RTX Lowers Full-Year Free Cash Flow Expectations
RTX stock declines as company revises full-year cash flow expectations, citing manufacturing issue with engine parts. However, adjusted earnings and sales forecast show positive momentum.
Shares of RTX were falling on Tuesday after the aerospace and defense company announced a downward revision of its full-year free cash flow expectations. In its second-quarter earnings report, RTX stated that it now anticipates full-year free cash flow to be $4.3 billion, compared to the previous guidance of $4.8 billion. The downward adjustment is attributed to a "rare condition" discovered in the powder metal used for manufacturing certain engine parts at Pratt & Whitney.
Chief Executive Greg Hayes expressed the need to address the issue promptly, stating, "We are lowering our free cash flow outlook to reflect the impact of an issue that has recently come to light, which will require Pratt & Whitney to remove certain engines from service for inspection earlier than expected."
As a result of this announcement, shares of RTX dropped 3.4% in premarket trading on Tuesday, reaching $93.92. Year-to-date, the stocks have seen a decline of 3.9%.
Despite the revision in free cash flow expectations, RTX reported second-quarter adjusted earnings of $1.29 per share on revenue of $18.3 billion. These figures surpassed Wall Street's predictions of $1.18 per share on revenue of $17.7 billion.
Moreover, RTX provided an improved forecast for the full year, raising the low end of its earnings estimates to be between $4.95 and $5.05 per share from the previous guidance range of $4.90 to $5.05 per share. Additionally, the company revised its sales expectations to be in the range of $73 billion to $74 billion for the year, surpassing the earlier outlook of $72 billion to $73 billion.
Overall, RTX's adjusted earnings and revised sales forecast indicate positive momentum for the company, despite the challenges posed by Pratt & Whitney's engine issues.