Collins Aerospace sees $5 billion in adjusted sales

One of the key themes that emerged during the second-quarter earnings call Tuesday for Collins Aerospace’s global parent company — as echoed by both its CEO and its sales vice president — was the rest of 2022 will be “a hill to climb.”

Overall, the second-quarter news was good. Cedar Rapids’ largest employer helped Raytheon Technologies earn $16.3 billion in sales for the April-through-June period, up 3 percent from the year before.

And one of the “positives” highlighted by CEO and Chairman Greg Hayes and Neil Mitchill, Raytheon’s sales vice president, was the 25 percent growth in Collins Aerospace’s commercial aftermarket operations in that quarter.

Collins Aerospace, as an individual unit, reported second-quarter adjusted sales of $5 billion — that’s a boost of 10 percent over the previous year. That rise also was helped by a 14 percent increase in commercial original equipment sales.

“The trajectory for return to air travel caught everyone by surprise,” Hayes admitted during a Tuesday morning conference call with analysts.

Engine maker Pratt and Whitney, another Raytheon business unit, notched a 16 percent jump in second-quarter sales in part due to that big return of air passengers.

Collins Aerospace boasts 67,500 employees in 46 nations, according to Raytheon’s website.

Elsewhere in Raytheon

Raytheon’s sales outlook for the full 12 months of 2022 were $67.75 billion to $68.75 billion, according to its report.

Where the challenges have come in for Arlington, Va.-based Raytheon have been for two of its other units — in Intelligence and Space and in Missiles and Defense.

Intelligence and Space listed second-quarter adjusted sales of $3.57 billion, which was down 6 percent from the year before. Missiles and Defense had adjusted sales of $3.558 billion — a drop of 11 percent.

Adjusted operating profit outlook is anticipated to be flat or see a loss of $50 million each.

Raytheon cited inflation, ongoing supply chain constraints and the tight labor market for much of the decline.

More than once in the call Hayes noted Raytheon pays its employees competitive wages. But attracting enough workers — especially engineers — has been harder than expected.

Two years ago it was anticipated that the coronavirus would dissipate and “labor would return,” the CEO said.

Hayes pointed out that in past layoffs, 75 percent to 80 percent of former workers would return. But past-pandemic, the total has been closer to 25 percent.

Mitchill added that now Raytheon’s dilemma is an “absence of productivity.”

“It’s a hill to climb in the back of the year,” Hayes said. “... This thing doesn’t get solved this year.”

He also noted the challenge with competitively sourcing titanium from somewhere other than Russia, a major global supplier. Titanium and its alloy long have been used for airframes and for engine parts.

But Hayes expressed optimism despite these headwinds, emphasizing travel restrictions being eased globally and long-term agreements among vendors.

In addition, he pointed out that Raytheon’s goals are aligned with U.S. defense needs and that allies many U.S. allies have committed to spending 2 percent of their GDP on defense.

Hayes specifically cited orders for Stinger, Tomahawk and Javelin missiles and missile Jammers.

That situation, Hayes added, “is a lot different than what we expected two years ago.”

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