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RTX 8-K Report, Financial Results (Jul 25, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed July 25, 2024
Period End
July 25, 2024
Security
RTX
In the record · 2016–202610-K1210-Q338-K139

RTX filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 139 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Oct ’17Oct ’17
  2. Deal closed8-K · Apr ’20Apr ’20
  3. Leadership change8-K · Mar ’22Mar ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.

RTX Corp's second quarter 2024 results show solid operational performance with reported sales of $19.7 billiona, up 8% year over year (10% organic), and adjusted EPS of $1.41, up 9%.

Segment momentum was broad: Collins Aerospace and Pratt & Whitney both grew sales strongly with margin expansion, while Raytheon's reported results were weighed down by a $575 millionb charge tied to the anticipated termination of a fixed-price development contract with a foreign customer. Reported GAAP EPS fell to $0.08 (down 91%) because of a $918 million charge for the expected resolution of several legacy legal matters, a $438 million after-tax-equivalent contract charge at Raytheon, and acquisition accounting adjustments. Free cash flow of $2.2 billion in the quarter was strong, but management is guiding to a lower full-year free cash flow of about $4.7 billion, down from about $5.7 billion, largely due to the legal settlements.

For full-year 2024, RTX raised its adjusted sales outlook to $78.75c-$79.5 billion (from $78.0-$79.0 billion) and its adjusted EPS outlook to $5.35-$5.45 (from $5.25-$5.40). The company ended the quarter with a record $206 billion backlog, including $129 billion of commercial and $77 billion of defense, which supports multi-year revenue visibility. Investors should weigh the strong operating trajectory against the cash drag from legal settlements, roughly $1.0 billion of which is expected to be paid in the second half of 2024 with the remainder over several years, and the continued execution risk on fixed-price development programs.

02—Key points

Key Highlights

  1. Reported Q2 2024 sales of $19.7B (+8% YoY; +10% organic); adjusted sales of $19.8B (+8%).
  2. GAAP EPS of $0.08 (down 91%) versus adjusted EPS of $1.41 (+9%); the gap reflects a $0.68/share legacy legal charge, a $0.33/share Raytheon fixed-price contract charge, and $0.29/share of acquisition accounting adjustments.
  3. Total legacy legal matter reserve of $1.24B after a $918M Q2 charge; about $1.0B of related payments expected in H2 2024 with the balance over several years.
  4. Full-year 2024 free cash flow outlook cut to approximately $4.7B from approximately $5.7B, while adjusted sales and adjusted EPS guidance were raised.
  5. Collins Aerospace reported sales of $7.0B (+10%) with adjusted operating margin up 210 bps to 16.4%; Pratt & Whitney sales rose 19% to $6.8B with adjusted margin of 7.9%.
  6. Raytheon's reported operating profit fell 80% to $127M due to a $575M charge on a fixed-price development contract; adjusted operating profit rose 7% to $709M.
  7. Record backlog of $206B ($129B commercial, $77B defense) and $120M of incremental gross cost synergies realized in the quarter.

03—Questions

Frequently Asked Questions

  1. Why did RTX's GAAP EPS drop so sharply in Q2 2024 even though sales grew?

    GAAP EPS of $0.08 was pressured by non-recurring and non-operating items: a $918M legal matters charge (about $0.68/share), a $575M pre-tax charge at Raytheon on a fixed-price development contract with a foreign customer (about $0.33/share), and $504M of acquisition accounting adjustments. Adjusted EPS of $1.41, which excludes these items, rose 9%.

  2. Why is full-year free cash flow guidance being lowered?

    The company now expects free cash flow of about $4.7B versus about $5.7B previously. The drop reflects the cash impact of the legacy legal settlements with the DOJ, SEC, and Department of State, with about $1.0B of payments expected in the second half of 2024 and the remainder over several years.

  3. What is driving the strength in Collins and Pratt & Whitney?

    Collins benefited from a 12% increase in commercial aftermarket sales, a 10% rise in commercial OE, and 7% defense growth, supported by rising commercial air traffic and flight hours. Pratt & Whitney grew sales 19%, led by a 33% increase in commercial OE and a 15% increase in commercial aftermarket, plus 16% growth in military sustainment.

  4. Is the Raytheon weakness a sign of broader problems at the segment?

    Not entirely. Adjusted Raytheon operating profit rose 7% and adjusted margin improved to 10.8%, indicating underlying operating performance improved. The reported decline is driven primarily by a $575M charge on a legacy fixed-price development contract that is being anticipated for termination. Investors should still monitor execution risk on similar fixed-price programs.

  5. Does the raised 2024 guidance signal confidence in the business?

    Yes. RTX raised its adjusted sales outlook to $78.75-$79.5B and its adjusted EPS outlook to $5.35-$5.45, citing strong end-market demand and first-half performance. Management also highlighted a $206B backlog, which supports revenue visibility over multiple years.

04—Continue

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