RTX reported a better than expected first-quarter profit and maintained its annual forecast, after a strong demand for jet repair and maintenance services helped to offset weaker sales in the company's defense unit.
Despite reaffirming full-year guidance, the company said tariffs could hurt profit by about $850 million over the year, resulting in RTX shares declining by 4% in pre-market trading on April 22, 2025.
The company said that this figure of $850 million is an “approximation” and is based on assumptions that over the remainder of the year customers did not change buying habits, Canada, Mexico, steel and aluminium tariffs remain at 25%, tariffs imposed on China remain at 145% and global reciprocal tariffs remain at 10%. RTX said the figure is also net of available mitigations like duty drawbacks, supplier strategies, and operational adjustments - but the bulk of the financial hit would be felt in the “back half of the year” as inventory is liquidated.
Speaking on an earnings call, RTX president and CEO Chris Calio commented: “Generally speaking, the aerospace and defense sector has operated in a duty-free environment, and that has been instrumental to the industry maintaining one of the largest trade surpluses across American manufacturing industries for decades.
“If the current environment was to stay in place, not all regulatory and operational mitigations would address our tariff exposure.”
During the first quarter of the year, RTX reported first-quarter sales of $20.3bn, marking a 5% increase on the same period of the year prior, and an 8% organic growth, excluding the impact of divestitures.
The company said that these sales were driven by demand in both its commercial aerospace and defense businesses, although the company continues to face headwinds from supply chain constraints.
The company reported earnings per share (EPS) of $1.14, which includes $0.27 of acquisition accounting adjustments and $0.06 related to restructuring and other net significant or non-recurring items. Adjusted EPS came in at $1.47, reflecting a 10% increase from the previous year.
Operating cash flow for the quarter was $1.3bn, while free cash flow reached $800 million. RTX ended the quarter with a backlog of $217bn, including $125bn in commercial aerospace contracts and $92bn in defense-related orders.
The company returned $900 million to shareholders during the quarter, continuing its commitment to capital returns.
“We are off to a strong start to 2025 with 8% organic sales growth and 10% adjusted EPS growth, including 120 basis points of segment margin expansion during the first quarter,” said Calio. "Organic growth was broad based and led by strength in commercial aftermarket, which was up 21% on the year prior, driven by continued demand for our industry leading products and solutions."
The company’s aircraft engines and propulsion systems arm Pratt & Whitney reported first-quarter sales of $7.3bn, reflecting a 14% increase compared to the prior year.
This growth was driven by a 28% rise in commercial aftermarket sales, a 4% increase in military sales, and a 3% rise in commercial original equipment (OE) sales. The commercial aftermarket growth was fuelled by higher volumes and a favourable mix across both large commercial engines and Pratt & Whitney Canada.
The commercial OE increase was driven by higher engine deliveries, while military growth was primarily due to increased engine deliveries for the Tanker program and higher volume in the F135 Engine Core Upgrade program.
Operating profit for the quarter reached $580 million, a 41% increase on the first three-month period of 2024. This was driven by higher deliveries in large commercial engines, which more than offset the drop-through effect of higher commercial aftermarket volumes and a favourable aftermarket mix.
A reduction in R&D expenses also contributed to the profit growth. On an adjusted basis, operating profit was $590 million, up 37% from the previous year.
Collins Aerospace, RTX's aerospace and avionics arm, reported operating profit of $1.08bn, reflecting a 28% increase compared to the prior year. On an adjusted basis, operating profit reached $1.22bn, marking 17% growth on the previous year. The operational improvement was primarily driven by higher volumes in the commercial aftermarket and defense sectors, leading to strong profit flow-through.