ARLINGTON, Va. -- For the second quarter of 2024, RTX reported sales of $19.7 billion, up 8 percent over the $18.3 posted in the prior year. Net income for quarter fell to $111 million compared to $1.3 billion in the second quarter of 2023.
"RTX delivered strong operational performance in the second quarter, with 10 percent organic sales growth, adjusted margin expansion across all three segments and $2.2 billion in free cash flow," said RTX President and CEO Chris Calio. "The strength in our end markets and first half performance give us the confidence to increase our outlook for adjusted sales and adjusted EPS for the full year."
"With a $206 billion backlog and unprecedented demand across our portfolio, we are focused on executing on our customer commitments powered by our CORE operating system, investing in innovative technologies and capabilities, and leveraging the breadth and scale of RTX to drive long-term shareowner value."
The company backlog of $206 billion includes $129 billion related to commercial and $77 billion to defense.
The hit to income in the quarter was primarily attributed to a charge of $918 million related to outstanding legal matters. The company expects to enter into a deferred prosecution agreement with the Department of Justice (DOJ) and to be subject to an administrative order with the Securities and Exchange Commission (SEC) to resolve the previously disclosed criminal and civil government investigations into improper payments made by Raytheon company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012. The company also expects to enter into a deferred prosecution agreement and an False Claims Act (FCA) settlement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017. In total, RTX recorded an aggregate charge of $918 million in the quarter, bringing the total associated reserve for these matters to $1.24 billion. Based upon the current status of discussions, officials believe that the finalization of its respective agreements with the DOJ, SEC and DOS will occur during the second half of 2024 and therefore, expect approximately $1.0 billion of related payments to be made within the same timeframe with the balance to be paid over the next several years.
INDUSTRY SEGMENTS
Collins Aerospace
Collins Aerospace had second quarter 2024 reported sales of $6,999 million, up 10 percent versus the prior year. The increase in sales was driven by a 12 percent increase in commercial aftermarket, a 10 percent increase in commercial OE, and a 7 percent increase in defense. The increase in commercial sales was driven primarily by an increase in commercial air traffic, including in higher flight hours, and increased volume across all OEM sales channels. The increase in defense sales was driven primarily by higher volume.
Collins Aerospace reported operating profit of $1,118 million, up 24 percent versus the prior year. The increase in operating profit was primarily driven by drop through on higher commercial aftermarket volume, as well as higher defense and commercial OE volume. On an adjusted basis, operating profit of $1,145 million was up 25 percent versus the prior year.
Pratt & Whitney
Pratt & Whitney had second quarter 2024 reported sales of $6,802 million, up 19 percent versus the prior year. The increase in sales was driven by a 33 percent increase in commercial OE, a 16 percent increase in military, and a 15 percent increase in commercial aftermarket. The increase in commercial sales was primarily due to higher volume and favorable mix within aftermarket as well as higher GTF OE volume and favorable mix. The increase in military sales was driven by higher sustainment volume across multiple platforms.
Pratt & Whitney reported operating profit of $542 million, up 136 percent versus the prior year. Drop through on higher commercial aftermarket volume as well as favorable Large Commercial OE and commercial aftermarket mix, was partially offset by higher Large Commercial OE deliveries and the absence of a $60 million favorable prior year contract matter. Higher military volume and favorable mix was more than offset by higher production costs and higher R&D and SG&A expenses. The prior year reported operating profit included the impact of a charge related to a customer insolvency of $181 million. On an adjusted basis, operating profit of $537 million was up 23 percent versus the prior year.
Raytheon
Raytheon had second quarter 2024 reported sales of $6,511 million, down 3 percent versus prior year as higher volume on land and air defense systems including Global Patriot, counter-UAS programs and Stinger was more than offset by the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024. Adjusted sales* of $6,581 million were down 2 percent versus prior year. Excluding the impact of acquisition and divestitures, sales were up 4 percent versus prior year.
Raytheon reported operating profit of $127 million, down 80 percent versus the prior year. Drop through on higher volume, favorable mix, and improved net productivity was more than offset by a $575 million charge related to the anticipated termination of a fixed price development contract with a foreign customer which was contracted in 2016 under legacy Raytheon Company. On an adjusted basis, operating profit of $709 million was up 7 percent versus the prior year.
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