Raytheon in Tucson wins $2 billion missile contract as RTX raises full-year guidance
Tucson-based missiles and defense products manufacturer Raytheon has won a nearly $2 billion contract that will supply the Japanese military as well as U.S. forces.
The contract with the U.S. Missile Defense Agency for $1,944,082,765 call for the manufacture and assembly of Standard Missile-3 (SM-3) Block IIA All-Up Rounds, with work to be performed in Tucson and Alabama and completed by February 2031.
The SM-3 interceptor is described by Raytheon as a defensive weapon that destroys short- to intermediate-range ballistic missiles using sheer force rather than explosive warheads. Its “kill vehicle” collides with threats with the force of a 10-ton truck traveling 600 mph. Raytheon is Arizona’s largest defense contractor ranked by the value of contracts awarded during fiscal 2023, according to Business Journal research.
The contract was announced Thursday by the Defense Department on the same day that defense contractor RTX Corp, Raytheon’s Virginia-based parent company, released its second-quarter earnings report showing stronger-than-expected sales for its latest quarter, even as several one-time expenses ate into its profits.
RTX (NYSE: RTX) also raised its full-year sales guidance by $750 million at the low end of the range. It now expects adjusted sales of between $78.75 billion and $79.5 billion, up from a range of $78 billion to $79 billion.
At the close of markets Thursday, shares of aerospace and defense giant on Wall Street were up 8.24%, giving it a market capitalization of $151 billion.
For its second quarter, RTX reported sales of $19.7 billion, up 8% over $18.3 billion in the comparable period last year.
Despite the revenue increase, profits for the quarter were down 92% from last year, to just $111 million from $1.3 billion in Q2 2023.
RTX said that its net income reflects $393 million of “acquisition accounting adjustments,” $35 million of “restructuring” and other charges, a charge of $918 million related to the “expected resolution of several legacy legal matters” and a $438 million charge related to a “fixed price development contract with a foreign customer at Raytheon.”
Chris Johnson, a spokesperson for RTX, said that restructuring charges for the quarter are not specific to any specific layoffs. However, he did say RTX conducted “some layoffs” this year across the entire organization, while declining to share specifics.
RTX CEO Chris Calio told analysts in a Thursday call that RTX is “nearing completion of agreements with the Department of Justice, SEC and Department of State to resolve several legal matters.”
“These matters primarily arose out of legacy Raytheon Company and Rockwell Collins prior to the merger and acquisition of these companies,” Calio said. “We’ve already taken robust corrective actions to address the legacy gaps that led to these issues, being implementing enhanced compliance and training measures.”
RTX’s business units also include Collins Aerospace and aircraft engine manufacturer Pratt & Whitney.