Tuesday, September 30, 2014 Last update: 2:33 AM
FreshNews.com - Tech News = Large & Small Companies (Many you've never heard of) Since 1996

UTC Reports First Quarter 2014 Results

Companies mentioned in this article: United Technologies Corp.

HARTFORD, Conn., April 22, 2014 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) reported first quarter earnings per share of $1.32 and net income attributable to common shareowners of $1.2 billion, down 5 percent and 4 percent respectively, over the year ago quarter. Results for the current quarter include $0.09 per share of restructuring costs. Earnings per share in the year ago quarter included $0.11 of favorable one-time items net of restructuring costs. Excluding these items in both quarters, earnings per share increased 10 percent year over year.

http://photos.prnewswire.com/prnvar/20140122/NE50390LOGO

Sales of $14.75 billion increased 2 percent, reflecting the benefit of organic growth (5 points) partially offset by net divestitures (2 points) and adverse foreign exchange (1 point). First quarter segment operating profit increased 4 percent over the prior year quarter. Adjusted for restructuring costs and net one-time items, segment operating profit grew 9 percent.

"UTC delivered strong results to start the year with continued momentum coming out of 2013," said Louis Chenevert, UTC Chairman & Chief Executive Officer. "All five of the segments contributed to UTC's organic sales growth in the quarter. Our focus on growth and execution is paying off as we capitalize on improving end markets."

New equipment orders at Otis increased 9 percent over the year ago first quarter, led by 27 percent growth in China. Foreign currency had an unfavorable impact of 2 points overall and a favorable impact of 2 points in China. Equipment orders at UTC Climate, Controls & Security increased 1 percent organically, with growth in HVAC and fire and security products partially offset by a decline at Transicold. Large commercial engine spares orders were up 11 percent at Pratt & Whitney and commercial spares orders increased 9 percent at UTC Aerospace Systems.

"Continued organic growth and orders strength give us confidence in our sales expectation of $64 billion for 2014," added Chenevert. "Based on visibility to additional restructuring projects with solid returns, we now plan to increase restructuring spending from $300 million to $375 million, which we expect to be offset by one-time gains. The sales outlook together with continued cost reduction positions us to increase the lower end of our earnings per share range. We now expect earnings per share of $6.65 to $6.85, up from $6.55 to $6.85 previously."

Cash flow from operations was $1.3 billion and capital expenditures were $333 million in the quarter. Share repurchase was $335 million and UTC continues to anticipate share repurchase, acquisitions, and debt paydown of $1 billion each in 2014. The company continues to target cash flow from operations less capital expenditures equal to net income attributable to common shareowners for the year.

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. 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 future and estimated sales, earnings, cash flow, charges, expenditures, share repurchases and other measures of financial performance. 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, without limitation, 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 difficulties 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; the development and production of new products and services; the impact of diversification across product lines, regions and industries; the outcome 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 press release 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 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


    Contact:            John Moran, UTC

                        (860) 728-7062


                        Investor Relations

                        (860) 728-7608

    United Technologies Corporation

    Condensed Consolidated Statement of Comprehensive Income


                                                                                              Quarter Ended
                                                                                                March 31,

                                                                                              (Unaudited)
                                                                                               ----------

    (Millions, except per share amounts)                                                   2014              2013
                                                                                           ----              ----

    Net Sales                                                                                    $14,745           $14,399

    Costs and Expenses:

      Cost of products and services sold                                                 10,690             10,465

      Research and development                                                              624               610

      Selling, general and administrative                                                 1,596             1,627
                                                                                          -----             -----

      Total Costs and Expenses                                                           12,910             12,702

    Other income, net                                                                       263               309
                                                                                            ---               ---

    Operating profit                                                                      2,098             2,006

      Interest expense, net                                                                 225               236
                                                                                            ---               ---

    Income from continuing operations before income taxes                                 1,873             1,770

      Income tax expense                                                                    567               418
                                                                                            ---               ---

    Income from continuing operations                                                     1,306             1,352

      Less: Noncontrolling interest in subsidiaries' earnings from continuing operations     93                82
                                                                                            ---               ---

    Income from continuing operations attributable to common shareowners                  1,213             1,270
                                                                                          -----             -----

    Discontinued Operations:

      Income from operations                                                                  -                20

      Loss on disposal                                                                        -              (15)

      Income tax expense                                                                      -                (9)
                                                                                            ---               ---

    Loss from discontinued operations attributable to common shareowners                      -                (4)
                                                                                            ---               ---

    Net income attributable to common shareowners                                                 $1,213            $1,266
                                                                                                  ======            ======

    Comprehensive income                                                                          $1,238              $908

      Less: Comprehensive income attributable to noncontrolling interests                    86                61
                                                                                            ---               ---

    Comprehensive income attributable to common shareowners                                       $1,152              $847
                                                                                                  ======              ====

    Earnings Per Share of Common Stock - Basic:

      From continuing operations attributable to common shareowners                                $1.35             $1.41

      From discontinued operations attributable to common shareowners                         -                -

    Earnings Per Share of Common Stock - Diluted:

      From continuing operations attributable to common shareowners                                $1.32             $1.39

      From discontinued operations attributable to common shareowners                         -                -

    Weighted Average Number of Shares Outstanding:

      Basic shares                                                                          901               901

      Diluted shares                                                                        917               914

As described on the following pages, consolidated results for the quarters ended March 31, 2014 and 2013 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)                                 2014                  2013
                                               ----                  ----

    Net Sales

    Otis                                     $2,955                $2,814

    UTC Climate, Controls &
     Security                        3,851                 3,837

    Pratt & Whitney                  3,329                 3,402

    UTC Aerospace Systems            3,450                 3,263

    Sikorsky                         1,361                 1,249
                                     -----                 -----

    Segment Sales                   14,946                 14,565

    Eliminations and other            (201)                (166)

    Consolidated Net Sales                  $14,745               $14,399
                                              =====                 =====


    Operating Profit

    Otis                                       $570                  $575

    UTC Climate, Controls &
     Security                          537                   520

    Pratt & Whitney                    388                   406

    UTC Aerospace Systems              590                   501

    Sikorsky                            86                    90
                                       ---                   ---

    Segment Operating Profit         2,171                 2,092

    Eliminations and other              39                    21

    General corporate expenses        (112)                (107)

    Consolidated Operating Profit            $2,098                $2,006
                                             ======                ======



    Segment Operating Profit Margin

    Otis                              19.3%                 20.4%

    UTC Climate, Controls &
     Security                         13.9%                 13.6%

    Pratt & Whitney                   11.7%                 11.9%

    UTC Aerospace Systems             17.1%                 15.4%

    Sikorsky                           6.3%                  7.2%
                                       ---                   ---

    Segment Operating Profit
     Margin                           14.5%                 14.4%

As described on the following pages, consolidated results for the quarters ended March 31, 2014 and 2013 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)                                                      2014            2013
                                                                                        ----            ----

    Restructuring Costs included in Operating Profit:

    Otis                                                                                         $(17)         $(10)

    UTC Climate, Controls & Security                                                     (43)           (22)

    Pratt & Whitney                                                                      (42)             (7)

    UTC Aerospace Systems                                                                 (6)             (8)

    Sikorsky                                                                             (17)             (5)

                                                                                       (125)            (52)
                                                                                        ----             ---

    Non-Recurring items included in Operating Profit:

    UTC Climate, Controls & Security                                                       -              38

                                                                                           -              38
                                                                                         ---             ---

    Total impact on Consolidated Operating Profit                                      (125)            (14)

    Tax effect of restructuring and non-recurring items above                             42              16

    Non-Recurring items included in Income Tax Expense                                     -              95
                                                                                         ---             ---

    Impact on Net Income from Continuing Operations Attributable to Common Shareowners           $(83)          $97
                                                                                                 ====           ===

    Impact on Diluted Earnings Per Share from Continuing Operations                            $(0.09)        $0.11
                                                                                                =====           ===

Details of the non-recurring items for the quarter ended March 31, 2013 above are as follows:

UTC Climate, Controls & Security: Approximately $38 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of a business in Hong Kong.

Income Tax Expense: Approximately $95 million of favorable income tax adjustments as a result of the enactment of the American Taxpayer Relief Act of 2012 in January 2013. The $95 million is primarily related to the retroactive extension of the research and development credit to 2012.

    United Technologies Corporation

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


                                          Quarter Ended
                                            March 31,

                                          (Unaudited)
                                            ----------

    (Millions)                                 2014                  2013
                                               ----                  ----

    Net Sales

    Otis                                     $2,955                $2,814

    UTC Climate, Controls &
     Security                        3,851                 3,837

    Pratt & Whitney                  3,329                 3,402

    UTC Aerospace Systems            3,450                 3,263

    Sikorsky                         1,361                 1,249
                                     -----                 -----

    Segment Sales                   14,946                 14,565

    Eliminations and other            (201)                (166)
                                      ----                  ----

    Consolidated Net Sales                  $14,745               $14,399
                                              =====                 =====


    Adjusted Operating Profit

    Otis                                       $587                  $585

    UTC Climate, Controls &
     Security                          580                   504

    Pratt & Whitney                    430                   413

    UTC Aerospace Systems              596                   509

    Sikorsky                           103                    95
                                       ---                   ---

    Segment Operating Profit         2,296                 2,106

    Eliminations and other              39                    21

    General corporate expenses        (112)                (107)

    Adjusted Consolidated
     Operating Profit                        $2,223                $2,020
                                             ======                ======


    Adjusted Segment Operating Profit
     Margin

    Otis                              19.9%                 20.8%

    UTC Climate, Controls &
     Security                         15.1%                 13.1%

    Pratt & Whitney                   12.9%                 12.1%

    UTC Aerospace Systems             17.3%                 15.6%

    Sikorsky                           7.6%                  7.6%
                                       ---                   ---

    Adjusted Segment Operating
     Profit Margin                    15.4%                 14.5%

    United Technologies Corporation

    Condensed Consolidated Balance Sheet


                                         March 31,        December 31,

                                                   2014             2013

    (Millions)                          (Unaudited)       (Unaudited)
                                         ---------       ----------

    Assets
    ------

    Cash and cash equivalents                    $4,477           $4,619

    Accounts receivable, net           11,537           11,458

    Inventories and contracts in
     progress, net                     10,992           10,330

    Other assets, current               2,814            3,035
                                        -----            -----

    Total Current Assets               29,820           29,442

    Fixed assets, net                   8,895            8,866

    Goodwill                           28,216           28,168

    Intangible assets, net             15,528           15,521

    Other assets                        8,770            8,597
                                        -----            -----

    Total Assets                                $91,229          $90,594
                                                =======          =======


    Liabilities and Equity
    ----------------------

    Short-term debt                                $304             $500

    Accounts payable                    6,949            6,965

    Accrued liabilities                15,678           15,335
                                       ------           ------

    Total Current Liabilities          22,931           22,800

    Long-term debt                     19,739           19,741

    Other long-term liabilities        14,727           14,723
                                       ------           ------

    Total Liabilities                  57,397           57,264
                                       ------           ------

    Redeemable noncontrolling
     interest                             137              111

    Shareowners' Equity:

    Common Stock                       14,813           14,638

    Treasury Stock                    (20,760)          (20,431)

    Retained earnings                  41,205           40,539

    Accumulated other
     comprehensive loss                (2,941)          (2,880)
                                       ------           ------

    Total Shareowners' Equity          32,317           31,866

    Noncontrolling interest             1,378            1,353
                                        -----            -----

    Total Equity                       33,695           33,219

    Total Liabilities and Equity                $91,229          $90,594
                                                =======          =======


    Debt Ratios:

    Debt to total capitalization           37%              38%

    Net debt to net capitalization         32%              32%

See accompanying Notes to Condensed Consolidated Financial Statements.

    United Technologies Corporation

    Condensed Consolidated Statement of Cash Flows


                                                                                                    Quarter
                                                                                                     Ended
                                                                                                   March 31,

                                                                                                  (Unaudited)
                                                                                                  -----------

    (Millions)                                                                                 2014            2013
                                                                                               ----            ----

    Operating Activities of Continuing Operations:

    Income from continuing operations                                                                $1,306           $1,352

    Adjustments to reconcile net income from continuing operations to net cash flows provided

    by operating activities of continuing operations:

    Depreciation and amortization                                                               467             444

    Deferred income tax provision (benefit)                                                      44            (40)

    Stock compensation cost                                                                      60              70

    Change in working capital                                                                 (521)           (198)

    Global pension contributions                                                                (84)           (29)

    Other operating activities, net                                                              63           (190)

    Net cash flows provided by operating activities of continuing operations                  1,335           1,409
                                                                                              -----           -----

    Investing Activities of Continuing Operations:

    Capital expenditures                                                                      (333)           (295)

    Acquisitions and dispositions of businesses, net                                            106             722

    Increase in collaboration intangible assets                                               (142)           (157)

    Other investing activities, net                                                             (73)             69
                                                                                                ---

       Net cash flows (used in) provided by investing activities of continuing operations     (442)             339
                                                                                               ----             ---

    Financing Activities of Continuing Operations:

    Issuance (repayment) of long-term debt, net                                                   6            (46)

    Decrease in short-term borrowings, net                                                    (200)           (329)

    Dividends paid on Common Stock                                                            (514)           (465)

    Repurchase of Common Stock                                                                (335)           (335)

    Other financing activities, net                                                              48             156

       Net cash flows used in financing activities of continuing operations                   (995)            (1,019)
                                                                                               ----           ------

    Discontinued Operations:

    Net cash used in operating activities                                                         -           (715)

    Net cash used in investing activities                                                         -            (51)

       Net cash flows used in discontinued operations                                             -           (766)
                                                                                                ---            ----

    Effect of foreign exchange rate changes on cash and cash equivalents                        (40)           (18)
                                                                                                ---             ---

       Net decrease in cash and cash equivalents                                              (142)            (55)

    Cash and cash equivalents, beginning of period                                            4,619           4,836
                                                                                              -----           -----

    Cash and cash equivalents, end of period                                                  4,477           4,781

    Less: Cash and cash equivalents of assets held for sale                                       -              14
                                                                                                ---             ---

    Cash and cash equivalents of continuing operations, end of period                                $4,477           $4,767
                                                                                                       ====           ======

See accompanying Notes to Condensed Consolidated Financial Statements.

    United Technologies Corporation

    Free Cash Flow Reconciliation


                                                                                           Quarter Ended March
                                                                                                          31,

                                                                                              (Unaudited)
                                                                                               ----------

    (Millions)                                                                               2014                      2013
                                                                                             ----                      ----


    Net income from continuing operations attributable to common shareowners            $1,213                    $1,270
                                                                                          ====                      ====

    Net cash flows provided by operating activities of continuing operations            $1,335                    $1,409

    Net cash flows provided by operating activities of continuing operations as a          110%                     111%

    percentage of net income from continuing operations attributable to common

    shareowners

    Capital expenditures                                                          (333)                     (295)
                                                                                   ----                      ----

    Capital expenditures as a percentage of net income from continuing operations         (27)%                    (23)%

    attributable to common shareowners


    Free cash flow from continuing operations                                           $1,002                    $1,114
                                                                                          ====                      ====

    Free cash flow from continuing operations as a percentage of net income from            83%                      88%

    continuing operations attributable to common shareowners

    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.

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

SOURCE United Technologies Corp.