RTX Corporation - Unaudited Historical Financial Information
Effective July 1, 2023, the RTX Corporation (“RTX” or “the Company”) streamlined the structure of its core businesses into three principal business segments: Collins Aerospace, Pratt & Whitney, and Raytheon. RTX did not operate under this segment structure for segment reporting purposes or use this measure of segment operating performance in the three months ended June 30, 2023 or prior periods and will begin to report comparative results under this basis with the filing of its Quarterly Report on Form 10-Q for the quarter and nine months ending September 30, 2023. Until RTX’s interim financial statements as of and for the quarter and nine months ending September 30, 2023 are issued, amounts on the updated basis are not in accordance with accounting principles generally accepted in the United States (“GAAP”) and, as a result, are considered non-GAAP measures.
Use and Definitions of Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).
We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Adjusted net sales, organic sales, adjusted operating profit (loss) and margin, adjusted segment operating profit (loss) and margin, adjusted net income, adjusted earnings per share (“EPS”), and free cash flow are non-GAAP financial measures. Adjusted net sales represents consolidated net sales (a GAAP measure), excluding significant nonoperational items and/or significant operational items that may occur at irregular intervals (hereinafter referred to as “net significant and/or non-recurring items”). Organic sales represents the change in consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and net significant and/or non-recurring items. Adjusted operating profit (loss) represents operating profit (loss) (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and net significant and/or non-recurring items. Adjusted operating profit margin represents adjusted operating profit (loss) as a percentage of adjusted net sales. Adjusted segment operating profit (loss) represents the combined operating profit (loss) (a GAAP measure) of our business segments, excluding restructuring costs, and net significant and/or non-recurring items. Adjusted segment operating profit margin represents adjusted segment operating profit (loss) as a percentage of adjusted segment sales (the combined adjusted sales of our business segments). Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment.
Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and net significant and/or non-recurring items. Adjusted
EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and net significant and/or non-recurring items. For the business segments, when applicable, adjustments of net sales similarly reflect continuing operations (a GAAP measure) excluding net significant and/or non-recurring items. Organic sales for the business segments similarly excludes the impact of foreign currency, acquisitions and divestitures, and net significant and/or non-recurring items, and adjustments of operating profit (loss) and operating profit margins (also referred to as return on sales (“ROS”)) similarly reflect continuing operations, excluding restructuring, acquisition accounting adjustments and net significant and/or non-recurring items.
Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing RTX’s ability to fund its activities, including the financing of acquisitions, debt service, repurchases of RTX’s common stock and distribution of earnings to shareowners.
A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables below. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.
When we provide our expectation for adjusted net sales, organic sales, adjusted operating profit (loss) and margin, adjusted segment operating profit margin, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures, as described above, generally is not available without unreasonable effort due to potentially high variability, complexity, and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.
RTX Corporation
Reconciliation of Recasted (Non-GAAP) and Adjusted as Recasted (Non-GAAP) Results
Adjusted Sales as Recasted, Adjusted Operating Profit as Recasted & Operating Profit Margin as Recasted
| | | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended | | Quarter Ended |
| (Unaudited) | | (Unaudited) |
| (dollars in millions - Income (Expense)) | Mar 31, 2023 | Jun 30, 2023 | | Mar 31, 2022 | Jun 30, 2022 | Sept 30, 2022 | Dec 31, 2022 |
| Collins Aerospace | | | | | | | |
| Net sales | $ | 5,581 | | $ | 5,850 | | | $ | 4,824 | | $ | 5,011 | | $ | 5,100 | | $ | 5,662 | |
Segment Realignment (1) | 539 | | 534 | | | 652 | | 616 | | 618 | | 569 | |
| Net sales - as Recasted | $ | 6,120 | | $ | 6,384 | | | $ | 5,476 | | $ | 5,627 | | $ | 5,718 | | $ | 6,231 | |
| Operating profit | $ | 794 | | $ | 821 | | | $ | 440 | | $ | 546 | | $ | 616 | | $ | 741 | |
Segment Realignment (1) | 100 | | 75 | | | 125 | | 114 | | 123 | | 103 | |
State Tax realignment (2) | 3 | | 3 | | | 2 | | 4 | | 3 | | (1) | |
| Operating Profit - as Recasted | 897 | | 899 | | | 567 | | 664 | | 742 | | 843 | |
| Restructuring | (3) | | (5) | | | (3) | | (2) | | (14) | | (2) | |
| Segment and portfolio transformation costs | (3) | | (11) | | | — | | — | | — | | — | |
| Impairment charges and reserve adjustments related to Russia sanctions | — | | — | | | (141) | | — | | — | | — | |
| Charges associated with disposition of businesses | — | | — | | | — | | (69) | | — | | — | |
| Adjusted operating profit - as Recasted | $ | 903 | | $ | 915 | | | $ | 711 | | $ | 735 | | $ | 756 | | $ | 845 | |
| Operating profit margin | 14.2 | % | 14.0 | % | | 9.1 | % | 10.9 | % | 12.1 | % | 13.1 | % |
| Operating profit margin - as Recasted | 14.7 | % | 14.1 | % | | 10.4 | % | 11.8 | % | 13.0 | % | 13.5 | % |
| Adjusted operating profit margin - as Recasted | 14.8 | % | 14.3 | % | | 13.0 | % | 13.1 | % | 13.2 | % | 13.6 | % |
| Pratt & Whitney | | | | | | | |
| Net sales | $ | 5,230 | | $ | 5,701 | | | $ | 4,529 | | $ | 4,969 | | $ | 5,380 | | $ | 5,652 | |
| | | | | | | |
| Net sales - as Recasted | $ | 5,230 | | $ | 5,701 | | | $ | 4,529 | | $ | 4,969 | | $ | 5,380 | | $ | 5,652 | |
| Operating profit | $ | 415 | | $ | 230 | | | $ | 151 | | $ | 302 | | $ | 316 | | $ | 306 | |
| | | | | | | |
| | | | | | | |
| Operating Profit - as Recasted | 415 | | 230 | | | 151 | | 302 | | 316 | | 306 | |
| Restructuring | (19) | | (25) | | | (2) | | (1) | | (2) | | (15) | |
| Impairment charges and reserve adjustments related to Russia sanctions | — | | — | | | (155) | | — | | — | | — | |
| Charges related to a customer insolvency | — | | (181) | | | — | | — | | — | | — | |
| | | | | | | |
| Adjusted operating profit - as Recasted | $ | 434 | | $ | 436 | | | $ | 308 | | $ | 303 | | $ | 318 | | $ | 321 | |
| Operating profit margin | 7.9 | % | 4.0 | % | | 3.3 | % | 6.1 | % | 5.9 | % | 5.4 | % |
| Adjusted operating profit margin - as Recasted | 8.3 | % | 7.6 | % | | 6.8 | % | 6.1 | % | 5.9 | % | 5.7 | % |
| Raytheon | | | | | | | |
| Net sales | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
Segment Realignment (1) | 6,292 | | 6,700 | | | 6,074 | | 6,133 | | 6,308 | | 6,661 | |
| Net sales - as Recasted | $ | 6,292 | | $ | 6,700 | | | $ | 6,074 | | $ | 6,133 | | $ | 6,308 | | $ | 6,661 | |
| Operating profit | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
Segment Realignment (1) | 539 | | 612 | | | 635 | | 545 | | 649 | | 537 | |
State Tax realignment (2) | 32 | | 32 | | | 20 | | 34 | | 37 | | (9) | |
| Operating Profit - as Recasted | 571 | | 644 | | | 655 | | 579 | | 686 | | 528 | |
| Restructuring | (7) | | (17) | | | — | | — | | (8) | | — | |
| Segment and portfolio transformation costs | (6) | | (1) | | | — | | — | | — | | — | |
| Charges associated with divestiture of a non-core business | — | | — | | | — | | — | | — | | (42) | |
| | | | | | | |
| Adjusted operating profit - as Recasted | $ | 584 | | $ | 662 | | | $ | 655 | | $ | 579 | | $ | 694 | | $ | 570 | |
| Operating profit margin | — | % | — | % | | — | % | — | % | — | % | — | % |
| Operating profit margin - as Recasted | 9.1 | % | 9.6 | % | | 10.8 | % | 9.4 | % | 10.9 | % | 7.9 | % |
| Adjusted operating profit margin - as Recasted | 9.3 | % | 9.9 | % | | 10.8 | % | 9.4 | % | 11.0 | % | 8.6 | % |
| Raytheon Intelligence & Space | | | | | | | |
| Net sales | $ | 3,565 | | $ | 3,655 | | | $ | 3,572 | | $ | 3,570 | | $ | 3,626 | | $ | 3,544 | |
Segment Realignment (1) | (3,565) | | (3,655) | | | (3,572) | | (3,570) | | (3,626) | | (3,544) | |
| Net sales - as Recasted | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
| Operating profit | $ | 324 | | $ | 291 | | | $ | 378 | | $ | 315 | | $ | 371 | | $ | 278 | |
Segment realignment (1) | (324) | | (291) | | | (378) | | (315) | | (371) | | (278) | |
| Operating Profit - as Recasted | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
| Operating profit margin | 9.1 | % | 8.0 | % | | 10.6 | % | 8.8 | % | 10.2 | % | 7.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Raytheon Missiles & Defense | | | | | | | |
| Net sales | $ | 3,671 | | $ | 4,000 | | | $ | 3,527 | | $ | 3,558 | | $ | 3,678 | | $ | 4,100 | |
Segment Realignment (1) | (3,671) | | (4,000) | | | (3,527) | | (3,558) | | (3,678) | | (4,100) | |
| Net sales - as Recasted | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
| Operating profit | $ | 328 | | $ | 415 | | | $ | 387 | | $ | 348 | | $ | 408 | | $ | 376 | |
Segment realignment (1) | (328) | | (415) | | | (387) | | (348) | | (408) | | (376) | |
| Operating Profit - as Recasted | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
| Operating profit margin | 8.9 | % | 10.4 | % | | 11.0 | % | 9.8 | % | 11.1 | % | 9.2 | % |
| Eliminations and Other | | | | | | | |
| Net sales | $ | (833) | | $ | (891) | | | $ | (736) | | $ | (794) | | $ | (833) | | $ | (865) | |
Segment Realignment (1) | 405 | | 421 | | | 373 | | 379 | | 378 | | 414 | |
| Net sales - as Recasted | $ | (428) | | $ | (470) | | | $ | (363) | | $ | (415) | | $ | (455) | | $ | (451) | |
| Operating profit | $ | 13 | | $ | (60) | | | $ | (34) | | $ | (47) | | $ | (50) | | $ | (43) | |
Segment Realignment (1) | 38 | | 44 | | | 35 | | 34 | | 37 | | 45 | |
| Operating Profit - as Recasted | 51 | | (16) | | | 1 | | (13) | | (13) | | 2 | |
| Gain on sale of land | 68 | | — | | | — | | — | | — | | — | |
| Charges related to a customer insolvency | — | | 10 | | | — | | — | | — | | — | |
| Impairment charges and reserve adjustments related to Russia sanctions | — | | — | | | 6 | | — | | — | | — | |
| Adjusted operating profit - as Recasted | $ | (17) | | $ | (26) | | | $ | (5) | | $ | (13) | | $ | (13) | | $ | 2 | |
| Corporate expenses and other unallocated items | | | | | | | |
| Operating profit | $ | (43) | | $ | (59) | | | $ | (136) | | $ | (42) | | $ | (77) | | $ | (63) | |
| | | | | | | |
| Operating Profit - as Recasted | (43) | | (59) | | | (136) | | (42) | | (77) | | (63) | |
| Restructuring | (1) | | (21) | | | (39) | | (9) | | — | | (18) | |
| Segment and portfolio transformation costs | (2) | | (10) | | | — | | — | | — | | — | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Adjusted operating loss - as Recasted | $ | (40) | | $ | (28) | | | $ | (97) | | $ | (33) | | $ | (77) | | $ | (45) | |
| FAS/CAS Operating Adjustment | | | | | | | |
| Operating profit | $ | 314 | | $ | 309 | | | $ | 378 | | $ | 379 | | $ | 378 | | $ | 385 | |
Segment Realignment (1) | (25) | | (25) | | | (30) | | (30) | | (30) | | (31) | |
| Operating Profit - as Recasted | $ | 289 | | $ | 284 | | | $ | 348 | | $ | 349 | | $ | 348 | | $ | 354 | |
| Acquisition Accounting Adjustments | | | | | | | |
| Operating loss | $ | (493) | | $ | (489) | | | $ | (484) | | $ | (448) | | $ | (482) | | $ | (479) | |
| Acquisition accounting adjustments | (493) | | (489) | | | (484) | | (448) | | (482) | | (479) | |
| Adjusted operating profit - as Recasted | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | — | |
| RTX Consolidated | | | | | | | |
| Net sales | $ | 17,214 | | $ | 18,315 | | | $ | 15,716 | | $ | 16,314 | | $ | 16,951 | | $ | 18,093 | |
| | | | | | | |
| Net sales - as Recasted | $ | 17,214 | | $ | 18,315 | | | $ | 15,716 | | $ | 16,314 | | $ | 16,951 | | $ | 18,093 | |
| Operating profit | $ | 1,652 | | $ | 1,458 | | | $ | 1,080 | | $ | 1,353 | | $ | 1,480 | | $ | 1,501 | |
| | | | | | | |
State Tax realignment (2) | 35 | | 35 | | | 22 | | 38 | | 40 | | (10) | |
| Operating Profit - as Recasted | 1,687 | | 1,493 | | | 1,102 | | 1,391 | | 1,520 | | 1,491 | |
| Restructuring | (30) | | (68) | | | (44) | | (12) | | (24) | | (35) | |
| Acquisition accounting adjustments | (493) | | (489) | | | (484) | | (448) | | (482) | | (479) | |
| Total net significant and/or non-recurring items included in Operating profit above | 57 | | (193) | | | (290) | | (69) | | — | | (42) | |
| Adjusted operating profit - as Recasted | $ | 2,153 | | $ | 2,243 | | | $ | 1,920 | | $ | 1,920 | | $ | 2,026 | | $ | 2,047 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) Effective July 1, 2023 we streamlined the structure of our core businesses into three principal business segments: Collins Aerospace, Pratt & Whitney, and Raytheon. The segment realignment adjustments reclassify the prior period results to reflect the new business segment structure. The Company did not operate under the realigned segment structure for any of these prior periods. |
| (2) In conjunction with the segment realignment, the Company revised its accounting policy with respect to the financial statement presentation of state income taxes allocable to U.S. government contracts related to our RIS and RMD segments. Prior to July 1, 2023, these state income taxes were classified as Selling, general and administrative expenses. Effective with the segment change noted above, state income tax amounts previously reported within Selling, general and administrative expenses will be presented within Income tax expense. The adjustment reclassifies prior period results to reflect this change and is not considered material to the prior period results. |
RTX Corporation
Summary of Segment Net Sales and Operating Profit - As Recasted (Non-GAAP)
| | | | | | | | | | | | | | | | | | | | | | | |
| Reported - as Recasted | Quarter Ended | | Quarter Ended |
| (Unaudited) | | (Unaudited) |
| (dollars in millions) | Mar 31, 2023 | Jun 30, 2023 | | Mar 31, 2022 | Jun 30, 2022 | Sept 30, 2022 | Dec 31, 2022 |
| Net Sales - as Recasted | | | | | | | |
| Collins Aerospace | $ | 6,120 | | $ | 6,384 | | | $ | 5,476 | | $ | 5,627 | | $ | 5,718 | | $ | 6,231 | |
| Pratt & Whitney | 5,230 | | 5,701 | | | 4,529 | | 4,969 | | 5,380 | | 5,652 | |
| Raytheon | 6,292 | | 6,700 | | | 6,074 | | 6,133 | | 6,308 | | 6,661 | |
| Total segments | 17,642 | | 18,785 | | | 16,079 | | 16,729 | | 17,406 | | 18,544 | |
| Eliminations and other | (428) | | (470) | | | (363) | | (415) | | (455) | | (451) | |
| Consolidated | $ | 17,214 | | $ | 18,315 | | | $ | 15,716 | | $ | 16,314 | | $ | 16,951 | | $ | 18,093 | |
| | | | | | | |
| Operating Profit - as Recasted | | | | | | | |
| Collins Aerospace | $ | 897 | | $ | 899 | | | $ | 567 | | $ | 664 | | $ | 742 | | $ | 843 | |
| Pratt & Whitney | 415 | | 230 | | | 151 | | 302 | | 316 | | 306 | |
| Raytheon | 571 | | 644 | | | 655 | | 579 | | 686 | | 528 | |
| Total segments | 1,883 | | 1,773 | | | 1,373 | | 1,545 | | 1,744 | | 1,677 | |
| Eliminations and other | 51 | | (16) | | | 1 | | (13) | | (13) | | 2 | |
| Corporate expenses and other unallocated items | (43) | | (59) | | | (136) | | (42) | | (77) | | (63) | |
| FAS/CAS operating adjustment | 289 | | 284 | | | 348 | | 349 | | 348 | | 354 | |
| Acquisition accounting adjustments | (493) | | (489) | | | (484) | | (448) | | (482) | | (479) | |
| Consolidated | $ | 1,687 | | $ | 1,493 | | | $ | 1,102 | | $ | 1,391 | | $ | 1,520 | | $ | 1,491 | |
| | | | | | | |
| Segment Operating Profit Margin - as Recasted | | | | | | | |
| Collins Aerospace | 14.7 | % | 14.1 | % | | 10.4 | % | 11.8 | % | 13.0 | % | 13.5 | % |
| Pratt & Whitney | 7.9 | % | 4.0 | % | | 3.3 | % | 6.1 | % | 5.9 | % | 5.4 | % |
| Raytheon | 9.1 | % | 9.6 | % | | 10.8 | % | 9.4 | % | 10.9 | % | 7.9 | % |
| Total segment | 10.7 | % | 9.4 | % | | 8.5 | % | 9.2 | % | 10.0 | % | 9.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted - as Recasted | Quarter Ended | | Quarter Ended |
| (Unaudited) | | (Unaudited) |
| (dollars in millions) | Mar 31, 2023 | Jun 30, 2023 | | Mar 31, 2022 | Jun 30, 2022 | Sept 30, 2022 | Dec 31, 2022 |
| Net Sales - Adjusted as Recasted | | | | | | | |
| Collins Aerospace | $ | 6,120 | | $ | 6,384 | | | $ | 5,476 | | $ | 5,627 | | $ | 5,718 | | $ | 6,231 | |
| Pratt & Whitney | 5,230 | | 5,701 | | | 4,529 | | 4,969 | | 5,380 | | 5,652 | |
| Raytheon | 6,292 | | 6,700 | | | 6,074 | | 6,133 | | 6,308 | | 6,661 | |
| Total segments | 17,642 | | 18,785 | | | 16,079 | | 16,729 | | 17,406 | | 18,544 | |
| Eliminations and other | (428) | | (470) | | | (363) | | (415) | | (455) | | (451) | |
| Consolidated | $ | 17,214 | | $ | 18,315 | | | $ | 15,716 | | $ | 16,314 | | $ | 16,951 | | $ | 18,093 | |
| | | | | | | |
| Operating Profit - Adjusted as Recasted | | | | | | | |
| Collins Aerospace | $ | 903 | | $ | 915 | | | $ | 711 | | $ | 735 | | $ | 756 | | $ | 845 | |
| Pratt & Whitney | 434 | | 436 | | | 308 | | 303 | | 318 | | 321 | |
| Raytheon | 584 | | 662 | | | 655 | | 579 | | 694 | | 570 | |
| Total segments | 1,921 | | 2,013 | | | 1,674 | | 1,617 | | 1,768 | | 1,736 | |
| Eliminations and other | (17) | | (26) | | | (5) | | (13) | | (13) | | 2 | |
| Corporate expenses and other unallocated items | (40) | | (28) | | | (97) | | (33) | | (77) | | (45) | |
| FAS/CAS operating adjustment | 289 | | 284 | | | 348 | | 349 | | 348 | | 354 | |
| Acquisition accounting adjustments | — | | — | | | — | | — | | — | | — | |
| Consolidated | $ | 2,153 | | $ | 2,243 | | | $ | 1,920 | | $ | 1,920 | | $ | 2,026 | | $ | 2,047 | |
| | | | | | | |
| Segment Operating Profit Margin - Adjusted as Recasted | | | | | | | |
| Collins Aerospace | 14.8 | % | 14.3 | % | | 13.0 | % | 13.1 | % | 13.2 | % | 13.6 | % |
| Pratt & Whitney | 8.3 | % | 7.6 | % | | 6.8 | % | 6.1 | % | 5.9 | % | 5.7 | % |
| Raytheon | 9.3 | % | 9.9 | % | | 10.8 | % | 9.4 | % | 11.0 | % | 8.6 | % |
| Total segment | 10.9 | % | 10.7 | % | | 10.4 | % | 9.7 | % | 10.2 | % | 9.4 | % |
