Did RTX meet its 2024 expectations?

Yes. Management stated RTX exceeded its 2024 sales and EPS expectations on an adjusted basis. Full-year adjusted EPS was $5.73, up 13 percent, and adjusted sales were $80.8 billion, up 9 percent reported and 11 percent organically.

Why is GAAP EPS so much lower than adjusted EPS?

The gap reflects acquisition accounting adjustments (amortization of acquired intangibles, $1.20 per share for 2024), restructuring costs, and other net significant or non-recurring charges, which together totaled roughly $2.18 per share for the year. Investors should evaluate how often such items recur before treating them as excluded from ongoing performance.

What is the outlook for 2025?

RTX guided to adjusted sales of $83.0–$84.0 billion with 4–6 percent organic growth, adjusted EPS of $6.00–$6.15, and free cash flow of $7.0–$7.5 billion. The company did not provide GAAP reconciliations for these forward-looking figures, citing variability in excluded items.

Why did free cash flow decline so sharply in the fourth quarter?

Q4 free cash flow was $0.5 billion versus $3.9 billion a year earlier. Operating cash flow fell to $1.6 billion from $4.7 billion, with accounts receivable rising $1.1 billion and accounts payable and accrued liabilities declining $0.8 billion, partly offset by higher contract liabilities. Capital expenditures were $1.1 billion.

What risks should investors monitor?

The release flags the powder metal issue affecting the PW1100G-JM GTF engine fleet, the pending divestiture of Collins' actuation and flight control business, defense budget and program risks, geopolitical exposure, and legal and regulatory matters including DOJ and SEC arrangements. Investors should also watch the $0.9 billion of 2024 legal charges and the $33 billion in capital returns since the merger against leverage levels.

RTX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 28, 2025. Cited figures are marked; the original filing is the authoritative source.

RTX Corporation reported fourth quarter 2024 sales of $21.6 billion^a, up 9 percent reported and 11 percent organically excluding divestitures, with adjusted EPS of $1.54, up 19 percent.

GAAP EPS was $1.10^b, burdened by $0.30 of acquisition accounting adjustments and $0.14 of restructuring and other non-recurring charges. For full year 2024, reported sales were $80.7 billion, adjusted sales $80.8 billion (up 9 percent, 11 percent organic), and adjusted EPS $5.73 (up 13 percent). GAAP EPS was $3.55.

Full-year operating cash flow was $7.2 billion^c and free cash flow $4.5 billion, down from $5.5 billion in 2023, while capital returned to shareowners totaled $3.7 billion, with over $33 billion returned since the merger. Quality of earnings warrants attention. Adjusted results exclude a substantial set of items in 2024, including $0.9 billion of legal matter charges, $0.6 billion of a Raytheon contract termination, $0.2 billion of Collins contract cancellation and titanium-sourcing impairments, and a $0.3 billion tax benefit from audit settlements.

Fourth-quarter free cash flow of $0.5 billion^d was weak compared with $3.9 billion a year earlier, driven by a $1.1 billion increase in receivables and lower operating cash flow. Balance sheet metrics show long-term debt declining to $38.7 billion from $42.4 billion, and goodwill and intangibles together totaling roughly $86 billion, which keeps impairment risk relevant. Management guided 2025 adjusted sales of $83.0 to $84.0 billion with 4 to 6 percent organic growth, adjusted EPS of $6.00 to $6.15, and free cash flow of $7.0 to $7.5 billion.

Management cited a $218 billion backlog, including $125 billion commercial and $93 billion defense, as support for the outlook. Investors should weigh the strong backlog and guidance against the reliance on non-GAAP measures, the recurring nature of 'non-recurring' charges, and the forward-looking risks flagged in the release, including the powder metal engine issue and pending Collins divestiture.

02—Key points

Key Highlights

Q4 2024 reported sales rose 9% to $21.6B (11% organic); adjusted EPS of $1.54 grew 19% year over year, while GAAP EPS was $1.10.
Full-year 2024 adjusted EPS of $5.73 (up 13%) beat expectations; GAAP EPS was $3.55, with $1.20 of acquisition accounting adjustments and $0.98 of restructuring and other charges.
Record backlog of $218B ($125B commercial, $93B defense) supports the company's growth visibility heading into 2025.
Q4 free cash flow fell to $0.5B from $3.9B a year earlier, as operating cash flow dropped 67% on working capital build, including a $1.1B increase in receivables.
2025 guidance: adjusted sales of $83.0–$84.0B, adjusted EPS of $6.00–$6.15, and free cash flow of $7.0–$7.5B.
Segment margins expanded: Pratt & Whitney adjusted margin rose to 8.1% for the year from 7.1%, and Collins adjusted margin to 15.9% from 14.9%.
Full-year 2024 included significant non-GAAP adjustments, including $0.9B of legal matter charges and $0.6B from a Raytheon contract termination, and the company returned $3.7B to shareowners in 2024.

03—Questions

Frequently Asked Questions

Did RTX meet its 2024 expectations?
Yes. Management stated RTX exceeded its 2024 sales and EPS expectations on an adjusted basis. Full-year adjusted EPS was $5.73, up 13 percent, and adjusted sales were $80.8 billion, up 9 percent reported and 11 percent organically.
Why is GAAP EPS so much lower than adjusted EPS?
The gap reflects acquisition accounting adjustments (amortization of acquired intangibles, $1.20 per share for 2024), restructuring costs, and other net significant or non-recurring charges, which together totaled roughly $2.18 per share for the year. Investors should evaluate how often such items recur before treating them as excluded from ongoing performance.
What is the outlook for 2025?
RTX guided to adjusted sales of $83.0–$84.0 billion with 4–6 percent organic growth, adjusted EPS of $6.00–$6.15, and free cash flow of $7.0–$7.5 billion. The company did not provide GAAP reconciliations for these forward-looking figures, citing variability in excluded items.
Why did free cash flow decline so sharply in the fourth quarter?
Q4 free cash flow was $0.5 billion versus $3.9 billion a year earlier. Operating cash flow fell to $1.6 billion from $4.7 billion, with accounts receivable rising $1.1 billion and accounts payable and accrued liabilities declining $0.8 billion, partly offset by higher contract liabilities. Capital expenditures were $1.1 billion.
What risks should investors monitor?
The release flags the powder metal issue affecting the PW1100G-JM GTF engine fleet, the pending divestiture of Collins' actuation and flight control business, defense budget and program risks, geopolitical exposure, and legal and regulatory matters including DOJ and SEC arrangements. Investors should also watch the $0.9 billion of 2024 legal charges and the $33 billion in capital returns since the merger against leverage levels.

04—Continue

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