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United Technologies Q3 Earnings Beat

Zacks Equity Research

United Technologies Corp (UTX) reported third quarter 2013 earnings from continuing operations of $1.55 per share, up from $1.37 in the year-ago quarter. The reported earnings per share (EPS) beat the Zacks Consensus Estimate of $1.53. Net income increased 13% from the year-ago quarter to $1.4 billion. Recurring EPS increased 19.0% year over year to $1.63 per share.

Total revenue for the third quarter rose 3% year over year to $15.5 billion, but missed the Zacks Consensus Estimate of $16.2 billion. The increase in revenues was driven by net acquisitions.

New equipment orders at Otis were up 4% from the year-earlier quarter. UTC Climate, Controls & Security equipment orders increased 13% organically.  On a pro-forma basis, commercial spares orders increased 5% at UTC Aerospace Systems. However, large commercial engine spares orders were up 17% at Pratt & Whitney.

Segment Results

Otis reported revenues of $3,188 million in the third quarter, up 4.0% year over year. At the same time, revenues at UTC Climate Controls & Security declined 1.0% year over year to $4,237 million. Pratt & Whitney revenues decreased 5.0% year over year to $3,386 million in the third quarter. UTC Aerospace systems sales increased to $3,312 million from $2,670 million in the year-ago quarter. Additionally, Sikorsky sales were down 7.0% year over year to $1,541 million in the third quarter.

Segment operating profit in the third quarter increased 14% year over year to $2,476 million.

Balance Sheet and Cash Flow

The company continues to maintain a strong cash flow position. As of Sep 30, 2013, cash and cash equivalents were $4.6 billion with long-term debt of $19.8 billion. The company had a debt to capital ratio of 41.0%. Cash flow from operations was $1.5 billion, while capital expenditures were $383 million in the reported quarter. The company repurchased shares worth $330 million in the reported quarter and acquisition spending was $54 million in the reported quarter.

The company recently declared a 10% increase in its fourth quarter dividend to 59 cents per share.


Sales in 2013 are expected to be $63 billion. The company expects EPS guidance in the range of $6.10 - $6.15 per share. The company expects to invest $500 million in restructuring for 2013.

With sustained order growth momentum in majority of its markets, the company expects organic growth to continue to accelerate till the end of 2013. Going forward, UTC Building and Industrial Systems is expected to help United Technologies to capture growth opportunities in the market.

United Technologies currently has a Zacks Rank #3 (Hold). Other stocks that look promising in the industry and are worth a look now include Marubeni Corporation (MARUY), carrying a Zacks Rank #1 (Strong Buy), and 3M Company  (MMM)  and Honeywell International Inc (HON), both carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on MMM
Read the Full Research Report on HON
Read the Full Research Report on UTX
Read the Full Research Report on MARUY

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