Slide 1: 4Q 2020 Earnings Conference Call
4Q 2020 Earnings Conference Call January 26, 2021 © 2021 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: 2020 Highlights
2020 Highlights • Completed portfolio transformation and finalized divestitures Collins Aerospace Pratt & Whitney • Achieved $240M in RTX and $170M in Collins synergies • Exceeded cash conservation and executed on cost reduction commitments, and initiated other structural cost reduction actions Rayt
Slide 4: Cost and Cash Actions
Cost and Cash Actions ($ millions) 2020 Completed Actions Synergies Headcount & Structural Actions $2B of Cost Initiatives RTX Synergies Headcount • ~16,500 reduction 700 2,000 1,000+ 610 • ~20% commercial aero 700 reduction 600 240 • ~4,500 contractor roles reduced • >55% reduction 2Q 3Q 4Q FY 2020
Slide 5: 4Q 2020 Results: Sales, EPS and Cash Flow
4Q 2020 Sales EPS from Cash Flow Cont. Ops Includes $800M discretionary pension contribution Reported Adjusted* GAAP Adjusted* $16.4B $16.6B $0.74 $1.4B $0.7B $0.10 ($0.64) Cash Flow CapEx Free Cash Restructuring/ Other items From Cont. Flow* gain / (charge) Operations Revenue, adjusted EPS and free
Slide 6: Collins Aerospace Segment Highlights
Collins Aerospace Segment Highlights 4Q 2020 ($ millions) Reported Adjusted* YOY Var.* Sales 4,374 4,388 (32%) Operating Profit 11 89 (92%) ROS 0.3% 2.0% • Organic sales* down 31% • Adjusted sales* down 32% – Commercial OEM down 41% – Commercial aftermarket down 48% Collins Aerospace has been select
Slide 7: Pratt & Whitney Segment Highlights
Pratt & Whitney Segment Highlights 4Q 2020 ($ millions) Reported Adjusted* YOY Var.* Sales 4,465 4,496 (20)% Operating Profit 33 105 (78)% ROS 0.7% 2.3% • Organic sales* down 21% • Adjusted sales* down 20% – Commercial OEM down 46% – Commercial aftermarket down 32% – Military up 18% Photo: Photo: Be
Slide 8: Raytheon Intelligence & Space Segment Highlights
Raytheon Intelligence & Space Segment Highlights 4Q 2020 ($ millions) Reported Adjusted* Sales 3,853 3,853 Operating Profit 355 355 ROS 9.2% 9.2% • Bookings – $947 million of classified bookings – $236 million for the production of Silent Knight radar systems and spares for the U.S. Special Operatio
Slide 9: Raytheon Missiles & Defense Segment Highlights
Raytheon Missiles & Defense Segment Highlights 4Q 2020 ($ millions) Reported Adjusted* Sales 4,276 4,395 Operating Profit 40 586 ROS 0.9% 13.3% • Bookings – $354 million for a classified program – $240 million for StormBreaker production Lot 6 primarily for the U.S. Air Force – $234 million for Tube
Slide 10: Current Environment – 2021 Themes
Current Environment – 2021 Themes Cost reduction actions & • Continued execution on synergies and structural cost reduction in 2021 cost synergies • Robust pipeline of incremental actions • ~$9B of cash as of 4Q 2020 Liquidity • Repaid $1B of debt in 4Q 2020 • Preserve liquidity while opportunistica
Slide 11: 2021 Outlook
2021 Outlook 1Q 2Q – 4Q Full Year Sales1 $14.8B - $15.4B $48.6B - $50.0B $63.4B - $65.4B Organic sales growth2,* % (18%) – (15%) 7% - 10% flat - 3% Adjusted EPS1,* $0.70 - $0.75 $2.70 - $2.95 $3.40 - $3.70 Free cash flow* ~$4.5B 1) See slide 31 for the 2020 adjusted pro forma recast. 2) Versus full
Slide 12: 2021 Segment Outlook
2021 Segment Outlook* ($ millions) 1 Adjusted Sales Adjusted Operating 1 VPY % Profit VPY Full Year down high to low single ($275) - $25 Collins Aerospace 2Q - 4Q up mid single to low double $800 - $1,050 Full Year flat to up mid single ($125) - $25 Pratt & Whitney 2Q - 4Q up low-double to mid teens
Slide 13: Additional 2021 Items
Additional 2021 Items FY 2021 Adjusted Tax Rate* ~19% Interest Expense $1,400M - $1,425M Corporate Expense and Other Unallocated Items $425M - $450M FAS/CAS Operating Adjustment ~$1,675M Non-Service Pension Benefit ~$1,925M Capex Spending ~$2,500M 12 *See Appendix for additional information regardin
Slide 14: 2021 Adjusted EPS
2021 Adjusted EPS* ($ Adjusted EPS*) $0.48 ($0.09) ($0.18) $3.40 - $3.70 2021 Adj. ETR*: ~19% 2020 Adj. ETR*: 17.5% $0.09 $3.24 $0.01 Range Q1: ($0.95) - ($0.88) Q2 - Q4: $0.81 - $1.04 FY: ($0.14) - $0.16 2020 Pro Forma Segments FAS/CAS Non-Service Tax/NCI Corporate/Interest 2021E 1 Pension /Other 1
Slide 15: 2021 Free Cash Flow
2021 Free Cash Flow* 2020 Pro Forma RTX Operational FCF: $3.5B $2.1B ~$4.5B $1.2B ($0.8B) $0.8B ($0.5B) ($0.6B) Restructuring and merger $2.3B synergy expenses Merger expenses, restructuring and divestiture taxes 2020 2020 One-time RMD Int'l Pension 2021 One-time 2021 Structural Operational 2021E Pr
Slide 16: 2021 Priorities
2021 Priorities • Continued support of employees, customers and suppliers • Invest in technology and product innovation to drive industry leadership • Execute integration and deliver synergies • Drive structural cost reduction • Disciplined capital deployment and maintain strong liquidity Executing
Slide 17: © 2021 Raytheon Technologies All rights reserved
© 2021 Raytheon Technologies All rights reserved
Slide 18: Appendix
a Appendix s% Raytheon 17 ant Technologies
Slide 19: Use and Definitions of Non-GAAP Financial Measures
Use and Definitions of Non-GAAP Financial Measures Raytheon Technologies Corporation’s (“RTC”) reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). We supplement the reporting of our financial information determined under GAAP with
Slide 20: 4Q 2020 Quarterly Trends
4Q 2020 Quarterly Trends 12 Month Trailing Collins and Pratt Military Pratt & Whitney Book-to-Bill Ratio Organic Sales Growth Active Engines A320 V2500 18% A320 GTF 1.07 1.06 A220 85% 80% 75% 77% 65% 63% 61% 60% 45% 7% RIS RMD Collins Pratt 2Q 2020 3Q 2020 4Q 2020 Military Military Active is defined
Slide 21: P&W Engine Shipments to Customers
Raytheon Technologies: P&W Engine Shipments to Customers 2019 2020 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Military 39 58 53 65 215 48 72 59 62 241 Large commercial* 189 173 165 219 746 211 92 114 129 546 Pratt & Whitney Canada** 524 593 607 631 2,355 466 393 379 412 1,650 *Large commercial excludes industria
Slide 22: Free Cash Flow Reconciliation
Raytheon Technologies: Free Cash Flow Reconciliation ($ millions) 4Q 2020 Net income attributable to common shareowners from continuing operations 215 Depreciation & amortization 1,153 Change in working capital 549 Other (547) Cash flow from operations 1,370 Capital expenditures (623) Free cash flow
Slide 23: 4Q 2020 Sales Reconciliation
4Q 2020: Raytheon Technologies Sales Reconciliation Total Acquisitions Reported Organic and FX Growth Divestitures Collins Aerospace (32%) (31%) (1%) - Pratt & Whitney (21%) (21%) - - RIS 100% - 100% - RMD 100% - 100% - Elims & Other 39% (18%) 57% - Total 40% (26%) 66% - 22
Slide 24: 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 2020 2019 ($ Millions except per share amounts) Q1 Q2 Q3 Q4 YTD 2020 Q1 Q2 Q3 Q4 YTD 2019 Restructuring Costs Restructuring Cos
Slide 25: Segment Data – Adjusted
Raytheon Technologies: Segment Data – Adjusted Ex Rest & Significant non-recurring and non- Ex Rest & Significant non-recurring and non- Ex Rest & Significant non-recurring and non- Ex Rest & Significant non-recurring and non- operational items operational items RAYTHEON TECHNOLOGIES CORPORATION ope
Slide 26: Reconciliation of GAAP to Adjusted
Raytheon Technologies: Reconciliation of GAAP to Adjusted Quarter Ended December 31, Twelve Months Ended December 31, Raytheon Technologies Corporation (Unaudited) (Unaudited) Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results Adjusted Sales, Adjusted Operating Profit & Operating Profi
Slide 27: 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 28: Pro Forma Segment Data - GAAP and Adjusted
Raytheon Technologies: Pro Forma Segment Data - GAAP and Adjusted 1 Pro Forma1 Adjusted Pro Forma1 Net Sales Q1 2020 PF Q2 2020 PF Q3 2020 Q4 2020 FY 2020 PF Q1 2020 PF Q2 2020 PF Q3 2020 Q4 2020 FY 2020 PF Collins Aerospace Systems $ 6,438 $ 4,202 $ 4,274 $ 4,374 $ 19,288 $ 6,460 $ 4,298 $ 4,278 $
Slide 29: Pro Forma Segment Data: Sales
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Sales 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) (96) (4) (14
Slide 30: Pro Forma Segment Data: Operating Profit
Raytheon Technologies: Pro Forma Segment Data Reconciliation of Pro Forma1 GAAP to Adjusted Pro Forma Operating Profit 2020 (dollars in millions) 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)
Slide 31: Pro Forma Consolidated Data
Raytheon Technologies: Pro Forma Consolidated Data Reconciliation of Pro Forma1 to Adjusted Pro Forma Income (loss) from continuing operations & EPS RTX Pro Forma Income (loss) and Diluted earnings (loss) per share from continuing operations attributable to common shareowners Non-GAAP Reconciliation
Slide 32: Reconciliation of 2020 Adjusted to Adjusted Pro Forma Earnings
Raytheon Technologies: Reconciliation of 2020 Adjusted Earnings to 2020 Adjusted Pro forma Earnings (dollars in millions) 2020 Adjusted Earnings Pro Forma Adjustments 1 2020 Adjusted Pro Forma Earnings Net Sales Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2020
Slide 33: Pension Impact
Pension Impact Current projections* 2020 2020 2021 2022 2023 Actual Adjusted pro forma P&L impact RMD/RIS Service cost ($354) ($477) ($405) ($375) ($200) RMD/RIS CAS recovery $1,460 $1,987 $2,080 $2,100 $1,625 FAS/CAS operating adjustment $1,106 $1,510 $1,675 $1,725 $1,425 Non-service pension income