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United Technologies' (UTX) Q2 Earnings and Revenues Beat

Zacks Equity Research

United Technologies Corporation UTX reported better-than-expected second-quarter 2019 results. Quarterly adjusted earnings came in at $2.20 per share, surpassing the Zacks Consensus Estimate of $2.04. The bottom line was also higher than the year-ago figure of $1.97.

Revenues came in at $19,634 million, up 17.5% year over year. The top line also outpaced the consensus estimate of $19,459 million. The rise was driven by 6% contribution from organic sales growth and 13% positive impact of acquisitions, partially offset by 1% negative impact of currency translation.

United Technologies Corporation Price, Consensus and EPS Surprise

United Technologies Corporation Price, Consensus and EPS Surprise

United Technologies Corporation price-consensus-eps-surprise-chart | United Technologies Corporation Quote

Segmental Breakup

Otis’ revenues for the reported quarter were $3,348 million, up 0.1% year over year. Aggregate sales for the Carrier segment totaled $4,962 million, down 1.5%. Pratt & Whitney’s second-quarter revenues were $5,150 million, up 8.7%. Collins Aerospace Systems’ top line surged 65.9% to $6,576 million.

Costs and Margins

Cost of products and services sold during the second quarter was $14,413 million, up 16% year over year.

Selling, general and administrative expenses jumped 19.7% to $2,106 million.

Adjusted operating margin was 15%, up 80 basis points.

Balance Sheet/Cash Flow

Exiting the second quarter, United Technologies had cash and cash equivalents of $6,819 million, up from $6,152 million on Dec 31, 2018. Long-term debt was $37,910 million, down from $41,192 million recorded at the end of 2018.

During the April-June quarter, the company generated $2,111 million cash from operating activities compared with $2,102 million reported a year ago. Its capital expenditures were up 25.5% to $467 million.

Outlook

United Technologies is poised to grow on the back of continued investment in innovation, stronger end-market demand and strategic cost-reduction efforts. The acquisition of Rockwell Collins (completed in November 2018) is not only expected to fortify the company's existing product portfolio but also aid in launching innovative solutions for the aerospace customers.

The company has revised 2019 earnings guidance to $7.90-$8.05 per share from $7.80-$8.00 projected earlier. For 2019, it continues to expect revenues between $75.5 billion and $77 billion. It currently expects 4-5% organic sales growth for 2019, up from the 3-5% range guided earlier.

Zacks Rank & Key Picks

United Technologies currently carries a Zacks Rank #3(Hold).

Some better-ranked stocks in the same space are General Electric Company GE, Danaher Corporation DHR and Crane Co. CR. While General Electric sports a Zacks Rank #1 (Strong Buy), Danaher and Crane carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Electric delivered average earnings surprise of 5.56% in the trailing four quarters.

Danaher pulled off average positive earnings surprise of 3.25% in the trailing four quarters.

Crane delivered average earnings surprise of 6.12% in the trailing four quarters.

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