RTX Corporation (RTX) Cash Flow Statement

The wide quarterly swings in OCF/NI, from 0.20 to 24.62, underscore the impact of one-time GTF charges and working capital timing on earnings quality. Q2 2026's ratio of 1.94 suggests that reported net income is now more closely aligned with cash generation, but the historical volatility warrants caution in extrapolating current conversion rates. Investors should monitor whether the elevated conversion persists or reverts to the sub-1.0 levels seen in several quarters.

The FCF trajectory shows a clear recovery from the negative prints in early 2024, driven by strong operating cash flow and disciplined capex. Q2 2026's FCF margin of 14.5% exceeds the peer average of ~11%, suggesting RTX is now converting revenue into cash more efficiently. However, the quarterly volatility—FCF ranged from -$72M to $4.0B over the past two years—indicates that the trajectory is not linear and may be subject to working capital swings.

RTX's capex intensity is low, averaging around 3% of revenue, which supports strong FCF generation. The modest capex suggests that the company's growth is more dependent on aftermarket services and defense programs than on heavy asset expansion. However, the GTF remediation may require incremental investment in inspection and repair capabilities, which could push capex higher in the near term.

The large swings in working capital, particularly in Q2 2025 (-$2.3B) and Q2 2026 (+$2.0B), highlight the lumpy nature of defense contract payments and commercial aftermarket collections. These swings can obscure underlying cash generation, as seen in Q2 2025 when OCF was only $458M despite net income of $1.7B. Investors should focus on the multi-quarter average to assess true cash conversion, as single-quarter working capital effects are not indicative of long-term trends.

RTX has consistently increased its dividend, with quarterly payments growing 28% over the period, while share repurchases have been minimal or zero in the last three quarters. This suggests management is prioritizing returning cash to shareholders via dividends, possibly conserving cash for GTF remediation and debt reduction. The lack of buybacks may also reflect a desire to maintain financial flexibility amid ongoing operational challenges.

The cumulative OCF/NI ratio of 1.52 over the ten-quarter period suggests that RTX's earnings are backed by robust cash generation, even after accounting for the GTF-related charges that depressed net income in 2024. This divergence may indicate that the reported earnings understate the company's true cash-generating ability, or that working capital timing has favorably boosted cash flows. However, the persistence of this gap should be monitored, as it could narrow if working capital swings reverse.