Raytheon Technologies Corporation’s RTX fourth-quarter 2020 adjusted earnings per share (EPS) of 74 cents outpaced the Zacks Consensus Estimate of 71 cents by 4.2%. However, the bottom-line figure declined 36.2% from the year-ago quarter’s adjusted earnings of $1.16.
Including one-time items, the company reported GAAP earnings of 10 cents compared with earnings of 76 cents per share in the year-ago quarter.
The year-over-year deterioration in the bottom line is attributable to charges related to the current economic environment, primarily the COVID-19 pandemic, along with some restructuring costs.
For 2020, the company reported adjusted earnings of $2.73 per share, which missed the Zacks Consensus Estimate of $2.99. The full-year figure also deteriorated from $4.95 recorded in 2019.
Raytheon Technologies Corporation Price, Consensus and EPS Surprise
Raytheon Technologies Corporation Price, Consensus and EPS Surprise
Raytheon Technologies’ fourth-quarter adjusted sales amounted to $16,583 million, while the company’s GAAP sales came in at $16,419 million. The GAAP sales figure surpassed the Zacks Consensus Estimate of $16,303 million by 0.7%.
The company had reported GAAP sales worth $11,694 million in the year-ago quarter.
For 2020, the company recorded adjusted sales of $57.15 billion, while GAAP sales came in at $56.59 billion. The GAAP sales figure missed the Zacks Consensus Estimate of $64.20 billion. At the end of 2019, Raytheon Technologies recorded sales worth $45.35 billion.
Total costs and expenses increased 50.9% year over year to $16,327 million. The company generated operating profit of $142 million compared with $956 million in the year-ago quarter.
Segmental Performance
Collins Aerospace: Adjusted sales at this segment plunged 32% year over year to $4,388 million in fourth-quarter 2020 due to lower commercial OEM sales as well as commercial aftermarket sales decline attributable to reduced flight hours, aircraft fleet utilization and commercial OEM deliveries. Impact of the 737 MAX grounding also hampered this unit’s top line.
Its adjusted operating income came in at $89 million compared with the year-ago quarter’s level of $1,061 million.
Pratt & Whitney: Adjusted sales at this segment declined 20% year over year to $4,496 million due to a significant reduction in shop visits and related spare part sales as well as lower commercial engine deliveries.
Its adjusted operating profit was $105 million compared with the year-ago quarter’s operating income of $470 million.
Raytheon Intelligence & Space: This segment recorded fourth-quarter sales of $3,853 million and generated $355 million of adjusted operating profit.
Raytheon Missiles & Defense: This unit recorded adjusted sales of $4,395 million and $586 million of adjusted operating profit in the quarter.
Financial Update
Raytheon Technologies had cash and cash equivalents of $8,802 million as of Dec 31, 2020 with, up from $4,937 million as of Dec 31, 2019.
Long-term debt was $31,026 million, as of Dec 31, 2020, down from $37,701 million as of Dec 31, 2019.
Net cash inflow from operating activities amounted to $4,334 million at the end of 2020 compared with $5,821 million at the end of 2019.
Its free cash flow was $2,539 million compared with $3,953 million at the end of fourth-quarter 2019.
Guidance
Raytheon Technologies issued guidance for the first quarter of 2021 as well as full-year 2021. For the first quarter, the company expects to generate EPS in the range of 70-75 cents on revenues in the band of $14.8-$15.4 billion.
The Zacks Consensus Estimate for first-quarter EPS, pegged at 71 cents, lies below the mid-point of the guided range. The Zacks Consensus Estimate for revenues, pegged at $16.07 billion, is higher than the guided range.
For 2021, Raytheon Technologies projects to generate EPS in the range of $3.40-$3.70 billion on revenues in the band of $63.4-$65.4 billion.
The Zacks Consensus Estimate for EPS, pegged at $3.45, lies well below the mid-point of the guided range. The Zacks Consensus Estimate for revenues, pegged at $67.05 billion, is higher than the guided range.
The company also expects to generate free cash flow worth $4.5 billion during 2021.
Zacks Rank
Raytheon Technologies currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Defense Releases
Boeing BA and General Dynamics GD are set to release their fourth-quarter 2020 results on Jan 27.
L3Harris Technologies LHX is scheduled to announce its fourth-quarter results on Jan 29.
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