RTX Corp Q3 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert Stallard - Vertical Research Partners LLC - Analyst : Chris, a question for you on the GTF. I was wondering how you managed the competing demands of the spares pool versus the Airbus line in the third quarter? And how confident you are in hitting the delivery targets for the fourth quarter?

Question: Myles Walton - Wolfe Research - Analyst : I was hoping you could touch on Raytheon. Obviously, really good bookings but the organic growth has been sitting around 5% for a couple of years. What's the type of acceleration we should all think about into '25 and beyond? And also from a mix perspective, that 10-point higher mix in the backlog, how quickly does that impart into a significant mix shift in the sales in '25 and '26?

Question: Jason Gursky - Citigroup - Analyst : Chris, you mentioned, you made some comments, I should say, about productivity in your prepared remarks and I know Nathan talked a bit about it in his as well. Wondering if you could just add some context to your views on productivity. Kind of where we are today, maybe relative to where we were pre-pandemic across your businesses and where do you think this can all go over time, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 12:30PM, RTX.N - Q3 2024 RTX Corp Earnings Call your expectations about productivity growth in the quarters, and maybe multiple years ahead and the expectations that you're building into your plan?

Question: Sheila Kahyaoglu - Jefferies LLC - Analyst : So maybe if we could talk about Collins, please, both on the OE side and the aftermarket. Collins aftermarket was up 9%, OE was down 8%. First on the OE, it implies Q4 down 15%, just given the flat guidance now. So what are you expecting there just around the shipset volumes? If you could give any color. And then secondly, maybe if you could talk about the aftermarket up 9%. I know tough comps in some of the businesses there, but how do you think about the correlation between OE down and aftermarket? Are you seeing any aftermarket benefit from the delayed deliveries? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 12:30PM, RTX.N - Q3 2024 RTX Corp Earnings Call

Question: Peter Arment - Robert W. Baird & Co., Inc. - Analyst : Maybe, Neil, just to level set us on maybe free cash flow kind of the cadence when you think about it going forward. You've talked about obviously, this year, if we back out the payments and everything, you guys are probably over 80% kind of conversion. Just thinking at a high level, when you think about '25, how are you thinking in terms of any moving parts or pluses or minuses we should be thinking? Or does conversion improve with all of kind of the initiatives that Chris has established on productivity and whatnot. How do we think about that?

Question: Ronald Epstein - BofA Global Research - Analyst : Hopefully, you can hear. So what are the takeaways? It seemed like after spending a couple of days at AUSA this year that this next generation of company seems to be getting a little bit of traction, right? So you know who I'm talking about, the Palantirs and Andurils of the world. How are you thinking about them? Are they a competitive threat? Are they potential partners? How are you thinking about defense tech? I know you've got your RTX Ventures division. But broadly, how are you thinking about that? And is it an opportunity or a threat?

Question: Gautam Khanna - TD Cowen - Analyst : I was wondering if you could frame up for us when do you think at Raytheon defense productivity takes a more significant turn. I mean, obviously, this year, it's a big change year over year. You do have some challenged programs that at some point, I imagine are also kind of a negative to that ledger. When do those kind of roll off? And do we ever get back to the prepandemic $200 million-plus of favorable? And if so, when is that realistic?

Question: Seth Seifman - JPMorgan - Analyst : I wanted to follow up on Collins. There was a shortfall in the quarter, the guide is down, I think, about $75 million, which is around what you guys missed my estimate in this quarter. And you talked about the guide down relating to absorption of the Boeing strike and all that, which seems like it should be ahead of us. But it would seem that the pickup in the margin at Collins in the fourth quarter. And I wonder if you could talk about what's driving that and how much that absorption really impacted Q3 versus other stuff?

Question: Noah Poponak - Goldman Sachs - Analyst : Just following up there on the Collins margin. You had the '25 framework implied that segment margin just below 20% and had the incremental stepping up a lot next year. Is that still the directional framework or have just a lot of things moved around? And then on the GTF powder metal, any numbers you can put around how many engines have actually gone through the process and are back in service. And then of the engines we can see are off wing, how many of them are in a shop versus in line to get in a shop? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 12:30PM, RTX.N - Q3 2024 RTX Corp Earnings Call

Question: Noah Poponak - Goldman Sachs - Analyst : I really appreciate all that. Neil, did you quantify the EAC in Collins in the quarter?

Question: David Strauss - Barclays - Analyst : So I wanted to follow up on GTF and the spend there. I think, Neil, you had talked about it ramping up in Q3. It doesn't look like it did. It sounds like you plan on spending less this year, maybe if you can help us what the path looks like from here as it relates to '25 and '26. But I guess just high level, if you're reaching compensation agreements with your customers, your customers have a lot of aircraft on the ground out of service. I guess, why aren't you paying more? Or are you swapping maybe cash payments for something else in the future?

Question: David Strauss - Barclays - Analyst : Thanks for that. I think you had said $1.5 billion next year and then $200 million tail in '26. Does that doesn't hold anymore? It's more likely to kind of shift out to the right?

Question: Doug Harned - Bernstein Institutional Services LLC - Analyst : On Raytheon, you've got great orders here, strong international, focused very much on missile defense. So that's very good, as I see it for margin expansion going ahead. But can you talk a little bit about the other side of the business, the airborne and space systems, which have been more difficult for you for growth. What's going on there in terms of strategy and how you see that part playing out?

Question: Doug Harned - Bernstein Institutional Services LLC - Analyst : Is there a time frame that you can see where you'll pretty much have a new strategy in place and positioned for growth.

Question: Gavin Parsons - UBS Securities LLC - Analyst : I know we'll learn tomorrow on the Boeing front or learn more tomorrow anyway. But I wanted to clarify that you said you're full stopped. And if your expectation is that you would resume when Boeing resumes or if you think there's some possibility for destocking there?

Question: Scott Deuschle - Deutsche Bank Securities Inc. - Analyst : Chris, it seems like there's a lot of 787s already built sitting in Charleston, I think, waiting for seats, I think mostly for Lufthansa and American. Is Collins the seating supplier for either of those airlines? And then do you have any sense for where you're at on the FAA review there for those customers, assuming Collins actually is the seating supplier for either of those?

Question: Scott Deuschle - Deutsche Bank Securities Inc. - Analyst : And Neil, sorry if I missed this, but is there any directional framework you can share on how to think about military aftermarket growth at Pratt next year? Just given the installed base, I think would be growing a lot now that the delivery hold has been lifted, and I assume flight activity starts to ramp up?