Shares in Raytheon Technologies Corp. rose Tuesday after the aerospace and defense giant reported higher than expected first-quarter earnings and raised its outlook for the year, as strong results from the company’s defense businesses offset slumping commercial aviation sales.
The parent of Tucson-based Raytheon Missiles & Defense reported first-quarter net income of $772 million, or 51 cents per share, after $598 million in nonrecurring charges related to the acquisition of Raytheon Co. by United Technologies Corp. that formed Raytheon Technologies in April 2020.
Adjusted earnings of $1.37 billion, or 90 cents per share, beat the average analyst forecast of 88 cents per share as surveyed by Zacks Investment Research.
The Waltham, Massachusetts-based company reported first-quarter sales of $15.3 billion, slightly below analysts’ estimates.
Raytheon shares rose $1.81, or about 2%, on Tuesday, closing at $82.81 in trading on the New York Stock Exchange.
The company raised the lower end of its 2020 revenue forecast to $63.9 billion from $63.4 billion and upped its full-year earnings outlook to a range of $3.50 to $3.70 per share, from $3.40 to $3.70.
Raytheon Missiles & Defense reported first-quarter sales of $3.8 billion and an adjusted operating profit of $496 million.
Major bookings for the Tucson-based business unit in the first quarter included $518 million for the Advanced Medium-Range Air-to-Air Missile for the Air Force, Navy and international customers, and $247 million to provide Patriot missile systems engineering services for the Army and allied customers.
Raytheon Intelligence & Space, based in Virginia, had first-quarter adjusted sales of $3.8 billion and adjusted operating profit of $388 million, with major bookings including $1.4 billion in classified contracts, $227 million on a missile warning and defense contract, and $199 million for an international tactical airborne radar sustainment contract.
The COVID-19 pandemic continued to depress sales at Raytheon’s commercial aviation businesses, Collins Aerospace and Pratt & Whitney.
The company reported that first-quarter adjusted sales at Collins fell 32%, while operating profit plunged 74%, as demand for the company’s commercial aerospace systems, avionics, interior systems and information management services fell more than 40%.
Jet-engine maker Pratt & Whitney saw its sales drop 25% and its operating profit fall 92% on an adjusted basis, as military orders including nearly $600 million in sustainment contracts for the F-35 Lightning II multirole stealth fighter weren’t enough to offset a plunge in orders for commercial aircraft engines.
Raytheon Technologies CEO Greg Hayes said that one year after the Raytheon-United Technologies merger, the company increased its target for cost savings from the deal by $300 million, to $1.3 billion.
The parent company also announced it plans to increase planned share repurchases to $2 billion, up from $1.5 billion.
Meanwhile, Raytheon announced Monday that Thomas Kennedy, executive chairman of the company’s board of directors, will retire effective June 1.
A key architect of the merger with United Technologies, Kennedy joined Raytheon Co. in 1983 and had been the company’s CEO for six years before the merger.
Raytheon’s board appointed Hayes to the additional role of chairman of the board, an appointment that had been planned for two years after completion of the merger.
