Raytheon Technologies Corporation (NYSE:RTX) Q4 2022 Earnings Call Transcript

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Chris Calio: Myles, this is Chris. Maybe just as a step back for a minute on GTF. Demand remains really, really strong. As you know, we continue to do the block upgrades to drive improved time on wing obviously, improve time on wing helps with their contract profitability. We continue to incorporate upgrades to sort of improve the customer experience. On the aftermarket side, in 2022 turned slightly positive. And so from this point, it’s about accelerating those margins. You’re going to see that through some better contract mix as we talked about back in Investor Day in 2021. You’re going to see that through increased time on wing through some of these upgrades. And so the GTF aftermarket profitability is something that is of high focus at frac given the growing installed base, get about 2,500 engines out there and a very large backlog. So GTF aftermarket is a huge driver.

Neil Mitchill: And maybe I’ll just put a couple of financial numbers around that to help out a little bit. But at Pratt for 2023, we think the aftermarket there will be up between 20% and 25% from a sales perspective. So think about the legacy shop visits being about 15% to 20% up year-over-year. On the OE side, that would imply about a mid-teens sort of a sales growth there. So we see strong growth, obviously, in the commercial business. And I guess while I’m on Pratt, I’ll just throw out a couple of the Collins numbers just so everyone has them. In their aftermarket business, think about that as being up sort of low double digits to low teens, sequentially kind of growing in the low single-digit percentage kind of range. And on the OE side, up low to mid-teens year-over-year. So again, with all that OE growth that we see across the narrow and wide-body platforms, you’ll see that both at Pratt and Collins.

Myles Walton: Thank you.

Neil Mitchill: You’re welcome.

Operator: Thank you. Our next question comes from the line of David Strauss of Barclays. Your question please, David.

David Strauss: Good morning, everyone.

Greg Hayes: Good morning, David.

David Strauss: Greg, I guess following up on that. Could you just comment where you are on, I guess, across mainly Collins, but also touching on Pratt, where you are relative to the manufacturer stated rates, I guess, in particular on the MAX in the low 30s, A320 in the mid to high 40s and 787 around two a month. Thanks.

Greg Hayes: David, it’s something we focus a lot on. Obviously, we are, I would tell you, at Collins and at Pratt in lockstep with Boeing and Airbus in terms of their production rates. Obviously, some of the challenges that we’ve talked about at Pratt on the supply chain with structural castings is limited, I would say, some of our ability to meet some of the demand out there. That’s starting to ease. And again, we are working very closely with Airbus on the A320 production rate. As far as 737, that’s really a Collins story. And we €“ the outlook that Neil talked about, that assumes those rates that you talked about around 31 aircraft or so a month on average. I think they were a little light on that in the fourth quarter, but we think we’ll get back to that.

They still have roughly 200 aircraft that be delivered that are in inventory, too, from when the line was shut down, which, again, also is part of Collins’ upside for the year. As far as 787, we see that, as you said, I think it’s one a month going to two a month and perhaps up to three. Again, I think that’s €“ that will all depend upon Boeing’s ability to continue to get the aircraft out the door. But we are working with them on a daily, weekly basis to make sure that we can support them. But we don’t see anything in our supply chain today that would prevent us from delivering either at Boeing or Airbus to the rates that they need.

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