RTX Corp.’s stock was rallying Tuesday after the owner of Collins Aerospace Systems and Pratt & Whitney reported a record backlog and stronger-than-expected results.
The company also moved past trouble with geared turbo fan, or GTF, engines at its Pratt & Whitney unit, with no additional costs in the fourth quarter for the powder-metal problem discovered earlier this year.
In its 2024 outlook, the company said it expects $1.3 billion in payments related to the issue. The payment estimate comes out of an already disclosed $3 billion charge taken in the third quarter, however, with the rest to be spent in 2025 and 2026.
“While there is still a long way to go in getting all those GTF engines through the accelerated maintenance program, we think that investors will be relieved that there has not been a negative adjustment to the plan at this stage,” said analyst Robert Stallard of Vertical Research Partners, who reiterated a buy rating on RTX.
RTX’s stock
RTX,
rose 5.8% to $89.96 in afternoon trading. Earlier in the day, the stock rose by 8.2% and was on track for its largest one-day gain since it rose by 10.98% on Nov. 9, 2020, according to Dow Jones Market Data.
Chief Executive Greg Hayes said RTX supported a continued recovery in the commercial aerospace business, with $95 billion in new awards for the year and a record backlog of $196 billion.
RTX, formerly Raytheon, said its net income for the three months that ended Dec. 31 rose slightly to $1.43 billion, or $1.05 a share, from $1.42 billion, or 96 cents a share, in the year-ago quarter.
RTX’s adjusted profit of $1.29 a share beat the FactSet consensus estimate by a nickel per share.
RTX’s revenue rose 10% to $19.93 billion, ahead of the estimate of $19.74 billion.
In the third quarter, RTX took a $2.9 billion charge related to the removal of about 600 to 700 Pratt & Whitney GTF jet engines due to a powder-metal issue.
Benchmark analyst Josh Sullivan reiterated a hold rating on RTX and said the company’s aerospace business turned in a “slight beat” of estimates. However, Raytheon Defense sales of $618 million missed the consensus estimate of $703 million.
The company’s Pratt & Whitney geared turbo fan engine recovery program remains on track from RTX’s October guidelines, Sullivan said.
Looking ahead, RTX said it expects 2024 adjusted earnings of $5.25 a share to $5.40 a share, compared with the FactSet consensus estimate of $5.28 a share.
RTX also continues to expect to return $36 billion to $37 billion to shareholders by 2025.
“RTX is beginning 2024 with strong momentum, and we are projecting another year of strong sales growth and continued segment margin expansion,” said Chris Calio, the company’s president and chief operating officer.
The company’s Pratt & Whitney jet engine unit’s profit rose by 25% to $382 million, while sales increased by 14% to $6.44 billion, as it recovered from the geared turbo fan engine issue earlier in the year.
