Strategic Performance Drivers

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• Organic sales growth of 16% was driven by double-digit expansion in commercial aftermarket and defense, supported by a record $289 billion backlog.

• Raytheon's performance was bolstered by over $10 billion in international awards during the first half, reflecting heightened global demand for integrated air and missile defense systems.

• Pratt & Whitney's GTF fleet management plan is showing operational improvement, with aircraft-on-ground (AOG) levels down 25% year-to-date due to a 40% increase in MRO output.

• Operational execution is being enhanced through a connected factory network and AI platform, which has grown 30% since late 2025 to enable faster cycle times.

• Collins Aerospace achieved margin expansion through higher volume drop-through, despite headwinds from defense mix and divestiture impacts.

• Management attributes the strong defense top-line growth to improved material receipts and supply chain normalization on mature programs like Patriot and AMRAAM.

Outlook and Strategic Assumptions

• Full-year adjusted sales guidance was raised by $2.5 billion, assuming continued strength in defense execution and higher GTF aftermarket volume.

• Organic sales growth is expected to moderate to approximately 5% in the second half due to difficult year-over-year comparisons and the timing of contract awards.

• The company anticipates a record number of GTF engine deliveries to Airbus in 2026, despite a strategic shift to prioritize material flow for the MRO network.

• Free cash flow guidance assumes higher segment operating profit will be partially offset by inventory builds to support the 2027 production ramp.

• Management expects bipartisan support for increased defense spending to prioritize critical munitions, potentially benefiting programs like Tomahawk and Standard Missile.

Structural Changes and Risk Factors

• RTX entered an agreement to sell Raytheon's Blue Canyon Technologies for $620 million to sharpen focus on core defense capabilities.

• The company is investing over $200 million domestically to expand GTF MRO capacity and GEM-T component production to meet global demand.

• Powder metal-related compensation payments totaled approximately $150 million in the second quarter.

• Management flagged a shift in Pratt & Whitney's OE sales to a low single-digit decline as they prioritize aftermarket material allocation over spare engine sales.