RTX Lifts 2024 Outlook, Beats Q3 Expectations On Strong Defense And Commercial Growth

RTX Corporation RTX shares are trading higher after the company’s third-quarter fiscal 2024 results exceeded street expectations.

RTX raised its 2024 outlook after adjusted net sales increased 6% year-over-year to $20.089 billion. The company beat the consensus of $19.848 billion. Adjusted EPS grew 16% to $1.45, above the consensus of $1.34.

Collins Aerospace’s sales were $7.075 billion (+7% Y/Y). This was driven by a 14% increase in defense and 9% growth in commercial aftermarket. Numbers were partially offset by an 8% decline in commercial OE sales. The adjusted operating margin contracted by 10 bps Y/Y to 15.5%.

Pratt & Whitney’s sales were $7.239 billion (+14% Y/Y), driven by a 13% increase in commercial aftermarket, 20% military growth, and a 9% rise in commercial OE. The adjusted operating margin was 8.2%, up 170 bps.

Raytheon’s sales declined 1% year over year to $6.386 billion due to the divestiture of its Cybersecurity business. Excluding the divestiture, sales rose 5%. The adjusted operating margin expanded by 160 bps to 10.4%.

At the end of the quarter, the backlog was $221 billion, of which $131 billion was from commercial aerospace and $90 billion was from defense.

RTX’s operating cash flow for the third quarter totaled $2.523 billion compared to $3.316 billion last year and free cash of $1.971 billion.

The company returned $1.1 billion of capital to shareholders this quarter, bringing the total capital returned since the merger to over $32 billion. Additionally, it realized $90 million in incremental RTX gross cost synergies, achieving the $2 billion post-merger target.

“RTX delivered another strong quarter of organic sales growth, adjusted segment margin expansion, and free cash flow. Demand across our portfolio, particularly within commercial aftermarket and defense, remains robust and gives us the confidence to again raise our full year outlook for adjusted sales* and adjusted EPS,” commented RTX President and CEO Chris Calio.

Outlook 2024: RTX expects adjusted sales of $79.25 billion-$79.75 billion (prior $78.75 billion-$79.5 billion) versus the consensus of $78.501 billion.

Raises adjusted EPS outlook to $5.50-$5.58 (prior $5.35-$5.45) versus the consensus of $5.47.

The company reaffirms its free cash flow outlook of ~$4.7 billion for the year.

Recently, Collins Aerospace, an RTX business, announced the first deliveries of its upgraded Venue™ cabin management system, featuring new smart monitors and an enhanced user interface. With over 1,700 installations, Venue offers 4K resolution, improved cabin controls, and a streamlined user experience.

Price Action:

• RTX shares are trading higher by 1.59% at $127.90 premarket at the last check Tuesday.