Why did RTX lower its full-year adjusted EPS guidance even though it raised sales guidance?

Management attributed the adjusted EPS reduction to the expected impact of tariffs and changes associated with recently enacted tax legislation. Sales guidance was raised because of strong first-half operational performance and higher organic growth expectations (now 6–7%, up from 4–6%). The result is higher top-line expectations but a lower profit outlook, implying greater cost and tax headwinds in the second half.

How serious was the Pratt & Whitney work stoppage for RTX's cash flow?

The four-week work stoppage contributed to a sharp decline in Q2 operating cash flow, which fell to $458 million from $2.7 billion a year earlier. Free cash outflow was $(72) million for the quarter. Management did not change its full-year free cash flow guidance of $7.0–$7.5 billion, suggesting it expects to recover the lost cash generation in the second half, though this depends on execution.

What drove the difference between GAAP and adjusted results in Q2 2025?

GAAP EPS of $1.22 versus adjusted EPS of $1.56 reflects $0.28 of acquisition accounting adjustments (mainly amortization of acquired intangibles) and $0.06 of restructuring and other non-recurring items. Notable non-recurring items included a roughly $100M customer bankruptcy charge at Pratt & Whitney. Investors should consider both measures, as the adjustments recur every quarter in the acquisition accounting line.

Is RTX's demand outlook still strong despite the tariff and cost pressures?

The indicators are favorable. Backlog rose 15% to $236 billion, the Q2 book-to-bill was 1.86, and commercial aftermarket grew 16%, driven by continued growth in commercial air traffic. Defense growth was also solid, with Collins defense sales up 11% and Raytheon benefiting from international Patriot and NASAMS programs. The main risk lies in margins and cash conversion rather than demand.

What does the Simmonds Precision Products divestiture mean for RTX?

RTX agreed to sell Collins' Simmonds Precision Products business for $765 million. The sale is a portfolio-pruning move that generates cash for the company. The filing does not provide details on the business's earnings contribution or expected closing timing, so investors should review the company's subsequent disclosures for those specifics.

RTX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 22, 2025. Cited figures are marked; the original filing is the authoritative source.

RTX Corporation's second quarter 2025 results show solid top-line and profit growth, with reported sales of $21.6 billion^a (up 9% year over year, and 9% organically) and adjusted EPS of $1.56 (up 11%).

Commercial aftermarket was the standout, growing 16% across the company, and total backlog reached $236 billion^b (up 15%), with a book-to-bill of 1.86. Reported GAAP EPS of $1.22 included $0.28 of acquisition accounting adjustments and $0.06 of restructuring and other non-recurring items. Operating cash flow was weak at $0.5 billion, down 83%, which the company attributed in part to a four-week work stoppage at Pratt & Whitney.

Free cash outflow was $0.1 billion^c, though management reaffirmed full-year free cash flow guidance of $7.0 to $7.5 billion. Full-year 2025 guidance was mixed. Management raised adjusted sales guidance to $84.75 to $85.5 billion (from $83.0 to $84.0 billion) and organic growth to 6 to 7% (from 4 to 6%), reflecting strong first-half operations.

However, adjusted EPS guidance was lowered to $5.80 to $5.95^d (from $6.00 to $6.15). The company cited tariffs and recently enacted tax legislation as the drivers of the EPS reduction. Investors will likely focus on whether tariff costs and the Pratt & Whitney labor disruption can be absorbed without further margin pressure in the second half.

Segment performance was broadly positive. Collins Aerospace adjusted operating margin held at 16.4%, Pratt & Whitney's adjusted margin improved to 8.0%, and Raytheon's adjusted margin expanded to 11.6%.

Reported Raytheon profit was flattered by the prior-year $575 million contract charge, while Pratt & Whitney reported a roughly $100 million customer bankruptcy charge. The company also agreed to sell Collins' Simmonds Precision Products business for $765 million and raised its quarterly dividend 8%, while returning $0.9 billion to shareowners in the quarter.

02—Key points

Key Highlights

Sales of $21.6B, up 9% year over year (9% organic); adjusted sales guidance raised to $84.75–$85.5B from $83.0–$84.0B.
Adjusted EPS of $1.56, up 11%; full-year adjusted EPS guidance lowered to $5.80–$5.95 from $6.00–$6.15, citing tariffs and new tax legislation.
GAAP EPS of $1.22, including $0.28 of acquisition accounting adjustments and $0.06 of restructuring and other non-recurring items.
Commercial aftermarket grew 16% company-wide; backlog reached $236B (up 15%), with $144B commercial and $92B defense, and Q2 book-to-bill of 1.86.
Operating cash flow fell 83% to $0.5B, affected by the four-week Pratt & Whitney work stoppage; free cash outflow was $(0.1)B, while full-year FCF guidance of $7.0–$7.5B was confirmed.
Raised quarterly dividend 8% and returned $0.9B to shareowners; agreed to sell Collins' Simmonds Precision Products business for $765M.
Pratt & Whitney reported operating profit down 9% due to a ~$100M customer bankruptcy charge, though adjusted operating profit rose 13%; Raytheon's reported profit was boosted by lapping a prior-year $575M contract charge.

03—Questions

Frequently Asked Questions

Why did RTX lower its full-year adjusted EPS guidance even though it raised sales guidance?
Management attributed the adjusted EPS reduction to the expected impact of tariffs and changes associated with recently enacted tax legislation. Sales guidance was raised because of strong first-half operational performance and higher organic growth expectations (now 6–7%, up from 4–6%). The result is higher top-line expectations but a lower profit outlook, implying greater cost and tax headwinds in the second half.
How serious was the Pratt & Whitney work stoppage for RTX's cash flow?
The four-week work stoppage contributed to a sharp decline in Q2 operating cash flow, which fell to $458 million from $2.7 billion a year earlier. Free cash outflow was $(72) million for the quarter. Management did not change its full-year free cash flow guidance of $7.0–$7.5 billion, suggesting it expects to recover the lost cash generation in the second half, though this depends on execution.
What drove the difference between GAAP and adjusted results in Q2 2025?
GAAP EPS of $1.22 versus adjusted EPS of $1.56 reflects $0.28 of acquisition accounting adjustments (mainly amortization of acquired intangibles) and $0.06 of restructuring and other non-recurring items. Notable non-recurring items included a roughly $100M customer bankruptcy charge at Pratt & Whitney. Investors should consider both measures, as the adjustments recur every quarter in the acquisition accounting line.
Is RTX's demand outlook still strong despite the tariff and cost pressures?
The indicators are favorable. Backlog rose 15% to $236 billion, the Q2 book-to-bill was 1.86, and commercial aftermarket grew 16%, driven by continued growth in commercial air traffic. Defense growth was also solid, with Collins defense sales up 11% and Raytheon benefiting from international Patriot and NASAMS programs. The main risk lies in margins and cash conversion rather than demand.
What does the Simmonds Precision Products divestiture mean for RTX?
RTX agreed to sell Collins' Simmonds Precision Products business for $765 million. The sale is a portfolio-pruning move that generates cash for the company. The filing does not provide details on the business's earnings contribution or expected closing timing, so investors should review the company's subsequent disclosures for those specifics.

04—Continue

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