RTX Corp
LSE:0R2N
RTX Corp
RTX Corporation, a powerhouse in the aerospace and defense sectors, was born from the fusion of industry giants Raytheon Company and United Technologies Corporation. This merger, finalized in 2020, created a behemoth with a diversified portfolio that commands fleets of both commercial and military markets. The company's business model is a blend of innovation and strategic acquisition, which allows it to maintain a steady rhythm of growth in an ever-evolving landscape. RTX operates through its four main segments: Collins Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense. Each segment plays a vital role in creating high-performance technologies that are not only lucrative but also mission-critical. From sophisticated jet engines and integrated avionics to missile systems and cybersecurity solutions, RTX’s products and services cater to the demands of global defense ministries, commercial airlines, and allied governments.
Central to RTX's success is its ability to harness technological advances to drive efficiency and effectiveness within its offerings. The company invests heavily in research and development, ensuring a constant stream of innovation tailored to the complex requirements of its clientele. Simultaneously, RTX leverages its global footprint to maintain lucrative long-term contracts and service agreements, which generate a significant portion of its revenue. Notably, its aftermarket services capitalize on the persistent need for aircraft maintenance and component upgrades, ensuring steady cash flow and customer loyalty long after the initial sale. By balancing its defense and commercial aviation businesses, RTX not only capitalizes on the growth dynamics of each sector but also buffers itself against the cyclical nature of the aerospace industry. This strategic integration of product innovation and service provision continues to propel RTX Corp. as a formidable leader in its field, adept at navigating geopolitical and economic tides while delivering substantial shareholder value.
Earnings Calls
Resonac Holdings Corporation reported a robust Q3 for fiscal 2024, with net sales rising 9% year-on-year to JPY 1,027.5 billion and operating income jumping by JPY 63.2 billion, boosting it to JPY 58.9 billion. The Semiconductor and Electronic Materials segment was pivotal, increasing sales by 36% to JPY 328.5 billion, leading to an operating income surge of JPY 57.8 billion. The company revised its full-year operating income forecast upward by JPY 16.5 billion to JPY 77.5 billion, expecting an EBITDA margin improvement from 8.2% to 13.6%. Overall, the results reflect strong performance and a positive outlook due to recovering demand in semiconductors.
Management
Christopher T. Calio is a prominent business executive known for his significant contributions to the aerospace and defense industries, particularly through his leadership roles at RTX Corporation (formerly known as Raytheon Technologies). Calio serves as the President of RTX Corporation and has held various key positions within the company, showcasing his expertise in corporate strategy, operations, and management. Before assuming the presidency at RTX, Calio served as the President of Pratt & Whitney, a subsidiary of RTX, where he was instrumental in driving innovation and growth. His leadership was crucial in advancing the development and production of advanced engines, significantly impacting the commercial and military aerospace sectors. Under his guidance, Pratt & Whitney achieved notable milestones in engineering excellence and operational efficiency. Calio's tenure at RTX is marked by his commitment to pushing technological boundaries, fostering a culture of innovation, and prioritizing sustainability across the company's operations. Joining United Technologies Corporation (UTC), which later merged with Raytheon to form RTX, Calio held leadership roles that further demonstrated his capability to steer large, complex organizations through periods of transformation and growth. With a strong educational background, including a law degree, Calio combines legal and business acumen, which has been invaluable in navigating regulatory landscapes and shaping strategic initiatives. His leadership style emphasizes collaboration, customer focus, and nurturing talent, which continues to drive RTX Corporation's success on a global scale.
Neil G. Mitchill Jr. is a notable executive in the field of finance and corporate governance. He serves as the Executive Vice President and Chief Financial Officer (CFO) of RTX Corp, previously known as Raytheon Technologies Corporation, which is a prominent aerospace and defense company. In his role as CFO, Mitchill is responsible for overseeing the company's financial operations, including financial planning and analysis, accounting and reporting, tax, audit, and treasury. Mitchill has an extensive background in finance and leadership, bringing a wealth of experience to RTX Corp. Before his appointment as CFO, he held various important roles within the company and its predecessor organizations, where he contributed significantly to their financial strategy and operations. His expertise in finance has been instrumental in aligning the company's financial goals with its long-term business objectives. Prior to his tenure at RTX Corp, Mitchill held positions of increasing responsibility at PricewaterhouseCoopers (PwC), where he gained valuable experience in auditing and financial consulting. His broad experience in finance and strategic planning has established him as a key figure in the aerospace and defense industry. Neil G. Mitchill Jr.'s leadership and strategic financial management continue to be central to the ongoing success and stability of RTX Corp in the competitive global market.
Robin L. Diamonte is a prominent executive with extensive experience in the field of investment management and employee benefits. She serves as the Chief Investment Officer for Raytheon Technologies Corporation (RTX), a significant position that involves overseeing the company’s pension and financial asset investments. Before her role at Raytheon Technologies, Diamonte was the Chief Investment Officer at United Technologies Corporation (UTC), playing a similar role managing the pension plans of the company. Diamonte's expertise primarily focuses on managing large asset portfolios and ensuring that employee retirement plans are financially sound. She has a strong engineering and technical background, having earned a Bachelor of Science in Electrical Engineering from the University of New Haven and a Master of Business Administration from the University of Hartford. Her career began in the tech and engineering sectors, which have provided her with a unique perspective on investment and financial management. Throughout her career, Robin Diamonte has earned a reputation for her strategic approach to investment and her ability to navigate complex financial environments. Her leadership in managing pension fund assets demonstrates a commitment to protecting and growing the financial reserves of the organizations she serves.
Amy L. Johnson is a distinguished executive at RTX Corp, known for her leadership and strategic acumen in the aerospace and defense industry. As a key figure within the corporation, she plays an integral role in driving the company's mission and business goals. Her career at RTX, formerly known as Raytheon Technologies, showcases her expertise in managing complex programs and operations, which are crucial for sustaining RTX's competitive edge in the global market. Amy's profound understanding of both technical and business dynamics has been instrumental in fostering innovation and ensuring operational excellence across RTX's diverse portfolio. Her leadership style is often characterized by a commitment to empowering teams, driving inclusivity, and maintaining a strong focus on customer satisfaction and shareholder value.
Juan M. de Bedout is a senior executive at RTX Corporation, a leading aerospace and defense company. He holds the position of Chief Technology Officer (CTO) for the company, where he plays a crucial role in driving strategic technology and innovation initiatives across the organization. With a focus on advanced technologies and their integration into RTX's products and services, de Bedout works on ensuring the company's competitive edge in the aerospace and defense sectors. Before joining RTX Corporation, he accumulated significant experience in engineering and leadership roles within prominent industrial companies. His expertise spans various areas, including systems engineering, innovation management, and the development of cutting-edge technologies. De Bedout holds an academic background in electrical engineering and has contributed to various professional organizations and committees, reflecting his active involvement in shaping the future of technology in his industry.
Jennifer Reed is the Chief Communications Officer (CCO) at RTX Corp. In this role, she is responsible for overseeing all communication strategies and initiatives across the organization. With a focus on enhancing corporate messaging and stakeholder engagement, Reed plays a vital role in shaping the company's public image and ensuring effective communication internally and externally. Before assuming her current position, Jennifer Reed held various leadership roles in communication and public relations, demonstrating her expertise and strategic vision. Her career is marked by a commitment to fostering transparent and effective communication practices that align with corporate goals and values. Reed's approach often emphasizes innovation, collaboration, and leveraging new media platforms to reach diverse audiences. Her leadership has been instrumental in advancing RTX Corp's communication efforts in a rapidly evolving business landscape.
Ramsaran Maharajh Jr. is the executive vice president and chief financial officer (CFO) of RTX Corp, a role he assumed in August 2023. Before this role, Maharajh played a significant part in the finance sector within the company, having joined the company in 1997, where he has gained extensive experience over the years. His prior leadership roles at Raytheon Technologies included being the vice president and chief financial officer at Raytheon Missiles & Defense, operating out of Tucson, Arizona. His responsibilities there included leading the financial and business performance, strategy development, and operational execution for a major division. Before that, Ramsaran Maharajh Jr. was involved in wide-ranging global financial operations, where his financial acumen was instrumental in driving organizational success. Maharajh holds a bachelor’s degree in business administration from Northeastern University and an MBA from Boston University. His leadership and expertise in finance have consistently contributed to the growth and stability of RTX Corp, reflecting his substantial skills and dedication to the field.
Pamela M. Erickson is an executive at RTX Corporation, formerly known as Raytheon Technologies Corporation. She serves as Vice President of Global Branding & Corporate Citizenship. In this role, Erickson is responsible for overseeing the company’s global branding initiatives, marketing communications, and corporate citizenship strategies. Her responsibilities include fostering a strong brand identity for RTX Corp, enhancing the corporation's reputation globally, and integrating corporate social responsibility into the business strategy. Erickson has a long-standing career in strategic communications, marketing, and brand management, with significant experience in driving corporate initiatives that align with company values and goals. Her leadership extends to ensuring the company’s contributions to communities and societal impact are significant and meaningful, reflecting the corporation’s commitment to corporate responsibility and global citizenship.
Dantaya M. Williams is a prominent executive at RTX Corp, where she serves as the Chief Human Resources Officer. In her role, Williams is responsible for overseeing the development and implementation of human resources strategies that align with the company's business objectives. She plays a crucial role in talent management, organizational development, and ensuring a positive work culture across the global operations of RTX Corp. Williams has a strong background in HR and organizational leadership, with expertise in transforming and optimizing HR functions to drive business performance. Before joining RTX Corp, she held varied leadership roles in human resources and has been recognized for her strategic vision and ability to lead through change. Her contributions at RTX Corp include driving initiatives that foster diversity, equity, and inclusion within the company, as well as enhancing employee engagement and leadership development programs. Williams is also known for her commitment to building future leaders and advocating for a workplace that encourages growth and innovation. Her leadership and insight continue to shape RTX Corp's success and contribute to its standing as a leader in its industry.
Shane G. Eddy is the President of the Pratt & Whitney division at RTX Corp. (formerly known as Raytheon Technologies Corporation), a multinational aerospace and defense conglomerate. Eddy has extensive experience in the aerospace industry, bringing decades of leadership and technical expertise to his role. Before becoming the President of Pratt & Whitney, Eddy held various senior leadership roles within the company, where he was responsible for overseeing operations, manufacturing, quality, and supply chain management. His work has played a significant role in driving growth and innovation in Pratt & Whitney's product lines, which include commercial and military aircraft engines. Eddy's commitment to excellence and innovation is reflected in his ability to lead complex projects and adapt to the evolving needs of the aerospace industry. His leadership style emphasizes collaboration, continuous improvement, and a strong focus on delivering customer value.
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Hello, everyone. I am Hideki Somemiya, CFO of Resonac Holdings Corporation. Thank you very much for your understanding and support for our company. Let me explain the financial results overview of Q3 of fiscal 2024. Page 2 shows key takeaways. There are 2 points. First, the Q1 to Q3 results were strong, driven mainly by Semiconductor and Electronic Materials segment. Sales and profit grew significantly year-on-year. The second point is that based on these results and the market trends, we revised full year forecast. Operating income forecast is revised upward compared to earlier forecast.
Now let me explain Q1 to Q3 financial results. Page 4 shows the summary of Q1 to Q3 consolidated results comparing fiscal 2023 and '24. Please refer to the table on the left. In Q1 to Q3, net sales were JPY 1,027.5 billion, up JPY 85.2 billion or 9% year-on-year. Operating income was JPY 58.9 billion, up JPY 63.2 billion year-on-year. Ordinary income was JPY 46.5 billion, up JPY 53.6 billion year-on-year. Net income attributable to owners of the parent was JPY 50.8 billion, up JPY 57.1 billion year-on-year. EBITDA was JPY 142.4 billion, up JPY 64.9 billion year-on-year. EBITDA to sales ratio or EBITDA margin was 13.9%, improvement of 5.6 points.
Page 5 shows the breakdown of operating income changes from minus JPY 4.3 billion to JPY 58.9 billion in Q1 to Q3 in 2024. Profit increased by JPY 63.2 billion year-on-year. The biggest factor was sales volume, pushing up the profit by JPY 34.5 billion. Mainly JPY 34.7 billion increase was in Semiconductor and Electronic Materials. The major reason was sales volume recovery of semiconductor materials and hard disk media. Sales price pushed up the profit by JPY 21.4 billion. About half of this is related to higher naphtha prices in Chemicals segment.
Another half was due to corporate-wide impact from the weak yen and price revisions reflecting higher material costs. Variable and fixed costs pushed up the profit by JPY 0.9 billion. In Chemicals, higher naphtha prices lowered profit. In Semiconductor and Electronic Materials, the effect of the fixed cost reduction through the restructuring of Hard Disk Media business was a major factor. Lastly, others pushed up the profit by JPY 6.4 billion. In Semiconductor and Electronic Materials, product mix improved and the impact of lower others and adjustments is included.
Pages 6 to 7 show the breakdown of segment operating income changes. These are for your reference. Page 8 shows the results by segment. Here, we are showing the sales, operating income and EBITDA by segment comparing fiscal 2023 and '24. Semiconductor and Electronic Materials shown at the top, saw much higher sales and operating income year-on-year. Chemicals, fourth from the top, saw lower sales and profit. Pages 9 through 12 show segment summary.
First, Page 9 shows the Semiconductor and Electronic Materials. Sales grew 36% year-on-year to JPY 328.5 billion. Operating income saw a significant increase of JPY 57.8 billion to reach JPY 45.3 billion. In addition to gradual recovery of semiconductor demand, semiconductor materials for AI semiconductor was strong and sales volume of hard disk media recovered. Segment EBITDA margin increased from 11.4% in Q1 to Q3 2023 to 26.2%. Profitability is improving. Page 10 shows Mobility. Sales were almost flat year-on-year at JPY 160.7 billion. Operating income increased by JPY 0.7 billion year-on-year to JPY 3.5 billion. In automotive products as car production recovered gradually, there was a launch of products for new models. However, sales declined due to the sluggish demand in Thailand, which is one of the important markets. As for lithium-ion battery materials, weak consumer demand continued, but sales grew on higher sales volume for EVs.
Page 11 shows Innovation Enabling Materials. Sales grew by 6% year-on-year to JPY 71.8 billion. Operating income increased by JPY 2.9 billion year-on-year to JPY 8.5 billion. Both sales and profit grew on price revision to reflect higher material costs and increased sales volume. Page 12 is Chemicals. Sales were almost flat year-on-year at JPY 381.1 billion. Operating income declined JPY 3.8 billion to JPY 6.4 billion. Olefins and Derivatives sales grew on higher naphtha prices, but sales volume was down due to the first half shutdown maintenance of petrochemical derivatives. Sales of basic chemicals were largely unchanged year-on-year. Higher material price of some products led to lower operating income. Finally, both sales and profit of graphite electrode decreased on lower prices due to weak market condition. That's all for segment results.
Page 13 shows the nonoperating income and expenses and extraordinary profit and loss year-on-year comparison, starting with the net nonoperating income and expenses, is worsened by JPY 9.5 billion year-on-year. The major reason was the foreign exchange, which has worsened, while yen was weak in Q1, Q3 in the fiscal '23. In fiscal '24, especially at the end of September, yen strengthened. And as a result, FX loss booked in Q1, Q3 and FX gains and loss worsened by JPY 9.9 billion year-on-year. Next, the net extraordinary profit and loss improved by JPY 2.3 billion year-on-year. During Q1 and Q3 this year, JPY 25.7 billion gain on sale of former headquarters and former hard disk media facility in Taiwan was booked.
In the same period last year, the similar amount of gain was booked for the sale of Diagnostic Medicine business and others. The difference is related to the restructuring. In Q1 to Q3 '24, the JPY 4.7 billion business restructuring expenses was booked in relation to the sale of regenerative medicine subsidiaries. The same period of previous year, there was an extra retirement payment as well as the impairment loss in Hard Disk Media business, JPY 10 billion was booked. In comparison to that, there was an improvement.
Page 14 is consolidated balance sheet. Starting from the left, the total assets at the end of September were JPY 2,059.6 billion, up JPY 27.6 billion from the end of last fiscal year. Total intangible fixed assets were down by JPY 34.9 billion due to the amortization of goodwill. Cash and deposits increased by JPY 52.6 billion, mainly from the business activities. Total liabilities was JPY 1,443.3 billion, down JPY 10 billion from December end due to the JPY 18.8 billion decreases in other liabilities. JPY 100 billion convertible bond issued during the term is included in interest-bearing debt in this table. Long-term debt was repaid with this, and therefore, increase of the interest-bearing debt remained at JPY 16.3 billion from the end of last fiscal year. Net interest-bearing debt at the end of the last fiscal year was JPY 826.2 billion and JPY 789.8 billion at the end of September, down JPY 36.3 billion.
Total net assets were JPY 616.4 billion, up JPY 37.7 billion from the end of last year. The JPY 50.8 billion net income in Q1 to Q3 pushed up the retained earnings and dividend payment of the last fiscal year pushed down the retained earnings. Higher revaluation reserve for land included in the total accumulated other comprehensive income is offset by the same decrease amount of the retained earnings, having no impact on the net asset balance. Major indicators are shown at the bottom, mainly with the increase of the equity and cash deposit, debt equity ratio improved from 1 to 0.9x. The equity ratio also improved from 27.2% at the December end to 28.7%. As usual, at the footnote, we mentioned that to calculate the net D/E ratio, we evaluate 50% of the subordinated loan as equity capital based on the credit rating of Japan credit rating agency.
Next, let me talk about 2024 performance forecast. Page 16 shows the consolidated forecast. In the middle, there is a column C. This is a revised full year forecast announced on November 12. Based on the recent performance trend and others, in comparison to the operating loss and others of the previous fiscal year, sales forecast is up by JPY 93.1 billion. Operating income up by JPY 81.3 billion. Net income attributable to owners of the parent is up by JPY 51 billion. EBITDA margin is expected to improve from 8.2% to 13.6%. On the right-hand side, please refer to the column B. This is a comparison to earlier forecast. Operating income forecast is up by JPY 16.5 billion. As a result of the detailed review of nonoperating income and expenses and extraordinary profit and loss, income before income taxes remains the same. And with higher taxes due to the improved profit, net income attributable to owners of the parent is expected to slightly decrease.
Page 17 shows the revised forecast by segment. In the middle, there is a column which says a full year forecast. Out of the full year operating income forecast of JPY 77.5 billion, 80% at JPY 61.5 billion is in Semiconductor and Electronic Materials. The full year EBITDA margin of this segment is expected to be 26.6%. Now on the right-hand side, we are showing the 2023 results as well as earlier forecast comparison. So higher net income and higher profitability is thanks to the continued strength of the Semiconductor and Electronic Materials segment. Now in comparison to the earlier forecast, while sales and profit of Semiconductor and Electronic Materials was up, in Chemicals, sales and profit were lower due to the decreased naphtha prices.
On this slide, we are showing the quarterly trend from Q1 to Q3. You can see the improvement every quarter. In addition to the absolute amount of the profit, EBITDA margin has reached 31.4% in Semiconductor and Electronic Materials in Q3 and corporate-wide margin was 16.3%. So we are getting closer to our target of 20%. In a rough estimate, excluding the olefins and derivatives businesses, company-wide EBITDA margin in Q3 is about 20%. We will continue to improve profitability toward achieving 20% EBITDA margin. Pages 19 and onwards are appendix. These are for your reference. That concludes my presentation. Thank you for your attention.