RTX Corp. (NYSE:RTX)

The financial data over the five-year period exhibits notable trends across key metrics.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a significant recovery and growth trajectory. Starting from a negative value of -1,590 million US dollars in 2020, it increased sharply to 5,054 million in 2021. Although there was a slight decline in the following two years to 4,663 million in 2022 and 4,118 million in 2023, the figure rose again to 6,483 million in 2024, reaching the highest level within the five-year span. This pattern indicates a strong operational turnaround after 2020 and sustained profitability with some fluctuations.

Cost of Capital

The cost of capital remained relatively stable, fluctuating marginally between 6.56% and 6.98% over the period. The rate increased slightly from 6.56% in 2020 to a peak of 6.95% in 2022, then dipped to 6.68% in 2023, and rose again to 6.98% in 2024. This suggests that the company experienced only minor changes in its capital expense environment or risk profile during these years.

Invested Capital

Invested capital demonstrated a gradual decline over the period, decreasing from 115,597 million US dollars in 2020 to 111,328 million in 2024. The reduction was steady and consistent, implying possible divestments, asset disposals, or management’s efforts to optimize capital deployment.

Economic Profit

Economic profit, which accounts for the cost of capital, remained negative throughout the five years, although there is clear improvement. The largest loss was recorded in 2020, at -9,168 million US dollars. Subsequently, the negative economic profit contracted considerably to -2,731 million in 2021 but worsened slightly in 2022 and 2023 with values of -3,219 million and -3,363 million, respectively. In 2024, economic profit showed marked improvement again, decreasing the loss to -1,285 million. Despite ongoing negative economic profits, the trend points toward gradual enhancement in value creation.

Overall, the company exhibits a strong recovery in operational profitability after a significant loss in 2020, stable capital costs, and a reduction in invested capital. Despite continued negative economic profit, the trajectory suggests improving efficiency and potential for future value creation if operational gains are sustained and the cost of capital remains stable.

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.

Economic Profit

The economic profit shows a consistent negative value throughout the five-year period, indicating ongoing losses. However, there is a notable improvement in 2021 compared to 2020, with the loss decreasing significantly from -9168 million US dollars to -2731 million US dollars. Following this improvement, economic profit deteriorated slightly in 2022 and 2023 but remained relatively stable around -3200 to -3300 million US dollars. In 2024, there is a substantial recovery, with the economic loss reducing considerably to -1285 million US dollars, suggesting enhanced profitability or more effective cost management.

Invested Capital

There is a steady decline in invested capital over the observed period, decreasing from 115,597 million US dollars in 2020 to 111,328 million US dollars in 2024. This gradual reduction suggests a deliberate effort to either downsize investments or improve capital efficiency. The decline is consistent year over year, indicating a persistent trend rather than isolated changes.

Economic Spread Ratio

The economic spread ratio remains negative for all years, indicating that the return on invested capital is consistently below the company's cost of capital. The ratio improves significantly from -7.93% in 2020 to -2.38% in 2021, paralleling the improvement in economic profit. Minor fluctuations follow, with a slight worsening in 2022 (-2.84%) and 2023 (-3.0%). By 2024, the ratio improves again to -1.15%, the least negative figure in the timeframe, aligning with the better economic profit shown in the same year. This trend suggests gradual progress in closing the gap between returns and cost of capital, although the company still incurs a cost disadvantage.

Net Sales

There is a steady upward trend in net sales over the five-year period. Starting at $56,587 million in 2020, sales increased consistently each year, reaching $80,738 million by the end of 2024. This represents an overall growth of approximately 42.6%, indicating expanding revenue generation and possibly market share growth or price increases.

Economic Profit

Economic profit remains negative throughout the period but shows a marked improvement. Initially, the economic profit was significantly negative at -$9,168 million in 2020. This loss narrowed considerably to -$1,285 million by 2024. Although still negative, this improvement suggests better cost management, operational efficiency, or enhanced returns relative to the cost of capital.

Economic Profit Margin

The economic profit margin follows a similar pattern to economic profit, remaining negative but improving over time. From a low of -16.2% in 2020, it improves progressively to -1.59% by 2024. This indicates a gradual reduction in the proportion of loss relative to net sales, signifying enhanced profitability dynamics even as the company has not yet achieved a positive margin.

Overall Insights

The financial trends reveal a company experiencing growth in sales while simultaneously working toward greater profitability. The persistent negative economic profit and margin, despite considerable improvement, highlight ongoing challenges in generating returns above the cost of capital. The consistent reductions in economic losses and margin improvement are positive signals that financial performance is moving in a favorable direction, suggesting potential future profitability if this trend continues.