Earnings
RTX raises its 2026 outlook again as backlog jumps to a record $340 billion
More than $81 billion of new awards, including Tomahawk and AMRAAM missile contracts, lifted defense backlog by $45 billion in a single quarter.
HedgeWeekly News Desk ·
RTX raised its full-year forecasts for sales, adjusted earnings and free cash flow on Tuesday after third-quarter sales rose 11% to $25.0 billion, or 12% on an organic basis. Adjusted earnings per share climbed 33% to $2.26 and GAAP EPS was $1.89. The company now expects 2026 adjusted EPS of $7.65 to $7.75, up from $7.10 to $7.25, and adjusted sales of $97.0 billion to $97.5 billion, against $95.0 billion to $96.0 billion before.
Orders were the standout. RTX booked more than $81 billion of commercial and defense awards in the quarter, among them multi-year production contracts for Tomahawk and AMRAAM missiles that have not yet been definitized. Total backlog reached $340 billion, up from $289 billion at the end of June. Defense backlog rose to $164 billion from $119 billion, while the commercial book grew to $176 billion from $170 billion.
Each of the three segments grew sales by at least 10%. Raytheon sales rose 14% to $8.0 billion on naval programs and land and air defense systems including Patriot and Standard Missile, and Collins Aerospace lifted adjusted operating profit by 50%. Pratt & Whitney's reported operating profit fell 19% to $608 million after a $363 million charge linked to a customer bankruptcy that RTX did not name, although its adjusted profit rose 29%.
Why it matters: this is RTX's second guidance increase in a row, after July's move from $6.70 to $6.90 a share, and free cash flow is now seen at $9.0 billion to $9.2 billion, up from $8.50 billion to $8.75 billion. Investors should note how much of the quarter was one-off: $0.25 of the $2.26 in adjusted EPS came from cost recovery tied to the International Emergency Economic Powers Act, worth about $250 million to Collins and $160 million to Pratt. Excluding it, adjusted EPS would have been about $2.01, still up from a year ago. The jump in defense backlog is the clearest sign yet of missile demand flowing into signed orders, but the final terms of the Tomahawk and AMRAAM deals are still to be set.