RTX Q2 2026: Backlog Hits $289B, Operating Profit Up 31%
RTX is converting the European rearmament cycle into reported margin, not just order announcements. Second-quarter operating profit rose 31.0% to $2,811 million on sales of $24,708 million (up 14.5%), lifting the GAAP operating margin to 11.4% from 9.9% a year earlier, while total backlog climbed to $289 billion from $268 billion at year-end. The distinction matters because a defense book-to-bill above 2x is only valuable if the company can also fund the working capital it demands — and here first-half free cash flow rose nearly six-fold to $4.19 billion. For a business where defense programs now sit alongside a commercial aftermarket still absorbing the Pratt & Whitney powder metal disruption, this was the quarter where both engines fired at once.
1. Balance Sheet: Growth Is Being Funded by Customers
1-1. Principal Asset Movements
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 7,435 | 8,305 | +11.7 |
| Accounts receivable, net | 14,701 | 13,942 | -5.2 |
| Contract assets, net | 17,092 | 18,980 | +11.0 |
| Inventory, net | 13,364 | 14,409 | +7.8 |
| Fixed assets, net | 16,868 | 16,965 | +0.6 |
| Goodwill | 53,343 | 52,928 | -0.8 |
| Intangible assets, net | 31,845 | 31,043 | -2.5 |
| Total assets | 171,079 | 173,972 | +1.7 |
The asset side tells a straightforward production-ramp story. Inventory rose $1,045 million and contract assets — revenue recognized ahead of billing — rose $1,888 million, which the company attributes primarily to sales in excess of billings at Pratt & Whitney. Receivables moved the other way, down $759 million, but that decline is not purely a collections win: management discloses that factoring activity added $1.5 billion to operating cash flow versus the prior-year period. Goodwill and intangibles drifted lower on acquisition accounting amortization of $976 million for the half and divestiture effects, with no impairment recorded.
Equity accounts show a company distributing rather than retaining. Retained earnings rose 2.3% to $58,020 million as $4,198 million of attributable net income was offset by $2,882 million of common and ESOP dividends charged during the half. Treasury stock barely moved (from -$26,881 million to -$26,758 million), and the movement was share-based 401(k) matching, not repurchases — there were none. Accumulated other comprehensive loss widened by $591 million to -$3,309 million, driven by foreign currency translation and hedging swings rather than operating results.
