RTX Boosts 2024 Outlook After Strong Q3 Defense Results

In the third quarter of fiscal 2024, RTX Corporation reported a significant growth in adjusted net sales, rising 6% year-over-year to $20.089 billion and surpassing market expectations. The increase in revenue was largely attributed to strong performances in Collins Aerospace and Pratt & Whitney, with sales hitting $7.075 billion and $7.239 billion respectively, driven by growth in both defense and commercial segments. However, Raytheon experienced a slight sales decline due to the divestiture of its Cybersecurity business. The company noted an adjusted operating margin contraction of 10 basis points to 15.5%, while Pratt & Whitney's margin improved significantly. RTX's backlog at the conclusion of the quarter reached $221 billion, indicating sustained demand across its various segments. Furthermore, RTX’s operating cash flow was recorded at $2.523 billion, lower than the previous year, yet free cash flow was solid at $1.971 billion, showcasing the firm’s operational efficiency. Management expressed optimism about the future, raising the 2024 outlook for adjusted sales and earnings per share, reflecting the robust demand in defense and commercial aftermarket industries. With a convincing market position, RTX reaffirmed its free cash flow forecast of approximately $4.7 billion for the year. Recent product launches, such as Collins Aerospace's upgraded Venue™ cabin management system, further highlight the company’s commitment to innovation and customer satisfaction. Thus, the strategic actions and the robust financial performance have provided RTX with the confidence to adjust their annual financial forecasts upwards, aligning with a positive market outlook for the defense sector and aviation markets in the near future.