Raytheon Technologies(US:RTX)2026-02-06 21:33Financial Performance - Total backlog reached $268 billion as of December 31, 2025, with approximately 25% expected to be recognized as revenue within the next 12 months[33]. - U.S. government sales amounted to $33.3 billion in 2025, representing 38% of total net sales, down from 46% in 2023[30]. - International sales increased to $41.3 billion in 2025, accounting for 47% of total net sales, up from 43% in 2024[31]. Contracts and Agreements - Collins Aerospace secured over $4 billion in long-term agreements for maintenance, repair, and overhaul services, as well as spare parts for several airlines in 2025[16]. - Pratt & Whitney's F135 engine surpassed one million flight hours in 2025, with a $2.8 billion contract awarded for production of Lot 18 and Lot 19 engines[22]. - Raytheon received major contracts for advanced technologies, including AMRAAM missiles and the Next Generation Jammer, in 2025[29]. Research and Development - The company invests significantly in research and development to enhance existing products and develop future technologies[43]. - Pratt & Whitney Canada was selected to lead the PHARES project, targeting up to 20% improved fuel efficiency for regional aircraft[24]. - Collins Aerospace continues to invest in sustainable technologies, including advanced composite materials and digital trajectory optimizers, to reduce carbon footprint[17]. Supply Chain and Operational Challenges - Supply chain disruptions have led to increased costs and delays, particularly for rare earth elements and microelectronics, driven by inflation and geopolitical conditions[47]. - The company has implemented actions to mitigate supply chain impacts, including increasing inventory and establishing second and third supply sources[48]. - The company relies on foreign sources for certain raw materials, which poses risks related to supply chain stability and compliance with procurement requirements[46]. Employee and Workforce - The global employee population as of December 31, 2025, is approximately 180,000, including about 54,000 engineering professionals and 32,000 union-represented employees[39]. - Approximately 69% of employees are located in the U.S., with the company continuously monitoring labor market conditions to address hiring challenges[39][40]. Regulatory and Compliance Issues - The company has faced regulatory scrutiny, including a deferred prosecution agreement with the DOJ and an administrative order from the SEC related to past compliance issues[56][58]. - The company is subject to extensive environmental regulations, which may incur costs but are not expected to materially affect its competitive position or financial condition[60]. - The company is subject to future foreign or domestic laws regarding climate change, which may increase operational and compliance costs[62]. Financial Instruments and Risks - The present value of aggregate notional principal of outstanding foreign currency hedges was $26 billion and $17 billion at December 31, 2025 and 2024, respectively[394]. - A 10% unfavorable exchange rate movement in the foreign currency contracts would have resulted in an increase in unrealized losses of $0.9 billion and $1.0 billion at December 31, 2025 and 2024, respectively[394]. - A 100 basis point unfavorable interest rate movement would have had an approximate $3 billion impact on the fair value of fixed-rate debt at both December 31, 2025 and 2024[397]. - The company uses foreign currency forward contracts to hedge price risks associated with foreign currency payments and receipts[394]. - The company actively manages foreign currency exposures associated with committed foreign currency purchases and sales[394]. - The company is exposed to fluctuations in foreign currency exchange rates and interest rates related to cash, debt, and derivative instruments[393]. - The company has $0.9 billion of term loans outstanding that are affected by changes in market interest rates[397]. - The company has no current derivative contracts to hedge interest rate exposures but may consider such strategies in the future[397].