Slide 1: 3Q 2020 Earnings Conference Call
3Q 2020 Earnings Conference Call October 27, 2020 © 2020 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 press release contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the
Slide 3: 3Q Highlights
3Q Highlights • Sales in line with expectations, and better than expected adjusted EPS and free cash flow • Robust defense backlog of over $70B • Executing cost reduction and cash conservation actions • ~$700M of cost reduction realized in 3Q • ~$1.9B of cash conservation realized in 3Q • Achieved o
Slide 4: Cost and Cash Actions
Cost and Cash Actions Announced Actions Headcount Actions Structural Actions $2B of Cost Initiatives • 15,000 reduction • Footprint reduction 35% $2B – ~20% commercial aero • High cost to low cost 35% reduction at Collins and Pratt manufacturing 30% • 4,000 contractor roles reduced • Process automat
Slide 5: 3Q 2020 Sales, EPS and Cash Flow
3Q 2020 Sales EPS from Cash Flow Cont. Ops (attributable to common shareowners) Reported Adjusted* GAAP Adjusted* $14.7B $15.0B $0.58 $1.6B ($0.4B) $1.2B $0.10 Adjustments: Cash Flow CapEx Free Cash $0.17 Gain on dispositions From Cont. Flow* ($0.27) Acquisition accounting intangible amortization ($
Slide 6: 3Q 2020 Quarterly Trends
3Q 2020 Quarterly Trends 12 Month Trailing Collins and Pratt Military Pratt & Whitney Book-to-Bill Ratio Organic Sales Growth Active Engines A320 V2500 A320 GTF A220 80% 11% 75% 77% 65% 1.38 61% 8% 1.08 45% RIS RMD Collins Pratt 2Q 2020 3Q 2020 Military Military Active is defined as engines with fli
Slide 7: Collins Aerospace Segment Highlights
Collins Aerospace Segment Highlights 3Q 2020 ($ millions) Reported Adjusted* YOY Var.* Sales 4,274 4,278 (34)% Operating Profit 526 73 (94)% ROS 12.3% 1.7% • Organic sales* down 33% • Adjusted sales* down 34% – Commercial OEM down 44% – Commercial aftermarket down 52% – Military up 4% (up 8% ex-dive
Slide 8: Pratt & Whitney Segment Highlights
Pratt & Whitney Segment Highlights 3Q 2020 ($ millions) Reported Adjusted* YOY Var.* Sales 3,494 3,790 (28)% Operating Profit (615) (43) (108)% ROS (17.6)% (1.1)% • Organic sales* down 34% • Adjusted sales* down 28% – Commercial OEM down 30% – Commercial aftermarket down 51% – Military up 11% Photo:
Slide 9: Raytheon Intelligence & Space Segment Highlights
Raytheon Intelligence & Space Segment Highlights 3Q 2020 ($ millions) Reported Sales 3,674 Operating Profit 348 ROS 9.5% • Bookings – $928M of classified bookings – $176M to perform operations and sustainment for the U. S. Air Force’s Launch and Test Range System (LTRS) • 12 month trailing book to b
Slide 10: Raytheon Missiles & Defense Segment Highlights
Raytheon Missiles & Defense Segment Highlights 3Q 2020 ($ millions) Reported Sales 3,794 Operating Profit 453 ROS 11.9% • Bookings – $186M for AN/TPY-2 radar program for the Kingdom of Saudi Arabia • 12 month trailing book-to-bill ratio 1.38 • Q3 book-to-bill ratio 0.69 • Backlog $31.6B In September
Slide 11: Current Environment
Current Environment • Robust defense backlog • Cost synergies & cost reduction actions • Liquidity • Commercial air traffic ? • COVID-19 / macro economic environment ? Positioned to deliver ~$2 billion in full year pro forma free cash flow* 10 *See Appendix for additional information regarding these
Slide 12: 2020 Priorities
2020 Priorities • Support employees, customers and suppliers • Invest in technology and product innovation • Execute integration and deliver synergies • Drive structural cost reduction • Disciplined capital deployment and maintain strong liquidity Taking decisive actions to position the business for
Slide 13: © 2020 Raytheon Technologies All rights reserved
© 2020 Raytheon Technologies All rights reserved
Slide 14: Appendix
a Appendix SZ Raytheon 13 nk Technologies
Slide 15: Use and Definitions of Non-GAAP Financial Measures
Use and Definitions of Non-GAAP Financial Measures Raytheon Technologies Corporation’s (“RTC”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 16: P&W Engine Shipments to Customers
Raytheon Technologies: P&W Engine Shipments to Customers 2019 2020 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Military 39 58 53 65 215 48 72 59 Large commercial* 189 173 165 219 746 211 92 114 Pratt & Whitney Canada** 524 593 607 631 2,355 466 393 379 *Large commercial excludes industrial engine shipments. **Excludes
Slide 17: Free Cash Flow Reconciliation
Raytheon Technologies: Free Cash Flow Reconciliation ($ millions) 3Q 2020 Net income attributable to common shareowners from continuing operations 185 Depreciation & amortization 1,164 Change in working capital 647 Other (374) Cash flow from operations 1,622 Capital expenditures (389) Free cash flow
Slide 18: 3Q 2020 Sales Reconciliation
3Q 2020: Raytheon Technologies Sales Reconciliation Total Organic Acquisitions FX Growth - and Reported Divestitures Collins Aerospace (34%) (33%) (1%) - Pratt & Whitney (34%) (34%) - - RIS 100% - 100% - RMD 100% - 100% - Elims & Other 20% (24%) 44% - Total RTC 30% (34%) 64% - 17
Slide 19: Segment Data – GAAP
Raytheon Technologies: Segment Data – GAAP RAYTHEON TECHNOLOGIES CORPORATION (a) Restructuring costs as included in 2020 and 2019 results: SEGMENT DATA - Reported 2020 2019 ($ Millions except per share amounts) Q1 Q2 Q3 YTD 2020 Q1 Q2 Q3 Q4 YTD 2019 2020 2019 Collins Aerospace Systems Net Sales (n)
Slide 20: Segment Data – Adjusted
Raytheon Technologies: Segment Data – Adjusted Ex Rest & Significant non-recurring and non- Ex Rest & Significant non-recurring and non- RAYTHEON TECHNOLOGIES CORPORATION operational items Ex Rest & Significant non-recurring and non-operational items RAYTHEON TECHNOLOGIES CORPORATION operational ite
Slide 21: Reconciliation of GAAP to Adjusted
Raytheon Technologies: Reconciliation of GAAP to Adjusted Raytheon Technologies Corporation Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results Adjusted Sales, Adjusted Operating Profit & Operating Profit Margin Quarter Ended September 30, Nine Months Ended September 30, Quarter Ended S
Slide 22: Reconciliation of GAAP to Adjusted, cont.
Raytheon Technologies: Reconciliation of GAAP to Adjusted, cont. Raytheon Technologies Corporation Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results Adjusted Income from Continuing Operations, Earnings Per Share, Weighted Average Diluted Shares Outstanding and Effective Tax Rate Quart
Slide 23: Pro Forma Segment Data - GAAP and Adjusted
Raytheon Technologies: Pro Forma Segment Data - GAAP and Adjusted 1 RTX Pro Forma Segment Recast, GAAP and Adjusted (dollars in millions) 2020 2019 Pro Forma Net Sales1 Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 Q4 FY Collins Aerospace Systems $ 6,438 $ 4,202 $ 4,274 $ 14,914 $ 6,513 $ 6,576 $ 6,495 $ 6,444 $ 26,028
Slide 24: Pro Forma Segment Data: Sales Reconciliation
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Sales RTX Pro Forma Segment Results Non-GAAP Reconciliation 2020 2019 (dollars in millions) Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 Q4 FY Collins Aerospace Systems Net sales, Pro Forma $ 6,438 $ 4,202 $ 4,274 $ 14
Slide 25: Pro Forma Segment Data: Operating Profit Reconciliation
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Operating Profit RTX Pro Forma Segment Results Non-GAAP Reconciliation 2020 2019 (dollars in millions) Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 Q4 FY Collins Aerospace Systems Operating profit, Pro Forma $ 1,246 $
Slide 26: RIS & RMD 2020 Outlook
RIS & RMD 2020 Outlook Pre-Merger RTX Q2-Q4 RTX Q2-Q4 Pre-Merger % Q1 Q2-Q4 % ‘Stub Period’ Estimate at COVID-19 Outlook Outlook Outlook growth Actuals Outlook growth Mar 30-Apr 2 Divestiture Complete Reset Impact (Prior) (10/27/2020) Sales ($ billions) RIS 15.2-15.5 6-8% (3.6) 11.6-11.9 6-8% (0.2)
Slide 27: Additional Raytheon Technologies 2Q - 4Q 2020 Items
Additional Raytheon Technologies 2Q - 4Q 2020 Items 2Q – 4Q 2Q – 4Q (prior outlook) (10/27/2020 outlook) Adjusted Tax Rate ~22% ~20% Interest Expense $1,075M - $1,125M $1,045M - $1,055M Corporate Expense and Other Unallocated Items* $250M - $300M $120M - $140M FAS/CAS Operating Adjustment $1,090M -