Press release·03/02/2025 18:56:05

Financial Performance Overview

Raytheon Technologies Corporation (RTX) is a major aerospace and defense company that operates through three main business segments: Collins Aerospace, Pratt & Whitney, and Raytheon. In 2024, the company reported strong financial results, with total net sales increasing 17% to $80.7 billion compared to the prior year.

Operating profit also grew significantly, rising 84% to $6.5 billion. This improvement was driven by higher organic sales across all three segments, as well as the absence of a large charge related to the “Powder Metal Matter” that impacted Pratt & Whitney’s results in 2023. RTX’s operating profit margin increased to 8.1% in 2024, up from 5.2% the prior year.

The company also generated robust operating cash flow of $7.2 billion in 2024, though this was down slightly from $7.9 billion in 2023. RTX ended the year with a strong backlog of $218 billion, up from $196 billion at the end of 2023, indicating solid future sales growth potential.

Segment Performance

Collins Aerospace, which provides aircraft systems and aftermarket services, saw organic sales increase 8% in 2024 due to higher commercial aerospace aftermarket and defense sales. Operating profit rose 8% organically, driven by the higher commercial aerospace volume, though this was partially offset by increased research and development costs.

Pratt & Whitney, the company’s aircraft engine business, had a very strong year, with organic sales up 24% and operating profit up significantly compared to 2023. This was primarily due to higher commercial OEM and aftermarket sales, as well as the absence of the large charge related to the Powder Metal Matter. Military sales also increased for Pratt & Whitney.

Raytheon, which produces defense systems and technologies, reported a 1% increase in organic sales in 2024, with higher land and air defense systems and advanced technology program sales offsetting lower air and space defense systems. Operating profit rose 9% organically, aided by higher volume and improved program execution.

Legal and Regulatory Matters

In 2024, RTX resolved several outstanding legal and regulatory issues. The company entered into deferred prosecution agreements (DPAs) with the Department of Justice (DOJ) and settled an administrative proceeding with the Securities and Exchange Commission (SEC) related to payments made by Raytheon Company and a joint venture in connection with certain Middle East contracts.

RTX also resolved criminal and civil government investigations into defective pricing claims for certain legacy Raytheon contracts, as well as voluntarily disclosed export control violations. As a result of these settlements, the company recorded a combined pre-tax charge of $918 million in the second quarter of 2024.

Additionally, Pratt & Whitney determined that a rare condition in powder metal used to manufacture certain engine parts required accelerated inspection and maintenance of the PW1100G-JM Geared Turbofan engine fleet. This “Powder Metal Matter” resulted in a $2.9 billion pre-tax charge in 2023, which negatively impacted Pratt & Whitney’s results that year.

Macroeconomic Challenges

RTX faced several macroeconomic headwinds in 2024, including supply chain disruptions, inflationary pressures, and higher interest rates. These factors resulted in delays, increased costs, and lower productivity, which negatively impacted the company’s performance.

The inflationary environment increased material, component, and labor prices, which subjected RTX to potential losses on its fixed-price contracts if costs exceeded the contract value. Higher interest rates also increased the company’s borrowing costs and tightened the availability of capital, which could constrain customer purchasing power and decrease orders.

Furthermore, the company was impacted by geopolitical tensions, including Russia’s invasion of Ukraine and sanctions imposed by various governments. These actions disrupted RTX’s supply chain and business operations in certain regions. The company also faced potential risks from China’s announced sanctions against its Raytheon Missiles & Defense business.

Outlook and Initiatives

To address these macroeconomic pressures, RTX is pursuing various strategic and operational initiatives, including its digital transformation, operational modernization, cost reduction, and advanced technology programs. The company is also applying its “Customer Oriented Results and Excellence” (CORE) operating platform to execute these initiatives.

However, the ultimate impact of these initiatives is uncertain and subject to a range of future developments. RTX’s financial outlook could also be affected by potential changes to U.S. government defense spending, as the company is a major supplier to the U.S. military.

Overall, RTX delivered strong financial results in 2024, despite facing significant legal, regulatory, and macroeconomic challenges. The company’s diversified business model, focus on operational excellence, and investments in advanced technologies position it well for the future. However, the volatile economic and geopolitical environment creates uncertainty, and RTX will need to continue adapting to maintain its competitive edge.