Raytheon Technologies Corporation (RTX) Presents at Citi's 2023 Global Industrial Tech and Mobility Conference (Transcript)

Summary of Raytheon Technologies Corporation Conference Call Company Overview - Company: Raytheon Technologies Corporation (NYSE: RTX) - Date: February 22, 2023 - Participants: Chris Calio (COO), Neil Mitchill (CFO), John Thorton (Citi) Key Industry Insights - Industry: Aerospace and Defense (A&D) - Market Dynamics: The company is experiencing strong demand across both defense and commercial sectors, with a significant backlog of $175 billion, including nearly$70 billion in defense contracts [5][4]. Financial Performance - 2022 Results: - Organic sales growth of 6% - Year-over-year EPS growth of 12% - Free cash flow of nearly $5 billion, exceeding expectations [4]. - **2023 Guidance**: - Projected organic sales growth of 7$4.90 to $5.05 - Expected free cash flow of$4.8 billion [8]. Strategic Priorities - Medium-Term Focus Areas: - Capacity expansions - Investment in skilled workforce - Supply chain improvements - Inflation management [2][10]. - 2025 Targets: The company remains confident in achieving its 2025 financial targets despite market fluctuations and challenges [6][7]. Supply Chain Management - Challenges: The company faced $2 billion in inflation headwinds in 2022, primarily from product and labor costs [14]. - **Actions Taken**: - Engaged approximately 400 supply chain professionals to enhance visibility and quality management [11]. - Signed around 400 long-term agreements (LTAs) to secure supply and improve planning [12]. Investment Strategy - **Investment Focus**: -$5 billion in R&D and capital expenditures in 2023, increasing to $6 billion by 2025 [27]. - Emphasis on sustainable aviation, connected battle space, and data harnessing for predictive maintenance [20][21]. - Technology Development: Investments in advanced materials, electrification, and digital engineering to enhance product capabilities [22][23][25]. Organizational Restructuring - Business Realignment: Transitioning from four business units to three to improve efficiency and customer alignment [36][37]. - Operational Synergies: Expected improvements in operational performance and cost synergies through better resource allocation [42]. Growth Opportunities - Space Sector: Identified as a growth area, with a focus on proliferated Low Earth Orbit (LEO) capabilities and recent acquisitions to enhance market position [46][48]. - Pratt & Whitney: The GTF engine program is a core growth driver, with ongoing investments to improve performance and reduce costs [54][57]. Conclusion - Outlook: Raytheon Technologies is positioned for growth with a strong backlog, strategic investments, and a focus on operational efficiency. The company is committed to maintaining a robust balance sheet while pursuing long-term growth opportunities in the aerospace and defense sectors [29][30].