RTX Corporation

Good day and welcome to the RTX third quarter 2025 earnings conference call. My name is Desiree and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes. On the call today are Chris Calio, Chairman and Chief Executive Officer, Neil Mitchell, Chief Financial Officer, and Nathan Ware, Vice President of Investor Relations. This call is being webcast live on the internet and there is a presentation available for download for RTX website at www.rtx.com. Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding acquisition accounting adjustments, and net non-recurring and or significant items often referred to by management as other significant items. The company also reminds listeners that the earnings and cash flow expectations and any other forward-looking statements provided in this call are subject to risks and uncertainties. RTX SEC filings including its forms 8K, 10Q, and 10K provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. Once the call becomes open for questions, we ask that you limit your first round to one question per caller to give everyone the opportunity to participate. To ask a question, you will need to press star one on your telephone. You may ask further questions by reinserting yourself into the queue as time permits. With that, I will turn the call over to Mr. Calhoun.

Thank you and good morning, everyone.

We delivered a very strong quarter of results in Q3, which reflects our intense focus on execution, the broad utilization of our core operating system, and the durable demand for our products. On the top line, sales were up 13% organically year-over-year, with double-digit growth in each of commercial OE, commercial aftermarket, and defense. Adjusted segment operating profit was up 19% year-over-year, with growth and margin expansion across all three segments. and free cash flow was robust at $4 billion in the quarter, keeping us on track for the full year. Underpinning these results is the continued strength in the global demand for our products and services. In commercial aerospace, passenger air travel has remained resilient, with global RPKs on track for approximately 5% growth this year. We continue to see positive OE production trends, which drove a significant increase in production at Collins in the quarter, as well as at Pratt, which saw a 6% growth in large commercial engine deliveries. Commercial aftermarket also remained strong, supported by our large and growing installed base, including over $100 billion of out-of-warranty content at Collins and heavier shop visit content across our MRO activities. Aircraft retirements have remained low, with only 1.5% of the V-2500 fleet retired so far this year. In Pratt, Canada, with nearly 70,000 engines in service, has seen over 15% growth year-to-date in commercial aftermarket. On the defense side, we continue to be exceptionally well-positioned to meet the growing needs of our U.S. and international customers, in particular with respect to munitions and integrated air and missile defense, both core capabilities of our company. On the orders front, our book to bill in the quarter was 1.63, resulting in a backlog of $251 billion, up 13% year-over-year. The activity in the quarter included $37 billion of new awards, $23 billion of defense, and $14 billion of commercial orders. On the commercial side, through Q3, our book-to-bill this year is 1.71, and our backlog has grown 18% since the end of 2024, showing the exceptional demand for our products and technologies at both Collins and Pratt. At Raytheon, we booked over 8 billion of orders for munitions, including approximately 2.5 billion for GEMT to support multiple international customers, and 2.1 billion for AMRAAM, the largest order in the 30-year history of that program. Raytheon was also awarded a significant counter-drone contract for coyote production from the U.S. Army. Coyote has proven to be extremely effective in the field, and we've recently developed a lower-cost, non-kinetic coyote payload to combat drone swarms. And Pratt was awarded over $3 billion to support the F-135 engine, including the Lot 18 production contract. So overall, our end markets and operational performance remain strong as we enter the fourth quarter. Based on this, we're raising our full year outlook for adjusted sales and EPS and maintaining our free cash flow outlook of $7 to $7.5 billion. Neil will take you through the details in a few minutes, but before that, Let me provide an update on our strategic priorities on slide four. Starting with executing on our commitments, our focus on driving performance improvements through our core operating system has continued to generate productivity across RTX. Through Q3, we have delivered 10% organic sales growth this year while keeping headcount flat across the organization. This has been a key enabler in driving six consecutive quarters of year over year adjusted segment margin expansion. With respect to the GTF fleet management plan, our financial and technical outlook remains on track. PW 1100 MRO output was up 9% in the quarter and is up 21% year to date. We continue to work with our supply chain partners to increase the flow of critical value stream material to ramp MRO output. In Q3, we saw another quarter of solid progress with growth in isothermal forgings up 16% and structural castings up 29% year over year. Exiting the third quarter, this material flow has supported a record high number of PW1100 Gate 3 starts, which is where we reassemble engines during a shop visit, putting Pratt in a position to deliver about 30% MRO output growth for the year. And across the company, we continue to focus on increasing critical manufacturing capacity to support growth, including investing over 600 million this year in expansion projects. For example, Raytheon is on track to invest 300 million in capacity expansion to deliver the growing backlog. This includes the Redstone Missile Integration Facility in Huntsville, Alabama, which will increase site capacity by 50% and support the growing demand for our naval programs, including the standard missile franchise. Shifting to innovating for future growth, PRAC Canada was selected by the EU's Clean Aviation Program to design and integrate a hybrid electric propulsion demonstrator for regional aircraft. This system integrates a 250 kilowatt electric motor and advanced propeller technology from Collins and is expected to improve fuel efficiency by approximately 20%. Additionally, Collins is nearing final certification of its next generation braking system for the A321XLR aircraft. The design incorporates proprietary carbon technology and is expected to extend brake life and drive improved profitability in our maintenance support portfolio. And Raytheon recently demonstrated two significant effector technology achievements. The AMRAAM team successfully completed the longest ever air-to-air shot from a fifth generation fighter, And the Stormbreaker team, in just 50 days, designed, developed, and tested a new ground-launch demonstrator version of this air-launched effector, which will expand the capabilities and future applications for this product. And finally, we remain focused on leveraging the breadth and scale of RTX. As we've highlighted before, we continue to develop and deploy our data analytics and AI tools to improve productivity and the speed and quality of decision-making in our business. We're strategically using these tools to support the highest impact opportunities across the company, including increasing munitions and OE production rates, growing GTF MRO output, and improving sales and inventory planning and management. For example, the Raytheon AMRAAM team has deployed multiple proprietary digital AI tools to proactively identify production bottlenecks and reduce rework, which has contributed to output more than doubling year-to-date through Q3 on the program. These examples highlight the progress that we continue to make across our strategic priorities, and I'm pleased with the results they are yielding throughout the company. With that, let me turn it over to Neil to take you through the third quarter results and our updated outlook for the full year.