RTX makes money in two big ways. First, it sells complex hardware: jet engines through Pratt & Whitney, cockpit and cabin systems through Collins Aerospace, and missiles, radars, and air defense systems through its Raytheon division. Second, and more importantly, it keeps making money long after the original sale, because airlines and militaries must continuously buy spare parts, repairs, and maintenance to keep that hardware flying and fighting. A Pratt & Whitney GTF engine powering an Airbus A320neo, or a Patriot missile defense system protecting a NATO ally, creates a long tail of follow-on spending that RTX is often the only supplier licensed to provide. The diagram below traces where the money goes.
Five years of financials tell a story of a company that stumbled badly and then recovered sharply. Revenue climbed from $64.4 billion in 2021 to $88.6 billion in 2025, but the path was not smooth. Gross margin dipped from roughly 20% in 2022 to 17.5% in 2023, the year Pratt & Whitney discovered a rare defect in powder metal used to make certain engine parts. That defect forced thousands of PW1100G engines powering Airbus A320neo jets to be pulled for inspection, creating a massive one-time charge. The 2023 operating profit margin fell to just 5.2% as a result. By 2025, the company had worked through much of that damage. Operating profit margin recovered to 10.5%, and operating cash flow jumped to $10.6 billion, the strongest figure in the five-year window.
Debt tells a more complicated story. Net debt rose from $23.6 billion in 2021 to a peak of $36.0 billion in 2023, driven in part by the costs of absorbing the Powder Metal Matter and prior merger-related obligations. By 2025 it had pulled back to $27.1 billion as cash generation improved. Free cash flow, which measures cash left over after the company has paid for its operations and capital spending, went from $4.9 billion in 2022 down to $4.5 billion in 2024, then recovered to $7.9 billion in 2025. That improvement matters because free cash flow is what actually funds debt repayment, dividends, and future investment.
One of the most striking numbers in the filing is the order backlog. As of the end of 2025, RTX held $268 billion in firm orders already on the books, up from $218 billion just one year earlier. That figure represents work the company has already won but not yet delivered. The company expects to recognize about 25% of that backlog as revenue in the next twelve months. A backlog this large acts as a long runway of visibility, because even if new orders slowed tomorrow, the company would still have years of contracted work ahead.
The company faces five documented risk areas that are worth naming clearly. First, a large portion of revenue comes from the U.S. government. In 2025, direct U.S. government sales were $33.3 billion, or 38% of total revenue. If Congress cuts defense budgets, delays appropriations, or shifts priorities, that income can shrink fast. Second, the Powder Metal Matter is not fully resolved. Inspections of PW1100G engines are expected to continue through 2026, and the filing notes that similar problems could emerge in other engine models. Third, many defense contracts are fixed-price arrangements, meaning cost overruns come out of RTX's own pocket, not the customer's. Fourth, commercial aerospace sales rise and fall with airline health, and airlines are sensitive to recessions, fuel prices, and travel demand. Fifth, RTX depends on a global supply chain that includes rare earth metals and single-source foreign suppliers, and the company says it expects supply chain disruptions to continue.
Those legal settlements matter beyond the dollar amounts. RTX is now operating under multiple deferred prosecution agreements, meaning federal prosecutors agreed to hold off on criminal charges as long as the company meets its compliance obligations for three years. If the Department of Justice decides RTX has violated any term of those agreements, prosecution could follow. That is an unusual condition for a company this size to be carrying.
International sales are growing fast and now represent a larger share of revenue than U.S. government sales. In 2025, international sales reached $41.3 billion, or 47% of total revenue. That growth reflects strong global demand for air defense systems like Patriot, NASAMS, and AMRAAM, driven by the security environment in Europe and the Middle East. But it also creates exposure. China has already announced sanctions against parts of the Raytheon business over arms sales to Taiwan. The U.S. government can pause or revoke export licenses. And foreign governments can delay or withdraw their own approvals. Any of those outcomes could block a sale that is already in the backlog.
The U.S. government also passed legislation in July 2025 that added $156.2 billion in supplemental defense spending through 2029, including $24.4 billion for the Golden Dome for America missile defense initiative and $25.4 billion for munitions and supply chain resiliency. RTX's 10-K states the company is well-positioned for both programs. Whether that positioning translates into actual contract awards, and how large those awards would be, is not yet determined.