Executive Summary
RTX Corporation delivered solid Q1 2025 results with a revenue base of $20.31 billion and an operating profit of $2.03 billion, translating to an operating margin of 10.0% and a net margin of 7.56%. The company generated $1.305 billion of operating cash flow and $0.792 billion of free cash flow, supporting a healthy liquidity profile despite a heavy balance sheet. Year-over-year revenue rose ~5.2%, while net income declined ~10.2% on a yearly basis due to mix and tax impacts, with a QoQ improvement in earnings per share of 3.6%. Cash deployment remained disciplined: dividends totaled $0.84 billion and a modest amount of share repurchases occurred alongside ongoing capital expenditure of $0.513 billion, reflecting a balanced approach to shareholder value creation and strategic investment.
From a balance sheet perspective, RTX held $5.16 billion in cash and equivalents and reported total debt of $42.95 billion, yielding a net debt position of about $37.79 billion. The current ratio stood at ~1.01, with a quick ratio of ~0.75 and a cash ratio of ~0.10, signaling adequate liquidity but a working-capital-heavy business model typical of large programs with long cycle times. The company’s leverage metrics remain moderate by defense-prime standards (long-term debt to capitalization ~38.3%; total debt to capitalization ~41.1%), while interest coverage sits around 4.05x, underscoring ongoing obligation management.
Looking ahead, RTX remains exposed to government defense budgets, program execution risk, and the broader cyclicality of both military and commercial aerospace demand. In the absence of formal forward guidance in the provided materials, the key drivers to watch include (1) sustained defense appropriation and program ramp-ups, (2) order intake and backlog evolution, (3) supply-chain cost dynamics and commodity pass-throughs, and (4) cash-flow generation and capital allocation efficiency. Overall, the quarter reinforces RTX’s status as a diversified platform with solid cash generation, but the stock trade-off may reflect higher valuation given growth expectations in a two-speed aerospace cycle.
Key Performance Indicators
Key Insights
Revenue: $20.306B; YoY +5.19%; QoQ -6.09%; Gross Profit: $4.116B; Gross Margin 20.27%; YoY Gross Profit +15.59%; QoQ -2.81%; Operating Income: $2.031B; Operating Margin 10.00%; YoY +35.58%; QoQ -3.79%; Net Income: $1.535B; Net Margin 7.56%; YoY -10.18%; QoQ +3.58%; EBITDA: $3.512B; EBITDA Margin 17.30%; EPS: $1.15; Diluted EPS: $1.14; EPS YoY -10.85%; EPS QoQ +3.60%; Weighted Avg Shares (GAAP): 1.337B; Cash from Operating Activities: $1.305B; Free Cash Flow: $0.792B; Capex: $0.513B; Dividends Pa...
Financial Highlights
Revenue: $20.306B; YoY +5.19%; QoQ -6.09%; Gross Profit: $4.116B; Gross Margin 20.27%; YoY Gross Profit +15.59%; QoQ -2.81%; Operating Income: $2.031B; Operating Margin 10.00%; YoY +35.58%; QoQ -3.79%; Net Income: $1.535B; Net Margin 7.56%; YoY -10.18%; QoQ +3.58%; EBITDA: $3.512B; EBITDA Margin 17.30%; EPS: $1.15; Diluted EPS: $1.14; EPS YoY -10.85%; EPS QoQ +3.60%; Weighted Avg Shares (GAAP): 1.337B; Cash from Operating Activities: $1.305B; Free Cash Flow: $0.792B; Capex: $0.513B; Dividends Paid: $0.84B; Net Debt: $37.79B; Cash at End of Period: $5.16B; Total Assets: $164.86B; Total Liabilities: $101.52B; Total Equity: $61.52B; Current Ratio: 1.01; Quick Ratio: 0.75; Cash Ratio: 0.10; Debt/Capitalization: 0.411; Long-Term Debt to Capitalization: 0.383; Interest Coverage: 4.05x; Dividend Payout Ratio: 0.547; Price Earnings Ratio: 28.85; Price to Book: 2.88; Price to Sales: 8.72; Dividend Yield: 0.474%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
20.31B |
5.19% |
-6.09% |
| Gross Profit |
4.12B |
15.59% |
-2.81% |
| Operating Income |
2.03B |
35.58% |
-3.79% |
| Net Income |
1.54B |
-10.18% |
3.58% |
| EPS |
1.15 |
-10.85% |
3.60% |
Key Financial Ratios
operatingProfitMargin
10%
operatingCashFlowPerShare
$0.98
freeCashFlowPerShare
$0.59
dividendPayoutRatio
54.7%
Management Commentary
No earnings call transcript was provided in the data set. Consequently, key management themes, strategic guidance, and direct quotes from executives are not available for synthesis. The following highlights are based on the disclosed financials and standard industry considerations: (1) execution risk and program timing across aerospace and defense segments; (2) emphasis on sustaining free cash flow generation in a high-capital-intensive business; (3) balance-sheet discipline amid a sizable debt load; (4) ongoing exposure to defense budget cycles and export controls that influence backlog and orders.
Forward Guidance
No formal forward guidance was disclosed in the provided materials. Nevertheless, the outlook for RTX is generally tied to multi-year defense budgets, program ramp-ups, and the health of both commercial aviation and defense spending. Based on Q1 2025 results, the implied trajectory appears to support stable cash generation and moderate top-line growth should defense programs remain robust. Potential positive catalysts include: (1) stabilization and expansion of defense backlog through new awards or program extensions; (2) cost-reduction initiatives or productivity improvements that sustain operating margins around the current level; (3) further optimization of capital allocation toward high-return initiatives and shareholder returns. Key risks to monitor include: (1) changes in U.S. or allied defense funding, (2) geopolitical developments affecting order flow or export controls, (3) supply-chain disruptions or material cost volatility, and (4) integration and execution risks across RTX’s three-segment platform.