RTX Corp Q4 2024 Earnings Call Summary

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

Question: Myles Walton - Wolfe Research - Analyst : Maybe, Chris, on powder metal and the GTF, there wasn't a lot of discussion. So I'm taking that as good news that you're still on track, still on plan. And maybe just to put a point to it, it looks like your cash expectation for spend in '25 is the same. Are we still on track for the $800 million to $1 billion step-down in 2026? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 1:30PM, RTX.N - Q4 2024 RTX Corp Earnings Call

Question: Peter Arment - Robert W. Baird & Co., Inc. - Analyst : Nice results. Chris, on the -- so new administration, new spending priorities. How are you thinking with how Raytheon is aligned in terms of any replenishing stockpiles and how you see kind of that playing out for you? You've got a huge international mix. I think you're 44%, just how do you see kind of the uplift that's coming from the international side along with opportunities you're seeing on the replenishment side with the new administration? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 1:30PM, RTX.N - Q4 2024 RTX Corp Earnings Call

Question: Ron Epstein - BofA Global Research - Analyst : Yesterday, the Air Force bumped up their contract for NGAP to about $3.5 billion, a big number. Where do you guys stand on the program? Where are we? How do we think about it? Kind of what's going on with that next-generation engine?

Question: Ron Epstein - BofA Global Research - Analyst : And how much of a tailwind is that for Pratt this year? Or I mean, how do we think about that just kind of on the financial side?

Question: Scott Deuschle - Deutsche Bank - Analyst : Neil, are there any components of the free cash flow outlook in 2025 that you would call out as potentially normalizing or reversing in 2026 apart from, of course, the powder metal costs? And I'm mainly just trying to get a sense of whether this broader working capital improvement is to remain a persistent tailwind beyond 2025.

Question: Scott Deuschle - Deutsche Bank - Analyst : Great. And Chris, just to clarify, has Boeing restarted issuing purchase orders for 737 MAX avionics equipment yet?

Question: Rob Stallard - Vertical Research Partners LLC - Analyst : It's probably a question for Neil. On the 2025 aerospace OEM guidance, it looks pretty conservative compared to what Airbus and Boeing are currently saying. So wondering if you built some contingency into your forecast or if there's anything going on with inventory, for example, that's impacting that guidance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 1:30PM, RTX.N - Q4 2024 RTX Corp Earnings Call

Question: Sheila Kahyaoglu - Jefferies LLC - Analyst : Maybe just still picking up on commercial aero on Pratt. In 2024, if we look at the OE growth, it was about 21%. GTF deliveries were up 14%. So is that 7-point delta all price on spares on GTF? How do we think about that in '25? And on Pratt EBIT growth of $350 million at the midpoint, or $370 million, does that all drop through to the free cash flow bridge too, Neil? Is there -- how do we think about negative engine margin factoring in, more investment in GTFA and just aftermarket incremental?

Question: Seth Seifman - JPMorgan - Analyst : Maybe a question and maybe a tag on a quick clarification at the end. On the question, the age of the fleet is obviously supporting growth in the aftermarket at Collins. When you think about growth from here, how do you think about production and deliveries back about five or six years ago as we headed into the COVID period, the number of planes that are coming off warranty and how that's going to affect aftermarket growth at Collins? And then just quickly if you could talk about the number of large engine deliveries you expect at Pratt this year?

Question: Seth Seifman - JPMorgan - Analyst : Great. And then on the deliveries?

Question: Jason Gursky - Citigroup - Analyst : Chris, I was wondering if you could spend a few minutes talking about your top three or four priorities for the year. I suspect some of that will be productivity. So I'm just kind of curious to get an update on productivity across the company, maybe where you are relative to where we were pre-pandemic and what it's going to take to get us back to the productivity that you saw then. And then Iron Dome, what does that mean? What kind of opportunity is there for you all if we do really put up an Iron Dome here in the United States?

Question: Gautam Khanna - TD Cowen - Analyst : I was wondering if you could just broadly comment on the supply chain, where you're still seeing constraints? In the past, you've talked about heat exchangers and seats and the like. It sounds like at Pratt, the output is getting a lot better. But if you could just talk broadly where the pinch points are and kind of how those have progressed maybe over the last 90 days.

Question: Matt Akers - Wells Fargo - Analyst : Can you touch on pension? It looks like FAS/CAS a little bit of a headwind in '25. Is the thought that that will still sort of lead lower in the out years? And if so, what's kind of the headwind we should think about for FAS and CAS?

Question: Ken Herbert - RBC Capital Markets - Analyst : Chris or Neil, you called out provisioning in particular as a real source of strength for the aftermarket at Collins in the fourth quarter. As you think about the, call it, 10% growth in '25, can you provide -- for Collins in particular, can you provide any disaggregation of provisioning versus the repair parts of the business? And I guess as part of that, is there any incremental risk you're seeing around destocking at airlines as they think about spare parts across the Collins portfolio?

Question: David Strauss - Barclays - Analyst : Two-part question. Neil, first on GTF aftermarket, you gave some rough color there. Could you just be a little bit more precise where exactly you're booking GTF aftermarket today, I guess, in 2024 and expectation for '25? I think previously back at the Investor Day in '23, you talked about getting to mid-teens aftermarket margins on GTF. That's my first question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 1:30PM, RTX.N - Q4 2024 RTX Corp Earnings Call And then second question, on Collins, I think you had previously talked about this being a 40%-plus incremental margin business getting close to 20% margins in 2025. We're obviously not going to get there. So what's the right level of incremental margins to think about on Collins going forward?

Question: Noah Poponak - Goldman Sachs - Analyst : Neil, you just touched on it at Collins, but I wanted to ask if I take a step back and zoom out and look at those 2025 segment margin targets from 2021, and you referenced that a lot has changed, but which of those are still achievable in the medium term and have just had cost inflation or some other more transitory headwind versus which of those have structurally changed and the old target is just no longer relevant?

Question: Noah Poponak - Goldman Sachs - Analyst : Okay. And Neil, what's your latest assumption for the last year you have a GTF powder metal cash flow headwind? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 1:30PM, RTX.N - Q4 2024 RTX Corp Earnings Call

Question: Scott Mikus - Melius Research - Analyst : Neil, Chris, I was hoping if you guys could provide some color on the production rates implied in your guidance for the 737, A320, 787, how have they progressed through the year? And then also a quick question on Collins. Do you have any update on the certification timing for the new business class seats there?