• Adjusted Sales: $80.8 billion in 2024, up 11% organically.
• Adjusted EPS: $5.73, up 13% year over year.
• Free Cash Flow: $4.5 billion for the year.
• Backlog: $218 billion, up 11% year over year.
• Fourth Quarter Adjusted Sales: $21.6 billion, up 9% and 11% organically.
• Segment Operating Profit: $2.7 billion, up 29% with 180 basis points margin expansion.
• Adjusted EPS for Q4: $1.54, up 19% from the prior year.
• Free Cash Flow for Q4: $492 million.
• Collins Sales: $7.5 billion in Q4, up 8% organically.
• Pratt & Whitney Sales: $7.6 billion in Q4, up 18% organically.
• Raytheon Sales: $7.2 billion in Q4, up 10% organically.
• 2025 Sales Outlook: $83 billion to $84 billion, 4% to 6% organic growth.
• 2025 Adjusted EPS Outlook: $6.00 to $6.15, up 5% to 7% year over year.
• 2025 Free Cash Flow Outlook: $7 billion to $7.5 billion.

• Warning! GuruFocus has detected 8 Warning Signs with RTX.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RTX Corp (NYSE:RTX) reported strong financial performance in Q4 2024, with adjusted sales of $21.6 billion, up 11% organically.
• The company achieved a 13% year-over-year increase in adjusted EPS, reaching $5.73.
• RTX Corp (NYSE:RTX) ended the year with a record backlog of $218 billion, indicating robust customer demand.
• The company expects continued growth in 2025, with projected adjusted sales between $83 billion and $84 billion, translating to 4% to 6% organic growth.
• RTX Corp (NYSE:RTX) plans to invest over $7.5 billion in R&D in 2025 to advance technologies and meet customer needs.

Negative Points

• The company faces challenges with supply chain constraints, particularly in structural castings and isothermal forgings.
• RTX Corp (NYSE:RTX) anticipates a $0.15 headwind from lower FAS/CAS and non-service pension income in 2025.
• The company is dealing with ongoing powder metal compensation impacts, expected to be between $1.1 billion and $1.3 billion in 2025.
• There is a potential risk of inventory destocking at airlines, which could impact Collins' aftermarket growth.
• RTX Corp (NYSE:RTX) has not yet achieved its pre-COVID margin targets, with ongoing inflation and lower-than-expected OE volumes posing challenges.

Q & A Highlights

Q: Chris, on powder metal and the GTF, there wasn't a lot of discussion. Are we still on track for the $800 million to $1 billion step-down in 2026? A: Christopher Calio, President & CEO: Yes, the outlook remains consistent, and the technical and inspection assumptions are intact. MRO output is key, with a 30% increase last year, and we aim for above 30% growth in 2025. The supply chain is crucial, with improvements in structural castings and isothermal forgings. Our focus is on bending the AOG curve to return assets to customers quickly.

Q: How is Raytheon aligned with new administration spending priorities, especially regarding international demand and replenishment? A: Christopher Calio, President & CEO: Demand for Raytheon's products remains strong, with a $63 billion backlog and a 1.48 book-to-bill ratio. In the US, it's about replenishment, while in Europe, it's about integrated air and missile defense. International demand is robust, with NATO countries committing to increased defense spending, providing a tailwind for us.

Q: Where does RTX stand on the NGAP program, and how does it impact Pratt's financials? A: Christopher Calio, President & CEO: We've been developing our NGAP solution with rigorous testing and are pleased with the results. This funding will help us continue development and reduce risks. Neil Mitchill, CFO: Pratt is expected to see mid-single-digit growth in military sales, with NGAP being a tailwind for the business.

Q: Are there components of the 2025 free cash flow outlook that might normalize or reverse in 2026? A: Neil Mitchill, CFO: We expect a $1.3 billion working capital improvement in 2025, with additional runway for improvement beyond that. There's a one-time international tax payment in 2025, but overall, the $8 billion to $8.5 billion operational baseline is strong.

Q: Can you provide an update on the supply chain constraints and progress over the last 90 days? A: Christopher Calio, President & CEO: Structural castings and isothermal forgings are critical areas, with improvements seen. Collins has focused on microelectronics, and Raytheon is ramping up rocket motors. The interiors business at Collins is recovering, with progress in seating and heat exchangers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.