US aerospace manufacturer Raytheon Technologies Corp reported better than expected quarterly profit and sales Tuesday but forecast lower than expected 2021 revenue amid a slow global economic environment triggered by disruptions from the COVID-19 pandemic.
Shares of the company rose as much as 6% in early trading after the company said its free cash flow could almost double to $4.5 billion in 2021.
However, the company provided a full-year revenue outlook of about $63.4 billion to $65.4 billion which was below analysts’ estimate for revenue of about $67.28 billion.
Still, the Waltham, Massachusetts-based company said it now expects 2021 full-year earnings per share to be in the range of $3.40 per share to $3.70 per share, beating analysts’ average expectation of $3.47 per share, according to IBES data from Refinitiv.
Raytheon also beat its 2020 cash flow guidance of about $2 billion by posting $2.3 billion, thanks to stability in its defense unit that contributes to more than half of the company’s overall sales.
Although progressive Democrats in Congress have called for cuts in military spending amid the pandemic, analysts have said sudden changes are unlikely in an industry that supports countless jobs during the recession.
The newly installed US Secretary of Defense, Lloyd Austin, resigned from Raytheon’s board of directors on Friday following his confirmation by the US Senate. Austin has told Congress he will recuse himself of Raytheon-related matters at the Pentagon.
On an adjusted basis, Raytheon earned $0.74 per share in the quarter, beating analysts’ estimate of $0.70 per share.
Net sales in the quarter were $16.4 billion, just below analysts’ expectation of $16.92 billion.
The company, which had about 195 000 employees when it merged with United Technologies last April, has laid off nearly 20 000 full-time and contract employees in its commercial aerospace business, which makes aircraft engines and spare parts.
Raytheon’s backlog at the end of the fourth quarter was $150.1 billion and comprised of $82.8 billion from commercial aerospace and $67.3 billion from defense.
The company expects a 2021 tax rate about 19% versus 17.5% in 2020, management said on a post-earnings conference call with investors.