RTX Raises Full-Year Outlook Again as Backlog Tops $289 Billion
RTX (RTX) posted second-quarter sales of $24.7 billion, up 14% from a year earlier, and raised its full-year profit and revenue guidance for the second straight quarter.
RTX (RTX), the aerospace and defense manufacturer, reported second-quarter sales of $24.7 billion, up 14% year over year and 16% on an organic basis, an acceleration from the 9% reported and 10% organic growth posted in the first quarter. Adjusted earnings per share rose 21% from a year earlier, matching the first quarter's pace and marking a sharp turn from the 1% adjusted EPS growth the company reported in the fourth quarter of 2024.
The quarter extended a pattern of upward guidance revisions that began at the end of last year. RTX raised its 2024 organic sales growth guidance to 8%-9% from the 5%-6% range set at the first quarter, which itself had been introduced at 5%-6% in the fourth-quarter 2023 release. Adjusted EPS guidance moved to $7.10 to $7.25, up from $6.70 to $6.90, following an earlier increase from $6.60 to $6.80 at year-end. Adjusted sales guidance rose to $95.0 billion to $96.0 billion from $92.5 billion to $93.5 billion, compared with an original range of $92.0 billion to $93.0 billion set in the fourth quarter.
Cash generation also improved. RTX produced $3.5 billion in operating cash flow and $2.9 billion in free cash flow during the quarter, compared with negative free cash flow of $72 million in the prior-year period and up from $1.3 billion in free cash flow in the first quarter. The company raised its full-year free cash flow guidance to $8.50 billion to $8.75 billion from a range of $8.25 billion to $8.75 billion that had been held unchanged through both the first-quarter and fourth-quarter releases.
Backlog climbed to $289 billion, up 22% year over year, extending a sequential build from $271 billion at the first quarter and $268 billion at the end of 2023.
All three business segments expanded adjusted operating margin from a year earlier. Collins Aerospace margin rose 30 basis points to 16.7%, Pratt & Whitney rose 30 basis points to 8.3% and Raytheon rose 100 basis points to 12.6%, extending a trend management had described as a sixth consecutive quarter of margin expansion as of the third quarter of 2023. Collins organic growth accelerated to 13%, up from 5% reported sales growth in the first quarter, driven by 26% growth in commercial original-equipment sales. Raytheon sales grew 18% year over year with operating profit up 29% and margin up 110 basis points, building on 20% profit growth and 210 basis points of margin expansion in the first quarter.
Pratt & Whitney showed a more uneven picture. Commercial original-equipment sales fell 8% year over year on unfavorable engine mix, even as commercial aftermarket sales rose 25% and military sales rose 23%.
The quarter's results included a $69 million pre-tax litigation-matter charge that did not appear in prior quarters' adjustment tables. The GAAP effective tax rate rose to 18.0% from 15.4% a year earlier, while the adjusted effective tax rate held flat at 18.3%.
RTX also disclosed an agreement to sell Raytheon's Blue Canyon Technologies business for $620 million, the first mention of the deal in the company's releases.