partnerships: Strategic partnerships include those with Lockheed Martin (for the F-35 Joint Program Office), North Atlantic Treaty Organization (NATO) Support and Procurement Agency, and the Royal Australian Air Force.
• Customer Concentration: Airbus accounted for approximately 14% of RTX Corporation's total net sales in 2025. The U.S. government represents a substantial majority of total defense sales. Geographic Revenue Distribution:
• United States: $42,499 million (2025)
• Europe: $18,799 million (2025)
• Asia Pacific: $13,782 million (2025)
• Middle East and North Africa: $3,621 million (2025)
• Other regions: $5,110 million (2025)
• Growth Markets: Operations in emerging market countries are subject to additional risks.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: RTX Corporation operates in highly competitive and cyclical industries. The commercial aerospace industry is influenced by factors such as air traffic levels, fuel prices, airline financial health, and regulatory changes. The defense industry is shaped by U.S. Department of War budgets, geopolitical events, and evolving threat environments. The competitive landscape is dynamic, with increasing commercial competitors, new entrants, and governmental bid processes that may request expanded intellectual property disclosures.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: RTX Corporation faces numerous U.S. and foreign competitors in both its aerospace and defense businesses. Some major suppliers also compete on other programs. Non-U.S. competitors may receive government research and development assistance, marketing subsidies, and other forms of government support. In the commercial aerospace sector, competition includes other manufacturers of aircraft engines, components, and systems, as well as alternative spare parts suppliers. In defense, the Company competes with U.S. and foreign companies across various segments, including electronics, space, effectors, communications, and command and control. Emerging Competitive Threats: The Company notes increasing competition from commercial contractors, non-traditional defense contractors, and startups. Disruptive technologies, including the use of artificial intelligence by threat actors, pose evolving risks. Governmental procurement policies, such as increased use of fixed-price development contracts and demands for intellectual property disclosures, can also impact competitive positioning. Competitive Response Strategy: RTX Corporation's strategy includes substantial investment in research and development, continuous evaluation and restructuring of its cost structure, digital transformation initiatives, and leveraging its CORE operating system. The Company also pursues cost reductions through strategic sourcing, consolidating purchases, expanding long-term agreements, and capitalizing on supplier competition.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company's financial performance is significantly impacted by changes in U.S. government defense spending, which is subject to policy shifts, budgetary priorities, geopolitical events, and macroeconomic conditions. The commercial aerospace industry is cyclical, with demand influenced by traffic levels, fuel prices, airline financial health, and global events. The introduction of new products and technologies involves risks related to development, certification, production, and customer acceptance, with potential for competitors to develop superior offerings. The integration and use of artificial intelligence also presents risks related to compliance, unexpected performance, and intellectual property. Geopolitical Exposure: International sales and operations are sensitive to foreign national priorities, government budgets, political and economic factors, including wars, armed conflicts, and trade relations. China has imposed sanctions against Raytheon and a Collins Aerospace joint venture in connection with foreign military sales to Taiwan, and Russia sanctions have adversely affected the Company's supply chain and partners. The Company is monitoring potential impacts from regional instability in the Middle East. Customer Concentration: A substantial portion of commercial aerospace sales are with Airbus and The Boeing Company, making the Company susceptible to challenges faced by these individual customers.

Operational & Execution Risks

Supply Chain Vulnerabilities: RTX Corporation is dependent on a global supply chain for raw materials, components, and services, with some instances of single-source reliance and dependence on foreign suppliers for critical materials. Supply chain disruptions, driven by market constraints, inflation, labor shortages, and geopolitical conditions, have resulted in delays and increased costs, and are expected to continue. Product Safety & Quality: The highly sophisticated nature of the Company's products and services means that product safety failures, quality issues, or system failures could lead to injuries, property damage, reputational harm, product recalls, and significant liabilities. The Pratt & Whitney Powder Metal Matter, requiring accelerated inspection of the PW1100 Geared Turbofan fleet, has resulted in elevated aircraft on ground levels, increased shop visits, and significant incremental costs, with potential for other engine models to be impacted. Talent Management: The Company's future performance relies on attracting, developing, and retaining a highly skilled workforce, particularly technical, engineering, and science professionals, and personnel with security clearances. Challenges in hiring and retention, coupled with a high cost of labor and potential labor disruptions from collective bargaining, pose operational risks.

Financial & Regulatory Risks

Market & Financial Risks: Increased debt levels, partly due to accelerated share repurchases, shift cash flow to debt payments and reduce funds for other investments. The Company's credit ratings and borrowing costs are sensitive to financial performance and market conditions. Accounting for long-term contracts involves significant estimates and judgments, and changes in these estimates can materially affect financial results. Pension and postretirement plan estimates are sensitive to discount rates and expected returns on assets. Regulatory & Compliance Risks: As a U.S. government contractor, the Company is subject to extensive regulations, audits, investigations, and potential disputes, which can result in contract terminations, penalties, or debarment. Commercial aerospace products are subject to regulations by the Federal Aviation Administration and foreign authorities. Global trade regulations, including export controls and sanctions, require licenses and compliance, with non-compliance risking penalties and business restrictions. The Company is subject to Deferred Prosecution Agreements and an SEC Administrative Order related to past investigations into payments and defective pricing claims, and a Consent Agreement with the U.S. Department of State for export control violations. Breaches of these agreements could lead to further legal and financial repercussions. Environmental regulations impose compliance costs and potential liabilities for hazardous substances and climate change-related policies. Legal Proceedings: The Company is involved in various legal proceedings, including Cost Accounting Standards claims by the Defense Contract Management Agency against Pratt & Whitney, Powder Metal Disclosure Litigation and an SEC investigation, and 737 MAX Aircraft Litigation involving Collins Aerospace.

Geopolitical & External Risks

Geopolitical Exposure: International operations are exposed to political and economic instability, trade relations, and the imposition of sanctions and export controls. External Events: Threats to physical security, workplace violence, civil unrest, terrorism, public health crises, natural disasters, and cyber-attacks can disrupt business operations, supply chains, and demand for products and services.

Innovation & Technology Leadership

Research & Development Focus: RTX Corporation invests substantially in research and development to enhance existing products and develop future technologies. Core Technology Areas:

• Advanced Technologies: Focus on advanced technologies for commercial aerospace and defense systems, including artificial intelligence.
• Sustainable Technologies: Investments in electrical power architectures, advanced composite materials, digital trajectory optimizers, highly efficient cooling systems, and solutions for lower weight, improved drag, and reduced carbon footprint.
• Alternative Energy: Collaborations with industry organizations and airframers to explore sustainable aviation fuel, hydrogen, and hybrid electric power sources.
• Next-Generation Propulsion: Development of the XA103 engine for the U.S. Air Force’s Next Generation Adaptive Propulsion program and the F135 Engine Core Upgrade.
• Defense Systems: Development and early introduction of hypersonics, counter-hypersonics, next-generation radars, sensor experimentation, and electro-optical/infrared advancements. Innovation Pipeline: The Company is actively developing new technologies and systems, including a hybrid-electric propulsion demonstrator as part of the PHARES project. Intellectual Property Portfolio: RTX Corporation maintains a robust portfolio of patents, trademarks, copyrights, trade secrets, licenses, and franchises, protected through various measures including nondisclosure agreements and IT security systems. The U.S. government and foreign governments hold licenses to certain intellectual property developed under government contracts. Technology Partnerships: Strategic alliances and research collaborations include the European Union’s Clean Aviation Joint Undertaking and various collaboration arrangements for new engine development at Pratt & Whitney.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company regularly conducts talent reviews and develops succession plans to cultivate leadership talent. Board Composition: The Board of Directors provides primary oversight for enterprise cybersecurity risks through its Special Activities Committee (for classified business cybersecurity) and Audit Committee (for financial and compliance risk). The full Board receives periodic briefings on cybersecurity risks.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, RTX Corporation had approximately 180,000 employees globally, with 69% located in the U.S. The workforce includes approximately 54,000 engineering professionals and 32,000 employees represented by labor unions. Talent Management:

• Acquisition & Retention: The Company continuously monitors hiring, retention, and management of employees, focusing on attracting, developing, engaging, advancing, and retaining talent. Investments are made in internal and external education, training, development programs, and tuition assistance. Competitive compensation and benefits are provided, and performance is recognized through an annual review process. The Company uses employee feedback surveys to improve the workplace. Challenges persist in hiring highly qualified personnel, including engineers, skilled laborers, and security clearance holders.
• Diversity & Development: Not explicitly detailed beyond general talent management.
• Culture & Engagement: RTX Corporation promotes trust, accountability, and shared purpose, maintaining industry-leading health and safety programs and ethics and compliance programs. Health and wellness benefits and flexible work arrangements are offered to employees.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: RTX Corporation monitors developments in environmental and climate-related laws and regulations. The Company is evaluating additional investments in new technologies and capabilities to address long-term climate change, including lower emission technologies, alternative energy sources, and sustainable aviation technologies. Collins Aerospace is investing in sustainable technologies like electrical power architectures and advanced composite materials, and in higher efficiency build processes that reduce chemical and power usage and increase recycling. Collins Aerospace also collaborates with industry organizations to explore alternative energy solutions such as sustainable aviation fuel, hydrogen, and hybrid electric power sources. Supply Chain Sustainability: Not explicitly detailed. Social Impact Initiatives: Not explicitly detailed.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Not explicitly detailed.
• Economic Sensitivity: The commercial aerospace industry is cyclical, with performance tied to economic conditions, traffic levels, airline financial health, and global events. The general aviation sector is correlated with overall economic health and corporate profits. Defense operations are affected by U.S. Department of War budget and spending levels, changes in demand, policy shifts, and the geopolitical environment.
• Industry Cycles: The Company's business mix includes shorter cycles in commercial aerospace spares and certain defense service contracts, and longer cycles in aerospace original equipment manufacturer and aftermarket maintenance contracts, as well as complex defense equipment design, development, manufacturing, and modification contracts.

Planning & Forecasting: Not explicitly detailed.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: RTX Corporation's businesses are subject to extensive regulation. U.S. government contracts are governed by the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS). Commercial aerospace products are regulated by the Federal Aviation Administration, foreign aviation authorities, and international bodies. Operations are also subject to environmental regulations by federal, state, local, and foreign authorities. Trade & Export Controls: The Company must comply with various laws and regulations related to the export and import of products, services, and technology, including the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), Arms Export Control Act (AECA), embargoes, and sanctions regulations. Obtaining necessary licenses and authorizations is critical and subject to foreign policy changes and delays. Legal Proceedings:

• Compliance Matters: In October 2024, Raytheon Company entered into Deferred Prosecution Agreements (DPA-1 and DPA-2) with the U.S. Department of Justice and RTX Corporation became subject to an administrative order issued by the Securities and Exchange Commission (SEC Administrative Order) to resolve investigations into payments and defective pricing claims. These agreements require cooperation, disclosure obligations, and an independent compliance monitor for a three-year term. In August 2024, RTX Corporation entered into a Consent Agreement (CA) with the U.S. Department of State to resolve alleged civil violations of the AECA and ITAR, requiring remedial compliance measures, an external audit, and appointment of a Special Compliance Officer.
• Cost Accounting Standards Claims: Pratt & Whitney is appealing claims from the Defense Contract Management Agency totaling approximately $1.7 billion, $1.1 billion, and $277 million (plus interest) for alleged noncompliance with Cost Accounting Standards related to allocating research and development costs and determining collaborator parts costs.
• Powder Metal Disclosure Litigation and SEC Investigation: Following disclosures of the Pratt & Whitney Powder Metal Matter, RTX Corporation is subject to federal securities class action lawsuits and shareholder derivative lawsuits, and an ongoing SEC investigation.
• 737 MAX Aircraft Litigation: Collins Aerospace was named in lawsuits related to the Lion Air and Ethiopian Airlines accidents; the Lion Air cases are resolved, and one Ethiopian Airlines case remains pending.
• Environmental Enforcement Proceeding: Raytheon Company resolved a Notice of Violation/Cease and Desist Order from the Colorado Department of Public Health and Environment, paying $458,211 in civil penalties and agreeing to remediation work.

Tax Strategy & Considerations

Tax Profile: RTX Corporation's effective tax rate was 19.1% in 2025 and 2024, and 11.9% in 2023. The Company intends to repatriate certain previously taxed undistributed earnings of its international subsidiaries and has recorded associated taxes. Other undistributed international earnings are permanently reinvested unless tax-effective to repatriate. Tax Reform Impact: The "Act to Provide for Reconciliation Pursuant to Title II of the H. Con. Res. 14," enacted July 4, 2025, allows for immediate deductibility of U.S. research and development costs and certain capital expenditures, and includes changes to U.S. taxation on international earnings. The 2025 effective tax rate reflects a lower U.S. tax benefit associated with Foreign Derived Intangible Income due to this Act. Tax Audits: The Company is subject to examinations by tax authorities globally and is disputing certain proposed adjustments from Internal Revenue Service audits for prior tax years.

Insurance & Risk Transfer

Risk Management Framework: RTX Corporation extends various financial, market value, and product performance guarantees to third parties. The Company maintains insurance coverage and may be entitled to indemnification from customers through contractual provisions. Products and services may also qualify for protections under the SAFETY Act provisions of the Homeland Security Act of 2002. However, insurance coverage or indemnification may not be adequate to cover all claims or liabilities. Risk Transfer Mechanisms: The Company uses derivative instruments, including swaps, forward contracts, and options, to manage exposures to foreign currency exchange rates, interest rates, and commodity prices. Collaboration arrangements also serve to share sales, costs, and risks.