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Date

Jan. 27, 2026, 8:30 a.m. ET

Call participants

  • Chief Executive Officer — Chris Calio
  • Chief Financial Officer — Neil Mitchill
  • Vice President, Investor Relations — Nathan Ware

Takeaways

  • Adjusted full-year sales -- $88.6 billion, reflecting 11% organic growth driven by 10% growth in commercial original equipment, 18% growth in commercial aftermarket, and 8% in defense.
  • Adjusted EPS (full year) -- $6.29, increasing 10% primarily due to higher sales.
  • Free cash flow (full year) -- $7.9 billion, up $3.4 billion year over year.
  • Backlog -- $268 billion, up 23% year over year, including $161 billion in commercial and $107 billion in defense orders.
  • Book-to-bill ratio -- One point five six for the full year, with Raytheon defense at one point three one.
  • Orders -- One thousand five hundred GTF and over two thousand four hundred Pratt Canada engine orders committed during the year.
  • International mix (Raytheon) -- Forty-seven percent of Raytheon backlog, an increase of three points from the prior year.
  • Fourth quarter adjusted sales -- $24.2 billion, up 12% adjusted and 14% organically.
  • Fourth quarter adjusted segment operating profit -- $2.9 billion, up 9% year over year.
  • Fourth quarter adjusted EPS -- $1.55, up 1% from prior year, affected by higher corporate expenses and tax rate.
  • Fourth quarter free cash flow -- $3.2 billion, including approximately $1 billion powder metal compensation and approximately $600 million tariff impacts.
  • Debt reduction -- $1.1 billion debt paydown and completion of the Collins Simmons business divestiture in the quarter.
  • Collins fourth quarter sales -- $7.7 billion, up 3% adjusted and 8% organically, with commercial original equipment up 9% and aftermarket up 13%.
  • Collins adjusted operating profit (full year) -- $4.9 billion, yielding 30 basis points of margin expansion year over year.
  • Pratt & Whitney fourth quarter sales -- $9.5 billion, up 25% on both adjusted and organic bases, with commercial original equipment up 28% and aftermarket up 21%.
  • Pratt & Whitney adjusted operating profit (full year) -- $2.7 billion, with 17% organic sales growth and 20 basis points of margin expansion.
  • Raytheon fourth quarter sales -- $7.7 billion, up 7% adjusted and organically, driven by land and air defense systems and naval programs.
  • Raytheon bookings (quarter) -- $10.3 billion and book-to-bill ratio of one point three five; full year book-to-bill of one point four three and record $75 billion backlog.
  • 2026 guidance — adjusted sales -- Expected between $92 billion and $93 billion, translating to 5%-6% organic growth.
  • 2026 guidance — adjusted EPS -- Expected between $6.60 and $6.80, with $0.59 from segment operating profit growth and a $0.03 divestiture headwind at Collins.
  • 2026 guidance — free cash flow -- Forecast between $8.25 billion and $8.75 billion; $1.1 billion expected improvement mainly from segment profit growth.
  • 2026 guidance — segment outlooks -- Collins: sales up high single digits organically; Pratt & Whitney: sales up mid-single digits organic and adjusted; Raytheon: sales up mid- to high single digits.
  • Significant munitions output increase -- Raytheon programs achieved 20% output growth in 2025 and expect further increases in 2026.
  • Digital factory initiatives -- Over 50% of annual manufacturing hours now connected to digital platforms; Pratt achieved a 45% reduction in aged inventory at Lansing, and Raytheon a 35% reduction in circuit card production cycle times at Andover.
  • GTF fleet MRO output -- PW1100 MRO output up 39% in the fourth quarter and 26% for the year; heavier shop visits up 40% with 16% turnaround time reduction.
  • 2025 capital expenditures and R&D investment -- More than $10 billion invested, including $2.6 billion in capital expenditures focused on capacity expansion and automation.
  • 2026 capital expenditures guidance -- Expecting $10.5 billion in capital expenditures plus company and customer-funded R&D; $3.1 billion discussed for capital expenditures alone.

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Risks

  • Neil Mitchill said, "Adjusted earnings per share of $1.55 was up 1% from prior year as strong segment operating profit growth was partially offset by expected higher corporate expenses and a higher effective tax rate in the quarter."
  • Collins operating profit outlook for 2026 includes an approximately $50 million headwind due to divestitures, as stated by Neil Mitchill.
  • Pratt & Whitney 2026 commercial aftermarket growth is constrained by a roughly $100 million headwind from legacy engine retirements, according to Neil Mitchill.
  • Collins margins continue to experience a 90 basis point drag from tariffs, which will persist with added impact in the first quarter of 2026 per Neil Mitchill.

Summary

Management for RTX Corporation (RTX +2.12%) outlined sustained momentum across all major business segments, pointing to record backlog levels driven by robust defense and commercial demand. CEO Chris Calio highlighted the continued decline of PW1100 aircraft on ground and a 39% year-over-year jump in maintenance, repair, and overhaul output for the GTF fleet in the fourth quarter, with further improvements expected through 2026. Guidance for the upcoming year projects 5%-6% organic sales growth and margin expansion at each segment, supported by record investments in capacity, automation, and cross-segment digital transformation. The call detailed a $700 million powder metal compensation outflow in 2026, with management indicating that a couple hundred million dollars of headwind will remain after completion of the current fleet management plan cycle. International backlog mix in Raytheon now stands at 47%, and Collins is projected to deliver double-digit organic commercial original equipment growth, with defense revenues elevated by long-cycle programs such as the F-35.

  • Chris Calio stated, "we remain committed to the dividend," but emphasized capacity and technology investment will remain a capital allocation priority alongside shareholder returns.
  • Backlog growth at Raytheon stemmed from land and air defense systems including significant 2025 contract wins for Patriot and Tamir missiles, and about 85% of Raytheon's 2026 sales are already booked at the start of the year.
  • Neil Mitchill quantified the tariff drag at Collins as 90 basis points in 2025, with a $75 million expected tailwind in 2026 even as a first-quarter margin dip occurs from an extra tariff quarter.
  • Neil Mitchill stated, "there's no reason to believe that the Raytheon margins can't be north of 12%," and outlined ongoing international sales mix growth supporting this outlook.
  • Chris Calio said investments in casting capacity at Pratt's Asheville facility will not meaningfully impact output until the 2028-2029 timeframe, indicating a long-term approach to supply chain resilience.

Industry glossary

  • GTF (Geared Turbofan): Pratt & Whitney's next-generation aircraft engine design featuring a reduction gearbox to allow the fan and low-pressure turbine to operate at optimal speeds, improving fuel efficiency and reducing emissions.
  • AMRAAM: Advanced Medium Range Air-to-Air Missile, a Raytheon-produced missile for air combat applications.
  • LTAMDS: Lower Tier Air and Missile Defense Sensor, Raytheon's advanced radar system for missile defense applications.
  • PW1100: Model designation for a Pratt & Whitney GTF engine variant used on the Airbus A320neo family.
  • MRO (Maintenance, Repair and Overhaul): Services and processes related to the upkeep, repair, and refurbishment of aerospace components and engines.
  • AOG (Aircraft on Ground): An operational status indicating that an aircraft is unable to fly due to urgent maintenance or technical issues requiring rapid resolution.
  • Book-to-bill ratio: A measure of new orders received compared to products shipped and billed, used as an indicator of future revenue growth.
  • OE (Original Equipment): Aerospace sector sales to aircraft manufacturers for installation on new aircraft at the point of production.
  • RPK (Revenue Passenger Kilometer): Metric representing the volume of passengers carried by an airline, multiplied by the distance flown.
  • Effectors: Terminology for munitions or weapon components that deliver lethal effects to a target, including missiles and related systems.

Full Conference Call Transcript

Chris Calio: Thank you, and good morning, everyone. Delivered strong sales, adjusted EPS, and free cash flow in the fourth quarter, underscoring our momentum and focus on execution across RTX. 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. Adjusted EPS of $6.29 was up 10% year over year on drop through from higher sales. And free cash flow was a robust $7.9 billion, up $3.4 billion year over year. Our performance continues to be driven by the durable demand for our products and services, and operational improvements enabled by our core operating system.

On the orders front, we ended 2025 with a full year book to bill of 1.56, resulting in another record backlog of $268 billion, up 23% year over year with roughly $161 billion of commercial orders, and $107 billion of defense awards. On the commercial side of the business, our backlog is up 29% year over year driven by growing aircraft production rates, and resilient passenger air travel. Orders and commitments during the year included 1,500 GTF engines, and over 2,400 Pratt Canada engines. On the defense side, our book to bill for the year was a very strong 1.31, and included several significant fourth quarter awards.

For example, Raytheon booked $1.2 billion to supply Spain with additional Patriot air and missile defense systems. It was also awarded a $1.2 billion contract for Tamir missile production, with work to be executed in our recently completed Camden, Arkansas facility. Raytheon booked $40 billion of awards in the year, and their international backlog mix is now 47%, up three points from 2024. At Pratt, the military business booked $2.2 billion in sustainment contracts to support multiple engines including the F135, and the F119.

And at Collins in the fourth quarter, the business was awarded a $438 million contract from the FAA to deliver radar systems for the broader radar system replacement program, which will help modernize the US air traffic control system. So overall, a very strong year of orders across the company, highlighting the growing demand of our products and services and setting us up very well heading into 2026. Neil will walk you through the details of the fourth quarter and our 2026 outlook in a few minutes, but first, let me briefly comment on the operating environment that we see today.

Demand remains strong, which combined with our existing backlog and focus on execution positions us well for another year of top line growth. Commercial air travel is expected to grow again, with global RPK projected to increase around 5% this year, on top of the 5% we saw in 2025. On the commercial OE front, given the substantial airframe backlogs, we expect OEM production rates to increase again this year, particularly on the A320 NEO, 737 MAX, and 787 platforms, as well as on business jet and general aviation aircraft. All platforms where we have significant content.

In commercial aftermarket, our growing installed base, which now includes about $105 billion of out-of-warranty aircraft content at Collins, and expanding fleet of engines at Pratt, positions us well for sustained commercial aftermarket growth. On defense, there's a heightened need for munitions and integrated air and missile defense as the US and partner countries work to replenish inventories, modernize existing systems, and invest in new capabilities. We understand that our products are critical to maintaining security around the world, and we fully support the Department of War's transformation objectives to significantly increase capacity and accelerate production over a sustained period.

And given the commercial expertise in our business, we are very well positioned to bring a commercial approach to the department's transformation initiatives. On the international side, NATO allies, which today spend around 2% of GDP on defense, have committed to increasing their core defense spending to approximately 3.5% of GDP by 2035. And across the Asia Pacific and Middle East regions, defense budgets are projected to grow at an average of 3% to 4% annually over the next five years, with several countries at record levels. Altogether, these growing global demand signals support another strong financial outlook for RTX.

For 2026, we expect adjusted sales to be between $92 billion and $93 billion with 5% to 6% organic growth year over year. Increased volume, along with pricing and our continued focus on productivity and our cost structure, will support another year of consolidated segment margin expansion. We expect adjusted EPS to be between $6.60 and $6.80 with between $8.25 billion and $8.75 billion of free cash flow for the year. Consistent with 2025, our performance will be underpinned by our strategic priorities, and a relentless focus on operational execution. Moving to slide four, let me highlight how we continue to drive execution, improve productivity, and increase output utilizing our core operating system and digital solutions.

At Raytheon, the team leveraged core to significantly increase munitions output across the business in 2025. Notably, we saw output increase by 20% across a number of our critical programs, including GEMT for the Patriot Air and Missile Defense System, AMRAAM, which is the premier air-to-air combat proven effector, and Coyote to support counter UAS capabilities. In 2026, we expect to significantly increase output again on these programs as well as on other critical munitions, including SM-6, and Tomahawk. We're also continuing to deploy our proprietary data analytics and AI tools across our factories to monitor daily key performance indicators, identify bottlenecks to reduce work in process, and track equipment health and performance.

All to enable more informed decisions, reduce costs, and improve output. Across RTX, we've now connected factories that represent over 50% of our annual manufacturing hours to our digital platform. And we're seeing the benefits. For example, Pratt has reduced aged inventory by about 45% at its Lansing, Michigan facility, which manufactures GTF fan blades. And within Raytheon's Andover, Massachusetts facility, we've reduced circuit card production cycle times by about 35%. In 2026, we continue to see these benefits as we connect more equipment and expand coverage across our footprint. On the GTF fleet management plan, our financial and technical outlooks remain on track.

As planned, PW1100 AOGs declined in the fourth quarter, and we expect this trend to continue as we move throughout the year. MRO output was up 39% in the fourth quarter, up 26% for the full year, even as heavier shop visits increased 40% in 2025. We also announced the addition of two new MRO shops with the UAE Sinad Group and Spain's ITP Aero joining the GTF MRO network. We expect this momentum to continue in 2026 with year over year growth in PW1100 MRO output in line with what we saw in 2025. To support our operational growth, we continue to make significant investments in capacity and technology.

In 2025, we invested over $10 billion in CapEx and company and customer funded research and development, with a concentration on expanding our production capacity, and factory automation, bringing new products to the market, and our cross company technology road maps. On the CapEx front, we invested $2.6 billion last year. This included significant capacity expansion at Raytheon in areas such as Tucson, Arizona for Tomahawk and classified programs, and Huntsville, Alabama to increase output for the standard missile family.

We also made investments to increase production in other key facilities across the company, such as Spokane, Washington to support Collins' carbon brake production, and Asheville, North Carolina to expand Pratt's turbine airflow machining and coating capacity for the GTF and F135. In the fourth quarter, we received the EU certification of the GTF advantage engine and expect aircraft certification soon. We have begun production cut in of the advantage engine and expect entry into service later this year along with certification and first installations of the associated hot section plus upgrade package for MRO customers. We're also progressing on our strategic partnerships.

In 2025, we made $85 million in investments across 19 companies through RTX Ventures, in areas such as autonomy, advanced manufacturing, space, and propulsion. This included a successful demonstration of Raytheon's DeepStrike autonomous mobile launcher vehicle in collaboration with multiple RTX Ventures portfolio companies. In 2026, we plan to invest another $10.5 billion in CapEx in company and customer funded research and development, including another $3.1 billion in CapEx on top of the $2.6 billion I just highlighted for last year. Specifically, Raytheon will continue capacity investments in areas such as Tucson and Andover, building on projects completed last year, and creating additional capacity for munitions and sensors, including the standard missile family, AMRAAM, Tomahawk, Patriot, and LTAMDS.

Collins will increase CapEx this year to support growing commercial and defense platforms, including the expansion of the Richardson, Texas facility, the Survivable Airborne Operations Center, and the E130J programs. And Pratt will continue to invest in capacity across multiple sites including Columbus, Georgia to increase forging production and Asheville to establish a foundry to produce turbine airflow castings. We've got great momentum heading into 2026. We feel very good about how our company is positioned to drive another year of strong growth in organic sales, segment margin expansion, and free cash flow generation. With that, let me turn it over to Neil to take you through the fourth quarter results, and more details on our 2026 outlook. Neil?

Neil Mitchill: Alright, Chris. Thanks. I'm on Slide five. As you saw, we had very strong financial performance to finish the year. In the fourth quarter, adjusted sales of $24.2 billion were up 12% on an adjusted basis and 14% organically. By channel, organic growth was driven by commercial OE, which was up 18%, commercial aftermarket, which was up 17%, and defense, which was up 10%. Adjusted segment operating profit of $2.9 billion was up 9% year over year. Adjusted earnings per share of $1.55 was up 1% from prior year as strong segment operating profit growth was partially offset by expected higher corporate expenses and a higher effective tax rate in the quarter.

On a GAAP basis, EPS from continuing operations was $1.19 and included $0.31 of acquisition accounting adjustments and $0.05 of restructuring and all other nonrecurring items. This included a $0.15 settlement charge associated with a pension transaction we completed in the quarter. Free cash flow for the quarter was very strong at $3.2 billion bringing our full year free cash flow to $7.9 billion as Chris said. This included approximately $1 billion of powder metal related compensation, approximately $600 million of tariff related impacts. Lastly, in the quarter, we paid down $1.1 billion of debt and completed the divestiture of the Collins Simmons business. Okay.

With that, let me hand it over to Nathan to take you through the segment results and then I'll come back and share some details on our 2026 outlook.

Nathan Ware: Okay. Thanks, Neil. Starting with Collins on slide six. Sales were $7.7 billion in the quarter, up 3% on an adjusted basis and 8% organically, driven principally by strength across commercial OE, and aftermarket. Adjusting for divestitures, by channel, commercial OE sales were up 9%, driven by higher volume on wide body and narrow body platforms. Commercial aftermarket sales were up 13%, driven by a 24% increase in provisioning, an 11% increase in parts and repair, and a 7% increase in mods and upgrades. Defense sales were up 2% versus the prior year on a difficult compare, driven by higher volume across multiple programs. Recall that the prior year was up 13%.

Adjusted operating profit of $1.2 billion was up $16 million versus the prior year as drop through on higher commercial aftermarket and OE volume was partially offset by the impact of the divestitures completed during the year and higher tariffs across the business. For the full year, Collins generated $30.2 billion of adjusted sales and $4.9 billion of adjusted operating profit, resulting in 9% organic sales growth and 30 basis points of year over year margin expansion. Shifting to Pratt and Whitney on slide seven, sales of $9.5 billion were up 25% on both an adjusted and organic basis, driven by strength across all channels.

Commercial OE sales were up 28% driven by increased deliveries and favorable mix in large commercial engines, with large commercial engine deliveries up 6% for the full year. Commercial aftermarket sales were up 21% driven by higher volume, including heavier content, and large commercial engines and Pratt Canada. In military engines, sales were up 30% driven by higher F135 production volume and higher sustainment volume across multiple platforms, including the F135, and F100. Adjusted operating profit of $776 million was up $59 million versus the prior year driven by drop through on higher military and commercial aftermarket volume as well as favorable military and commercial OE mix.

This was partially offset by the impact of commercial aftermarket mix, higher tariffs across the business, higher SG&A expense and the absence of an approximately $70 million prior year insurance recovery. For the full year, Pratt generated $32.9 billion of adjusted sales and $2.7 billion of adjusted operating profit, resulting in 17% organic sales growth and 20 basis points of year over year margin expansion. Turning to Raytheon on slide eight. Sales of $7.7 billion in the quarter, were up 7% on both an adjusted and organic basis, driven by higher volume on land and air defense systems, including Patriot and GEMT, and higher volume on naval programs including EVOLVE Sea Sparrow missile, and Tomahawk.

This was partially offset by the absence of a prior year benefit related to a restart of contracts with a Middle East customer. Adjusted operating profit of $885 million was up $157 million versus the prior year driven by improved net productivity, higher volume, and favorable program mix. Bookings in the quarter were $10.3 billion resulting in a book to bill of 1.35 and a record backlog of $75 billion with a full year book to bill of 1.43. In addition to the awards Chris mentioned earlier, other key awards in the quarter included over $900 million of classified bookings, and approximately $600 million for NASAMs.

For the full year, Raytheon generated $28 billion of adjusted sales and $3.2 billion of adjusted operating profit, resulting in 6% organic sales growth and 130 basis points of year over year margin expansion, including $157 million of improved net productivity. With that, I'll hand it back over to Neil to provide some more details on our 2026 outlook.

Neil Mitchill: Thanks, Nathan. Turning to Slide nine, let me take you through the drivers of our 2026 outlook that Chris highlighted. Starting with sales, given our current backlog and the demand environment we've discussed, we expect total RTX sales to be between $92 billion and $93 billion for the full year. On an organic basis, this translates to between 5% to 6% top line growth. By sales channel at the RTX level, and adjusting for divestitures, we expect both commercial OE and defense to grow mid single digits and commercial aftermarket to be up high single digits. Moving to EPS. Let me take you through the year over year walk.

For the year, the most significant driver will be segment operating profit, which will drive approximately $0.59 of EPS growth at the midpoint of our outlook range. Included in this segment growth is a headwind of roughly $0.03 associated with the divestitures we completed last year at Collins. And with lower average debt, we expect a tailwind from lower interest of about $0.06. Partially offsetting these items is approximately $0.13 from lower pension income driven primarily by the actions we've taken to derisk our pension plans including the transaction I just mentioned.

Finally, we expect a $0.05 headwind from a higher share count and anticipate a $0.06 headwind from all other items largely related to higher minority interest associated with our joint ventures. All in, this brings our adjusted EPS outlook range to between $6.60 and $6.80 for the year. Moving to our free cash flow walk. Operational performance, primarily segment operating profit growth, will drive an improvement of approximately $1.1 billion. This operational improvement includes a slight working capital tailwind as we continue our company wide initiatives to improve inventory management. Specific to powder metal compensation, we expect around $700 million for the year, which results in a tailwind of about $300 million year over year.

Partially offsetting these items will be the impact of higher CapEx of approximately $500 million as we invest to support the growing customer demand that Chris discussed. For the full year, we expect to invest approximately $3.1 billion in CapEx. Lastly, we expect a headwind of approximately $300 million for all other items including the net impact of pension, interest, taxes, and other investments. All in, we expect free cash flow to be between $8.25 billion and $8.75 billion for the full year. With that, let's turn to Slide 10, and I'll provide the details around our segment outlooks.

Starting with Collins, we expect full year sales to be up mid single digits on an adjusted basis and up high single digits organically. Adjusting for the divestitures we completed in 2025, we expect commercial OE to be up approximately 10% driven by double digit growth across narrow body and wide body production, along with single digit growth across business jet and civil rotorcraft platforms. Commercial aftermarket is expected to be up high single digits, driven primarily by further growth in out of warranty flight hours and global RPKs. Defense sales are expected to be up mid single digits driven by multiple programs including the F-35, other mission systems platforms.

With respect to Collins' adjusted operating profit, we expect it to grow between $425 million and $525 million versus the prior year. This is driven by drop through on higher volume across all three channels, higher pricing, the benefit of continued cost reduction efforts across the business. Keep in mind, this profit outlook includes an approximately $50 million headwind associated with the completed divestitures. Shifting to Pratt and Whitney, we expect full year sales to be up mid single digits on both an adjusted and organic basis. By channel, we expect commercial OE to be up low single digits as increased large commercial and Pratt Canada engine deliveries are partially offset by engine mix within large commercial engines.

Commercial aftermarket is expected to be up high single digits driven by higher volume across large commercial engines primarily GTF and Pratt Canada. Within the military business of Pratt, sales are expected to be up mid single digits driven by higher F135 production and sustainment volume. For Pratt's adjusted operating profit, we expect growth of between $225 million and $325 million versus the prior year. This is driven by drop through on higher commercial aftermarket and military volume, and cost reduction efforts across the business. Partially offset by increased commercial OE deliveries and mix. Turning to Raytheon.

We expect sales to grow mid to high single digits on both an adjusted and organic basis, principally driven by growth across land and air defense systems. Raytheon's adjusted operating profit is expected to be up between $200 million and $300 million versus the prior year, driven by drop through on higher volume, favorable contract mix and improved net productivity. In addition to the segment outlooks, we've included guidance for pension and some of the other below the line items in the appendix of our earnings presentation. All in, 2026 is expected to be another strong year of financial performance for RTX.

With all three segments delivering growth in organic sales and operating profit with continued margin expansion and solid cash conversion. Okay. With that, I'll hand it back over to Chris to wrap things up.

Chris Calio: Okay. Thanks, Neil. Looking at our 2025 results, it's clear we have built great momentum across RTX. Delivering both top and bottom line growth throughout a dynamic year. I want to thank all of our employees across RTX for their hard work, dedication, and commitment to our mission that led to these results. As we move into 2026, our strategic priorities remain consistent. We are committed to making the right investments in the business to support the favorable long term demand we see and drive sustainable growth this year and beyond. With that, let's open it up for questions.

Operator: Thank you. Ladies and gentlemen, as a reminder, in the interest of time, to allow for broader participation, you are asked to limit yourself to one question. To ask a question, you will need to press 11 on your telephone. The first question will come from the line of Peter Arment from Baird. Peter Arment, your line is open.

Peter Arment: Hey. Thanks. Good morning, Chris, Neil, Nathan. Nice results, and congrats on all the momentum in the business, Chris.

Chris Calio: Hey. Thanks so much, Peter.

Peter Arment: Yeah. So many topics here to talk about in '26, but I guess I'd want to start with the GTF fleet management plan. It's year three here, and your financial and technical outlook has remained on track the entire time. Maybe can you give us the latest kind of update in any key items we should expect, going forward with the plan?

Chris Calio: Thanks. Yep. You got it, Peter. And you're right, Peter. Like, I always start this way. You know, our financial technical outlook remains on track and consistent with our prior comments. AOGs did come down in Q4, and they're down over 20% from the highs of 2025. So making good progress there. As I've said before, you know, MRO output remains a key enabler, and that continues to improve. The 1,100 output, as we said upfront, was up 26% last year, and that was with heavier shop visits increasing 40% year over year. So really good improvement in the shops. You know? And importantly, we exited the year on a strong note.

Output was up 39% in the fourth quarter, which included a 16% reduction in turnaround time and a significant increase in repair volume which, as you know, takes some pressure off of the need for new material. So all in, this positions us pretty well to grow MRO output at a similar level in 2026. Which in turn, you know, enables us to continue to reduce AOGs throughout the year. Continues to be our top priority, making sure we get the fleet in a better condition and we're making progress there.

Peter Arment: Appreciate the color. Thanks, Chris.

Operator: Thank you. The next question will come from the line of Ronald Epstein from Bank of America. Ronald Epstein, your line is now open.

Ronald Epstein: Yeah. Hey. Hey. Good morning, guys.

Chris Calio: Good morning.

Ronald Epstein: Morning, man. Kinda like Peter alluded to it. Sort of like everything everywhere all at once so far this year, and we're only a couple weeks in. Maybe broadly, Chris, how are you thinking about you know, we got this executive order about how defense companies deploy capital you know, RTX was highlighted in, you know, a social media post by the administration. How are you broadly thinking about that? And, you know, what's it mean to you as a manager of the business? Like, how do you handle all that?

Chris Calio: Yeah. Thanks for the question, Ron. Let me break it down, maybe, in a couple parts here. Know, number one, you know, we understand that our products are critical to national security. Security of our partners and allies. And I can tell you across the organization, we absolutely feel the responsibility and urgency to deliver more and to deliver it faster. And, you know, candidly, we understand the frustration. And I can tell you our focus and resources are fully aligned with the department's mandate to ramp production and invest in capacity. And as we said upfront, we made some progress in 2025. I think some very good progress.

Output was up over 20% on a number of the critical programs. But there's more to do. We expect to significantly increase output again this year. We're also gonna increase our CapEx to enable that ramp. As it relates to capital allocation, again, we recognize our shareholders rely on our dividends. They've come to expect our dividends. We've been paying them for decades on a quarterly basis. So we remain committed to the dividend. That said, again, we're comfortable we can accommodate both that and the investment needs that come with delivering the current backlog and the potential future volumes on key programs.

I can tell you that we continue to have active and constructive engagement with the department on its future needs and how we can fulfill those. Strengthening the industrial base. So we've gotta do it all.

Ronald Epstein: Got it. Thank you.

Operator: Thank you. The next question will come from the line of Kristine Liwag from Morgan Stanley. Kristine Liwag, your line is now open.

Kristine Liwag: Hey. Good morning, everyone. You know, maybe Chris Neil, you know, RTX is now the largest aerospace defense company in the world by sales, and we're living in a very dynamic period seeing unprecedented demands for your products. But, also, you know, unique actions from the government where they're willing to invest in supporting CapEx. Guess, like, are you thinking about the portfolio composition and potential monetization for shareholders given, you know, the recent move from one of your competitors where they're carving out emission solutions business, receiving a billion dollar investment from the government, with an IPO in the second half of the year. How do you think about your portfolio, and where do you see the opportunities?

Chris Calio: Yeah. Thanks, Kristine. I'll start. Again, I continue to believe we continue to believe and have strong conviction that RTX is constructed to meet the moment. By the moment, I mean, the ramp both in defense and commercial. And to drive long term value for customers and shareholders. I've said this before. Our breadth and scale provide a competitive advantage in our mind in terms of technology, cost structure, customer and market knowledge, and talent.

And as you know, in this industry, you make big bets on large platforms, and that requires a strong balance sheet, an ability to innovate and invest over the long term, and the ability to manufacture at scale for a sustained period of time, all things that are within, you know, the RTX core competency. And, you know, you're also starting to see this convergence of commercial and defense tech. You're seeing a lot of that given the transformation initiatives that the Department of War is pushing forward. I think we're just uniquely positioned to compete in that environment. And I think that provides us a real opportunity as opposed to perhaps some of our competitors.

And as we said before, we're gonna continue to invest and we've got the balance sheet to continue to invest in the capacity and in technology to meet both the current backlog and the programs of the future.

Operator: Thank you. For the color. Thank you. The next question will come from the line of Robert Stallard from Research. Robert Stallard, your line is open.

Robert Stallard: Thanks so much. Good morning.

Chris Calio: Good morning, Rob.

Robert Stallard: Hey, Rob. Probably a question for Neil regarding the 2026 guidance. Your forecast for Pratt and Whitney particularly on the OEM side, looks a bit conservative, particularly given what Airbus is planning on the A320 and A220 going forward here. So I was wondering if you could perhaps delve into the components a bit more, particularly aerospace OEM. Thank you.

Neil Mitchill: Yes. Thanks, Rob. I appreciate the question. Let me give you a little bit of color. I think it's important to kind of see underneath the covers there on the Pratt side. I would start by saying in 2025, we had our large commercial engine deliveries up 6% as Nathan said. As we think about 2026, I think the large commercial engine output in terms of deliveries is likely to be up call it, mid to high single digits. So, you know, it's growing on top of the number that we put up for 2025.

We've talked at length for a number of years about the mix in the OE and balancing the need to support the flying fleet today as well as installs in Airbus. We think we put together a plan that does just that. And so we will see continued growth on the MRO side at Pratt. That will support the GTF aircraft in particular. And the rest will go between Airbus and spares. I think if we look inside of the install side, we still see growth on both the installs and probably flattish on the spare engine deliveries for 2026.

So little mixed headwind on the top line, but in terms of output, strong output throughout the course of this year. You know, if it's better, you'll see that, but, you know, we're really trying to make the right balancing decisions for between MRO and install. And Chris has a couple other Yeah. No. I just add a couple other notes here. You know, again, know, our 2025 total deliveries were up over 50% versus 2019 levels. I think that's important to continue to reinforce. And, you know, as Neil said, we're always gonna try to support our customers. There's a balance that we've gotta bring to bear given what's going on with the fleet.

But the backlog on the program is very strong. And we've got key investments coming online over the next 24 months to continue to support a new powdered metal tower, new forging press, some additional capacity in Asheville where we do turbine airfoils. So we're 100% in support of continuing to drive deliveries on the program over the long term because the backlog is there and the customer demand is there.

Robert Stallard: That's right. Thanks so much.

Neil Mitchill: You're welcome.

Operator: Thank you. Next question will come from the line of Scott Dorsley from Deutsche Bank. Scott Dorsley, your line is now open.

Scott Dorsley: Hey. Good morning. Neil, why does Pratt commercial aftermarket growth slow to high single digits in 2026? Particularly given the strength you saw here in the fourth quarter? And then the commentary on GTF MRO volumes. And then for Chris, I was wondering if you might give us an update on when you expect casting's output to begin to ramp up at Asheville. Thank you.

Neil Mitchill: Yeah. Thanks, Scott. I will start with the Pratt I'll fill in where I left off. We're talking about the OE side. About 70% of Pratt's growth in '26 is going to come from commercial aftermarket. We talked about that being up high single digits. If you kind of look at the pieces here, I'll start with Pratt Canada. We'll see growth in their aftermarket that's in the high single digit range. So, you know, very solid there. You know, growing ahead of, you know, RPKs in the market.

Within the large commercial engine business, you know, on a V2500 shop visit basis, we talked last year about, you know, doing 800 or so shop visits with probably did a little bit more than that. Think for 2026, we're expecting it to be more or less the same, probably within 20 shop visits of, 2025. So steady and above 800. There's a little bit of offset on the PW4000s and 2000s as those older engines start to retire. Those are expensive overhauls, and know, we're seeing a little bit of headwind there, probably about $100 million for 2026. All things that we saw coming and we planned aligned with, our customers, fleet plan.

So inside of the aftermarket, those are a couple of moving pieces on the legacy side of the business. And, of course, the GTF aftermarket is continuing to grow, as you point out. Chris talked about stepping up again, similar to the growth level that we saw in 2025. The shop visit content varies, though they're getting heavier, and so we will see that in the top line. Maybe just a comment on the profitability there. You know, we've seen you know, solid margins, you know, in progression on the GTF aftermarket. So, you know, I'd call it low double digit kinda margins. See one to two points maybe of expansion here in '26.

So that GTF aftermarket revenue stream is moving in the right direction as we get further away from entry into service and start to put in new contracts and gain durability improvements that we've talked about and the pricing in the contract structures.

Chris Calio: Yeah. And, Scott, maybe on the second part of your question, the casting piece. So the casting foundry investment has been approved. We moved out on that investment. We're in that sort of build up phase and working to make sure the yields where we need them so that when we're going into production, we're getting the yields, you know, that we need. And, you know, I think that impact, we'll start to feel that more in the 2028-2029 time frame.

Scott Dorsley: Thank you very much.

Neil Mitchill: You're welcome.

Operator: The next question will come from the line of Myles Walton from Wolfe Research. Myles Walton, your line is now open.

Myles Walton: Thanks. Good morning. Good morning. This might be might be for Neil. So, Neil, could you pull back the covers on the Raytheon segment in terms of the growth rates of maybe some of the larger SDUs I heard the comment about the 20% growth in some of the effectors, but maybe just a little bit of color there. And then, Chris, following the comments by the administration, have you engaged to change any behavior? And if so, what is it that they're requesting? Thanks.

Neil Mitchill: Great. Thanks, Myles. I'll start here. As I pointed out in our opening comments here, the majority of that sales increase is coming from the Land and Air Defense Systems. I'd say over half of it, frankly, obviously, that's supported by material growth. We've seen 11 consecutive quarters of growth. We're expecting mid- to high single digit growth in mid material again here in '26. That's the heart of the Raytheon business obviously, on the munitions and the sensors. So that's where the bulk of it's coming from. Supporting programs that you all know about, Patriot, GEMT, LTAMDS, etcetera. I think, importantly, for Raytheon, about 85% of our 2026 sales are sitting in our backlog today.

So I'm feeling very confident in the outlook that we put out today for them. And as I think about, you know, the rest of the year, what we should you know, be able to fill that remaining 15% nicely. And, you know, it's all about, you know, coordinating the supply chain and getting things synchronized with we're seeing continued improvement in over the last twelve to eighteen months.

Chris Calio: Yeah. So, Myles, I would say that we're obviously fully supportive of the transformation initiatives that the department is pushing forward. And we are working in partnership with them on ways to move output faster and to accelerate, whether that be through, you know, different requirements or testing protocols or anything within our shop that can make things, you know, more efficient in partnership with the customer. We're also talking to them about how do we get the most out of our existing capacity. What suppliers do we need help with, whether that be from, you know, a throughput perspective or an investment perspective?

And then, you know, again, where do we need to invest in capacity as we as we see the, you know, demand continuing to ramp. So it's a partnership on a number of fronts. It's been very constructive and collaborative. And we're gonna I hope to start to see the benefit of that here in '26 as we gotta continue to ramp on some critical programs.

Myles Walton: Alright. Thank you.

Chris Calio: You're welcome.

Operator: The next question will come from the line of Seth Seifman from JPMorgan. Seth Seifman, your line is now open.

Seth Seifman: Hey. Thanks very much, and good morning, everyone. So yeah. Good morning. Well, wanted to ask another one about defense and maybe a slightly different topic. But in terms of missile defense and the Golden Dome initiative, you know, we understand that the administration's looking for contractors to step out a little bit more there in terms of, you know, fronting our R&D to, you know, to be involved in that effort. Particularly with space based interceptors. And wondering how you're thinking about that given both Raytheon's traditional capabilities in missile defense, but also know, we're we're pretty full plate in terms of ramping up some of the existing programs.

Chris Calio: Yeah. Thanks, Seth. Overall, we're looking at Golden Dome as a real opportunity for us. You just step back and look at what we continue to believe is the multilayered architecture. We believe we've got solutions at each of those layers. And you know those systems very well, whether it be Patriot, whether it be GEMT, Spy six, Coyote. And the like. So between effectors and sensors, have a have a full suite of products that we think can meet the needs of Golden Dome. Think there are also some opportunities, you know, in space. Can't talk about them too much, but you know, again, I think we've got some unique capabilities there.

That we're discussing, you know, with the department. As with all things, we're always looking at the opportunities for us to increase capacity for some of this demand. As you know, there are long lead time items in some of these areas. There are suppliers that we need to continue to, sort of, you know, rejuvenate and make sure that they can meet the demands that we need. So all of those things are going on, identifying a long lead material we might need, everything that'll help us accelerate production. So when those awards come down, we're ready.

Neil Mitchill: Seth, I would just add that with respect to the investment and our willingness to invest, we, of course, would invest in good business. And so we're prepared to, you know, make the right choices there. Our R&D for 2026 is gonna approach $3 billion with a healthy portion of that sitting in Raytheon, obviously. So, you know, we're prepared to make those investments when it makes sense to do so.

Seth Seifman: Great. Very much.

Operator: The next question will come from the line of John Gordon from Citi. John Gordon, your line is now open.

John Gordon: Hey, guys. Thanks for taking my question. All the businesses are experiencing tailwinds and it's been quite a good run for the last few quarters. I know it can be hard to pick your favorite child, but I was hoping you could just help us sensitize the outlook a bit. In the context of the segments. Which one do you think has the most scope for exceeding guidance based on the demand signals that you're seeing recently?

Neil Mitchill: I'm gonna give this one to Chris. Actually, I'll answer it, John. It's obviously early in the year, and we love all of our children here at RTX. So I think all three businesses have tailwinds behind them, frankly. I think, you know, it's early in the year. We set our guide based on where our backlog sits today. Got a number of initiatives that are obviously in the pipeline here in terms of cost reduction. So when I think about Collins in particular, they kicked off a pretty, significant transformation effort there to drive cost out of both production side as well as the back office. So I see tailwinds supporting the Collins margin trajectory.

If I go to Raytheon, we've talked a lot about it already this morning. The defense business, the demand, the product improvements that we're seeing in Raytheon. We've seen about $160 million year over year improvement for each of the last two years. Now that may tail off a little bit. We'll see probably another 25 or so million dollars year over year improvement. But we're in the we're in the zone where we're seeing positive productivity coming out of the Raytheon business, and that's because of the significant volume the synchronization with the supply chain, and the you know, execution mode that we're in there. So that's you know, that's how I kinda think about the Raytheon business.

And over at Pratt, obviously, there's there's a ways to go there, but, know, we know that the GTF program is growing significantly. We're performing well. We're growing out of the older contracts. We're getting pricing, and the legacy businesses continue to be intact there, and we see that, you know, you know, staying steady for the next several years. So great businesses. Hard to pick one. But, clearly, you know, all of them have margin potential. Over the next several years, and that's what we're focused on. And I think if we execute and deliver the backlog we have today, that we'll naturally see that margin expansion over the next couple of years. Importantly, that will convert to cash.

And you're seeing that in the '26 outlook, saw it as we exited '25, exceeding where we had thought we would exit the year on strong collections. So really good position to be in. And, again, it affords us the opportunity to take on that extra investment to build for the future capacity that's not even yet sitting in our backlog.

Chris Calio: I think you said it really well, Neil. And the only thing that I would emphasize, John, is that each of the businesses is fully focused on getting to its full potential. I'll tell you that Neil outlined some time frames for each of those. Some are closer, as you might imagine. But all you know, dedicated to driving operational improvement through core, structural cost reduction and a and a and a, you know, maniacal focus on execution given the backlog.

John Gordon: Thanks a lot, guys.

Operator: The next question will come from the line of Gautam Khanna from TD Cowen. Gautam Khanna, your line is now open.

Gautam Khanna: Thanks. Good morning. I had two quick ones. One, a follow-up to the prior question just on Raytheon Defense. Productivity. And you also have you know, higher volumes and better mix over time with the foreign backlog conversion and the sales. So what's your updated thoughts on eventual margin entitlement for that segment? And then wanted to just ask on GTF, could you remind us again in the guidance for 26% what the cash customer compensation payments are, and if there's gonna be any tail to that in 2027, and if you could just give us the final number for 2025. Thanks.

Neil Mitchill: Thanks, Gautam. Let me start with the last question. So in our outlook for 2026, we have $700 million place held as the cash outflow. We exited 2025 with $1 billion. So cumulatively, we're at $2.8 billion when you get through the end of 2026. We had talked about that being about a $3 billion cash headwind to us over the period of time we execute the FMP. So that leaves a couple $100 million. You know, I as I sit here today, we've been very prudent in our management of the compensation. We've got agreements with customers, and very, very disciplined there. So that's how I see it today, in good shape for the 2026.

As it relates to, the Raytheon margin potential, you know, we're exiting 2025 strong. Our outlook for 2026 puts us, you know, pretty close to the 12% range that we talked about. And as you pointed out, the international mix is increasing. Today, our backlog has about 47% international mix in it. And we expect the sales mix to grow. I will say, you know, as we talk about increasing our capacity for munitions and sensors, that will have a different sort of mix impact as well, but you know, there's no reason to believe that the Raytheon margins can't be north of 12%, and we're certainly well on our way in this outlook that we put out today.

Chris Calio: The other piece of tailwind that I would add there to Neil's comments is just look at the backlog composition. Neil talked about the international component. If you just if you think about the products that are continuing to grow in that backlog, those are those are products in our core competency mature products. That are gonna continue to help drive productivity improve margins. And we think about where of this future demand is as part of this defense transformation, whether it be, you know, defectors, Golden Dome, again, these are gonna be the products in integrated air and missile defense that are core to Raytheon.

Gautam Khanna: Thank you.

Operator: The next question will come from the line of Sheila Kahyaoglu from Jefferies. Sheila Kahyaoglu, your line is now open.

Sheila Kahyaoglu: Good morning, guys, and thank you. Good morning. I wanted to ask about Collins because I feel like it's a bit forgotten. Given everything else going on. You know, Collins embed 70 basis points of margin expansion. 40 basis points of that is the divestiture benefit. So only 30 bps organically. But it seems like there's a lot of good things going on in the segment, whether it's double digit OE narrowbody growth, which I presume is in line with segment margins, 10% aftermarket, productivity plan in place. Maybe if you guys could bridge us and obviously a full year of tariffs is maybe some of that offset.

Neil Mitchill: Thanks, Sheila, for the question. So let me start with '25. You're right. We had about 30 basis points of margin expansion there. Would tell you that from a tariff perspective, that was a 90 basis point drag. So if you were to add that back you know, we saw Collins, I'll call it, organic margins at 17.1%, which was really, really nice to see. Obviously, we're still living with the tariff situation. We do expect to see a bit of a tailwind as we move from 2025 to 2026 on tariffs, probably $75 million lower. And keep in mind, we're picking up an extra quarter of tariff expense in 2026.

So the first quarter will be a little bit depressed on the Collins margins. As they pick up an extra quarter. But nonetheless, I'm still seeing real really good margin expansion there. As you as you go to 2026, inclusive of tariffs, we're gonna see another 80 basis points of margin expansion at the midpoint. As I said a couple minutes ago, Collins has a ton of effort going into digitizing the back office, streamlining their footprint, and we're seeing the benefits of that cost reduction activity already come through in these margins. And I think that there are several years of benefits ahead of us as a result of the work they're doing.

So we are seeing that improved drop through. Obviously, '26, we've got OE growing about 10%. Those margins are probably consistent with what you'd expect for sort of a defense kind of margin, you know, low double digits. And some really robust aftermarket. About 45% of their growth coming, from the aftermarket business with the kind of drop through that you'd expect in the business at Collins. So well positioned, growing installed base, RPKs are strong, and we're getting the pricing benefit too that we've been you know, pushing for in light of, these headwinds we've been dealing with over the last couple of years.

Neil Mitchill: You're welcome.

Operator: The next question will come from the line of Douglas Harned from Bernstein. Douglas Harned, your line is now open.

Douglas Harned: Good morning. Thank you.

Chris Calio: Hey, Doug.

Douglas Harned: When you look at the GTF right now, when you talked about how AOGs are coming down off at peak, the other thing going on at Pratt is as you talked about, you've got increasing work scope on V2500s, which is very good for margin. You've had you're getting life extensions. But how should we think about the longer term margin at Pratt? Because on one hand, you have that benefit, but as AOGs start coming back, you may have two other effects, which are you may see some PW1100 powered airplanes lead to parking of some V2500s. And you're gonna have some decline in spare engine ratio. So how should we think about combining all of those things?

For the long term Pratt margin?

Chris Calio: Yeah. I'll start, Doug, and Neil, feel free to chime in. You're right on a number of those tailwind components, Doug. The V2500 is gonna continue to be strong. Shop visits are gonna stay in that 800 range in the in the content gonna continue to be strong. We see low retirements there. A lot of continued demand, you know, for that for that platform. When you think about the margin trajectory at Pratt, obviously, there's gonna be some headwind associated with continued OE deliveries. You know that, you know, what that, you know, margin profile sort of looks like there. We're also continuing to grow, you know, the GTF in the, you know, installed base.

So a big part of this is gonna be continuing to drive GTF aftermarket margins. And so how do we go and do that? Well, number one, you know we've put in place a number of durability improvements. A number started going in, you know, last year, and you can start to see that benefit throughout the fleet. You've got the GTF Advantage that's gonna be coming into play. We got the EU engine certification in Q4. Expect the aircraft certification relatively soon. We started producing that engine and that production cut over. Expect EIS on that, you know, later in the year.

And then the third piece, and it's related to the GTF advantage, that we're also anticipating the incorporation of our hot section plus retrofit package. Into MRO later this year. That's 90 to 95% of the durability benefits of the GTFA, and that's gonna be going into the installed base today as part of that retrofit package. It's gonna be the GTF aftermarket that's gonna need to continue to grow and profitability. That'll take the margins, you know, up at Pratt.

Neil Mitchill: And maybe just to add a couple points, Doug. I think with respect to the size of the fleet, today's GTF fleet is about the same size. In fact, I think it's a little bit larger than the installed flying V2500 fleet. So sort of to compensate for what will ultimately be retirements as you look out a number of years, that GTF fleet is just growing at really significant rate. And so that will overcome sort of lost revenues and profits that will, you know, see on the V2500 as it retires. As it relates to the spare engines, I mean, you talk about the ratio.

I think, you know, another way to think about that might be there's just gonna be continued demand for spare engines. So, again, as that fleet gets bigger, while the ratio might come down, we'll still be selling a lot of spare engines and I expect that to be a continued steady stream of revenue and profits. And what we like about that, of course, is it helps the fleet. Which helps the aftermarket contracts, but it also generates its own aftermarket because those engines will ultimately come in for overhauls as well. So that's how I would frame, you know, a couple of the data point behind what Chris said.

Douglas Harned: Very good. Thank you.

Neil Mitchill: You're welcome.

Operator: Next question will come from the line of Scott Mikus from Melius Research. Scott Mikus, your line is now open.

Scott Mikus: Morning, Chris and Neil. Very nice results and solid guide. Wanted to touch on Ron's and Miles' question. So this administration seems more willing to allow M&A deals to go through. They also want defense companies to invest ahead of contract awards and expand capacity. I've always just thought that the primes get somewhat unfairly blamed because a lot of the bottlenecks, the higher production, actually lie deeper in the supply chain. So does it make sense from a capital deployment perspective to pursue vertical integration at Raytheon, whether it's organic or inorganic?

Chris Calio: Yeah. Thanks for the question, Scott. And, again, when we talk to the department I will tell you that, you know, we are our supply chain. They pay us to manage, you know, our supply and deliver whether it be an all up round or a full system or whatnot. So yeah, and we've been working in partnership with them on how do we continue to strengthen the industrial base because to take production to the levels that the department needs, you're just gonna need to continue to invest in that industrial base and bring new suppliers into the fold. And that's where I think I'd I'd sort of, you know, direct your second part of your question.

I don't necessarily think it's about vertical integration. I think about strengthening what we have today and bringing new source, you know, into the industrial base. You've seen there's been a number of activities and investments on solid rocket motors for instance, because that has continued to be a bottleneck for the industry, you know, writ large. We continue to look for other casting suppliers because that affects not only what's going on in commercial, but defense as well. So I think it's really infusing more capital into the supply base, strengthening that supply base, and then finding new suppliers in some of the constrained value streams.

Scott Mikus: Alright. Thank you.

Operator: Thank you. And the last question will come from the line of Matt Akers from BNP Paribas. Matt Akers, your line is now open.

Matt Akers: Yeah. Hey. Good morning. Thanks for the question. Most of mine have been answered, but I just wanted to ask about debt maturities. A fair amount coming due this year. Just curious what your plans are to address those.

Neil Mitchill: Yes. Thanks, Matt. Appreciate the question. We've talked for a couple of years now about our debt repayment priorities. We made a payment of $1.1 billion in the fourth quarter. And we've got about $3.4 billion of payments that are coming due this year that we anticipate to make and bring that debt down further. So, you know, that's what I would say today about our plans for, you know, paying down the debt that's on the balance sheet and making great progress. As Chris said, balance sheet's really strong and positions us well for continuing to make the investments that we've talked at length about today.

Matt Akers: Great. Thank you.

Operator: Thank you. And with that, I will now send the callback to Nathan Ware.

Nathan Ware: Alright. Thank you very much. That concludes today's call. As always, the Investor Relations team will be available for follow-up questions. Thank you all for joining us today, and have a good day.

Operator: Ladies and gentlemen, this now concludes today's conference. You may now disconnect.