Raytheon Technologies Corporation (NYSE: RTX) reported third quarter 2020 results.

• Sales of $14.7 billion; Adjusted sales of $15.0 billion
• GAAP EPS from continuing operations of $0.10, which included $0.48 of net significant and/or non-recurring charges and acquisition accounting adjustments
• Adjusted EPS of $0.58
• Operating cash flow from continuing operations of $1.6 billion
• Free cash flow of $1.2 billion
• Achieved ~$700 million in cost reduction and ~$1.9 billion in cash conservation actions
• Robust Defense backlog of $70.2 billion

"We delivered sales that were in line with our expectations as well as better than expected adjusted EPS and free cash flow during the quarter as we achieved approximately $700 million of cost reduction and $1.9 billion of cash conservation actions, which was significantly better than our plan. We are delivering on our commitments to customers while taking the necessary actions that will equip us to weather the current environment and emerge as a stronger business," said Raytheon Technologies Chief Executive Officer Greg Hayes. "The long-term business fundamentals and earnings power of Raytheon Technologies remain strong with our balanced portfolio, leading businesses and advanced technologies that combine the best of commercial aerospace and defense."

Raytheon Technologies reported third quarter sales of $14.7 billion and adjusted sales of $15.0 billion. GAAP EPS from continuing operations was $0.10 and included $0.48 of net significant and/or non-recurring charges and acquisition accounting adjustments. This includes a net gain on dispositions of $0.17 per share, which was more than offset by $0.27 of acquisition accounting adjustments primarily related to intangible amortization, $0.26 of charges due to the current economic environment primarily driven by the COVID-19 pandemic, and $0.12 of restructuring. Adjusted EPS was $0.58.

The company recorded net income from continuing operations in the third quarter of $151 million, which included $721 million of net significant and/or nonrecurring charges and acquisition accounting adjustments. Adjusted net income was $872 million. Operating cash flow from continuing operations in the third quarter was $1.6 billion and was better than expected primarily due to the timing of customer collections and the accelerated execution on cash conservation actions. Capital expenditures were $389 million, resulting in free cash flow of $1.2 billion. Free cash flow included approximately $600 million of merger costs, restructuring and tax payments on divestitures. This quarter's performance includes approximately $700 million of cost savings and approximately $1.9 billion of cash conservation actions, reflecting substantial progress on our previously stated goal of $2 billion in cost savings and $4 billion in cash conservation actions by the end of 2020.

Bookings and OrdersBacklog at the end of the third quarter was $152.3 billion, of which $82.1 billion was from commercial aerospace and $70.2 billion was from defense.

Notable defense bookings during the quarter included:

• $928 million of classified bookings at Raytheon Intelligence & Space (RIS)
• $473 million of F-135 bookings at Pratt & Whitney
• $320 million award for a multi-year Extravehicular Space Operations Contract (ESOC) to provide services, upgrades and sustainment in support of NASA's Extra Vehicular Activity (EVA) on the International Space Station at Collins Aerospace
• $186 million on the Army Navy/Transportable Radar Surveillance-Model 2 (AN/TPY-2) radar program for the Kingdom of Saudi Arabia (KSA) at Raytheon Missiles & Defense (RMD)
• $176 million to perform operations and sustainment for the U.S. Air Force's Launch and Test Range System (LTRS) at RIS

Segment ResultsThe company's reportable segments are Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD). In connection with the merger, the company revised its segment presentation. Prior periods have been revised to reflect the current presentation. Refer to the accompanying tables for further details.

Collins Aerospace had third quarter 2020 adjusted sales of $4,278 million, down 34 percent versus the prior year. Commercial OE was down 44 percent and commercial aftermarket was down 52 percent, while military was up 4 percent. Excluding the impact of the Military GPS and Space ISR divestitures and FX, military was up 8 percent in the quarter. The decrease in commercial sales was driven primarily by the current environment which has resulted in lower flight hours, aircraft fleet utilization and commercial OEM deliveries, as well as the impact of the 737 MAX grounding and lower ADS-B mandate volume. This was slightly offset by higher sales across key military platforms.

Collins Aerospace recorded adjusted operating profit of $73 million in the quarter, down 94 percent versus the prior year. The decrease in adjusted operating profit was driven by lower commercial aerospace OEM and aftermarket sales volume. This was partially offset by cost reduction actions and gross margin drop through on higher military volume.

Pratt & Whitney had third quarter 2020 adjusted sales of $3,790 million, down 28 percent versus the prior year. Commercial OE was down 30 percent and commercial aftermarket was down 51 percent, while military was up 11 percent. The decrease in commercial sales was primarily due to a significant reduction in shop visits and related spare part sales and commercial engine deliveries principally driven by the current environment. This was slightly offset by higher F135 engine sales, F117 overhauls and aftermarket growth on multiple fighter jet platforms.

Pratt & Whitney recorded an adjusted operating loss of $43 million in the quarter, down 108 percent versus the prior year. The decrease in adjusted operating profit was primarily driven by lower commercial aerospace sales volume and unfavorable mix. This was partially offset by cost reduction actions and gross margin drop through on higher military volume.

About Raytheon Technologies

Raytheon Technologies Corporation is an aerospace and defense company that provides advanced systems and services for commercial, military and government customers worldwide. With four industry-leading businesses ? Collins Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space and Raytheon Missiles & Defense ? the company delivers solutions that push the boundaries in avionics, cybersecurity, directed energy, electric propulsion, hypersonics, and quantum physics. The company, formed in 2020 through the combination of Raytheon Company and the United Technologies Corporation aerospace businesses, is headquartered in Waltham, Massachusetts.