UTC Reports First Quarter 2015 Results

- EPS of $1.58, up 20% (up 7% ex. restructuring and one-time items)

- Sales of $14.5 billion, including 3% organic growth

- 2015 EPS range of $6.85 to $7.05 reaffirmed

News provided by

United Technologies Corp.

Apr 21, 2015, 08:00 ET

HARTFORD, Conn., April 21, 2015 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) today reported first quarter earnings per share of $1.58 and net income attributable to common shareowners of $1.4 billion, up 20 percent and 18 percent respectively versus the prior year.  Results for the current quarter include favorable one-time items of $0.07 per share net of restructuring costs. Earnings per share in the year ago quarter included $0.09 of net restructuring costs.  Excluding these items in both quarters, earnings per share of $1.51 increased 7 percent year over year.  Foreign currency had an unfavorable impact of $0.07.

Sales of $14.5 billion decreased by 1 percent, reflecting the impact of adverse foreign exchange (4 points), which was partially offset by the benefit of organic growth (3 points). First quarter segment operating profit increased 8 percent over the prior year quarter.  Adjusted for restructuring costs and net one-time items, segment operating profit was flat, including an unfavorable impact from foreign exchange (5 points).

"We had a good start to the year, despite headwinds from a stronger U.S. dollar," said Gregory Hayes, UTC President and Chief Executive Officer.  "The fundamentals of all of our businesses remained solid, continuing to drive strong organic sales growth and allowing us to increase EPS by 13 percent on a constant currency basis, excluding the impact of gains and restructuring."

Otis new equipment orders in the quarter increased 8 percent over the prior year at constant currency. Equipment orders at UTC Climate, Controls & Security increased 6 percent. Commercial aerospace aftermarket sales were up 2 percent at Pratt & Whitney and up 4 percent at UTC Aerospace Systems on an organic basis.

"Although commercial aerospace aftermarket growth was slower in the quarter than we anticipate for the year," Hayes added, "the commercial building business in the U.S. is looking better and I'm encouraged by the signs of growth that we're seeing in Europe. We remain confident in our expectations of 3 to 5 percent organic top line growth and sales of $65 to $66 billion, and this continues to support our earnings per share guidance of $6.85 to $7.05 in 2015."

Cash flow from operations was $1.3 billion and capital expenditures were $348 million in the quarter. The planned share repurchase of $3.0 billion for the year has been completed.  UTC continues to assume a placeholder for full year acquisition spend of $1 billion and expects cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners for 2015.

United Technologies Corp., based in Hartford, Connecticut, provides high technology products and services to the building and aerospace industries. Additional information, including a webcast, is available on the Internet at http://www.utc.com. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

All financial results and projections reflect continuing operations unless otherwise noted. Foreign currency impact includes currency translation as well as hedging activity at Pratt & Whitney Canada. The accompanying tables include information integral to assessing the company's financial position, operating performance, and cash flow, including a reconciliation of differences between non-GAAP measures used in this release and the comparable financial measures calculated in accordance with generally accepted accounting principles in the United States.

This press release includes statements that constitute "forward-looking statements" under the securities laws. Forward-looking statements often contain words such as "believe," "expect," "plans," "project," "target," "anticipate," "will," "should," "see," "guidance," "confident" and similar terms. Forward-looking statements may include, among other things, statements relating to the plans, strategies, and objectives of UTC for future operations, including statements relating to a potential strategic alternative transaction relating to Sikorsky, or the terms, timing or structure of any such transaction (or whether any such transaction will take place at all); the future performance of UTC or Sikorsky if any such transaction is completed; future and estimated sales, earnings, cash flow, charges, expenditures and share repurchases; anticipated growth in sales; new products and their entry into service; anticipated benefits of organizational changes; and other measures of financial or operational performance. There can be no assurance that any transaction or future events will occur as anticipated, if at all, or that actual results will be as expected.  All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties include risks related to a potential separation of, or any other transaction relating to, Sikorsky; the effect of economic conditions in the markets in which we operate, including financial market conditions; fluctuation in commodity prices, interest rates and foreign currency exchange rates; future levels of research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial condition of commercial airlines; the impact of government budget and funding decisions on the economy; changes in government procurement priorities and funding; weather conditions and natural disasters; delays and disruption in delivery of materials and services from suppliers; company- and customer- directed cost reduction efforts and restructuring costs and consequences thereof; the impact of acquisitions, dispositions, joint ventures and similar transactions; challenges in the development and production of new products and services; the impact  of diversification across product lines, regions and industries; the impact of legal proceedings, investigations and other contingencies; pension plan assumptions and future contributions; the effect of changes in tax, environmental and other laws and regulations and political conditions; and other factors beyond our control. The level of share repurchases depends upon market conditions and the level of other investing activities and uses of cash. The forward- looking statements speak only as of the date of this presentation and we undertake no obligation to update or revise any forward-looking statements as of a later date. For additional information identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time, including, but not limited to, the information included in UTC's Forms 10-K and 10-Q under the headings "Business," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and

Results of Operations" and "Legal Proceedings" and in the notes to the financial statements included in UTC's Forms 10-K and 10-Q.

UTC-IR

United Technologies Corporation

Condensed Consolidated Statement of Operations





Quarter Ended March 31,


(Unaudited)

(Millions, except per share amounts)

2015

2014

Net Sales

$

14,541

$

14,745

Costs and Expenses:



Cost of products and services sold

10,523

10,690

Research and development

602

624

Selling, general and administrative

1,563

1,596

Total Costs and Expenses

12,688

12,910

Other income, net

421

263

Operating profit

2,274

2,098

Interest expense, net

218

225

Income before income taxes

2,056

1,873

Income tax expense

558

567

Net income

1,498

1,306

Less: Noncontrolling interest in subsidiaries' earnings

72

93

Net income attributable to common shareowners

$

1,426

$

1,213

Earnings Per Share of Common Stock:



Basic

$

1.60

$

1.35

Diluted

1.58

1.32

Weighted Average Number of Shares Outstanding:



Basic shares

890

901

Diluted shares

904

917







As described on the following pages, consolidated results for the quarters ended March 31, 2015 and 2014 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.







See accompanying Notes to Condensed Consolidated Financial Statements.

United Technologies Corporation

Segment Net Sales and Operating Profit



Quarter Ended March 31,

(Unaudited)

(Millions)

2015

2014

Net Sales


Otis

$

2,745

$

2,955

UTC Climate, Controls & Security

3,852

3,851

Pratt & Whitney

3,332

3,329

UTC Aerospace Systems

3,548

3,450

Sikorsky

1,267

1,361

Segment Sales

14,744

14,946

Eliminations and other

(203)

(201)

Consolidated Net Sales

$

14,541

$

14,745




Operating Profit


Otis

$

527

$

570

UTC Climate, Controls & Security

729

537

Pratt & Whitney

419

388

UTC Aerospace Systems

569

590

Sikorsky

92

86

Segment Operating Profit

2,336

2,171

Eliminations and other

48

39

General corporate expenses

(110)

(112)

Consolidated Operating Profit

$

2,274

$

2,098








Segment Operating Profit Margin






Otis

19.2

%

19.3

%

UTC Climate, Controls & Security

18.9

%

13.9

%

Pratt & Whitney

12.6

%

11.7

%

UTC Aerospace Systems

16.0

%

17.1

%

Sikorsky

7.3

%

6.3

%

Segment Operating Profit Margin

15.8

%

14.5

%








As described on the following pages, consolidated results for the quarters ended March 31, 2015 and 2014 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.

United Technologies Corporation

Restructuring Costs and Non-Recurring Items Included in Consolidated Results



Quarter Ended March 31,

(Unaudited)

In Millions - Income (Expense)

2015

2014

Restructuring Costs included in Operating Profit:


Otis

$

(6)

$

(17)

UTC Climate, Controls & Security

(24)

(43)

Pratt & Whitney

(13)

(42)

UTC Aerospace Systems

(50)

(6)

Sikorsky

—

(17)

(93)

(125)

Non-Recurring items included in Operating Profit:


UTC Climate, Controls & Security

126

—

Total impact on Consolidated Operating Profit

33

(125)

Tax effect of restructuring and non-recurring items above

30

42

Impact on Net Income Attributable to Common Shareowners

$

63

$

(83)

Impact on Diluted Earnings Per Share

$

0.07

$

(0.09)








Details of the non-recurring items for the quarter ended March 31, 2015 above are as follows:

Quarter Ended March 31, 2015

UTC Climate, Controls & Security: Approximately $126 million gain as a result of a fair value adjustment related to the acquisition of a controlling interest in a joint venture investment.

United Technologies Corporation

Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and Non-Recurring Items (as reflected on the previous page)



Quarter Ended March 31,

(Unaudited)

(Millions)

2015

2014

Net Sales


Otis

$

2,745

$

2,955

UTC Climate, Controls & Security

3,852

3,851

Pratt & Whitney

3,332

3,329

UTC Aerospace Systems

3,548

3,450

Sikorsky

1,267

1,361

Segment Sales

14,744

14,946

Eliminations and other

(203)

(201)

Consolidated Net Sales

$

14,541

$

14,745




Adjusted Operating Profit


Otis

$

533

$

587

UTC Climate, Controls & Security

627

580

Pratt & Whitney

432

430

UTC Aerospace Systems

619

596

Sikorsky

92

103

Segment Operating Profit

2,303

2,296

Eliminations and other

48

39

General corporate expenses

(110)

(112)

Adjusted Consolidated Operating Profit

$

2,241

$

2,223








Adjusted Segment Operating Profit Margin






Otis

19.4

%

19.9

%

UTC Climate, Controls & Security

16.3

%

15.1

%

Pratt & Whitney

13.0

%

12.9

%

UTC Aerospace Systems

17.4

%

17.3

%

Sikorsky

7.3

%

7.6

%

Adjusted Segment Operating Profit Margin

15.6

%

15.4

%








United Technologies Corporation

Condensed Consolidated Balance Sheet





March 31,

December 31,

2015

2014

(Millions)

(Unaudited)

(Unaudited)

Assets


Cash and cash equivalents

$

5,281

$

5,235

Accounts receivable, net

11,512

11,317

Inventories and contracts in progress, net

10,336

9,865

Other assets, current

2,829

3,341

Total Current Assets

29,958

29,758

Fixed assets, net

9,175

9,276

Goodwill

27,557

27,796

Intangible assets, net

15,571

15,560

Other assets

9,066

8,899

Total Assets

$

91,327

$

91,289




Liabilities and Equity


Short-term debt

$

4,184

$

1,922

Accounts payable

6,929

6,967

Accrued liabilities

14,616

14,006

Total Current Liabilities

25,729

22,895

Long-term debt

17,809

17,872

Other long-term liabilities

17,487

17,818

Total Liabilities

61,025

58,585

Redeemable noncontrolling interest

135

140

Shareowners' Equity:


Common Stock

14,919

15,185

Treasury Stock

(24,520)

(21,922)

Retained earnings

45,462

44,611

Accumulated other comprehensive loss

(7,211)

(6,661)

Total Shareowners' Equity

28,650

31,213

Noncontrolling interest

1,517

1,351

Total Equity

30,167

32,564

Total Liabilities and Equity

$

91,327

$

91,289








Debt Ratios:






Debt to total capitalization:

42

%

38

%

Net debt to net capitalization

36

%

31

%








See accompanying Notes to Condensed Consolidated Financial Statements.

United Technologies Corporation

Condensed Consolidated Statement of Cash Flows



Quarter Ended March 31,

(Unaudited)

(Millions)

2015

2014

Operating Activities:


Net income

$

1,498

$

1,306

Adjustments to reconcile net income to net cash flows provided by operating activities:


Depreciation and amortization

479

467

Deferred income tax provision

145

44

Stock compensation cost

51

60

Change in working capital

(639)

(521)

Global pension contributions

(45)

(84)

Other operating activities, net

(179)

63

Net cash flows provided by operating activities

1,310

1,335

Investing Activities:


Capital expenditures

(348)

(333)

Acquisitions and dispositions of businesses, net

(72)

106

Increase in collaboration intangible assets

(132)

(142)

Receipts (payments) from settlements of derivative contracts

569

(113)

Other investing activities, net

156

40

Net cash flows provided by (used in) investing activities

173

(442)

Financing Activities:


Issuance of long-term debt, net

10

6

Increase (decrease) in short-term borrowings, net

2,177

(200)

Dividends paid on Common Stock

(553)

(514)

Repurchase of Common Stock

(3,000)

(335)

Other financing activities, net

(18)

48

Net cash flows used in financing activities

(1,384)

(995)

Effect of foreign exchange rate changes on cash and cash equivalents

(53)

(40)

Net increase (decrease) in cash and cash equivalents

46

(142)

Cash and cash equivalents, beginning of period

5,235

4,619

Cash and cash equivalents, end of period

$

5,281

$

4,477








 See accompanying Notes to Condensed Consolidated Financial Statements.

United Technologies Corporation

Free Cash Flow Reconciliation



Quarter Ended March 31,

(Unaudited)

(Millions)

2015

2014






Net income attributable to common shareowners

$

1,426


$

1,213

Net cash flows provided by operating activities

$

1,310


$

1,335

Net cash flows provided by operating activities as a percentage of net income
attributable to common shareowners

92

%

110

%

Capital expenditures

(348)


(333)

Capital expenditures as a percentage of net income attributable to common shareowners

(24)

%

(27)

%

Free cash flow

$

962


$

1,002

Free cash flow as a percentage of net income attributable to common shareowners

67

%

83

%








Notes to Condensed Consolidated Financial Statements








(1) Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents.








(2) Organic sales growth represents the total reported increase within the Corporation's ongoing businesses less the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and significant non-recurring items.


(3) Free cash flow, which represents cash flow from operations less capital expenditures, is the principal cash performance measure used by UTC. Management believes free cash flow provides a relevant measure of liquidity and a useful basis for assessing UTC's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of UTC's common stock and distribution of earnings to shareholders. Other companies that use the term free cash flow may calculate it differently. The reconciliation of net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is shown above.

Contact: Danielle Canzanella, UTC
(860) 728-6238

Investor Relations
(860) 728-7608

Logo - http://photos.prnewswire.com/prnh/20140122/NE50390LOGO

SOURCE United Technologies Corp.

Related Links

http://www.utc.com

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