Slide 1: 4Q 2022 Earnings Conference Call
4Q 2022 Earnings Conference Call January 24, 2023 © 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 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: 2022 Highlights
2022 Highlights 2022 Sales up 6% organically year-over-year & strong free cash flow* $67.1B Sales Commercial aftermarket up 25% year-over-year $4.78 Adjusted EPS* Received $86B of new awards; 1.28 full year book-to-bill Achieved $405M of incremental gross merger cost synergies; $4.9B Free cash flow*
Slide 4: RTX Realignment
RTX Realignment Realigning into three Business Units Leveraging our scale and unique capabilities • Improve performance • Improve win rate and customer experience • Better positioned to realize product and technology synergies • Improve cost structure and simplify/streamline footprint New structure
Slide 5: 2023 Environment
2023 Environment Positives Monitoring Challenges Commercial air traffic recovery Global tax environment Supply chain / inflation (Aftermarket, Int’l, OE) Geopolitical landscape Labor availability Global defense spending Macroeconomic environment Cost reduction / synergies Continued focus on operatio
Slide 6: 4Q 2022 Sales, EPS and Cash Flow
4Q 2022 Sales EPS Cash Flow from continuing operations GAAP Adjusted* 7% organic Up 109% Up 18% growth* $4.6B ($0.86B) $1.27 $18.1B $3.8B $1.08 $17.0B $0.96 $0.46 2021 2022 4Q 2021 4Q 2022 4Q 2021 4Q 2022 Cash Flow CapEx Free Cash from continuing operations 2021 2022 Flow* Excludes: Acq. Accounting
Slide 7: Collins Aerospace Segment Highlights
Collins Aerospace Segment Highlights 4Q 2022 ($ millions) Reported Adjusted* YOY Var.* Sales 5,662 5,662 15% Operating Profit 741 743 58% ROS 13.1% 13.1% 360 bps • Organic sales* up 16% • Adjusted sales* up 15% – Commercial aftermarket up 21% – Commercial OE up 20% – Military up 5% • Adjusted operat
Slide 8: Pratt & Whitney Segment Highlights
Pratt & Whitney Segment Highlights 4Q 2022 ($ millions) Reported Adjusted* YOY Var.* Sales 5,652 5,652 10% Operating Profit 306 321 98% ROS 5.4% 5.7% 250 bps • Organic sales* up 11% • Adjusted sales* up 10% – Commercial OE up 37% – Commercial aftermarket up 11% – Military down 2% • Adjusted operatin
Slide 9: Raytheon Intelligence & Space Segment Highlights
Raytheon Intelligence & Space Segment Highlights 4Q 2022 ($ millions) Reported Adjusted* YOY Var.* Sales 3,544 3,544 (8%) Operating Profit 278 278 (31%) ROS 7.8% 7.8% (250) bps • Organic sales* down 5% • Adjusted sales* down 8% – Global Training and Services divestiture – Lower sales in Command, Con
Slide 10: Raytheon Missiles & Defense Segment Highlights
Raytheon Missiles & Defense Segment Highlights 4Q 2022 ($ millions) Reported Adjusted* YOY Var.* Sales 4,100 4,100 6% Operating Profit 376 418 (14%) ROS 9.2% 10.2% (240) bps • Organic sales* up 7% • Adjusted sales* up 6% – Higher volume in Naval Power including SPY-6, Strategic Missile Defense inclu
Slide 11: 2023 Outlook
2023 Outlook Full Year Outlook 2023 Adjusted EPS* $0.77 ($0.22) Sales $72.0B - $73.0B ($0.22) ($0.14) $4.90 - $5.05 Organic sales growth*% 7% - 9% $4.78 FAS/CAS Adj. 2023 Adj. ($0.16) ETR*: 18.0% Segment range Adjusted EPS* $4.90 - $5.05 $0.70 - $0.85 Non-Service ($0.06) 2022 Adj. ETR*: 14.4% Free c
Slide 12: 2023 Segment Outlook
2023 Segment Outlook ($ millions) Reported Sales Organic Sales Adjusted Operating VPY % VPY %* Profit VPY* Collins Aerospace Up low double digits Up low double digits $750 - $825 Pratt & Whitney Up low to mid-teens Up low to mid-teens $200 - $275 Raytheon Intelligence & Space Flat Flat $75 - $125 Ra
Slide 13: Priorities
Priorities Deliver on customer commitments Invest in technology and product innovation to drive industry leadership 2023 Investor Day Paris Air Show l June 19th Execute business transformation to position for long-term success Drive operational excellence and continued structural cost reduction Disc
Slide 14: © 2022 Raytheon Technologies All rights reserved
© 2022 Raytheon Technologies All rights reserved
Slide 15: Appendix
a Appendix SZ Raytheon 14 anf Technologies
Slide 16: 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 17: Additional 2023 Items
Additional 2023 Items FY 2023 Adjusted Tax Rate* ~18.0% Interest Expense ~$1,450M Corporate Expense and Other Unallocated Items ~$300M FAS/CAS Operating Adjustment ~$1,250M Non-Service Pension Income ~$1,780M Capex Spending ~$2.5B 16 *See Appendix for additional information regarding these non-GAAP
Slide 18: 2023 Free Cash Flow
2023 Free Cash Flow* $0.7B ($0.3B) ($0.5B) $4.9B ~$4.8B1 2022 Operational growth / Restructuring Pension 2023E Capex & Interest 1) Free cash flow outlook assumes the legislation requiring R&D capitalization for tax purposes is not repealed 17 *See Appendix for additional information regarding these
Slide 19: 2022 Trends
2022 Trends 4Q Sequential Commercial Pratt & Whitney Active FY Book-to-Bill Ratio Aftermarket Growth Engines A320 V2500 A320 GTF A220 83% 84% 85% 84% 85% 82% 83% 6% 79% 80% 1.37 78% 79% 67% 5% 0.96 RIS RMD Collins Pratt & 1Q '22 2Q '22 3Q'22 4Q'22 Whitney Active is defined as engines with flight act
Slide 20: P&W Engine Shipments to Customers
Raytheon Technologies: P&W Engine Shipments to Customers 2021 2022 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Military 44 61 58 55 218 60 62 49 48 219 Large Commercial1 137 144 165 177 623 119 177 192 224 712 Pratt & Whitney Canada2 396 467 475 487 1,825 455 459 509 542 1,965 1) Large commercial excludes industr
Slide 21: Free Cash Flow Reconciliation
Raytheon Technologies: Free Cash Flow Reconciliation ($ millions) 4Q 2022 FY 2022 Net income from continuing operations 1,468 5,327 Depreciation & amortization 1,048 4,108 Change in working capital 2,204 522 Other (92) (2,789) Cash flow from operations 4,628 7,168 Capital expenditures (855) (2,288)
Slide 22: 4Q 2022 Sales Reconciliation
4Q 2022: Raytheon Technologies Sales Reconciliation Total Acquisitions FX / Reported Organic and Other Growth Divestitures Collins Aerospace 15% 16% - (1%) Pratt & Whitney 10% 11% - (1%) RIS (8%) (5%) (3%) - RMD 6% 7% - (1%) Elims & Other 17% 17% - - Total 6% 7% (1%) - 21
Slide 23: 4Q 2022 Restructuring Costs
4Q 2022: Raytheon Technologies Restructuring Costs ($ millions) 2022 2021 Restructuring impact to: Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Operating profit Collins Aerospace (3) (2) (14) (2) (21) (18) (12) (2) (8) (40) Pratt & Whitney (2) (1) (2) (15) (20) (20
Slide 24: 2021 Reported to Adjusted
Raytheon Technologies: 2021 Reported to Adjusted ($ millions) Reported Restructuring & net significant and/or non-recurring 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 2021 Coll
Slide 25: 2022 Reported to Adjusted
Raytheon Technologies: 2022 Reported to Adjusted ($ millions) Reported Restructuring & net significant and/or non-recurring items 1 Adjusted1 (Unaudited) (Unaudited) Net Sales Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Coll
Slide 26: Reconciliation of GAAP to Adjusted: Collins Aerospace
Raytheon Technologies: Reconciliation of GAAP to Adjusted Collins Aerospace ($ millions) (Unaudited) (Unaudited) 2022 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Collins Aerospace Net sales $ 4,824 $ 5,011 $ 5,100 $ 5,662 $ 20,597 $ 4,370 $ 4,545 $ 4,592 $ 4,
Slide 27: Reconciliation of GAAP to Adjusted: Pratt & Whitney
Raytheon Technologies: Reconciliation of GAAP to Adjusted Pratt & Whitney ($ millions) (Unaudited) (Unaudited) 2022 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Pratt & Whitney Net sales $ 4,529 $ 4,969 $ 5,380 $ 5,652 $ 20,530 $ 4,030 $ 4,280 $ 4,725 $ 5,115
Slide 28: Reconciliation of GAAP to Adjusted: Raytheon Intelligence & Space
Raytheon Technologies: Reconciliation of GAAP to Adjusted Raytheon Intelligence & Space ($ millions) (Unaudited) (Unaudited) 2022 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Raytheon Intelligence & Space Net sales $ 3,572 $ 3,570 $ 3,626 $ 3,544 $ 14,312 $ 3,
Slide 29: Reconciliation of GAAP to Adjusted: Raytheon Missiles & Defense
Raytheon Technologies: Reconciliation of GAAP to Adjusted Raytheon Missiles & Defense ($ millions) (Unaudited) (Unaudited) 2022 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Raytheon Missiles & Defense Net sales $ 3,527 $ 3,558 $ 3,678 $ 4,100 $ 14,863 $ 3,793
Slide 30: Reconciliation of GAAP to Adjusted: Non-Segment Operating Profit
Raytheon Technologies: Reconciliation of GAAP to Adjusted Non-Segment Operating Profit ($ millions) (Unaudited) (Unaudited) 2022 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Eliminations and other Net sales $ (736) $ (794) $ (833) $ (865) $ (3,228) $ (707) $ (
Slide 31: Reconciliation of GAAP to Adjusted: Consolidated Income, EPS
Raytheon Technologies: Reconciliation of GAAP to Adjusted Consolidated Income, Earnings Per Share ($ millions) (Unaudited) (Unaudited) 2022 2021 Income (Expense) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Income from continuing operations attributable to common s
Slide 32: Pension Impact
Pension Impact ($ millions) 2022 2023 Actual Projection P&L impact RMD/RIS Service cost ($365) ($160) RMD/RIS CAS recovery $1,885 $1,410 FAS/CAS operating adjustment $1,520 $1,250 Non-service pension income $1,891 $1,780 Net cash Gross funding ($409) ($425) RMD/RIS CAS recovery $1,885 $1,410 Net cas