RTX Q2 2026 Earnings Analysis
RTX posted strong Q2 with $24.7B sales (+16% organic) and $1.89 EPS (+21%), raising full-year guidance on defense and commercial aftermarket strength.
Key Metrics
Points clés
- RTX raised full-year guidance: sales $95B-$96B (+$2.5B), EPS $7.10-$7.25, FCF $8.5B-$8.75B
- Record $289B backlog +22% YoY; Raytheon booked $20B in Q2 with 2.42x book-to-bill ratio
- Pratt's GTF aftermarket surged 25%; AOGs down 25% YoY; MRO output up 43% YoY
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Transcript
// Full episode scriptWelcome to Beta Finch, your AI-powered earnings breakdown! Today we're diving into RTX's second quarter 2026 results, and this one's got a lot of moving pieces — defense budgets, GTF engines, international demand, the works. Before we get into it though, quick disclaimer: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.
And Alex, this was a genuinely strong print. Adjusted sales of $24.7 billion, up 16% organically. Adjusted EPS of $1.89, up 21% year-over-year. Free cash flow of $2.9 billion. Pretty much across the board, beat and raise.
Right, and the backlog number really jumped out at me — $289 billion, a record, up 22% year-over-year. Raytheon alone booked nearly $20 billion in awards this quarter, giving them a book-to-bill ratio of 2.4. That's just a massive amount of future work stacking up.
What's interesting is where that demand is coming from. Over $5 billion of it was GEM-T Patriot effectors, largely international, plus the first domestic GEM-T production order in 30 years. And get this — 48% of Raytheon's backlog is now international, up four points year-over-year. Europe alone contributed over $7 billion in the first half.
That NATO spending story is really showing up in the numbers. And CEO Chris Calio flagged something big on the domestic side too — the 2027 base budget request is around $1.1 trillion, roughly a 25% increase year-over-year, with real money earmarked for RTX priority programs like Tomahawk and LTAMDS.
Let's talk guidance, because they raised it meaningfully. Full-year adjusted sales now expected between $95 and $96 billion, up from $92.5 to $93.5 billion previously. EPS guidance moved up to $7.10-$7.25, from $6.70-$6.90. And free cash flow guidance ticked up to $8.5-$8.75 billion.
Breaking that down by segment — Collins Aerospace sales were up 13% organically, driven by strength across commercial OE, aftermarket, and defense. Pratt & Whitney was up 17% organically, helped by a huge 25% jump in commercial aftermarket. And Raytheon posted 18% organic growth with margins expanding a full 100 basis points to 12.6%.
That Pratt aftermarket story is worth unpacking a bit. Remember, last year's Q2 had a four-week work stoppage, so there's some catch-up dynamic at play. But the underlying trend is real — GTF engine AOGs, meaning aircraft grounded waiting on engines, are down 25% year-to-date. MRO output was up over 40%, turnaround times down 23%. They're clearly getting that fleet management situation under control.
And on the innovation side, a few milestones stood out to me. Pratt got certification for the GTF Advantage engine and started deliveries to Airbus — that's supposed to double time-on-wing performance. Collins got selected to deliver mission autonomy software for the Air Force's Collaborative Combat Aircraft program, which feels like a meaningful foothold in next-gen fighter development.
The Q&A had some good color too. One analyst pushed on those defense "framework agreements" — basically pre-negotiated deals that haven't converted into firm, backlog-counted contracts yet. Calio was pretty candid that those conversations are ongoing and productive, but the real unlock is getting multi-year funding commitments so suppliers will actually invest in ramping capacity.
There was also a great exchange about Collins margins. CFO Neil Mitchill talked about a "big step up" expected in the second half — about 60% from volume drop-through, 40% from structural cost-cutting actions like consolidating operations and reducing overhead layers. Long-term, they're still eyeing that 19-20% margin range for Collins.
One thing worth flagging for investors — despite raising full-year revenue guidance, they're actually modeling a slowdown in growth rate for the second half, something like 5% organic versus 13% in the first half. Mitchill was clear that's mostly about tough year-over-year comparisons — the Pratt work stoppage catch-up, an F135 contract timing benefit last year — not a demand slowdown.
And capital allocation-wise, no major surprises. CEO reiterated the priorities: reinvesting in the business, commitment to the dividend, paying down debt, and staying disciplined on M&A. They did agree to sell the Blue Canyon Technologies satellite business for $620 million, which fits the "focus on core capabilities" theme.
So stepping back — what does this mean for investors? You've got a company firing on all three cylinders: commercial aftermarket recovery at Pratt, a defense business riding both domestic budget tailwinds and surging international demand, and Collins working through a self-help margin story. The backlog gives a lot of revenue visibility, and those framework agreements represent potential upside that isn't even reflected in the numbers yet.
The things to watch going forward — how quickly those framework agreements convert into firm, multi-year contracts, whether the 2027 defense budget actually lands where expected, and whether Collins can execute on that cost-reduction plan to close the margin gap with peers.
Before we wrap up — everything discussed is AI-generated analysis for educational purposes. Past performance doesn't guarantee future results. Please do your own due diligence.
Great quarter for RTX, strong momentum heading into the back half of the year, and plenty of catalysts to watch. That's it for today's Beta Finch breakdown.
Thanks for listening, and we'll catch you next time.