United Technologies Corp
) reported second quarter 2013 earnings from continuing
operations of $1.70 per share, up from $1.62 in the year-ago
quarter. The reported earnings per share (EPS) beat the Zacks
Consensus Estimate of $1.56. Before one time items, EPS increased
4.0% year over year. The increase in earnings was driven by
higher revenues in both Pratt & Whitney and UTC Aerospace
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Total revenue for the second quarter 2013 grew 16% year over year
to $16.0 billion, but missed the Zacks Consensus Estimate of
$16.2 billion. The increase in revenues was driven by net
acquisitions. Organic sales were flat year over year.
New equipment orders at Otis were up 23% over the year-earlier
quarter. UTC Climate, Controls & Security equipment orders
increased 6% organically. Organically, commercial spares orders
increased 15% at Pratt & Whitney. On a pro-forma basis,
commercial spares orders were up 4% at UTC Aerospace Systems.
However, large commercial engine spares orders were up 65% at
Pratt & Whitney (including benefit from International Aero
Otis reported revenues of $3,138 million in the second quarter,
up 3.6% year over year. At the same time, revenues at UTC Climate
Controls & Security declined 0.6% year over year to $4,543
million. Pratt & Whitney revenues increased 5.1% year over
year to $3,624 million in second quarter. UTC Aerospace systems
sales jumped to $3,321 million from $1,254 million in the year
ago quarter. Additionally, Sikorsky sales were down 3.3% year
over year to $1,566 million in the second quarter.
Segment operating profit in the second quarter increased 15% year
over year to $2507 million.
Balance Sheet and Cash Flow
The company continues to maintain a strong cash flow position. As
of Jun 30, 2013, cash and cash equivalents were $4.9 billion with
long-term debt of $20.4 billion. The company had a debt to
capital ratio of 43.0%. Cash flow from operations was $1.9
billion while capital expenditures were $369 million in the
reported quarter. The company repurchased shares worth $335
million in the reported quarter.
Concurrent with the strong quarterly results, sales in 2013 are
expected to be $64 billion. The company increased the lower end
of its earnings guidance range from $5.85 - $6.15 per share to
$6.00 - $6.15 per share driven by strong execution, additional
restructuring savings and growing backlogs. The company expects
to invest $450 million in restructuring for 2013.
Additionally, Goodrich and IAE acquisitions are expected to
create new opportunities for growth in the long term.
United Technologies currently has a Zacks Rank #3 (Hold). Other
stocks that look promising and are worth a look in the industry
Macquarie Infrastructure Company LLC.
Hutchison Whampoa Ltd
General Electric Company
), each carrying a Zacks Rank #2 (Buy)