Raytheon Technologies' Q1 2025: Navigating Contradictions in Tariffs, Supply Chain, and Cash Flow Expectations
Earnings DecryptWednesday, Apr 23, 2025 2:59 pm ET

Tariff impact and mitigation strategies, supply chain stability and improvements, supply chain health and delivery capacity, free cash flow expectations are the key contradictions discussed in Raytheon Technologies' latest 2025Q1 earnings call.
Revenue and Profitability Growth:
- RTX generated 8% organic sales growth in Q1, with a 120 basis points segment margin expansion.
- Growth was driven by stronger commercial aftermarket and defense sales, along with improved operational efficiency and execution.
Supply Chain and Operations:
- Pratt & Whitney's commercial aftermarket sales rose 21%, and Collins' commercial aftermarket sales increased 13% in Q1.
- This was attributed to better supply chain management, including a 16% year-over-year increase in structural castings and a 35% rise in PW1100 MRO output.
Defense and International Demand:
- defense sales at Raytheon increased 4%, supported by higher volume on land and air defense systems.
- Growth was driven by increased demand from international markets and commitments to defense spending, such as the EU's plan for a $850 billion increase.
Tariff Impact and Mitigation:
- RTX estimated a potential $850 million direct impact from tariffs, assuming current rates stay in effect.
- Mitigation strategies include regulatory mechanisms and operational changes to minimize exposure to tariffs, although the situation remains fluid.
RTX Total Revenue YoY, Total Revenue
Revenue and Profitability Growth:
- RTX generated 8% organic sales growth in Q1, with a 120 basis points segment margin expansion.
- Growth was driven by stronger commercial aftermarket and defense sales, along with improved operational efficiency and execution.
Supply Chain and Operations:
- Pratt & Whitney's commercial aftermarket sales rose 21%, and Collins' commercial aftermarket sales increased 13% in Q1.
- This was attributed to better supply chain management, including a 16% year-over-year increase in structural castings and a 35% rise in PW1100 MRO output.
Defense and International Demand:
- defense sales at Raytheon increased 4%, supported by higher volume on land and air defense systems.
- Growth was driven by increased demand from international markets and commitments to defense spending, such as the EU's plan for a $850 billion increase.
Tariff Impact and Mitigation:
- RTX estimated a potential $850 million direct impact from tariffs, assuming current rates stay in effect.
- Mitigation strategies include regulatory mechanisms and operational changes to minimize exposure to tariffs, although the situation remains fluid.

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