Raytheon Technologies [RTX] on Tuesday posted higher earnings and sales in its fourth quarter and full-year driven largely by gains in its business segments supporting the commercial aerospace market while results at the company’s defense businesses were mixed.

Net income in the quarter more than doubled to $1.4 billion, 96 cents earnings per share (EPS), from $685 million (46 cents EPS) a year ago. Adjusted earnings, which exclude restructuring costs, acquisition accounting adjustments and non-recurring times, were $1.27 EPS in the quarter, three cents ahead of consensus estimates.

Sales in the quarter jumped 96 percent to $18.1 billion versus $17 billion a year ago driven by strong commercial business at the Collins Aerospace and Pratt & Whitney segments, and solid growth at the Raytheon Missile & Defense (RMD) segment, which benefited from improved sales related to the AN-SPY-6 Navy radar, the Next Generation Interceptor missile defense program, and advanced technology. The company said 7 percent of the growth was organic.

In the second half of 2023, Raytheon Technologies plans to consolidate its two defense segments, RMD and Raytheon Intelligence & Space (RIS) into a single segment called Raytheon. The realignment will be overseen by Christopher Calio, chief operating officer (COO) of Raytheon Technologies, whose role will be expanded on March 1 to also be to be president of the company. Calio was named COO in March 2022.

The realignment will be more than a simple consolidation and will examine where it makes sense to put different business units from a technology and customer standpoint, Greg Hayes, chairman and CEO of Raytheon Technologies, said during the company’s earnings call.

“So, you may well see pieces, especially related to JADC2 moving into the Collins business,” Hayes said. JADC2 is the Defense Department’s concept for Joint All-Domain Command and Control, the goal being to connect all elements of the battlespace into a single network to speed decision-making and effects.

Calio highlighted on the call that Collins and RIS already work together on a JADC2 effort called TITAN, work the company won recently for the Army on a tactical ground station to find and track threats in support of long-range precision targeting.

“We’ve had customer feedback throughout the last couple of years about the need for us to figure out how to better integrate some of our solutions providing mission solutions,” Calio said. He said that the realignment “will help remove some” of the “friction” encountered in a large business and lead to better solutions.

The realignment “is about enabling us to better coordinate with our customers, aligning with their needs, and collaborating more effectively across our businesses, all of which is feedback we’ve received from our customers,” he said.

The company at the end of March will have a better handle on the details of the consolidation, although the “rewiring” will take longer, Hayes said.

“Additionally, this realignment will allow us to better leverage our scale so we can optimize our footprint, improve resource allocation and reduce costs for both RTX and our customers,” Calio said.

Roy Azevedo, who leads RIS, is retiring but will help Calio with the business transformation.

For 2022, net income jumped 34 percent to $5.2 billion ($3.51 EPS) from $3.9 billion ($2.58 EPS) in 2021. Sales rose 4 percent to $67.1 billion from $64.4 billion, with organic growth up 6 percent. The company divested a global training business in late 2021 that dampened growth in 2022.

Free cash flow for the year was $4.9 billion despite a $1.6 billion headwind stemming from the expiration of a federal research and development tax credit. Backlog at the end of 2022 stood at $175 billion, including $69 billion from defense, up 12 percent and 10 percent, respectively, from a year ago. Orders were strong at $86 billion.

In 2023, the company expects sales to increase to between $72 billion and $73 billion driven primarily by gains at Pratt & Whitney and Collins on the continued recovery in the commercial aerospace sector. The RMD segment is also forecast to be up while the outlook at RIS is flat.

Adjusted earnings are projected to be between $4.90 and $5.05 per share, with the increase over 2022 driven by segment performance. Free cash flow is forecast at around $4.8 billion.

Hayes said that the macroeconomic issues that challenged the company in 2022 will continue into 2023. The company managed inflation pressure through higher pricing, cost reduction, and the fact that some of the higher costs get passed to the government on cost-reimbursable contracts, he said. These tools, including the upcoming realignment, will help moderate inflation this year, he added.

Calio said that lead times for computer chips have “stabilized” but remain above 2019 levels. He also said improvements have been made around structural castings, although this area won’t get back to 2019 levels until late 2023.

Demand is still “incredibly strong” across the company, Hayes said.