23 Oct 24. Once again, Boeing reported a bad set of figures reflecting the proposed fundraising, ongoing strike, job losses and massive reorganisation to streamline the business. Every other US Major reported strong figures across the board reflecting increased work defence spending to combat the ongoing threats from Russia in Europe, China in the far East and Iran and its proxies in the Middle East.
Boeing
23 Oct 24. Boeing CEO Message on Third Quarter Results. Boeing President and CEO Kelly Ortberg shared the following message with all employees today, including his prepared remarks for the third quarter financial results webcast:
‘Team,
As we report our third-quarter 2024 results today, I want to take this opportunity to share my perspective on the challenges we face and, more importantly, my focus for how we will move Boeing forward, together.
I am sharing my remarks directly with you this morning, because when it comes to our future the only way to be successful is by working together.
It will take time to return Boeing to its former legacy but, with the right focus and culture, we can be an iconic company and aerospace leader once again. We will be focused on fundamentally changing the culture, stabilizing the business and improving program execution, while setting the foundation for the future of Boeing.
To define that future, we will stay true to our roots and the values that defined our legacy.
Be on the lookout for an invitation to an all-employee meeting in the coming weeks where we will share more about our path ahead and answer your questions. Thanks for all you do.
Kelly.’
Boeing Reports Third Quarter Results
Third Quarter 2024
- Financials reflect impacts of the International Association of Machinists and Aerospace Workers (IAM) work stoppage and previously announced charges on commercial and defense programs
- Revenue of $17.8bn, GAAP loss per share of ($9.97) and core (non-GAAP)* loss per share of ($10.44)
- Operating cash flow of ($1.3)bn and free cash flow of ($2.0)bn (non-GAAP)*
- Total company backlog of $511bn, including over 5,400 commercial airplanes
The Boeing Company [NYSE: BA] recorded third quarter revenue of $17.8bn, GAAP loss per share of ($9.97) and core loss per share (non-GAAP)* of ($10.44) primarily reflecting impacts of the IAM work stoppage and previously announced charges on commercial and defense programs. Boeing reported operating cash flow of ($1.3)bn and free cash flow of ($2.0)bn (non-GAAP)*.
“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” said Kelly Ortberg, Boeing President and Chief Executive Officer. “Going forward, we will be focused on fundamentally changing the culture, stabilizing the business, and improving program execution, while setting the foundation for the future of Boeing.”
Operating cash flow was ($1.3)bn in the quarter reflecting lower commercial widebody deliveries, as well as unfavorable working capital timing, including the impact of the IAM work stoppage.
Cash and investments in marketable securities totaled $10.5bn, compared to $12.6bn at the beginning of the quarter driven by free cash flow usage in the quarter. In October, the company entered into a new $10.0bn short-term credit facility and now has access to total credit facilities of $20.0bn, which remain undrawn.
Total company backlog at quarter end was $511bn.
Segment Results
Commercial Airplanes
Commercial Airplanes third quarter revenue of $7.4bn and operating margin of (54.0) percent reflect previously announced pre-tax charges of $3.0bn on the 777X and 767 programs as well as the IAM work stoppage and higher period expense, including research and development.
The 787 program is currently producing at 4 per month and maintains plans to return to 5 per month by year end. In the quarter, Commercial Airplanes booked 49 net orders and delivered 116 airplanes, with backlog of over 5,400 airplanes valued at $428bn.
Defense, Space & Security
Defense, Space & Security third quarter revenue of $5.5bn and operating margin of (43.1) percent reflect the previously announced pre-tax charges of $2.0bn on the T-7A, KC-46A Tanker, Commercial Crew, and MQ-25 programs. Results also reflect unfavorable performance on other programs.
During the quarter, Defense, Space & Security delivered the first production MH-139A to the U.S. Air Force and definitized a contract for two E-7A Wedgetails from the U.S. Air Force. Backlog at Defense, Space & Security was $62bn, of which 28 percent represents orders from customers outside the U.S.
Global Services
Global Services third quarter revenue of $4.9bn and operating margin of 17.0 percent reflect higher commercial volume and mix. During the quarter, Global Services secured agreements for Landing Gear Exchange Program and Integrated Material Management with All Nippon Airways and a KC-135 spares contract from the U.S. Air Force.
General Dynamics
23 Oct 24. General Dynamics’ revenue rise on defense, but profits hit by bizjet deliveries.
- Summary
- Companies
- Defense unit revenue driven by global conflicts
- Bizjet deliveries fall short due to engine delays
- Marine Systems profit margins revised down by Novakovic
General Dynamics reported a more than 10% rise in third-quarter revenue on Wednesday, driven by strength in its defense unit, but fewer business jet deliveries hurt company profits.
Shares of the Reston, Virginia-based company were flat in early trading after reporting quarterly revenue of nearly $11.67bn, up from $10.57bn a year ago.
The ongoing conflicts in Ukraine and the Middle East and the United States’ efforts to replenish its inventory are driving increased global demand for munitions, vehicles and other military equipment.
For the quarter ended Sept. 29, the company’s aerospace segment which makes Gulfstream business jets saw revenue rise to $2.4bn, up 22.1% from a year ago. But profit margins were 12.3%, lower by nearly a percentage point compared to the same period a year ago.
Total deliveries in the company’s aerospace segment rose to 24 jets, including four G700s, from 22 a year ago. But the company said it delivered 11 fewer G700 business jets than expected due to engines arriving later than hoped due to an elongated certification timeline.
(Source: Reuters)
23 Oct 24. General Dynamics Reports Third-Quarter 2024 Financial Results.
- Revenue of $11.7bn, up 10.4% from year-ago quarter
- Operating earnings of $1.2bn, up 11.7% from year-ago quarter
- Diluted EPS of $3.35, up 10.2% from year-ago quarter
- Operating margin of 10.1%, a 10-basis-point expansion from year-ago quarter
General Dynamics (NYSE: GD) today reported third-quarter 2024 revenue of $11.7bn, up 10.4% from the third quarter of 2023. Operating earnings of $1.2bn were up 11.7% from the year-ago quarter. Diluted earnings per share (EPS) were $3.35, up 10.2% from the year-ago quarter. Operating margin for the quarter was 10.1%, a 10-basis-point expansion from the year-ago quarter.
“The company continues to see strong growth and steady improvement in operating performance,” said Phebe Novakovic, chairman and chief executive officer. “Demand across the portfolio also remains strong in the current environment.”
Gulfstream delivered 28 aircraft in the quarter, of which 24 were large-cabin aircraft, including four G700s. This compares with 27 aircraft delivered in the year-ago quarter, of which 22 were large cabin.
Cash and Capital Deployment
Net cash provided by operating activities in the quarter was $1.4bn, or 152% of net earnings. During the quarter, the company paid $390m in dividends, invested $201m in capital expenditures, and used $44m to repurchase shares, ending the quarter with $2.1bn in cash and equivalents on hand.
Orders and Backlog
The consolidated book-to-bill ratio, defined as orders divided by revenue, was 1.1-to-1 for the quarter. Company-wide backlog was $92.6bn. Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $45bn. Total estimated contract value, the sum of all backlog components, was $137.6bn.
In the Aerospace segment, orders in the quarter totaled $2.4bn. The segment ended the quarter with backlog of $19.8bn.
In the defense segments, orders in the quarter totaled $10.5bn, with particular strength in the Combat Systems and Technologies segments. Significant awards in the defense segments included $885 m for various munitions and ordnance, with maximum potential value of $1.7bn; $465m, with maximum potential value of $1.7 bn, for two U.S. Army contracts for production of 155mm artillery projectile metal parts; $780m, with maximum potential contract value of more than $6.7bn including options, for the construction of additional John Lewis-class (T-AO-205) fleet replenishment oilers; $1.5bn for long-lead materials for Block VI Virginia-class submarines; $840m, with maximum potential value of $1bn, for several key contracts for classified customers; and $605m for multiple awards from the U.S. Space Development Agency to develop and integrate ground systems for the low-Earth orbit satellite network.
L3Harris Technologies
24 Oct 24. L3Harris Technologies Reports Strong Third Quarter 2024 Results, Increases 2024 Guidance.
Highlights*
- Orders of $7.2bn; book-to-bill of 1.4x
- Revenue of $5.3bn, up 8%, and 5% organically
- Operating margin of 9.4%; adjusted segment operating margin of 15.7%
- Diluted earnings per share (EPS) of $2.10; non-GAAP diluted EPS of $3.34
- 2024 revenue guidance range increased to $21.1bn – $21.3bn
- 2024 adjusted segment operating margin guidance increased to ~15.5%
- 2024 non-GAAP diluted EPS guidance range increased to $12.95 – $13.15
L3Harris Technologies (NYSE: LHX) reported third quarter 2024 diluted EPS of $2.10, an increase of 4% from third quarter 2023, on third quarter 2024 revenue of $5.3bn, an increase of 8%. Third quarter 2024 non-GAAP diluted EPS was $3.34, a 5% increase from third quarter 2023. A reconciliation of non-GAAP results are detailed in tables beginning on page 11.
“We delivered strong third-quarter results, highlighted by outstanding book-to-bill of 1.4x, solid organic growth, and while continuing to improve margins as we make progress toward the financial framework announced at our 2023 Investor Day. These results reaffirm that our Trusted Disruptor strategy is working, driving value for our customers, shareholders and employees,” said Christopher E. Kubasik, Chair and CEO.
Kubasik added, “We are making impressive progress on our LHX NeXt initiative and expect to exceed the 2024 cost savings target of $400 m. As a result, we are updating our 2024 savings target to at least $600 m and now expect to reach the overall target of $1 bn a year early. Our pipeline provides opportunity for additional cost savings opportunities to exceed the $1 bn target. All of this gives us confidence to deliver 2026 segment operating margins of at least 16%.”
*Organic revenue, adjusted segment operating margin and non-GAAP diluted EPS are non-GAAP financial measures defined on page 17. A reconciliation of adjusted segment operating margin guidance and non-GAAP diluted EPS guidance is not available. See the note on page 2 and Non-GAAP Financial Measures on page 7 for more information.
Revenue: Third quarter revenue increased 8%, primarily driven by the acquisition of Aerojet Rocketdyne (AR) and 5% total organic growth, primarily from continued robust demand for our resilient communication products and night vision devices in our Communication Systems (CS) segment. Organic growth was also driven by our Integrated Mission Systems (IMS) segment, with higher aircraft missionization volumes, increased volumes for advanced electronics related to space and munitions programs, and higher volumes in our Commercial Aviation business, the divestiture of which is pending closure.
* Adjusted segment operating income and margin, effective tax rate on non-GAAP income, non-GAAP diluted EPS, pension adjusted non-GAAP diluted EPS, organic revenue and adjusted free cash flow are non-GAAP financial measures defined on page 17. A reconciliation of adjusted segment operating income and margin, effective tax rate on non-GAAP income, non-GAAP diluted EPS and adjusted free cash flow on a forward-looking basis to GAAP is not available without unreasonable effort due to the unavailability of items for exclusion from the GAAP measure. We are unable to address the probable significance of this information, the variability of which may have a significant impact on future GAAP results. See Non-GAAP Financial Measures on page 7 for more information.
Operating Margin:
GAAP: Third quarter operating margin decreased 30 bps to 9.4% primarily driven by an increase in unallocated items, including an increase in valuation allowance related to the pending Commercial Aviation Solutions business divestiture and increases in fair value of non-qualified retirement plan liabilities. This was partially offset by improved segment performance and a full quarter of contribution from AR.
Adjusted segment operating margin: Expanded 70 bps to 15.7%, with solid contribution from LHX NeXt cost savings, strong performance from higher volume and favorable mix in our CS segment, and improved program performance in our IMS segment. This was partially offset by the absence of a non-recurring license sale that positively impacted 2023 and challenges on classified space development programs, both in our SAS segment.
Diluted EPS:
GAAP: Third quarter diluted EPS increased 4% to $2.10 due to an increase in operating income and lower FAS/CAS operating adjustment, partially offset by higher interest expense.
Non-GAAP: Increased 5% to $3.34 driven by higher adjusted segment operating income, partially offset by higher interest expense.
Pension Adjusted Non-GAAP: Increased 8% to $2.94 driven by higher adjusted segment operating income, partially offset by higher interest expense. We believe this represents the best economic measure of our EPS as it reflects the operational performance of our segments without non-cash impacts of pension accounting, primarily FAS/CAS operating adjustment.
The largest differences between GAAP and Non-GAAP diluted EPS are attributable to amortization of acquisition-related intangibles and LHX NeXt implementation costs.
Cash Flows:
Cash from Operations: Third quarter cash from operations increased 44% to $780 m driven by net income growth and decreases in transaction costs related to the AJRD acquisition, partially offset by timing of working capital.
Adjusted free cash flow: Increased 18% to $728m driven by net income growth and decreases in capital expenditures, partially offset by timing of working capital.
SEGMENT RESULTS AND GUIDANCE*
SAS
Revenue: Third quarter revenue was flat, reflecting the divestiture of the antenna business in the second quarter. Excluding the divestiture impact, organic revenue increased 2%, primarily from growth of classified programs in Intel and Cyber, and increased volume in our FAA mission-critical safety of flight networks business. Organic revenue was partially offset by lower F-35 related volumes as TR-3 development ramps down in our Airborne Combat Systems business. Growth was also impacted by challenges on classified development programs, LHX NeXt cost savings and the absence of a non-recurring license sale that positively impacted 2023.
Operating Margin: Third quarter operating margin decreased 90 bps, primarily due to the absence of an $18m non-recurring license sale that positively impacted 2023 and challenges on classified development programs, partially offset by growth in Intel and Cyber and FAA mission-critical safety of flight networks businesses, and LHX NeXt cost savings.
IMS
Revenue: Third quarter revenue increased primarily from higher aircraft missionization volumes, increased advanced electronics demand for space and munitions programs, and higher volumes in our Commercial Aviation Solutions business, the divestiture of which is pending closure.
Operating Margin: Third quarter operating margin increased 30 bps, primarily from improved program performance across the segment, LHX NeXt cost savings and higher volume and favorable mix in Commercial Aviation Solutions, partially offset by unfavorable mix impact in our aircraft missionization business.
*Organic revenue is a non-GAAP financial measure defined on page 17.
CS
Revenue: Third quarter revenue increased 10%, primarily driven by robust demand for our resilient communication equipment, related waveforms, and night vision devices. Growth for software defined tactical radios was especially strong across international markets, in particular from NATO countries, reflecting demand for our superior capabilities for critical battlefield communications equipment and waveforms.
Operating Margin: Third quarter operating margin increased 350 bps as a result of strong performance from higher volumes, favorable high margin international mix, proprietary waveform license sales, and LHX NeXt cost savings.
AR
Revenue and Operating Margin: Third quarter results are attributed to program execution across both sectors, Missile Solutions and Space Propulsion and Power Systems, reflecting a full quarter of contribution for 2024 and a partial quarter for 2023, from the July 28, 2023 acquisition date. Operating margins include the positive impact of amortization related to purchase price adjustments.
Lockheed Martin
23 Oct 24. Lockheed Martin shares slide 5% on F-35 headwinds despite lifting profit and sales forecast. Defense contractor Lockheed Martin (LMT.N) lifted its annual profit and sales forecasts on Tuesday, but shares slid 5% because the company’s F-35 fighter jet program faced payment headwinds stemming from the government contracting process.
The Bethesda, Maryland-based company now expects per-share profit of $26.65 for 2024, above its earlier forecast of $26.10 to $26.60.
Still, shares slid 5.2% in early trading in New York to $582.71.
Lockheed’s flagship F-35 program has been facing challenges, particularly due to delays in rolling out an upgrade intended to enhance the fighter jet’s processing capabilities.
But drawn-out contract negotiations have meant Lockheed is having to incur procurement costs for the F-35 jets in lots 18 and 19, set to be delivered in 2026 and 2027.
The absence of a contract means Lockheed is having to pay suppliers for long-lead materials such as sensors, radars and other electronics for the jets without being reimbursed by the government. This impacted sales and profit at both the business and company level. (Source: Reuters)
22 Oct 24. Lockheed Martin Reports Third Quarter 2024 Financial Results.
- Net sales of $17.1bn, an increase of 1% year over year
- Net earnings of $1.6bn, or $6.80 per share
- Cash from operations of $2.4bn and free cash flow of $2.1bn
- $1.6bn of cash returned to shareholders through dividends and share repurchases
- Increased share repurchase authority by $3.0bn to a total authorization of $10.3 bn
- Increased quarterly dividend 5% to $3.30 per share
- 2024 financial outlook increased
Lockheed Martin Corporation [NYSE: LMT] today reported third quarter 2024 net sales of $17.1 bn, compared to $16.9bn in the third quarter of 2023. Net earnings in the third quarter of 2024 were $1.6bn, or $6.80 per share, compared to $1.7bn, or $6.73 per share, in the third quarter of 2023. Cash from operations was $2.4 bn in the third quarter of 2024, compared to $2.9bn in the third quarter of 2023. Free cash flow was $2.1bn in the third quarter of 2024, compared to $2.5 bn in the third quarter of 2023.
“In the third quarter, we advanced our strategic, operational and financial priorities, as demonstrated by our record backlog of more than $165bn, 48 F-35 deliveries, increased production on missile programs, and $2.1bn of free cash flow generation,” said Lockheed Martin Chairman, President and CEO Jim Taiclet.
“As a result of our strong year-to-date results and confidence in our near-term performance, we are raising the outlook for full year 2024 sales, segment operating profit, EPS and free cash flow. Looking forward, we continue to make progress on the three key initiatives of our 21st Century Security® strategy of strengthening the resiliency and scalability of our production system, accelerating cutting edge digital and physical technologies into all our mission solutions and our internal operations, and expanding international partnerships to broaden our production capacity and drive more international sales. We are making substantial investments in these areas, while continuing to focus on our fundamental financial objective of driving free cash flow per share growth to generate returns for shareholders. Given our confidence in the company’s ability to deliver on these objectives, our Board has also approved a five percent increase in our quarterly dividend, the 22nd F-35 Lots 18-19 Contract Update. The company remains in negotiations with the U.S. Government on the Lots 18-19 production contract. Although negotiations for this contract are in process, the company has been performing work on Lots 18-19 production under initial customer authorization and funding to begin work pursuant to an advance acquisition contract received in the fourth quarter of 2023. The company and its industry team continue work in an effort to meet the customer’s desired aircraft delivery dates for the Lots 18-19 aircraft. The company’s costs began to exceed the advanced acquisition contract value in the third quarter of 2024. As a result, the company was unable to recognize revenue and profit on approximately $400m of costs incurred on the program in the third quarter of 2024, with at least an additional $300m of impacts across the supply chain. Additionally, the company was prevented from invoicing and receiving cash of approximately $450m through the third quarter of 2024. At the end of the third quarter of 2024, the company also had approximately $2bn in potential termination liability exposure to third parties related to Lots 18-19 (some of which would be recoverable in the unlikely event of a termination). Currently, the company expects to receive contractual authorization and funding on the Lots 18-19 production contract with the U.S. Government and resume invoicing costs incurred and recover sales, profit, and cash in the fourth quarter of 2024. However, until a final agreement is reached, or the U.S. Government otherwise provides additional contractual authorization and funding, the company’s results of operations, cash flows, and financial condition will continue to be negatively impacted, and the impacts could be material and differ from the company’s current 2024 outlook.”
2024 Financial Outlook
The following table and other sections of this news release contain forward-looking statements, which are based on the company’s current expectations. Actual results may differ materially from those projected. It is the company’s practice not to incorporate adjustments into its financial outlook for proposed or potential acquisitions, divestitures, ventures, pension risk transfer transactions or discretionary contributions, financing transactions, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the company’s actual results, refer to the “Forward-Looking Statements” section in this news release.
Cash Flows and Capital Deployment Activities
The decrease in operating and free cash flows in the third quarter of 2024 compared to the same period in 2023 was primarily due to a decrease in working capital (defined as receivables, contract assets, and inventories less accounts payable and contract liabilities), which includes the cash impacts for the lack of additional contractual authorization and funding from the U.S. Government prior to the end of the third quarter of 2024 on the Lots 18-19 contract of the F-35 program.
The company’s cash activities in the third quarter of 2024, included the following:
- paying cash dividends of $749m; and
- paying $850m to repurchase 1.5m shares.
As previously announced on Oct. 2, 2024, the company’s board authorized the repurchase of its common stock up to an additional $3.0bn, increasing the total authorization for potential future common stock repurchases to $10.3bn. The stock repurchase program does not have an expiration date and may be amended or terminated by the board of directors at any time. The amount of shares ultimately purchased and the timing of purchases are at the discretion of management and subject to compliance with applicable law and regulation.
Additionally, on Oct. 2, 2024, the company authorized a fourth quarter dividend payment of $3.30 per share, representing an increase of $0.15 per share over the prior quarterly dividend payment.
Segment Results
The company operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the company’s business segments and reconciles these amounts to the company’s consolidated financial results.
The company’s consolidated net favorable profit booking rate adjustments represented approximately 20% and 19% of total segment operating profit in the quarters ended Sept. 29, 2024 and Sept. 24, 2023. During the quarter ended Sept. 29, 2024, the company recognized losses of $80m on a classified program at the company’s Aeronautics business segment due to higher than anticipated costs to achieve program objectives.
Aeronautics
Aeronautics’ net sales in the third quarter of 2024 decreased $230m, or 3%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $480m on the F-35 program due to lower volume on production contracts as a result of delays in receiving additional contractual authorization and funding under the Lots 18-19 contract. This decrease was partially offset by higher net sales of $120 m on the C-130 program primarily due to higher volume on production and sustainment contracts; and $85 m on the F-16 program due to the ramp up on production.
Aeronautics’ operating profit in the third quarter of 2024 decreased $12m, or 2%, compared to the same period in 2023. The decrease in operating profit was attributable to $25m from lower volume described above and $20 m from unfavorable contract mix, partially offset by $30 m of higher profit booking rate adjustments. The increase in profit booking rate adjustments included an $85m favorable profit rate adjustment for a claim associated with a contract to modernize and install new engines in C-5 Galaxy aircraft, partially offset by $80m of unfavorable profit rate adjustments on a classified program due to higher than anticipated costs to achieve program objectives.
Missiles and Fire Control
MFC’s net sales in the third quarter of 2024 increased $236m, or 8%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $285 m for tactical and strike missile programs due to production ramp up on Guided Multiple Launch Rocket Systems (GMLRS) and Long Range Anti-Ship Missile (LRASM) programs. This increase was partially offset by lower net sales of $90m for integrated air and missile defense programs due to lower volume on Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense (THAAD).
MFC’s operating profit in the third quarter of 2024 increased $58m, or 15%, compared to the same period in 2023. The increase in operating profit was attributable to $35m of higher profit booking rate adjustments and $20m from volume described above. The increase in profit booking rate adjustments was primarily due to higher favorable profit rate adjustments on PAC-3 as a result of better than anticipated cost performance.
Rotary and Mission Systems
RMS’ net sales in the third quarter of 2024 increased $246m, or 6%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $185m on integrated warfare systems and sensors (IWSS) programs due to higher volume on radar programs and the Canadian Surface Combatant (CSC) program; and $50m for Sikorsky helicopter programs due to higher production volume on CH-53K, Seahawk and Black Hawk programs.
RMS’ operating profit in the third quarter of 2024 was comparable to the same period in 2023 as a $25m increase due to the higher volume described above was offset by $25m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was primarily due to a reach-forward loss recognized on a radar program as a result of additional quantity ordering risk identified on fixed-price options.
Space
Space’s net sales in the third quarter of 2024 decreased $26m, or 1%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $50m for commercial civil space due to lower volume on the Orion program, partially offset by higher volume on other space exploration programs. This decrease was partially offset by higher net sales of $25m for strategic and missile defense programs due to higher volume on reentry programs.
Space’s operating profit in the third quarter of 2024 increased $13m, or 5%, compared to the same period in 2023. The increase in operating profit was attributable to $25m related to favorable contract mix across the portfolio, partially offset by $10m of lower equity earnings driven by lower launch volume from the company’s investment in United Launch Alliance (ULA). Profit booking rate adjustments were comparable.
Total equity earnings (ULA) represented approximately $5m, or 2% of Space’s operating profit in the third quarter of 2024, compared to approximately $15m, or 6% for the same period in 2023.
Northrop Grumman
24 Oct 24. Northrop Grumman Reports Third Quarter 2024 Financial Results
- Net awards of $11.7bn; record backlog of $85bn
- Q3 sales of $10.0bn; year to date sales up 6 percent
- Operating margin rate of 11.2 percent; segment operating margin rate1 of 11.5 percent
- Diluted earnings per share increase 13 percent to $7.00
- Company raises lower end of 2024 segment operating income1 guidance and increases MTM-adjusted EPS1 guidance by 75 cents to $25.65 – $26.05. Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2024 sales increased 2 percent to $10.0bn, as compared with $9.8bn in the third quarter of 2023. Third quarter 2024 sales reflect continued strong demand for our products and services. Third quarter 2024 net earnings totaled $1.0bn, or $7.00 per diluted share, as compared with $937m, or $6.18 per diluted share, in the third quarter of 2023.
“Based on the strength of our year-to-date results and our positive outlook for the future, we are once again raising our 2024 guidance. Sales remain on target for 5% growth this year and the deliberate actions we are taking to improve margin rates have resulted in further expansion this quarter,” said Kathy Warden, chair, chief executive officer and president. “With our investments to create capacity and focus on performance, we continue to deliver value for our customers and our shareholders. As we look toward 2025, our outlook includes continued top line growth, margin rate expansion and greater than 20% free cash flow growth.”
Sales Third quarter 2024 sales increased $221m, or 2 percent, due to higher sales at Mission Systems, Aeronautics Systems and Defense Systems, partially offset by lower sales at Space Systems largely driven by a reduction of $224m associated with wind-down of our work on the restricted space and NGI programs, as previously disclosed.
Third quarter 2024 sales reflect continued strong demand for our products and services. Operating Income and Margin Rate Third quarter 2024 operating income increased $104m, or 10 percent, primarily due to $57 m of higher segment operating income1 and a $40m increase in the FAS/CAS operating adjustment.
Operating margin rate increased to 11.2 percent from 10.4 percent primarily due to benefits associated with the FAS/CAS operating adjustment and a higher segment operating margin rate. Segment Operating Income and Margin Rate Third quarter 2024 segment operating income increased $57m, or 5 percent, primarily due to a higher segment operating margin rate and higher sales. Segment operating margin rate1 increased to 11.5 percent and reflects higher operating margin rates at Space Systems and Aeronautics Systems, partially offset by lower operating margin rates at Mission Systems and Defense Systems. Federal and Foreign Income Taxes
The company’s third quarter 2024 effective tax rate (ETR) decreased to 13.6 percent from 16.2 percent in the prior year period principally driven by a net reduction in tax reserves largely due to a recent federal court decision, partially offset by higher interest expense on unrecognized tax benefits.
Net Earnings and Diluted EPS Third quarter 2024 net earnings increased $89 m, or 9 percent, primarily due to $104 m of higher operating income, a $36 m increase in the non-operating FAS pension benefit and a lower effective tax rate, partially offset by a $97m gain recognized in the prior year upon the sale of a minority investment. Third quarter 2024 diluted earnings per share increased 13 percent, reflecting a 9 percent increase in net earnings and a 3 percent reduction in weighted-average diluted shares outstanding.
Cash Flows Third quarter 2024 cash provided by operating activities decreased $137 m and third quarter 2024 free cash flow1 decreased $139m principally due to higher net federal tax payments. Awards and Backlog Third quarter 2024 net awards totaled $11.7bn and backlog totaled $84.8bn.
Significant third quarter new awards include $2.7bn for restricted programs (primarily at Mission Systems, Aeronautics Systems, and Space Systems), $1.6bn for E-2 and $0.7bn for certain military ammunition programs.
Segment Operating Results Effective July 1, 2024, the company realigned the Strategic Deterrent Systems (SDS) division, which includes the Sentinel program, from Space Systems to Defense Systems. This realignment is reflected in the accompanying financial information. Recast financial information for certain prior periods is presented in Schedule 6 of this release.
AERONAUTICS SYSTEMS
Three Months Ended September 30
Sales
Third quarter 2024 sales increased $112m, or 4 percent, primarily due to higher F-35 production volume largely driven by the timing of materials, increased E-2 fleet sustainment and modernization work, higher Triton LRIP production volume and an increase in Global Hawk sustainment activities. These increases were partially offset by lower restricted sales.
Operating Income Third quarter 2024 operating income increased $15m, or 5 percent, due to higher sales and a higher operating margin rate. Operating margin rate increased to 10.4 percent from 10.2 percent principally due to higher net EAC adjustments, largely driven by improved performance and cost efficiencies on certain mature production programs.
DEFENSE SYSTEMS
Three Months Ended September 30
Third quarter 2024 sales increased $34m, or 2 percent, primarily due to higher volume on the Sentinel program, ramp-up on the Stand-in Attack Weapon (SiAW) program and higher volume on certain military ammunition programs. These increases were partially offset by lower volume due to the completion of an international training program and lower volume on the Special Electronic Mission Aircraft (SEMA) program as that program nears completion.
Operating Income Third quarter 2024 operating income decreased $5m, or 2 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 9.4 percent from 9.8 percent principally due to lower net EAC adjustments and changes in contract mix.
MISSION SYSTEMS
Third quarter 2024 sales increased $195m, or 7 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, increased marine systems sales due, in part, to the timing of materials, and higher Ground/Air Task Oriented Radar (G/ ATOR) volume due to continued ramp-up on full-rate production (FRP) awards.
Operating Income Third quarter 2024 operating income increased $4m, or 1 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 13.8 percent from 14.7 percent primarily due to lower net EAC adjustments and changes in contract mix toward more cost-type content.
SPACE SYSTEMS
Third quarter 2024 sales decreased $83m, or 3 percent, primarily due to wind-down of our work on the restricted space and NGI programs, which reduced sales by $224 m. This reduction was partially offset by a $129m increase on Space Development Agency (SDA) satellite programs and higher sales across our remaining restricted space portfolio.
Operating Income Third quarter 2024 operating income increased $43m, or 14 percent, due to a higher operating margin rate, which more than offset lower sales. Operating margin rate increased to 12.0 percent from 10.2 percent principally due to an improvement in net EAC adjustments, partially offset by a $16m benefit in the prior year from insurance recoveries in our commercial space business.
22 Oct 24. RTX (RTX.N) on Tuesday raised its 2024 adjusted profit and sales forecasts for the second time, citing strong demand for aircraft repairs and defense systems, and reported better-than-expected quarterly earnings.
Shares of the Arlington, Virginia-based company were up 2.1% before the opening bell.
The aerospace and defense giant expects full-year adjusted profit per share to be between $5.50 and $5.58, compared with its prior forecast range of $5.35 to $5.45.
The company raised its revenue forecast range to $79.25bn to $79.75bn, from $78.75 to $79.5bn.
With a surge in air travel demand, airlines had to extend the service life of aircraft amid the limited availability of new commercial planes, creating a bustling aftermarket business. (Source: Reuters)
22 Oct 24. RTX Reports Third Quarter 2024 Results. RTX delivers strong operational performance; Increases 2024 outlook for adjusted sales* and adjusted EPS*
RTX (NYSE: RTX) reported third quarter 2024 results.
Third quarter 2024
- Reported sales of $20.1bn
- Adjusted sales* of $20.1bn, up 6 percent versus prior year, and up 8 percent organically* excluding the divestiture of the Cybersecurity, Intelligence and Services business
- GAAP EPS was $1.09 and included $0.31 of acquisition accounting adjustments and $0.05 of restructuring and other net significant and/or non-recurring charges
- Adjusted EPS* of $1.45, up 16 percent versus prior year
- Operating cash flow of $2.5bn; Free cash flow* of $2.0bn
- Company backlog of $221bn; including $131 bn of commercial and $90bn of defense
- Returned $1.1bn of capital to shareowners, returning over $32bn since the merger
- Realized $90m of incremental RTX gross cost synergies, achieving the $2bn post-merger target
Updates outlook for full year 2024
- Adjusted sales* of $79.25 – $79.75bn, up from $78.75 – $79.5bn
- Adjusted EPS* of $5.50 – $5.58, up from $5.35 – $5.45
- Confirms free cash flow* of approximately $4.7bn
“RTX delivered another strong quarter of organic sales* growth, adjusted segment margin* expansion, and free cash flow*,” said RTX President and CEO Chris Calio. “Demand across our portfolio, particularly within commercial aftermarket and defense, remains robust and gives us the confidence to again raise our full year outlook for adjusted sales* and adjusted EPS*.”
“With a record $221bn backlog, we are focused on executing our strategic priorities to drive best-in-class performance, deliver for our customers and create long-term shareowner value.”
Third quarter 2024
RTX reported third quarter sales of $20.1bn. Adjusted sales* were $20.1bn, up 6 percent over the prior year. GAAP EPS of $1.09 included $0.31 of acquisition accounting adjustments, and $0.05 of restructuring and other net significant and/or non-recurring charges. Adjusted EPS* of $1.45 was up 16 percent versus the prior year.
The company reported net income attributable to common shareowners in the third quarter of $1.5bn which included $418m of acquisition accounting adjustments, and $58m of restructuring and other net significant and/or non-recurring charges. Adjusted net income* of $1.9bn was up 7 percent versus the prior year driven by growth in adjusted segment operating profit* and a lower effective tax rate. This increase was partially offset by higher interest expense and lower pension income. Operating cash flow in the third quarter was $2.5bn. Capital expenditures were $552 m, resulting in free cash flow* of $2.0bn.
The prior year reported results included a charge related to the previously disclosed Pratt powder metal matter which reduced sales by $5.4 bn, net income by $2.2bn, and GAAP EPS by $1.53.
Summary Financial Results – Operations Attributable to Common Shareowners
Segment Results
Collins Aerospace
Collins Aerospace had third quarter 2024 reported sales of $7,075m, up 7 percent versus the prior year. The increase in sales was driven by a 14 percent increase in defense and a 9 percent increase in commercial aftermarket, partially offset by an 8 percent decrease in commercial OE. The increase in defense sales was driven by higher volume across multiple programs, and the increase in commercial aftermarket sales was driven by continued growth in commercial air traffic, including higher flight hours. The decrease in commercial OE sales was driven by lower narrowbody volume. Adjusted sales* of $7,075m, were up 6 percent versus the prior year.
Collins Aerospace reported operating profit of $1,062m, up 18 percent versus the prior year. The increase in operating profit was driven by drop through on higher commercial aftermarket and defense volume. This increase was partially offset by lower commercial OE volume, unfavorable commercial OE mix, and higher R&D expense. Q3 2024 benefited from the absence of a $57 m charge related to a litigation matter in the prior year, as well as lower restructuring costs. On an adjusted basis, operating profit* of $1,096m was up 5 percent versus the prior year.
Pratt & Whitney
Pratt & Whitney had third quarter 2024 reported sales of $7,239m. Adjusted sales* of $7,239m, were up 14 percent versus the prior year driven by a 13 percent increase in commercial aftermarket, a 20 percent increase in military, and a 9 percent increase in commercial OE. The increase in commercial sales was driven by higher aftermarket volume, as well as favorable OE mix in Large Commercial Engines. The increase in military sales was driven by higher sustainment volume across the F135 and F117 platforms, as well as higher development volume driven by the F135 Engine Core Upgrade program.
Pratt & Whitney reported operating profit of $557m, up versus the prior year. Operationally, the increase was driven by drop through on higher commercial aftermarket and military volume. Favorable mix and lower OE delivery volume in Large Commercial Engines were offset by higher production costs. On an adjusted basis, operating profit* of $597 m, was up 45 percent versus the prior year.
The prior year reported results included a charge related to the previously disclosed powder metal matter which reduced sales by $5,401m and operating profit by $2,888m.
Raytheon
Raytheon had third quarter 2024 reported sales of $6,386m, down 1 percent versus prior year. Higher volume on land and air defense systems, including Global Patriot, NASAMS and counter-UAS programs, as well as higher volume on advanced technology programs was more than offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024 and lower volume on air and space defense systems. Excluding the impact of the divestiture, sales were up 5 percent versus prior year*.
Raytheon reported operating profit of $647m, up 16 percent versus the prior year. Favorable mix, improved net productivity, and drop through on higher volume was partially offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business. On an adjusted basis, operating profit of $661m was up 16 percent versus the prior year. (Source: PR Newswire)
Textron
24 Oct 24. Textron Reports Third Quarter 2024 Results.
- EPS of $1.18; adjusted EPS of $1.40, down from $1.49 in the prior year
- Net cash from operating activities of $208m in the third quarter of 2024
- $215m returned to shareholders through share repurchases in the third quarter
- Textron Aviation segment revenue and profit impacted by IAM strike
Textron Inc. (NYSE: TXT) today reported third quarter 2024 income from continuing operations of $1.18 per share, as compared to $1.35 per share in the third quarter of 2023. Adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.40 per share for the third quarter of 2024, compared to $1.49 per share in the third quarter of 2023.
“In the third quarter, Textron Aviation experienced a strike upon the expiration of its existing labor agreement with bargaining unit employees that was recently settled with the ratification of a new five-year contract,” said Textron Chairman and CEO Scott C. Donnelly. “The labor disruption adversely impacted our third quarter results and we expect it to negatively affect fourth quarter financials.”
“In the quarter, Bell achieved a key milestone on the FLRAA program with the U.S. Army’s approval of Milestone B establishing FLRAA as a program of record,” said Donnelly. “In addition, at Textron Aviation, the ongoing investment in new products continued to drive demand, achieving over $1.0 bn of new orders.”
Cash Flow
Net cash provided by operating activities of the manufacturing group for the third quarter was $208 m, compared to $270m last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $147 m for the third quarter, compared to $205m last year.
In the quarter, Textron returned $215m to shareholders through share repurchases. Year to date, Textron has returned $890m to shareholders through share repurchases.
Outlook
On October 20th, the International Association of Machinists and Aerospace Workers (IAM) District 70, Local Lodge 774 representing the Wichita-based direct labor workforce, ratified a new five-year labor contract, after engaging in a four-week strike. While it has been resolved, we expect revenue and segment profit to be unfavorably impacted in the fourth quarter of 2024 related to the labor disruption and the recovery of production and delivery activities as our employees return to work.
Textron now expects 2024 adjusted earnings per share from continuing operations to be in a range of $5.40 to $5.60, down from its previous outlook of $6.20 to $6.40. Manufacturing cash flow before pension contributions is now expected to be in a range of $650 m to $750 m, as compared to its previous outlook of $0.9 bn to $1.0 bn, with planned pension contributions of about $50 m.
Third Quarter Segment Results
Textron Aviation
Delayed aircraft deliveries along with unfavorable performance from manufacturing inefficiencies associated with the labor disruption resulting from the IAM strike lowered Textron Aviation’s third quarter revenues by approximately $50m and segment profit by approximately $30m.
Textron Aviation’s revenues were $1.3bn, essentially unchanged from last year’s third quarter, with higher pricing of $36 m mostly offset by lower volume and mix of $35m.
Textron Aviation delivered 41 jets in the quarter, up from 39 in the third quarter of 2023, and 25 commercial turboprops, down from 38 in last year’s third quarter.
Segment profit was $128m in the third quarter, down $32m from a year ago, reflecting lower volume and mix of $29m.
Textron Aviation backlog at the end of the third quarter was $7.6bn, up $162 m from the second quarter.
Bell
Bell revenues were $929 m, up $175m from the third quarter of 2023, largely reflecting higher volume and mix of $148m. Volume and mix included higher military volume of $81m, primarily related to the FLRAA program, partially offset by lower volume on the V-22 program, and higher commercial volume and mix of $67m, reflecting an increase in deliveries.
Bell delivered 44 commercial helicopters in the quarter, up from 23 in last year’s third quarter.
Segment profit of $98m was up $21m from last year’s third quarter, largely due to a favorable impact from performance of $17m, and a favorable impact from pricing, net of inflation, of $12m.
Bell backlog at the end of the third quarter was $6.5bn, up $2.3bn from the second quarter, largely reflecting approval of Milestone B for FLRAA and the resulting transition into the Engineering and Manufacturing Development phase of the program.
Textron Systems
Revenues at Textron Systems were $301m, down $8m from last year’s third quarter, largely due to lower volume.
Segment profit of $39m was down $2m, compared with the third quarter of 2023.
Textron Systems’ backlog at the end of the third quarter was $1.9bn.
Industrial
Industrial revenues were $840m, down $82m from last year’s third quarter, mainly due to lower volume and mix of $86m, principally in the Specialized Vehicles product line.
Segment profit of $32m was down $19m from the third quarter of 2023, primarily due to lower volume and mix.
Textron eAviation
Textron eAviation segment revenues were $6m and segment loss was $18m in the third quarter of 2024, compared with a segment loss of $19m in the third quarter of 2023.
Finance
Finance segment revenues were $12m, and profit was $5m.
(Source: BUSINESS WIRE)