RTX Corp Q4 FY2024 earnings call

In 2024, RTX delivered $80.8 billion in adjusted sales, up 11% organically, with adjusted EPS up 13% to $5.73 and free cash flow $4.5 billion. Backlog was $218 billion. For 2025, adjusted sales are expected to be between $83 billion and $84 billion (4-6% organic growth), adjusted EPS $6.00-$6.15, and free cash flow $7-$7.5 billion. Key priorities include executing commitments (e.g., GTF fleet management, core operating system improvements), innovating for future growth (over $7.5B R&D spend, AI/ML applications), and leveraging breadth and scale (facility utilization, capacity expansion).

Collins: Fourth quarter sales were $7.5 billion, up 8% on adjusted and organic bases, driven by defense and commercial aftermarket strength. Full year adjusted sales were $28.3 billion with $4.5 billion in adjusted operating profit, resulting in 100 basis points of year-over-year margin expansion. Pratt & Whitney: Fourth quarter sales were $7.6 billion, up 18% on adjusted and organic bases. Full year adjusted sales were $28.1 billion with $2.3 billion in adjusted operating profit, 100 basis points of year-over-year margin expansion. Raytheon: Fourth quarter sales were $7.2 billion, up 4% adjusted and 10% organic. Full year adjusted sales were $26.8 billion with $2.7 billion in adjusted operating profit, 100 basis points of year-over-year margin expansion.

• 2025 adjusted sales expected to be between $83 billion and $84 billion, representing 4% to 6% organic growth. • Adjusted EPS outlook ranges from $6.00 to $6.15 per share. • Free cash flow expected to be between $7 billion and $7.5 billion for the year.

• Supply chain constraints such as structural castings, isothermal forging, and microelectronics. • Macroeconomic uncertainties impacting demand. • Powder metal related cash flow impacts.

Q: Good morning. Maybe, Chris, on powder metal and the GTF, there wasn't a lot of discussion. So I'm taking that as good news that you're still on track, still on plan. And maybe just to put a point to it, it looks like your cash expectation for spend in '25 is the same. Are we still on track for the $800 million to $1 billion step-down in 2026?

A: Yeah. Thanks, Myles. Let me go through the main components here. As I said upfront, the outlook remains consistent and the underlying technical and inspection assumptions all remain intact. So good news. AOGs have been stable. And now look, I said this before, MRO output is the key enabler. We saw some very good progress last year. PW1100 output was up 30% last year. So very good progress in terms of material flow and in-shop performance. But we need to continue to ramp output to bend the curve here as we work our way through 2025. And we talked about a plan here of above 30% growth in 2025, and that's going to be critical. Now, the supply chain is going to be instrumental in helping us get there. And we've continued to see improvement there. Structural castings were up 12% year-over-year. Isothermal forgings output was up significantly. And of course, that's important as we incorporate full life powder metal parts into MRO. As you know, it's already going into new engine deliveries. So again, there are a lot of puts and takes, as you might imagine, as we're going through this process. And our 100% focus, again, is on bending the AOG curve, to make sure that we get the assets back into our customers' hands as quickly as possible.

Q: Good morning, Chris, Neil, Nathan, nice results.

A: Good morning.

Q: Hey, Chris. Chris. On the -- so new administration, new spending priorities, how are you thinking with how Raytheon is aligned in terms of any replenishing stockpiles and how you see kind of that playing out for you? You got a huge international mix. I think you mentioned 44%, and just how you see kind of the uplift that's coming from the international side along with opportunities you're seeing on the replenishment side with the new administration.

A: Yeah. Thanks, Peter. Good question. Well, and you sort of led with it up front, right, the demand for our products continues to be really strong, right? Raytheon, a $63 billion backlog. 1.48 book-to-bill. As I said in my comments upfront, you've got 30-plus systems in operation in conflicts today defending the US and our allies very, very effectively. In the US, it's about replenishment, as you referenced. As you move across the world, Europe, this is about integrated air and missile defense, continuing to replenish effectors, GEM-T, AMRAM and the like. And as you move to Asia-Pac, it's more on naval munitions, the standard family, SM-3, SM-6, continuing to ramp up there. So overall, again, we continue to see international demand to be very strong. The NATO countries are continuing either to commit or actually spend above the 2% target, you think of what you're seeing in Poland, it's coming up on almost 5%. Again, international demand continues to be strong. We've seen that in our backlog, and that will be a tailwind for us.