Heightened demand for military supplies boosts RTX's first-quarter profit
Strong demand in defense military and commercial aftermarket sales lifted RTX Corp. to a 34% increase in first-quarter net income to $2.06 billion.
One of RTX's three primary business units is Collins Aerospace, which has a workforce of about 1,500 and is one of Winston-Salem's largest private employers.
RTX reported Tuesday that adjusted net income was $2.42 billion when including a $400 million in positive acquisition accounting adjustments.
Sales jumped 9% to $22.08 billion, up 9% from a year ago, but down from $24.24 billion in the fourth quarter.
Earnings per share were $1.51, while adjusted earnings were $1.78.
Average earnings forecast was $1.52 by six analysts surveyed by Zacks Investment Research. Analysts typically do not include one-time gains and charges in their projections.
"RTX delivered a very strong start to 2026 with organic sales and adjusted operating profit growth across all three segments, driven by our continued focus on execution and delivering our backlog," Chris Calio, RTX's chairman and chief executive, said in a news release.
"Given our first-quarter performance and the strength we're seeing in our defense business, we are increasing adjusted sales and earnings in our full year outlook."
RTX's initial fiscal 2026 financial guidance was provided in January even as the manufacturer continues to experience turbulence from the Trump administration's tariffs on aluminum and steel affecting the aviation and defense industries.
At that time, adjusted sales are projected in the range of $92 billion to $93 billion, up 3.8% and 5%, respectively. On Tuesday, RTX increased the range to $92.5 billion to $93.5 billion.
Adjusted earnings per share were projected in January in the range of $6.60 to $6.80, up 4.9% to 8.1% respectively. On Tuesday, RTX bumped up the range by 10 cents on each end to $6.70 to $6.90.
Collins reported a 5% increase in sales to $7.6 billion, led by a 15% rise in commercial original equipment, a 7% increase in commercial aftermarket products, and a 9% gain in defense.
Pratt & Whitney's sales climbed 11% to $8.2 billion, lifted by a 19% jump in commercial original equipment, a 1% decrease in commercial aftermarket products, and a 7% increase in defense.
The bulk of the defense revenue increase came from higher F135 engine production volume.
Raytheon's defense-sector sales rose 10% to $6.9 billion, led by higher demand for Patriot and GEM-T missile production and naval munitions programs.
Benchmark Research analyst Josh Sullivan said RTX's projected revenue growth for Collins Aerospace and Pratt & Whitney "reflects the positive aerospace industry dynamics despite the tariff/tax adjustments."
Trump armaments demand
Celio told analysts in January the manufacturer is working to find a balance between meeting the military production goals of the Trump administration and fulfilling its shareholder obligations.
RTX's backlog levels are caught in the web of President Donald Trump's mercurial approach to free market capitalism and expectations of corporate loyalty to his administration.
Trump demanded on Jan. 7 - both in a Truth Social post and an executive order - that RTX halt any share-repurchase and dividend programs, as well as limit executive base salary increases, until it has ramped up production of defense weaponry to fill its backlog of orders with the Pentagon.
Celio told analysts in January that "we understand our products are critical to maintaining security around the world, and we fully support the Department of War's transformation initiative," referring to the administration's preferred term for the U.S. Defense Department.
On Tuesday, Celio said that "our differentiated products across RTX are well positioned to support our customers' needs, and we're making significant investments to increase output and accelerate the fielding of new capabilities."
Trump wrote in the Truth Social post that RTX - which he referred to by its Raytheon defense unit brand - "has been the least response to the needs of the Department of War, the slowest in increasing their volume, and the most aggressive spending on their shareholders rather than the needs and demands of the U.S. military."
"Raytheon seems to think this is the Biden administration, and this is 'business as usual.' IT'S NOT.
"Either Raytheon steps up and starts investing in more upfront investments, like plants and equipment, or they will no longer be doing business with the Department of War."
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