Raytheon sees $17 billion in fourth-quarter sales

Raytheon Technologies Corp. CEO and Chairman Greg Hayes, in a fourth-quarter earnings call with analysts and reporters Tuesday morning, deemed 2021 as an “important year for Raytheon.”

Waltham, Mass.-based Raytheon, parent company of Collins Aerospace, Cedar Rapids’s largest employer, closed its October-through-December period with $17 billion in sales, operating cash from continuing operations with $3.2 billion, and free cash flow of $2.2 billion.

And Hayes and CFO Neil Mitchill see 2022’s full-year outlook with sales in the range of $68.5 billion to $69.5 billion. Mitchill projected 2022’s earning per share at $4.60 to $4.80 — up 8 percent to 12 percent.

Yet, during the hour-long call, the words “omicron” and “supply chain challenges” came up more than once.

Along with Collins Aerospace, global aerospace and defense company Raytheon owns Pratt and Whitney, Raytheon Intelligence and Space, and Raytheon Missiles and Defense.

"Raytheon Technologies is entering 2022 with continued momentum and resilience,“ Hayes said, reading from his prepared remarks. ”The long-term outlook for our commercial aerospace and defense markets remains strong.

“Our focused A&D (acquisitions and divestitures) portfolio and intense focus on program execution position us well to deliver sales, earnings and free cash flow growth, as well as margin expansion across all businesses in 2022."

The executives attributed those strong sales figures mostly to the recovery of domestic air travel, merger cost synergies and commercial aftermarket sales for Collins Aerospace.

Aftermarket sales — parts and components — in the fourth quarter were up 47 percent, to $4.9 billion, Raytheon reported. Commercial original equipment sales also rose, by 4 percent.

That in part was thanks to air traffic remaining “resilient despite the omicron variant,” Hayes noted during the call.

Much of 2022’s earnings will hang on orders related to a resurgence in international air travel, Hayes and Mitchill said during the call. Aftermarket sales for widebody aircraft, in particular, are dependent “primarily on the re-opening of Asia-Pacific” routes, Hayes said.

They both cited hope for some recovery in international travel by the second quarter of this year.

Hayes added that Raytheon overall was two years ahead of schedule in meeting its “cost synergies,” and singed out Collins Aerospace as being one year ahead of its timeline since its acquisition by United Technologies Corp. in 2018, with $600 million in savings.

He added there is “more to come and more to do.”

Raytheon Co. merged with United Technologies, then the parent company of Collins Aerospace, in 2020, to form Raytheon Technologies Corp.

But amid the good news in the morning call, Raytheon reported military sales for Collins Aerospace for the quarter declined 3 percent.

Hayes, in response to a question on mounting international tensions, said “we fully expect we’ll see some benefits” in terms of an increase in international defense spending.

“The biggest driver will be in LTAMDS,” he said, referring to lower-tier air and missile defense sensors — described on a Raytheon Missile and Defense website as “a radar designed to defeat advanced and next-generation threats, including hypersonic weapons, or those that fly faster than a mile a second.”

Raytheon Missile and Defense named its LTAMDS system “GhostEye.”

Another analyst’s question referred to comments made by Air Force Secretary Frank Kendall in late November to Reuters in regard to an arms race with the Chinese for hypersonic weapons. Kendall said previous administrations had focused military spending on Iraq and Afghanistan.

"This isn't saying we've done nothing, but we haven't done enough," Kendall told Reuters.

Raytheon along with Lockheed Martin and Northrop Grumman produce hypersonic defense programs.

In response, and noting most tech contract information is classified, Hayes said “layered defensive systems“ would be the most valuable to clients.

Going forward, Hayes included inflation, continuing supply chain kinks and labor shortage issues among suppliers, particularly for welders, as creating 2022 headwinds.

But wanting to put that last issue in context, the CEO added Raytheon has some 13,000 product suppliers and fewer than 100 “are giving us real concern.”

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