Financial Data and Key Metrics Changes - For the full year, adjusted sales were $88.6 billion, up $9 billion year-over-year, or 11% organically, driven by 10% growth in commercial OE, 18% growth in commercial aftermarket, and 8% growth in defense [4] - Adjusted EPS of $6.29 was up 10% year-over-year, and free cash flow was $7.9 billion, up $3.4 billion year-over-year [4][18] - The company ended 2025 with a book-to-bill of 1.56, resulting in a record backlog of $268 billion, up 23% year-over-year [4] Business Line Data and Key Metrics Changes - Collins' sales were $7.7 billion in the fourth quarter, up 3% on an adjusted basis and 8% organically, driven by strength in commercial OE and aftermarket [21] - Pratt & Whitney's sales were $9.5 billion, up 25% on both an adjusted and organic basis, driven by strength across all channels [23] - Raytheon's sales were $7.7 billion in the quarter, up 7% on both an adjusted and organic basis, driven by higher volume on land and air defense systems [24] Market Data and Key Metrics Changes - Commercial air travel is expected to grow again, with global RPKs projected to increase around 5% this year, on top of the 5% seen in 2025 [7] - NATO allies are expected to increase their core defense spending to approximately 3.5% of GDP by 2035, supporting strong demand for defense products [9] Company Strategy and Development Direction - The company is committed to making the right investments to support favorable long-term demand and drive sustainable growth [33] - Increased production rates are expected in 2026, particularly on the A320neo, 737 MAX, and 787 platforms, as well as on business jet and general aviation aircraft [8] - The company plans to invest approximately $10.5 billion in CapEx in 2026, focusing on expanding production capacity and factory automation [15] Management's Comments on Operating Environment and Future Outlook - Demand remains strong, and the company is well-positioned for another year of top-line growth [7] - For 2026, adjusted sales are expected to be between $92 billion and $93 billion, with 5%-6% organic growth year-over-year [9][26] - The company expects adjusted EPS to be between $6.60 and $6.80, with free cash flow projected to be between $8.25 billion and $8.75 billion [10][29] Other Important Information - The company invested over $10 billion in CapEx and R&D in 2025, with a focus on expanding production capacity and factory automation [13] - The GTF Fleet Management Plan is on track, with MRO output up 39% in the fourth quarter and expected to continue growing in 2026 [40] Q&A Session Summary Question: Update on GTF Fleet Management Plan - The financial and technical outlook remains on track, with AOG down over 20% from the highs of 2025, and MRO output is expected to continue improving [38][40] Question: Thoughts on Executive Order for Defense Companies - The company recognizes the responsibility to deliver more and faster, aligning resources with the Department of Defense's mandate to ramp production and invest in capacity [44][46] Question: Portfolio Composition and Monetization Opportunities - The company believes it is well-positioned to meet the ramp in defense and commercial sectors, with a strong balance sheet to support investments [50][52] Question: 2026 Guidance for Pratt & Whitney - The company expects large commercial engine deliveries to grow mid to high single digits, balancing the need to support the flying fleet and new installs [58] Question: Raytheon Segment Growth Rates - The majority of sales increase is coming from land and air defense systems, with a strong backlog supporting the outlook for 2026 [74]

Financial Data and Key Metrics Changes - For the full year 2025, adjusted sales were $88.6 billion, an increase of $9 billion year-over-year, or 11% organically [3] - Adjusted EPS was $6.29, up 10% year-over-year, and free cash flow was $7.9 billion, an increase of $3.4 billion year-over-year [3] - The company ended 2025 with a book-to-bill ratio of 1.56 and a record backlog of $268 billion, up 23% year-over-year [3] Business Line Data and Key Metrics Changes - Commercial OE sales grew by 10%, commercial aftermarket by 18%, and defense by 8% for the full year [3] - In the fourth quarter, Collins' sales were $7.7 billion, up 3% adjusted and 8% organically, driven by commercial OE and aftermarket [17] - Pratt & Whitney's sales were $9.5 billion, up 25% on both an adjusted and organic basis, with commercial OE sales up 28% [19] - Raytheon's sales were $7.7 billion, up 7% on both an adjusted and organic basis, driven by higher volume on land and air defense systems [20] Market Data and Key Metrics Changes - Global RPKs are projected to increase around 5% in 2026, following a similar growth in 2025 [5] - The defense budgets in the Asia-Pacific and Middle East regions are expected to grow at an average of 3%-4% annually over the next five years [8] Company Strategy and Development Direction - The company aims to invest significantly in capacity and technology, with over $10 billion in CapEx planned for 2026 [11] - The strategic focus includes increasing production rates for key aircraft platforms and enhancing operational efficiencies through digital solutions [10] - The company is positioned to leverage its commercial expertise to support defense transformation initiatives [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand and operational execution, expecting adjusted sales for 2026 to be between $92 billion and $93 billion, with 5%-6% organic growth [9] - Adjusted EPS for 2026 is projected to be between $6.60 and $6.80, with free cash flow expected to be between $8.25 billion and $8.75 billion [9] - The company anticipates continued margin expansion driven by productivity improvements and cost management [9] Other Important Information - The company invested $2.6 billion in CapEx in 2025, focusing on capacity expansion and technology upgrades [12] - The GTF Fleet Management Plan is on track, with MRO output up 39% in the fourth quarter [31] Q&A Session Summary Question: Update on GTF Fleet Management Plan - Management confirmed that the financial and technical outlook remains on track, with AOG down over 20% from highs in 2025 and MRO output significantly improving [30][31] Question: Thoughts on Defense Capital Deployment - Management acknowledged the importance of their products for national security and emphasized their commitment to ramping production and investing in capacity [32][33] Question: Portfolio Composition and Monetization Opportunities - Management expressed confidence in RTX's ability to meet current and future demands, highlighting the competitive advantages of their scale and technology [36][37] Question: 2026 Guidance for Pratt & Whitney - Management provided insights into expected growth rates for large commercial engine deliveries and emphasized the balance between MRO and new installations [39][40] Question: Raytheon Segment Growth Rates - Management indicated that the majority of sales growth in Raytheon is driven by land and air defense systems, with a strong backlog supporting future growth [46][47]

Financial Data and Key Metrics Changes - The company reported revenues of $3.6 billion, reflecting a 2% growth year-over-year [6][27] - Adjusted EBITDA was $274 million, marking a 7% year-over-year growth with a margin increase of 30 basis points to 7.7% [6][27] - Free cash flow for the quarter was $100 million, contributing to a year-to-date total of $255 million [6][30] Business Line Data and Key Metrics Changes - Digital Solutions generated revenues of $1.4 billion, representing a 12% growth driven by new contract awards [28] - Global Engineering Solutions reported revenues of $2.1 billion, impacted by the ramp down of certain historical programs but offset by new contract growth [28][29] Market Data and Key Metrics Changes - The company secured $3.4 billion in net bookings for the quarter, resulting in a book-to-bill ratio of 1.0 [13][39] - The total backlog reached $45 billion, representing 3.2 times the annual revenue [13] Company Strategy and Development Direction - The company is focused on optimizing its core business through divestitures, having completed two significant divestitures during the quarter [6][7] - The company aims to achieve at least $30 million in net run rate cost synergies by the end of the fiscal year [7] - The strategic focus includes expanding offerings in defense, space, and nuclear sectors, aligning with government spending trends [9][12][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance and the ability to meet fiscal year 2025 financial objectives [33] - The company anticipates strong demand in the nuclear sector, with a projected market growth that could double in size within the next decade [23][79] - Management highlighted the positive impact of recent government budget initiatives on future growth opportunities [9][12] Other Important Information - The company reduced its net leverage ratio to 3.5 times, ahead of expectations, and aims for less than three times by the end of fiscal year 2026 [31][32] - The company is positioned to benefit from significant investments in national security and infrastructure modernization [9][12] Q&A Session Summary Question: Clarification on JV adjusted quarterly book to bill and Space Force pipeline - The imputed JV book to bill for the quarter was 1.8, with strong performance in business development [38][39] - The Space Force contract is expected to enhance the company's position in commercial space integration [40][41] Question: Expectations for budget flush opportunities and federal contracting - Management noted that the government is operating efficiently, with RFPs and awards proceeding as planned [62][63] Question: Insights on the Golden Dome opportunity - The Golden Dome initiative emphasizes rapid deployment of defensive capabilities, with significant funding already allocated [66][68] Question: Nuclear exposure and growth potential - The company has over $2 billion in nuclear-related business, with a strong pipeline of projects expected to grow significantly [74][80] Question: Total backlog and pipeline picture - The funded backlog is impacted by timing but does not raise concerns about the company's ability to perform mission-critical work [88][90]

Financial Data and Key Metrics Changes - The company secured $853 million in bookings for the quarter, achieving a 1.0 book-to-bill ratio, with total backlog rising to $8.6 billion, a 9% year-over-year increase [6][8] - Revenue for the quarter was $829 million, reflecting a 10% increase year-over-year, with adjusted EBITDA up 17% to $96 million and adjusted diluted EPS up 28% [20][22][24] - The company raised its full-year revenue growth expectations to 9% to 11% [8][24] Business Line Data and Key Metrics Changes - The Electric Power and Propulsion segment showed strong performance, contributing significantly to revenue growth, particularly on the Columbia Class program [22][24] - The Advanced Sensing and Computing (ASC) segment's adjusted EBITDA increased by 5%, but margins contracted due to higher R&D investments and less favorable program mix [22] - The Integrated Mission Systems (IMS) segment's adjusted EBITDA rose by 41%, with margin expansion attributed to improved profitability on the Columbia Class program [22] Market Data and Key Metrics Changes - Global defense spending is increasing, with NATO members targeting 5% of GDP for national security, which is expected to drive international demand for the company's capabilities [10][11] - The U.S. defense budget request for FY 2026 is $962 billion, representing a 12% year-over-year increase, providing a favorable environment for the company [10] Company Strategy and Development Direction - The company is focused on disciplined program execution, investing for future growth, and navigating a complex operational environment [9][19] - The enactment of the One Big Beautiful Bill Act, which includes $150 billion in defense funding, is expected to create significant opportunities for the company [9][10] - The company is enhancing its R&D investments to support new technologies, particularly in space sensing and counter UAS capabilities [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet full-year outlooks, citing strong customer demand and a healthy backlog [8][19] - The operational environment remains complex, particularly regarding supply chain challenges, specifically related to germanium availability [12][14] - Management is optimistic about the long-term growth potential driven by geopolitical tensions and increased defense spending [10][11] Other Important Information - The company is actively seeking to mitigate supply chain challenges, particularly regarding germanium, through various strategies [12][14] - The company is exploring M&A opportunities but is cautious about high valuations in the current market [33][47] Q&A Session Summary Question: When should the company expect orders related to the Golden Dome initiative to impact backlog? - Management indicated that significant orders are expected to roll out in the 2026 timeframe as the architecture is still being organized [31] Question: What is the current situation regarding germanium supply and its impact? - Management explained that germanium supply has been constrained due to geopolitical tensions, leading to increased prices and the need to seek alternative sources [41][42] Question: How does the company view the M&A environment? - Management noted that while they are actively looking for opportunities, rising prices in the sector are a consideration, and they are willing to be flexible on financial criteria for strategically aligned acquisitions [33][47] Question: What are the expectations for international sales growth? - Management expressed confidence that international sales will continue to grow, driven by NATO commitments and ongoing geopolitical conflicts [75] Question: How does the company plan to address the challenges posed by germanium shortages? - Management is pursuing multiple strategies, including recycling and seeking alternative materials, with a target to alleviate issues by 2026 [42][83]

Financial Data and Key Metrics Changes - The company secured $853 million in bookings for the quarter, achieving a book-to-bill ratio of 1.0, with total backlog rising to $8.6 billion, a 9% year-over-year increase [6][7] - Revenue for the quarter was $829 million, reflecting a 10% increase year-over-year, with adjusted EBITDA up 17% to $96 million and adjusted diluted EPS up 28% [20][22][23] - The full-year revenue growth expectations have been increased to 9% to 11% [7][24] Business Line Data and Key Metrics Changes - The Electric Power and Propulsion segment showed strong performance, contributing significantly to revenue growth, particularly from the Columbia Class program [22][18] - The Advanced Sensing and Computing (ASC) segment's adjusted EBITDA increased by 5%, but margins contracted due to higher R&D investments and less favorable program mix [22] - The Integrated Mission Systems (IMS) segment's adjusted EBITDA rose by 41%, with margin expansion attributed to improved profitability on the Columbia Class program [22] Market Data and Key Metrics Changes - Global defense spending is increasing, with NATO members targeting 5% of GDP for national security, which is expected to drive demand for the company's capabilities [9][10] - The U.S. defense budget request for FY 2026 is $962 billion, representing a 12% year-over-year increase, providing a favorable environment for the company [9] Company Strategy and Development Direction - The company is focused on disciplined program execution and investing for future growth, particularly in areas aligned with national defense priorities [8][9] - Increased internal R&D investment is being directed towards enhancing space sensing capabilities and counter UAS technologies [15][18] - The company is exploring M&A opportunities, although rising prices in the sector are a consideration [34][46] Management's Comments on Operating Environment and Future Outlook - Management noted a complex operational environment but highlighted sustained momentum in capturing customer demand and expanding profitability [5][8] - The enactment of the One Big Beautiful Bill Act is expected to provide significant opportunities for the company [8][9] - Concerns regarding germanium availability and pricing were raised, with mitigation efforts expected to yield relief in 2026 [11][40] Other Important Information - The company is actively monitoring geopolitical tensions, particularly in Israel, and is taking steps to ensure employee safety [10] - The company anticipates a strong bookings environment for the second half of the year, expecting to exit with a higher backlog than at June 30 [61] Q&A Session Summary Question: Timing of Golden Dome program impact on backlog - Management indicated that significant orders related to the Golden Dome initiative are expected to roll out in 2026, as the architecture is still being organized [32] Question: M&A environment and deal flow - Management confirmed ongoing diligence in the M&A market, noting that while there is a continuous flow of opportunities, rising prices are a factor in their assessment [34] Question: Impact of germanium supply issues - Management explained that germanium supply has been constrained due to geopolitical tensions, leading to increased prices and the need to seek alternative sources [40][41] Question: Opportunities from NATO commitments - Management expressed optimism about international sales growth driven by NATO commitments and ongoing geopolitical conflicts [68] Question: Future defense budget expectations - Management anticipates sustained and predictable increases in defense budgets, driven by the need to address growing threats from global adversaries [114]