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United Technologies: Utc Reports Third Quarter 2015 Results; Reaffirms 2015 Full Year Expectations

The following excerpt is from the company's SEC filing.

EPS from continuing operations of $1.61, down 17% versus the prior year quarter

(up 1% ex. currency, restructuring and one-time items)

Reaffirms 2015 EPS from continuing operations expectations of $6.15 to $6.30 on sales of $57 to $58 billion

Sikorsky sale expected to close in Q4 2015; $6 billion in net cash proceeds to be used for share repurchases

UTC Board of Directors authorizes $12 billion share repurchase plan; $16 billion share repurchases expected for 2015 - 2017

FARMINGTON, Conn., October 20, 2015 - United Technologies Corp. (NYSE:UTX) today reported third quarter 2015 r esults. All results in this release reflect continuing operations unless otherwise noted.

Third quarter earnings per share of $1.61 and net income attributable to common shareowners of $1.4 billion were down 17 percent and 19 percent, respectively, versus the third quarter of 2014. Results for the current quarter include restructuring costs of $0.06 per share, while earnings per share in the year ago quarter included $0.22 of favorable one-time items net of restructuring. Excluding these items in both quarters, earnings per share of $1.67 decreased 2 percent year-over-year. Foreign currency had an unfavorable impact of $0.05, or 3 percent in the quarter. Excluding the impact of both unfavorable foreign exchange rate changes and restructuring and one-time items, earnings per share were up 1 percent year-over-year.

Sales of $13.8 billion decreased by 6 percent in the quarter, driven by 5 points of adverse foreign exchange and a 1 point decline in organic sales primarily attributed to a delay in engine deliveries as a result of the transition to a new logistics center at Pratt & Whitney. These deliveries should largely be recovered in the fourth quarter. Third quarter segment operating margin was 17.2 percent, and 17.6 percent when adjusted for restructuring costs.

“United Technologies is executing the strategic plan set forth earlier this year and is focused on maximizing the performance of our core building and aerospace systems businesses under a flatter and more transparent organizational structure,” said Gregory Hayes, UTC President and Chief Executive Officer. “We are on track to deliver results within our previous guidance ranges for full-year EPS of $6.15 to $6.30 and sales between $57 and $58 billion.”

Otis new equipment orders in the quarter increased 2 percent over the prior year at constant currency. Equipment orders at UTC Climate, Controls & Security decreased 2 percent. Commercial aerospace aftermarket sales were up 8 percent at Pratt & Whitney and up 1 percent at UTC Aerospace Systems on an organic basis.

“Our long-term growth outlook remains strong and we are well-positioned to continue creating value for our shareholders,” Mr. Hayes added. “UTC has world class, industry-leading franchises that provide differentiated technologies to very attractive end markets, create a strong base of recurring revenues, and generate a reliable stream of cash flow through cycles. Our approach to capital allocation remains balanced as we successfully reinvest in our business, evaluate M&A opportunistically and return cash to shareholders.”

UTC expects the previously announced sale of its Sikorsky unit to close in the fourth quarter of 2015. The Board of Directors has authorized a new $12 billion share repurchase program, including the $6 billion accelerated share repurchase using the net proceeds from the Sikorsky sale. The new share repurchase program replaces the previous program announced on July 20, 2015. The timing and amount of repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The program may be suspended or discontinued at any time.

“United Technologies’ shares are an attractive investment opportunity which we are going to take advantage of in order to increase value for our shareholders,” said Mr. Hayes. “Including the $4 billion in repurchases made to date in 2015, we now expect to complete $16 billion of share repurchases through 2017.”

Cash flow from operations was $1.0 billion and capital expenditures were $390 million in the quarter. Share repurchase in the quarter was $1.0 billion and takes the year to date total to $4.0 billion. UTC continues to assume a placeholder for full year acquisition spend of $1 billion and expects cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners for 2015.

About United Technologies

United Technologies Corp., based in Farmington, Connecticut, provides high-technology systems 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. Foreign currency impact includes currency translation as well as hedging activity at Pratt & Whitney Canada. 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.

Safe Harbor

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,”...


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