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F500 2023 057 Raytheon Technologies_PW-WPB-A10-Test-Stand-PW1100G-JM_Engine

The aerospace and defense industry manufacturer had another year of improved sales in 2022, and in April 2023 reported $21 billion in new orders and a record backlog of $180 billion across its portfolio. 
<ul> 
 	<li>Raytheon has set out to realign its business units into three segments—Collins Aerospace, Pratt &amp; Whitney, and Raytheon—to more fully leverage its scale and realize cost savings.</li> 
 	<li>The post-COVID travel recovery strengthened sales in the quarter ended in April 2023, as Raytheon’s Collins Aerospace unit drew in $5.58 billion and its Pratt &amp; Whitney engine unit sales trailed just behind.</li> 
 	<li>In April 2023 a former Pratt &amp; Whitney manager was among a handful of aerospace industry executives who were acquitted of criminal charges in a case brought by the Justice Department that accused the group of agreeing to not hire the others’ workers. Still, workers who say they were harmed by the alleged conspiracy brought a separate civil suit against Raytheon in Connecticut federal court.</li> 
</ul>

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F500 2022-Raytheon Technologies

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G500-2021-183-RAYTHEON TECHNOLOGIES

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The newly created aerospace giant emerged in April 2020 from the merger of United Technologies and Raytheon Co. Former UT CEO Greg Hayes took over as chief executive, while Raytheon boss Thomas Kennedy became the board’s executive chairman. The pair focused the new company on winning more government orders, including a $320 million NASA contract to support operations at the International Space Station. It was a strategy created partly out of necessity, because Raytheon’s other major customer base—the commercial airline industry—was decimated by the pandemic. The company laid off 16,500 workers and cut costs by $2 billion; even so, operating profits at Raytheon’s two aerospace units dropped 67% and 131% in 2020 compared with the prior year. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">The newly created aerospace giant emerged in April 2020 from the merger of United Technologies and Raytheon Co. Former UT CEO Greg Hayes took over as chief executive, while Raytheon boss Thomas Kennedy became the board’s executive chairman. The pair focused the new company on winning more government orders, including a $320 million NASA contract to support operations at the International Space Station. It was a strategy created partly out of necessity, because Raytheon’s other major customer base—the commercial airline industry—was decimated by the pandemic. The company laid off 16,500 workers and cut costs by $2 billion; even so, operating profits at Raytheon’s two aerospace units dropped 67% and 131% in 2020 compared with the prior year.

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F500-2021-57-Raytheon Technologies

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The newly created aerospace giant emerged in April 2020 from the merger of United Technologies and Raytheon Co. Former UT CEO Greg Hayes took over as chief executive, while Raytheon boss Thomas Kennedy became the board’s executive chairman. The pair focused the new company on winning more government orders, including a $320 million NASA contract to support operations at the International Space Station. It was a strategy created partly out of necessity, because Raytheon’s other major customer base—the commercial airline industry—was decimated by the pandemic. The company laid off 16,500 workers and cut costs by $2 billion; even so, operating profits at Raytheon’s two aerospace units dropped 67% and 131% in 2020 compared with the prior year. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">The newly created aerospace giant emerged in April 2020 from the merger of United Technologies and Raytheon Co. Former UT CEO Greg Hayes took over as chief executive, while Raytheon boss Thomas Kennedy became the board’s executive chairman. The pair focused the new company on winning more government orders, including a $320 million NASA contract to support operations at the International Space Station. It was a strategy created partly out of necessity, because Raytheon’s other major customer base—the commercial airline industry—was decimated by the pandemic. The company laid off 16,500 workers and cut costs by $2 billion; even so, operating profits at Raytheon’s two aerospace units dropped 67% and 131% in 2020 compared with the prior year.

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G500-2020-119-Raytheon-Technologies

Raytheon Technologies was created in April of this year when United Technologies merged its aerospace units Pratt &amp; Whitney and Collins Aerospace with the Raytheon Company in a deal valued at $86 billion. United spun off its Carrier HVAC and Otis elevator businesses in separate transactions. Greg Hayes, who was serving as United’s CEO, continues in that role at the newly merged company, which specializes in everything from aircraft to missile defense systems.

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F500-2020-108-Raytheon

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RTX, an aerospace and defense company, provides systems and services for commercial, military, and government customers in the United States and internationally. It operates through three firms: Collins Aerospace, Pratt &amp; Whitney, and Raytheon. The Collins Aerospace Systems segment designs, produces, and supports cabin interiors, including oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems; battlespace, test and training range systems, crew escape systems, and simulation and training solutions. Pratt &amp; Whitney supplies aircraft engines for commercial, military, business jet, and general aviation customers; and produces, sells, and services military and commercial auxiliary power units. Raytheon provides defensive and offensive threat detection, tracking, and mitigation capabilities for U.S., foreign government, and commercial customers. The company, incorporated in 1934, was formerly known as Raytheon Technologies Corp. and changed its name to RTX Corp. in July 2023.

Q2 2026

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Q4 2025

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Q4 2024

RTX (RTX): Company Profile, Stock Price, News, Rankings

legacy

Good day, ladies and gentlemen, and welcome to the RTX First Quarter twenty twenty five Earnings Conference Call. My name is Latif, and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes. On the call today are Chris Calio, President and Chief Executive Officer Neil Mitchell, Chief Financial Officer and Nathan Ware, Vice President of Investor Relations. This call is being webcast live on the Internet, and there is a presentation available for download from RTX website at www.rtx.com.

Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding acquisition accounting adjustments and net nonrecurring and or significant items often referred to by management as other significant items. The company also reminds listeners that the earnings and cash flow expectations and any other forward looking statements provided in this call are subject to risks and uncertainties. RTX SEC filings, including its forms eight ks, 10 Q, and 10 ks, provide details on important factors that could cause actual results to differ materially from those anticipated in the forward looking statements. Once the call becomes open for questions, we ask that you limit your first round to one question per caller to give everyone the opportunity to participate. To ask a question, you will need to press 1 1 on your telephone.

You may ask further questions by reinserting yourself into the queue as time permits. With that, I will turn the call over to Mr. Talia.

Thank you, and good morning, everyone. We're clearly in the middle of a highly dynamic operating environment right now, and we'll, of course, talk about that today. But first, I want to highlight the strong financial and operational performance we delivered in the first quarter. Starting with the top line, we generated 8% organic sales growth. We also drove 120 basis points of segment margin expansion, which included strong contributions from each business segment.

And we generated strong free cash flow, an improvement of more than $900,000,000 versus the prior year. On an organic basis, commercial aftermarket sales were up 21%, commercial OE sales were up 3% on a difficult prior year compare, and defense sales were up 4%. Underlying these results is our continued focus on execution and the deployment of our core operating system. Starting with the GTF program, PW1100 MRO output was up 35% year over year and 14% sequentially, and we remain on track for over a 30% improvement for the full year. This output is a key enabler for reducing AOGs, which we continue to expect to trend down in the back half of the year.

Isothermal forging output also continued to be strong in the quarter after record output last year, up over 10% versus prior year. And our outlook for the fleet management plans remains consistent with our prior comments. Our focus on supply chain also continues to yield results. At Collins, overdue line items across all suppliers were down over 20% versus the prior year. And at Raytheon, material receipts were up again, marking eight consecutive quarters of year over year growth.

Also in the quarter, we made significant progress on two future franchises in our innovation pipeline. Pratt received FAA certification for the GTF Advantage, an important milestone for the program. The Advantage incorporates all of the learnings from the first ten years of the GTF engine in service. We expect it to provide up to two times the time on wing compared to the current engine, and it will enter service with full life LLPs. We remain on track for initial deliveries to Airbus later this year.

We're also certifying an upgrade package to incorporate roughly 90% to 95% of GTF advantage durability improvements into the existing fleet during MRO visits. We're targeting next year to have this package available for customers. And at Raytheon, we have completed the prototyping and development phase of the lower tier Air and Missile Defense Sensor, or LTAMDS program. LTAMS brings advanced three sixty degree performance to the market and more than twice the tracking range compared to the existing Patriot radar system, enhancing protection against complex threat scenarios, including large quantities of unmanned aircraft LTAMDS can be integrated with battle tested industry leading capabilities of Patriot, which is the backbone of air and missile defense for 19 partner countries around the world.

LSAMS will now transition into the production and deployment phase with continued deliveries to The U. S. This year and next, followed by deliveries to European customers. So overall, we've made good progress in the quarter on multiple fronts and we're pleased with our performance. Okay, let me turn to the operating environment and our current thinking on tariffs, which we have outlined in terms of potential direct impacts on Slide four.

Generally speaking, the aerospace and defense sector has operated in a duty free environment, and that has been instrumental to the industry maintaining one of the largest trade surpluses across American manufacturing industries for decades. Our industrial base is largely located in The U. S, including about 70% of our employees and a majority of our total labor manufacturing hours. And on the supply chain side, about 65% of our product spend is with U. S.

Suppliers. We also continue to invest in our U. S. Industrial base. Over the last five years, we've invested nearly $10,000,000,000 to enhance our domestic manufacturing footprint and capabilities.

And this year, we're planning another $2,000,000,000 of investment to further increase our U. S. Capacity. For example, in the first quarter, Raytheon completed a $60,000,000 expansion project in Tucson, Arizona, which will significantly increase capacity to support growing effector demand. And this year, Pratt has kicked off a two eighty five million dollars investment to expand our foundry in Asheville, North Carolina.

This is part of our broader turbine airflow production strategy to support growing demand and to maintain a competitive cost structure. Combined, this industrial base and significant investment supports our position as a net exporter of goods out of The U. S, with exports exceeding imports by over $12,000,000,000 last year. But like many companies in the industry, our supply chain and customer base are global, and we import raw materials, parts, and modules from around the world. In light of this, we would be impacted if the current environment were to stay in place because not all regulatory and operational mitigations would address our tariff exposure.

But the situation remains fluid, and it's difficult to assess the impact of multiple variables, from a change in the duration and size of the current tariffs, to countermeasures taken by other countries to the potential secondary effects of customer reactions and supply chain and operational disruptions. As a result, we have not included the potential tariff impacts in our outlook for the year at this time. That said, we believe it is prudent and helpful to at least share some estimates of the direct impact of the current tariffs on our outlook, assuming they were to stay in effect throughout the year. Now these estimates don't include secondary tariff related impacts, such as changes to customer demand. So let me turn it over to Neil to take you through our assessment of the impacts.

Okay, thanks Chris. Let me take you through the various categories of incremental direct tariff exposure and the level of pretax operating profit impacts, net of available mitigations, we have currently assessed for each category. Starting with Canada and Mexico, assuming the USMCA agreement continues, we estimate there would be a cost impact of around $250,000,000 assuming current tariff rates remain in place for the rest of the year. With respect to China, at current U.

S. And China tariff rates, we estimate there would also be a cost impact of around $250,000,000 again, assuming the tariffs remain in place through year end. Keep in mind, our business in China primarily serves local customers, and China accounts for only about 2% of our global imports. As it relates to the rest of the world, we estimate there would be a cost impact of around $300,000,000 at the 10% tariff rate currently in place. And finally, on steel and aluminum, we estimate the cost will be around $50,000,000 for the year.

For all of these scenarios, we would expect to see most of the impact in the back half of the year as inventory is liquidated. And from a cash perspective, we assume there would be a bit larger drag due to the timing of inventory consumption and duty drawback recovery, and this impact would be evenly spread over the rest of the year. Going forward, we expect the landscape to continue to evolve, and we'll update our assessment accordingly.

As Neil said, we're closely tracking the changes in the global trade environment. While some of the exemptions we have had in the past will continue to apply, such as the military duty free exemption for US government and foreign military sale contracts, we are also working to implement and capture additional mitigations. These include regulatory mechanisms such as temporary imports under bond, duty drawbacks, free trade zones, contractual and pricing actions, and implementing operational changes such as leveraging different suppliers and assembly sites. Despite these near term uncertainties, I want to remind everyone that our company remains exceptionally well positioned in all of our key end markets given the strength of our product portfolio, which is reflected in our backlog.

We exited the quarter with a backlog of $217,000,000,000 which was up 8% year over year and includes $125,000,000,000 of commercial orders and $92,000,000,000 of defense awards. On the commercial side, we remain cautiously optimistic that aircraft utilization will remain strong, supporting continued aftermarket demand. But of course, we will closely monitor consumer sentiment as we approach the busy summer travel season. On the OE front, we expect production of new aircraft to remain strong given the backlog levels at our OEM customers. On the defense side, we're encouraged that the continuing resolution passed with funding for key priorities, including next generation adaptive propulsion, standard missile effectors, LTAMDS radars, and our Coyote counter UAS system.

There's also growing commitment to increase defense budgets globally. Of note, the European Union has pushed for an additional $850,000,000,000 in defense spending over the next four years, focused on munitions and integrated air and missile defense products, which are fully aligned to our core capabilities, such as Patriot, NASAMs, Coyote, and F-thirty five. These are all battle proven and tested systems that our partners and allies rely on each and every day for national security. Additionally, we have strong and longstanding international co production and co sustainment agreements with European companies, including MBDA and Kongsberg, that position us well to help meet the increased demand across the region. Before I hand it back over to Neil, let me reiterate that we are very pleased with the performance in the first quarter and the progress we are making on our three strategic priorities: executing on our commitments, innovating for future growth and leveraging our breadth and scale.

And while the industry's operating environment is dynamic, our team is experienced and will remain focused on execution and the things in our control. Okay. With that, I'll turn it back over to Neil to take you through the first quarter results.

Thanks, Chris. I'm on Slide five. As Chris said, operationally, we're off to a strong start to the year. In the first quarter, adjusted sales of $20,300,000,000 were up 5% and up 8% organically, led by strength in commercial aftermarket.

Segment operating profit of $2,500,000,000 was up 18% as drop through on higher volume, the benefit of cost reduction activities, and improved defense mix drove 120 basis points of segment margin expansion, with strong performance at all three segments and highlighting the continued momentum on our cost transformation activities across the company. We've now seen four consecutive quarters of year over year consolidated segment margin expansion. Adjusted earnings per share of $1.47 was up 10% from the prior year, driven by segment operating profit growth, which was partially offset by an expected higher effective tax rate and a higher share count. On a GAAP basis, EPS from continuing operations was 1.14 and included $0.27 of acquisition accounting adjustments and $06 of restructuring and other items. And free cash flow was $792,000,000 in the quarter, which included approximately $200,000,000 for powder metal related compensation.

On the capital deployment front, we returned $890,000,000 of capital to shareowners during the quarter, primarily through dividends. And on the sale of the actuation business at Collins, we continue to make good progress on key milestones and are working through the remaining items required to close. With that, let me hand it over to Nathan to take you through the segment results for the first quarter. Nathan?

Thanks, Neil. Starting with Collins on Slide six. Sales were $7,200,000,000 in the quarter, up 8% on an adjusted basis and 9% organically, driven by strength in commercial aftermarket and defense. Adjusting for divestitures, by channel, commercial aftermarket sales were up 13%, driven by a 15% increase in parts and repair, an 18% increase in mods and upgrades, and a 1% increase in provisioning. Defense sales were up 10%, primarily due to higher volume across multiple programs and platforms, including multiple C4I programs, the Survivable Airborne Operations Center program, and F-thirty five.

And commercial OE sales were up 2% versus the prior year as higher A220, regional, and seven eighty seven volume was partially offset by lower seven thirty seven MAX volume. Adjusted operating profit of $1,200,000,000 was up $179,000,000 versus the prior year, driven by drop through on higher commercial aftermarket and defense volume. The resulting margins at Collins expanded 130 basis points in the quarter versus prior year. Turning to Collins' full year outlook. Excluding the potential impact of the tariffs that Neil discussed, we continue to expect sales to grow low single digits on an adjusted basis and mid single digits organically, with operating profit growth between $500,000,000 and $600,000,000 versus 2024.

Shifting to Pratt and Whitney on slide seven. Sales of $7,400,000,000 were up 14% on both an adjusted and organic basis, with sales growth across all three channels. Commercial aftermarket sales were up 28% in the quarter, driven by higher volume and favorable mix across both large commercial engines and Pratt Canada. In military engines, sales were up 4%, driven by increased engine deliveries on the tanker program and higher volume on the F135 engine core upgrade program. Commercial OE sales were up 3% in the quarter, primarily driven by increased deliveries.

As a reminder, commercial OE sales were up 64% in Q1 of twenty twenty four. Adjusted operating profit of $590,000,000 was up $160,000,000 versus the prior year, as increased deliveries in large commercial engines was more than offset by drop through on higher commercial aftermarket volume and favorable commercial aftermarket mix. Lower R and D expense more than offset higher SG and A expense. All of this resulted in margin expansion of 130 basis points in the quarter versus prior year. Turning to Pratt's full year outlook.

Excluding the potential impact of tariffs, we continue to expect sales to grow high single digits on an adjusted and organic basis, with operating profit growth between $325,000,000 and $400,000,000 versus 2024. Now turning to Raytheon on slide eight. Sales of $6,300,000,000 in the quarter were down 5% on an adjusted basis as a result of the cybersecurity divestiture completed at the end of the first quarter of last year. As expected, on an organic basis, sales were up two percent, driven by higher volume on land and air defense systems, including International Patriot and LTAMDS, which was partially offset by lower development program volume within Air and Space Defense Systems. Adjusted operating profit of $678,000,000 was up $48,000,000 versus the prior year, driven primarily by favorable mix and $15,000,000 of improved net productivity.

This was partially offset by the absence of the cybersecurity business. The resulting margins at Raytheon expanded 120 basis points in the quarter versus the prior year. Bookings in the quarter were 4,400,000,000 resulting in a book to bill of 0.7. And on a rolling twelve month basis, Raytheon's book to bill is 1.35. Key awards in the quarter included over $750,000,000 for Netherlands air and missile defense capabilities, about $650,000,000 of classified awards, and about $250,000,000 of evolved Sea Sparrow missile orders for Japan.

Turning to Raytheon's full year outlook. Excluding the potential impact of tariffs, we continue to expect sales to grow low single digits on an adjusted basis and mid single digits organically, with operating profit growth between 150,000,000 and $225,000,000 versus 2024. With that, I'll hand it back over to Chris for some closing remarks.

Okay. Thanks, Nathan. I'm on slide nine. Before we open up to questions, I want to emphasize that RTX is built to perform in any environment. The fundamentals of our business remain intact, and our continued focus on execution has delivered a strong start to the year.

With industry leading products on the highest growth platforms in commercial aerospace and defense, and our commitment to innovation over the long term continues to pay off, with next generation products such as the GTF Advantage and LTAMDS demonstrating our leadership and future growth opportunities. The long term structural demand for our products and technologies all remain in place today. Additionally, the need for our defense solutions that provide critical security to The U. S. And our allies has never been stronger.

And so I'm confident that these trends will drive significant growth for us over the coming years. With that, let's open it up for questions.

In the interest of time and to allow for broader participation, you are asked to limit yourself to one question. To ask a question, you will need to press 11 on your telephone. The first question comes from Peter Arment of Baird. Please go ahead, Peter.

Yeah, thanks. Good morning, Chris and Neil. Nice results. Hey, Chris. Thanks for the details on tariffs.

It's very helpful. Obviously, things are very dynamic. So I guess I'll ask a question on related to kind of the current defense environment. Are you seeing the rearm Europe effort as a big opportunity for Raytheon? Or does it change any of the timing of awards that you were looking at?

And then I guess just overall, do you expect still the Raytheon business to have a book to bill above one this year? Thanks.

Yeah, thanks, Peter. I would say that the focus of the EU on ramping up presents an opportunity for Raytheon clearly. I mean, if you just think of the countries there, Poland is up close to 5%, the UK has talked about taking spending up, Germany obviously. There was obviously the EU announcement for support for the $850,000,000,000 of additional defense spending over the next four to five years. And I think, again, I said upfront, clear opportunity for Raytheon given its core competency in integrated air and missile defense systems.

These are proven battle tested products, think Patriot, Gentee, Naysams, Coyote. And we've got a very strong European installed base. We've got eight Patriot users, and we've got strong co production and co sustainment relationships, as I said in my remarks. We've got nine suppliers in Poland alone on Patriot, MBDA partnership on the GemT ramp up. So again, strong demand in the region and strong partnerships overall.

I will tell you, overall on Raytheon's demand signal, that hasn't changed. I think there are some timing issues that will recover in the year, which we expected, but the global demand remains strong. We expect a book to bill of one point zero or more.

Our next question comes from Robert Stallard of Vertical Research. Please go ahead, Robert.

Chris and Neil, obviously, a very fluid situation with the whole trade war thing. But in terms of the $850,000,000 you've laid out here, is that a gross or a net number after you've applied these mitigations? And similar to that, your peers earlier this morning said that they were essentially going to pass on cost as a surcharge to customers. What sort of ability do you have that, particularly on the commercial aerospace side of things?

Yes. Thanks, Rob. Yes, the $850,000,000 is inclusive of mitigations, Rob. Those mitigations, regulatory, like we talked about, things like duty drawback, contractual, again, that's pricing and other mechanisms, and I'll talk about that in a second. And then operational, where are there things where we can optimize the flow of material and work to, again, get the best mitigation we can from the tariff regime.

On pricing, look, Rob, we've been operating in a highly inflationary environment over the last several years. And so I think we've gotten pretty proficient at knowing where and how to pass along higher costs through pricing. Again, situation is fluid. There are a number of variables that are out there. And so we came into the year with a number of levers we would potentially pull if we saw things change in the marketplace.

We're going to let things sort of play out. And then to the extent that we see some softening or other things, then we're going to go and execute on that playbook. But again, we know how to push pricing.

to be balanced about it, given where we are with our customers.

Thank you. Our next question comes from the line of Myles Walton of Wolfe Research. Please go ahead, Myles.

Thanks. Chris, you mentioned that the tariff side didn't assume changes in customer buying behavior, operational disruption. Could you maybe talk about those as elements of watch items, in particular, the China strategy as it relates to aircraft and aircraft parts? What your assumptions are there in terms of what they may or may not do? And then also relative to supply chain disruptions, where are you most focused to ensure that these tariff issues don't create supply chain disruptions?

Yes. Thanks, Myles. Look, I'll take the supply chain piece first. If you just think of the first quarter, we saw, again, some steady improvements continuing in our supply base. You heard me talk about structural castings at Pratt up 16% year over year.

Heard me talk about Raytheon's material growth eight straight quarters Collins bringing down overdue line items. Rocket Motors, again, one of our key suppliers saw output up substantially in Q1 year over year. So again, saw some continuing stability and improvement in the supply chain as we exited Q1. And so obviously, we want to stay super tight with our supply base, making sure that we're all working together on tariff mitigations and the movement of work and making sure that we don't see those disruptions. I mean, keep in mind, the industry has been used to a duty free environment.

So all of us have had to come up with different sort of processes and protocols to avail ourselves of these mitigations that we've talked about. And so again, we want to stay locked tight with our supply base to make sure we know how to do this and we keep parts flowing. We've seen in the past what happens when you kind of are herky jerky with your supply chain. We saw that in COVID. It takes a while to recover.

We want to continue that moving forward. On China, I mean, look, it's obviously an important market for commercial aerospace, both in terms of RPK growth, fleet growth. I would say that Western companies are pretty integral to the growth in China as well. So I don't want to get out ahead of ourselves here to see how this plays out. I think we've just got to kind of sit back and see where it stands.

I I mean, I'll just point back to what I said before. The US A and D industry has a large trade surplus. It is a great example of US competitiveness, advanced manufacturing, and technology leadership. And then ultimately, we hope that's recognized. On the supply chain front out of China, again, we've been on a path to develop multiple sources globally for a while now.

A lot of that was hastened, frankly, out of COVID. And so we're going to continue to accelerate those efforts.

Thank you. Our next question comes from the line of Ronald Epstein of Bank of America. Your question please, Ronald.

So, yeah, just recently, as you all know, we had the decision on the NGAD manned aircraft. Do you have any idea on NGAP when that that could be? Because I would imagine that's gonna be one of the XA engines from either you guys or your competitor. Do have any color on that?

Well, I guess what I would say here, Ron, is we got an award in Q1 for about $550,000,000 to continue to progress on NGAP, and we're actually very pleased with what we're seeing on the testing side, and we're getting some great feedback from that and from the customer. And again, I think Pratt has a demonstrated record of providing leading fighter propulsion technologies at scale. And it's making significant strides on technologies that are going to improve range and stealth. So again, we're excited that NGAD is moving forward and that hopefully what we're doing on NGAD will yield some benefit. Again, we're pleased with how that program's moving and the funding that underpins it.

Thank you. Our next question comes from the line of Scott Dischel of Deutsche Bank. Your question please, Scott.

Hey, good morning. Chris, have you seen any operational impacts of the SPS fire at either Collins or Pratt? And then for RTX, is most of that lost fastener capacity being made up by SPS itself on existing contracts? Or are you needing to get that demand filled by alternative suppliers? Thank you.

Yes. Hey, Scott. Our team, separate and apart from tariffs and all the analysis there, was working really hard on understanding the impacts from that fire, working closely with not only SPS but others where we could potentially pick up the slack there. I'll tell you that as we continue to move forward here, work through with some alternate suppliers, work through with SPS, we're feeling more optimistic in our ability to avoid any notable impacts given the fire.

Thank you. Our next question comes from the line of Sheila Kahyaoglu of Jefferies. Please go ahead, Sheila.

go back to tariffs, and I appreciate you guys have a pretty tough job in the trade surplus that Aerospace has. So, Neil, maybe in your comments, you mentioned the $850,000,000 I just want to clarify that's a net impact. How do we think about that across the rest of the Q2 to Q4 and across the segments? Is there any timing mismatch where it hits Collins first and Pratt in 'twenty '6? Any detail you could provide.

Sure. Thanks, Sheila. Yes, obviously a lot of estimates involved in kind of assessing the impact here, but just to be clear, the $8.50 on the page is an approximation. It is net of mitigations. As Chris talked about, there are a variety of mitigations available to us.

And frankly, many of them are new in terms of our application of them because we lived in an environment where most of goods were coming across the border without a duty. And so we'll continue to mature our mitigation strategies and in part the size of the number reflects the time that it takes to mature that. So if you just step back though, let me break that down just a tad for you. And again, this assumes the rates that are out there today remain in effect for the rest of the year. Think about that as about a nine month period.

I'd say the Raytheon impact is very minimal. Think about that as like a $0 per share kind of a number. The rest of it, the residual impact is split pretty evenly between Collins and Pratt, so a little over $400,000,000 each. As I think about the timing of that, if this were to play out in effect as it is today, think about that fairly back half loaded on the earnings side because some of this will end up in inventory and then turn through the P and L as the inventory is sold. And then I guess the other comment I would make, I made a comment that the cash flow impact would be a bit larger and that's because of the timing lag on getting the duty drawback cash back to us.

So think about that as about 15% to 20% above the rough estimate that we provided today. So I think though as I really step back, I think there's a lot of variability yet to come here. And so what we wanted to do today was just provide a framework and break it down by bucket of applicable tariffs and countries so that as things evolve, it will be easier for you and for us to model those changes. And of course, when that firms up, we'll take that into account and bake it into our outlook.

Thank you. Our next question comes from the line of Seth Seifman of JPMorgan. Your line is open, Seth.

to ask about it. Apologies if you addressed this,

but in the you mentioned not assuming changes in

customer behavior, but just kind of the latest indications you're getting in order activity and kind of the shorter cycle areas of columns aftermarket and what kind of might be most exposed if we were to see a significant slowdown in air traffic for the rest of the year?

Thanks, Seth. That's a good question. Let me start and I'll hand it off to Chris if he has anything to add. I would anchor ourselves first and foremost back to the first quarter. It was a good solid first quarter.

I know that things have changed as we exited the quarter, but our order activity was strong. Our aftermarket was really strong. And as we looked at the first few weeks here in April, we've seen no major changes in the behaviors of our customers. Now that's a relatively short period of time, obviously, given the dynamics in the environment. But as we look ahead, I think, and go around the business, I'll start with the OE side, the demand there remains very strong.

Obviously, it's a constrained environment. There's a lot of demand for new aircraft, and we expect that to largely continue. If you stick with Pratt and Whitney for a minute and you think about the aftermarket there, clearly tremendous demand for GTF aftermarket. We saw strong output, as Chris alluded to in his opening remarks, in the first quarter and expect us to be on track to continue to deliver growth there throughout the rest of the year. And on the V2500 side, I talked about 800 shop visit outlook for the full year and we were right in line with about a quarter of that in the first quarter.

So and I'd say the same on the PW2000s and 4000s, our legacy engines. So the indicators there are pretty consistent. I think we've got a good bottoms up view of the customer demand profile and we've factored in some of the things you're hearing about from our customers. On the Collins side, I would say the same applies on the OE outlook. And as you think about the aftermarket, really strong first quarter.

The compares get a little bit more difficult. But again, as we looked at April so far, those orders remain intact. Now there's a reason we have a range on our outlooks. And I think as we sit here today, I think our ranges operationally could absorb some of the impact if there is softening in the later part of the year. We're coming on a really important part of the travel season.

And as those aircraft fly, they require parts, they require maintenance and the slots coming into the shops are obviously constrained. And I think our customers are going want to maintain their position in line. Yes.

RTX (RTX) Q1 2025 Earnings Call Transcript

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