Slide 1: 4Q 2021 Earnings Conference Call
4Q 2021 Earnings Conference Call January 25, 2022 © 2022 Raytheon Technologies All rights reserved
Slide 2: Forward-Looking Statements
Forward-Looking Statements Note: All results and expectations in the presentation reflect continuing operations unless otherwise noted. This webcast contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the secur
Slide 3: 2021 Highlights
2021 Highlights 2021 Strong financial performance & margin expansion across all businesses $64.4B Sales Commercial aftermarket up 9% year-over-year; up 38% Q2 – Q4 $4.27 Adjusted EPS* Achieved $760M of incremental gross merger cost synergies; $1B merger-to-date Completed SEAKR and FlightAware acquis
Slide 4: 4Q 2021 Sales, EPS and Cash Flow
4Q 2021 Sales EPS Cash Flow from continuing operations GAAP Adjusted* 4% adjusted organic growth* $1.08 $3.2B ($1.0B) $16.4B $16.6B $17.0B $0.74 $2.2B $0.46 $0.10 4Q 2020 4Q 2020 4Q 2021 4Q 2020 4Q 2021 4Q 2020 4Q 2021 Cash Flow CapEx Free Cash reported adjusted* reported 2020 2021 from continuing o
Slide 5: Collins Aerospace Segment Highlights
Collins Aerospace Segment Highlights 4Q 2021 ($ millions) Reported Adjusted* YOY Var.* Sales 4,942 4,942 13% Operating Profit 461 469 427% ROS 9.3% 9.5% 750 bps • Organic sales* up 13% • Adjusted sales* up 13% – Commercial aftermarket up 47% – Commercial OE up 4% – Military down 3% Collins Aerospace
Slide 6: Pratt & Whitney Segment Highlights
Pratt & Whitney Segment Highlights 4Q 2021 ($ millions) Reported Adjusted* YOY Var.* Sales 5,115 5,115 14% Operating Profit 135 162 54% ROS 2.6% 3.2% 90 bps • Organic sales* up 15% • Adjusted sales* up 14% – Commercial OE up 32% – Commercial aftermarket up 28% – Military down 6% • Adjusted operating
Slide 7: Intelligence & Space Segment Highlights
Raytheon Intelligence & Space Segment Highlights 4Q 2021 ($ millions) Reported Adjusted* YOY Var.* Sales 3,870 3,870 (2%) Operating Profit 639 400 11% ROS 16.5% 10.3% 110 bps • Organic sales* down 1% • Adjusted sales* down 2% – 4 fewer workdays – Global Training and Services divestiture • Adjusted o
Slide 8: Missiles & Defense Segment Highlights
Raytheon Missiles & Defense Segment Highlights 4Q 2021 ($ millions) Reported Adjusted* YOY Var.* Sales 3,859 3,859 (10%) Operating Profit 486 486 (16%) ROS 12.6% 12.6% (90) bps • Organic sales* down 8% • Adjusted sales* down 10% – 4 fewer workdays – Lower material receipts – Lower volume on internat
Slide 9: 2022 Environment
2022 Environment Positives Monitoring Challenges Commercial aero aftermarket International travel recovery Supply chain disruption Narrowbody deliveries Global tax environment Inflation Defense growth Continuing Resolution 787 OE build rates Cost reduction / synergies 8
Slide 10: 2022 Outlook
2022 Outlook Full Year Outlook Sales $68.5B - $69.5B Organic sales growth*% 7% - 9% Adjusted EPS* $4.60 - $4.80 Free cash flow*,1 ~$6.0B 1) Free cash flow outlook assumes the legislation requiring R&D capitalization for tax purposes is deferred beyond 2022. 9 *See Appendix for additional information
Slide 11: 2022 Segment Outlook
2022 Segment Outlook ($ millions) Reported Sales Organic Sales Adjusted Operating VPY % VPY %* Profit VPY* Collins Aerospace Up low double digits Up low double digits $650 - $800 Pratt & Whitney Up low double digits Up low double digits $500 - $600 Raytheon Intelligence & Space Down slightly Up low
Slide 12: 2022 Adjusted EPS
2022 Adjusted EPS* $0.83 ($0.17) Up 8 – 12% Up 10% at mid-point ($0.05) ($0.19) $4.60 - $4.80 ($0.06) $0.07 2022 Adj. ETR*: 18.5% - 19% 2021 Adj. ETR*: 15.5% $4.27 Segment range $0.73 - $0.93 2021 Segments FAS/CAS Non-Service Tax Corporate Shares/Interest/ 2022E Pension Other 11 *See Appendix for ad
Slide 13: 2022 Free Cash Flow
2022 Free Cash Flow* Up ~20% $1.4B $0.1B ($0.3B) ($0.2B) ~$6.0B1 $5.0B 2021 Operational growth / Restructuring Pension Tax 2022E Capex & other 1) Free cash flow outlook assumes the legislation requiring R&D capitalization for tax purposes is deferred beyond 2022. 12 *See Appendix for additional info
Slide 14: 2022 Priorities and 2025 Goals
2022 Priorities Capital return to shareowners1 Continued support of employees, customers and suppliers $20+ billion Invest in technology and product innovation to drive industry leadership 2025 goals Sales Adjusted margin Free Deliver RTX synergies growth expansion* cash flow*,2 +6 – 7% CAGR +550 –
Slide 15: © 2022 Raytheon Technologies All rights reserved
© 2022 Raytheon Technologies All rights reserved
Slide 16: Appendix
a Appendix SZ Raytheon 15 anf Technologies
Slide 17: Use and Definitions of Non-GAAP Financial Measures
Use and Definitions of Non-GAAP Financial Measures Raytheon Technologies Corporation (“RTC”) reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). We supplement the reporting of our financial information determined under GAAP with ce
Slide 18: Additional 2022 Items
Additional 2022 Items FY 2022 Adjusted Tax Rate* 18.5% - 19% Interest Expense ~$1,300M Corporate Expense and Other Unallocated Items $375M - $400M FAS/CAS Operating Adjustment ~$1,500M Non-Service Pension Income ~$1,875M Capex Spending ~$2.5B 17 *See Appendix for additional information regarding the
Slide 19: 2021 Trends
2021 Trends Sequential 4Q Commercial Pratt & Whitney Active FY Book-to-Bill Ratio Aftermarket Growth Engines A320 V2500 A320 GTF 17% A220 90% 87% 86% 86% 87% 88% 86% 70% 70% 10% 68% 1.02 60% 1.01 59% RIS RMD Collins Pratt & 1Q '21 2Q '21 3Q '21 4Q '21 Whitney Active is defined as engines with flight
Slide 20: P&W Engine Shipments to Customers
Raytheon Technologies: P&W Engine Shipments to Customers 2020 2021 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Military 48 72 59 62 241 44 61 58 55 218 Large Commercial1 211 92 114 129 546 137 144 165 177 623 Pratt & Whitney Canada2 466 393 379 412 1,650 396 467 475 487 1,825 1) Large commercial excludes industri
Slide 21: Free Cash Flow Reconciliation
Raytheon Technologies: Free Cash Flow Reconciliation ($ millions) 4Q 2021 FY 2021 Net income attributable to common shareowners from continuing operations 771 4,145 Depreciation & amortization 1,144 4,557 Change in working capital 1,060 (278) Other 186 (1,282) Cash flow from operations 3,161 7,142 C
Slide 22: 4Q 2021: Sales Reconciliation
4Q 2021: Raytheon Technologies Sales Reconciliation Total Acquisitions Organic sales growth on an Reported Organic and Other1 adjusted pro forma basis 2 Growth Divestitures Collins Aerospace 13% 13% - - 4Q Pratt & Whitney 15% 15% - - Total reported growth 4% Raytheon merger pro forma RIS - (2%) (1%)
Slide 23: FY 2021: Sales Reconciliation
FY 2021: Raytheon Technologies Sales Reconciliation Total Acquisitions Organic sales growth on an Reported Organic and Other1 adjusted pro forma basis 2 Growth Divestitures Collins Aerospace (4%) (3%) (1%) - Pratt & Whitney 8% 8% - - Total reported growth 14% Raytheon merger pro forma RIS (13%) 37%
Slide 24: 4Q 2021: Restructuring Costs
4Q 2021: Raytheon Technologies Restructuring Costs ($ millions) 2021 2020 Restructuring impact to: Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Operating profit Collins Aerospace Systems (18) (12) (2) (8) (40) (6) (151) (138) (65) (360) Pratt & Whitney (20) 16 (2)
Slide 25: 2020 Reported to Adjusted
Raytheon Technologies: 2020 Reported to Adjusted ($ millions) Restructuring & Significant non-recurring and non- Reported1 Adjusted2 (Unaudited) operational items 2 (Unaudited) Net Sales Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 F
Slide 26: 2021 Reported to Adjusted
Raytheon Technologies: 2021 Reported to Adjusted ($ millions) Restructuring & Significant non-recurring and non- Reported operational items 1 Adjusted1 (Unaudited) (Unaudited) Net Sales Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY
Slide 27: Reconciliation of GAAP to Adjusted: Collins Aerospace
Raytheon Technologies: Reconciliation of GAAP to Adjusted Collins Aerospace Systems ($ millions) (Unaudited) (Unaudited) 2021 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Collins Aerospace Systems Net sales $ 4,370 $ 4,545 $ 4,592 $ 4,942 $ 18,449 $ 6,438 $ 4,
Slide 28: Reconciliation of GAAP to Adjusted: Pratt & Whitney
Raytheon Technologies: Reconciliation of GAAP to Adjusted Pratt & Whitney ($ millions) (Unaudited) (Unaudited) 2021 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Pratt & Whitney Net sales $ 4,030 $ 4,280 $ 4,725 $ 5,115 $ 18,150 $ 5,353 $ 3,487 $ 3,494 $ 4,465
Slide 29: Reconciliation of GAAP to Adjusted: Intelligence & Space
Raytheon Technologies: Reconciliation of GAAP to Adjusted Raytheon Intelligence & Space ($ millions) (Unaudited) (Unaudited) 2021 2020 1 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Raytheon Intelligence & Space Net sales $ 3,765 $ 3,805 $ 3,740 $ 3,870 $ 15,180 $
Slide 30: Reconciliation of GAAP to Adjusted: Missiles & Defense
Raytheon Technologies: Reconciliation of GAAP to Adjusted Raytheon Missiles & Defense ($ millions) (Unaudited) (Unaudited) 2021 2020 1 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Raytheon Missiles & Defense Net sales $ 3,793 $ 3,985 $ 3,902 $ 3,859 $ 15,539 $ - $
Slide 31: Reconciliation of GAAP to Adjusted: Non-Segment Operating Profit
Raytheon Technologies: Reconciliation of GAAP to Adjusted Non-Segment Operating Profit ($ millions) (Unaudited) (Unaudited) 2021 2020 1 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Eliminations and other Net sales $ (707) $ (735) $ (746) $ (742) $ (2,930) $ (431) $
Slide 32: Reconciliation of GAAP to Adjusted: Consolidated Income and EPS
Raytheon Technologies: Reconciliation of GAAP to Adjusted Consolidated Income, Earnings Per Share (Unaudited) (Unaudited) ($ millions) 2021 2020 Income (Expense) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Income (loss) from continuing operations attributable to c
Slide 33: Adjusted Pro Forma Segment Data
Raytheon Technologies: Adjusted Pro Forma Segment Data ($ millions) (Unaudited) Adjusted2 Adjusted Pro Forma / Actuals 1, 3 Net Sales Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 PF Q2 2020 PF Q3 2020 Q4 2020 FY 2020 PF Collins Aerospace Systems $ 4,370 $ 4,545 $ 4,592 $ 4,942 $ 18,449 $ 6,460 $
Slide 34: Pro Forma Segment Data: Sales
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Sales ($ millions) 2020 (dollars in millions) Q1 Q2 Q3 Q4 FY Collins Aerospace Systems Net sales, Pro Forma $ 6,438 $ 4,202 $ 4,274 $ 4,374 $ 19,288 Significant unfavorable contract adjustments (22)
Slide 35: Pro Forma Segment Data: Operating Profit
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Operating Profit ($ millions) 2020 Q1 Q2 Q3 Q4 FY Collins Aerospace Systems Operating profit, Pro Forma $ 1,246 $ (317) $ 526 $ 11 $ 1,466 Restructuring (6) (151) (138) (65) (360) Significant unfavo
Slide 36: Pro Forma Consolidated Data
Raytheon Technologies: Pro Forma Consolidated Data Reconciliation of Pro Forma1 to Adjusted Pro Forma Income (loss) from continuing operations & EPS ($ millions) Q1 2020 PF Q2 2020 PF Q3 2020 Q4 2020 FY 2020 PF Net income (loss) from continuing operations attributable to common shareowners, Pro Form
Slide 37: Reconciliation of 2020 Adjusted to Adjusted Pro Forma Earnings
Raytheon Technologies: Reconciliation of 2020 Adjusted Earnings to 2020 Adjusted Pro forma Earnings ($ millions) (Unaudited) Adjusted2 Adjusted Pro Forma / Actuals 1, 3 Net Sales Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2020 PF Q2 2020 PF Q3 2020 Q4 2020 FY 2020 PF Collins Aerospace Systems $ 4,37
Slide 38: Pension Impact
Pension Impact ($ millions) Current projections* 2021 2022 2023 2024 2025 Actual P&L impact RMD/RIS Service cost ($405) ($375) ($200) ($200) ($175) RMD/RIS CAS recovery $2,201 $1,875 $1,375 $875 $550 FAS/CAS operating adjustment $1,796 $1,500 $1,175 $675 $375 Non-service pension income $1,961 $1,875