RTX raised its 2026 sales, earnings and free cash flow outlook Tuesday after third-quarter sales grew 11% to $25.0 billion and adjusted earnings per share rose 33% to $2.26, according to its earnings release. The company’s backlog reached $340 billion, while part of the quarter’s adjusted earnings growth came from a $250 million benefit tied to recovery of previously incurred tariff costs.
Demand was firm in both commercial aerospace and defense, across Collins Aerospace, Pratt & Whitney and Raytheon. Part of the improvement, though, came from one-time recoveries rather than recurring operations.
Commercial and defense demand lifted sales
RTX said sales were up 12% organically, which excludes the effect of acquisitions and currency changes. Adjusted net income increased 34% to $3.1 billion, with growth in adjusted segment operating profit across all three businesses. The company attributed the increase in part to $400 million of International Emergency Economic Powers Act, or IEEPA, recovery across its segments.
Reported GAAP earnings were $1.89 per diluted share, according to the release filed with the SEC. Investing.com reported that adjusted EPS beat analysts’ estimates by 48 cents and that revenue topped forecasts. RTX’s adjusted EPS of $2.26 excludes selected items and included $0.25 per share from the IEEPA recovery, according to the company. That is a sizable piece of the quarter, and there is no guarantee it repeats.
RTX ended the quarter with a $340 billion backlog, made up of $176 billion in commercial programs and $164 billion in defense. How fast that work turns into revenue depends on production capacity, customer schedules and contract terms.
Outlook raised across major measures
The company raised its 2026 adjusted sales outlook to $97.0 billion to $97.5 billion from $95.0 billion to $96.0 billion. Its expected organic sales growth range moved to 10% to 11% from 8% to 9%. Adjusted EPS guidance increased to $7.65 to $7.75 from $7.10 to $7.25, and the free cash flow range rose to $9.0 billion to $9.2 billion from $8.5 billion to $8.75 billion.
Quarterly operating cash flow was $2.9 billion, including about $300 million from IEEPA recovery, and free cash flow was $2.1 billion. The cost recovery flowed through cash as well as earnings, so production and working capital will show more about the underlying trend.
Orders support the higher forecast
The higher organic growth target suggests management sees civil aerospace and defense demand holding up better than it expected earlier in the year. RTX said commercial and defense customers awarded more than $81 billion of new business during the quarter. The company also reported multi-year production contracts for Tomahawk and AMRAAM missiles.
Execution is the risk. Aerospace manufacturers have to raise output without slipping on quality or delivery dates, and defense work depends on funding, production schedules and customer acceptance.
The next quarters will show the pace of commercial engine and aftermarket deliveries, how quickly defense production converts the backlog and what cash flow looks like without the tariff recovery. Those results, more than the raised forecast, will decide how durable the improvement is.