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Call sheet · Q3'26

RTX (RTX)

Q3'26 earnings call · held October 20, 2026 · compared with the Q2'26 call · management-credibility review
9/12
Disclosure score
4 medium flags
Financial quality
Bottom line
RTX raised its outlook with 12% organic sales growth and record backlog. The $0.25 IEEPA recovery explains about 45% of the year-over-year adjusted EPS increase, while Q3 free cash flow was $2.119B versus $4.025B a year earlier. The useful follow-through is recurring margin after recoveries, defense production execution and conversion of Pratt contract assets into cash.

The 30-second version

  • IEEPA recovery explains part of the earnings increase
  • Backlog growth is substantial, but cash conversion takes time
  • Track recurring margins and overhaul cash recovery

What changed this quarter

MetricQ2'26Q3'26Change
Adjusted Sales$24.7B, +16% organic YoY$25.0B, +12% organic YoYOrganic growth decelerated 400bps even as backlog surged
Adjusted EPS$1.89, +21% YoY$2.26, +33% YoY, incl. $0.25 IEEPAIEEPA recovery represents about 45% of the $0.56 year-over-year increase, not an earnings-consensus beat
Free Cash Flow$2.9B$2.119B, including approximately $300M IEEPA cash recovery; powder-metal compensation is an outflowDown $800M sequentially despite guidance raise
Segment Operating Profit$3.2B, +18% YoY$3.9B, +39% YoYIncludes IEEPA recovery and contract-related benefits; separate recurring drivers
Segment Margin Expansion+40bps YoY+310bps YoY, incl. ~160bps IEEPAOver half the expansion is non-recurring
Total Backlog$289B, +22% YoY$340B, +36% YoY, +18% sequentialRecord build, largely from UCA conversions
Raytheon Bookings / Book-to-Bill$19.9B / 2.42x$52.3B / 6.54xLumpy UCA-driven spike, not run-rate demand
Raytheon International Backlog %48%37% headline, 52% ex-munitionsMix changed after large munitions awards; 37% and 52% use explicitly different denominators
Collins Segment Margin Change+30bps YoY+560bps YoY, incl. 300bps IEEPAGuided to pull back to mid-teens in Q4
Pratt Segment Margin+30bps YoY10.5%, incl. 170bps IEEPAUnderlying margin much lower ex-IEEPA

Accountability tracked

6 new promises made1 narrative shift flagged5 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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