RTX Reports 2023 Results and Announces 2024 Outlook

RTX (NYSE: RTX) reported fourth quarter 2023 results and announces 2024 outlook.

Fourth quarter 2023

• Reported sales of $19.9 billion, up 10 percent versus prior year
• Adjusted sales* of $19.8 billion, up 10 percent versus prior year
• GAAP EPS from continuing operations of $1.05 included $0.29 of acquisition accounting adjustments and a $0.05 benefit from restructuring and net significant and/or non-recurring items
• Adjusted EPS* of $1.29, up 2 percent versus prior year
• Operating cash flow from continuing operations of $4.7 billion; Free cash flow* of $3.9 billion
• Company backlog of $196 billion; including $118 billion of commercial and $78 billion of defense
• Repurchased $10.3 billion of RTX shares

Full year 2023

• Reported sales of $68.9 billion, up 3 percent versus prior year, reflecting the impact of the previously disclosed Pratt powder metal matter
• Adjusted sales* of $74.3 billion, up 11 percent versus prior year
• GAAP EPS of $2.23, down 36 percent versus the prior year, reflecting the impact of the previously disclosed Pratt powder metal matter
• Adjusted EPS* of $5.06, up 6 percent versus the prior year
• Operating cash flow from continuing operations of $7.9 billion; Free cash flow* of $5.5 billion
• Achieved approximately $295 million of incremental RTX gross synergies
• Repurchased $12.9 billion of RTX shares

Outlook for full year 2024

• Sales of $78.0 – $79.0 billion
• Adjusted EPS* of $5.25 – $5.40
• Free cash flow* of approximately $5.7 billion

2025 RTX financial commitments

• Updates 2020 to 2025 adjusted annual sales* growth to 5.5 to 6.0 percent¹, down from 6.0 to 7.0 percent
• Updates 2020 to 2025 adjusted segment margin* expansion to 500 to 550 basis points¹, down from 550 to 650 basis points
• Reaffirms 2025 free cash flow* commitment of $7.5 billion
• Reaffirms 2025 capital return commitment of $36 to $37 billion through 2025

“RTX reported solid full-year results, delivering 11 percent organic sales* growth and $5.5 billion in free cash flow* for the year, exceeding our expectations” said RTX Chairman and CEO Greg Hayes. “Across our portfolio, we supported the continued recovery in commercial aerospace and provided critical platforms and advanced technologies to our customers, achieving $95 billion in new awards and ending the year with a record backlog of $196 billion. I am extremely proud of what RTX has been able to accomplish, and I’m even more excited to see the innovations that RTX will deliver in the future.”

“RTX is beginning 2024 with strong momentum and we are projecting another year of strong sales growth and continued segment margin expansion,” said RTX President and COO Chris Calio. “The financial and operational outlook of our GTF fleet management plans remain consistent from October and continues to be a top priority as we focus on driving performance across all three businesses to support our customers and deliver shareowner value. With the execution of our $10 billion accelerated share repurchase program, we’ve delivered over $29 billion to shareowners since the merger, achieving significant progress toward our capital return commitment of between $36 – $37 billion through 2025.”

Fourth quarter 2023
RTX reported fourth quarter sales of $19.9 billion, up 10 percent over the prior year, which included a benefit of $0.1 billion related to a customer settlement. On an adjusted basis, sales* were $19.8 billion, up 10 percent over the prior year. GAAP EPS from continuing operations of $1.05 was up 9 percent versus the prior year, and included $0.29 of acquisition accounting adjustments, a $0.06 benefit related to a customer settlement and $0.01 of restructuring and other net significant and/or non-recurring charges. Adjusted EPS* of $1.29 was up 2 percent versus the prior year.

The company recorded net income from continuing operations attributable to common shareowners in the fourth quarter of $1.4 billion which included $394 million of acquisition accounting adjustments, a benefit of $87 million related to a customer settlement and $20 million of restructuring and other net significant and/or non-recurring charges. Adjusted net income* was $1.8 billion, down 6 percent versus prior year as adjusted segment operating profit* growth was more than offset by higher interest expense and tax expense, and lower non-operating pension income. Operating cash flow from continuing operations in the fourth quarter was $4.7 billion. Capital expenditures were $805 million, resulting in free cash flow* of $3.9 billion.

Summary Financial Results – Continuing Operations Attributable to Common Shareowners

Backlog and Bookings
Backlog at the end of the fourth quarter was $196 billion, of which $118 billion was from commercial aerospace and $78 billion was from defense.

Notable defense bookings during the quarter included:

• $2.8 billion for GEM-T production at Raytheon
• $1.3 billion of classified bookings at Raytheon
• $838 million for F135 sustainment at Pratt & Whitney
• $443 million for F119 sustainment at Pratt & Whitney
• $408 million for HACM development at Raytheon
• $355 million for F100 sustainment at Pratt & Whitney
• $343 million for StormBreaker production at Raytheon
• $321 million for Silent Knight production at Raytheon

Segment Results
The company’s reportable segments are Collins Aerospace, Pratt & Whitney, and Raytheon.

Collins Aerospace

Collins Aerospace had fourth quarter 2023 reported sales of $7,120 million, up 14 percent versus the prior year. Reported sales benefited from a customer settlement. The remaining increase in sales was driven by a 23 percent increase in commercial aftermarket, a 17 percent increase in commercial OE, and a 1 percent increase in military. The increase in commercial sales was driven primarily by strong demand across commercial aerospace end markets, which resulted in higher flight hours and higher OE production rates. The increase in military sales was driven primarily by the timing of deliveries. On an adjusted basis, sales* were up 12 percent versus the prior year.

Collins Aerospace recorded operating profit of $1,126 million, up 34 percent versus the prior year. The increase in operating profit was primarily driven by drop through on higher commercial aftermarket volume and favorable mix, partially offset by lower commercial OE as drop through on volume was more than offset by higher production costs. Higher R&D expenses were offset by lower SG&A. Reported operating profit included a $112 million benefit from a customer settlement. On an adjusted basis, operating profit* of $1,035 million was up 22 percent versus the prior year.

Pratt & Whitney

Pratt & Whitney had fourth quarter 2023 reported sales of $6,439 million, up 14 percent versus the prior year. The increase in sales was driven by a 20 percent increase in commercial OE, an 18 percent increase in commercial aftermarket, and a 4 percent increase in military sales. The increase in commercial sales was primarily due to higher aftermarket volume, higher OE volume and favorable mix. The increase in military sales was driven by higher sustainment volume partially offset by lower material inputs on production programs.

Pratt & Whitney recorded operating profit of $382 million, up 25 percent versus the prior year. The increase in  operating profit was primarily driven by drop through on higher commercial aftermarket volume and favorable commercial OE mix. This was partially offset by higher commercial OE volume, higher production costs, an unfavorable military contract adjustment, and the absence of a benefit from a prior year customer contract adjustment. Higher R&D expenses were offset by lower SG&A. On an adjusted basis, operating profit* of $405 million was up 26 percent versus the prior year.

Raytheon

Raytheon had fourth quarter 2023 reported sales of $6,886 million, up 3 percent versus prior year. The increase in sales was primarily driven by higher volume on advanced technology and air power programs.

Raytheon recorded operating profit of $604 million, up 14 percent versus the prior year. The increase in operating profit was driven primarily by higher volume and lower operating expenses, partially offset by unfavorable net program efficiencies. The prior year operating profit also included a charge of $42 million related to a divestiture. On an adjusted basis, operating profit* of $618 million was up 8 percent versus the prior year.