Shares of RTX Corp (formerly known as Raytheon Technologies) experienced a significant decline of 4.4% in premarket trading on Monday. This drop comes as a direct result of the defense contractor revising its sales outlook, primarily due to a rare condition found in the power metal used for certain engine parts.
The company’s press release states that approximately 600 to 700 Pratt & Whitney engines will need to be removed for shop visits due to the powder metal condition, with the majority of these removals occurring between 2023 and early 2024. As a consequence of this issue, RTX Corp expects to incur a substantial charge of $3 billion in the third quarter.
Neil Mitchill, the Chief Financial Officer, acknowledged the seriousness of the matter, stating, “The financial charges related to the powder metal manufacturing issue, that will be recognized this quarter, reflect the impact of this matter and how we expect to support our customers.”
In light of this unfortunate development, RTX Corp has adjusted its reported 2023 sales forecast. The revised guidance now anticipates sales between $67.5 billion and $68.5 billion, down from the initially projected $73.0 billion to $74.0 billion. However, the company reiterates its outlook for adjusted earnings per share, which remain in the range of $4.95 to $5.05.
This adjustment serves as a reminder of the challenges faced by corporations in the defense industry. Although the revision will undoubtedly have an impact on RTX Corp’s financial performance, the company remains committed to providing unparalleled support to its valued customers.
Let us hope that this setback serves as an opportunity for RTX Corp to further strengthen its manufacturing processes and ensure that such rare conditions are swiftly identified and resolved in order to prevent future disruptions.