The shares of RTX (NYSE: RTX) popped 7.18 percent to $78.38 after the aerospace and defense company reported a year-over-year Adjusted sales growth of 12 percent to $19 billion in the three months that ended Sept. 30, 2023. Besides announcing a $10 billion stock buyback program, RTX also entered into a definitive agreement to sell its cybersecurity, intelligence and services business within its Raytheon segment for approximately $1.3 billion.
“The historic demand across our commercial aerospace and defense businesses drove 12 percent organic sales growth during the third quarter and led to another record backlog of $190 billion,” RTX Chairman and CEO Greg Hayes said in a statement published Tuesday.
Hayes adds, “Today, RTX shares are an attractive investment opportunity, and we are … increasing our capital return commitment through 2025 to $36 to $37 billion.”
RTX recorded a net loss from continuing operations attributable to common shareowners of $984 million during the quarter due to the powder metal defect that required the grounding of 350 jets per year through 2026.
But Hayes said, “We have made significant progress on our assessment of the Pratt & Whitney powder metal manufacturing matter and expect the financial impact to be in line with the previously disclosed charge.”
The sales of Pratt & Whitney declined 83 percent to $926 million versus Q3 2022 sales. Still, adjusted net income increased 2 percent to $1.82 billion from a year ago, while free cash flow climbed 946 percent year-to-year to $2.75 billion.
RTX’s focus now is to execute fleet management plans and work relentlessly to mitigate further customer disruption. Due to its fleet management plans, Hayes doesn’t expect any significant future incremental impact.
The Collins Aerospace segment delivered a robust 30 percent commercial aftermarket growth, with sales climbing 16 percent to $6.63 billion versus Q3 2022. Its commercial OE increased 27 percent, but military sales fell one percent.
For the Raytheon segment, sales reached $6.47 billion, three percent higher than in Q3 2022. However, operating profit fell 18 percent to $560 million compared to the prior year due to the higher volume on lower margin programs and lower net program efficiencies. There were also additional headwinds on certain fixed-price development programs.
The board approved the ASR and its immediate implementation after management convinced the directors about its confidence in resolving the matter. Also, by divesting its cybersecurity, intelligence and services business, RTX seeks to have greater autonomy to deliver on customer missions and serve as a platform for innovation in the future.
