RTX (RTX) Q4 2023 earnings summary

Executive summary

• FY 2023 adjusted sales were $74.3B, up 11% organically; adjusted EPS was $5.06, up 6%, and adjusted segment operating profit rose 18%.

• Q4 adjusted sales were $19.8B, up 10% organically; adjusted EPS was $1.29, up 2%.

• FY free cash flow was $5.468B and year-end backlog reached a record $196B.

• Commercial aftermarket and OE sales rose 23% and 20%, respectively; defense sales increased 4%, with FY defense book-to-bill of 1.24 and $51B in new awards.

Financial highlights

• Q4 reported sales were $19.9B versus $18.1B; Q4 diluted GAAP EPS was $1.05 versus $0.96, while adjusted EPS was $1.29 versus $1.27.

• FY reported sales were $68.9B, up 3%; GAAP EPS was $2.23, down 36%, versus adjusted EPS of $5.06, up 6%.

• FY operating cash flow was $7.9B and free cash flow was $5.468B, versus $7.2B and $4.9B in 2022.

• Q4 cash flow from continuing operations was $4.7B, capital expenditures were $805M, and free cash flow was $3.906B.

• Q4 adjusted net income was $1.8B, down 6% YoY; GAAP net income from continuing operations attributable to common shareowners was $1.4B.

Outlook and guidance

• FY 2024 outlook: sales of $78B–$79B, organic sales growth of 7%–8%, adjusted EPS of $5.25–$5.40, and free cash flow of $5.7B.

• 2024 adjusted EPS bridge includes $0.72 from segments, offset by pension ($0.36), tax/other ($0.30), and powder metal ($0.16), alongside other listed items.

• 2024 adjusted tax rate is 19.5%; capex is projected at $2.5B–$2.6B, interest expense at $2.05B, and non-service pension income at $1.5B.

• 2020–2025 adjusted annual sales growth commitment was lowered to 5.5%–6.0% from 6.0%–7.0%; adjusted segment margin expansion was lowered to 500–550 bps from 550–650 bps.

• 2025 free cash flow commitment of $7.5B and capital return commitment of $36B–$37B were reaffirmed; GTF fleet management outlook remained consistent with the October update.