RTX Corporation (NYSE: RTX) posted numbers strong enough to justify a guide raise. Management delivered, lifting full-year adjusted sales, EPS, and free cash flow targets across the board. The message: operational momentum has staying power.
Third-quarter sales hit $25.0 billion, up 11% reported and 12% organically. That cleared the $24.1 billion consensus by nearly $850 million. Adjusted EPS of $2.26 surged 33% year-over-year and beat the $1.78 estimate by $0.48. The quarter included $0.25 per share from IEEPA cost recovery. Strip that out, and core earnings power still ran well ahead of expectations.
The guide raise was the headline. Adjusted sales now target $97.0B-$97.5B, up from $95.0B-$96.0B. Organic sales growth lifted to 10%-11% from 8%-9%. Adjusted EPS guidance rose to $7.65-$7.75, a $0.55 midpoint increase from the prior $7.10-$7.25 range. Free cash flow guidance was raised to $9.0B-$9.2B from $8.50B-$8.75B. The EPS raise is striking: the new midpoint implies 8% sequential growth from Q3's annualized run rate, suggesting margin expansion continues into Q4.
Collins Aerospace led the way. Adjusted operating profit jumped 50% to $1.79 billion, with margin expanding 560 basis points to 21.3%. Drop-through on higher commercial volume, favorable mix, and approximately $250 million of IEEPA recovery drove the gain. Commercial OE sales rose 23%; aftermarket grew 9%. The IEEPA benefit was material. But underlying commercial aftermarket growth in modifications, upgrades, and parts points to structural demand, not a one-time bump.
Pratt & Whitney's reported numbers looked messy. Operating profit fell 19% to $608 million, weighed down by a $363 million charge from a customer bankruptcy. Adjusted operating profit, however, rose 29% to $968 million, with margin expanding 160 basis points to 10.5%. The growth came from drop-through on higher commercial aftermarket volume, up 21%, plus $160 million of IEEPA recovery. The bankruptcy charge is discrete. The core aftermarket story holds.
Commercial OE sales declined 5% on large engine mix. That's mix, not demand weakness.
Raytheon grew sales 14% to $8.0 billion, powered by naval programs and land/air defense systems including Patriot, Standard Missile, and Tomahawk. Adjusted operating profit rose 32% to $1.13 billion, with margin expanding 190 basis points to 14.1%. Productivity benefits included $85 million from an international contract modification and a favorable offset obligation adjustment. Multi-year contracting tailwinds continue, as the Tomahawk and AMRAAM awards in the quarter attest.
The company ended Q3 with a record backlog of $340 billion: $176 billion commercial, $164 billion defense. Over $81 billion in new awards were booked in the quarter alone. That backlog provides exceptional multi-year visibility, particularly for Raytheon and Pratt & Whitney's military programs.
Free cash flow of $2.1 billion fell 47% year-over-year. The comparison is distorted: Q3 2025 included $1.2 billion from the sale of the actuation and flight control business. Operating cash flow of $2.9 billion included $0.3 billion of IEEPA recovery. The raised FCF guide of $9.0B-$9.2B implies a strong Q4, consistent with the raised earnings outlook.
Does the raised guide fully capture the momentum? The new adjusted EPS midpoint of $7.70 implies Q4 adjusted EPS of roughly $1.77, down sequentially from Q3's $2.26. That looks conservative given the backlog, the IEEPA recovery tail, and the Collins margin trajectory. Management may be leaving room for upside, or signaling caution on Q4 seasonality. Either way, the guide raise itself is the signal: RTX sees its operational trajectory as intact, and the record backlog suggests that trajectory has legs.