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Call sheet · Q2'26

RTX (RTX)

Q2'26 earnings call · held July 23, 2026 · compared with the Q1'26 call · management-credibility review
8/12
Disclosure score
3 medium, 3 low flags
Financial quality
Bottom line
The international defense shift is the real margin story here, not the headline backlog number. Yes, backlog hit $289B, but more importantly, 48% is now international with structurally better pricing, and Raytheon just posted 12.6% margins despite minimal productivity gains. The binding constraint isn't demand or supply chain; it's RTX's deliberate choice to starve Pratt OE to fix the GTF fleet, shown by OE sales DOWN 8% despite 15% more deliveries. Most revealing quote: 'We need all 15 of those shops hitting that 90-day mark.' My view changes if Collins margins don't inflect in Q3, proving their cost cuts are real.

The 30-second version

  • The sleeper: International defense is becoming the margin story, not just a growth story
  • The obvious: Record backlog at $289B, but Pratt's deliberately starving OE to feed aftermarket
  • The red flag: Collins margins suspiciously flat despite 'significant' cost cuts

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$22.1B (10% organic YoY)$24.7B (16% organic YoY)+600bps organic acceleration
Adjusted EPS$1.78 (+21% YoY)$1.89 (+21% YoY)Growth rate maintained
Free Cash Flow$1.3B$2.9B+123% sequential surge
Backlog$271B (+25% YoY)$289B (+22% YoY)Growth decelerating but absolute adds strong
Raytheon Operating Margin12.2%12.6%+40bps expansion
Pratt Operating Margin8.7%8.3%-40bps compression
Collins Operating Margin17.1%17.1%Dead flat despite growth
GTF AOGsDown 15% from year-endDown 25% YTDAccelerating improvement
GTF MRO Output+23% YoY+43% YoYNear doubling of growth rate
Raytheon Book-to-Bill0.96x2.42xMassive surge on Patriot orders

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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