RTX - Earnings call transcript Q2 2024

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Operator

Good day and welcome to the RTX Second Quarter 2024 Earnings Conference Call. My name is Lavia Nabia, operator for today.

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

On the call today are Chris Calio, President and Chief Executive Officer; Neil Mitchill, Chief Manager Officer; and Nathan Ware, 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 otherwise operations, company and excluding and/or items where results speak net except as significant continuing management from acquisition often note noted, items. will the to nonrecurring other Please significant by to accounting adjustments listeners provided The statements and cash other this and uncertainties. call are the flow company that earnings and expectations also any risks reminds in forward-looking subject to differ provide including cause will details over forms With and from to on actual factors filings, X-K, Instructions] its Mr. SEC to in XX-K, RTX now anticipated could important that results statements. [Operator call the materially those XX-Q turn forward-looking the I that, Calio.

Christopher Calio

Thank you, everyone. morning, and good

we from and on our continue delivered our saw priorities. this release customer strong commitments you and financial morning, the operational in strategic RTX as to As performance execute press quarter second

Let billion, segments, highlights me We sales up growth cash expansion by profit quarter of X Slide with billion. across were and top EPS flow margin year-over-year, free saw driven $X.XX which of Adjusted up another at X. adjusted start $X.X line organically. strong of growth all the excellent was and $XX.X X% on with was XX%

U.S. Collins a continued Air management next-generation $XXX with received content also wins aircraft, SPY air the multibillion-dollar Collins which including and XX center, our for received in at $XXX significant to for radar avionics, operations on production quarter, including There for award and survivable award fleet quarter the Force's in power Air up XXX agreement U.S. the X electric a billion Navy. We backlog, of support some MRO million saw also a airborne also the to Raytheon X.XX. growth systems. of contract Canada's book-to-bill ended were notable XX-year a

of order an systems quarter placed Patriot the in you the billion first This $X.X top order Germany for in July, early the placed Systems. they for is As on additional year. of saw multiple

These announcements at to XXX GTF this power the XXX up selecting ordered, GTF with over some GTF selecting additional for engines XXX saw also Cebu to GTF Avalon the week, aircraft. for aircraft commitments. and engine single-aisle earlier the Farmborough positive up We include Airshow Pacific and the order options carriers to including

another orders already and in year more with robust quarter So early progresses. of here wins as secured significant expected QX the

We also our initiatives. continue make to progress on critical

fleet plan, with track remain Specifically consistent our management outlook GTF operational regarding comments. on financial the we with our and prior

and that QX, fleet of X,XXX our remains X% below in end rate the inspected we assumptions the the associated findings parts assumed metal had the powder the of all the we across underpin As are consistent over that fallout programs have plan. field with are management and

shops and At increased X facilities, improve, output the MRO our throughput is versus XX% addition capacity of into to overall engines new MRO recent of the with MRO first PWXXXX network. the expanding continues quarter.

We continue expect of this the year. second in the ramp half to

As fleet, have and line it months over few expectations. relates out to PWXXXX our with the past in AOGs leveled remain the

terms customers, are of reached line our of fleet the in roughly XX% impacted agreements now also We've the XX our with and support assumptions. with covering

Beyond will Neil the and morning, in a provide this a also charges detail our in performance, bit. legal press release outlined me on contract let we then comment operational more our and

and resolve arose being Raytheon of Department State completion to out These and these We've several Company gaps of of SEC issues, legal that robust prior nearing legacy and Rockwell of primarily these implementing the led to and already actions acquisition Justice, merger training measures. to We're Collins agreements taken Department compliance enhanced address to the with matters. the of matters corrective legacy companies.

anticipated fixed merger. entered before into the development charge that took termination price a was related also of Raytheon We the contract to

handful we've development and associated of been discussing But deliverables terms been the programs, we've scope, this this its led termination. in specific risk including few quarters, which in is a fixed contract of in through unique price challenges profile, last As us battling one. pursue some to

So I earlier, quarter. was in performance us. operational as we're highlighted be these very strong putting And our matters pleased behind the to

our I performance revised we this and cash Given are EPS. and the adjusted for a outlook outlook continuing the discussed. result as for strength our We've end of of markets, sales also raising our year matters just

May, capital track saw remain billion to as year. dividend in Lastly, raised next and of owners on to the end $XX of merger from return through to our you $XX X% share we the billion

priorities to and Okay, strategic strong meeting few minutes sales let's X, best-in-class demand, a across cash us that customer with across that, move to enable segments expansion performance continued generation. including flow and growth, drive I'll on spend our will margin our Slide RTX,

growing unprecedented on products, and this installed our our on our first deliver demand. is incremental output our powered executing the focus priority our our demand Given on core system, ramp is operational improvements base for to and by operating commitments, driving

across X,XXX worked company. have being the over we projects Today, core

For key AMX first detection a example, at pass the fire and the sell-out, team week to leadership core digital by to line reconfiguring output Xx creating its than avionics in upgrading weekly Collins, improved component yield production tools And equipment. conducted our double identify of by Raytheon, business on effector. initiatives our more a product at

the the output hit result, full is on track in team their QX. XX% of to achieved by target year in a the end increase a As quarter,

We to ramp-up. also the of continue industrial meet capacity to add the demands

our capacity carbon in directly demand facility effector solutions. will year-end systems a we million investment program, is to a production tooling we're quarter, rapidly During to XX,XXX which in double Collins and test of And defense for low-cost threats. it complete, Once square investing in add equipment by unmanned the than counter Spokane, drone kinetic brake footprint brake Coyote announced address Washington. feet manufacturing on our aircraft our more growing today's in the the side, for $XXX that meet

XX RTX, the part to as X.X our since factories XX providing us our our sites Across technology, the the In quality footprint addition of end This real-time with by with increase output. start analytics in continue we efficiency, factories Industry connect proprietary digital connected the and improve year. we connected capacity, of existing on initiatives. boost to yield creating data year, now to have new modernize to of represents remain equipment and track XX% higher we a

These incremental efficiency, capacity to our critical meeting technology and in as of improvements our environment operate needs in strongest the we are demand history. customers the

our now move me for growth. to Let future innovating priority, second

$X.X our on research this road and propulsion, year development product customer-funded cross-company as on and and company our to develop hypersonics, in differentiated battle pipeline. our areas capabilities over mature We will we introduce to new and advanced map are base executing sensing, alone, connected sustainability, such solutions technology and customers next-generation to billion spend sell

missions providing our of in delivered space and electric domain expanded the nitride electric number Collins, Research batteries the working on deliver propulsion hybrid changer incorporates additional completed significant Pratt for and validating sensing and capability, of hypersonic technology programs we technologies hybrid Technology technology. integrated electric are of aircraft advanced a the our For motor, demonstrator, segments. This demonstrator the enable game and in radar And engine, greater defense. and that Recently, future system is to in functionality electric all surveillance example, we Center across our our range fuel a a milestone efficiency development supporting high-voltage PX power gallium the first teams proprietary distribution. quarter, the

learning. deployed invest deep continue transformation artificial additional in generate in also year, XX-plus productivity savings We In advances and we over digital functions. AI are use we across cases using that to currently and and intelligence adding have This our XXX internal RTX cost AI. use cases an incremental various across total,

new human in Our AI are equipment in complex tasks. improved investments such and predicting our also capabilities as and executing failures enabling aiding operators products

will next-gen in products innovation investments continue solutions allow of and to into develop the types future. us These well to

value and Our third fully our for breadth leverage RTX priority across our to scale drive stakeholders. is to

more competitive Specifically, cost structure creating supply chain. efficient this and and our common managing a includes

NGAD, also For our XX% unified that our cycle product harmonizing approach integrated all review next-generation to target example, for strategic as processes as spend our management life our is sourcing solutions also M&A prune businesses. technology strategy. road franchises. needed It where FLORA support we'll our And well course, X support bolt-on as contracts of and includes and to procurement of pursuits campaigns using portfolio over RTX our continue core map such We're grow common product platforms. our with and to developing a commercial and RTX of and and suppliers

everything our we that together, we RTX. And extremely commitment Putting compromise a what will the underlying we excited and customers expect of confident do. these of about quality all and and priorities I'm It's it all and and X compliance safety, our to on. commitment future is never unwavering

update leadership that, to over to With week. I we last want the it Neil, acknowledge announced I turn before

Collins strong to years for Steve Steve partner the and teammate, to X as is and President has fortunate at him the that of Collins. new Brunk are As is retire to excited bench a units over was as qualified we're Troy served decided I . taking Troy uniquely business very Collins, President you of after company. saw, Tim of XX the want the vers very the thank great X role leadership a has have in with and

Okay.

to quarter in to second Let take detail. Neil me you over the turn more it Neil? through results

Neil Mitchill

on I'm Chris. X. Slide Thanks,

were as growth by to make segment RTX. financial a prior was sales backlog. RTX of by and By a key As share growth XX% from we was $X.XX $XX.X continue was profit billion on which XX%. expected to operationally, adjusted earnings on across we basis, travel as sales international basis well organic and X% tax up up margin to consolidated X% profit an up up and and operating expansion operating were per grow. were OE Commercial Chris XX% up as the pension of with divestiture, had of of said, strong commercial the X% quarter demand. progress continue interest lower X to offset share cybersecurity we aircraft metrics all domestic, $X.X segment from income. as on year, defense XXX continues XX% our Raytheon billion . Segment at channel, and expense count, partially excluding higher points. support operating lower businesses was headwinds driven contributing as And long-haul Adjusted was execute up aftermarket up

$X.XX items. of On from significant GAAP and $X.XX operations continuing a restructuring other adjustments included nonrecurring accounting and was of EPS and acquisition $X.XX basis,

In addition, legal $X.XX resolution a EPS of to legacy to a Chris to matters related contract it expected mentioned, a as price Raytheon. also $X.XX the development charge includes charge the related at several relates GAAP and items fixed

legal will These investigations administrative the cover the will order disclosed Raytheon for are claims working with with settlement They Raytheon defective agreements previously disclosed agreements XXXX. cover in we its to and deferred XXXX payments Raytheon improper and and SEC. civil respect East DOJ With the of XXXX certain joint made the between previously pricing legacy dating to also Company some by a back Middle connection company matters, XXXX. into entered Systems prosecution were in and to contracts and an Talos which finalize the of contracts, investigations with venture,

recorded a quarter, the pretax in million $XXX reserves a matters our brings As with charge result, of to these $XXX we million. total associated which

we during consent primarily identified in voluntarily addition, agreement of expected pretax of charge In $XXX the and a controls Collins related disclosed State. of to addressed Department million are matters be including Company matters Rockwell recorded the into export which RTX integration Raytheon with a to compliance

In these have X-year the the incorporated on resolution term other moving part $X retain of outlook next each will the I'll to and we these that matters of into be year. X independent the our our this pieces pay agreements. required As matters, we flow you monitors take compliance free expect to updated the about of outlook year the billion cash of over total, through slide. to related for of

provisions financial put While government with taken had these previously issues financially, and us move the these external monitors above the we we believe we will behind continue what is the and items of we we cooperate forward. reserved, to have impact as

some price termination X we've time. of on million In anticipated of pretax customer, Raytheon the the been on that we've development programs conjunction you through to charge with front been quarter. as and foreign an know, in working the $XXX for effort discussing our this it with we've recorded challenges a As fixed contract, relates a

this outlook Again, the year. our revised cash cash into free we've flow for expected incorporated outflows

payments. flow cash and cash For with driven strong billion lower was across was that tax flow the by the collections free quarter, robust portfolio of $X.X some

we to million to We the quarter. also and continued our deleveraging quarter debt $XXX in debt paid and last October during repayments billion, capital of second bringing shareowners dividends of accelerated million another repurchase the was our the returned $XXX total primarily $X.X share initiated since down through

the Collins entered Collins continue And have we're approved the to we sell actuation to of to an million. also On business, the we complete into portfolio front, efforts has seen, actively business Italy as may $XXX winch the support sale and transaction. that hoist pleased for and you also agreement remaining over have

of example franchises. portfolio focus to on the great pruning are Another we our doing core

Okay.

Turning X. to Page

Let me a few outlook details updated share for our year. the on

$XX first But performance rate seen, our by continue demand half challenges, the uncertainty. of areas from businesses to our the and growth chain has pockets to year course, billion prior production sales strong, from we year, are, full range the range up of inflation outlook results you've $XX.XX X% increasing market been organic now and $XX up X% OE $XX.X expect all few million of execution. and of between As X our end supply X% to to and including we we million across billion, to continued There a prior of the sales to monitor, given for date, adjusted driven X%. ongoing are our

also pension the and interest end $X.XX range tax end, lower $X.XX income The on low to $X.XX in are higher high primarily a up effective $X.XX driven by new lower $X.XX. expenses, and full putting increasing from on at corporate $X.XX, our EPS year to We is outlook rate. improvement the adjusted by the

corresponding have for our in these We webcast of slides. the included updated outlook the metrics appendix

compared the cash current payments legal matters contract mentioned in offsetting cash cash improvement approximately free expectation these impacts our have free our in, incorporated we with and outflows All year expected to earlier, roughly On associated I of outlook Partially as into is to tax of some outlook. billion we've our previous billion. million. $X.X flow, approximately $XXX updated our flow $X.X be

our results over Nathan outlooks. through With and to segment that, me turn let to it talk you

Nathan Ware

both with organic aftermarket quarter, strength up and the Thanks, By channel, Collins XX% up defense. X. an were Sales commercial Neil. Starting OE by commercial basis, driven aftermarket, Slide were commercial on on in billion $X adjusted in and by a upgrades. a in mods decrease and X% off mods XG driven parts increase that XX% upgrades in compare With XX% repair, XX%, prior in difficult benefited provisioning a and and increase mandate. and from a the year sales coming

well higher year, growth wide-body were driven were drop-through Adjusted quarter and platforms, in prior from XX% primarily operating of versus sales profit to higher was and billion OE commercial up regional million volume. X%, $XXX volume volume. Commercial commercial $X.XX up or the the for sales XX% prior the higher defense up narrow-body, year by and as on OE defense primarily aftermarket as by due

operating to $XXX X. prior on were Commercial basis organic we digits, single $XXX across now of commercial were XXXX. Pratt up sales mid- high adjusted profit Looking engine the and ahead, and in with deliveries we favorable Shifting up the strength both year growth billion business. adjusted basis, sales Collins higher an and quarter And a Slide engine from $X.X versus commercial lease and Whitney on growth to on large defense XX% up digits full expect expect both on mix Sales XX% air the by volume. X in all on to million continued grow and channels. organic million sales in single continue high traffic basis range an to of driven between

commercial million engine commercial the partially on versus up $XXX and OE XX% large higher by by the deliveries prior million a was aftermarket well as the higher were up FXXX favorable business, sustainment volume volume Adjusted up in XX%, in contract Drop-through mix Pratt and year $XX million prior was volume operating commercial in both year. the of primarily were businesses. large the matter. platforms. favorable $XXX absence driven engine headwinds favorable sales offset And as mix of commercial mix higher aftermarket OE the across FXXX favorable and from profit and Canada sales and Commercial engine driven by large quarter, military

and offset expenses. production and higher R&D more from costs volume by SG&A favorable mix Drop-through military than higher and was higher

sales by year and volume double $XXX $XXX profit Pratt's stronger from million to operating commercial higher and we million outlook. Turning adjusted now prior organic We up grow of see full continue growth and military range OE, on mid-teens to our low basis, expect driven to an versus XXXX. adjusted between digits

an was by bookings resulting of divestiture and Patriot, volume, Adjusted including favorable volume Now Raytheon turning versus On as on $X.X profit On million the Raytheon programs completed the drop-through quarter, first million UAS the mix divestiture, land were quarter. sales the had sales organic cybersecurity to Slide primarily in billion rolling XX-month and billion in of and by basis, driven of impact by net the on improved X. backlog productivity, Stinger. $X Raytheon's the $XX higher Adjusted air is cybersecurity primarily $XXX driven quarter basis, defense book-to-bill were of X% in billion. offset systems, up counter operating up $XX on X%, result a prior of down and a year, X.XX. of partially the a in higher

In X a will from had units classified addition produce deliver Chris award also million and earlier, $XXX to that earth of provide observation. the NASA Raytheon SPY-X to awards mentioned award advanced and design, $XXX that million

mid-single to mid-single flow. improved digits now Looking of ahead, digits, organically, sales grow range expect we the material by Raytheon driven prior up to by from low

prior $XXX this we between $XXX $XXX from impact XXXX, result, Raytheon's and divestiture. the and operating now from and a versus up grow cybersecurity million, million to range the between the million includes expect million As $XXX profit of

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

Christopher Calio

XX. Slide on I'm Nathan. Thanks, Okay.

and very we're year. term our look and platforms the we've at best if aerospace today, franchise updated for full But back XXXX the right got results second long the heard content think and of for RTX, the across strong, confident were commercial, in right you programs quarter beyond step outlook defense. with position the just our you've on As and operating

Our decades across installed industry-leading base come, will large threats our landscape. growth for the playing capabilities out support defense growing the significant to and and aftermarket commercial address global

All right. let's questions. that, With for line open the

Operator

[Operator Arment the comes first Instructions] Peter line of Baird. question from The from

Peter Arment

results. nice Chris,

I the GTF availability. kind just little where back talked any like sounds going in is and It about metrics and these fleet Just, maybe of track. just able come But maybe might to is maybe kind or getting the metrics if just MRO plan I plan. on about life going still distant any to the like bit. actually peel shops could you you into according opportunities MRO guess, of be management full and pacing before any some remains capacity the past on know . items everything sounds but color left material you're It as seeing the what of planned, XXXX. any a to

Christopher Calio

Yes.

question. the for Thanks Peter. Okay,

you take where stand. things me through Let

assumptions I or noted, are compensation you heavy As lingering assumptions inspection our findings noted even upfront, rates between around visit as better shop and key turnaround the our we all light all consistent. and mix time, consistent on remain planned. And AOGs, fallout customer the and than

So key around good the stability assumptions.

the is first As the focused on we on of some we're XX% we've key capacity And over is enabler. from of you year. the saw signs better XX% I progress good XXXX. improving in in And the output half And material shops, first front. the in QX. MRO again, up some half flow, here this mean, processes to XXXX first and QX output know, output was versus the half up the on added

helpful. MRL on The is there, We continue the which key is some to material. output course, put of enabler drive

mentioned had You upfront. that

X% progress on are We're year-over-year. about and some structural continuing Structural castings sequentially XX% see castings. to up

drive to well. continue forging, powdered additional good machining. there. almost So parts, and as capacity we then add and on the continue And forgings metal for Isothermal output progress up XXX% year-over-year, were there to we inspection

our doubled for the capacity year. nearly we've example, For Sonic inspection

first try the just note management OE deliveries shape despite a to as half driving also drive through unrelated plans as get to fleet this sort So XX% can. on some in again, I'll healthy the Peter, year-over-year sequentially, chain sort supply enablers, output of all to portabilities. as on of possibly were OE we of up to a well. up in key continue basis the the grinding fleet

at And we're Farnborough recently. the with additions to were also GTS that announced backlog pleased the

to into control So focusing again, the can backlog. on new supply fleet plan both orders chain drive what on we continuing and the management and

Operator

question Research. Our Robert Vertical . from next from coming Stallard

Robert Stallard

situation on following I anticipated. the clearly their Chris, comment is on the as was because new they've cut not as wondering you and if getting engines Airbus could been recent many forecast they GTF theme. on with what

did go into as engines the . pool. those spare So engine

Christopher Calio

Yes. Thanks, Rob.

needs necessarily ROE Again, the basis. sequentially need that heard we to So up minute we're of and be and us, of and ago are our sequentially a Peter And with of what just you strong again, seeing outlook from first on our growth half me where deliveries kind Airbus. XX% a reflects year-over-year assessment say support on up Airbus We're need. to year, not year-over-year. aligned But they where we're

back balancing both the material, continue we'll and getting and they do continue in that's to need. we balance but continue MRO in and and encouraged drive the production need. Airbus engines the fleet. to need alluded we're get I we And true. to for that that support again, I You be half, the to they I by think But think the of Airbus going to fact OE what position and needs, of spare in what And a we're engine be terms to what to OE spare

Operator

the of Wolfe And from question coming next line our Research. from Walton Myles

Myles Walton

of percentage Neil, if terminate customer or cash cut not the And could that was Are to it there contracts could cause handle you proactively on a want distress? are a where backlog? would specifically this decision on I'm contract, losses easy to there remaining, then what little And decision, an impact. side, revenue, not programs similarly? the to other sort lastly, extinguish what right? of still problem and Or Raytheon, you dig maybe maybe or you sure the Chris bit into that's defense which a

Christopher Calio

best Certainly what our that we an classified of and preformation the the we Yes. core struggled to had And right wheelhouse, technical the in was where focus just the resources get had us do Neil we we've to interest ultimately just solutions in to and didn't I'll got. this in. here we down kind taken not to certainly was a and can competency. to of us that reset But in the would to it RTX we've and been productive there and to that say, that go continue other a start not this Thanks, Miles. customer out on the came decision. chime path was of in easy fact to program point that alluding contract then of allow not a on think with was our our anymore work meaning we was it programs struggled go significant we've ultimately within decided some

'XX. been price handle fixed other, mentioned programs much to to development, some that and better say than classified had in them, X we've on we different and of we here those we we're about a to there we've understand much needs talking And what are here feel call 'XX I and milestones closure. much than here. about. risks them I'll like the terms be get feel a done X profile important the took better but the got handful of development like on talking have action those Those in risk You would

Neil Mitchill

impact. Myles, of add, cash flow to in the terms just And

to there's just today, we a sit So here changes really 'XX as outlook. our I made few that

of related seen operationally is about we've first talking to The $X the that $X.X to Chris just we've to about billion legal offsetting is was about some We about. matters. the that billion due our in payments And sold billion that contract that related $X.X tax improvement done. matter planning

net-net, billion. that's $X So

in the fourth And It sits when get towards on expect that early in quarter. this that, the year. final resolutions but fourth would September or late quarter certainly depend of that's government will with the mostly we agencies, the trending I

Operator

coming question next from . our Sheila line of And the Jefferies. Kahyaoglu,

Sheila Kahyaoglu

So X maybe Neil, you. another for

on Just of you're income and an $X.X basis billion generate billion to net going of year do about this cash. $X.X adjusted

DOJ, is Some with tax. the the and items onetime metal of that powder

that more we gap And can the that flow? 'XX? it DOJ, cash So outcomes about we the cash on elaborate how just the on think how then a impact closing of little do outside income bit you net and think about of to

Neil Mitchill

Sure.

cash flow. free with start me Let

that just sort the me the into changes heard outlook talk rolled we year. our of You about for

think the $X billion, of even a are pretty a flow of free of includes nonrecurring And you that get to items is about for billion, that adjust I billion, things, level As value $X.X operational. absolute those the you couple if that kind remember, substantial. maybe higher $X.X of cash

think year get look I forward, this we as powder year, So payments us metal and we and just behind color. next Sheila, the a little

So outflows far, we're a little less than this $XXX year. metal million in powder into our $X.X billion

that ramp We up. obviously to expect

doubling agreements X/X the the fleet got customers that with and number about agreement. about under us heard we've of talk of You

third the strong organic, you evenly that real can fourth the be you flow. payments would there's underlying this rest sustainable split So pretty at if the I operations, expect cash and of see respect with kind to But of quarter year. look

that's be itself see will think sustain time. over looking what I to

Now in $X.X particular, like first improvement there's billion of talked arriving Obviously, cash inventory improvement. about a some in of working I've at half. use year-over-year capital was our billion. and the $X.X

half, collections customer bit we're side. of OE that contemplated stronger the We on got rates but that, is turn in for production we've expect a from the around our which in second business. seeing little headwind typical the that to We've

the balance is that for year. of So this rest

So free I the characterize that's cash how would flow situation today.

this think certain about feel happen the As going to amount we the year. outcomes, it very to impact relates and of that's DOJ I the cash

There's months. the few remarks, work agencies. As we talked do reached that agreements a to could with to that get take various about prepared finalized some in government principle. we've in our

following available the it filed it's year happens, so XXXX, And payments say that. in that But to beyond There's that range little $XX publicly. kind and million when very will we'll be then be a required thereafter, the of shortly manageable. I'd that. with get it's lingers make associated

Those global obviously the as as costs that on continue residual invest monitor as some our some to support agreement include will well activities. we we'll consent internal in costs our processes to the trade-related payments improve

leave for now it with at I would So that those items.

Operator

next coming Bernstein. Doug Our the . question is from of Harned line from

Douglas Harned

what What shop lot is Thank that is brought on shop, the you. in shop that the the down GTF about talked you which the of and heard visit great. significantly you've a well that we've as the time times,

did away do resources that. availability presumably, parts. parts to with so order And And improved you from that's enable you to allowed I GTF BXXXX provide better work QX, divert to this in you in is know

X this. on so And things

now First, on to stand come you that we've visit still where long even seen down do are those that MRO? Is X though to perhaps VXXXX have shop really could address wait And issues, is seem of induction would times be normal? it then helpful. significantly, back everything times second, those kind if quite you and

Neil Mitchill

times. let then induction about over I'll turnaround times little start talk me GTF bit Doug, on and Chris the a VXXXX, hand to to the it

half On to the at first we're on inductions VXXXX date. basis, a XXX about

an also that shop the expect and work full So about good are half XXX we talked more we second in of we're the year only that still news had scope. And year, is we with seeing million a acceleration, to of the continue. seeing expect the there not I we that guess in basis, that, on number visits increase

of particularly will all coming the see Whitney, & in that half we'll contribute aftermarket. to growth expect heavier to So these overhauls. Pratt from second are that . And the

part VXXXX operating Pratt's is the that. for story we being biggest focused of half second around outlook what call engines, mature the commercial the really So the

today So front. that's on we where that sit

a of GTF. comments couple on maybe Chris,

Christopher Calio

Doug, I'll just relying the do I on our say that given other before the stress on V, obviously, And yes. that, customers heavily the are Yes, in fleet.

So that inductions, making base. heavily the focused turnaround we're whatnot, on sure V is for the support times customer there and that

X shops are GTF we've Gate the turnaround shop Gate our the the our positions On got shop we you're time, material right in which we've got MRO, partners, material and really In both significant seeing and right. when is in flowing, encouraging. in when reduction X

lot. parking wing, we did of AD There of a people lot are hit a some really what that are times that when the induction the of call The engines function came obviously, would proactively. and off

So we need that shop. engines the a into to working inducted lot get large parking still through are of

by making we're heavily chain we're why we're the there, healthy. focused the sure is which is material on supply seeing Again, encouraged is so what when

forgings. support us me as talk about AOG that isothermal castings, heard down unlock and structural take biggest You things our we numbers customers. for the These the going to are the be are

Operator

Epstein the coming question from of . line Next Ronald Bank America. from of

Unknown Analyst

interiors, if little about Samantha. doing what what This there. expectations are I kind you was particularly talk is wondering a and of could your they're Collins, bit .

Neil Mitchill

were the we Collins above we're rely frankly, we've the there. X where the is start for segments, is to and on the the mean, I going of seeing SBU mods are where frankly, upgrades. And in business. all me we're would the Let above I Interiors second Collins X about . And or is the significant of still and substantially thing portfolio the story really half uptick in there. segments in across businesses interiors improvement lagging. And at seen XXXX. there many them say aftermarket place performance strong

half be So we're growth to seeing a part and encouraged we second expect aftermarket in driving by the the of that to substantial that's are going year to we there, translate Collins of orders this substantial year-over-year. do

Operator

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

Seth Seifman

you you of of wonder opportunity areas stands, Chris, like Kind of of address flow free if year. feel risk, and areas cash kind . the could confidence. for about your talk that next Neil, still level target whether of I

Christopher Calio

don't as Thanks Yes. The defense end side, and now, markets proven drivers and have we demand question. pretty commercial remain Right resilient both remains for the a front. business on outlook. change strong Seth, our reason up we fundamental to see strong the the set

I several think with everybody we're there else, XXXX implications. tracking that items are have that

to rates big the OE think in the of strength walk I aftermarket. kind part see of cash XXXX. a the in continue That's

the walls seeing, of here stability based the And But cash everything like heard to feel ramp. got is we're but that's the goal improvement environment. XXXX still and me we chain the both and again, our you macro X talk today, supply the course, on achievable within I just to see continue sequential mean about

Operator

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

Kristine Liwag

getting Maybe Pratt, Chris, with better. back isothermal are Neil and you guys forgings that have Nathan. highlighted

increases structural to provide historically mean, ups. linger, all to Can capacity doubled look, which ramp this aerospace of are the I be color in on seeing and issue. structural You're you an more why also, castings casting Sonic inspections, good, continue X but continues been then for has bottlenecks previous

And tightness color be on could So is you any the helpful. around approach this underlying mitigate provide time I would different your how guess, risk? to

Christopher Calio

value both Thanks, you're has of of than some a sort since I ramp-up habitual structural in to that, to castings sequentially. back the continue Christine. higher seen 'XX, we've 'XX to airframers, frame, engines, here, the And the X% up of order meet Sure. been MRO. improvement stream the while even spare OE to constrained and beginning the be It demands in mentioned time right, needs

because positive needs grow. So seeing that incremental same to improvement, the constrained And few people continue it's And do of to we're there again, lot a the of on players. it while in is reason us rely sort the this. are industry very

is we're all OE the need, clear we're our point people can about investments up so I demand what deliver. would on necessary from so To also make signal sure same but time. we getting again, And on need and to knows working we're that we making that supply it need as can LTAs they really MRO that, that what an as make say crystal go chain perspective. And around we that we then your quickly doing know sure can an the differently. ramping both we hard what when

Neil Mitchill

to there, help lot would people criteria. is are I required own the inspection these the suppliers too, thing our deployed we've add One forward through assessments around sort that of to that a

through that lot we've parts a that engineering that our can working clear are important that to these with put couple teams think base years, last know, production the ramped you I tolerances. have As items process. something And been And supply the recently. frankly, collaboratively it's that's we've we are but extremely they make as of . to come built the of to those effort up sure over into tight

Operator

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

Cai Von Rumohr

mean, in bit it . looks on like in Collins, that, guide, a but the half and Give at profit and you some Pratt margins look increased if the lighter you in the sales are Collins than quarter, could. are second sales beat, good basically basically quarter. the is for assuming, second didn't you've Or the beat, touch same Operations conservative? I that color the year, you us little margins or

Christopher Calio

strong thanks growth. results Cai, pleased kind there comments. with half there, and you headwinds. that think our we we've the segments updated Overall, are When the and for we're to full on what's of first about reflect the as line top guide there, outlined going year some

got some of of in the primarily bit of got higher defense E&D. we've lower And some product a We've little seen rates. we've & pieces OE costs, the underabsorption with higher Pratt Collins, some

Now we those as such with some tightening. have spending offset headwinds some reductions items of and below-the-line corporate

and we there second year, outlook. of few the half in enter as here, the updated but pieces good momentum we're a are moving So we've the got confident

Neil Mitchill

Chris. Thanks,

me pieces. of Let some maybe moving little bit, perspective the the top on add line, terms in a Cai,

You the sales took our up high at XXX the we low end, end. at XXX saw that

the midpoint, think XXX. So about obviously,

down, would Pratt the million Whitney that. put that pieces and you in business. I really break of $XXX that X If It's of is

the saw inputs, And We About the through. military and dropped particularly million that, FXXX of $XXX slightly really the strong is material We higher XX% rest OE. business. supporting FXXX that aftermarket. is in

the numbers in and first You quarter. we had second saw the

we're mix year through and well. that And letting good so full we're as seeing to flow the

little we're GTF mentioned, of R&D certification supporting in Chris of spending FXXX production particularly costs, continued advantage and the the the side As seeing related as profit obviously, military of the higher things. higher metal down of powder we burn business a Pratt, bit side again, the the the contract and

offsetting we about At Collins, higher of also I to think high points taken the before. side that, million were in range that OE up that more our sales. about side it's particular, that the than a a but on took hundred bit, X% little guide Collins military couple well. X% digit, as commercial single the Boeing lower at I maybe of see down a the X is as of That's rates offsetting we and We've And end think, or of million, $XXX aftermarket the that side. on

increase on point commercial defense. the X a about aftermarket, So on X points

year, up mid-single the to corporate level. and at the it for Collins hold solid round at rest what a million. going kind to there. now you organically and activity the in digits. about kind second of if placeholder It's Raytheon, higher eliminations as we Just There's see out, $XX Pratt flat, intercompany of will, We're we of the saw more of and quarter Collins lot a between Raytheon slightly

I certainly, quarter we're play slightly ranges, And we're the the out. there's course, another on top them the early, want a here. first prior of the our see results up seeing profit half end, more, in So again, that But results. taking we're top encouraged by you'll the if to side. on end of towards see of trend kind

Operator

from coming the from . Citi. next of Jason Gursky question Our line

Jason Gursky

on just paint whether of the a that fuel more a me what the comment going conversations and I engine potential call. wouldn't spend clear next XX% be welcome us the to starting of to generation be? rise in you all is of customers grow. and next can suggested that then fleet. executing back efficient. recognize of you, are might GE some . Not might about of you're overall call flow I existing was Farnborough its Thank I'm comments the if where These from on to was I'm going customer the And like morning, on the more to get kind into have suggests that that with existing the week what you market. engines look your to GTF it you made interest the platforms. that for But about narrowbody if at engine to on timing a Pratt the somebody narrow-body new side GTF maybe talking rolls the kind or relative generation good think wondering picture everybody. about Nathan, But know is perspective, minutes to Great. Farnborough at this out few Chris, earnings wondering continues existing And a I coming future. your -- the

Christopher Calio

a of near on imagine, service. those Jason. And you, then of there I'll sustainability this narrow-body maybe term. having into platforms -- when of into medium kind the get I week, of a Farnborough break been be and lot on sort launched was Thank you as and conversation this just will longer around and will might future

alluded to is results medium, focus sort and durability, XX-plus percent the way out we're of you about some and certification environmental that continuing this, of got on through We've Near so that path. good and testing. of down Right our our the now, advantage. GTF we're

another more but of know, X% you reliable fuel As a burn, and thrust, X% engine. durable

So that's the near term.

referenced planetary number medium, gear we blades, longer and key I think will for fan a tell insertion technologies like GTF future in hybrid of into system. the advanced you, electric. term, about of investing And sort enabling then evaluating As composite CMCs, you configurations, materials think, we're

that coming as of work. about electrical an if the the electric I narrow-body, you more for numbers points think assist, that out corner Some And that or view of lower around sort you would flight of are envelope, platform, smaller of of Farnborough those were the I hybrid platforms, more call will, applications. electric what view hybrid

invest and strides strong of programs. really some demonstrator there to continue we made our in have And some

architecture said we've before, the to have this runway. again, continues So GTF

in technologies to these going we in single-aisle. all that invest insert continue the enabling are that to next-generation able we so for we're to the And that think be

and many also really we're tell focused I'll on I point that and efficiency so. in fuel the us also durability make you the of industry focused reliability. on will that are rightly

coatings efficiency manufacturing techniques those can in trade-offs. the is the that going of there's be that sure why we advanced engine, We've which make durability advanced the engines. invest and make sense, in got always go push to help trades to to continue other we to with things continue like As gains

If what you efficiency they We've got in today, is make we're durability time to that's sure the that efficiency That's frankly thing want and we're that to also as fuel -- that wing. driving in we sustainability and operators customers talk engines rightly business need model. win. the on addition the our focused on need #X of what to the on so, and how that's for the time

Operator

Wells next coming Matthew from of from . question Our Fargo. the Akers line

Matthew Akers

see to little could a divestitures you touch if bit. I on wanted

able been there. the from . specifically, You've kind EBIT we're inning pretty revenue of to And what give Could you about What's deal. winch are and just and active you in there? left talk to hoist divest? the contribution

Neil Mitchill

be with the not some of right Matt, is give out to in today, the We're once this happy, get Neil. that announced going form. transaction that in I'm is that able particular. obviously, but closed, you value wind to got really numbers hoist transactions we've recently there. and But there in the we'll good we

the the Italian fourth to quarter. to Collins, in approval the close are the actuation at in relates quarter it We business see pleased last to that as we expect

that at We're hurdles take looking continuing we and to looking going transaction. But Again, portfolio. get but see are of bit a there's here, the it's there. still always required close things can't other little We're that support to we're to we some efforts nothing regulatory at. through remain that Safran time, the

I talked into As type and maps we're road that M&A targeting appropriate. Chris have bolt-on about, fits where it's our technology

do a from to to with. talked we but be looking year. And again, We pruning we rigorous through want them the and but tell today, that there, today. that And of thoughtful want past, nothing you we about at to always up to be handful We've come we're of in process, always a also but a say portfolio we're careful. probably be opportunistic some then nothing going can others there'll I announce every the perspective, as

Christopher Calio

continuing look to might strong term take want solid we differentiation we to do aftermarket there at rigorous Maybe through criteria fit at every robust Yes. they have while right? add that process prism. just and that a year. into long the technology the namely to sure tails, So to look And that, hard to and RTX, be portfolio are Matt, businesses within portfolio a make the performers, that

up RTX eye our trends, an I'll investments you we've also making of keeping commercial companies set and some been We've in defense. on early-stage those that both remind Ventures.

for may those some as opportunities our yield criteria. well bolt-ons fit that so And into, again,

Operator

And David line from Barclays. coming from our next of Strauss question the

David Strauss

the and at down. you the to for said on if or Want comments could slowing? . if up on Boeing click meant them you talk actually Neil, MAX Maybe building the more Collins that OE know you you possible, XXX reach, on are which going that? didn't reduced about the and MAX you're exactly XXX you and I are your took have where just And if rate

Neil Mitchill

that get per more I not tell rate rates I'm terms is look in year. XXs Sure, you started of as we specific And half ramp David. obviously, what the aggressive that of with ramp that, tell would Listen, like. the to the into low to What we're the in a se, in I'll you outlook we rate would year going on. the the do first expect goes up year but

from I'd rate So it's calculated it's Boeing to but you'll able And not say assumption, a increase. hear a next week. flat be

about else. I'd I think their like monitoring everybody with they'll sure say just we're say something airframers, it to aligned rates. the but today, we're have I'm

There to desire we're from doing barring best aware Chris is of and customers rates, on talked now. not We're outlook airline perspective, the increase OEMs front, Same balance . it right there some with change well Airbus those I'd an here. the to team we're between say we're already. can the we reasonably output. But calibrated, that On always about thing. the aligned but Airbus a

Operator

question Robert Research. . from our coming And Spingarn from Melius of next the line

Unknown Analyst

past, cash Scott model Chris through on is you recoup and your lose the Mikus have in exactly that heavy don't on the like or This for the development business in a sales cycle, Spingarn. to aftermarket. engine go OE the Neil mentioned OEMs the Rob where investment you've

wondering be the that drivers profit the of between can airframers attention just general when and the misalignment I'm OEMs resources. allocating with So engine scarce

program, On drivers airframers OEMs? and industry engine clean aircraft to better be a sheet going profit future the there to discussion broader align between is those a

Christopher Calio

you've it's are in X is does just of the incentives team. make aligning Yes, the going model. When side And Pratt money, customer to of interest I'll question. the speak around to be from the discussion the terms airframer -- the your yes, not good a Scott, question, and need between also you our in the you from sometimes Thanks engine short for got And sort a there's believe I business caught answer that's is of from different team, it tension. a that's ultimately, how the but -- there. drive in only

the models more And be customer obviously our in we so better for right, for that going platform. And and the I better you're aligned next I and again, play their opportunity to And get the the will entrenched seeing both that to align serve this on a current do customers. of OEMs sketch think can to paper the is our it But We're out. misalignment better chance sheet the clean platforms. times, base. the gives think business be how already I think platforms, with we at new a we're out do with us

Operator

And our Sachs. of line the next question coming from from Poponak Goldman Noah

Noah Poponak

full will . many range put fixed to With powdered number need even possible engines many numbers process, and line to of what wing to of are percentage versus that in process that, of so? actually off if wing, through have waiting do around fully how gone the come it the the have a GTF come is to regard how metal off --

Christopher Calio

Noah. Thanks,

powder sort give me sort back let metal step ramp-up So and here. of just you and a of insertion background

since before, talked year, last going the we've full everything coming to parts. had metal about as So the OEMs line late powder life the off

well. I'll phased ramp-up. engines always MRO as all call have Now spare those it, a was a,

and the And of accelerate in and up here so to start to into ramp second see going we'll XXXX the year, half XXXX. into it's this to continue

forging on put a isothermal emphasis Again, we've lot production. of

see said, a lot the we fleet. And some might continue solid ramp I shop seen -- a some we the we needs, when to system, of me, shop when the an or work it we what's up. see said you As parts operates, demand comes the a it on of given scope with going we've into into do progress to need as before, excuse another And put not more to visit, makes sense. visit where imagine, as determine upfront, was shop to evaluation based insertion naturally engine when whether an those for it happened

can longest these Again, that time that we're trying the appropriately. get on to wing sure we allocate we resources and make

other the do those -- which an the that in we that things so to as it and come engine And all the which life into are things limits the was inspection full can advance already slated of go the we've time get because all in engines to established. parts do that back decision in

and a lot here. going 'XX production pieces metal and suffice there's . it's say, 'XX So ramp this of to But and of to back on half powdered it year, insertion be a continued MRO. moving

Noah Poponak

Okay.

far? through As assumptions are more or assumptions what change of customer thus output experienced you the it negotiations, are the has been able because either Or incremental similar are you remain finding you've based kind better to in worse yourself going line? . on is

Christopher Calio

they they different similar, customer you, I'll operate. how remain negotiation operate is assumptions tell The each upon and Noah. based But where

call say, And board. the upfront are using tailored But agreements those, we we're the assumptions to I criteria. same, across would so it, and key airline-specific I'll outlined the that metrics

Operator

coming Bank. line the question final of from Scott Deutsche Deuschle And

Scott Deuschle

terms of are up ramping seats the first-class heat some on on momentum it, you FAA missed Chris, XXX are getting And but sorry with of in you the progress wide-body I certified? then seeing I'm if output these seeing exchanger.

Christopher Calio

Scott. Thanks, Yes.

the I question, -- more certified relatively our we and understand but ultimately of certification lot airlines. get there arms the certification and what yes, and on hands into need think do are the to high and are complex, the we we requirements work bar, to we around through continue people the way our there. These have these a think seating actually we to airframers So

here, everyone and set remind to a Russia that to and separate just think Russia, I'll part in to another of exchanger, move as taken the that was of we Boeing's had starting supply is. chain, up Ukraine, result ramp a that, conflict to and a support then time, set heat out there up some need demand we're the what that that we we On rates has the up but source

Operator

the team. that, with will now to the I over And call turn back RTX

Jennifer Reed

right. That All concludes call. Olivia. today's Thanks,

I good team I and day. be Relations always, available will and joining a follow-up for As the Investor us appreciate questions. really have everyone today,

Operator

concludes today's now This conference.

disconnect. now may You

RTX (RTX) 25 Jul 242024 Q2 Earnings call transcript