RTX Corp. (NYSE:RTX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a significant positive turnaround over the observed period. Initially, there was a substantial loss of US$ 1,590 million at the end of 2020. However, in 2021, this figure sharply improved to a profit of US$ 5,054 million. Subsequent years saw some fluctuation: a decrease to US$ 4,663 million in 2022, followed by a further decline to US$ 4,118 million in 2023. In 2024, the NOPAT increased again, reaching US$ 6,483 million, marking the highest value in the period. Overall, the trend indicates recovery and growth with variability after the initial loss.

Cost of Capital

The cost of capital shows a generally increasing trend over the period analyzed. Starting at 6.59% in 2020, it rose to 6.82% in 2021 and continued to increase to 6.99% in 2022. There was a slight decrease to 6.71% in 2023 before increasing again to 7.01% in 2024. This pattern suggests a modest upward pressure on the cost of funds, with minor fluctuations.

Invested Capital

Invested capital has experienced a gradual decline throughout the period. It decreased from US$ 115,597 million in 2020 to US$ 114,687 million in 2021, then continued downward to US$ 113,345 million in 2022, US$ 112,037 million in 2023, and further to US$ 111,328 million in 2024. The progressive reduction implies a strategy of capital efficiency or asset divestment, resulting in lower invested capital over time.

Economic Profit

Economic profit remains negative throughout the entire period but shows a trend of improvement. It was at a low of -US$ 9,203 million in 2020, which improved significantly to -US$ 2,769 million in 2021. After that, economic profit slightly worsened to -US$ 3,258 million in 2022 and -US$ 3,398 million in 2023. Another improvement occurred in 2024, reducing the negative economic profit to -US$ 1,323 million. Although still negative, the trend indicates a narrowing loss, possibly reflecting enhanced profitability relative to the cost of capital.

Net Income (Loss) Attributable to Common Shareowners

The data reveals a significant turnaround in net income over the five-year span. Starting with a substantial loss of $3,519 million in 2020, the company moved to positive net income in 2021, earning $3,864 million. This positive trajectory continued with net income increasing to $5,197 million in 2022. However, there was a notable decline in 2023, with net income dropping to $3,195 million. The year 2024 saw a substantial recovery, with net income rising again to $4,774 million. Overall, the trend shows strong volatility but an underlying recovery and growth following initial losses.

Net Operating Profit After Taxes (NOPAT)

NOPAT also exhibits considerable improvement from 2020 through 2024. It started in negative territory at -$1,590 million in 2020, then sharply increased to $5,054 million in 2021. A slight decrease occurred in 2022, with NOPAT falling to $4,663 million, followed by a further decline to $4,118 million in 2023. In 2024, there was a substantial increase to $6,483 million, marking the highest point during the observed period. This suggests strong operating performance recovery and improved profitability post-2020.

General Observations

Both net income and NOPAT reveal a pattern of initial recovery after a period of losses, with some fluctuations between 2022 and 2023. The company demonstrates resilience with net income and operating profit growing significantly from 2020 lows to much higher figures by 2024. The decline in 2023 warrants attention as it interrupts the otherwise upward trend, but the subsequent recovery indicates an overall positive financial health trajectory.

Income Tax Expense

The income tax expense exhibits variability over the analyzed five-year period. Starting at 575 million US dollars in 2020, it increased notably to 786 million in 2021. However, in 2022, it declined to 700 million before experiencing a further reduction to 456 million in 2023. In 2024, a significant rise to 1181 million occurred, marking the highest level in the period. The fluctuation suggests the influence of changing taxable income, tax rates, or tax planning strategies impacting reported tax expenses.

Cash Operating Taxes

Cash operating taxes show a generally upward trend with some volatility. Beginning at 978 million US dollars in 2020, this figure increased to 1158 million in 2021. A sharp and substantial increase to 2635 million is seen in 2022, more than doubling the previous year’s amount. This peak was followed by a considerable decline to 1197 million in 2023. In 2024, cash operating taxes rose again to 1638 million. This pattern indicates significant fluctuations in actual cash tax payments, potentially reflecting changes in tax regulations, timing of tax payments, or differences between accounting tax expense and cash tax outflows.

Total Reported Debt & Leases

The total reported debt and leases remained relatively stable from 2020 through 2022, with values around 33,800 million US dollars. However, a notable increase occurred in 2023, where the amount rose sharply to 45,587 million US dollars. This increase was followed by a slight decline in 2024 to 43,260 million US dollars, yet still remaining substantially higher than the levels observed in the initial years.

Shareowners’ Equity

Shareowners’ equity showed a slight upward trend from 2020 to 2021, reaching 73,068 million US dollars. It then experienced a minor decrease in 2022, followed by a significant reduction in 2023 to 59,798 million US dollars. In 2024, the equity levels stabilized modestly with a small increase to 60,156 million US dollars, but overall, the equity remained below the earlier period’s highs.

Invested Capital

Invested capital demonstrated a gradual decline over the entire period. From 115,597 million US dollars in 2020, it decreased steadily each year to reach 111,328 million US dollars by 2024. This consistent downward trend suggests a contraction in the company's invested assets or capital base over this timeframe.

The financial data reveals key trends regarding economic profit, invested capital, and economic spread ratio over the five-year period ending December 31, 2024.

Economic Profit

The economic profit shows a substantial improvement from a deeply negative position at -9,203 million US dollars in 2020 to a considerably reduced loss of -1,323 million US dollars in 2024. Despite remaining negative throughout the period, the losses have consistently decreased year-over-year, indicating progress towards profitability or at least reduced economic losses.

Invested Capital

Invested capital demonstrates a gradual decline from 115,597 million US dollars in 2020 to 111,328 million US dollars in 2024. This represents a modest contraction in the asset base or investments committed, decreasing by roughly 3.7% over the five years. The steady reduction may suggest a strategic shift toward leaner capital deployment or divestment of certain assets.

Economic Spread Ratio

The economic spread ratio remains negative throughout the timeframe, indicating that the return on invested capital is below the cost of capital. However, there is a notable trend of improvement from -7.96% in 2020 to -1.19% in 2024. This movement towards a narrower negative spread reflects enhanced capital efficiency and potentially better profitability despite the persistent shortfall relative to the cost of capital.

Overall, the data indicates a trajectory of operational and financial improvement marked by shrinking economic losses and increased capital efficiency, albeit without reaching positive economic profit or a positive economic spread ratio by the end of 2024. The decline in invested capital alongside improving economic metrics suggests deliberate efforts to optimize capital structure or focus on higher-return initiatives.

The financial data reveal several significant trends in the company's performance from 2020 through 2024. The net sales exhibit a consistent upward trajectory, increasing each year from $56,587 million in 2020 to $80,738 million in 2024. This steady growth in revenue suggests expanding market presence or successful sales strategies.

Despite the rising net sales, the company has faced persistent negative economic profit throughout the period. The economic profit showed a marked improvement from a substantial loss of $9,203 million in 2020 to a reduced loss of $1,323 million by 2024. This trend indicates progress in moving toward profitability, albeit still resulting in an economic loss.

Examining the economic profit margin further illuminates this improvement. The margin improved from a deeply negative -16.26% in 2020 to a less severe -1.64% in 2024. Although the margin remains in negative territory, the reduction in negative percentage signifies enhanced operational efficiency or better cost management contributing to narrowing losses relative to net sales.

Between 2021 and 2023, economic profit figures fluctuated within a comparatively narrow range, peaking at a minor improvement of -$2,769 million in 2021 but slightly worsening again in 2022 and 2023 before a more considerable improvement in 2024. This pattern suggests some variability in cost control or other factors affecting profitability, but the overall trajectory remains positive towards reduced losses.

Net Sales

Consistent year-on-year growth from 2020 to 2024 indicates expansion in revenue generation capabilities.

Economic Profit

Continues to be negative but shows a strong improvement trend, indicating convergence toward breaking even.

Economic Profit Margin

Improving margins suggest better cost control or increased efficiency, though still below zero, denoting lack of economic profitability.

In summary, while the company is not yet generating positive economic profit, it is making significant strides in reducing losses relative to its increasing sales base. The trends imply ongoing efforts to improve profitability and operational performance are yielding positive results, with the company approaching nearer to a breakeven point economically.