RTX (RTX) 24 Oct 232023 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the RTX Third Quarter 2023 Earnings Conference Call. My name is Latif, and I will be your operator for today.

As a reminder, this conference is being recorded for replay purposes.

On the call today are Greg Hayes, Chairman and Chief Executive Officer; Chris Calio, President and Chief Operating Officer; Neil Mitchill, Chief Financial Officer; and Jennifer Reed, Vice President of Investor Relations.

webcast available the website for being is and at is presentation a download call live Internet, on there www.rtx.com. This from RTX's

note, call are X-K, any to statements management provide other and listeners differ in this and net those will in filings, could and/or significant Forms forward-looking also uncertainties. materially and the continuing its details that Please reminds anticipated referred that SEC to the XX-Q excluding subject significant RTX's nonrecurring actual otherwise factors provided cash to items. risks often and results XX-K, results forward-looking company by cause operations, from adjustments earnings Instructions] to other on flow statements. including from company accounting important and [Operator acquisition items, where except as the speak expectations noted, The

the I will now that, With over turn Hayes. to Mr. call

morning, you, All everyone. Thank and right. good

I situation of that what with of start, there impacted, we our to people want see the minute has just in a prayers and employees thoughts thousands has and devastating including the It call couple last out RTX Before Israel today. over home. playing the the been spend tragic weeks, unfolded to are acknowledging Israel

let turn With that said, on markets. update me to our end an

and with aero travel air air growth, miles commercial revenue global We're levels. XXXX domestic traffic travel XXXX side, air passenger levels the back seeing On demand remains well solid strong. essentially above to

narrow-body holiday aftermarket for remainder the continued of demand strength We the also and year, wide-body expect and business for for travel strong both supporting aircraft.

increased threat elevated side, drive defense the environment globally. is the continuing spending On defense to

of with to will F-XX support in States years the United content for F-XX estimated worth come. Korea. for further about approved example That's and moving the forward one with growth customer billion be to quarter, this to aircraft $X the South Just sale

missile defense for from to as content. continues, and and month, our And systems U.S. and approximately air State for that's and Russia's Patriot systems a advanced earlier include significant demand defense Raytheon expected unfortunately the U.S. of air approved Department of sale significant the to this seeing invasion the Spain munitions. Additionally, billion $X allies are we Ukraine

included past this NASAMS; Stinger, artillery for this munitions; quarter, antitank-guided are additional and Excalibur, orders During shells; which TOW, anti-aircraft missiles. precision-guided

we we've what that businesses. despite there the all our Domestically, increased over bipartisan be across positioned of spending. few remain to support is D.C., last And RTX in X weeks seen defense continues for well confident

Shifting to Pratt Whitney. &

an quality update powder matter. manufacturing Let the me on metal you give

been Our engines. the focused efforts date ensuring to have heavily on safety our of

As here you saw is charge have we this had recorded in in with in the the release press finalized line what we morning, previously disclosed. quarter, which the

stages Through early of both and So metal just and on which PWXXXX powder AXXXneo of operationally, the a issue. Embraer fleets. with the the EX; consistent PWXXXX, legacy thoughts removals expectations. also safety our We've other engine, outlook, financially the AXXX; the our VXXXX, which the remains which PWXXXX, includes the inspections powers powers made few assessments the the powers That AXXX. and progress the for Pratt Whitney-powered aircraft, & the powers on the which significant

RTX Pratt plans improve result customers today. have we as complete, trust and partners, fleet incremental & impact the do both maintaining upon we are and of working is focus expect the to we of any The financial not of and organization substantially plans. our place Whitney analyses the relentlessly significant a management in entire on With those our the

driving and in our As commercial our across because remain future and robust, on the we the to aerospace resilient performance last I've meet to both months, said for RTX the demand our laser-focused customer markets our excellence needs. of many few you is defense confident products over end team of is remain

backlog Our and developments. of pipeline new record existing franchises a a $XXX technology with both billion, is now

continue to portfolio. have, our always we actively As manage we

As a combined you business, XXXX. the of we to sale saw morning, $X.X will gross this and cash billion proceeds this services reached sale which with approximately billion, approximately recently for announced cyber an Collins' of $X sell agreement Raytheon's actuation generate in business

So with Slide turn that, to let's X.

between As Simply accelerated program, value RTX initiating of ASR, the which stock our and our put, we significant morning, will current also we be price. or has a announced see approved tomorrow. Board we billion this $XX repurchase a share discount intrinsic

VXXXX installed flying beyond The of long-term about Pratt well outlook Canada is of continues aftermarket still engines. an GTF. base to XX,XXX its Pratt of X,XXX the military is business Pratt's The sole world's engines fighters. has with extend provider And manufacturer, small more on of franchises spot than cycle. in premier the the and GTF the the engines and remains engine strong, sweet fifth-generation be of the

XX% a the their their serving system, franchises, lines as and Hypersonic expansion in Attack combined of #X the growing and margin with This Patriot X or Collins our strong next-generation includes Cruise Missile, next-generation of technologies. And opportunities. lastly, portfolio LTAMDS, HACM. defense along with segment of segments has portfolio, an has number or product incredible well-established which a is newly great Raytheon

$XX to Board company more previous which value This was of help to authority Given immediately. The authorization XXXX. growth approved repurchase the of December replaces shares. an through $XX the company's approved fundamental billion opportunities recently that and ASR program, our new includes billion capture the RTX of ahead, program in some an strength

merger. we've range capital Altogether, commitment billion to of to This from $XX shareowners the year-to-date. the to increase return previous $XX XXXX billion ASR, $XX billion. through billion That's time the repurchased of already $XX our is course, billion this will from our to top of on up $X.X of

through this As of combination program short- funded said, will long-term be and immediately almost will I debt. ASR and commence a

the I proceeds supported the announced from importantly, And part that dispositions by of we'll mentioned. deleveraging the in in begin process recently XXXX, just

remain RTX we commitment deliver and of our shareowner to headwinds, So steadfast bright, remains long-term value. the in despite near-term future

highlights. With to and cover it provide the to the Pratt me over hand matters that, to QX additional let on Chris color

Thank you, Slide on Greg, X. good morning, everyone. I'm and

is intact is financial Greg As that line the managing the recovery powder and on the and since for remains to both our impact metal situation our last our outlook priority. team our top impact and execute fleet The said, management plans. fleet continues bottom call, our

PWXXXX, details, our we financial to all elements plan plan, start provide is me outlined executing no a With and of particular, weeks consistent remain flow, X September the few with fleet industrial management fleet said the change with focus I'll Let the estimates the and is what and management and to plan output in more in respect material ago, we support. output The GTF. customer there call. our on and MRO

the eligible first engines visit And tranche the removals occurred, these a roughly work times The of visits engine scope. were for of XX average several project for has these turnaround and days.

engine portion be time a shop encouraging, process will few While the will outline bulletins continuing on the and life it is teams repetitive address of or management common way detailed be bulletins we are models, next our airworthiness of prior perspective, a improvements. different compliance And fleet in for sections is components just practice of turnaround the overall and be multiple project our background, to directives from and that communicated visits and additional smaller requirements released to call. engine. to the weeks the plan times service that process inspection visits, And a by through identify limits further

programs. details me our share some GTF Now on other let

shop and the PWXXXX financial is the financial XXXX, in inside already our the For contract the institute and in will we for that fleet are significant a contemplated current management plans impact estimates be these place We for visit plan that largely Pratt. won't fleets. the outlook fit will and believe

AOGs incremental and Regulators on will we but XXXX, air As configuration largely parts. first of a the part cycles the this end recommendation. mitigated an be shorter early aligned by will some limit the X,XXX configuration life in are of about of inspection for this believe we at current place framers plan, certain year. be There requirement parts will with and half these

expect by directives. We released actions service beginning airworthiness the in be implementing these will bulletin November, followed

And this a management We're will a since inspection operationally turn a little stretched fleet will removals have to very or and plan impact place to Let result total over out VXXXX. work years, having plan visit of XXXX. by had this with financially. scope. as augment in too certain X but accelerating project less now or me reminder, of going a we've in visits expect It the roughly these next incremental the majority the inspections, XXX

in available engines the of the VXXXX fleet, green given number time. manageable and size very available of with market engines Again, the spare the

to a time contract estimates current be is of the outlook. released be contemplated action November in through perhaps, All our bulletin will communicated This in this and, financial service frame.

the program operational on joint And office if FXXX. fleet reviewing will lastly, the The any, to is we plan which limited, customer. management recommendation, impact have believe turning our

metal the have evaluate limited fleet management to containing expect fleet powder We if and continue to updates, balance the needed, any of plan Pratt impact.

on plan the our of capacity With fleet are and full-life up MRO our let to production management new our and turn largely increasing metal to customers: support powder shops reducing operational in set, times ramping parts. initiatives we turn focused the me

support increase previously GTF bring planned First, capacity to the shops more MRO, to accelerating we're our customers. with respect to investments in online and network

Just GTF the Korea be this third Maintenance of Pratt also Airlines operated capacity and expansion And their be announced last network. their facility Singapore by will engines. And the month, by month, aftermarket earlier they're center, year. first at year, the will engine MRO end adding shops perhaps GTF joining inducted the China Iberia Air which this

brought to shops roughly bringing have this able X the the more partner total be shop enable network online an but will XX additional to the fivefold This to complete, XXXX come globally, support having to than GTF global Once visits for will X a annual from XXXX. shops XX. X,XXX plans in sites conduct fleet, network this increase by to year online XXXX,

extensive and MRO improve process RTX improvements includes repair cross-functional shops shop compared leveraging and help a to industrialization also focused in development on We're to on floor. process our to us plan. times talent knowledge This our turn our drive across the and part baseline enhancements availability, team

and shop. disks our HPC Second, with as on for maximize leave and as the time HPT disks when engines possible, many replace full-life is their in as they when come order said visit a September, shop in wing in to we to objective

now As we we've our the and production metal forging machining and previously investments increasing capacity. capacity are and inspection made said before, powder necessary

rate Our production. baseline get QX to for capacity disk run today XXXX forecasts to plan

to working parts. us will of an are even with accelerate fleet allow replace larger full-life to We line, portion this which time the

So to powder up wrap on metal.

fleets are impact fully has what complete. consistent impacted we most management we with the on executing the fleet largely The on Our and these remains call on plans our on said subject, been are plans. reassessed financial XX September focused and

XX%. to third Neil additional third billion our now in in a quarter color the consecutive with sales double-digit segment operating organic in I'll strong highlights, of growth, shift we an expectations the and $X.XX, flow XX%, some and had grew will quarter. which Adjusted adjusted quarter our line basis, on EPS $X.X few free cash at grew was profit minutes. of On provide

new captured bringing recovery, Sales of book-to-bill year-over-year. $XXX growth up $XX while In growth and our we was and XX% RTX, with record across a in by billion. traffic the quarter, aftermarket air the commercial were to X.XX growth commercial OE of billion X% strong led had sales a commercial backlog defense XX% bookings again continued

our was in operating quarter Finally, officially X-business-unit the we realigned began QX structure. first

our and We are continuing develop enable cost customer best-in-class structure. leverage better alignment to to scale breadth and to initiatives

With recent R&D basis, range also year. are reported respect On be few sales adjusted incorporated capitalization, with expect to IRS year. sales tax billion. we go, discuss our our to X reported to some guidance sales our approximately quarter an will headwind basis, outlook of to Neil XXXX expect adjusted and EPS raising both a approximately for $XX.X outlook, be the and we we on And We're $XX further. the prior versus XX% around tightening billion, cents have organically about up which from a

adjusted EPS $X.XX see As year. the result, now we and for $X.XX between a

cash approximately by IRS free billion. increasing just driven from for favorable improve million, to I Additionally, we approximately free mentioned, by flow guidance we perspective, to and are, the cash expect a cash primarily flow the outlook just therefore, our year $XXX $X.X

through with it details the take Neil let So me that, over turn to to quarter. the you additional on

Thanks, Chris. I'm on Slide X.

impact. and have in metal with in line of profit what billion powder $XX.X billion a finalized $X.X in the third is we resulted charge, PWXXXX a in we quarter. $X.X the third saw, in share resulted estimate sales of recorded reported operating for you our matter As our quarter September and This here in sales which billion communicated the

As was ramp summer primarily $XX billion Chris said, across adjusted production sales quarter, driven the Growth strong busy prior had up for OE year. OEMs demand organically and our businesses commercial versus and to we aftermarket travel XX% of supported continue the season. the airline as by

in We also saw to growing execute our defense positive backlog. we growth as on continue

On tax offset effective by per and of a rate was $X.XX higher the share pension GAAP restructuring up and included adjustments, with from share items. interest segment operations from Pratt charge loss a partially operating acquisition basis, expense. as higher and income, accounting $X.XX year-over-year, X% matter earnings nonrecurring higher was profit lower well Adjusted and earnings $X.XX continuing nonoperational from per $X.XX of a as other

alluded respect R&D tax R&D certain means portion contracts. Chris provided will cost-plus deductible. now IRS of purposes currently R&D capitalization customer-funded to, a This be capitalized the to As on guidance recently costs for our for previously with

reduce slightly in $X.XX it While effective earnings per rate forward, quarter, the this tax will payments. a resulted in In share. tax cash higher a adjusted our this will about result to headwind going

headwind. full we $X.XX to about of expect For year, the be this

we guidance we included of cash as free generation Finally, a $X.X discussed. billion, had the R&D had IRS' $XXX benefit approximately capitalization from strong just in of flow quarter million I the anticipated, which

X the segment into QX Slide to let's get with Now results. turn to that,

So a we units: are Collins, X before Pratt as business and begin, I reminder, reporting just Raytheon. now

XX%, Adjusted XX% while both were basis, sales growth. narrow-body quarter. due the primarily commercial wide-body OE of commercial Sequentially, versus as in provisioning channel, the with and organic both well Collins. up quarter, and in sales X%, were sales to repair, year, increase on aftermarket X% in driven And parts sales by down by continued Starting XX% a modifications in were OE billion and XX% $X.X by up and upgrades up strength military were an both driven deliveries. primarily By as the commercial were adjusted Commercial were X%. driven in aftermarket prior up the growth and sales timing up platforms. aftermarket

by with costs, and volume OE or on XX% Adjusted $XXX higher on higher SG&A of operating aftermarket higher profit $X.XX the production up unfavorable mix prior expenses. year, commercial billion was million and drop-through military partially offset

to the Collins' from year, and double operating $XXX in digits For of given we commercial the in profit, $XXX to prior full respect to prior range up continued range OE to up the range sales strength the aftermarket, million maintaining an increase we low of expect previous low be mid-teens, up versus teens. are operating profit to year. low our adjusted With million now

Whitney & Shifting to Pratt on Slide X.

the to approximately the relates PWXXXX, communicated matter, impact be gross it operating for billion, impact metal the $X in billion financial to $X pretax QX powder the with profit in expected expected of we range of an billion. that we As to September, $X

mentioned, remaining I operating billion the sales recorded life in $X.X Recall, over a will line where upfront, contracts. billion profit share net of program expected. to cost just representing of a charge, billion remainder will our be elements $X the mentioned resulting we quarter, the As $X $X.X in impact, in with pretax I gross booked and we that third be booked certain billion the the

the were and X%, XX% sales higher driven as as higher deliveries quarterly were with large and mix military the aftermarket in X an engine in all and driven by Commercial in content up up basis, large driven quarter, So higher of mix business. the volume. up by channels. businesses. favorable growth XX% XX% both Whitney commercial sales Commercial development & were up looking favorable OE billion Pratt XX% on sales sales in quarter, both Canada at an and the the engine well by commercial FXXX and sales organic on And Pratt's business, engine sustainment results basis, $X.X volume adjusted were across in

million unfavorable from partially expenses. commercial higher up prior $XX with on offset of sales, year, OE Adjusted higher commercial production was military mix as operating $XXX higher by million aftermarket costs, as R&D well drop-through higher profit volume, the

OE military be due to our to sales up ahead, adjusted we Pratt's Looking mid-teens year. towards expect higher higher and volume, prior commercial versus end of range or now the prior

Given $XXX the we're from range of prior aftermarket, adjusted as the Pratt's to increasing versus higher sales as up profit million a operating mix and to across OE better $XXX prior military million of range up $XXX our million new well to million $XXX year. also

operating to X. the including organic development Adjusted on in programs. primarily driven on billion including $X.X by of was AIM-XX, of X% were Power versus now Advanced programs programs, and Naval and up million programs. Sales on basis, an efficiencies Turning quarter primarily price by fixed driven and million in $XXX headwind on additional year, higher certain Raytheon Slide Technology-classified net and profit higher $XXX volume program lower-margin lower down volume the prior adjusted

HAWK of X.XX for the Raytheon addition, had X.XX. expected, awards, bookings option short-range Year-to-date, of in in a a billion. and was quarter, the an $XX billion of contract a million program, next-generation sustainment. for as backlog Raytheon from unfavorable billion classified in award a and exercised has a significant This $X.X $XX including resulted there of In the impact of $XXX million and Interceptor $X.X in million quarter. $XXX book-to-bill Patriot award about book-to-bill

This development price by mix fixed continues a chain as to year, sales combination be discussed mid-single profit, material Raytheon respect For the With evidenced quarters, well to low while full X have digits. increase in the stemmed production previously continue receipts operating to we in to we have programs improve, productivity costs. from higher continues to of supply last up we as the the expect as challenges. have seen the to and

a million As to to $XX the operating prior million new from result, $XX profit million we're up range $XXX a prior to Raytheon's reducing million $XXX versus range of adjusted up the year. of

to segment it anticipate margin year the I cash couple of Before solid comments organic environment XXXX. just in hand of Overall, and free sales, back flow. for profit, we a Greg, operating on growth another

step-up headwind the with tempered to as the as growth associated related of cash taxes cash from flow powder some will R&D. level However, well cash metal free impacts by be matter in the

While strong has becoming more and growth the travel difficult. demand we into RPKs with commercial beginning year-over-year is air compare we been head see passengers as at incredibly levels from to and airlines, XXXX XXXX, normalize back

we the OE the of continued overall, growth However, aftermarket, in including wide-body. expect and recovery ongoing

convert we continue strong has year-to-date demand, international continue that side, backlog which years. to the defense solid driven X.XX already defense XXXX book-to-bill growth will the On of a domestic to to and record several next over and a expect

there to has high still within While that inflation begun moderate, pockets our persistently manufacturing are base. remain

into We we'll and actions see the next we've pressure past working continue the place year. additional years, in all had in implement X in expect offset to we the to continue expect We'll the this initiatives XXXX. mitigation to strategic

rates. have and the lot as seen know, financial you of volatility interest Finally, in we a markets

to actions status the that We and expect $X.XX next we this year further the could on improved a headwind funded year-over-year be the market preserve of plan. basis taking about conditions current given to pension are drive pension

of we towards and optimistic but and aggressive pieces are cost ahead XXXX on execution driving lot a XXXX. we focused remain look here, moving So obviously, as reduction and

to back to that, up. hand With it wrap Greg things I'll

Neil. Okay. Thanks,

we a a step discussion. today. Let's takeaways there's key I we've know X back, information our think can, you are I lot a there But of from really, just for take if given minute.

our issue. believe metal all, we and of around financial the impacts of I arms the First operational have powder

plans focus & Whitney RTX out. across executing and Our at Pratt laid on those Chris is now that

growth ended we by XX% markets. in this saw demand with. organic the revenue the evidenced our we strong backlog Secondly, $XXX billion continues the end quarter That's and quarter

strong our a today. advantage going $XX see we're billion to sheet value this utilize through tremendous we to Finally, ASR. balance in take RTX And of

it stop me let and questions. that, With open for up

first comes Instructions] Arment of [Operator line the question Our of from Peter Baird.

Greg, you us that? -- update could the the Has margins you in any kind last Pratt headwinds change just see about as September, you how been Whitney the the to think kind there time you talked on look of in out update that mid-decade. of an would give on call & Or you you've progresses. to done that

point we've will in What at interval a Peter. the end think you significant, And that aftermarket thanks, Not laid the contemplated all talked up the -- in fact contract associated Pratt. about time. some guidance we that will the September, think the 'XX, margins accounting as over of about depress but with it's recall, in on 'XX. by I about costs inspection Pratt as we out, No, back

comes of Our line next question Noah Poponak of from the Sachs. Goldman

more little margins? defense just but Is a the continues spend time I you thing specifics end to you on at broader some happening level? Can mean quarter, the the bigger, in market there noted heard move I lower.

that new progress did a once the into Neil, target from you in here? you're And kind defense decade you margin consolidated earlier you the X can in middle that's on update ever you 'XX expecting us as 'XX? to just margin the the to how spoke the provide call, And of of just segments consolidated

and Chris. to Neil Maybe I'll start talk ask about consolidated the Noah, Raytheon. it's then

of demand robust. First, markets, very in end remains terms the

me, in year-to-date, heard excuse $X.X the the You the Neil billion quarter quarter of in billion. -- or X.XX backlog talk in book-to-bill overall and the bookings $XX the about

So demand products. the really for strong

of a said, We've development That hitting some been fixed-price a some some have We've inflation drag. had had that challenging had of programs. we a contracts have handful bit fixed-price headwinds.

had said, areas. in gains productivity we certain That some have

suspect, mature, programs. might you higher-volume those As

some leveraging look stabilizing. Labor And as are attrition frankly, decreasing, forward, volume chain is the growing. We buys. supply we have gains efficiency had rates larger supplier by with

in forward So those we are kind very business. some positive the look defense signs of as

price through up about get get will that And got and milestones key those hit say development now. to talked programs got those on fixed just through milestones or several We've coming those milestones ultimately, key these on sold off. contracts. then, next some so we've over I we've to calls we the months XX need And and

Thanks, Chris.

me definitely a We Let where that on consolidated did just up off. you view. pick provide left

when margins get a at the looking XXXX. You're around into bit you XX% little midpoint, of north

we we the I we and backlog our and see mix, at the the we of demand seeing. given between point the year the sort a shifting focused, now couple of this look the more we're the mix think as sales signals what of domestically next talked that about then, see being increasing not to that heavier bit over surprising side, of years to on be that foreign low

in the are key to going get that direction. those So heading us drivers that be

What full from to we production mature. side programs know a to, grow. that of right the Chris alluding And programs, executing expect have we defense number and those $XX to is we're focused large now backlog, early as really billion, we on on production rate continue was transition to that do the and as

So the for driving formula we know productivity.

We have challenges this next months, longer the happen on we'll year. programs, development that over the XX see term. seen story And think but I that's the some

Is is Or it in 'XX and 'XX to that 'XX? similar, the expansion of weighted is Neil? rate more --

that backlog will more and got, year a to to know, out but 'XX. as sales weighted next probably It's going be later here, growing play accelerating in XXXX. through you We've

Wolfe Walton of Myles Our line next of question Research. comes the from

on the maybe GTF. Neil,

AXXX pretty of on GTF-powered expectations terms you're managing in the the saying fleet of and their and something that challenging of XX% endeavor forward, own about all Looking ground customers on the execution. your looks and

in it availability? what happen work just I'm just online? Is wondering, that it when of lot engines? network would a sort open at? balancing you these might of and screen There's the looking it maybe just biggest MRO Is be of Is prioritization discovery helpful. you're could register you the out part lay up risk incremental your risks the coming this

kind here, Yes. alluded kick Chris. output. it's to we've of think, it fair to Myles, is going to amount I'll you flow. parts mean capacity MRO obviously, that those and single, MRO aircraft are I but biggest challenging of got time accelerate material this a for it, key the got we've is customers. off. output. lever a Maybe ground, I the the There's be the on of And and The

On the capacity expansions doing, we're and the both side, within shops the that you across network. Pratt heard about the

talk In heard terms this before. of us about material flow, you've

and to got objective full-life at to HPT ramp we've in visits, Our and disks continue these HPC shop is go up. put to those

ramp-up that and have steps and progressing made, then like key metal we demand. this downstream meet production, accelerating and Again, Investments that underway place. can is well for in in capacity make capacity like we're inspection is already that and And there treat. process the been heat machining, forging powder more processes, sure to sonic

performed so partners some And parties. of this by Pratt our and and some third by

the support to output our at focused going the and we're machining But MRO is penalties end to have pay therefore, take of and customers. our take going ultimately the down capacity on to customers and, day, capacity. very AOGs the again, the very, down inspection But the what's to

target shops the XXXX than this same. it's follow-up. your that quick Is MRO earlier in think year? I XX a number Just different of

changed of maybe expansion? what so terms has And in just network MRO

the same, about. again, is into And of talked our but enough. unlocking we accelerated as in best of throughput mean bringing that can. we've a That's to MRO the shops. that accelerated spend of these the some key Fair I as We've it's as sort on inspection capacity MRO investments. Yes. plan. we It they the can I were much

we're again, just on know on visits. the learnings of second, But then tackled us we're And we of those those a you these for doing and there's heard going go lot gets when that earlier a curve learning project visits of aren't talk lot beyond Myles, about turnaround that times things. And and the to that get. preponderance the a day XX-or-so

tear can every those limits, putting efficient down, how every resources time and time, being taking literally inspection we more it's repairs, more cell quickly test and So through part out in in areas. MRO, gate

from of comes question Vertical next line Research. Rob the Our of Stallard

Chris. for question a be might This

on the something problem powder this issue seemed like the metal the But on there it's up that on in When VXXXX. going you there spoke be September, pretty sound significant. the not the AXXX, is Following not convinced does about you it would and you a issue. said now, although EX

So elaborate you inspections on could engines. I progressed the those how was wondering on if have

Yes, the thanks for Sure, Rob. question.

analysis largely the have think on telegraphed impact. within the they on had the going the more limits we our those today. I will were those, than have last maintenance XXXX of are XXXX, would be manageable inspections intervals of shop in and that calls The life So terms visit we will while on fall sort and far the And fleets through shorter on we forecast as XXXX. said, frankly, we is

why inspections of life within so and many And those plans. that's fit limits these

analyze inspections. parts them, we've the from engines On now. again, accelerated continued about had fleet. inspection targeted on the place and continue thrust, inspections, learn X to characteristics in that we've of down inspections VXXXX, years as data And those other path that in to we for halfway We're inspection their sort more able for profile, based got -- and that we accelerated do we're those they've about pinpoint through certain

going XXX But a very think largely a got become And X again, turnaround We've that's XX-day project work are we've work at out scopes visit again, the in I on about And proficient years. project scopes. shop stretched a VXXXX. to visits total experience very, those. Those on manageable. be XX- time. are over of That's of those or very less to visit lot

and will why have that's calling those we're significant again, not operational very financial or So impact. manageable

comes Jefferies. question from of Sheila the of next Our Kahyaoglu line

do through of you XXXX? then us payments about on the if billion Maybe basis of what a GTF into the for you quarter takes segment to year. just are some the next have year, stepped-up And MRO it and not final on you and if don't $X.X announce GTF? think $X.X year-to-date, biggest the just How walk the on mind, ask given the cash, risk head then billion drivers ASR. billion I generated just could And the there? derisk now Why you puts $XX output as

Sheila. Thanks, right. All

on to we what do with start flow. me cash Let need free

free we cash the line the of year. the for billion flow to need full $X.X see trajectory quarter. with to strong for pleased were Clearly, we see and So in

look $X.X going you And to drive X as quarter, major the fourth are to the really getting there's that billion. at parts

fourth is And we put see billion fourth And first ranges of operating need that quarter. $X out the demand of would a quarter, I -- feel down little into we I with sales given given see achievable we'll Again, the the we comfortable X growth break there. billion to that about million in $XXX inventory that think and improvement we're manageable. capital seeing buckets, in the clearly profit, about just working about $X and and the as The see we over in signals improvement.

the milestones some achievement are defense of on side. significant advances We expecting and

$X.X think about when about So contracts, billion. long-term that's and you net -- liabilities on contractual advances

the would that's fourth So the big a piece that of year. in I normal the the of rest is quarter. disbursements then timing call really And of business course

in as going things those the into or of good you do to not next lot out provide growth a to line to So there. other get see get we free to we in have map come sight we'll do, the specifics to of say year year January flow we And about after, closing look road to 'XX. as I'm and year. how back but cash than more a

about do Greg, ASR? the you And want to talk

with And the of timing a it's timing, think had Sheila, I you, question. tell the Yes, ASR ASR. question Board I would the relevant the around we a fulsome about the sure. discussion

it Board the I and impact saw you team powder time year-to-date. we financial billion if right bought significant $XX this management confidence We $X.X another and time down This about bound the to the the intrinsic to having that. And opportune it, convinced at billion resolution a an again, as back the in our of what stock. the is think to was is double metal what And believe discount value. on that be

but buy. also this the we that the confidence in really in And issue. think around confidence, confidence metal arms doubling time we're And do the our of RTX down of is our have to I future powder terms

the Epstein of from line question Bank America. next of Our of comes Ronald

When not new in on again? call XXXX basis? are What a situation, I go-forward engines What we this frame. kind this you are learned, there be lessons time today. look the to creeped my And first back happen are understanding the it, Because perhaps of will concern, up, have a like growing it here is on right, the takeaways big future. mean the

and Chris. incident and sort -- through that a all come this it an to Ron, actually seen metallurgical rare after we before. led investigation records able the our the it back it incredibly And rigorous were Yes, did We hadn't XXXX. did was in of we March review then this until is the defect. of to all was trace and this analysis to realize of go XXXX. wasn't to went of And

much processing determination have rigorous inspection about changes, We've I Well, gone systemic across our that into would assessment, every programs. the both which all that our hand "Okay. a of from of data to And before, made you safety learnings into guys that manufacturing in we of again, again, Once one if all -- didn't step out, think of later describe through you've facility, inspection back But figure and right till, a we models number sort you and risk just perhaps of metal techniques. incorporated the our powder heard say, do XXXX. process you it?" data what changes us make

every through You've that engine right across again, most seen got. those But of prioritize as kind impacted we we've us single it by go one the program gets one fleets.

another at we do better, to I on resources have combination site do visits, something would management And developing below by outside but And the and situation, review responded enhanced continued and experts they Again, us life recommendations, look leverage a basis. We've and to in, make the that metal we're of leverage that those. that's maybe on we've and product senior safety to understand processes come implement of then culture we more interview regular committee, engineering to course, do plans got we of a afraid the then, parts. and broadly comprehensive comprised developed can management give outside unrelated powder fleet and metal, say resources to we've expertise. to perspective. outside and go not our inspections powder the what limits and industry trying the veterans a that key and we've unrelated processes,

be? does require everything of kind I is or going kind that don't forward, just in, mean of nuts whatever And to of sort engineering I where infrastructure the in to it Pratt, mean make more it's some just going sure or and know, just should bolts of investment

invest, that Well, you, of so all us process of thousands Ron, something. get identify both we manufacturing look in that we're of to sure, continue machine automation data going this and system. quality making ahead out they at in for to terms help can and we're to -- tell also issues our of I'll investments we've learning thousands in-house turn records better and inspection the into before anomalies, got in

an has on on fleet that and Unfortunately, our impact the customers.

part the we're and We've to of invest all in modernization plans to better, to continue to leaner. had accelerate faster, footprint things So going place. We're continue going again, how do our areas. of we investment those in those, those

from the JPMorgan. Our Seifman Seth of line of next question comes

to or be next billion guys what buying that fair I billion, about cash? not it is what I consensus Maybe pretty a is mean regarding back assume going given you're in you're of stock is mean small say the disappointed Street accelerating to $XX January stock, cash. you $X.X questions of year, here bundle in repurchase. have to

the just in about impact, month? last move to when thinking target and in be the that we and R&D change the then the you repo, XXXX you'll the versus expense XXXX, interest what share have think told about we the And change from we should how out us

XXXX, ahead cash get see up. the do we We're question. for thanks Seth, free stepping Okay. but flow not going of to

comfortable XXXX that target are free about. we've our $X.X billion with talked cash flow We

And those as what be impact, R&D interest about offset think to an XXXX. and higher in you about from increased benefit just the going is will

so for And comfortable $X.X feel billion with a I that's XXXX. why, staying target today,

of X pieces But lot then. and a now there's course, those today. we see Of moving time are between the

Our Stanley. of Liwag comes from of Morgan next the question line Kristine

security is of to billion U.S. So defense includes national a industrial over question. defense The requesting moving a number House in maybe which supplemental in for $XX the priorities, spending for White investment base. billion $XXX

Looking defense And this got of you've quite Israel the to stockpile replenishment defense Raytheon this air request, with for for fit and missile nicely and for at seems Ukraine, both. equipment portfolio.

earliest to addressable revenue? opportunity see of this what dollars So could if are And convert how the this much company? be appropriated, you the is the would to

Kristine, let that. me on start

U.S. the Ukraine earlier we've I think really to war replenishing seen in that's far conversation, $X mentioned about And orders billion so I of the related replenishment. stocks. So

We orders billion years. X of next another $X expect in the

out over of most to XX play the terms And will that XX of in months delivery. next

a revenue So this. you next won't pop see from big even year

$XX you're much been quantities. this the request, same but for about to higher President's have the we billion in going is $XXX-plus what As we than seeing think Ukraine, next tranche, which more billion things is that see

to Systems, missiles the MRM we're Patriot true air Again, Those would today. there, we defense and GEM-T see using we're the obviously, that system. defense is think are The significantly. system, are that. So air up, supply is which same that going short short-range NASAM the supply those we in munitions orders with those pick for

see ramp unmanned play, the vehicles. today to big like very are with air which of going a come again, unmanned countering specifically also there. the you dealing So systems into And systems these effective around vehicles. we Coyote, is terms But in short-range weapon other air have

also replenish So stocks the going top increase top DoD going in the an portfolio, benefit to Pacific. again, see as and the fleet replenish war you're be of really the across entire continue Again, is restocking, we I think on line. to of what of we in Raytheon a some to this think

munitions SM-Xs, SM-Xs that's really huge a that So that of are we've got backlog today. other and part this

new margin-accretive? profile the contracts you margin do of these about how think opportunities? And incremental Are these

I the kind right? talking would they're them These are in cost actually, no, margins, margins. well-known type I I say And cost detrimental you're they're of going a years. producing to on program, of again, So wouldn't margin-accretive say normal -- We've been these for XX%. systems. about XX%, XX%, these are nor terms would of

to it's are. but And I it's costs think the again, -- what know we margins, overall accretive. So again, hugely not helpful

spot. Again, is Neil, sweet kind of to XX% I think XX% the

exactly to increased up of chain with getting about all a on. got deal think we've These lot right. production mature I that's that the programs expect. ramped are history the we supply that It's

Our Akers of comes Matt Fargo. of Wells next the from question line

sort just maybe the that is guess we And of carrying of XXX, part benefit recovery XXXX about the clarify, I how guess should the to XXXX? that I payment? forward benefit, that $XXX think into million Section from

that is, fact, that Thanks. Yes, some contracts. R&D will. We recovery to assumed were That's you a cost-plus these our in deductibility on the file return good basis a tax of XXXX of question. able overpayments, the of if

next be What little because the though, tax year, year of we'll little payments. cash into of And then will lower in a filings. form bit it is we'll making next a headwind bake a payments that this bit will estimated start estimated to happen, our year get more back next year's and tax

out. play will So that's how that

of of previously period of deferring we time, amortizing. about If XX% a at it kind look were you what over multiyear it's and

cash that goodness free So billion if over you incremental that in kind through XXXX, stretch $X.X that's period. flow of about of

& of the line of Harned Bernstein from Company. comes question Doug next Our

removal you on of level mean, talked talked GTF HX in the XX business, about sounds I AOGs XXX XXX to short of a the the a of days, when days Chris, number. When of kind to XXX. very return XXX before project had forward, you on to like about time -- look peak you

of thinking this than and revisit that and in way term, the earlier How does sense of an any you about at the would give in that looking then short unable if that's disks affect you're you're customers forth liked can so that economics? the changed? have do of you're Now have before. process more to your fibers how presumably, replacements detail, us may and the also, a And you

questions, Good Yes. Doug.

of face. turnaround that And very -- to of sort show taking shop larger-scope can that visits going the honestly how hours, days and to project incredibly done visits So we've reason out handful the just to focused translate early minutes, people this. are of mentioned the on that I early we're times is we on

that time Doug, right is key that process, XXX incredibly cell And taking peak AOGs, wing-to-wing the XXX, within process. gate But just focused now, organization on literally to the you out those impact us the are upon those the out, And that. laid go of that here. everything test financial baked including as assumptions every to to that on improve And is those. are the the MRO about talked output we're we linchpin to can in the assumptions. Those earlier, what's I doing we said

is, Doug, and kind that's day. so that's And every to organization's where of each better we've focus the where get got and

Doug. it plan disks. of inspection. new and second not isn't slot, OE point induction your first full-life that the come quarter of those, shop then today on To going year ramp-up the to is will quarter extent visits. about the starting to engines the the output in in. first Yes, those They'll in the be to our an To each put in needs at the waste of year MRO we're in and The get the where the at these

this so X,XXX it's congestion. MRO X,XXX the And wing critical shops thrust to that forgings reinspect, back the leave more for on powder see when period is they the ramp-up have visits, it a just have the continue on back have, point, which our why because us engine, in these add to the to your at longest they'll for then can engines of time depending come in shop to these this got in cycle metal so they will don't we and during

and in next engines taken the tranche the has may, what is of know to will haven't original airlines there that tranche, frustrations them And being the -- help dark on set that timing somewhat first the the and the -- out come we be? you've impact one taken in but when would be impact, September, in need long to off that I to off heard I've what of wing, exactly then if so seem able

of off customer you've at discussions, Doug. look of by got part the engines those at looking been the specific we're to but their Again, customers against cycle We're it's those bounce times I've by so conversations Again, process, they thorough them understand those plan, actually impacts. customer, having management a their them. having because many serial number. rigorous, with and so on fleet

said provide are the but service And visits in of XXX going we're AOGs. shop the that early lion's the follow of Doug, that I earlier and the and call, 'XX. those of we're going to about to bow have, in on. causes that we bulletins of we back are wave, relatively 'XX going XXX on to those think that to September As incremental XXX that these talked to That's ADs what share X/X 'XX, peak when 'XX some

those impact you're early see happening, are 'XX. that communications to going but So in

Markets. Capital comes next question Our Ken of from RBC Herbert

Chris, bracket to guess, metrics got the customer the And you've you on the to of how sounds up I gives around provide uncertainty, sort more going? those side. With are sort conversations. that comment customer conversations are still what confidence, of in sort the the shop on I you all confidence those follow you any that -- on incremental of around granularity risk conversations? these. your obviously, where visits, just Can it regarding sort the wanted of any And like incremental us on in timing give ability

Sure, Ken. Thanks for the question.

what is management continued over fleets. we're operation doing and understand the the risk plans, the through several specific as understanding customers inspection our limits, on that fleet, you analysis then So its impact their cyclic walking the that ensure and focus, of imagine, they safe the intervals the might last fleet the months safety to

we're that certainly our powder in the health, happy with and net them not with fleet right effect, assets think certain from more output reliance they've spare differs as understand the they're but engines others doing what thing, by again, Customers need. getting even doing of the and their perspective the The and the we're than metal just a to MRO by virtue GTF. and they're risk imagine, not they the customer. We're shops going might impacted are that conversations, on it customers, size, been difficult. have our Again, you to happy safety be going to prior their and on

they as Ken. And you might obviously them difficult some support once the year part fleet-by-fleet, each they're to to we will tailor customer imagine, Again, the conversations, have and packages. whatnot. to individually are having than and are impact more flights, others. those And make those with people so of their customer-by-customer their conversations their into we're changes a continue network truly impacted and through ongoing, as the understand and But go early are going

So those next happening, conversations will are progress into early year.

to like the Greg Hayes conclude does the of call. for That portion Q&A call would closing I to remarks. our now back turn

and all today. in for Okay. Thanks, Latif, thanks listening

team As all take Take to be and IR to coming you look always, Thank will calls, you. in seeing months. forward we around weeks the the care. your of Jennifer and and

This now concludes today's conference.

now disconnect. may You