RTX To Take $3 Bln Charge In Q3 Due To Engine Issue; Cuts FY23 Sales Outlook

RTX Corp. (RTX) said it will take a pre-tax charge of about $3 billion in the third quarter of 2023, due to Pratt & Whitney powder metal manufacturing issue. Therefore, it lowered its 2023 sales outlook but confirmed 2023 adjusted earnings per share guidance.

In Monday pre-market trade, RTX was trading at $80.89 down $2.59 or 3.10%.

Recently, Pratt & Whitney, a subsidiary of RTX, determined that a rare condition in powder metal used to manufacture certain engine parts will require accelerated inspection of the PW1100G-JM (GTF) fleet, which powers the A320neo.

In August 4, 2023, Pratt & Whitney issued a special instruction, to operators of GTF powered A320 aircraft, requiring accelerated inspections and engine removals covering the initial tranche of operational engines, no later than September 15, 2023.

RTX said Monday that Approximately 600 to 700 engines will be removed for shop visits between 2023 and 2026 beyond Pratt & Whitney’s shop visit forecast entering 2023. A majority of the incremental engine removals required by the fleet management plan will occur in 2023 and early 2024. The accelerated removals and incremental shop visits will result in higher aircraft on ground.

RTX expects pre-tax operating profit impact to be between $3 billion and $3.5 billion over the next several years, inclusive of an approximately $3 billion pre-tax charge in third quarter, after partners’ share of charges.

RTX confirmed 2023 adjusted earnings per share to be in the range of $4.95 – $5.05. Analysts polled by Thomson Reuters expect the company to report earnings of $5.01 per share for fiscal year 2023. Analysts’ estimates typically exclude special items.

RTX expects reported 2023 sales of $67.5 billion to $68.5 billion, with no change to its prior 2023 outlook for adjusted sales of $73 billion to $74 billion. Analysts expect revenue of $73.6 billion for fiscal year 2023.

The company continues to prioritize strategic investments in next generation technology and expanded capacity which will drive RTX towards its 2020 to 2025 adjusted annual sales growth commitment of 6 to 7 percent, and sustain long-term growth well beyond 2025.

RTX said it remains confident in its ability to return $33 billion – $35 billion in capital to its shareowners from the merger through 2025.

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