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WST Q2 Earnings Preview: Will the Stock's Segmental Edge Hold Up?
West Pharmaceutical Services WST is scheduled to release second-quarter 2025 results on July 24, before the opening bell. In the last reported quarter, the company delivered an earnings beat of 18.85%. WST's earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 7.81%. Q2 Estimates Per management, the company expects second-quarter revenues to be in the range of $720 million to $730 million, implying a 3% to 4% organic sales growth. Also, second-quarter adjusted diluted earnings per share (EPS) are expected to be in the range of $1.50 to $1.55. Currently, the Zacks Consensus Estimate for revenues is pegged at $726 million, indicating growth of 3.4% from the year-ago period's level. The consensus mark for earnings is pinned at $1.51 per share, indicating a decline of 0.7% year over year. Our model estimates total revenues to be $722.2 million, implying a 3.2% organic improvement year over year. The adjusted EPS is estimated to be $1.50. While the Proprietary Products segment sales are anticipated to be $583.5 million (organic growth of 4.6%), Contract-Manufactured Products segmental sales are likely to be $138.7 million. Operating profit for the Proprietary Products segment is likely to improve 6.8% whereas for the Contract-Manufactured Products segment, operating profit is likely to decline 14.2%. Factors to Note West Pharmaceutical delivered a solid first-quarter performance in 2025, beating both revenue and earnings expectations. With reported revenues of $698 million and earnings per share (EPS) of $1.45, the company demonstrated resilience despite industry-wide destocking challenges. As the company is poised to post second-quarter results, a segmental analysis suggests a mix of continued growth and stabilization, supported by strategic investments in high-value products (HVPs), contract manufacturing and biologics. In the Proprietary Products segment, West is heading into the second quarter with solid demand trends, particularly for high-value offerings like GLP-1-related components and self-injection platforms. HVPs made up more than 73% of segment revenues in the first quarter, driven by continued strength in GLP-1s. The company is working through a short-term capacity constraint at one facility due to a shift in customer sourcing, which may affect near-term volumes. Pricing came in slightly softer than expected, but not materially so. While some early-quarter challenges could influence growth pacing, management remains confident in a steady pickup in volumes as the year unfolds. Biologics, a key sub-segment within Proprietary Products, is likely to show a mixed but stable performance in the second quarter. The SmartDose platform continued to gain traction in the first quarter, and that momentum is expected to carry into the second quarter as well. However, investors should be mindful that incentive-related comparisons from the back half of 2024 could temper growth in the coming quarters. High-value component volumes in Biologics remained soft due to ongoing destocking trends, and while a more meaningful recovery is anticipated later this year, the second quarter may still reflect some of that gradual normalization. On a positive note, Annex 1 contributed more than expected in the first quarter, benefiting from favorable timing, and while that early lift may normalize in coming periods, the growing project pipeline signals a steady tailwind through the rest of the year. In Contract Manufacturing, WST is navigating a deliberate shift in portfolio dynamics, as growth in GLP-1 auto-injectors helps offset volume declines tied to the wind-down of continuous glucose monitoring (CGM) contracts. This balancing act is expected to remain a theme through the second quarter, with revenue likely to trend stable while the mix continues to evolve. A key part of this transformation is the Dublin facility, which began early-stage commercial production earlier this year and is expected to expand its role over time. The site is being positioned not only for device manufacturing but also as a launchpad for drug-handling capabilities, which WST sees as a natural extension of its expertise. While utilization is still in its early stages, the company indicated that onboarding new drug-handling projects, which come with more attractive margin profiles and lower capital intensity, is progressing as planned. As these programs ramp, they should help smooth out transitional pressures and support a more profitable growth trajectory for the segment in the periods ahead. However, West Pharmaceutical's second-quarter performance is likely to reflect continued macro pressures and inventory-related dynamics, particularly in Biologics. A softer mix of lower-margin delivery devices and reduced volumes in high-margin HVP components may have weighed slightly on gross margins, though operational efficiencies and disciplined cost management likely provided some offset. The company remains focused on long-term margin improvement through automation, including progress toward its new SmartDose production line. West Pharmaceutical Services, Inc. Price, Consensus and EPS Surprise West Pharmaceutical Services, Inc. price-consensus-eps-surprise-chart | West Pharmaceutical Services, Inc. Quote What the Zacks Model Unveils Our proven model predicts an earnings beat for WST this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here, as you will see below. Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.57%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Zacks Rank: The company carries a Zacks Rank #2 at present. Other Stocks Worth a Look Here are some other medical stocks worth considering, as these also have the right combination of elements to post an earnings beat this time: GeneDx Holdings WGS has an Earnings ESP of +5.26% and a Zacks Rank #2. The company is slated to release second-quarter 2025 results on July 29. WGS' earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 145.82%. The Zacks Consensus Estimate for the company's second-quarter EPS is expected to increase 190.9% from the year-ago quarter figure. Cencora COR has an Earnings ESP of +1.49% and a Zacks Rank #2. The company is set to release third-quarter fiscal 2025 results on Aug. 6. COR's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%. The Zacks Consensus Estimate for COR's fiscal third-quarter EPS is expected to surge 13.2% from the year-ago reported figure. Cardinal Health CAH has an Earnings ESP of +0.81% and a Zacks Rank #2. The company is slated to release fourth-quarter fiscal 2025 results on Aug. 12. CAH's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.3%. The Zacks Consensus Estimate for the company's fiscal fourth-quarter EPS is expected to increase 10.3% from the year-ago quarter figure. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cardinal Health, Inc. (CAH) : Free Stock Analysis Report Cencora, Inc. (COR) : Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report GeneDx Holdings Corp. (WGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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7 hours ago
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RTX Reports Q2 2025 Results
RTX delivers 9% sales growth with strong commercial aftermarket and operational performance in Q2; Robust demand with RTX Q2 book-to-bill of 1.86 ARLINGTON, Va., July 22, 2025 /PRNewswire/ -- RTX (NYSE: RTX) reports second quarter 2025 results. Second quarter 2025 Sales of $21.6 billion, up 9 percent versus prior year, and up 9 percent organically* excluding divestitures GAAP EPS of $1.22, including $0.28 of acquisition accounting adjustments and $0.06 of restructuring and other net significant and/or non-recurring items Adjusted EPS* of $1.56, up 11 percent versus prior year Operating cash flow of $0.5 billion; free cash outflow* of $0.1 billion Company backlog of $236 billion, including $144 billion of commercial and $92 billion of defense Returned $0.9 billion of capital to shareowners and raised the quarterly dividend 8 percent Reached agreement to sell Collins' Simmonds Precision Products business for $765 million Updates outlook for full year 2025 Outlook reflects strong first half operational performance and incorporates the expected impact of tariffs and changes associated with recently enacted tax legislation Adjusted sales* of $84.75 - $85.5 billion, up from $83.0 - $84.0 billion Organic sales growth* of 6 to 7 percent, up from 4 to 6 percent Adjusted EPS* of $5.80 - $5.95, down from $6.00 - $6.15 Confirms free cash flow* of $7.0 - $7.5 billion "We continued our momentum in the second quarter with organic sales and profit growth* across all three segments, including 16 percent commercial aftermarket growth," said RTX Chairman and CEO Chris Calio. "Our backlog grew to $236 billion, up 15 percent versus prior year, and we secured major awards for our geared turbofan engines and integrated air and missile defense capabilities in the quarter." "Our updated outlook reflects strong operational performance in the first half and incorporates our current assessment of the impact of tariffs. We are focused on delivering on the strong growth in our commercial and defense end markets and remain well positioned to drive long term profitable growth." *Adjusted net sales (also referred to as adjusted sales), organic sales, adjusted operating profit (loss) and margin percentage (ROS), adjusted segment operating profit (loss) and margin percentage (ROS), adjusted net income, adjusted earnings per share ("EPS"), adjusted effective tax rate, and free cash flow are non-GAAP financial measures. When we provide our expectation for adjusted net sales (also referred to as adjusted sales), adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures (expected diluted EPS and expected cash flow from operations) 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. See "Use and Definitions of Non-GAAP Financial Measures" below for information regarding non-GAAP financial measures. Second quarter 2025RTX second quarter reported and adjusted sales were $21.6 billion, up 9 percent over the prior year. GAAP EPS of $1.22 included $0.28 of acquisition accounting adjustments, and $0.06 of restructuring and other net significant and/or non-recurring items. Adjusted EPS* of $1.56 was up 11 percent versus the prior year. The company reported net income attributable to common shareowners in the second quarter of $1.7 billion which included $0.4 billion of acquisition accounting adjustments and $0.1 billion of restructuring and other net significant and/or non-recurring items. Adjusted net income* of $2.1 billion was up 12 percent versus the prior year driven by growth in adjusted segment operating profit*. Operating cash flow in the second quarter was $0.5 billion and was impacted by the four week work stoppage that occurred at Pratt & Whitney in the quarter. Capital expenditures were $0.5 billion, resulting in free cash outflow* of $0.1 billion. Summary Financial Results – Operations Attributable to Common Shareowners2nd Quarter ($ in millions, except EPS) 20252024 % Change Reported Sales $ 21,581$ 19,721 9 % Net Income $ 1,657$ 111 NM EPS $ 1.22$ 0.08 NMAdjusted* Sales $ 21,581$ 19,791 9 % Net Income $ 2,118$ 1,895 12 % EPS $ 1.56$ 1.41 11 %Operating Cash Flow $ 458$ 2,733 (83) % Free Cash Flow* $ (72)$ 2,196 NM NM = Not Meaningful Segment Results Collins Aerospace2nd Quarter ($ in millions) 20252024 % Change ReportedSales $ 7,622$ 6,999 9 %Operating Profit $ 1,173$ 1,118 5 %ROS 15.4 %16.0 % (60) bps Adjusted*Sales $ 7,622$ 6,999 9 %Operating Profit $ 1,249$ 1,145 9 %ROS 16.4 %16.4 % — bps Collins Aerospace second quarter 2025 reported and adjusted sales of $7,622 million were up 9 percent versus the prior year. Excluding the impact of divestitures, the increase in sales* was driven by a 13 percent increase in commercial aftermarket, an 11 percent increase in defense, and a 1 percent increase in commercial OE. The increase in commercial aftermarket sales was driven by continued growth in commercial air traffic. The increase in defense sales was driven by higher volume across multiple programs and platforms, including F-35 and the Survivable Airborne Operations Center program. Lower commercial OE volume on the 737 MAX program was more than offset by higher commercial OE volume on other platforms, including the 787. Collins Aerospace reported operating profit of $1,173 million was up 5 percent versus the prior year. On an adjusted basis, operating profit* of $1,249 million was up 9 percent versus the prior year. Drop through on higher commercial aftermarket and defense volume, favorable defense mix, and lower R&D expense more than offset unfavorable commercial OE mix and the impact of higher tariffs across the business. Pratt & Whitney2nd Quarter ($ in millions) 20252024 % Change ReportedSales $ 7,631$ 6,802 12 %Operating Profit $ 492$ 542 (9) %ROS 6.4 %8.0 % (160) bps Adjusted*Sales $ 7,631$ 6,802 12 %Operating Profit $ 608$ 537 13 %ROS 8.0 %7.9 % 10 bps Pratt & Whitney second quarter reported and adjusted sales of $7,631 million were up 12 percent versus the prior year and includes the four week work stoppage that occurred in the quarter. The sales growth was driven by a 19 percent increase in commercial aftermarket and a 15 percent increase in commercial OE. The increase in commercial aftermarket was driven by higher volume in Large Commercial Engines and favorable mix in Pratt Canada, while the growth in commercial OE was driven by favorable mix in Large Commercial Engines and higher volume in Pratt Canada. Military sales were flat driven by lower F135 volume, including the impact of contract award timing. Pratt & Whitney reported operating profit of $492 million was down 9 percent versus the prior year. Reported operating profit included a charge of approximately $100 million related to a customer bankruptcy. On an adjusted basis, operating profit* of $608 million was up 13 percent versus the prior year. The increase was driven by favorable commercial OE mix, drop through on higher commercial aftermarket volume, and lower R&D expense which more than offset the impact of commercial aftermarket mix, higher tariffs across the business, and the four week work stoppage. Raytheon2nd Quarter ($ in millions) 20252024 % Change ReportedSales $ 7,001$ 6,511 8 %Operating Profit $ 805$ 127 534 %ROS 11.5 %2.0 % 950 bps Adjusted*Sales $ 7,001$ 6,581 6 %Operating Profit $ 809$ 709 14 %ROS 11.6 %10.8 % 80 bps Raytheon second quarter reported sales of $7,001 million were up 8 percent versus the prior year. This increase was driven by higher volume on land and air defense systems, including international Patriot and NASAMS as well as higher volume on naval programs, including SPY-6 and Evolved SeaSparrow Missile. This growth was partially offset by lower development program volume within air and space defense systems. Adjusted sales* of $7,001 million were up 6 percent versus prior year. Raytheon reported operating profit of $805 million was up versus the prior year primarily due to a $575 million charge related to a contract matter initiated in Q2 2024. On an adjusted basis, operating profit* of $809 million was up 14 percent versus the prior year driven primarily by favorable program mix, including international Patriot, and higher volume. About RTXRTX is the world's largest aerospace and defense company. With approximately 185,000 global employees, we push the limits of technology and science to redefine how we connect and protect our world. Through industry-leading businesses – Collins Aerospace, Pratt & Whitney, and Raytheon – we are advancing aviation, engineering integrated defense systems for operational success, and developing next-generation technology solutions and manufacturing to help global customers address their most critical challenges. The company, with 2024 sales of more than $80 billion, is headquartered in Arlington, Virginia. Conference Call on the Second Quarter 2025 Financial ResultsRTX's financial results conference call will be held on Tuesday, July 22, 2025 at 8:30 a.m. ET. The conference call will be webcast live on the company's website at and will be available for replay following the call. The corresponding presentation slides will be available for downloading prior to the call. Use and Definitions of Non-GAAP Financial MeasuresRTX Corporation ("RTX" or "the Company") 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. We believe that these non-GAAP measures provide investors with additional insight into the Company's ongoing business performance. 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. A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. Certain non-GAAP financial adjustments are also described in this Appendix. Below are our non-GAAP financial measures: Non-GAAP measure Definition Adjusted net sales / Adjusted sales Represents consolidated net sales (a GAAP measure), excluding net significant and/or non-recurring items1 (hereinafter referred to as "net significant and/or non-recurring items"). Organic sales Organic sales represents the change in consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and net significant and/or non-recurring items. Adjusted operating profit (loss) and margin percentage (ROS) Adjusted operating profit (loss) represents operating profit (loss) (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments2, and net significant and/or non-recurring items. Adjusted operating profit margin percentage represents adjusted operating profit (loss) as a percentage of adjusted net sales. Segment operating profit (loss) and margin percentage (ROS) Segment operating profit (loss) represents operating profit (loss) (a GAAP measure) excluding acquisition accounting adjustments2, the FAS/CAS operating adjustment3, Corporate expenses and other unallocated items, and Eliminations and other. Segment operating profit margin percentage represents segment operating profit (loss) as a percentage of segment sales (net sales, excluding Eliminations and other). Adjusted segment sales Represents consolidated net sales (a GAAP measure) excluding eliminations and other and net significant and/or non-recurring items. Adjusted segment operating profit (loss) and margin percentage (ROS) Adjusted segment operating profit (loss) represents segment operating profit (loss) excluding restructuring costs, and net significant and/or non-recurring items. Adjusted segment operating profit margin percentage represents adjusted segment operating profit (loss) as a percentage of adjusted segment sales (adjusted net sales excluding Eliminations and other). Adjusted net income Adjusted net income represents net income (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments2, and net significant and/or non-recurring items. Adjusted earnings per share (EPS) Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs, acquisition accounting adjustments2, and net significant and/or non-recurring items. Adjusted effective tax rate Adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding the tax impact of restructuring costs, acquisition accounting adjustments2, and net significant and/or non-recurring items. Free cash flow Free cash flow 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 RTX's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of RTX's common stock, and distribution of earnings to shareowners.1 Net significant and/or non-recurring items represent significant nonoperational items and/or significant operational items that may occur at irregular intervals. 2 Acquisition accounting adjustments include the amortization of acquired intangible assets related to acquisitions, the amortization of the property, plant and equipment fair value adjustment acquired through acquisitions, the amortization of customer contractual obligations related to loss making or below market contracts acquired, and goodwill impairment, if applicable. 3 The FAS/CAS operating adjustment represents the difference between the service cost component of our pension and postretirement benefit (PRB) expense under the Financial Accounting Standards (FAS) requirements of GAAP and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS) primarily related to our Raytheon segment. When we provide our expectation for adjusted net sales (also referred to as adjusted sales), organic sales, adjusted operating profit (loss) and margin percentage (ROS), adjusted segment operating profit (loss) and margin percentage (ROS), adjusted EPS, adjusted effective tax rate, and free cash flow, on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures, as described above, generally are 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 RTX Corporation ("RTX") management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid and are not statements of historical fact. 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," "goals," "objectives," "confident," "on track," "designed to, " "commit," "commitment" 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 payments and rates, research and development spending, cost savings, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, the Pratt powder metal matter and related matters and activities, including without limitation other engine models that may be impacted, the merger (the "merger") between United Technologies Corporation ("UTC") and Raytheon Company ("Raytheon") or the spin-offs by UTC of Otis Worldwide Corporation and Carrier Global Corporation into separate independent companies (the "separation transactions") in 2020, the pending disposition of Collins' actuation and flight control business, targets and commitments (including for share repurchases or otherwise), 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 changes in economic, capital market and political conditions in the U.S. and globally, such as from the global sanctions and export controls with respect to Russia, and any changes therein, and including changes related to financial market conditions, banking industry disruptions, fluctuations in commodity prices or supply (including energy supply), inflation, interest rates and foreign currency exchange rates, disruptions in global supply chain and labor markets, levels of consumer and business confidence, the imposition and duration of tariffs (including counter tariffs) and other trade measures and the inability of RTX to mitigate U.S. tariffs and countermeasures including by exemptions, exclusions, operational changes or otherwise, and geopolitical risks, including, without limitation, in the Middle East and Ukraine; (2) risks associated with U.S. government sales, including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration, a continuing resolution, a government shutdown, the debt ceiling or measures taken to avoid default, or otherwise, and uncertain funding of programs; (3) risks relating to our performance on our contracts and programs, including our ability to control costs, the mix of our contracts and programs, and our inability to pass some or all of our costs on fixed price contracts to the customer, and risks related to our dependence on U.S. government approvals for international contracts; (4) challenges in the development, certification, production, delivery, support and performance of RTX advanced technologies and new products and services and the realization of the anticipated benefits (including our expected returns under customer contracts), as well as the challenges of operating in RTX's highly-competitive industries both domestically and abroad; (5) risks relating to RTX's reliance on U.S. and non-U.S. suppliers and commodity markets, including the effect of sanctions, tariffs (and counter tariffs) and other trade measures and the duration thereof, delays and disruptions in the delivery of materials and services to RTX or its suppliers and cost increases, and the inability of RTX to mitigate U.S. tariffs and countermeasures including by exemptions, exclusions, operational changes or otherwise; (6) risks relating to RTX international operations from, among other things, changes in trade policies and implementation of sanctions, foreign currency fluctuations, economic conditions, political factors, sales methods, U.S. or local government regulations, and our dependence on U.S. government approvals for international contracts; (7) the condition of the aerospace industry; (8) potential changes in U.S. government policy positions, including changes in DoD policies or priorities; (9) the ability of RTX to attract, train, qualify, and retain qualified personnel and maintain its culture and high ethical standards, and the ability of our personnel to continue to operate our facilities and businesses around the world; (10) the scope, nature, timing and challenges of managing acquisitions, investments, divestitures and other transactions, including the realization of synergies and opportunities for growth and innovation, the assumption of liabilities and other risks and incurrence of related costs and expenses, and risks related to completion of announced divestitures; (11) compliance with legal, environmental, regulatory and other requirements, including, among other things, obtaining regulatory approvals for new technologies and products and export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anticorruption requirements, such as the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations in the U.S. and other countries in which RTX and its businesses operate; (12) the outcome of pending, threatened and future legal proceedings, investigations, and other contingencies, including those related to U.S. government audits and disputes and the potential for suspension or debarment of U.S. government contracting or export privileges as a result thereof; (13) risks relating to the previously-disclosed deferred prosecution agreements entered into between the Company and the Department of Justice (DOJ), the Securities and Exchange Commission (SEC) administrative order imposed on the Company, and the related investigations by the SEC and DOJ, and the consent agreement between the Company and the Department of State; (14) factors that could impact RTX's ability to engage in desirable capital-raising or strategic transactions, including its credit rating, capital structure, levels of indebtedness, and related obligations, capital expenditures and research and development spending, and capital deployment strategy including with respect to share repurchases, and the availability of credit, borrowing costs, credit market conditions, and other factors; (15) uncertainties associated with the timing and scope of future repurchases by RTX of its common stock or declarations of cash dividends, which may be discontinued, accelerated, suspended or delayed at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (16) risks relating to realizing expected benefits from, incurring costs for, and successfully managing, strategic initiatives such as cost reduction, restructuring, digital transformation and other operational initiatives; (17) risks of additional tax exposures due to new tax legislation or other developments in the U.S. and other countries in which RTX and its businesses operate; (18) risks relating to addressing the identified rare condition in powder metal used to manufacture certain Pratt & Whitney engine parts requiring accelerated removals and inspections of a significant portion of the PW1100G-JM Geared Turbofan (GTF) fleet, including, without limitation, the number and expected timing of shop visits, inspection results and scope of work to be performed, turnaround time, availability of new parts, available capacity at overhaul facilities, outcomes of negotiations with impacted customers, and risks related to other engine models that may be impacted by the powder metal matter, and in each case the timing and costs relating thereto, as well as other issues that could impact RTX product performance, including quality, reliability or durability; (19) changes in production volumes of one or more of our significant customers as a result of business, labor, or other challenges, and the resulting effect on its or their demand for our products and services; (20) risks relating to an RTX product safety failure, quality issue or other failure affecting RTX's or its customers' or suppliers' products or systems; (21) risks relating to cybersecurity, including cyber-attacks on RTX's information technology infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations; (22) risks relating to insufficient indemnity or insurance coverage; (23) risks relating to artificial intelligence; (24) risks relating to our intellectual property and certain third-party intellectual property; (25) threats to RTX facilities and personnel, or those of its suppliers or customers, as well as other events outside of RTX's control that may affect RTX or its suppliers or customers, including without limitation public health crises, damaging weather or other acts of nature; (26) the effect of changes in accounting estimates for our programs on our financial results; (27) the effect of changes in pension and other postretirement plan estimates and assumptions and contributions; (28) risks relating to an impairment of goodwill and other intangible assets; (29) the effects of climate change and changing climate-related regulations, customer and market demands, products and technologies; and (30) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions and other internal restructurings as tax-free to UTC and former UTC shareowners, in each case, for U.S. federal income tax purposes. 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 RTX, 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 RTX 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. RTX 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) 2025202420252024 Net Sales $ 21,581$ 19,721$ 41,887$ 39,026 Costs and expenses: Cost of sales 17,20516,14133,39531,885Research and development 6977061,3341,375Selling, general, and administrative 1,5731,4493,0212,843Total costs and expenses 19,47518,29637,75036,103 Other income (expense), net 40(896)44(524) Operating profit 2,1465294,1812,399Non-service pension income (351)(374)(717)(760)Interest expense, net 457475900880 Income before income taxes 2,0404283,9982,279Income tax expense 315253648361 Net income 1,7251753,3501,918Less: Noncontrolling interest in subsidiaries' earnings 686415898 Net income attributable to common shareowners $ 1,657$ 111$ 3,192$ 1,820Earnings Per Share attributable to common shareowners: Basic $ 1.24$ 0.08$ 2.38$ 1.37Diluted $ 1.22$ 0.08$ 2.36$ 1.36Weighted Average Shares Outstanding: Basic shares 1,340.61,331.81,338.81,330.5Diluted shares 1,354.01,342.11,352.91,339.7 RTX Corporation Segment Net Sales and Operating Profit (Loss) Quarter EndedSix Months Ended(Unaudited)(Unaudited)June 30, 2025June 30, 2024June 30, 2025June 30, 2024 (dollars in millions) Reported AdjustedReported AdjustedReported AdjustedReported Adjusted Net SalesCollins Aerospace $ 7,622 $ 7,622$ 6,999 $ 6,999$ 14,839 $ 14,839$ 13,672 $ 13,672 Pratt & Whitney 7,631 7,6316,802 6,80214,997 14,99713,258 13,258 Raytheon 7,001 7,0016,511 6,58113,341 13,34113,170 13,240 Total segments 22,254 22,25420,312 20,38243,177 43,17740,100 40,170 Eliminations and other (673) (673)(591) (591)(1,290) (1,290)(1,074) (1,074) Consolidated $ 21,581 $ 21,581$ 19,721 $ 19,791$ 41,887 $ 41,887$ 39,026 $ 39,096 Operating Profit (Loss)Collins Aerospace $ 1,173 $ 1,249$ 1,118 $ 1,145$ 2,261 $ 2,476$ 1,967 $ 2,193 Pratt & Whitney 492 608542 5371,072 1,198954 967 Raytheon 805 809127 7091,483 1,4871,123 1,339 Total segments 2,470 2,6661,787 2,3914,816 5,1614,044 4,499 Eliminations and other 24 (17)(36) (36)36 (5)(41) (41) Corporate expenses and other unallocated items (47) (42)(930) (7)(85) (71)(1,026) (32) FAS/CAS operating adjustment 186 186212 212371 371426 426 Acquisition accounting adjustments (487) —(504) —(957) —(1,004) — Consolidated $ 2,146 $ 2,793$ 529 $ 2,560$ 4,181 $ 5,456$ 2,399 $ 4,852 Segment Operating Profit MarginCollins Aerospace 15.4 % 16.4 %16.0 % 16.4 %15.2 % 16.7 %14.4 % 16.0 % Pratt & Whitney 6.4 % 8.0 %8.0 % 7.9 %7.1 % 8.0 %7.2 % 7.3 % Raytheon 11.5 % 11.6 %2.0 % 10.8 %11.1 % 11.1 %8.5 % 10.1 % Total segment 11.1 % 12.0 %8.8 % 11.7 %11.2 % 12.0 %10.1 % 11.2 % RTX Corporation Condensed Consolidated Balance Sheet June 30, 2025December 31, 2024 (dollars in millions) (Unaudited)(Unaudited) AssetsCash and cash equivalents $ 4,782$ 5,578 Accounts receivable, net 12,38510,976 Contract assets, net 15,68614,570 Inventory, net 14,01212,768 Other assets, current 7,7927,241 Total current assets 54,65751,133 Customer financing assets 2,1042,246 Fixed assets, net 16,20516,089 Operating lease right-of-use assets 1,8691,864 Goodwill 53,32752,789 Intangible assets, net 32,74833,443 Other assets 6,2295,297 Total assets $ 167,139$ 162,861 Liabilities, Redeemable Noncontrolling Interest, and EquityShort-term borrowings $ 1,635$ 183 Accounts payable 13,43312,897 Accrued employee compensation 2,1332,620 Other accrued liabilities 15,86114,831 Contract liabilities 19,18618,616 Long-term debt currently due 2,0842,352 Total current liabilities 54,33251,499 Long-term debt 38,25938,726 Operating lease liabilities, non-current 1,6171,632 Future pension and postretirement benefit obligations 2,0382,104 Other long-term liabilities 6,6466,942 Total liabilities 102,892100,903 Redeemable noncontrolling interest 4135 Shareowners' Equity:Common stock 37,68037,434 Treasury stock (26,995)(27,112) Retained earnings 54,10453,589 Accumulated other comprehensive loss (2,391)(3,755) Total shareowners' equity 62,39860,156 Noncontrolling interest 1,8081,767 Total equity 64,20661,923 Total liabilities, redeemable noncontrolling interest, and equity $ 167,139$ 162,861 RTX Corporation Condensed Consolidated Statement of Cash Flows Quarter Ended June 30,Six Months Ended June 30,(Unaudited)(Unaudited) (dollars in millions) 2025202420252024 Operating Activities:Net income $ 1,725$ 175$ 3,350$ 1,918 Adjustments to reconcile net income to net cash flows provided by operating activities from:Depreciation and amortization 1,0761,0722,1282,131 Deferred income tax provision 54299121185 Stock compensation cost 113111224223 Net periodic pension income (312)(328)(636)(666) Share-based 401(k) matching contributions 14064307146 Gain on sale of Cybersecurity, Intelligence and Services business, net of transaction costs ———(415) Change in:Accounts receivable (765)156(1,137)587 Contract assets (484)(479)(1,190)(1,457) Inventory (384)(715)(1,197)(1,361) Other current assets 25442(100)217 Accounts payable and accrued liabilities (538)1,463(141)1,245 Contract liabilities (30)566343512 Other operating activities, net (162)(93)(309)(190) Net cash flows provided by operating activities 4582,7331,7633,075 Investing Activities:Capital expenditures (530)(537)(1,043)(1,004) Dispositions of businesses, net of cash transferred ———1,283 ...Increase in other intangible assets (122)(155)(226)(318) Receipts (payments) from settlements of derivative contracts, net 192(28)145(29) Other investing activities, net (49)(13)(63)28 Net cash flows used in investing activities (509)(733)(1,187)(40) Financing Activities:Repayment of long-term debt (780)(750)(789)(1,700) Change in commercial paper, net 1,432—1,432— Change in other short-term borrowings, net (10)651843 Dividends paid (910)(823)(1,750)(1,592) Repurchase of common stock —(44)(50)(100) Other financing activities, net (85)(32)(270)(242) Net cash flows used in financing activities (353)(1,584)(1,409)(3,591) Effect of foreign exchange rate changes on cash and cash equivalents 38(4)54(12) Net increase (decrease) in cash, cash equivalents and restricted cash (366)412(779)(568) Cash, cash equivalents and restricted cash, beginning of period 5,1935,6465,6066,626 Cash, cash equivalents and restricted cash, end of period 4,8276,0584,8276,058 Less: Restricted cash, included in Other assets, current and Other assets 45474547 Cash and cash equivalents, end of period $ 4,782$ 6,011$ 4,782$ 6,011 RTX Corporation Reconciliation of 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)) 2025202420252024 Collins AerospaceNet sales $ 7,622$ 6,999$ 14,839$ 13,672 Operating profit $ 1,173$ 1,118$ 2,261$ 1,967 Restructuring (39)(12)(152)(18) Charge associated with initiating alternative titanium sources (1) ———(175) Segment and portfolio transformation and divestiture costs (1) (37)(15)(63)(33) Adjusted operating profit $ 1,249$ 1,145$ 2,476$ 2,193 Adjusted operating profit margin 16.4 %16.4 %16.7 %16.0 % Pratt & WhitneyNet sales $ 7,631$ 6,802$ 14,997$ 13,258 Operating profit $ 492$ 542$ 1,072$ 954 Restructuring (8)(15)(18)(33) Insurance settlement —20—20 Customer bankruptcy (1) (108)—(108)— Adjusted operating profit $ 608$ 537$ 1,198$ 967 Adjusted operating profit margin 8.0 %7.9 %8.0 %7.3 % RaytheonNet sales $ 7,001$ 6,511$ 13,341$ 13,170 Contract termination (1) —(70)—(70) Adjusted net sales $ 7,001$ 6,581$ 13,341$ 13,240 Operating profit $ 805$ 127$ 1,483$ 1,123 Restructuring (4)(7)(4)(16) Gain on sale of business, net of transaction and other related costs (1) ———375 Contract termination (1) —(575)—(575) Adjusted operating profit $ 809$ 709$ 1,487$ 1,339 Adjusted operating profit margin 11.6 %10.8 %11.1 %10.1 % Eliminations and OtherNet sales $ (673)$ (591)$ (1,290)$ (1,074) Operating profit (loss) $ 24$ (36)$ 36$ (41) Gain on Investment (1) 41—41— Adjusted operating profit (loss) $ (17)$ (36)$ (5)$ (41) Corporate expenses and other unallocated itemsOperating loss $ (47)$ (930)$ (85)$ (1,026) Restructuring —(2)(9)(3) Tax audit settlements and closures (1) (5)—(5)(68) Segment and portfolio transformation and divestiture costs (1) —(3)—(5) Legal matters (1) —(918)—(918) Adjusted operating loss $ (42)$ (7)$ (71)$ (32) FAS/CAS Operating AdjustmentOperating profit $ 186$ 212$ 371$ 426 Acquisition Accounting AdjustmentsOperating loss $ (487)$ (504)$ (957)$ (1,004) Acquisition accounting adjustments (487)(504)(957)(1,004) Adjusted operating profit $ —$ —$ —$ — RTX ConsolidatedNet sales $ 21,581$ 19,721$ 41,887$ 39,026 Total net significant and/or non-recurring items included in Net sales above (1) —(70)—(70) Adjusted net sales $ 21,581$ 19,791$ 41,887$ 39,096 Operating profit $ 2,146$ 529$ 4,181$ 2,399 Restructuring (51)(36)(183)(70) Acquisition accounting adjustments (487)(504)(957)(1,004) Total net significant and/or non-recurring items included in Operating profit above (1) (109)(1,491)(135)(1,379) Adjusted operating profit $ 2,793$ 2,560$ 5,456$ 4,852 (1) Refer to "Non-GAAP Financial Adjustments" below for a description of these adjustments. RTX Corporation Reconciliation of Adjusted (Non-GAAP) Results Adjusted Income, Earnings Per Share, and Effective Tax Rate Quarter Ended June 30,Six Months Ended June 30,(Unaudited)(Unaudited) (dollars in millions - Income (Expense)) 2025202420252024 Net income attributable to common shareowners $ 1,657$ 111$ 3,192$ 1,820 Total Restructuring (51)(36)(183)(70) Total Acquisition accounting adjustments (487)(504)(957)(1,004) Total net significant and/or non-recurring items included in Operating profit (1) (109)(1,491)(135)(1,379) Significant and/or non-recurring items included in Non-service Pension IncomeNon-service pension restructuring —(3)—(5) Pension curtailment related to sale of business (1) ———9 Significant non-recurring and non-operational items included in Interest Expense, NetTax audit settlements and closures (1) 11—5478 International tax matter (1) ——(35)— Tax effect of restructuring and net significant and/or non-recurring items above 142257280216 Significant and/or non-recurring items included in Income Tax ExpenseTax audit settlements and closures (1) 33—59296 Significant and/or non-recurring items included in Noncontrolling InterestNoncontrolling interest share of charges related to an insurance settlement —(7)—(7) Less: Impact on net income attributable to common shareowners (461)(1,784)(917)(1,866) Adjusted net income attributable to common shareowners $ 2,118$ 1,895$ 4,109$ 3,686 Diluted Earnings Per Share $ 1.22$ 0.08$ 2.36$ 1.36 Impact on Diluted Earnings Per Share (0.34)(1.33)(0.68)(1.39) Adjusted Diluted Earnings Per Share $ 1.56$ 1.41$ 3.04$ 2.75 Weighted Average Number of Shares OutstandingReported Diluted 1,354.01,342.11,352.91,339.7 Impact of dilutive shares ———— Adjusted Diluted 1,354.01,342.11,352.91,339.7 Effective Tax Rate 15.4 %59.1 %16.2 %15.8 % Impact on Effective Tax Rate (2.9) %38.4 %(2.6) %(3.0) % Adjusted Effective Tax Rate 18.3 %20.7 %18.8 %18.8 % (1) Refer to "Non-GAAP Financial Adjustments" below for a description of these adjustments. RTX Corporation Reconciliation of Adjusted (Non-GAAP) Results Segment Operating Profit Margin and Adjusted Segment Operating Profit Margin Quarter Ended June 30,Six Months Ended June 30,(Unaudited)(Unaudited) (dollars in millions) 2025202420252024 Net Sales $ 21,581$ 19,721$ 41,887$ 39,026 Reconciliation to segment net sales:Eliminations and other 6735911,2901,074 Segment Net Sales $ 22,254$ 20,312$ 43,177$ 40,100 Reconciliation to adjusted segment net sales:Net significant and/or non-recurring items (1) —(70)—(70) Adjusted Segment Net Sales $ 22,254$ 20,382$ 43,177$ 40,170 Operating Profit $ 2,146$ 529$ 4,181$ 2,399 Operating Profit Margin 9.9 %2.7 %10.0 %6.1 % Reconciliation to segment operating profit:Eliminations and other (24)36(36)41 Corporate expenses and other unallocated items 47930851,026 FAS/CAS operating adjustment (186)(212)(371)(426) Acquisition accounting adjustments 4875049571,004 Segment Operating Profit $ 2,470$ 1,787$ 4,816$ 4,044 Segment Operating Profit Margin 11.1 %8.8 %11.2 %10.1 % Reconciliation to adjusted segment operating profit:Restructuring (51)(34)(174)(67) Net significant and/or non-recurring items (1) (145)(570)(171)(388) Adjusted Segment Operating Profit $ 2,666$ 2,391$ 5,161$ 4,499 Adjusted Segment Operating Profit Margin 12.0 %11.7 %12.0 %11.2 % (1) Refer to "Non-GAAP Financial Adjustments" below for a description of these adjustments. RTX Corporation Free Cash Flow Reconciliation Quarter Ended June 30,(Unaudited) (dollars in millions) 20252024 Net cash flows provided by operating activities $ 458$ 2,733 Capital expenditures (530)(537) Free cash flow $ (72)$ 2,196Six Months Ended June 30,(Unaudited) (dollars in millions) 20252024 Net cash flows provided by operating activities $ 1,763$ 3,075 Capital expenditures (1,043)(1,004) Free cash flow $ 720$ 2,071 RTX Corporation Reconciliation of Adjusted (Non-GAAP) Results Organic Sales Reconciliation Quarter ended June 30, 2025 compared to the Quarter Ended June 30, 2024(Unaudited) (dollars in millions) Total Reported Change Acquisitions & Divestitures Change FX / Other Change (2) Organic ChangePrior Year Adjusted Sales (1) Organic Change as a % of Adjusted Sales Collins Aerospace $ 623 $ (31) $ 23 $ 631$ 6,999 9 % Pratt & Whitney 829 — 18 8116,802 12 % Raytheon 490 — 75 4156,581 6 % Eliminations and Other (3) (82) 1 (9) (74)(591) 13 % Consolidated $ 1,860 $ (30) $ 107 $ 1,783$ 19,791 9 % (1) For the full Non-GAAP reconciliation of adjusted sales refer to "Reconciliation of Adjusted (Non-GAAP) Results - Adjusted Sales, Adjusted Operating Profit & Operating Profit Margin." (2) Includes other significant non-operational items and/or significant operational items that may occur at irregular intervals. (3) FX/Other Change includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada, which is included in Pratt & Whitney's FX/Other Change, but excluded for Consolidated RTX. Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024(Unaudited) (dollars in millions) Total Reported Change Acquisitions & Divestitures Change FX / Other Change (2) Organic ChangePrior Year Adjusted Sales (1) Organic Change as a % of Adjusted Sales Collins Aerospace $ 1,167 $ (63) $ 7 $ 1,223$ 13,672 9 % Pratt & Whitney 1,739 — (2) 1,74113,258 13 % Raytheon 171 (460) 70 56113,240 4 % Eliminations and Other (3) (216) 1 4 (221)(1,074) 21 % Consolidated $ 2,861 $ (522) $ 79 $ 3,304$ 39,096 8 % (1) For the full Non-GAAP reconciliation of adjusted sales refer to "Reconciliation of Adjusted (Non-GAAP) Results - Adjusted Sales, Adjusted Operating Profit & Operating Profit Margin." (2) Includes other significant non-operational items and/or significant operational items that may occur at irregular intervals. (3) FX/Other Change includes the transactional impact of foreign exchange hedging at Pratt & Whitney Canada, which is included in Pratt & Whitney's FX/Other Change, but excluded for Consolidated RTX. Non-GAAP Financial Adjustments Non-GAAP Adjustments Description Segment and portfolio transformation and divestiture costs The quarters and six months ended June 30, 2025 and 2024 include certain segment and portfolio transformation costs incurred in connection with the 2023 completed segment realignment as well as separation costs incurred in advance of the completion of certain divestitures. Charge associated with initiating alternative titanium sources The six months ended June 30, 2024 includes a net pre-tax charge of $0.2 billion related to the recognition of unfavorable purchase commitments and an impairment of contract fulfillment costs associated with initiating alternative titanium sources at Collins. These charges were recorded as a result of the Canadian government's imposition of new sanctions in February 2024, which included U.S.- and German-based Russian-owned entities from which we source titanium for use in our Canadian operations. Management has determined that these impacts are directly attributable to the sanctions, incremental to similar costs incurred for reasons other than those related to the sanctions and has determined that the nature of the charge is considered significant and unusual and, therefore, not indicative of the Company's ongoing operational performance. Customer bankruptcy The quarter and six months ended June 30, 2025 include a net pre-tax charge of approximately $0.1 billion related to a customer bankruptcy. The charge primarily relates to contract asset exposures with the customer. Management has determined that the nature and significance of the charge is considered unusual and, therefore, not indicative of the Company's ongoing operational performance. Contract termination The quarter and six months ended June 30, 2024 includes a pre-tax charge of $0.6 billion related to the termination of a fixed price development contract with a foreign customer at Raytheon. The charge includes the write-off of remaining contract assets and settlement with the customer. Management has determined that these impacts are directly attributable to the termination, incremental to similar costs incurred for reasons other than those attributable to the termination and has determined that the nature of the pre-tax charge is considered significant and unusual and, therefore, not indicative of the Company's ongoing operational performance. Gain on sale of business, net of transaction and other related costs The six months ended June 30, 2024 includes a pre-tax gain, net of transaction and other related costs, of $0.4 billion associated with the completed sale of the Cybersecurity, Intelligence and Services (CIS) business at Raytheon. Management has determined that the nature of the net gain on the divestiture is considered significant and non-operational and, therefore, not indicative of the Company's ongoing operational performance. Gain on investment The quarter and six months ended June 30, 2025 includes a pre-tax gain of $41 million related to the increase in fair value on an investment. Management has determined that the nature of the gain on investment to be significant and nonoperational and, therefore, not indicative of the Company's ongoing operational performance. Tax audit settlements and closures The six months ended June 30, 2025 includes a tax benefit of $59 million and a pre-tax benefit on the reversal of $54 million of interest accruals both recognized as a result of the closure of the examination phase of multiple state tax audits. In addition, in the three and six months ended June 30, 2025, there was a tax benefit of $33 million and a net pre-tax benefit of $6 million from the reversal of interest accruals and the write-off of certain tax related indemnity receivables associated with the closure of a federal tax audit. The six months ended June 30, 2024 includes a tax benefit of $0.3 billion recognized as a result of the closure of the examination phase of multiple federal tax audits. In addition, in the six months ended June 30, 2024 there was a pre-tax charge of $68 million for the write-off of certain tax related indemnity receivables and a pre-tax gain on the reversal of $78 million of interest accruals, both directly associated with these tax audit settlements. Management has determined that the nature of these impacts related to the tax audit settlements and closures is considered significant and non-operational and, therefore, not indicative of the Company's ongoing operational performance. International tax matter The six months ended June 30, 2025 includes the impact of an unfavorable decision related to an international tax matter for the years ended December 31, 2015 to December 31, 2019, which resulted in interest expense, net of $35 million and a tax benefit of $8 million. Management has determined that the nature of this impact is considered significant and non-operational and, therefore, not indicative of the Company's ongoing operational performance. Legal matters The quarter and six months ended June 30, 2024 includes charges of $0.9 billion related to the resolution of several outstanding legal matters. The charge includes an additional accrual of $0.3 billion to resolve the previously disclosed criminal and civil government investigations of defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017; an additional accrual of $0.4 billion to resolve the previously disclosed criminal and civil government investigations of improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems, in connection with certain Middle East contracts since 2012; and an accrual of $0.3 billion related to certain voluntarily disclosed export controls violations, primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company, including certain violations that were resolved pursuant to a consent agreement with the Department of State. Management has determined that these impacts are directly attributable to these legacy legal matters and that the nature of the charges are considered significant and unusual and, therefore, not indicative of the Company's ongoing operational performance. Media Contact202.384.2474 Investor Contact781.522.5123 View original content: SOURCE RTX
Yahoo
a day ago
- Business
- Yahoo
Domino's Pizza Generates Strong Q2 Free Cash Flow - DPZ Stock Looks Cheap
Domino's Pizza (DPZ) announced strong Q2 results this morning, showing free cash flow FCF up over 31% YoY with a high FCF margin. DPZ stock is undervalued here, worth over 21% more, or $566.00 per share. Shorting OTM puts is a way to buy in cheaply. DPZ is lower at $464.76 in midday trading. That is well off its high point of $497.52 on May 19. More News from Barchart Option Volatility And Earnings Report For July 21 - 25 How to Make a 3.0% One-Month Yield By Shorting UBER Puts What Gamma Exposure is Saying About Alphabet Stock Ahead of Earnings Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! It presents a unique buy-in opportunity for value investors. This article will show that, based on its FCF margin history and a 3.9% FCF yield metric, it could be worth 21% more at $566.45. And it could be worth much more based on its historic dividend yield metrics. Domino's Pizza Strong Results Monday morning, July 21, Domino's Pizza reported that its revenue rose +4.3% YoY and U.S. same-store sales growth was up 3.4% (int'l rose +2.4%). More importantly, Domino's showed strong free cash flow (FCF) performance. It generated $331.7 million in FCF over the past 2 quarters, up 43.9% YoY. Moreover, in Q2 it generated $167.3 million in FCF, up +1.81% from Q2, according to Stock Analysis. This is important since it shows that Domino's has now generated two quarters with over 14% FCF margins (i.e., FCF/revenue). In Q2, its FCF margin was 14.61% and in Q1, it made a 14.78% FCF margin, according to Stock Analysis. In the past 2 quarters, that average was 14.7%, as seen from data on page 2 of its Q2 earnings release (see table below). That implies that Domino's is squeezing large amounts of cash out of its operations. As a result, we can project higher FCF for the company over the next 12 months (NTM). Forecasting FCF Analysts project 2025 sales will be $4.94 billion and $5.27 billion in 2026. That means its NTM sales forecast is $5.1 billion. So, applying the 14.7% FCF margin: $5.1b x 0.147 = $750 million FCF That is +22% higher than the trailing 12 months (TTM) FCF of $613.2 million, according to Stock Analysis. In other words, DPZ stock could be significantly undervalued if this occurs. But how much? Target Price Based on FCF One way to value DPZ stock using this FCF forecast is to use a FCF yield metric. For example, DPZ's market cap today is $15.778 billion (based on 33.9489 million shares outstanding at $464.76). That implies that its TTM FCF of $613.2 million represents 3.886% of its market value (i.e., a 3.9% FCF yield). Therefore, we can apply that metric (assuming the same valuation lasts over the next 12 months) to our FCF forecast: $750m NTM FCF / 0.039 = $19.231 billion mkt value That is +21.88% higher than today's $15.778 billion market cap. In other words, DPZ could be worth 21.9% more over the next 12 months: $464.76 x 1.2188 = $566.45 target price There are other ways to value DPZ stock. One way is to use its historic dividend yield. Target Price Using Dividend Yield For example, right now, based on Domino's quarterly $1.74 dividend per share (DPS), its annual yield is 1.50%: $1.74 x 4 = $6.96/$464.76 = 0.01497 = 1.50% But historically, based on Morningstar's calculations, its average yield has been lower at 1.02% over the last 5 years. Yahoo! Finance says it's been 1.08%. So, using this higher average we can estimate where DPZ should trade if it reverts to this mean yield: $6.96 DPS / 0.0108 = $644.44 target price That provides an investor with a potential upside of +39% from today's price. Another way to value the stock is to use analysts' target prices. Target Price Using Analysts' Projections Analysts surveyed by Barchart have a mean price target of $509.55, and Yahoo! Finance reports that 32 analysts have an average of $505.35. Similarly, Stock Analysis reports that 23 analysts have a price average of $486.83, but AnaChart's survey of 26 analysts is $514.19. So, the mean analyst survey price is $503.98, or +8.4% over today's price. Summary of Price Targets So, using these three valuation methods, we can estimate its price target at: FCF Yield target ………. $566.45 Dividend Yield ………… $644.44 Analysts' targets …….. $503.98 Average Price Target … $571.62, or +22.9% higher than today The bottom line here is that DPZ stock looks deeply undervalued. One way to play this is to set a lower buy-in price by shorting out-of-the-money (OTM) put options. Shorting OTM Puts For example, the August 15 expiration period shows that the $440.00 strike price put option, 4.8% below today's price, has a $3.75 premium. That provides a short seller an immediate yield of 0.852% (i.e., $3.75/$440.00). Moreover, the 450.00 strike price put has a $6.10 premium. A short seller can make an immediate yield of 1.1356% (i.e., $6.10/$450.00). As a result, using a 50/50 mix of these two strike prices, an investor could set a lower buy-in of $445 and make 1.111% on average ($4.925/$445) over the next 25 days. That sets a buy-in that is about 4.3% below today's price and provides a good breakeven of just $440.07 per share (i.e., $445-$4.93). That is over 5.3% below today's price, so it provides good downside protection to investors. Moreover, note that the delta ratio, i.e., the risk of this strike price being assigned based on historical variance, is low at between 20% and 30%. The bottom line here is that DPZ stock looks deeply undervalued, and one way to set a good buy-in point is to short OTM puts. On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
3 days ago
- Business
- Yahoo
Meta's AI Innovations Drive $850 Price Target as Analysts See Strong Q2 Ahead
Meta Platforms, Inc. (NASDAQ:) is one of the . On July 16, Canaccord Genuity analyst Maria Ripps raised the price target on the stock to $850.00 (from $825.00) while maintaining a 'Buy' rating. The firm is optimistic about Meta's second Q2 results and believes that the setup is compelling as it moves into FY26. 'We expect Meta to report solid Q2 results, with ad revenue growth remaining in the mid-teens y/y despite some modest q/q deceleration, in part reflecting tariff-driven uncertainty impacting budget deployments in the earlier part of the quarter. Growth likely remained buoyed by continued AI-driven improvements to content creation and ads recommendation models, with Meta having introduced a new generative ads recommendation model in Q1 that is twice as efficient at improving ad performance as legacy models. Looking ahead, we expect the pace of innovation to remain robust given recent AI investments, including acquiring 49% stake in Scale AI, hiring OpenAI and Apple researchers, unveiling Meta Superintelligence labs, and acquiring voice AI startup PlayAI. Copyright: buchachon / 123RF Stock Photo "These investments, coupled with the technical infrastructure build out, should support Meta's reported goal of enabling brands to fully create and target ads using AI by the end of 2026, among other initiatives. For Q2, we forecast ad revenue and total revenue to both increase ~14% y/y (vs. +16% y/y in Q1), with the modest q/q deceleration in part reflecting tariff-related uncertainty, and we expect OI of $16.7B, 37.5% margin, modestly below consensus. Given the recent investments Meta has been making in AI engineers/researchers, we do see some increased upside risk to FY25 OpEx guidance. That said, in addition to continued improvements to core monetization functions, Meta has several new tailwinds that should progressively build, including further automation of key advertiser functions, ads on WhatsApp and Threads, and a potential general release of the WhatsApp Business' chatbot offering. While we acknowledge shares are trading near all-time highs, we continue to think the setup is compelling, particularly as we move into FY26.' While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure: None.
Globe and Mail
5 days ago
- Business
- Globe and Mail
Halliburton Q2 Earnings Preview: Here's What You Should Know
Halliburton Company HAL is set to release second-quarter results on July 22. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a profit of 56 cents per share on revenues of $5.4 billion. Let's delve into the factors that might have influenced the oilfield service firm's performance in the June quarter. But it's worth taking a look at HAL's previous-quarter performance first. Highlights of Q1 Earnings & Surprise History In the last reported quarter, this Houston, TX-based provider of technical products and services to drillers of oil and gas wells met the consensus mark, reflecting softer activity in the North American region, partly offset by international growth. Halliburton reported adjusted net income per share of 60 cents, same as the Zacks Consensus Estimate. Revenues of $5.4 billion beat the Zacks Consensus Estimate of $5.3 billion. HAL beat the Zacks Consensus Estimate once in the last four quarters and matched in the other three. This is depicted in the graph below: Halliburton Company Price and EPS Surprise Halliburton Company price-eps-surprise | Halliburton Company Quote Trend in Estimate Revision The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 30% fall year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 6.7% decrease from the year-ago period. Factors to Consider Despite sequential revenue growth in the first quarter of 2025, Halliburton's North America business remains under pressure due to weaker commodity prices and customer uncertainty. Due to this soft operating environment, we expect sales from the region to be $2.3 billion, suggesting a 6.6% drop on a year-over-year basis. This is likely to have weighed on the company's earnings and cash flows. Going by our model, the company's second-quarter gross profit is likely to be $846.8 million, down almost 25% from the year-ago period. The downward income trajectory could be attributed to a sharp margin decline in its Drilling & Evaluation division. Our operating margin estimate is pegged at 13.8%, implying a decline of 280 basis points. However, as a respite to the company, its pivot to digitalization and integrated services is gaining traction. The company's Zeus IQ platform, an autonomous, closed-loop hydraulic fracturing system, marks a significant step forward in automation and efficiency. By utilizing real-time reservoir feedback to guide fracturing without human intervention, Zeus IQ enhances well productivity and safety. This not only deepens client relationships but also ensures more stable and recurring revenues. What Does Our Model Say? The proven Zacks model does not conclusively predict an earnings beat for Halliburton for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. But that's not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.29%. Zacks Rank: HAL currently carries a Zacks Rank #5 (Strong Sell). Stocks to Consider While an earnings beat looks uncertain for Halliburton, here are some firms from the energy space that you may want to consider on the basis of our model: Valero Energy Corporation VLO has an Earnings ESP of +1.22% and a Zacks Rank #3. The firm is scheduled to release earnings on July 24. You can see the complete list of today's Zacks #1 Rank stocks here. Over the past 60 days, the Zacks Consensus Estimate for Valero Energy's 2025 earnings has moved up 3.3%. Valued at around $47 billion, Valero Energy has lost 3.1% in a year. Ovintiv Inc. OVV has an Earnings ESP of +2.34% and a Zacks Rank #3. The firm is scheduled to release earnings on July 24. Ovintiv beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 27.8%. Valued at over $10 billion, Ovintiv has lost 17.8% in a year. Phillips 66 PSX has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release earnings on July 25. Phillips 66 beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 10.6%. Valued at more than $52 billion, Phillips 66 has lost 10.2% in a year. Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Halliburton Company (HAL): Free Stock Analysis Report Valero Energy Corporation (VLO): Free Stock Analysis Report Phillips 66 (PSX): Free Stock Analysis Report Ovintiv Inc. (OVV): Free Stock Analysis Report This article originally published on Zacks Investment Research (
