Raytheon’s first quarter results exceeded Wall Street’s revenue and non-GAAP profit expectations, but the market reacted negatively, focusing on external risks highlighted during the call. Management credited the quarter’s performance to robust growth in commercial aftermarket services, disciplined execution on cost transformation, and continued progress in the supply chain. CEO Chris Calio emphasized a 21% increase in commercial aftermarket sales and 120 basis points of segment margin expansion as key highlights. The leadership acknowledged ongoing industry challenges, including dynamic operating conditions and supply chain pressures, but underscored resilience in core segments such as aftermarket services and defense programs.
Is now the time to buy RTX? Find out in our full research report (it’s free).
RTX (RTX) Q1 CY2025 Highlights:
- Revenue: $20.31 billion vs analyst estimates of $19.92 billion (5.2% year-on-year growth, 1.9% beat)
- Adjusted EPS: $1.47 vs analyst estimates of $1.37 (7.5% beat)
- Adjusted EBITDA: $3.72 billion vs analyst estimates of $3.11 billion (18.3% margin, 19.3% beat)
- The company reconfirmed its revenue guidance for the full year of $83.5 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $6.08 at the midpoint
- Operating Margin: 10%, in line with the same quarter last year
- Market Capitalization: $195.7 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions RTX’s Q1 Earnings Call
- Peter Arment (Baird) asked about the impact of European defense spending on Raytheon’s opportunity pipeline. CEO Chris Calio responded that European commitments are increasing demand for integrated air and missile defense, with strong regional partnerships supporting order flow.
- Robert Stallard (Vertical Research) sought clarification on the $850 million tariff impact and the company’s ability to pass costs to customers. Calio explained the estimate already incorporates mitigations and noted that pricing actions are possible but must be balanced with customer relationships.
- Myles Walton (Wolfe Research) questioned assumptions around customer behavior and supply chain disruption due to tariffs and China exposure. Calio indicated that while China is a small portion of imports, the company is diversifying sourcing and remains vigilant for supply chain shocks.
- Sheila Kahyaoglu (Jefferies) pressed for detail on the timing and segment impact of tariffs. CFO Neil Mitchill clarified the majority of the impact would be split evenly between Collins and Pratt, and is expected to be back-half loaded as inventory turns over.
- Noah Poponak (Goldman Sachs) asked about margin guidance at Collins and Pratt, and whether outlooks leave room for absorbing softening demand or tariff costs. Mitchill noted the outlook accommodates some uncertainty, and margins could flex depending on market conditions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the implementation and effectiveness of tariff mitigation strategies, (2) the pace of defense backlog conversion into revenue, especially in Europe, and (3) the sustainability of aftermarket demand as travel trends evolve. Progress on new engine programs and supply chain resilience will also be important indicators for future performance.
RTX currently trades at $148.74, up from $126.03 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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