United Technologies Beats Q3 Earnings, Reaffirms Outlook
United Technologies CorporationUTX reported third-quarter 2015 net income of $1,426 million or $1.61 per share, down from $1,755 million or $1.93 in the year-ago quarter. The decrease in net income was due to a decline in revenues.
Excluding one-time items, recurring earnings for the quarter were $1.67 per share, down 2% year over year. However, the figure surpassed the Zacks Consensus Estimate of $1.54.
Total revenue for the third quarter decreased 6.0% year over year to $13,788 million. The decrease in revenues was owing to the impact of adverse foreign exchange and a decline in organic sales. Revenues also missed the Zacks Consensus Estimate of $14,593 million.
New equipment orders at Otis were up 2% from the year-earlier quarter. UTC Climate, Controls & Security equipment orders decreased 2%. Commercial aerospace aftermarket sales rose 1% at UTC Aerospace Systems and increased 8% at Pratt & Whitney.
Otis recorded revenues of $3,043 million in the reported quarter, down 8.5% year over year. Revenues at UTC Climate Controls & Security stood at $4,279 million versus $4,351 million in the year-ago quarter. Pratt & Whitney revenues decreased 9.2% to $3,234 million in the third quarter. UTC Aerospace systems' sales fell 2.2% to $3,457 million.
Operating profit of Otis declined to $642 million in the reported quarter from $703 million in the prior-year quarter. Operating profit at UTC Climate Controls & Security stood at $771 million versus $807 million in the year-ago period. Pratt & Whitney's operating profit decreased 33.8% year over year to $419 million in the reported quarter, while UTC Aerospace systems' operating profit dropped to $572 million from $575 million in the year-ago quarter.
Consolidated segment operating profit in the reported quarter stood at $2,302 million versus $2,612 million in the prior-year period. Segment operating margin stood at 17.2% versus 18.4% in the year-earlier quarter.
Balance Sheet and Cash Flow
As of Sep 30, 2015, cash and cash equivalents were $5,477 million versus $5,229 million as of Dec, 31, 2014. Long-term debt stood at $19,428 million as of Sep 30, 2015 versus $17,867 million as of Dec 31, 2014. The company had a debt-to-capital ratio of 41.0%.
Cash flow from operations aggregated $1,021 million for the quarter compared with $2,027 million in the year-ago quarter. Capital expenditures were $390 million in the reported quarter.
United Technologies reached an agreement to sell its Sikorsky Aircraft business to Lockheed Martin Corp. for $9 billion in cash, subject to regulatory approvals. This previously announced sale of its Sikorsky unit is expected to close in the fourth quarter of 2015. Also, the company authorized a new $12 billion share repurchase program, including the $6 billion share repurchase, using the net proceeds from the Sikorsky sale. The company expects to complete $16 billion of share repurchases through 2017.
United Technologies reaffirmed its full-year 2015 guidance. Earnings from continuing operations per share are expected in the range of $6.15-$6.30. Sales from continuing operations are anticipated in the range of $57-$58 billion. The company expects acquisitions of $1 billion and cash flow from operations less capital expenditures in the range of 90%-100% of net income in 2015.
United Technologies currently has a Zacks Rank #3 (Hold). Stocks that look promising in the industry include Compass Diversified Holdings CODI , Danaher Corp. DHR , and Graham Corporation GHM , each carrying a Zacks Rank #2 (Buy).
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