How has the merger with Raytheon Company and the separation of Otis and Carrier affected the financial results?

The merger with Raytheon Company, completed on April 3, 2020, is reflected in the results starting from that date, contributing to increased net sales. The separation of Otis and Carrier on April 3, 2020, means their historical results are presented as discontinued operations for all periods, significantly impacting year-over-year comparisons. The company also incurred merger-related costs and restructuring charges related to these significant corporate events.

How is the COVID-19 pandemic impacting RTX's different segments?

The COVID-19 pandemic has severely impacted RTX's commercial aerospace businesses, Collins Aerospace and Pratt & Whitney. This is evident in reduced commercial aerospace OEM sales and aftermarket demand due to lower flight hours and aircraft utilization. While the defense segments (RIS and RMD) are performing well, the company anticipates continued significant negative impacts on its commercial aerospace operations for the foreseeable future.

What is the company's liquidity position?

Despite the significant loss and the challenging market conditions, RTX believes it has sufficient liquidity to withstand the potential impacts of the COVID-19 pandemic. As of June 30, 2020, the company had $6.975 billion in cash and cash equivalents and $6.84 billion available under its credit facilities. The company has also taken steps to preserve capital, including cutting discretionary spending and reducing capital expenditures.

RTX 10-Q Quarterly Report Q2 FY2020 — Revenue, Net Income, EPS

Q: What is the primary reason for the significant loss in the second quarter of 2020?

The primary reason for the substantial net loss of $3.835 billion in the second quarter of 2020 was a goodwill impairment charge of $3.2 billion recognized in the Collins Aerospace segment. This impairment reflects the severe negative impact of the COVID-19 pandemic on the commercial aerospace industry, leading to reduced demand for aerospace products and services.

Summary

Raytheon Technologies Corporation (RTX) reported a significant loss of $3.84 billion for the second quarter of 2020, largely driven by a substantial goodwill impairment charge of $3.2 billion impacting its Collins Aerospace segment. This impairment reflects the severe downturn in the commercial aerospace industry due to the COVID-19 pandemic, leading to reduced flight hours, aircraft utilization, and order cancellations. While the aerospace and defense segments (RIS and RMD) are performing as expected, the commercial aerospace divisions (Collins Aerospace and Pratt & Whitney) are experiencing significant headwinds. RTX completed the merger with Raytheon Company on April 3, 2020, and also separated its Otis and Carrier businesses, which are now presented as discontinued operations. Despite the substantial net loss and the ongoing challenges in the commercial aerospace market, the company highlights its diversified portfolio and believes it has sufficient liquidity to manage the current environment.

Financial Highlights

52 data points

Beta

Revenue

$14.06B

0.1% Gross Margin

Net Income

-$3.83B

-0.3% Net Margin

EPS (Diluted)

$-2.55

Total Assets

$161.52B

Cash & Equivalents

$6.97B

Free Cash Flow

$210.00M

Financial Statements

Beta

Revenue	$14.06B
Gross Profit	$1.85B
R&D Expenses	$695.00M
SG&A Expenses	$1.81B
Operating Expenses	$14.72B
Operating Income	-$3.76B
Interest Expense	$335.00M
Net Income	-$3.83B
EPS (Basic)	$-2.55
EPS (Diluted)	$-2.55
Shares Outstanding (Basic)	1.50B
Shares Outstanding (Diluted)	1.50B

Key Highlights

1Net loss attributable to common shareowners was $3.835 billion for the second quarter of 2020.
2A significant goodwill impairment charge of $3.2 billion was recognized in the Collins Aerospace segment due to the impact of COVID-19 on the commercial aerospace industry.
3Total net sales increased to $14.06 billion, up from $11.33 billion in the prior year's quarter, primarily due to the acquisition of Raytheon Company.
4Operating profit (loss) for the quarter was a loss of $3.76 billion, compared to an operating profit of $1.39 billion in the prior year's quarter, significantly impacted by the goodwill impairment and increased restructuring costs.
5The company has a substantial backlog of $73.13 billion in defense contracts as of June 30, 2020.
6Restructuring costs totaled $427 million in the second quarter of 2020, primarily related to actions taken at Collins Aerospace and Pratt & Whitney in response to the pandemic and merger integration.

RTX Corp Quarterly Report for Q2 Ended Jun 30, 2020

Summary

Financial Highlights

Key Highlights

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