Raytheon Technologies(US:RTX)2024-04-23 20:14Financial Performance - Net sales for the quarter ended March 31, 2024, increased by $2.1 billion to $19.3 billion compared to $17.2 billion in the same quarter of 2023, primarily driven by organic sales growth of $2.1 billion [150]. - Total consolidated net sales for the quarter ended March 31, 2024, were $19,305 million, a 12.7% increase from $17,214 million in the same quarter of 2023 [1]. - Operating profit for the consolidated segment was $1,870 million, up 10.9% from $1,687 million in the prior year [1]. - Net income attributable to common shareowners increased to $1.709 billion in Q1 2024, up from $1.426 billion in Q1 2023, resulting in diluted earnings per share of $1.28 compared to $0.97 [182]. - Operating profit for Q1 2024 was $1.870 billion, compared to $1.687 billion in Q1 2023, with an operating profit margin of 9.7% [173]. - Total cost of sales increased to $15.744 billion in Q1 2024, up from $13.645 billion in Q1 2023, with the percentage of net sales rising to 81.6% from 79.3% [155]. Segment Performance - Collins Aerospace reported net sales of $6,673 million, a 9% increase from $6,120 million in Q1 2023, while operating profit decreased by 5% to $849 million [1][3]. - Pratt & Whitney's net sales increased by 23% to $6,456 million, with operating profit slightly decreasing by 1% to $412 million [1][3]. - Raytheon achieved net sales of $6,659 million, a 6% increase, and a significant operating profit increase of 74% to $996 million [1][3]. - Net services sales increased by $0.6 billion in Q1 2024 compared to Q1 2023, driven by increases at Pratt & Whitney ($0.3 billion), Raytheon ($0.2 billion), and Collins ($0.1 billion) [154]. - The organic net sales increase for Collins Aerospace was primarily driven by higher commercial aerospace aftermarket sales of $0.3 billion [1][4]. Costs and Expenses - The company recorded charges of $175 million in Q1 2024 due to supply chain disruptions and unfavorable purchase commitments related to titanium sourcing [136]. - High inflation levels have negatively impacted operating profit and margins, with increased material and labor costs affecting fixed-price contracts [137]. - The organic increase in total cost of sales was $1.8 billion for Q1 2024, driven by sales increases at Pratt & Whitney, Collins, and Raytheon [157]. - Research and development spending increased to $1.905 billion in Q1 2024, up from $1.729 billion in Q1 2023, with company-funded R&D at $0.669 billion and customer-funded R&D at $1.236 billion [163]. Cash Flow and Financing - Net cash flows provided by operating activities for Q1 2024 were $342 million, a significant improvement of $1.2 billion compared to a cash outflow of $863 million in Q1 2023 [233]. - Cash flows used in investing activities for Q1 2024 were $693 million, a change of $1.3 billion compared to a cash outflow of $579 million in Q1 2023, mainly due to the sale of the CIS business for approximately $1.3 billion [238][239]. - Net cash flows used in financing activities for Q1 2024 were $(2.0) billion, a decrease of $3.1 billion compared to $1.1 billion in Q1 2023, primarily due to long-term debt repayments [242][243]. - The company repurchased $56 million worth of common stock, totaling 616,000 shares, during Q1 2024, compared to $790 million in total dividends paid [245][246]. - Total debt as of March 31, 2024, was $42.8 billion, down from $43.8 billion as of December 31, 2023, with total equity increasing to $62.1 billion from $61.4 billion [222]. Strategic Initiatives and Risks - The company is pursuing strategic initiatives including digital transformation and operational modernization to address macroeconomic pressures [137]. - The ongoing geopolitical situation, including sanctions related to Russia and China, poses risks to the company's operations and supply chain [138][139]. - The defense business is influenced by U.S. Department of Defense budget levels and geopolitical risks, which may impact sales and approvals for foreign military sales [132]. - As of March 31, 2024, the company has $405 million in contract liabilities related to advance payments from a Middle East customer, which may become refundable if contracts are terminated [141]. Backlog and Bookings - Total backlog as of March 31, 2024, was approximately $202 billion, including a defense backlog of $77 billion [1][4]. - Defense bookings for the quarter were approximately $11 billion, down from $12 billion in the same quarter of 2023 [1][4]. - Raytheon booked significant contracts including $1.2 billion for Patriot Air Defense systems to Germany and $282 million for NASAMS for Ukraine [1][4].