RTX Corp. (RTX 0.67%), a prominent player in the aerospace and defense industry, reported fourth-quarter and full-year 2024 earnings on Tuesday, Jan. 28, that topped analysts' consensus estimates. Adjusted earnings per share of $1.54 beat the anticipated $1.38 and rose a substantial 19.4% over Q4 2023. Revenue of $21.6 billion surpassed the forecasted $20.54 billion and jumped 8.6% year over year.
Overall, RTX demonstrated robust demand and strategic capability to manage costs, signaling a successful quarter despite challenges related to supply chains and government dependencies.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.54 | $1.38 | $1.29 | 19.4% |
| Revenue | $21.6 billion | $20.54 billion | $19.9 billion | 8.6% |
| Adjusted net income | $2.07 billion | N/A | $1.75 billion | 18.1% |
| Free cash flow | $492 million | N/A | $3.9 billion | (87.4%) |
Source: RTX. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Understanding RTX's Business
RTX is known for its comprehensive offerings in aerospace and defense, organized through three main segments: Collins Aerospace, Pratt & Whitney, and Raytheon. Collins Aerospace delivers advanced systems and aftermarket services crucial to both civil and military aviation. Pratt & Whitney specializes in high-efficiency aircraft engines, while Raytheon provides innovative defense systems.
RTX recently focused on bolstering innovation through substantial research and development (R&D) investments. This includes advancements like Pratt & Whitney’s GTF engine, known for fuel efficiency, and Collins Aerospace’s research into electric power systems. Such endeavors are key to maintaining a competitive edge and capturing market opportunities.
NYSE: RTX
Key Data Points
Notable Developments During the Quarter
Throughout the fourth quarter of 2024, RTX outperformed expectations despite facing supply chain disruptions and regulatory challenges. Highlights from the quarter include a 13% rise in defense sales and a 12% increase in commercial aftermarket sales reported by Collins Aerospace. However, commercial original equipment sales decreased by 6%, affected by market conditions.
Pratt & Whitney exhibited significant growth, with a 31% rise in commercial original equipment sales, contributing to the segment's 18% overall sales increase. This boost was aided by a favorable mix in its large commercial engine products.
Raytheon achieved a 4% uptick in sales, driven by demand for land and air defense systems. However, the segment was impacted by the divestiture of its Cybersecurity, Intelligence, and Services business.
RTX’s operating cash flow for the quarter was $1.6 billion, but free cash flow saw a significant reduction to $492 million, attributed to necessary capital investments. The company successfully returned $852 million to shareholders and reported a backlog of $218 billion, ensuring sustained demand and future revenue visibility.
Looking Ahead
RTX's management projects 2025 adjusted sales to be between $83 billion and $84 billion, targeting 4% to 6% organic growth. The adjusted EPS guidance for the year is set at $6 to $6.15, with projected free cash flow ranging from $7 billion to $7.5 billion. These forecasts indicate confidence in continued demand within defense and commercial markets and an optimistic outlook for further margin improvements and cash flow generation.
As RTX navigates supply chain and geopolitical risks, stakeholders should focus on how the company mitigates these challenges through strategic procurement and robust governance. The ongoing emphasis on R&D and long-term government contracts will be critical for sustaining growth and securing a leading position in the aerospace and defense sectors.
