RTX · Earnings call · 2026Q3T · Full report
Operating Cash Flow Trends
RTX Corp · 2026-10-20 · Importance 69 · Surprise 60 · From source text
Third-quarter free cash flow was $2.1 billion, including approximately $165 million of powder-metal-related compensation and $300 million of IEEPA recovery. RTX expects full-year free cash flow of $9.0 billion-$9.2 billion and targets conversion of 90%-100% of adjusted net income over time. Munitions contracts use a collaborative funding approach that is expected to preserve upfront free cash flow while RTX invests in capacity. Management expects free cash flow to increase in 2027, although higher working capital for continued organic growth could create a headwind.
Key facts
- RTX now expects full-year free cash flow between $9.0 billion and $9.2 billion, up from prior range of $8.5 billion to $8.75 billion.
- RTX expects to generate 90% to 100% of free cash flow to adjusted net income over time.
- RTX expects powder metal payments to tail down and be approximately a $500 million tailwind heading into 2027.
- RTX indicated the contracts include a funding approach that will essentially preserve upfront free cash flow.
- RTX received approximately $300 million of IEEPA recovery cash in Q3 and expects another $50 million in Q4.
- Free cash flow in Q3 was $2.1 billion.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| cash | positive | committed | +0.2% | RTX now expects full-year free cash flow between $9.0 billion and $9.2 billion, up from prior range of $8.5 billion to $8.75 billion. |
| cash | positive | realized | +0.2% | RTX received approximately $300 million of IEEPA recovery cash in Q3 and expects another $50 million in Q4. |
| cash | positive | probable | +0.1% | RTX expects powder metal payments to tail down and be approximately a $500 million tailwind heading into 2027. |
| cash | positive | probable | +0.0% | RTX received approximately $300 million of IEEPA recovery cash in Q3 and expects another $50 million in Q4. |
| cash | positive | probable | — | RTX expects to generate 90% to 100% of free cash flow to adjusted net income over time. |
| cash | positive | probable | — | RTX indicated the contracts include a funding approach that will essentially preserve upfront free cash flow. |