Raytheon Technologies Corporation ((RTX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Raytheon Technologies Corporation (RTX) reported a strong performance in its latest earnings call, reflecting significant growth in sales and profitability for 2024. The company showcased robust demand in its commercial aerospace and defense segments, backed by a solid backlog. Despite facing supply chain challenges and headwinds from divestitures and pension income, RTX remains optimistic about continued growth in 2025.
Strong Financial Performance in 2024
RTX demonstrated impressive financial results with $80.8 billion in adjusted sales, marking an 11% organic increase. The company also saw a 13% rise in adjusted EPS and generated $4.5 billion in free cash flow. The backlog surged to $218 billion, up 11% year-over-year, highlighting the company’s growing business momentum.
Commercial Aerospace Growth
The commercial aerospace segment experienced notable growth, with commercial Original Equipment (OE) expanding by 14% and aftermarket sales increasing by 13%. Passenger air travel continues to be strong, with global Revenue Passenger Kilometers (RPKs) expected to rise by 8% in 2025, indicating a promising outlook for the sector.
Defense Segment Success
RTX’s defense segment reported a 9% organic sales growth, achieving a record $93 billion defense backlog. Notably, 44% of this backlog is international, reflecting an 8-point increase compared to the previous year, underscoring the company’s global reach and influence in the defense market.
Innovative R&D Efforts
The company invested over $7.5 billion in research and development, advancing technologies like the upgraded Coyote effector and the GTF Advantage at Pratt. These innovations have shown promising results in recent tests, positioning RTX for future technological leadership.
Supply Chain Challenges
RTX continues to navigate supply chain bottlenecks, particularly in structural castings and isothermal forgings, which affect production efficiency. The company is working to address these challenges to maintain its operational effectiveness.
Headwinds from Divestitures and Pension Income
RTX anticipates a $0.07 EPS headwind from divestitures and a $0.15 headwind from lower FAS/CAS and non-service pension income in 2025, presenting financial hurdles the company must manage in the upcoming year.
Pratt & Whitney GTF Engine Challenges
Pratt & Whitney faces challenges in ramping up Maintenance, Repair and Overhaul (MRO) output for the GTF engine, impacting Aircraft on Ground (AOG) levels. This necessitates continued focus on improving supply chain efficiencies.
Positive 2025 Outlook
Looking ahead, RTX expects adjusted sales in 2025 to be between $83 billion and $84 billion, reflecting a 4% to 6% organic growth. Segment profit growth is anticipated between 10% and 13%, with continued margin expansion across all business segments. The adjusted EPS is projected to rise by 5% to 7%, and free cash flow is expected to be between $7 billion and $7.5 billion, which will support shareholder returns. Key strategic priorities include executing commitments, innovating for future growth, and leveraging scale through substantial R&D investments and capacity expansion.
In summary, the earnings call from Raytheon Technologies Corporation painted a picture of strong performance in 2024 with optimism for 2025. While there are challenges, particularly in the supply chain and financial headwinds from divestitures and pension income, the company remains focused on strategic growth initiatives. The key takeaways highlight RTX’s robust financial health, ongoing innovation, and a positive outlook for sustained growth in the coming years.
