United Technologies 2Q Earnings Beat - Analyst Blog

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United Technologies Corp ( UTX ) 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 systems businesses.

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 Engine).

Segment Results

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 include Macquarie Infrastructure Company LLC. ( MIC ), Hutchison Whampoa Ltd . ( HUWHY ) and General Electric Company ( GE ), each carrying a Zacks Rank #2 (Buy)

GENL ELECTRIC (GE): Free Stock Analysis Report


MACQUARIE INFRA (MIC): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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