United Technologies Corp
) reported second quarter 2014 net income of $1,680 million or
$1.84 per share up from $1,560 million or $1.70 in the year-ago
quarter. The reported EPS beat the Zacks Consensus Estimate of
$1.79. The increase in earnings was primarily driven by higher
revenues. However, the second quarter results failed to cheer
investors' sentiment and the shares dropped marginally on Oct, 22
driven by lower orders and sales from Pratt & Whitney
United Technologies Corporation - Earnings
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Total revenue for the second quarter edged up 7% year over year to
$17,191 million. The reported revenues were above the Zacks
Consensus Estimate of $16,689 million. The increase in revenues was
driven by organic growth, partially offset by divestitures.
New equipment orders at Otis were up 3% from the year-earlier
quarter, driven by growth in North America. UTC Climate, Controls
& Security equipment orders increased 2% organically.
Commercial spares orders increased 28% at UTC Aerospace Systems.
However, large commercial engine spares orders were down 6% at
Pratt & Whitney.
Otis reported revenues of $3,365 million in the second quarter,
up 7.2 % year over year. At the same time, revenues at UTC Climate
Controls & Security decreased 2.5 % year over year to $4,429
million. Pratt & Whitney revenues decreased 0.8 % year over
year to $3,592 million in the second quarter. UTC Aerospace systems
sales increased to $3,636 million from $3,321 million in the
year-ago quarter. However, Sikorsky sales stood at $2384 million
versus $1,566 million in the year-ago quarter.
Otis reported operating profit of $693 million in the second
quarter, up 6.6% year over year. At the same time, operating profit
at UTC Climate Controls & Security increased 8.4% year over
year to $815 million. Pratt & Whitney's operating profit
decreased 23.8% year over year to $432 million in the second
quarter, while UTC Aerospace systems operating profit increased to
$602 million from $499 million in the year-ago quarter. However,
Sikorsky's operating loss was $317 million versus operating profit
of $156 million in the year-ago quarter. Consolidated segment
operating profit in the second quarter stood at $2,355 million
versus $2,507 million in the year-ago quarter.
Balance Sheet and Cash Flow
The company continues to maintain a strong cash flow position.
As of Jun 30, 2014, cash and cash equivalents were $4,962 million
with long-term debt of $17.8 billion. The company had a
debt-to-capital ratio of 36.0%. Cash flow from operations was $1.7
billion, while capital expenditures were $406 million in the
quarter. The company repurchased shares worth $335 million during
The company increased the lower end of its EPS guidance for 2014
from $6.55-$6.85 per share to $6.75 to $6.85 per share. Also, the
company expects 2014 cash flow from operations less capital
expenditures to range from 90 - 100 % of net income. In
addition, the company expects share repurchase of $1.25 billion and
acquisitions of less than $1 billion for 2014.
United Technologies currently has a Zacks Rank #2 (Buy). Other
stocks that look promising and are worth a look include
Noble Group Limited
), carrying a Zacks Rank #1 (Strong Buy), and
Macquarie Infrastructure Company LLC
), both carrying a Zacks Rank #2 (Buy).
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