RTX · Earnings call · 2026Q3T · Full report
Operating Income and Margins
RTX Corp · 2026-10-20 · Importance 64 · Surprise 56 · No source text
Adjusted segment operating profit was $3.9 billion, up 39% year over year, driven by higher sales volume, Raytheon productivity, and IEEPA cost recovery. Segment margins expanded 310 basis points, including approximately 160 basis points from IEEPA recovery. Collins adjusted operating profit increased $594 million to $1.8 billion, with margins expanding 560 basis points including 300 basis points from IEEPA. Raytheon adjusted operating profit rose $275 million to $1.1 billion, while Pratt operating profit increased $17 million to $968 million despite unfavorable engine mix and higher SG&A.
Key facts
- Collins now expects operating profit growth between $925 million and $975 million versus 2025, up from a prior expectation of $550 million to $625 million.
- Pratt now expects operating profit growth between $475 million and $525 million versus 2025, up from a prior expectation of $275 million to $350 million.
- Collins adjusted operating profit in the quarter was $1.8 billion, up $594 million versus the prior year, and Collins expanded margins by 560 basis points year over year including 300 basis points of IEEPA recovery.
- Raytheon reported adjusted operating profit of $1.1 billion in the quarter, up $275 million versus the prior year, and net productivity improved by $104 million year over year including approximately $85 million of benefits associated with an international contract modification and an offset obligation adjustment.
- Adjusted EPS in Q3 was $2.26, up $0.56, or 33% year over year, including $0.25 from IEEPA cost recovery.
- Pratt adjusted operating profit in the quarter was $968 million, up $17 million versus the prior year, and Pratt's margins of 10.5% included 170 basis points of IEEPA recovery.
- As Raytheon moves into the production phase and achieves efficiencies from higher volumes and the supply base, management thinks these can support margin expansion at Raytheon.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| margin | positive | realized | +5.6% | Collins adjusted operating profit in the quarter was $1.8 billion, up $594 million versus the prior year, and Collins expanded margins by… |
| operating_income | positive | realized | +2.4% | Collins adjusted operating profit in the quarter was $1.8 billion, up $594 million versus the prior year, and Collins expanded margins by… |
| operating_income | positive | committed | +1.3% | Collins now expects operating profit growth between $925 million and $975 million versus 2025, up from a prior expectation of $550 million… |
| operating_income | positive | realized | +1.1% | Raytheon reported adjusted operating profit of $1.1 billion in the quarter, up $275 million versus the prior year, and net productivity… |
| operating_income | positive | committed | +0.7% | Pratt now expects operating profit growth between $475 million and $525 million versus 2025, up from a prior expectation of $275 million… |