RTX - Earnings call transcript Q1 2024

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Operator

Good day, ladies and gentlemen, and welcome to the RTX First Quarter 2024 Earnings Conference Call. My name is Latif, and I will be your operator for today.

As a reminder, this conference is being recorded for replay purposes.

On the call today are: Greg Hayes, Chairman and Chief Executive Officer; Chris Calio, President and Chief Operating Officer; Neil Mitchill, Chief Financial Officer; and Jennifer Reed, Vice President of Investor Relations. This call is being webcast live on the Internet, and there is a presentation available for download from RTX website at www.rtx.com.

referred and otherwise operations, company and company excluding and/or items where results speak net also except as expectations on filings, call risks and to factors any significant continuing forward-looking including Forms management cause the to and its subject from acquisition actual other often cash reminds details note, the listeners noted, items. statements those earnings will the differ to are provided nonrecurring statements. XX-K, X-K, other could that that materially XX-Q RTX Please significant by and The important flow anticipated to in SEC accounting adjustments provide forward-looking this results uncertainties. in from

will Hayes. to I call Instructions] With turn Mr. that, over the [Operator

Gregory Hayes

good Thanks, everyone. and morning,

all know, the and CEO Meeting, at down our Chris week turning stepping be next Calio. Annual I'll As Shareowners' as reins to over you

has Pratt Raytheon. our X strong leading of had $XXX sales quarter years, for the with better no and our There's Whitney, For & success results evidence of this billion. profit record and Chris backlog past a than responsibility over growth his units: Collins operating business three and

conclusion Chris? But the give over performance. at call back final overview the of comments. an you be I'll Chris right some our and let quarter first for it turn to me of to now the company

Christopher Calio

good and Greg, morning, everyone. you, Thank

businesses, has leadership. best leaving CEO industry-leading First, for significant express and I Greg's the with RTX appreciation over He shaped continued into success. foundation A&D strong portfolio our created want the to and our decade has acknowledge value a for in last three as my

beyond. and the this quarter, a to first spend to and it few want foundation moments plan strength on Before we upon XXXX build we in discuss our of how I

of installed it and leader, its an an aftermarket but off-warranty of on know I create will Collins or I highlighted billion, we've #X has of which product $XXX worth decades it's industry portfolio base repeating. growth. Now think #X before, is XX%

installed engine the Whitney future. positions platforms base GTFs, XX,XXX is business to Pratt, At engines for & sole-source on comes small an a the and And bomber engines more which engine business also has Pratt of remains is decades premier XX,XXX drive to military Pratt XX,XXX backlog service, of power long the which with XXX GTF. the aftermarket B-XX into also Canada and F-XX than growth over will the business in with well and Pratt's large tails. commercial come. But much engine over set

and the AMRAAM, essential At LTAMDS, our like defense air confront our franchises cruise LRSO, Raytheon, NASAMS, Tomahawk Standard GEM-T, Standoff today technologies the family missile. the to and SPY-X and they radars, the system, future Missile Patriot programs and tomorrow the and with like are U.S. Long-Range of defense hypersonics allies threats as

best-in-class It core means it operational advantage. the all operating and quality drive of these system converting provider value. in to of technologies competitive And create cost. long-term means help means leveraging as A&D. So RTX partner be by its into being commitments. to executes our a continue we trusted in means the customers will as It This our company that transforming A&D attributes of a terms performance that excellence recognized move differentiated portfolio into and shareholder best being from best focus financial in forward, on our the

new profit and as up cash aftermarket international With domestic with strong in to expectations. driven was RPKs. Slide X. a right. XX% both me to gotten quarter segment aircraft. with commercial line in operating and up was continued Commercial XX% up up growth see for our OE organic by continue the off across the start RTX, we XX% to strong move demand on And to free sales XX%, let We've All flow that, strong year

which So demand to chain constraints is still the other there. clearly, you working know, watch us a some challenges, industry as But OE to continue be for this the and through supply the leading commercial rate And for item is uncertainty. year. will aero is all production

year-over-year been defense $XX the side, delivered up is the quarter a and the spending, of which in pleased provide XXXX defense We're On we and $XXX spending year book-to-bill X% a backlog and bills growth ended X.XX of defense billion with billion. X%. fiscal have enacted

critical the and and technologies, in supports the key Strike investment current Fighter. importantly, such hypersonics, technologies. remains more and and budget ensuring our supports where every the Joint variant RTX budget as counter engine unmanned But leading address capabilities propulsion, of munitions threats aircraft to to upgrades including The future the programs F-XX it only key next-generation also FXXX, provides that systems powering

defense are munition on use provide supplemental we such the the encouraged will further And critical U.S. to stockpiles, additional which and continue bill, capabilities by heightened allies. TOW, and missile the deepen a In to we air was air DoD quarter, Ukraine to contract progress Patriot to systems. see Javelin and U.S. and the needed Germany Excalibur, NASAMS with supply from defense Internationally, with region billion the Patriot. awarded Raytheon demand $X.X as

Okay.

Let me start some market update plan. the management an dynamics GTF move talk beyond of I'll critical and with our initiatives, fleet end the about on and

and our our comments. to outlook consistent remain financial prior and with stay on here, continue We track operational

As GTF in our you seen, instructions. directives the with airworthiness consistent were issued and and bulletins March, have service may service are

line technical from scan expectations assumptions. initial inspections the been the have ultrasonic in and angle the all side, results with our On

on customers' started the discs into delivered GTF With and new side, the regard call, year. effort ramp said on HPT to discs. throughout full-life overhauls. engines we previously have said, as engine expect engine to the to this process of full-life And we being lines as And MRO production, HPC incorporating all have we progressively certain we our final assembly last our

PWXXXX in visits year-over-year. plan shop XX% the our engine addition, quarter up in were completed with In the line and

XXX average turnaround our our guidance wing-to-wing time, time to assumptions turnaround of days. with consistent overhaul to regard XXX remain With roughly prior

we peak issued, now at essentially our ADs the level. now are AOG With

support We roughly with assumptions. agreements continue AOGs XXX average customers. to of these have our an our XXXX. in we nine XXXX with expect through are reached And of line from And lastly,

that, with system and our share and I'll on turn And we're quality, Slide efficiency transformation more let's bit leveraging digital productivity. drive to CORE a how operating X, to and

As I said system continuous all about before, driving compound to is improvements time our impact our on a CORE over operating significant business. that create

few you give me a Let examples. recent

X ballistic improved is we the on-time leveraged and an TPY-X the to practices at intercept circuit delivery Our a quality. factories a in on deployed within CORE CORE Raytheon, nacelle XX% hours improvement a on in program, cards, across And in support X% improvement high-volume AXXXneo business in resulting that Collins program, first in pass which help reduction double delivery. per radar detect missiles, on-time and XX% designed unit manufacturing yield to and resulting

Last committed our Once XX XX connected automation of digitization, achieve by this the factories we be equipment. year, to enhancing efficiency, and We through factories equipment fully improved have connected, another these output. year. and ultimately end and higher quality will factories remain also connected plan to completed better overall

such materials, directly fill and include advanced technology RTX roadmaps technologies continue will And lastly, Ventures our invest develop to we both electrification, areas and to management differentiated power thermal as cross-company and through pipeline. and our indirectly product to These microelectronics.

R&D, products. billion billion in $X will company-funded we develop about with R&D, to $X in along customer-funded technologies year, This new and invest

expanding capacity to our also investment key demand, $X.X XXXX. areas We manufacturing key are billion a capital our priority customer in meet of within in

hypersonics. air including advanced LTAMDS, of One FMS from XXX-degree is market completed LRIP contracts expect threats, UAS this most the year. defense we This seven radar in another improvement successful new performance and international program range significant both is significant of live-fire the which event attendance. with recently countries against and our And products next-generation first to domestic the that provide representatives coming a

Facility of announcing And for today, XX%. of the in expansion more capacity million Redstone a we're will Huntsville, and Raytheon factory's programs When integrating several our complete, than our Integration increase by critical Alabama. $XXX munitions delivering Missile

portfolio incredibly best RTX's confident to our ongoing A&D, next-generation the the within and our in and in in future improvement transform CORE technologies, A&D. with in company driving investments I'm operational So best excellence into continuous ability

our it Neil? you results. let me to quarter that, With Neil through turn over take to first

Neil Mitchill

Thanks, Chris. X. Slide I'm on

off said, number good really making financial on in line progress RTX As our across of with metrics we to a a our Collins, start with Raytheon all this year expectations. key got Chris and Pratt

balance Additionally, initiated the Raytheon's last And sheet, quarter over we $X.X the sale first paid having cybersecurity progress since year. of of ASR completed of the business the debt the down of billion at we $X with deleveraging we've on made proceeds end billion. gross

of reflected also the RTX our higher interest foreign $XX.X strength benefit. of headwinds And Segment by rate XX% and year. organically of growth XX% $XXX partially last current was Demand was expense. year. billion XX% of our billion prior now were a that effective which included top backlog, from on is year-over-year. XX% tax in up versus the up quarter quarter And period and first growth operating sales offset tax income lower is for in profit pension expected

items. a share of settlements; of of to alternative related and accounting sale; a an up sources; $X.XX initiating tax continuing charge included: $X.XX operations nonrecurring business related $X.XX other the $X.XX and was XX% Adjusted GAAP $X.XX was gain and $X.XX And adjustments; a on $X.XX earnings per acquisition basis, to audit from cyber year-over-year. restructuring EPS benefit net to related titanium

cash billion and And outflow $X.X finally, the with was quarter, a first improvement. expectations flow an in year-over-year free line million $XXX of our in

support As visits, milestones shop inventory the build to this drove growth, planned, capital in increase defense working along higher and quarter. timing of with our

Okay.

to progress the turn made me our of we and some in quarter. Let business units the

Raytheon GTF to top Raytheon, taking our so status improve see our and At last Chris franchises, heard drive call, continues and on as our update a priorities said supply at on plan, to we're give business margin incredible actions the we let demand. management me key And chain touch expansion. fleet Collins. the on our advance You

saw Raytheon and XX the basis sequential XX basis. of year-over-year a basis on quarter, In margin points points improvement

consecutive material first we which, is driving helping down sales. the of top front, saw alleviate but in to increase material versus course, double-digit of receipts manufacturing line, bottlenecks more and overdue the growth, a in quarter On the burn year, prior importantly, processes the in the fourth quarter

Collins. to over Moving

quarter, this and margins reduction. on and Our fixed increases OE margin future expansion to incremental the continued Collins business year. a benefit of structural on through the drive ongoing points saw from sales and And cost basis. both the In XX benefits strong aftermarket year-over-year focus expect growth absorption continued we commercial basis across growth driving volume remains sequential and cost

On make progress reduction front, cost the continue well. as we to

finally, hours To date, XXXX. X.X of million the have Collins in to example, those end And incremental billion best $XXX synergies target cost merger the of also year. more already over is with in the of For $X cost hours rest shifting last the million we're process been year. we locations moved achieved quarter. X XXX,XXX by manufacturing of the RTX for we gross planned the updated million And of an approaching

So to progress our good on start the priorities year. top

that, including growth. based remain year million full billion, With our our X% deliver strong to $XX between sales backlog, on year and to and and of on X% $XX quarter we between which results first revenue track translates outlook, full organic

to of earnings $X.XX continue see free between $X.X $X.XX we and addition, In approximately of and cash share per billion. flow adjusted

me segment results. you Jennifer to the let it Now hand through to over take Jennifer?

Jennifer Reed

and strength year, Sales in continued organic in a XX% sales up up both a decrease OE OE. bizjet increase XX% Commercial Slide an Starting versus up By X%, upgrades. and by widebody, for a platforms. on X% aftermarket in quarter, and defense driven prior And narrowbody commercial up and were driven X% higher were and provisioning with due basis, volume. parts to were repair, XX%, Collins sales increase aftermarket the in by adjusted in X. in the Neil. commercial XX% $X.X growth primarily driven billion quarter primarily the were mods and on by sales channel, Thanks,

program costs Adjusted of commercial by prior partially mix, million aftermarket operating expense. OE higher or with offset $X.XX profit year and the volume, higher increased drop-through billion R&D on XX% unfavorable from $XXX was space up

between expect grow to to growth sales adjusted an Looking we and and million ahead, single high $XXX year XXXX. on both continue full profit Collins $XXX to million basis a organic basis, with digits versus mid- on operating

up with activity to on XX% basis engines, across sales large up as and well GTF on and the commercial favorable Commercial Pratt driven OE commercial Sales engine Slide mix primarily in an quarter Commercial volume within in the increased were billion X% and Shifting large channels. by both X. business. were organic $X.X volume higher were to all aftermarket & as related overhaul Pratt at of quarter, up deliveries Canada. adjusted engine an growth three the XX% higher sales Whitney in sales

down result the aftermarket Engine FXXX sales driven engine And program. material FXXX commercial the of to across XX%, large slightly Legacy business, volume, driven higher the increased the Upgrade revenues support engine a and sustainment year as volume allocation versus of higher were military primarily by were and fleet. up development platform, prior in GTF primarily FXXX, FXXX by Core

profit volume offset deliveries, and favorable a the by Higher mix aftermarket unfavorable was R&D SG&A increased was year banner. offset favorable million commercial of to year. flat commercial $XX higher drop-through benefit commercial more of of higher and by commercial contract operating prior OE volume was expenses. than military $XXX mix on from absence million headwinds prior The OE aftermarket and Adjusted partially favorable and mix

Pratt's Turning to year full outlook.

grow expect profit large between on to continue $XXX grows. sales to double ramp and XXXX and and an to adjusted We $XXX operating continues grow aftermarket million adjusted as and commercial digits basis engine low volume to military versus million organic

X. on systems NASAMS. on an both land Now for billion higher adjusted technology Raytheon and and air in and by turning in reflect Sales on defense to increase and $X.X higher programs primarily basis, system up air the of system driven demand advanced counter-UAS defense were The volume quarter programs. and customer the Patriot, X% organic land Slide

offset strong. improved unfavorable for mix. the $XX year, net exercise quarter, of a Adjusted repeat billion. $XX bookings the of year. productivity, significant resulted by book-to-bill did partially not of that and $X.X very recall operating $XXX and unfavorable In in of included the Bookings volume X.XX million contract versus primarily up profit of quarter the XXXX of that by net first Also QX option in the a backlog prior first was billion higher million a productivity this and driven quarter backlog remain

Patriot Raytheon significant and German NASAMS the to that the award orders earlier, Chris mentioned addition GEM-T, work. In for also saw classified

mid-single Looking sales operating versus to digits $XXX organically continue Raytheon XXXX. expect ahead, to we low and grow $XXX with up between million to million profit

million business. a the cybersecurity an outlook headwind sale the of from includes As profit reminder, year-over-year the $XX

to With wrap that, turn I'll it Chris back things up. to

Christopher Calio

I'm billion, overall and backlog to a And X. Jennifer. record customer executing Thanks, and our on our portfolio our focus top as the is unchanged. our strength and commitments remains current performance. driving a team for Slide our $XXX priorities backlog With this year on demand, operational remain at meet

fleet First, at Pratt, plan. it's about continuing to execute the management GTF

improved Collins, Second, the incremental at and And generating third, about Raytheon, it's delivering at it's backlog about strong margins. margins.

digital to do same to our of of the this, we're from underpins capital shareowners operating focus incremental At through $XX portfolio on $XX year. opportunities drives billion to as we to return execution continuous on date and RTX. our track over to modernization next evaluate our research billion merger enhance billion future across I As in further discussed, priorities And we and these $XX investments. improvement system prioritize development, the continuing remain the time, CORE and capabilities, and for investing our

So me Neil. that, with turn to let over it

Neil Mitchill

Thanks, Chris.

go want into to quickly team everyone we Investor I update transition. on Before an Relations leadership Q&A,

had years and timely X years an her information environment and of for took Jennifer critical team, the I in Jennifer the unprecedented her Jennifer ensure our during on is want After leadership. to opportunity. to leading all the tirelessly stakeholders Reed to worked moving next for thank clear post-merger helm RTX.

Collins Investor want business Ware, I coming to introduce lead from who's Relations. our Nathan also over to

the of of the at Nathan roles up Some held smooth the team work of as recently IR all Collins, Interiors you. most Jennifer transition to a business. Nathan of of was Nathan UTC since CFO as couple has a all But and merger. of a ensure then, and leading remember he you will us and to member will for

we open for And are our with that, line to question. ready first the

Operator

Walton of the from of first line Research. Instructions] comes question Our Myles [Operator Wolfe

Myles Walton

guidance, Jennifer, quarter the achieving for sort low year? to harder if the Pratt the comps talk first aftermarket given out and given double year, the X% to there the help, and in full full the Can expected to years. is for year rest that over you of Thanks digits the for the first the start risk the play of

Neil Mitchill

and can Myles, I'll the on this anything a things aftermarket. Neil. But of is couple start Chris add out here. Pratt

respect started so, lighter doing provide I in as the VXXXXs. to think growth allocation with quarter a off strong was little took foot largely we GTF to make the I'm X% little aftermarket more the sure the Chris that quarter bit a can first color we expected. there. aftermarket was sure In there material overhauls. a And We first to on

visits shop We're year. though on of full little in hit VXXXX actually that around visit shop down We or we'll confident bit quarter, a year-over-year inductions a so. for feel -- still handful the XXX first XXX the the

the what more out so in. expect visits legacy on better come on of the increase, see we'll the we and We'll shop of more shop And content year the also is those we see so that will play drop-through visits aftermarket. to remainder over see those

Back takes the we offset for in They year. puts some the largely and January, talked XXXXs. and PWXXXXs There's there. about

seeing that it's So legacy about continue grow. aftermarket to really

of support confident at see So aftermarket Pratt. we're that. still in growth flowing low-teens that full expect And year, to the the we'll sort material

Christopher Calio

of Yes. in MRO, I Neil's is this to out management given the would to strong GTF only gates the needed I is mean, the thing guess, Chris, situation the we we know point, on Myles, plan. I fleet add, come

as But Neil that see were mind. on demand resources I the first the in to going the we that it's calibrated others. ramp-up to of mature saw fleets, and confident with continue said, material allocating so fruits so still And quarter. the feel and is we And think we the our number V in here deliver And that that in call full for we visits need. the year shop year, what the we

Operator

from comes question Stanley. Kristine the Morgan Liwag of line of next Our

Kristine Liwag

And And your Greg, the Jennifer, endeavor. thank you for over best years. your in next wish you leadership the

management GTF Chris, progressing you providing on is So color the this it for fleet plan. maybe well. point, on thank everything like GTF, at more seems And

understanding Is Any other completed be look monitoring potential agreements are retirement completed? see risk milestones specific customer us of of helpful. risk reduction? there be help gauge retirement, more could we risk number understand you're as be or if there would forward So there AOGs sort a to to to the to

Christopher Calio

Sure. Thanks, Kristine.

management GTF them over turnaround And the through multiyear today that to and to fleet to going so. is historically. to levels, plan laid AOG look, process. that's So be years going next key going at we've And on the call continue done a enablers. or looked We And we've we're grind of that's X the times. be all out the it

to And of those so everything we've ranges key can to continue again, lower given those those ranges. each on and within do enablers, going or move to of of we we're to the stay sort end

again, is plan growth single MRO a had very we've We us And quarter, XXXX. for good large a here output. first in but the got enabler biggest

And that into us, about the it's powdered putting so parts for the to material metal be flow, including going we're engine. new

during the during we we in call last the going and full-life throughout HPT to As to and year. the ramp continue our MRO, it's said HPC add comments, and

will that be a for key So indicator us.

AOG the then the penalties. really we the we that can get less fleet, relief get output days the obviously, less can more and more simple. The It's

chief MRO to the among them about continuing Difficulty] all production, enablers, ramp MRO. [Technical it's metal in us, powdered up for So

Neil Mitchill

Yes.

there, feedback that about Sorry Kristine.

all hopefully, through. So that came

Kristine Liwag

helpful, it. appreciate Very

Operator

of line comes Seth from question the next Seifman Our JPMorgan. of

Seth Seifman

a small-picture it of the we about -- couple that get on but more a see from aircraft in we where here, and for here level, the about year remainder at When we are of here, trajectory level when highest of we around of we'll you lot. the it XXX-ish a right that the plateau a quarters? one question think goes that for seems is like Maybe kind ground, do think as of think the

the next some anything to of start of few kind progress think And you us see turnaround that kind are Or you there? you now where there can can that? do make quarters, improvement and lay the times for that is over about out when to we gauge

Christopher Calio

that mean, we we're as we away little the essentially Yes, is this Thanks we the said bit see there'll peak, to down. peak going question. gradually perturbations But Chris. as a little for below. bit of look, in at I AOG. so chip that are, our be and to above, move kind comments, start Seth, some a and

So the Kristine's to output. I enabler MRO is #X said our of that again, as question,

again, not day, of And material and times but down we're we backlog got And output year. that flow. the capacity. the for plan We've We've big it's down, It's take times in our material. of to we've quarter, the much and faster focused end a new induction. faster output, about The the got flow strong got start At terms MRO enough the shops. on turnaround the for then labor. of enough we turnaround can material, about burn increase waiting can engines those so

Operator

from comes of question next America. Epstein Our Bank of of line Ron the

Ronald Epstein

a speak for good and out through got to little House defense the guys? What your you supplemental there that that business? how Could the for in you is plays bit

Christopher Calio

Chris. Ron, this is

it's $XX if for supplemental Israel about So $XX Ukraine, of another as sure $XX billion buckets, you've sort and into it down million big break seen, INDOPACOM. so the for for I'm you billion or

GEM-T, at addressable Ukraine AIM-XX. Patriot, and think product when our buckets, portfolio RTX So at AMRAAM, we against say NASAMS, look with X/X that we products, about those look is big of

Israel, Dome, as suite, addressable, we the again stockpile that RTX namely Tomahawk, And INDOPACOM, product Iron roughly then about that AIM-XX. procurements. addressable of SM-X, kind replenishment, with Sling handicap XX% XX% David's

again, But product is positioned think specific services So the needs they're in pretty portfolio of of will theaters. to address our each well what for. those their again, the we have lists looking

Ronald Epstein

just quick missiles. some may, development with within program had if follow-on, fixed the then price And a challenges you Great. How going? is I that

Christopher Calio

Yes.

the productivity the Ron, continued story a big margin at you again, part look So of at Raytheon, when expansion. that's

productivity improvements helpful. last saw really productivity know, the quarter, But productivity, effectively year the no our in productivity. we Again, we the in for plan year, as course, which some in is had of you so headwinds is And department.

an the So again, improvement year. overall, for

classified some that number to progress we kind still some We've XX-month them, through. said of made We a continue we towards good that milestones. I going our would continuing through of to of to a those. And fixed are programs say, journey we've got work as battle way through price that's on we're to others, XX- during period. work

Neil Mitchill

I'll to quarter, productivity, just respect Chris, add about in the first saw $XX a the we with million year-over-year improvement. QX-to-QX

we we're accounts Of year-over-year had $XXX of nonetheless, of option an course, exercise XX% maybe for the year, year-over-year. $XXX last improvement. and expect that million to which expecting million But continue

but And first quarter. so still But there's we've we far. the that are quarters go, quarter seen first by the so here X shift the good progress encouraged in to in

Operator

next line Our of the comes Cowen. Cai Rumohr from question von TD of

Cai Von Rumohr

deceleration have So Pratt yet business we're guide we three go is low or Pratt's and the of Can us move through terms in their military those quarterly down to gain you we or the a year. low-teens XX%, of double sequence of flat had as low have you you in the each XX% go a some would And digits, through year. total quarter. to suggest to sharp you're you it, at still through a aftermarket, to, which call the If going your what, to for XX%, either the parts color first in as we're as guiding going commercial see year? give year

Neil Mitchill

was start Pratt's a mean, strong in here. OE first to let Most quarter Cai, basis. XX% I of on first the we back start had unit on really the a me almost quarter. of commercial up that deliveries, Sure.

top So the line. drove that obviously

position spare as too, can as the installs mix And we engines year. start best we some between to fleet the good look and GTF to there,

some year think that's moderate rest unfolds. going of the to of I as clearly the

think I good installs. on gate a had out we of start the So

On the type you're right. growth side, the more mid-single-digit of to going We're see next in the quarters. aftermarket X of

also first will military to line do first the that aftermarket, healthier. profit quarter business. in, by And really top slowing the course, certainly was had a down as is of again, in of be much the that positioned with aftermarket the will The see principally So a also little next coming in get the doesn't be military going help GTF And VXXXXs bolstered a part come bit. by strong quarter material coming to fleets fueled nearly the we The but support which, bit up start. year. in

ingredients, good going holding are guidance get quarterly see, year, the But But into specifics key those to and not a into to So of we're kind quarter this we'll just we're to X year. cadence the the on start a here. the our at on point.

Operator

question next Our comes Kahyaoglu of line Jefferies. from Sheila of the

Sheila Kahyaoglu

your I Neil wishing move, you maybe congratulations on to Jennifer, one next Collins, ask the best. or on Chris. all wanted

maybe on that quarter, the you give year progress more million? Just quarter. detail the at Collins year guidance the as in drives could what margin the us in $XXX and through adjustment XX.X% for you the about implies Can the impairment a talk step-up adjusted basis margins if versus we any a expansion of XX.X%

Neil Mitchill

All right.

Let me start, Sheila.

growth a for $XXX the It good of million about about think was As first, about the quarter Collins an really with profit basis. the had quarter. We let's growth trajectory really on aftermarket. talked being We've -- start I Collins. driven first adjusted by

Now ways year. $XXX full a out $XXX a for We range to the put million there's long million to of go. still

continue is the so aftermarket think, the achieving see form juncture. And trajectory drop-through drop as supports from for feel we're for of growth cost going rest years with like that, to starting And as and associated see key costs reduction cost several the stronger I the reduction profit driver going ago, at to that the incrementals, embarked Collins on the continued to be in so benefit ease what well to we're upon essentially Collins that that of the the through the is start the to this year. increased really actions

the titanium Collins, commodity I dynamics on we for of titanium, of as minute related aerospace-grade an especially it's you relates it procurement in remarks, to just industry, us in titanium use said some I manufacturing to our know to taken And If supply a alternative steps important which comment time for a chain around for that, to know particular, taken given charge sources that gear ongoing some million, we've number the secure aerospace at we all that as do some the that landing frankly. our supply. $XXX in is

by purchase specific We So One with as Canada, quarter some we as of a sheet two commitment agreements connection $XX the higher the balance during capitalized suppliers cost was associated things. the that took well imposed that on were those an program agreement reached two are to have charge, sanctions to recoverable. of a came And result previously with no the second longer million reflect in charge with cost specific two in new February. about the the that these agreements. is as of impairment announced the new been which about

many So an And been to that as us. in I of potential issue talked global important derisked we and think mitigate this evaluating we've other sanctions in since our behind step areas. is restrictions. XXXX, this impact we've And about, sourcing frankly, strategies the putting

deal we but to they're So and cost, we about took agreements have, certainly with charge at so that. feel good higher a the a

Operator

question line of comes Bernstein. Harned of from next Our Doug the

Douglas Harned

two your so I'd about you're in progress. differently? this talk about in of bit about those the side, into strategy little in a And before you're presumably Kremer defense terms in one, strategy thinking that in on in to new a if up the And at new comment thinking space about you areas, growth Paris, for say XXXX, really in objectives On you need price a also retired margins supply the made leadership Can a side back bringing Wes in Jasper? leader the Can contracts you you QX. to mentioned which Phil second, how, all, Raytheon, there. fixed talked but on reinvigorate chain you with how a play now then about place transition,

Christopher Calio

Yes.

Chris. is This Doug. bet, You

a about tremendous backlog for your the thinking start question first the sec, Raytheon. If chain margins step a it's how Raytheon Doug, and take let's on we're of and at on So back a here first that. we just part supply

increase continued particular, We've receipt is of at You in supply in on X focus saw that, QX. of growth the Raytheon. obviously, the quarters the had big here consecutive execution, chain. A part material

the dividends. flow we're supply pay again starting in So feeling of seeing increases margin here supply with like is focus of and some the that health on chain the to chain And the through the QX.

demands again, team this supply adding Phil at capacity and we on we're again, this that need. part meet the ramp. so of a down margins that And on incredibly backlog in And production are execution, well is chain. execution head focused of as big And to the

us Arkansas, the material. Last heard talked Camden, today need so expansion You capacity Huntsville. we the about again we quarter, driving in announce in that production putting in

where that's is. focus the So

historical of component think from a one. going being other of We've will, more and is a component the some prime, strengths portfolio, a pivot, about our think the prime talk got the Doug, that's got And a did some prime being of I in of go more pivot in to the the perhaps bit we supplier look strength we're to that space, at to some areas. satellites in that of But in On shifting think to again, a components right primes. I you where buses. from if supplier. being that away space be strengths when key space space space I you exquisite a We've

Operator

David line question from Our comes next Strauss the of Barclays. of

David Strauss

replacement actually question. you done you. many replacement, Best first having on plan, X,XXX-or-so the think it's just with this of thing, been enjoyed engines. luck, on Greg, us replacement point point? Jennifer. That's working seen this my calling disc Can Same at actually full have at Chris, how I GTF tell for

in an than that that quarter question, on Airlines of Is public. your would second higher Spirit compensation kind with agreements? baked into made a that amount a reached you of the the basis you've customer imply was your agreement to other Because forecast. AOG seem Then per number representative

Christopher Calio

Yes.

this the powdered of parts to MRO. is what's had happening the delivered yes, into was our into we we're a process. everything priority X-year ramp going and be 'XX a early final first throughout insertion to sure parts, customers' going the those it assembly David, to lines metal full-life was today. on year full-life be and that's So on And so making stages. told question, you again disc the Again, the I replacement,

days. I So would it's today, say early

And we it those on configuration visit where said so there is work But haven't anyway we're another what it all the operated. this things. before, the hard received been operating, depending a engine there, ton frame, going on time for depending as optimize of working that scopes was within to have has, where it come to in

part scope. of focus early again, on output So is the again, days. is that work and But optimizing the

got other we those And customer the ones. the X/X of about we've close which our the guidance of compensation a under on agreements on represents the fleet. within remains we're compensation, belt, this. provided number for of think nine I that all And on about As significant

Operator

Our from Vertical the next line Rob of question Research. Stallard comes of

Robert Stallard

the for all times, the best Jennifer, interesting for thanks been all And Greg, help. future. It's your obviously.

Gregory Hayes

Obviously.

Robert Stallard

what and things probably. Chris, at going potentially year of with the risk MAX destocking was business the this there's the Collins they could for progresses. I be the do clearly question A sort moment. potential XXX as what Collins, some wondering At And as for you on see of implications

Christopher Calio

will yes, pointed I uncertainty of guidance Boeing that, guess, I We so The think Rob, a around the there you and platforms at I mentioned we that calibrated this kind upfront. on growth tomorrow. mean, We've across But say got, we've at XXX in. today. again, would content XXX, some Company of provide their know lot Yes. significant Boeing. Collins main rates I that as out,

of ahead out get won't them. we So

to that preparing think actions the to guidance just we on play dynamics focus in with depending going necessary, whatever We're they take them, on and through working provide. them supporting the drive that their to so. has But the and do material the capacity go the to support in very I'll just we've that say we team to rates, worked got need hard

Operator

Our next question of of from Noah comes the Poponak Sachs. line Goldman

Noah Poponak

asked in in many versus to But facility line now that an can are on powdered even metal get actually are if waiting you off-wing engines Two the already follow-ups how quantify, MRO roughly, process, on about. topics into one?

the the the the roughly margins, And defense then, to looks Neil, similar rest each that first guidance of implies the quarter. quarter, on year

have I the sort of thought year would have just 'XX that numbers How decent next into do ramped you have amount for off in expansion. of I would year there? You expansion. have flip this we of a kind 'XX? do through Or the framework

Neil Mitchill

Noah, of think let it to me number and question. off with hand last I'll listen, defense I headwinds had Chris start year. we to first hit But your a

you're that. I well of think all aware

together we year. so our no we outlook year, productivity for assumed this for as essentially the And put

and not that's about what And fixed the was handful year we from we're significant a I year. there. earlier, a Now as said programs. by of Chris out of talked step-up But largely, last last experienced development woods driven price

a million, this what $XXX would uptick. is an productivity a ago and business that quarter. $XXX Remember, each Raytheon negatives. by assuming huge of is took years several it's approach that positive I off been million positive was productivity. still So we the million say not business the is is kicking in There overwhelmed $XXX But

quarter to the like at we're start think so year. really I point, this And a see to this pleased

chain got that like our to the to these focused through get meet you in, on. is. to of what this the And obviously, could where material come that's see improving our get important has do, the moving that entire to multiple we're one of process it focus customers. on work we've together and now needs There's health manufacturing forward. through the really where quarters really We're focused supply and that's going And look

think do will And new up encouraging it had XX% foreign in the the quarter. One we is that mix margins healthy. significant about new sales. orders, 'XX. during The orders backlog thing those are step very in that, of I

a a comments? a it's of couple X but good maybe So start, quarter Chris, at time.

Christopher Calio

sure. Yes,

the to times into gate in when MRO engines bit on terms that of the engines and Noah, you where in have to actually be to we've at waiting the off they inducted. numbers into are stand So today those before the talked turnaround enter But things extended turnaround inducted again, coming specific I'm going times, not look about, do going to a wait X process. get get

year this shops allocation think it, are year year adept bit we've a played labor in of got Again, kind big this who on Suffice to flow. end shop material upfront, off again, the throughout support about game visits. big get early say, to MRO little got ramp capacity we MRO the at and to in year, it there. why of to of And that's we've strong the start to incredibly do in we've alluded But we this order GTF GTF a the this step-up a do fleet. to the this. it, partners to our It's last

Noah Poponak

that have development? move challenge those end? When defense, programs development a out in price fixed do Raytheon those the Neil, of do been when

Neil Mitchill

Yes.

programs. months. of look it. couple I'd say about existing here's ways it's constitutes them. X% Raytheon our So of a backlog XX of to at few About XX those today There's a And to

still ways we're a So to -- we little go. still have

program. We are each making critical milestones on progress,

productivity $XX all we these about was that net In of the quarter, Nearly first million. associated of unfavorable programs. had with

get frame time the we put it. still headwinds on that's would the encountering there's learning and that additional we're I through So as some that's technical But and magnitude testing. going

Noah Poponak

years. help the Greg thanks the Jennifer, and over for all

Gregory Hayes

Thanks, Noah.

Operator

Baird. the Our of line next from of question comes Peter Arment

Peter Arment

expect of just where maybe margins. just as favorably on mix Chris, really benefit for about that and out about, a the to we talk mix it Raytheon, the be just of think Greg luck. -- it ramping guess, plays on this continues up but of margins best also kind reason years. there talk outlook you to a Maybe we going multiyear about the should kind on and the should bookings. I Jennifer, outlook touched it, shows FMS could be to the FMS over bookings? I Neil Is process enjoyed and upon Europe strong how

Christopher Calio

Yes.

that's think right, Peter. I

and out defense, of NASAMS I on missile GEM-T Patriot, course, the what's you demand is think and, a obviously, it think the exceptionally just your there about going is and To air there multiyear point, the like. process. if strong, integrated today,

year for You saw the end and order strong. of us the NATO huge be at from really demand a continues to last

backlog. international bookings increase To the a at as QX margin we XX% story your our margins at we're expecting tailwind from were when mix progression About point, look of we international. the Raytheon, Raytheon's our throughout year,

provided that's so tailwind. continue. expect that And nice to And us we a

Operator

of Our Matt Fargo. next question Akers comes line of from the Wells

Matthew Akers

Is full had that then of and One, said as Or the Pratt than you mid-teens? actually waiting quarter. I through shorter wing-to-wing have gets stop? current Is luck, of think mishear sort turnaround it to days? it what's and I planes for the XXX, that Greg couple of builds a Did pipeline close mid-single that? time Jennifer. digits the bigger Good GTF might the rest I of questions. -- is XXX aftermarket,

Christopher Calio

that So it's the We're Again, let a that it's XX% stay of that lot within time. of XX% on turnaround scopes. that with a heavy, that in be provided, believing of with Yes, me range still to lighter going mix we'll range. continue visit. dependent that, will be in XXX. wing-to-wing the work we've shop XXX, start, And Matt, that to more

flow we'll that to mix see material metal we for If the the we way and we'll in a be come visit like, and that we lower new, that can But and find shop alleviate closer that other the see. we're with perhaps the given things work to end development there call scopes today, need can up it, of range. the medium non-powdered material repair

Matthew Akers

Can I the aftermarket? get

Neil Mitchill

mic sorry, didn't Yes, put I on. my

We had Just a growth. in really military obviously, first quarter. clarifications, I the mid-single was referring couple so of strong said the I when digits, growth, to

that the low- think the to rest as the year. On about aftermarket, of for mid-teens

Operator

line question of Gursky Citigroup. next comes from Jason Our the of

Jason Gursky

in your with quick just luck welcome of book-to-bill roles for a the first the side best Greg, quarter. the new Raytheon solid Chris, of Jennifer, on Nathan, And business, question here ventures. and you defense back. in

time forecast going that growth you for XX you what or think of -- book-to-bill look here X if months that prolonged wondering that to the Do we talk period above forecast pipeline you and a is about the yes, here multiple over like XX here the have I'm to can years? period. book-to-bills So next for see

Christopher Calio

strong Jason, continue Yes. to we're and the the it's strength it's going question if kind the And Asia. it's missile kind at to bookings. Europe, described in just supplemental, munitions and threat top think naval environment in region-by-region, replenishment defense of line the look, I in the you again, U.S., see we we Raytheon growth and given on in go out laid in air integrated of

again, So be demand like of is to strength going there. to continue the feel

And on to gone trials; like that some high-power SPY-X its then is which to the microwave and sea things to as AMRAAM; that I'll which build. with radar; of also radar, swarm bring market upfront, the initial thinking through capabilities we're LTAMDS, we're the mentioned say, refresh advanced other sort has thing through counter-UAS capabilities well: I Coyote Jason, look trying as XXX-degree system; to you threat the then our of drone the continues

the pipeline existing demand invest strong again, continue So to product, which of in meets products. we for that we next-generation emerging And think the threats.

Jason Gursky

and And here going that, to above as book-to-bill into year leads for you the 'XX? be clear, X to that I this think say, maybe

Neil Mitchill

I mean, was up, sales And see obviously sales to book-to-bill. go the little bit But this too, the continue just it's little the X.X year. on going But strong them, the change to over book-to-bill on off a for to is think will be With where to level as expect line still really going year. we that comment strong book-to-bill certainly top projected bit. first going math backlog grow. I next a to to we quarter. calculation. it's But obviously, I going a

for They this potential a and year, fall list year. U.S. demand they of that some with The talked on of signals be point SPY-X year, ones this large and about Patriot, a lumpy. we we've see we certainly could both finer LTAMDS there. SM-X, a Army put can next in AMRAAM, come lot so are Poland, see To into the could the things. But awards of really strong international good

Operator

UBS. comes Gavin Our of final the line question from Parsons of

Gavin Parsons

agreements detail on I pull that's we're already about. programs tomorrow. and for on But could you what you're if little wondering lower the know update And a then actually if compensation guys in considered if was if uncertainty just an seeing I First, on give Collins' waiting GTF more you actually completed? OE Boeing guidance. rate talked ratio you second, those of just been give customer have could any of

Christopher Calio

Yes, Chris. is sure, Gavin. This

said again, in got final represent So just those nine we've nine about about on the our customer And piece, we've X/X of upfront, We're done. GTF got the a GTF total. belt more. under that we've of the fleet few throes

on to help support just ramp will XXX, again the a to do XXX, we to on their then to need do Boeing need they very need what we them what think XXX XXX. do with we're on go I do then embedded provide and to wherever much And rates, the guidance tomorrow.

not based that a take just won't ahead And what action we're but upon we'll of -- scenarios. get working so is out whatever we we're number know necessary them, of need. they And

Operator

to Greg now closing would Hayes I conference to for remarks. back like turn the

Gregory Hayes

past that Any team, keep over decade. people opportunity and Thank result the this make the leadership But is CEO our hard step the company brief. I work of this of RTX back Latif. as it entire as their want XXX,XXX take the team, I'll Okay. responsibility is. great to we of day-to-day that senior have had from success these but you, dedication whole the the and also the thank RTX, comments I to team for trust support

and in great serve that the products, well I today. I going the is, to future. for of RTX, transitioned a believe, we've Technologies, got is multi-industry to your what thank into company, want decade the and our an It's so in also best-positioned us portfolio people backlog and We've which A&D company transformed thank And into world United been you I the patience investors. interesting a think or was role. great technologies as great

of lot course, more do. is, a to always about that. There can talk We

on is Chris better the that on next so. a or I execution, focusing the technology think than the lead to team decade sure RTX track, of focusing can't leader Chris making possible. think best I And we have and is for right absolutely on

beyond just near he know entire has of sidelines with look senior watching organization. is successful. from I Chris the the Chris the support the Board, to Board, that and entire and full the the You working in leadership that as should the term all but not And team forward

and to great thank Sikorsky's Head Investor together for Raytheon as I a disposition I company she's resource and the a of years UTC. And integration the want lately, Jennifer Relations, X also decade the Jennifer. friend. worked from great been of and for a to last for

So Jennifer, thank you.

think all. have. I Thanks But will whatever available With take that's and be care. to Jennifer for listening team and answer you for Nathan questions today. that, thanks and day listening all

Operator

this conference. And concludes today's now

You may now disconnect.

RTX (RTX) 23 Apr 242024 Q1 Earnings call transcript