8-K
RTX Corp (RTX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 8-K
____________________________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2020
____________________________________
RAYTHEON TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________
| Delaware | 001-00812 | 06-0570975 | |
|---|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) | |
| 870 Winter Street, | Waltham, | Massachusetts | 02451 |
| --- | --- | --- | --- |
(Address of principal executive offices, including zip code)
| (781) | 522-3000 |
|---|
(Registrant's telephone number, including area code)
____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock ($1 par value) | RTX | New York Stock Exchange |
| (CUSIP 913017 10 9) | ||
| 2.150% Notes due 2030 | RTX 30 | New York Stock Exchange |
| (CUSIP 913017 CV9) |
Section 2—Financial Information
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2020, Raytheon Technologies Corporation (“RTC” or “the Company”) issued a press release announcing its second quarter 2020 results.
The press release issued July 28, 2020 is furnished herewith as Exhibit No. 99 to this Report, and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Section 9—Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>Number | Exhibit Description |
|---|---|
| 99 | Press release, dated July 28, 2020, issued by Raytheon Technologies Corporation. |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RAYTHEON TECHNOLOGIES CORPORATION | ||
|---|---|---|
| (Registrant) | ||
| Date: July 28, 2020 | By: | /S/ ANTHONY F. O'BRIEN |
| Anthony F. O'Brien | ||
| Executive Vice President & Chief Financial Officer |
Document
Exhibit 99
Raytheon Technologies Reports
Second Quarter 2020 Results
Accelerated cost reduction and cash conservation actions
•Sales of $14.1 billion
•Adjusted sales of $14.3 billion
•GAAP EPS from continuing operations of a loss of $2.56 and included $2.96 of net significant and/or non-recurring charges and acquisition accounting adjustments
•Adjusted EPS of $0.40
•Operating cash flow from continuing operations of $210 million
•Free cash flow of an outflow of $248 million
•Achieved ~$600 million of cost reduction and ~$1 billion of cash conservation actions
•Combined book-to-bill ratio of 1.20 at RIS and RMD segments
WALTHAM, Mass., July 28, 2020 – Raytheon Technologies Corporation (NYSE: RTX) reported second quarter 2020 results.
“During the quarter, we continued to deliver good performance in our defense business, while we saw challenges in commercial aerospace as expected,” said Raytheon Technologies CEO Greg Hayes. “Looking ahead, we expect the pressures in commercial aerospace to persist as OEM production levels and aftermarket activity remain low. As a result, we are taking difficult but necessary actions to strengthen the business, including achieving the previously announced cost and cash savings this year. At the same time, we continue to deliver cost synergies from the Rockwell Collins acquisition and the Raytheon merger.”
Hayes continued, “I’m proud of what our team has accomplished in support of our customers, suppliers, and communities during this difficult time. Our balance sheet remains strong and the resiliency of our defense business will help us weather this storm as we continue to capitalize on growth opportunities supported by our record backlog. I am confident that our balanced portfolio and advanced technologies will position us for long-term value creation as the global economy recovers.”
Raytheon Technologies reported second quarter sales of $14.1 billion and adjusted sales of $14.3 billion. GAAP EPS from continuing operations was a loss of $2.56 and included $2.96 of net significant and/or non-recurring charges and acquisition accounting adjustments, where $2.34 was related to charges due to the current economic environment primarily driven by the COVID-19 pandemic. Of the $2.34, $2.13 was related to an impairment of Collins Aerospace goodwill and intangibles. Other adjustments included $0.28 for acquisition accounting adjustments primarily related to intangible amortization and $0.21 for restructuring. Adjusted EPS was $0.40.
The company recorded a net loss from continuing operations in the second quarter of $3.8 billion, and included $4.4 billion of net significant and/or nonrecurring charges and acquisition accounting adjustments. Adjusted net income was $598 million. Operating cash flow from continuing operations in the second quarter was $210 million and better than expected primarily due to the timing of collections and execution on cash conservation actions. Capital expenditures were $458 million, resulting in a free cash outflow of $248 million. Free cash flow included $165 million of merger costs and restructuring.
See “Use and Definitions of Non-GAAP Financial Measures” below for information regarding non-GAAP financial measures.
Summary Financial Results – Continuing Operations
| ($ in millions, except EPS) | 2nd Quarter 2020 | ||
|---|---|---|---|
| Reported | |||
| Sales | $ | 14,061 | |
| Net Income | $ | (3,844) | |
| EPS | $ | (2.56) | |
| Adjusted | |||
| Sales | $ | 14,277 | |
| Net Income | $ | 598 | |
| EPS | $ | 0.40 | |
| Operating Cash Flow from Continuing Operations | $ | 210 | |
| Free Cash Flow | $ | (248) |
Note: Q2 2020 results include the legacy Raytheon business since the merger date of April 3, 2020. Reported and adjusted numbers do not include the legacy Raytheon business pre-merger stub period from March 30, 2020 to April 2, 2020 which had an estimated $400M of sales, $40M of net income, and $100M of operating cash flow.
Bookings and Orders
Backlog at the end of the second quarter was $158.7 billion, of which $85.6 billion was from commercial aerospace and a record $73.1 billion was from defense.
Notable defense bookings during the quarter included:
•$2.3 billion on the Army Navy/Transportable Radar Surveillance-Model 2 (AN/TPY-2) radar program for the Kingdom of Saudi Arabia (KSA) at Raytheon Missiles & Defense (RMD)
•$1.4 billion on a number of classified programs at Raytheon Intelligence & Space (RIS)
•$299 million for Standard Missile-3 (SM-3®) for the Missile Defense Agency (MDA) and an international customer at RMD
In addition, during the quarter RMD was selected by the U.S. Air Force to develop the Long-Range Standoff Weapon (LRSO).
Segment Results
The company’s reportable segments are Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD). In connection with the merger, the company revised its segment presentation. Prior periods have been revised to reflect the current presentation. Refer to the accompanying tables for further details.
Collins Aerospace
| 2nd Quarter | Six Months | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions ) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||
| Reported | ||||||||||||||||
| Sales | $ | 4,202 | $ | 6,576 | (36) | % | $ | 10,640 | $ | 13,089 | (19) | % | ||||
| Operating Profit | $ | (317) | $ | 1,276 | (125) | % | $ | 929 | $ | 2,240 | (59) | % | ||||
| ROS | (7.5) | % | 19.4 | % | 8.7 | % | 17.1 | % | ||||||||
| Adjusted | ||||||||||||||||
| Sales | $ | 4,298 | $ | 6,576 | (35) | % | $ | 10,758 | $ | 13,089 | (18) | % | ||||
| Operating Profit | $ | 24 | $ | 1,293 | (98) | % | $ | 1,308 | $ | 2,502 | (48) | % | ||||
| ROS | 0.6 | % | 19.7 | % | 12.2 | % | 19.1 | % | ||||||||
| Note: Prior periods have been revised to reflect the current segment presentation which excludes acquisition accounting adjustments and includes additional corporate expense allocations. |
Collins Aerospace had second quarter 2020 adjusted sales of $4,298 million, down 35 percent versus the prior year. Commercial OE was down 53 percent and commercial aftermarket was down 48 percent, while military was up 10 percent. The decrease in commercial sales was driven primarily by the current economic environment which has resulted in lower flight hours, aircraft fleet utilization and commercial OEM deliveries, which was slightly offset by F-35 and defense development program growth.
Collins Aerospace recorded adjusted operating profit of $24 million in the quarter, down 98 percent versus the prior year. The decrease in adjusted operating profit was driven by lower commercial aerospace OEM and aftermarket sales volume that was slightly offset by gross margin drop through on higher military volume.
Pratt & Whitney
| 2nd Quarter | Six Months | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions ) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||
| Reported | ||||||||||||||
| Sales | $ | 3,487 | $ | 5,154 | (32)% | $ | 8,840 | $ | 9,972 | (11)% | ||||
| Operating Profit | $ | (457) | $ | 449 | (202)% | $ | 18 | $ | 927 | (98)% | ||||
| ROS | (13.1) | % | 8.7 | % | 0.2 | % | 9.3 | % | ||||||
| Adjusted | ||||||||||||||
| Sales | $ | 3,607 | $ | 5,154 | (30)% | $ | 8,938 | $ | 9,972 | (10)% | ||||
| Operating Profit | $ | (151) | $ | 452 | (133)% | $ | 364 | $ | 944 | (61)% | ||||
| ROS | (4.2) | % | 8.8 | % | 4.1 | % | 9.5 | % | ||||||
| Note: Prior periods have been revised to reflect the current segment presentation which excludes acquisition accounting adjustments and includes additional corporate expense allocations. |
Pratt & Whitney had second quarter 2020 adjusted sales of $3,607 million, down 30 percent versus the prior year. Commercial OE was down 42 percent and commercial aftermarket was down 51 percent, while military was up 11 percent. The decrease in commercial sales was primarily due to a significant reduction in shop visits and related spare part sales and commercial engine deliveries principally driven by the current economic environment, which was slightly offset by F135 production volume and aftermarket growth on multiple fighter jet platforms.
Pratt & Whitney recorded an adjusted operating loss of $151 million in the quarter, down 133 percent versus the prior year. The decrease in adjusted operating profit was primarily driven by lower commercial aftermarket sales volume and unfavorable mix.
Raytheon Intelligence & Space
| Six Months | |||||
|---|---|---|---|---|---|
| ( in millions) | 2020 | ||||
| Reported | |||||
| Sales | 3,314 | $ | 3,314 | ||
| Operating Profit | 311 | $ | 311 | ||
| ROS | % | 9.4 | % | ||
| Adjusted | |||||
| Sales | 3,314 | $ | 3,314 | ||
| Operating Profit | 311 | $ | 311 | ||
| ROS | % | 9.4 | % | ||
| Note: Q2 2020 reported and adjusted results include RIS since the merger date of April 3, 2020. Reported and adjusted numbers do not include RIS pre-merger stub period from March 30, 2020 to April 2, 2020 which had an estimated 200M of sales and 20M of operating profit. |
All values are in US Dollars.
RIS had second quarter adjusted sales of $3,314 million and recorded $311 million of adjusted operating profit in the quarter.
Raytheon Missiles & Defense
| Six Months | |||||
|---|---|---|---|---|---|
| ( in millions) | 2020 | ||||
| Reported | |||||
| Sales | 3,590 | $ | 3,590 | ||
| Operating Profit | 397 | $ | 397 | ||
| ROS | % | 11.1 | % | ||
| Adjusted | |||||
| Sales | 3,590 | $ | 3,590 | ||
| Operating Profit | 397 | $ | 397 | ||
| ROS | % | 11.1 | % | ||
| Note: Q2 2020 reported and adjusted results include RMD since the merger date of April 3, 2020. Reported and adjusted numbers do not include RMD pre-merger stub period from March 30, 2020 to April 2, 2020 which had an estimated 200M of sales and 25M of operating profit. |
All values are in US Dollars.
RMD had second quarter adjusted sales of $3,590 million and recorded $397 million of adjusted operating profit in the quarter.
About Raytheon Technologies
Raytheon Technologies Corporation is an aerospace and defense company that provides advanced systems and services for commercial, military and government customers worldwide. With 195,000 employees and four industry-leading businesses ― Collins Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space and Raytheon Missiles & Defense ― the
company delivers solutions that push the boundaries in avionics, cybersecurity, directed energy, electric propulsion, hypersonics, and quantum physics. The company, formed in 2020 through the combination of Raytheon Company and the United Technologies Corporation aerospace businesses, is headquartered in Waltham, Massachusetts.
Conference Call on the Second Quarter 2020 Financial Results
Raytheon Technologies’ financial results conference call will be held on Tuesday, July 28, 2020 at 8:30 a.m. ET. The dial-in number for the conference call will be (866) 219-7829 in the U.S. or (478) 205-0667 outside of the U.S. The passcode is 4609655. The conference call will also be audiocast on the Internet at www.rtx.com/investors. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.
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 certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Adjusted net sales, organic sales, adjusted operating profit (loss), adjusted net income, adjusted earnings per share (“EPS”), adjusted diluted weighted average shares outstanding, and the adjusted effective tax rate are non-GAAP financial measures. Adjusted net sales represents consolidated net sales from continuing operations (a GAAP measure), excluding significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as “other significant items”). Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items. Adjusted operating profit (loss) represents income from continuing operations (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and other significant items. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and other significant items. Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments and other significant items. Adjusted diluted weighted average shares outstanding represents diluted weighted average shares outstanding (a GAAP measure), including stock awards which were anti-dilutive during the quarter and six months ended June 30, 2020 as a result of the net loss from operations. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding the tax effect of restructuring costs, acquisition accounting adjustments and other significant items. For the Business segments, when applicable, adjustments of net sales similarly reflect continuing operations excluding other significant items, and adjustments of operating profit and margins similarly reflect continuing operations, excluding restructuring, acquisition accounting adjustments and other significant items.
Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing RTC's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of RTC's common stock and distribution of earnings to shareowners.
A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.
When we provide our expectation for free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide Raytheon Technologies Corporation’s (“RTC”) management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “confident,” “on track” and other words of similar meaning. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates, R&D spend, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, other anticipated benefits to RTC of United Technologies Corporation’s (“UTC”) Rockwell Collins acquisition, the merger between UTC and Raytheon Company (“Raytheon”, and such merger, the “merger”) or the spin-offs by UTC of Otis Worldwide Corporation and Carrier Global Corporation into separate independent companies (the “separation transactions”), including estimated synergies and customer cost savings resulting from the merger and the separation transactions and other statements that are not solely historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which RTC operates in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, and the impact of pandemic health issues (including COVID-19 and its effects, among other things, on global supply, demand and distribution capabilities as the COVID-19 outbreak continues and results in an increasingly prolonged period of disruption to air travel and commercial activities generally, and significant restrictions and limitations on businesses, particularly within the aerospace and commercial airlines industries) aviation safety concerns, weather conditions and natural disasters, the financial condition of our customers and suppliers, and the risks associated with U.S. government sales (including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration or the allocation of funds to governmental responses to COVID-19, a government shutdown, or otherwise, and uncertain funding of programs); (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services; (3) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things the integration of UTC’s and Raytheon’s businesses or the integration of RTC with other businesses and realization of synergies
and opportunities for growth and innovation and incurrence of related costs and expenses; (4) RTC’s levels of indebtedness, capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases by RTC of its common stock, which have been suspended through the end of the calendar year and may continue to be suspended, or discontinued or delayed, at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs); (9) new business and investment opportunities; (10) the ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which RTC and its businesses operate, including the effect of changes in U.S. trade policies or the U.K.’s withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and regulations (including, among other things, export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements, including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations) in the U.S. and other countries in which RTC and its businesses operate; (17) the possibility that the anticipated benefits from the combination of UTC’s and Raytheon’s businesses (including ongoing integration activities from historic UTC and Raytheon acquisitions prior to the merger) cannot be realized in full or at all or may take longer to realize than expected, or the possibility that costs or difficulties related to the integration of UTC’s businesses with Raytheon’s will be greater than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all; (18) the ability of RTC to retain and hire key personnel and the ability of our personnel to continue to operate our facilities and businesses around the world in light of, among other factors, the COVID-19 outbreak; (19) the expected benefits to RTC of the separation transactions; (20) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions as tax-free to UTC and former UTC shareowners, in each case, for U.S. federal income tax purposes; and (21) the risk that dissynergy costs incurred in connection with the separation transactions will exceed legacy UTC’s or legacy Raytheon’s estimates. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the reports of RTC, UTC and Raytheon on Forms S-4, 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission from time to time. Any forward-looking statement speaks only as of the date on which it is made, and RTC assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
RTC-IR
# #
Raytheon Technologies Corporation
Condensed Consolidated Statement of Operations
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | ||||||||||||||||
| (dollars in millions, except per share amounts; shares in millions) | 2020 | 2019^(1)^ | 2020^(1)^ | 2019^(1)^ | |||||||||||||
| Net Sales | $ | 14,061 | $ | 11,329 | $ | 25,421 | $ | 22,282 | |||||||||
| Costs and Expenses: | |||||||||||||||||
| Cost of sales | 12,214 | 8,554 | 20,786 | 16,973 | |||||||||||||
| Research and development | 695 | 605 | 1,230 | 1,192 | |||||||||||||
| Selling, general and administrative | 1,811 | 902 | 2,788 | 1,770 | |||||||||||||
| Total Costs and Expenses | 14,720 | 10,061 | 24,804 | 19,935 | |||||||||||||
| Goodwill impairment | (3,183) | — | (3,183) | — | |||||||||||||
| Other (expense) income, net | 82 | 118 | 101 | 181 | |||||||||||||
| Operating profit | (3,760) | 1,386 | (2,465) | 2,528 | |||||||||||||
| Non-service pension (benefit) | (237) | (200) | (405) | (392) | |||||||||||||
| Interest expense, net | 335 | 352 | 667 | 772 | |||||||||||||
| Income (loss) from continuing operations before income taxes | (3,858) | 1,234 | (2,727) | 2,148 | |||||||||||||
| Income tax expense (benefit) | (38) | 6 | 601 | 159 | |||||||||||||
| Net income (loss) from continuing operations | (3,820) | 1,228 | (3,328) | 1,989 | |||||||||||||
| Less: Noncontrolling interest in subsidiaries' earnings from continuing operations | 24 | 45 | 78 | 94 | |||||||||||||
| Income (loss) from continuing operations attributable to common shareowners | (3,844) | 1,183 | (3,406) | 1,895 | |||||||||||||
| Discontinued operations: | |||||||||||||||||
| Income (loss) from discontinued operations | (56) | 1,206 | (232) | 2,114 | |||||||||||||
| Income tax expense (benefit) from discontinued operations | (65) | 435 | 237 | 679 | |||||||||||||
| Income (loss) from discontinued operations | 9 | 771 | (469) | 1,435 | |||||||||||||
| Less: Noncontrolling interest in subsidiaries' earnings from discontinued operations | — | 54 | 43 | 84 | |||||||||||||
| Income (loss) from discontinued operations attributable to common shareowners | 9 | 717 | (512) | 1,351 | |||||||||||||
| Net (loss) income attributable to common shareowners | $ | (3,835) | $ | 1,900 | $ | (3,918) | $ | 3,246 | |||||||||
| (Loss) Earnings Per Share attributable to common shareowners - Basic: | |||||||||||||||||
| Income (loss) from continuing operations attributable to common shareowners | $ | (2.56) | $ | 1.38 | $ | (2.78) | $ | 2.22 | |||||||||
| Income (loss) from discontinued operations | 0.01 | 0.84 | (0.42) | 1.58 | |||||||||||||
| Net income (loss) attributable to common shareowners | $ | (2.55) | $ | 2.22 | $ | (3.20) | $ | 3.80 | |||||||||
| (Loss) Earnings Per Share attributable to common shareowners - Diluted: | |||||||||||||||||
| Income (loss) from continuing operations attributable to common shareowners | $ | (2.56) | $ | 1.37 | $ | (2.78) | $ | 2.20 | |||||||||
| Income (loss) from discontinued operations | 0.01 | 0.83 | (0.42) | 1.56 | |||||||||||||
| Net income (loss) attributable to common shareowners | $ | (2.55) | $ | 2.20 | $ | (3.20) | $ | 3.76 | |||||||||
| Weighted Average Shares Outstanding: | |||||||||||||||||
| Basic shares | 1,501.3 | 854.4 | 1,225.4 | 853.8 | |||||||||||||
| Diluted shares | 1,501.3 | 863.7 | 1,225.4 | 862.3 |
(1) As a result of the Separation Transactions and the Distributions we have reclassified certain prior year amounts for the reclassification of the historical Otis and Carrier results to discontinued operations.
Raytheon Technologies Corporation
Segment Net Sales and Operating Profit
| Quarter Ended | Six Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | |||||||||||||||||
| June 30, 2020 | June 30, 2019^(1)^ | June 30, 2020^(1)^ | June 30, 2019^(1)^ | |||||||||||||||
| (dollars in millions) | Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | Reported | Adjusted | ||||||||||
| Net Sales | ||||||||||||||||||
| Collins Aerospace Systems | $ | 4,202 | $ | 4,298 | $ | 6,576 | $ | 6,576 | $ | 10,640 | $ | 10,758 | $ | 13,089 | $ | 13,089 | ||
| Pratt & Whitney | 3,487 | 3,607 | 5,154 | 5,154 | 8,840 | 8,938 | 9,972 | 9,972 | ||||||||||
| Raytheon Intelligence & Space | 3,314 | 3,314 | — | — | 3,314 | 3,314 | — | — | ||||||||||
| Raytheon Missiles & Defense | 3,590 | 3,590 | — | — | 3,590 | 3,590 | — | — | ||||||||||
| Total segment | 14,593 | 14,809 | 11,730 | 11,730 | 26,384 | 26,600 | 23,061 | 23,061 | ||||||||||
| Eliminations and other | (532) | (532) | (401) | (401) | (963) | (963) | (779) | (779) | ||||||||||
| Consolidated | $ | 14,061 | $ | 14,277 | $ | 11,329 | $ | 11,329 | $ | 25,421 | $ | 25,637 | $ | 22,282 | $ | 22,282 | ||
| Operating Profit | ||||||||||||||||||
| Collins Aerospace Systems | $ | (317) | $ | 24 | $ | 1,276 | $ | 1,293 | $ | 929 | $ | 1,308 | $ | 2,240 | $ | 2,502 | ||
| Pratt & Whitney | (457) | (151) | 449 | 452 | 18 | 364 | 927 | 944 | ||||||||||
| Raytheon Intelligence & Space | 311 | 311 | — | — | 311 | 311 | — | — | ||||||||||
| Raytheon Missiles & Defense | 397 | 397 | — | — | 397 | 397 | — | — | ||||||||||
| Total segment | (66) | 581 | 1,725 | 1,745 | 1,655 | 2,380 | 3,167 | 3,446 | ||||||||||
| Eliminations and other | (28) | (28) | (42) | (42) | (53) | (53) | (69) | (69) | ||||||||||
| Corporate expenses and other unallocated items | (277) | (24) | (87) | (50) | (407) | (123) | (133) | (86) | ||||||||||
| FAS/CAS operating adjustment | 356 | 356 | — | — | 356 | 356 | — | — | ||||||||||
| Acquisition accounting adjustments | (3,745) | — | (210) | — | (4,016) | — | (437) | — | ||||||||||
| Consolidated | $ | (3,760) | $ | 885 | $ | 1,386 | $ | 1,653 | $ | (2,465) | $ | 2,560 | $ | 2,528 | $ | 3,291 | ||
| Segment Operating Profit Margin | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Collins Aerospace Systems | (7.5) | % | 0.6 | % | 19.4 | % | 19.7 | % | 8.7 | % | 12.2 | % | 17.1 | % | 19.1 | % | ||
| Pratt & Whitney | (13.1) | % | (4.2) | % | 8.7 | % | 8.8 | % | 0.2 | % | 4.1 | % | 9.3 | % | 9.5 | % | ||
| Raytheon Intelligence & Space | 9.4 | % | 9.4 | % | NM | NM | 9.4 | % | 9.4 | % | NM | NM | ||||||
| Raytheon Missiles & Defense | 11.1 | % | 11.1 | % | NM | NM | 11.1 | % | 11.1 | % | NM | NM | ||||||
| Total segment | (0.5) | % | 3.9 | % | 14.7 | % | 14.9 | % | 6.3 | % | 8.9 | % | 13.7 | % | 14.9 | % |
(1) Legacy UTC segments have been recast for 2019 and first quarter 2020 as a result of the Separation Transactions, the Distributions and the Raytheon Merger. Refer to supplemental information in the tables on the following pages for additional information.
NM Not Meaningful
Raytheon Technologies Corporation
Condensed Consolidated Balance Sheet
| June 30, 2020 | December 31, 2019 | |||
|---|---|---|---|---|
| (dollars in millions) | (Unaudited) | (Unaudited) | ||
| Assets | ||||
| Cash and cash equivalents | $ | 6,975 | $ | 4,937 |
| Accounts receivable, net^(2)^ | 9,496 | 8,743 | ||
| Contract assets^(2)^ | 9,943 | 4,462 | ||
| Inventory, net | 10,256 | 9,047 | ||
| Assets related to discontinued operations^(1)^ | 135 | 31,823 | ||
| Other assets, current | 5,469 | 2,565 | ||
| Total Current Assets | 42,274 | 61,577 | ||
| Customer financing assets | 3,363 | 3,463 | ||
| Future income tax benefits | 732 | 884 | ||
| Fixed assets, net | 14,805 | 10,322 | ||
| Operating lease right-of-use assets | 2,102 | 1,252 | ||
| Goodwill | 53,269 | 36,609 | ||
| Intangible assets, net | 42,003 | 24,473 | ||
| Other assets^(2)^ | 2,969 | 1,035 | ||
| Total Assets | $ | 161,517 | $ | 139,615 |
| Liabilities, Redeemable Noncontrolling Interests and Equity | ||||
| Short-term borrowings | $ | 243 | $ | 2,293 |
| Accounts payable | 7,182 | 7,816 | ||
| Accrued liabilities^(2)^ | 14,253 | 9,770 | ||
| Contract liabilities^(2)^ | 11,997 | 9,014 | ||
| Liabilities related to discontinued operations^(1)^ | 319 | 14,443 | ||
| Long-term debt currently due | 1,297 | 3,258 | ||
| Total Current Liabilities | 35,291 | 46,594 | ||
| Long-term debt | 31,210 | 37,701 | ||
| Operating lease liabilities, non-current | 1,723 | 1,093 | ||
| Future pension and postretirement benefit obligations | 14,972 | 2,487 | ||
| Other long-term liabilities^(2)^ | 9,394 | 7,414 | ||
| Total Liabilities | 92,590 | 95,289 | ||
| Redeemable noncontrolling interest | 35 | 95 | ||
| Shareowners’ Equity: | ||||
| Common Stock | 36,679 | 22,955 | ||
| Treasury Stock | (10,398) | (32,626) | ||
| Retained earnings | 49,744 | 61,594 | ||
| Accumulated other comprehensive loss | (8,800) | (10,149) | ||
| Total Shareowners’ Equity | 67,225 | 41,774 | ||
| Noncontrolling interest | 1,667 | 2,457 | ||
| Total Equity | 68,892 | 44,231 | ||
| Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ | 161,517 | $ | 139,615 |
As a result of the Separation Transactions, the Distributions and the Raytheon Merger, certain reclassifications have been made to the prior year amounts to conform to the current year presentation. These reclassifications include:
(1) the reclassification of the historical Otis and Carrier results to assets and liabilities related to discontinued operations
(2) the presentation of contract-related assets and liabilities as current based upon the duration of our operating cycle
Raytheon Technologies Corporation
Condensed Consolidated Statement of Cash Flows
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | |||||||
| (dollars in millions) | 2020 | 2019^(1)^ | 2020 | 2019^(1)^ | ||||
| Operating Activities: | ||||||||
| Net income (loss) from continuing operations | $ | (3,820) | $ | 1,228 | $ | (3,328) | $ | 1,989 |
| Adjustments to reconcile net income (loss) from continuing operations to net cash flows provided by operating activities: | ||||||||
| Depreciation and amortization | 1,111 | 650 | 1,839 | 1,330 | ||||
| Deferred income tax provision | (274) | 3 | 118 | 10 | ||||
| Stock compensation cost | 72 | 69 | 135 | 118 | ||||
| Net periodic pension and other postretirement benefit | (93) | (125) | (223) | (244) | ||||
| Goodwill impairment loss | 3,183 | — | 3,183 | — | ||||
| Change in: | ||||||||
| Accounts receivable | 773 | (146) | 1,163 | 736 | ||||
| Contract assets | 725 | (255) | 376 | (573) | ||||
| Inventory | (155) | (317) | (550) | (795) | ||||
| Other current assets | 28 | 21 | (180) | (322) | ||||
| Accounts payable and accrued liabilities | (2,007) | 109 | (1,395) | (218) | ||||
| Contract liabilities | 302 | 413 | 201 | 633 | ||||
| Global pension contributions | (34) | (33) | (42) | (37) | ||||
| Canadian government settlement | — | — | — | (38) | ||||
| Other operating activities, net | 399 | (121) | 45 | 180 | ||||
| Net cash flows provided by operating activities from continuing operations | 210 | 1,496 | 1,342 | 2,769 | ||||
| Investing Activities: | ||||||||
| Capital expenditures | (458) | (384) | (783) | (678) | ||||
| Dispositions of businesses | 234 | — | 234 | 133 | ||||
| Cash acquired in Raytheon Merger | 3,208 | — | 3,208 | — | ||||
| Increase in customer financing assets, net | (41) | (159) | (129) | (332) | ||||
| Increase in collaboration intangible assets | (28) | (82) | (106) | (169) | ||||
| Receipts (payments) from settlements of derivative contracts | 238 | (31) | (286) | 61 | ||||
| Other investing activities, net | (57) | (58) | (82) | (118) | ||||
| Net cash flows provided by (used in) investing activities from continuing operations | 3,096 | (714) | 2,056 | (1,103) | ||||
| Financing Activities: | ||||||||
| Issuance of long-term debt | 1,984 | 3 | 1,984 | 2 | ||||
| Dividend from discontinued operations | — | — | 17,207 | — | ||||
| Repayment of long-term debt | (1,228) | (9) | (15,038) | (13) | ||||
| Decrease in short-term borrowings, net | (1,382) | (18) | (2,045) | (388) | ||||
| Proceeds from Common Stock issued under employee stock plans | 4 | 6 | 10 | 11 | ||||
| Dividends paid on Common Stock | (724) | (610) | (1,338) | (1,219) | ||||
| Repurchase of Common Stock | — | (40) | (47) | (69) | ||||
| Net transfers (to) from discontinued operations | (950) | 168 | (1,966) | 682 | ||||
| Other financing activities, net | (76) | (11) | (99) | (73) | ||||
| Net cash flows used in financing activities from continuing operations | (2,372) | (511) | (1,332) | (1,067) | ||||
| Discontinued Operations: | ||||||||
| Net cash (used in) provided by operating activities | (189) | 614 | (661) | 841 | ||||
| Net cash used in investing activities | — | (109) | (241) | (114) | ||||
| Net cash used in financing activities | (1,803) | (178) | (1,481) | (698) | ||||
| Net cash flows (used in) provided by discontinued operations | (1,992) | 327 | (2,383) | 29 | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 9 | — | (10) | 4 | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents from discontinued operations | — | (25) | (76) | 11 | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (1,049) | 573 | (403) | 643 | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 6,073 | 4,057 | 4,961 | 3,731 | ||||
| Cash, cash equivalents and restricted cash within assets related to discontinued operations, beginning of period | 1,993 | 2,225 | 2,459 | 2,481 | ||||
| Cash, cash equivalents and restricted cash, end of period | 7,017 | 6,855 | 7,017 | 6,855 | ||||
| Less: Restricted cash | 42 | 18 | 42 | 18 | ||||
| Less: Cash, cash equivalents and restricted cash for discontinued operations | — | 2,521 | — | 2,521 | ||||
| Cash and cash equivalents, end of period | $ | 6,975 | $ | 4,316 | $ | 6,975 | $ | 4,316 |
(1) As a result of the Separation Transactions, the Distributions and the Raytheon Merger, certain reclassifications have been made to the prior year amounts to conform to the current year presentation. These reclassifications include the reclassification of the historical Otis and Carrier results to discontinued operations and the reclassification of lease amortization within our presentation of cash flows.
Raytheon Technologies Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
Adjusted Sales, Adjusted Operating Profit & Operating Profit Margin
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | |||||||||||
| (dollars in millions - Income (Expense)) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Collins Aerospace Systems | ||||||||||||
| Net sales | $ | 4,202 | $ | 6,576 | $ | 10,640 | $ | 13,089 | ||||
| Significant unfavorable contract adjustments^(1)^ | (96) | — | (118) | — | ||||||||
| Adjusted net sales | $ | 4,298 | $ | 6,576 | $ | 10,758 | $ | 13,089 | ||||
| Operating profit (loss) | $ | (317) | $ | 1,276 | $ | 929 | $ | 2,240 | ||||
| Restructuring | (151) | (17) | (157) | (56) | ||||||||
| Significant unfavorable contract adjustments^(1)^ | (122) | — | (144) | — | ||||||||
| Bad debt expense driven by customer bankruptcies and collectability risk^(1)^ | (89) | — | (99) | — | ||||||||
| Foreign government wage subsidies^(1)^ | 24 | — | 24 | — | ||||||||
| Fixed asset impairment^(1)^ | (3) | — | (3) | — | ||||||||
| Loss on sale of business | — | — | — | (25) | ||||||||
| Amortization of Rockwell Collins inventory fair value adjustment | — | — | — | (181) | ||||||||
| Adjusted operating profit | $ | 24 | $ | 1,293 | $ | 1,308 | $ | 2,502 | ||||
| Adjusted operating profit margin | 0.6 | % | 19.7 | % | 12.2 | % | 19.1 | % | ||||
| Pratt & Whitney | ||||||||||||
| Net sales | $ | 3,487 | $ | 5,154 | $ | 8,840 | $ | 9,972 | ||||
| Favorable impact of a contract termination | — | — | 22 | — | ||||||||
| Significant unfavorable contract adjustments^(1)^ | (120) | — | (120) | — | ||||||||
| Adjusted net sales | $ | 3,607 | $ | 5,154 | $ | 8,938 | $ | 9,972 | ||||
| Operating profit (loss) | $ | (457) | $ | 449 | $ | 18 | $ | 927 | ||||
| Restructuring | (107) | (3) | (107) | (17) | ||||||||
| Bad debt expense driven by customer bankruptcies and collectability risk^(1)^ | (148) | — | (210) | — | ||||||||
| Significant unfavorable contract adjustments^(1)^ | (110) | — | (110) | — | ||||||||
| Foreign government wage subsidies^(1)^ | 59 | — | 59 | — | ||||||||
| Favorable impact of a contract termination | — | — | 22 | — | ||||||||
| Adjusted operating profit | $ | (151) | $ | 452 | $ | 364 | $ | 944 | ||||
| Adjusted operating profit margin | (4.2) | % | 8.8 | % | 4.1 | % | 9.5 | % | ||||
| Raytheon Intelligence & Space | ||||||||||||
| Net sales | $ | 3,314 | $ | — | $ | 3,314 | $ | — | ||||
| Operating profit | $ | 311 | $ | — | $ | 311 | $ | — | ||||
| Operating profit margin | 9.4 | % | — | % | 9.4 | % | — | % | ||||
| Raytheon Missiles & Defense | ||||||||||||
| Net sales | $ | 3,590 | $ | — | $ | 3,590 | $ | — | ||||
| Operating profit | $ | 397 | $ | — | $ | 397 | $ | — | ||||
| Operating profit margin | 11.1 | % | — | % | 11.1 | % | — | % | ||||
| Corporate, Eliminations and other items | ||||||||||||
| Net sales | $ | (532) | $ | (401) | $ | (963) | $ | (779) | ||||
| Operating profit | $ | (305) | $ | (129) | $ | (460) | $ | (202) | ||||
| Restructuring | (169) | (1) | (171) | (2) | ||||||||
| Transaction and integration costs related to acquisition of Rockwell Collins, Inc. | — | (10) | — | (19) | ||||||||
| Costs associated with the separation of the commercial businesses | (14) | — | (14) | |||||||||
| Transaction expenses associated with the Raytheon Merger | (70) | (26) | (99) | (26) | ||||||||
| Adjusted operating profit | $ | (52) | $ | (92) | $ | (176) | $ | (155) | ||||
| Acquisition Accounting Adjustments^(2)^ | ||||||||||||
| Operating Profit | $ | (3,745) | $ | (210) | $ | (4,016) | $ | (437) | ||||
| Intangible impairment^(1)^ | (17) | — | (57) | — | ||||||||
| Goodwill impairment^(1)^ | (3,183) | — | (3,183) | — | ||||||||
| Acquisition accounting adjustments | (545) | (210) | (776) | (437) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Adjusted operating profit | $ | — | $ | — | $ | — | $ | — | ||||
| RTC Consolidated | ||||||||||||
| Net sales | $ | 14,061 | $ | 11,329 | $ | 25,421 | $ | 22,282 | ||||
| Significant unfavorable contract adjustments | (216) | — | (216) | — | ||||||||
| Adjusted net sales | $ | 14,277 | $ | 11,329 | $ | 25,637 | $ | 22,282 | ||||
| Operating profit | $ | (3,760) | $ | 1,386 | $ | (2,465) | $ | 2,528 | ||||
| Restructuring | (427) | (21) | (435) | (75) | ||||||||
| Acquisition accounting adjustments | (545) | (210) | (776) | (437) | ||||||||
| Total significant non-recurring and non-operational items included in Operating Profit above | (3,673) | (36) | (3,814) | (251) | ||||||||
| Consolidated adjusted operating profit | $ | 885 | $ | 1,653 | $ | 2,560 | $ | 3,291 |
(1) For the three and six months ended June 30, 2020, included in other significant items in the table above is a net pre-tax charge of $3.6 billion related to the impact of the COVID-19 pandemic. This amount includes a $3.2 billion impairment of goodwill, $0.2 billion of charges related to customer bankruptcies and increased collectability risk, and $0.2 billion of charges related to significant unfavorable contract adjustments. Management has determined these items are directly attributable to the COVID-19 pandemic, incremental to similar costs incurred for reasons other than the pandemic, not expected to recur once the impact of the pandemic has subsided, and therefore not indicative of the Company’s ongoing operational performance.
(2) In conjunction with the Raytheon Merger, we have revised our definition of Adjusted operating profit, Adjusted net income, and Adjusted EPS to exclude the impact of Acquisition accounting adjustments along with restructuring costs and other significant items. Acquisition accounting adjustments include the amortization expense and impairment charges related to acquired intangible assets related to historical acquisitions, the amortization of the property, plant and equipment fair value adjustment acquired through historical acquisitions, and the amortization of customer contractual obligations related to loss making or below market contracts acquired. Management believes the revision to these non-GAAP measures is useful in providing period-to-period comparisons of the results of the Company’s ongoing operational performance. All periods presented reflect the impact of this change
Raytheon Technologies Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
Adjusted Income (Loss) from Continuing Operations, Earnings Per Share, Weighted Average Diluted Shares Outstanding and Effective Tax Rate
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | |||||||||||
| (dollars and shares in millions - Income (Expense)) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Income (loss) from continuing operations attributable to common shareowners | $ | (3,844) | $ | 1,183 | $ | (3,406) | $ | 1,895 | ||||
| Total Restructuring Costs | (427) | (21) | (435) | (75) | ||||||||
| Total Acquisition accounting adjustments | (545) | (210) | (776) | (437) | ||||||||
| Total significant non-recurring and non-operational items included in Operating Profit | (3,673) | (36) | (3,814) | (251) | ||||||||
| Significant non-recurring and non-operational items included in Non-service Pension | ||||||||||||
| Pension curtailment | (25) | — | (25) | — | ||||||||
| Significant non-recurring and non-operational items included in Interest Expense, Net | ||||||||||||
| Interest on tax settlements | — | 58 | — | 58 | ||||||||
| Deferred compensation | 4 | — | 4 | — | ||||||||
| Tax effect of restructuring and significant non-recurring and non-operational items above | 321 | 53 | 403 | 162 | ||||||||
| Significant non-recurring and non-operational items included in Income Tax Expense | ||||||||||||
| Tax expenses associated with the Company's separation of Otis and Carrier | — | — | (415) | — | ||||||||
| Tax settlements | — | 264 | — | 264 | ||||||||
| Tax impact from business disposal | (22) | — | (22) | — | ||||||||
| Tax impact related to debt exchange | (60) | — | (60) | — | ||||||||
| Revaluation of certain international tax incentives | (46) | — | (46) | — | ||||||||
| Revaluation of deferred taxes related to Raytheon merger and the Company's separation of Otis and Carrier | 31 | — | 31 | — | ||||||||
| Less: Impact on net income attributable to common shareowners | (4,442) | 108 | (5,155) | (279) | ||||||||
| Adjusted income (loss) from continuing operations attributable to common shareowners | $ | 598 | $ | 1,075 | $ | 1,749 | $ | 2,174 | ||||
| Diluted (Loss) Earnings Per Share | $ | (2.56) | $ | 1.37 | $ | (2.78) | $ | 2.20 | ||||
| Impact on Diluted (Loss) Earnings Per Share | (2.96) | 0.13 | (4.20) | (0.32) | ||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.40 | $ | 1.24 | $ | 1.42 | $ | 2.52 | ||||
| Weighted Average Number of Shares Outstanding | ||||||||||||
| Reported Diluted | 1,501.3 | 863.7 | 1,225.4 | 862.3 | ||||||||
| Impact of dilutive shares^(1)^ | 2.4 | — | 4.9 | — | ||||||||
| Adjusted Diluted | 1,503.7 | 863.7 | 1,230.3 | 862.3 | ||||||||
| Effective Tax Rate | 1.0 | % | 0.5 | % | (22.0) | % | 7.4 | % | ||||
| Impact on Effective Tax Rate | 22.0 | % | 21.9 | % | 43.2 | % | 13.1 | % | ||||
| Adjusted Effective Tax Rate | 23.0 | % | 22.4 | % | 21.2 | % | 20.5 | % |
(1) The computation of reported diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, because their effect was antidilutive in the quarter ended and six months ended June 30, 2020 due to the reported loss from operations. On an adjusted basis, the Company reported income from continuing operations and the dilutive effect of such awards is included in the calculation of Adjusted Diluted Earnings Per Share.
Raytheon Technologies Corporation
Free Cash Flow Reconciliation
| Quarter Ended June 30, | ||||
|---|---|---|---|---|
| (Unaudited) | ||||
| (dollars in millions) | 2020 | 2019 | ||
| Net cash flows provided by operating activities from continuing operations | $ | 210 | $ | 1,496 |
| Capital expenditures | (458) | (384) | ||
| Free cash flow | $ | (248) | $ | 1,112 |
| Six Months Ended June 30, | ||||
| (Unaudited) | ||||
| (dollars in millions) | 2020 | 2019 | ||
| Net cash flows provided by operating activities from continuing operations | $ | 1,342 | $ | 2,769 |
| Capital expenditures | (783) | (678) | ||
| Free cash flow | $ | 559 | $ | 2,091 |
Raytheon Technologies Corporation
Legacy UTC Reported Segment Results
In conjunction with the Raytheon Merger, we revised our measurement of segment performance to reflect how management now reviews and evaluates operating performance. Under the new segment performance measurement, certain acquisition accounting adjustments are now excluded from segment results in order to better represent the ongoing operational performance of those segments. In addition, the majority of Corporate expenses are now allocated to the segments, excluding certain items that remain at Corporate because they are not included in management’s review of the segment results. The tables below summarize the historical results of our Pratt and Whitney and Collins Aerospace Systems segments reflecting the impact of these adjustments.
| 2020 | 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Sales (dollars in millions) | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | $ | 5,353 | $ | 4,818 | $ | 5,154 | $ | 5,285 | $ | 5,645 | $ | 20,902 | ||||||
| Collins Aerospace Systems | 6,438 | 6,513 | 6,576 | 6,495 | 6,444 | 26,028 | ||||||||||||
| Total segments | 11,791 | 11,331 | 11,730 | 11,780 | 12,089 | 46,930 | ||||||||||||
| Eliminations and other | (431) | (378) | (401) | (407) | (395) | (1,581) | ||||||||||||
| Total net sales from continuing operations | $ | 11,360 | $ | 10,953 | $ | 11,329 | $ | 11,373 | $ | 11,694 | $ | 45,349 | ||||||
| 2020 | 2019 | |||||||||||||||||
| Operating Profit (dollars in millions) | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | $ | 475 | $ | 478 | $ | 449 | $ | 520 | $ | 354 | $ | 1,801 | ||||||
| Collins Aerospace Systems | 1,246 | 964 | 1,276 | 1,259 | 1,009 | 4,508 | ||||||||||||
| Total segments | 1,721 | 1,442 | 1,725 | 1,779 | 1,363 | 6,309 | ||||||||||||
| Corporate expenses and other unallocated items | (25) | (27) | (42) | (46) | (25) | (140) | ||||||||||||
| Eliminations and other | (130) | (46) | (87) | (83) | (151) | (367) | ||||||||||||
| Acquisition accounting adjustments | (271) | (227) | (210) | (220) | (231) | (888) | ||||||||||||
| Total operating profit from continuing operations | $ | 1,295 | $ | 1,142 | $ | 1,386 | $ | 1,430 | $ | 956 | $ | 4,914 | ||||||
| 2020 | 2019 | |||||||||||||||||
| Operating Profit Margin | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | 8.9 | % | 9.9 | % | 8.7 | % | 9.8 | % | 6.3 | % | 8.6 | % | ||||||
| Collins Aerospace Systems | 19.4 | % | 14.8 | % | 19.4 | % | 19.4 | % | 15.7 | % | 17.3 | % | ||||||
| Total segments operating profit margin | 14.6 | % | 12.7 | % | 14.7 | % | 15.1 | % | 11.3 | % | 13.4 | % |
Raytheon Technologies Corporation
Legacy UTC Reconciliation of Previously Reported to Reported Segment Results
| (dollars in millions) | 2020 | 2019 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| Pratt & Whitney | ||||||||||||||||||
| Net sales, as previously reported | $ | 5,351 | $ | 4,817 | $ | 5,150 | $ | 5,283 | $ | 5,642 | $ | 20,892 | ||||||
| Corporate expense allocation adjustment | 2 | 1 | 4 | 2 | 3 | 10 | ||||||||||||
| Net sales, reported | $ | 5,353 | $ | 4,818 | $ | 5,154 | $ | 5,285 | $ | 5,645 | $ | 20,902 | ||||||
| Operating profit, as previously reported | $ | 439 | $ | 433 | $ | 424 | $ | 471 | $ | 340 | $ | 1,668 | ||||||
| Corporate expense allocation adjustment | (37) | (32) | (34) | (33) | (51) | (150) | ||||||||||||
| Acquisition accounting adjustment | 73 | 77 | 59 | 82 | 65 | 283 | ||||||||||||
| Operating profit, reported | $ | 475 | $ | 478 | $ | 449 | $ | 520 | $ | 354 | $ | 1,801 | ||||||
| Operating profit %, as previously reported | 8.2 | % | 9.0 | % | 8.2 | % | 8.9 | % | 6.0 | % | 8.0 | % | ||||||
| Operating profit %, reported | 8.9 | % | 9.9 | % | 8.7 | % | 9.8 | % | 6.3 | % | 8.6 | % | ||||||
| Collins Aerospace Systems | ||||||||||||||||||
| Net sales, reported | $ | 6,438 | $ | 6,513 | $ | 6,576 | $ | 6,495 | $ | 6,444 | $ | 26,028 | ||||||
| Operating profit, as previously reported | $ | 1,092 | $ | 856 | $ | 1,172 | $ | 1,167 | $ | 905 | $ | 4,100 | ||||||
| Corporate expense allocation adjustment | (44) | (42) | (47) | (46) | (62) | (197) | ||||||||||||
| Acquisition accounting adjustment | 198 | 150 | 151 | 138 | 166 | 605 | ||||||||||||
| Operating profit, reported | $ | 1,246 | $ | 964 | $ | 1,276 | $ | 1,259 | $ | 1,009 | $ | 4,508 | ||||||
| Operating profit %, as previously reported | 17.0 | % | 13.1 | % | 17.8 | % | 18.0 | % | 14.0 | % | 15.8 | % | ||||||
| Operating profit %, reported | 19.4 | % | 14.8 | % | 19.4 | % | 19.4 | % | 15.7 | % | 17.3 | % | ||||||
| 2020 | 2019 | |||||||||||||||||
| Total Segments | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Net sales, reported | $ | 11,791 | $ | 11,331 | $ | 11,730 | $ | 11,780 | $ | 12,089 | $ | 46,930 | ||||||
| Operating profit, reported | $ | 1,721 | $ | 1,442 | $ | 1,725 | $ | 1,779 | $ | 1,363 | $ | 6,309 | ||||||
| Operating profit %, reported | 14.6 | % | 12.7 | % | 14.7 | % | 15.1 | % | 11.3 | % | 13.4 | % | ||||||
| Corporate, Eliminations, and Other | ||||||||||||||||||
| Net sales, as previously reported | $ | (433) | $ | (384) | $ | (402) | $ | (411) | $ | (398) | $ | (1,595) | ||||||
| Adjustment for discontinued operations | 2 | 6 | 6 | 6 | 6 | 24 | ||||||||||||
| Corporate Expense Allocation Adjustment | — | — | (5) | (2) | (3) | (10) | ||||||||||||
| Net sales, reported | $ | (431) | $ | (378) | $ | (401) | $ | (407) | $ | (395) | $ | (1,581) | ||||||
| Operating Profit: | ||||||||||||||||||
| General corporate expenses, as previously reported | $ | (25) | $ | (101) | $ | (239) | $ | (232) | $ | (360) | $ | (932) | ||||||
| Corporate expense allocation adjustment | — | 74 | 197 | 186 | 335 | 792 | ||||||||||||
| Corporate expenses and other unallocated items, reported | $ | (25) | $ | (27) | $ | (42) | $ | (46) | $ | (25) | $ | (140) | ||||||
| Eliminations and other, as previously reported | $ | (115) | $ | (98) | $ | (124) | $ | (113) | $ | (180) | $ | (515) | ||||||
| Adjustment for discontinued operations | 228 | 52 | 153 | 137 | 251 | 593 | ||||||||||||
| Corporate expense allocation adjustment | (243) | — | (116) | (107) | (222) | (445) | ||||||||||||
| Eliminations and other, reported | $ | (130) | $ | (46) | $ | (87) | $ | (83) | $ | (151) | $ | (367) | ||||||
| Acquisition Accounting Adjustments, reported | $ | (271) | $ | (227) | $ | (210) | $ | (220) | $ | (231) | $ | (888) | ||||||
| Continuing Operations, reported | ||||||||||||||||||
| Net sales, reported | $ | 11,360 | $ | 10,953 | $ | 11,329 | $ | 11,373 | $ | 11,694 | $ | 45,349 | ||||||
| Operating profit, reported | $ | 1,295 | $ | 1,142 | $ | 1,386 | $ | 1,430 | $ | 956 | $ | 4,914 | ||||||
| Operating profit %, reported | 11.4 | % | 10.4 | % | 12.2 | % | 12.6 | % | 8.2 | % | 10.8 | % |
Raytheon Technologies Corporation
Legacy UTC Segment Results, Adjusted
| 2020 | 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Sales, Adjusted (dollars in millions) | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | $ | 5,331 | $ | 4,818 | $ | 5,154 | $ | 5,285 | $ | 5,645 | $ | 20,902 | ||||||
| Collins Aerospace Systems | 6,460 | 6,513 | 6,576 | 6,495 | 6,444 | 26,028 | ||||||||||||
| Total segments | 11,791 | 11,331 | 11,730 | 11,780 | 12,089 | 46,930 | ||||||||||||
| Eliminations and other | (431) | (378) | (401) | (407) | (395) | (1,581) | ||||||||||||
| Total adjusted net sales from continuing operations | $ | 11,360 | $ | 10,953 | $ | 11,329 | $ | 11,373 | $ | 11,694 | $ | 45,349 | ||||||
| 2020 | 2019 | |||||||||||||||||
| Operating Profit, Adjusted (dollars in millions) | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | $ | 515 | $ | 492 | $ | 452 | $ | 520 | $ | 470 | $ | 1,934 | ||||||
| Collins Aerospace Systems | 1,284 | 1,209 | 1,293 | 1,286 | 1,061 | 4,849 | ||||||||||||
| Total segments | 1,799 | 1,701 | 1,745 | 1,806 | 1,531 | 6,783 | ||||||||||||
| Corporate expenses and other unallocated items | (25) | (27) | (42) | (46) | (25) | (140) | ||||||||||||
| Eliminations and other | (99) | (36) | (50) | (46) | (96) | (228) | ||||||||||||
| Total adjusted operating profit from continuing operations | $ | 1,675 | $ | 1,638 | $ | 1,653 | $ | 1,714 | $ | 1,410 | $ | 6,415 | ||||||
| 2020 | 2019 | |||||||||||||||||
| Operating Profit Margin, Adjusted | Q1 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||
| Pratt & Whitney | 9.7 | % | 10.2 | % | 8.8 | % | 9.8 | % | 8.3 | % | 9.3 | % | ||||||
| Collins Aerospace Systems | 19.9 | % | 18.6 | % | 19.7 | % | 19.8 | % | 16.5 | % | 18.6 | % | ||||||
| Total Segments Adjusted Operating Profit Margin | 15.3 | % | 15.0 | % | 14.9 | % | 15.3 | % | 12.7 | % | 14.5 | % |
Raytheon Technologies Corporation
Legacy UTC Reconciliation of Reported (GAAP) to Adjusted (non GAAP) Segment Results
| (dollars in millions) | 2020 | 2019 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||
| Pratt & Whitney | ||||||||||||||||||
| Net sales | $ | 5,353 | $ | 4,818 | $ | 5,154 | $ | 5,285 | $ | 5,645 | $ | 20,902 | ||||||
| Favorable impact of a contract termination | 22 | — | — | — | — | — | ||||||||||||
| Adjusted net sales | $ | 5,331 | $ | 4,818 | $ | 5,154 | $ | 5,285 | $ | 5,645 | $ | 20,902 | ||||||
| Operating profit, Recast | $ | 475 | $ | 478 | $ | 449 | $ | 520 | $ | 354 | $ | 1,801 | ||||||
| Restructuring | — | (14) | (3) | — | (116) | (133) | ||||||||||||
| Bad debt expense driven by customer bankruptcies and collectability risk | (62) | — | — | — | — | — | ||||||||||||
| Favorable impact of a contract termination | 22 | — | — | — | — | — | ||||||||||||
| Adjusted operating profit | $ | 515 | $ | 492 | $ | 452 | $ | 520 | $ | 470 | $ | 1,934 | ||||||
| Adjusted operating profit margin | 9.7 | % | 10.2 | % | 8.8 | % | 9.8 | % | 8.3 | % | 9.3 | % | ||||||
| Collins Aerospace Systems | ||||||||||||||||||
| Net sales | $ | 6,438 | $ | 6,513 | $ | 6,576 | $ | 6,495 | $ | 6,444 | $ | 26,028 | ||||||
| Significant unfavorable adjustments to contract estimates | (22) | — | — | — | — | — | ||||||||||||
| Adjusted net sales | $ | 6,460 | $ | 6,513 | $ | 6,576 | $ | 6,495 | $ | 6,444 | $ | 26,028 | ||||||
| Operating profit | $ | 1,246 | $ | 964 | $ | 1,276 | $ | 1,259 | $ | 1,009 | $ | 4,508 | ||||||
| Restructuring | (6) | (39) | (17) | (27) | (19) | (102) | ||||||||||||
| Loss on sale of business | — | (25) | — | — | — | (25) | ||||||||||||
| Amortization of Rockwell Collins inventory fair value adjustment | — | (181) | — | — | — | (181) | ||||||||||||
| Costs associated with pension plan amendment | — | — | — | — | (33) | (33) | ||||||||||||
| Bad debt expense driven by customer bankruptcies and collectability risk | (10) | — | — | — | — | — | ||||||||||||
| Significant unfavorable adjustments to contract estimates | (22) | — | — | — | — | — | ||||||||||||
| Adjusted operating profit | $ | 1,284 | $ | 1,209 | $ | 1,293 | $ | 1,286 | $ | 1,061 | $ | 4,849 | ||||||
| Adjusted operating profit margin | 19.9 | % | 18.6 | % | 19.7 | % | 19.8 | % | 16.5 | % | 18.6 | % | ||||||
| Corporate, Eliminations, and Other | ||||||||||||||||||
| Net sales | $ | (431) | $ | (378) | $ | (401) | $ | (407) | $ | (395) | $ | (1,581) | ||||||
| Eliminations and other | ||||||||||||||||||
| Operating profit | $ | (25) | $ | (27) | $ | (42) | $ | (46) | $ | (25) | $ | (140) | ||||||
| Adjusted operating profit | $ | (25) | $ | (27) | $ | (42) | $ | (46) | $ | (25) | $ | (140) | ||||||
| Corporate expenses and other unallocated items | ||||||||||||||||||
| Operating profit | $ | (130) | $ | (46) | $ | (87) | $ | (83) | $ | (151) | $ | (367) | ||||||
| Restructuring | (2) | (1) | (1) | (1) | (3) | (6) | ||||||||||||
| Transaction and integration costs related to merger agreement with Rockwell Collins, Inc. | — | (9) | (10) | (11) | (10) | (40) | ||||||||||||
| Transaction expenses associated with the Raytheon Merger | (29) | — | (26) | (25) | (32) | (83) | ||||||||||||
| Costs associated with pension plan amendment | — | — | — | — | (10) | (10) | ||||||||||||
| Adjusted operating profit | $ | (99) | $ | (36) | $ | (50) | $ | (46) | $ | (96) | $ | (228) | ||||||
| Total Adjusted net sales from continuing operations | $ | 11,360 | $ | 10,953 | $ | 11,329 | $ | 11,373 | $ | 11,694 | $ | 45,349 | ||||||
| Total Adjusted operating profit from continuing operations | $ | 1,675 | $ | 1,638 | $ | 1,653 | $ | 1,714 | $ | 1,410 | $ | 6,415 |