United Technologies Corporation (UTX) reported second-quarter earnings of $1.05 per share, slightly ahead of the Zacks Consensus Estimate but down 20% year over year. Earnings per share included restructuring charges of $0.22 and one-time gain of $0.06. Net income attributable to common stockholders was $976 million, down 23% over the year-ago quarter.
Revenues of $13.2 billion were down 17% year over year due to organic decline (11%), adverse foreign currency translation (5%) and net divestitures (1%). Adjusted for restructuring costs and the one-time gain, segment operating margin was 50 basis points higher than prior year.
Benefits from cost reduction initiatives, including restructuring, have offset the impact of a $2.7 billion decline in revenues. All business units achieved double digit operating margins, with four of six – Otis, UTC Fire & Security, Sikorsky and Pratt & Whitney – increasing margins by 100 basis points or more.
However, new equipment orders at Otis declined 42% over the year ago quarter, Carrier’s commercial HVAC new equipment orders were down 26%, spares orders were down 25% at Pratt & Whitney’s large engine business and down 14% at Hamilton Sundstrand.
Cash flow from operations was $1.5 billion, including $401 million of domestic pension contributions. Capital expenditures were $173 million in the quarter.
The company expects full-year revenues of $53 billion, lower than its previous guidance of $55 billion. It expects EPS in the range of $4.00 to $4.20, lower than its earlier forecast of $4.00 to $4.50. The Zacks Consensus Estimate is currently pegged at $4.07.
United Technologies Corporation is a diversified company whose products include Carrier heating and air conditioning, Hamilton Sundstrand aerospace systems and industrial products, Otis elevators and escalators, Pratt & Whitney aircraft engines, Sikorsky helicopters, UTC Fire & Security systems and UTC Power fuel cells.
We currently have a Neutral recommendation on UTX.
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