FARMINGTON, Conn., Oct. 22, 2019 /PRNewswire/ -- United
Technologies Corp. (NYSE: UTX) reported third quarter 2019 results
and increased its full year adjusted EPS and free cash flow outlook
for 2019.
"United Technologies delivered another strong quarter with 5
percent organic sales growth, as well as margin expansion across
all four businesses," said UTC Chairman and Chief Executive Officer
Gregory Hayes. "Our strong
performance through the first three quarters gives us confidence in
the improved adjusted EPS range of $8.05 to $8.15 and
free cash flow range of $5.3 to
$5.7 billion for the year.* Continued
strength at Collins Aerospace, including the integration of
Rockwell Collins, and a lower tax rate are expected to more than
offset softness we are seeing at Carrier."
Hayes continued, "Looking ahead, our transformational merger
with Raytheon Company, which was overwhelmingly approved by both
companies' shareowners this month, positions Raytheon Technologies
as a premier aerospace and defense systems provider and a leader in
high technology segments. We also remain on track to establish Otis
and Carrier as independent companies in the first half of 2020,
with the end of the first quarter as our target."
Third quarter sales of $19.5 billion were up 18 percent over the
prior year, including 5 points of organic sales growth and 14
points of acquisition benefit offset by 1 point of foreign exchange
headwind. GAAP EPS of $1.33 was
down 14 percent versus the prior year and included 82 cents of net nonrecurring charges and
6 cents of restructuring charges.
Adjusted EPS of $2.21 was up 15
percent.
Net income in the quarter was $1.1
billion, down 7 percent versus the prior year and included
$760 million of net nonrecurring
charges. Cash flow from operations was $2.5
billion and capital expenditures were $529 million, resulting in free cash flow of
$2.0 billion.
Collins Aerospace commercial aftermarket sales were up 78
percent and up 20 percent organically. On a pro forma basis,
Collins Aerospace commercial aftermarket sales were up 17 percent
including Rockwell Collins. Pratt & Whitney commercial
aftermarket sales were up 6 percent. Equipment orders at Carrier
were down 11 percent organically. Otis new equipment orders were up
6 percent at constant currency in the quarter and down 1 percent on
a rolling twelve month basis.
UTC updates its 2019 outlook* and now anticipates:
- Adjusted EPS of $8.05 to
$8.15, up from $7.90 to $8.05;
- Sales of $76.0 to $76.5 billion versus the prior outlook of
$75.5 to $77.0
billion;
- Free cash flow of $5.3 to
$5.7 billion including $1.0 billion of one-time cash payments related to
the portfolio separation, up from $4.5 to $5.0
billion;
- There is no change in the Company's previously provided 2019
expectations for organic sales growth of 4 to 5 percent.
*Note: When we provide
expectations for adjusted EPS, organic sales and free cash flow on
a forward-looking basis, a reconciliation of the differences
between the non-GAAP expectations and the corresponding GAAP
measures generally is not available without unreasonable
effort. See "Use and Definitions of Non-GAAP Financial
Measures" below for additional information.
United Technologies Corp., based in Farmington, Connecticut, provides high
technology products and services to the building and aerospace
industries. By combining a passion for science with precision
engineering, the company is creating smart, sustainable solutions
the world needs. Additional information, including a webcast, is
available at www.utc.com or
https://edge.media-server.com/mmc/p/bkoavkkk, or to listen to the
earnings call by phone, dial (877) 280-7280 between 8:10 a.m. and 8:30 a.m. ET. To learn more
about UTC, visit the website or follow the company on Twitter:
@UTC
Use and Definitions of Non-GAAP Financial Measures
United Technologies Corporation ("UTC") reports its financial
results in accordance with accounting principles generally accepted
in the United States ("GAAP").
We supplement the reporting of our financial information
determined under GAAP with certain non-GAAP financial
information. The non-GAAP information presented provides
investors with additional useful information, but should not be
considered in isolation or as substitutes for the related GAAP
measures. Moreover, other companies may define non-GAAP
measures differently, which limits the usefulness of these measures
for comparisons with such other companies. We encourage
investors to review our financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure.
Adjusted net sales, organic sales, adjusted operating profit,
adjusted net income, adjusted earnings per share ("EPS"), and the
adjusted effective tax rate are non-GAAP financial measures.
Adjusted net sales represents consolidated net sales from
continuing operations (a GAAP measure), excluding significant items
of a non-recurring and/or nonoperational nature (hereinafter
referred to as "other significant items"). Organic sales
represents consolidated net sales (a GAAP measure), excluding the
impact of foreign currency translation, acquisitions and
divestitures completed in the preceding twelve months and other
significant items. Adjusted operating profit represents
income from continuing operations (a GAAP measure), excluding
restructuring costs and other significant items. Adjusted net
income represents net income from continuing operations (a GAAP
measure), excluding restructuring costs and other significant
items. Adjusted EPS represents diluted earnings per share from
continuing operations (a GAAP measure), excluding restructuring
costs and other significant items. The adjusted effective tax
rate represents the effective tax rate (a GAAP measure), excluding
restructuring costs and other significant items. For the
business segments, when applicable, adjustments of net sales,
operating profit and margins similarly reflect continuing
operations, excluding restructuring and other significant
items. Management believes that the non-GAAP measures just
mentioned are useful in providing period-to-period comparisons of
the results of the Company's ongoing operational
performance.
Free cash flow is a non-GAAP financial measure that represents
cash flow from operations (a GAAP measure) less capital
expenditures. Management believes free cash flow is a useful
measure of liquidity and an additional 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.
A reconciliation of the non-GAAP measures to the corresponding
amounts prepared in accordance with GAAP appears in the tables in
this Appendix. The tables provide additional information as
to the items and amounts that have been excluded from the adjusted
measures.
When we provide our expectation for adjusted EPS, adjusted
operating profit, adjusted effective tax rate, organic sales and
free cash flow on a forward-looking basis, a reconciliation of the
differences between the non-GAAP expectations and the corresponding
GAAP measures (expected diluted EPS from continuing operations,
operating profit, the effective tax rate, sales and expected cash
flow from operations) generally is not available without
unreasonable effort due to potentially high variability, complexity
and low visibility as to the items that would be excluded from the
GAAP measure in the relevant future period, such as unusual gains
and losses, the ultimate outcome of pending litigation,
fluctuations in foreign currency exchange rates, the impact and
timing of potential acquisitions and divestitures, and other
structural changes or their probable significance. The
variability of the excluded items may have a significant, and
potentially unpredictable, impact on our future GAAP results.
Cautionary Statement
This communication contains
statements which, to the extent they are not statements of
historical or present fact, constitute "forward-looking statements"
under the securities laws. From time to time, oral or written
forward-looking statements may also be included in other
information released to the public. These forward-looking
statements are intended to provide management's current
expectations or plans for our future operating and financial
performance, based on assumptions currently believed to be valid.
Forward-looking statements can be identified by the use of words
such as "believe," "expect," "expectations," "plans," "strategy,"
"prospects," "estimate," "project," "target," "anticipate," "will,"
"should," "see," "guidance," "outlook," "confident," "on track" and
other words of similar meaning. Forward-looking statements may
include, among other things, statements relating to future sales,
earnings, cash flow, results of operations, uses of cash, share
repurchases, tax rates, R&D spend, other measures of financial
performance, potential future plans, strategies or transactions,
credit ratings and net indebtedness, other anticipated benefits of
the Rockwell Collins acquisition, the proposed merger with Raytheon
Company ("Raytheon") or the spin-offs by UTC of Otis and Carrier
into separate independent companies (the "separation
transactions"), including estimated synergies and customer cost
savings resulting from the proposed merger with Raytheon, the
expected timing of completion of the proposed merger and the
separation transactions, estimated costs associated with such
transactions and other statements that are not historical facts.
All forward-looking statements involve risks, uncertainties and
other factors that may cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the U.S. Private
Securities Litigation Reform Act of 1995. Such risks, uncertainties
and other factors include, without limitation: (1) the effect
of economic conditions in the industries and markets in which UTC
and Raytheon operate in the U.S. and globally and any changes
therein, including financial market conditions, fluctuations in
commodity prices, interest rates and foreign currency exchange
rates, levels of end market demand in construction and in both the
commercial and defense segments of the aerospace industry, levels
of air travel, financial condition of commercial airlines, the
impact of weather conditions and natural disasters, the financial
condition of our customers and suppliers, and the risks associated
with U.S. government sales (including changes or shifts in defense
spending due to budgetary constraints, spending cuts resulting from
sequestration, a government shutdown, or otherwise, and uncertain
funding of programs); (2) challenges in the development,
production, delivery, support, performance and realization of the
anticipated benefits (including our expected returns under customer
contracts) of advanced technologies and new products and services;
(3) the scope, nature, impact or timing of the proposed merger
with Raytheon and the separation transactions and other merger,
acquisition and divestiture activity, including among other things
the integration of or with other businesses and realization of
synergies and opportunities for growth and innovation and
incurrence of related costs and expenses; (4) future levels of
indebtedness, including indebtedness that may be incurred in
connection with the proposed merger with Raytheon and the
separation transactions, and capital spending and research and
development spending; (5) future availability of credit and
factors that may affect such availability, including credit market
conditions and our capital structure; (6) the timing and scope
of future repurchases by the companies of their respective common
stock, which may be suspended at any time due to various factors,
including market conditions and the level of other investing
activities and uses of cash; (7) delays and disruption in
delivery of materials and services from suppliers; (8) company
and customer-directed cost reduction efforts and restructuring
costs and savings and other consequences thereof (including the
potential termination of U.S. government contracts and performance
under undefinitized contract awards and the potential inability to
recover termination costs); (9) new business and investment
opportunities; (10) the ability to realize the intended
benefits of organizational changes; (11) the anticipated
benefits of diversification and balance of operations across
product lines, regions and industries; (12) the outcome of
legal proceedings, investigations and other contingencies;
(13) pension plan assumptions and future contributions;
(14) the impact of the negotiation of collective bargaining
agreements and labor disputes; (15) the effect of changes in
political conditions in the U.S. and other countries in which UTC,
Raytheon and the businesses of each operate, including the effect
of changes in U.S. trade policies or the U.K.'s pending withdrawal
from the European Union, on general market conditions, global trade
policies and currency exchange rates in the near term and beyond;
(16) the effect of changes in tax (including U.S. tax reform
enacted on December 22, 2017, which
is commonly referred to as the Tax Cuts and Jobs Act of 2017),
environmental, regulatory and other laws and regulations
(including, among other things, export and import requirements such
as the International Traffic in Arms Regulations and the Export
Administration Regulations, anti-bribery and anti-corruption
requirements, including the Foreign Corrupt Practices Act,
industrial cooperation agreement obligations, and procurement and
other regulations) in the U.S. and other countries in which UTC,
Raytheon and the businesses of each operate; (17) negative
effects of the announcement or pendency of the proposed merger or
the separation transactions on the market price of UTC' and/or
Raytheon's respective common stock and/or on their respective
financial performance; (18) the ability of the parties to
receive the required regulatory approvals for the proposed merger
(and the risk that such approvals may result in the imposition of
conditions that could adversely affect the combined company or the
expected benefits of the transaction) and to satisfy the other
conditions to the closing of the merger on a timely basis or at
all; (19) the occurrence of events that may give rise to a
right of UTC or Raytheon or both to terminate the merger agreement;
(20) risks relating to the value of the UTC's shares to be
issued in the proposed merger with Raytheon, significant
transaction costs and/or unknown liabilities; (21) the
possibility that the anticipated benefits from the proposed merger
with Raytheon cannot be realized in full or at all or may take
longer to realize than expected, including risks associated with
third party contracts containing consent and/or other provisions
that may be triggered by the proposed transaction; (22) risks
associated with transaction-related litigation; (23) the
possibility that costs or difficulties related to the integration
of UTC's and Raytheon's operations will be greater than expected;
(24) risks relating to completed merger, acquisition and
divestiture activity, including UTC's integration of Rockwell
Collins, including the risk that the integration may be more
difficult, time-consuming or costly than expected or may not result
in the achievement of estimated synergies within the contemplated
time frame or at all; (25) the ability of each of UTC,
Raytheon and the companies resulting from the separation
transactions and the combined company to retain and hire key
personnel; (26) the expected benefits and timing of the
separation transactions, and the risk that conditions to the
separation transactions will not be satisfied and/or that the
separation transactions will not be completed within the expected
time frame, on the expected terms or at all; (27) the intended
qualification of (i) the merger as a tax-free reorganization
and (ii) the separation transactions as tax-free to UTC and
UTC's shareowners, in each case, for U.S. federal income tax
purposes; (28) the possibility that any opinions, consents,
approvals or rulings required in connection with the separation
transactions will not be received or obtained within the expected
time frame, on the expected terms or at all; (29) expected
financing transactions undertaken in connection with the proposed
merger with Raytheon and the separation transactions and risks
associated with additional indebtedness; (30) the risk that
dissynergy costs, costs of restructuring transactions and other
costs incurred in connection with the separation transactions will
exceed UTC's estimates; and (31) the impact of the proposed
merger and the separation transactions on the respective businesses
of UTC and Raytheon and the risk that the separation
transactions may be more difficult, time-consuming or costly than
expected, including the impact on UTC's resources, systems,
procedures and controls, diversion of its management's attention
and the impact on relationships with customers, suppliers,
employees and other business counterparties. There can be no
assurance that the proposed merger, the separation transactions or
any other transaction described above will in fact be consummated
in the manner described or at all. For additional information on
identifying factors that may cause actual results to vary
materially from those stated in forward-looking statements, see the
joint proxy statement/prospectus (defined below) and the reports of
UTC and Raytheon on Forms 10-K, 10-Q and 8-K filed with or
furnished to the Securities and Exchange Commission (the "SEC")
from time to time. Any forward-looking statement speaks only as of
the date on which it is made, and UTC assumes no obligation to
update or revise such statement, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
Additional Information
In connection with the proposed
merger, on September 4, 2019, UTC
filed with the SEC an amendment to the registration statement on
Form S-4 originally filed on July 17,
2019, which includes a joint proxy statement of UTC and
Raytheon that also constitutes a prospectus of UTC (the "joint
proxy statement/prospectus"). The registration statement was
declared effective by the SEC on September
9, 2019, and UTC and Raytheon commenced mailing the joint
proxy statement/prospectus to shareowners of UTC and stockholders
of Raytheon on or about September 10,
2019. Each party will file other documents regarding the
proposed merger with the SEC. In addition, in connection with the
separation transactions, subsidiaries of UTC will file registration
statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain
copies of the registration statements and the joint proxy
statement/prospectus free of charge from the SEC's website or from
UTC or Raytheon. The documents filed by UTC with the SEC may be
obtained free of charge at UTC's website at www.utc.com or at the
SEC's website at www.sec.gov. These documents may also be obtained
free of charge from UTC by requesting them by mail at UTC Corporate
Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at
1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents
filed by Raytheon with the SEC may be obtained free of charge at
Raytheon's website at www.raytheon.com or at the SEC's website at
www.sec.gov. These documents may also be obtained free of charge
from Raytheon by requesting them by mail at Raytheon Company,
Investor Relations, 870 Winter Street, Waltham, MA, 02451, by telephone at
1-781-522-5123 or by email at invest@raytheon.com.
No Offer or Solicitation
This communication shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
Contact:
|
Media Inquiries,
UTC
|
|
(860)
493-4364
|
|
|
|
Investor Relations,
UTC
|
|
(860)
728-7608
|
UTC-IR
United
Technologies Corporation
|
Condensed
Consolidated Statement of Operations
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions, except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
Sales
|
$
|
19,496
|
|
|
$
|
16,510
|
|
|
$
|
57,495
|
|
|
$
|
48,457
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
Cost of products and
services sold
|
14,211
|
|
|
12,536
|
|
|
42,331
|
|
|
36,238
|
|
|
Research and
development
|
732
|
|
|
586
|
|
|
2,203
|
|
|
1,729
|
|
|
Selling, general and
administrative
|
2,104
|
|
|
1,681
|
|
|
6,207
|
|
|
5,151
|
|
|
Total Costs and
Expenses
|
17,047
|
|
|
14,803
|
|
|
50,741
|
|
|
43,118
|
|
Other income,
net
|
37
|
|
|
131
|
|
|
361
|
|
|
1,303
|
|
Operating
profit
|
2,486
|
|
|
1,838
|
|
|
7,115
|
|
|
6,642
|
|
|
Non-service pension
(benefit)
|
(303)
|
|
|
(188)
|
|
|
(727)
|
|
|
(571)
|
|
|
Interest expense,
net
|
401
|
|
|
258
|
|
|
1,192
|
|
|
721
|
|
Income from
operations before income taxes
|
2,388
|
|
|
1,768
|
|
|
6,650
|
|
|
6,492
|
|
|
Income tax
expense
|
1,131
|
|
|
419
|
|
|
1,969
|
|
|
1,636
|
|
Net income from
operations
|
1,257
|
|
|
1,349
|
|
|
4,681
|
|
|
4,856
|
|
|
Less: Noncontrolling
interest in subsidiaries' earnings
from operations
|
109
|
|
|
111
|
|
|
287
|
|
|
273
|
|
Net income
attributable to common shareowners
|
$
|
1,148
|
|
|
$
|
1,238
|
|
|
$
|
4,394
|
|
|
$
|
4,583
|
|
Earnings Per Share
of Common Stock:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.34
|
|
|
$
|
1.56
|
|
|
$
|
5.14
|
|
|
$
|
5.80
|
|
|
Diluted
|
$
|
1.33
|
|
|
$
|
1.54
|
|
|
$
|
5.09
|
|
|
$
|
5.72
|
|
Weighted Average
Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
shares
|
855
|
|
|
791
|
|
|
854
|
|
|
791
|
|
|
Diluted
shares
|
864
|
|
|
802
|
|
|
863
|
|
|
801
|
|
United
Technologies Corporation
|
Segment Net Sales
and Operating Profit
|
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
(dollars in
millions)
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Otis
|
$
|
3,307
|
|
$
|
3,307
|
|
|
$
|
3,223
|
|
$
|
3,223
|
|
|
$
|
9,751
|
|
$
|
9,751
|
|
|
$
|
9,604
|
|
$
|
9,604
|
|
Carrier
|
4,822
|
|
4,822
|
|
|
4,880
|
|
4,880
|
|
|
14,107
|
|
14,107
|
|
|
14,291
|
|
14,291
|
|
Pratt &
Whitney
|
5,283
|
|
5,283
|
|
|
4,789
|
|
4,789
|
|
|
15,250
|
|
15,250
|
|
|
13,854
|
|
13,854
|
|
Collins Aerospace
Systems
|
6,495
|
|
6,495
|
|
|
3,955
|
|
3,955
|
|
|
19,584
|
|
19,584
|
|
|
11,734
|
|
11,734
|
|
Segment
Sales
|
19,907
|
|
19,907
|
|
|
16,847
|
|
16,847
|
|
|
58,692
|
|
58,692
|
|
|
49,483
|
|
49,483
|
|
Eliminations and
other
|
(411)
|
|
(411)
|
|
|
(337)
|
|
(337)
|
|
|
(1,197)
|
|
(1,197)
|
|
|
(1,026)
|
|
(1,026)
|
|
Consolidated Net
Sales
|
$
|
19,496
|
|
$
|
19,496
|
|
|
$
|
16,510
|
|
$
|
16,510
|
|
|
$
|
57,495
|
|
$
|
57,495
|
|
|
$
|
48,457
|
|
$
|
48,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
Otis
|
$
|
508
|
|
$
|
512
|
|
|
$
|
486
|
|
$
|
489
|
|
|
$
|
1,449
|
|
$
|
1,493
|
|
|
$
|
1,424
|
|
$
|
1,476
|
|
Carrier
|
685
|
|
861
|
|
|
844
|
|
857
|
|
|
2,050
|
|
2,289
|
|
|
3,081
|
|
2,334
|
|
Pratt &
Whitney
|
471
|
|
471
|
|
|
109
|
|
409
|
|
|
1,328
|
|
1,345
|
|
|
919
|
|
1,222
|
|
Collins Aerospace
Systems
|
1,167
|
|
1,195
|
|
|
610
|
|
627
|
|
|
3,195
|
|
3,485
|
|
|
1,767
|
|
1,892
|
|
Segment Operating
Profit
|
2,831
|
|
3,039
|
|
|
2,049
|
|
2,382
|
|
|
8,022
|
|
8,612
|
|
|
7,191
|
|
6,924
|
|
Eliminations and
other
|
(232)
|
|
(64)
|
|
|
(102)
|
|
(58)
|
|
|
(572)
|
|
(150)
|
|
|
(210)
|
|
(116)
|
|
General corporate
expenses
|
(113)
|
|
(112)
|
|
|
(109)
|
|
(109)
|
|
|
(335)
|
|
(332)
|
|
|
(339)
|
|
(335)
|
|
Consolidated
Operating Profit
|
$
|
2,486
|
|
$
|
2,863
|
|
|
$
|
1,838
|
|
$
|
2,215
|
|
|
$
|
7,115
|
|
$
|
8,130
|
|
|
$
|
6,642
|
|
$
|
6,473
|
|
|
|
Segment Operating
Profit Margin
|
|
Otis
|
15.4
|
%
|
15.5
|
%
|
|
15.1
|
%
|
15.2
|
%
|
|
14.9
|
%
|
15.3
|
%
|
|
14.8
|
%
|
15.4
|
%
|
Carrier
|
14.2
|
%
|
17.9
|
%
|
|
17.3
|
%
|
17.6
|
%
|
|
14.5
|
%
|
16.2
|
%
|
|
21.6
|
%
|
16.3
|
%
|
Pratt &
Whitney
|
8.9
|
%
|
8.9
|
%
|
|
2.3
|
%
|
8.5
|
%
|
|
8.7
|
%
|
8.8
|
%
|
|
6.6
|
%
|
8.8
|
%
|
Collins Aerospace
Systems
|
18.0
|
%
|
18.4
|
%
|
|
15.4
|
%
|
15.9
|
%
|
|
16.3
|
%
|
17.8
|
%
|
|
15.1
|
%
|
16.1
|
%
|
Segment Operating
Profit Margin
|
14.2
|
%
|
15.3
|
%
|
|
12.2
|
%
|
14.1
|
%
|
|
13.7
|
%
|
14.7
|
%
|
|
14.5
|
%
|
14.0
|
%
|
United
Technologies Corporation
|
Reconciliation of
Reported (GAAP) to Adjusted (Non-GAAP) Results
|
Adjusted Operating
Profit & Operating Profit Margin
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions - Income (Expense))
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Otis
|
|
|
|
|
|
|
|
Net sales
|
$
|
3,307
|
|
|
$
|
3,223
|
|
|
$
|
9,751
|
|
|
$
|
9,604
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
508
|
|
|
$
|
486
|
|
|
$
|
1,449
|
|
|
$
|
1,424
|
|
Restructuring
|
(4)
|
|
|
(3)
|
|
|
(44)
|
|
|
(52)
|
|
Adjusted operating
profit
|
$
|
512
|
|
|
$
|
489
|
|
|
$
|
1,493
|
|
|
$
|
1,476
|
|
Adjusted operating
profit margin
|
15.5
|
%
|
|
15.2
|
%
|
|
15.3
|
%
|
|
15.4
|
%
|
Carrier
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,822
|
|
|
$
|
4,880
|
|
|
$
|
14,107
|
|
|
$
|
14,291
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
685
|
|
|
$
|
844
|
|
|
$
|
2,050
|
|
|
$
|
3,081
|
|
Restructuring
|
(34)
|
|
|
(17)
|
|
|
(97)
|
|
|
(52)
|
|
Gain on sale of
Taylor Company
|
—
|
|
|
4
|
|
|
—
|
|
|
799
|
|
Investment
impairment
|
(108)
|
|
|
—
|
|
|
(108)
|
|
|
—
|
|
Consultant contract
termination
|
(34)
|
|
|
—
|
|
|
(34)
|
|
|
—
|
|
Adjusted operating
profit
|
$
|
861
|
|
|
$
|
857
|
|
|
$
|
2,289
|
|
|
$
|
2,334
|
|
Adjusted operating
profit margin
|
17.9
|
%
|
|
17.6
|
%
|
|
16.2
|
%
|
|
16.3
|
%
|
Pratt &
Whitney
|
|
|
|
|
|
|
|
Net sales
|
$
|
5,283
|
|
|
$
|
4,789
|
|
|
$
|
15,250
|
|
|
$
|
13,854
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
471
|
|
|
$
|
109
|
|
|
$
|
1,328
|
|
|
$
|
919
|
|
Restructuring
|
—
|
|
|
—
|
|
|
(17)
|
|
|
(3)
|
|
Charge resulting from
customer contract matters
|
—
|
|
|
(300)
|
|
|
—
|
|
|
(300)
|
|
Adjusted operating
profit
|
$
|
471
|
|
|
$
|
409
|
|
|
$
|
1,345
|
|
|
$
|
1,222
|
|
Adjusted operating
profit margin
|
8.9
|
%
|
|
8.5
|
%
|
|
8.8
|
%
|
|
8.8
|
%
|
Collins Aerospace
Systems
|
|
|
|
|
|
|
|
Net sales
|
$
|
6,495
|
|
|
$
|
3,955
|
|
|
$
|
19,584
|
|
|
$
|
11,734
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
1,167
|
|
|
$
|
610
|
|
|
$
|
3,195
|
|
|
$
|
1,767
|
|
Restructuring
|
(27)
|
|
|
(17)
|
|
|
(83)
|
|
|
(77)
|
|
Loss on sale of
business
|
—
|
|
|
—
|
|
|
(25)
|
|
|
—
|
|
Amortization of
Rockwell Collins inventory fair value
adjustment
|
—
|
|
|
—
|
|
|
(181)
|
|
|
—
|
|
Asset
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(48)
|
|
Costs associated with
the Company's intention to separate
its commercial businesses
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Adjusted operating
profit
|
$
|
1,195
|
|
|
$
|
627
|
|
|
$
|
3,485
|
|
|
$
|
1,892
|
|
Adjusted operating
profit margin
|
18.4
|
%
|
|
15.9
|
%
|
|
17.8
|
%
|
|
16.1
|
%
|
Eliminations and
other general corporate expenses
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
(345)
|
|
|
$
|
(211)
|
|
|
$
|
(907)
|
|
|
$
|
(549)
|
|
Restructuring
|
(1)
|
|
|
—
|
|
|
(3)
|
|
|
(4)
|
|
Transaction and
integration costs related to merger
agreement with Rockwell Collins, Inc.
|
(11)
|
|
|
(21)
|
|
|
(30)
|
|
|
(71)
|
|
Costs associated with
the Company's intention to separate
its commercial businesses
|
(132)
|
|
|
(23)
|
|
|
(341)
|
|
|
(23)
|
|
Transaction expenses
associated with the Raytheon Merger
|
(25)
|
|
|
—
|
|
|
(51)
|
|
|
—
|
|
Adjusted operating
profit
|
$
|
(176)
|
|
|
$
|
(167)
|
|
|
$
|
(482)
|
|
|
$
|
(451)
|
|
UTC
Consolidated
|
|
|
|
|
|
|
|
Operating
profit
|
$
|
2,486
|
|
|
$
|
1,838
|
|
|
$
|
7,115
|
|
|
$
|
6,642
|
|
Restructuring
|
(66)
|
|
|
(37)
|
|
|
(244)
|
|
|
(188)
|
|
Total significant
non-recurring and non-operational items
included in Operating Profit above
|
(311)
|
|
|
(340)
|
|
|
(771)
|
|
|
357
|
|
Consolidated Adjusted
operating profit
|
$
|
2,863
|
|
|
$
|
2,215
|
|
|
$
|
8,130
|
|
|
$
|
6,473
|
|
United
Technologies Corporation
|
Reconciliation of
Reported (GAAP) to Adjusted (Non-GAAP) Results
|
Adjusted Net
Income, Earnings Per Share, and Effective Tax Rate
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions - Income (Expense))
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Income from
operations attributable to common shareowners
|
$
|
1,148
|
|
|
$
|
1,238
|
|
|
$
|
4,394
|
|
|
$
|
4,583
|
|
|
|
|
|
|
|
|
|
Restructuring
Costs
|
(66)
|
|
|
(37)
|
|
|
(244)
|
|
|
(188)
|
|
|
|
|
|
|
|
|
|
Total significant
non-recurring and non-operational
items included in Operating Profit
|
(311)
|
|
|
(340)
|
|
|
(771)
|
|
|
357
|
|
|
|
|
|
|
|
|
|
Significant
non-recurring and non-operational items
included in Non-service Pension
|
|
|
|
|
|
|
|
Pension
curtailment
|
98
|
|
|
—
|
|
|
98
|
|
|
—
|
|
Non-service pension
cost restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|
2
|
|
Significant
non-recurring and non-operational items
included in Interest Expense, Net
|
|
|
|
|
|
|
|
Rockwell Collins
pre-acquisition interest
|
—
|
|
|
(22)
|
|
|
—
|
|
|
(22)
|
|
Interest on tax
settlements
|
5
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
5
|
|
|
(22)
|
|
|
63
|
|
|
(22)
|
|
|
|
|
|
|
|
|
|
Tax effect of
restructuring and significant non-recurring
and non-operational items above
|
24
|
|
|
96
|
|
|
141
|
|
|
(58)
|
|
|
|
|
|
|
|
|
|
Significant
non-recurring and non-operational items
included in Income Tax Expense
|
|
|
|
|
|
|
|
Tax
settlements
|
8
|
|
|
—
|
|
|
272
|
|
|
—
|
|
Tax expenses related
to separation of commercial businesses
|
(518)
|
|
|
—
|
|
|
(618)
|
|
|
—
|
|
Income tax
adjustments related to the estimated impact of
the U.S. tax reform legislation enacted on December 22,
2017
|
—
|
|
|
(6)
|
|
|
—
|
|
|
(52)
|
|
|
(510)
|
|
|
(6)
|
|
|
(346)
|
|
|
(52)
|
|
Less: Impact on Net
Income Attributable to Common
Shareowners
|
(760)
|
|
|
(309)
|
|
|
(1,059)
|
|
|
39
|
|
Adjusted net
income attributable to common shareowners
|
$
|
1,908
|
|
|
$
|
1,547
|
|
|
$
|
5,453
|
|
|
$
|
4,544
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Share
|
$
|
1.33
|
|
|
$
|
1.54
|
|
|
$
|
5.09
|
|
|
$
|
5.72
|
|
Impact on Diluted
Earnings Per Share
|
(0.88)
|
|
|
(0.39)
|
|
|
(1.23)
|
|
|
0.05
|
|
Adjusted Diluted
Earnings Per Share
|
$
|
2.21
|
|
|
$
|
1.93
|
|
|
$
|
6.32
|
|
|
$
|
5.67
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
47.3
|
%
|
|
23.7
|
%
|
|
29.6
|
%
|
|
25.2
|
%
|
Impact on Effective
Tax Rate
|
(23.1)
|
%
|
|
(0.2)
|
%
|
|
(6.1)
|
%
|
|
(1.1)
|
%
|
Adjusted Effective
Tax Rate
|
24.2
|
%
|
|
23.5
|
%
|
|
23.5
|
%
|
|
24.1
|
%
|
United
Technologies Corporation
|
Components of
Changes in Net Sales
|
|
Quarter Ended
September 30, 2019 Compared with Quarter Ended September 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors
Contributing to Total % Change in Net Sales
|
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions /
Divestitures, net
|
|
Other
|
|
Total
|
|
Otis
|
|
4%
|
|
(2)%
|
|
—%
|
|
1%
|
|
3%
|
|
Carrier
|
|
—%
|
|
(2)%
|
|
1%
|
|
—%
|
|
(1)%
|
|
Pratt &
Whitney
|
|
11%
|
|
(1)%
|
|
—%
|
|
—%
|
|
10%
|
|
Collins Aerospace
Systems
|
|
7%
|
|
(1)%
|
|
58%
|
|
—%
|
|
64%
|
|
Consolidated
|
|
5%
|
|
(1)%
|
|
14%
|
|
—%
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collins Aerospace
Systems
|
|
|
|
|
|
|
|
|
|
|
|
Commercial aftermarket
sales*
|
|
20%
|
|
—%
|
|
58%
|
|
—%
|
|
78%
|
|
*On a pro
forma basis, Collins Aerospace Systems commercial aftermarket sales
increased 17% calculated by combining the results of UTC with the
stand-alone results of Rockwell Collins for the pre-acquisition
periods adjusted for conformity, as if the acquisition had been
completed on January 1, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended September 30, 2019 Compared with Nine Months Ended September
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors
Contributing to Total % Change in Net Sales
|
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions /
Divestitures, net
|
|
Other
|
|
Total
|
|
Otis
|
|
5%
|
|
(3)%
|
|
—%
|
|
—%
|
|
2%
|
|
Carrier
|
|
2%
|
|
(2)%
|
|
(1)%
|
|
—%
|
|
(1)%
|
|
Pratt &
Whitney
|
|
11%
|
|
(1)%
|
|
—%
|
|
—%
|
|
10%
|
|
Collins Aerospace
Systems
|
|
9%
|
|
(1)%
|
|
59%
|
|
—%
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
6%
|
|
(1)%
|
|
14%
|
|
—%
|
|
19%
|
|
United
Technologies Corporation
|
Condensed
Consolidated Balance Sheet
|
|
|
September
30,
|
|
December 31,
|
|
2019
|
|
2018
|
(dollars in
millions)
|
(Unaudited)
|
|
(Unaudited)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
7,341
|
|
|
$
|
6,152
|
|
Accounts receivable,
net
|
13,607
|
|
|
14,271
|
|
Contract assets,
current
|
4,316
|
|
|
3,486
|
|
Inventory,
net
|
11,242
|
|
|
10,083
|
|
Other assets,
current
|
1,310
|
|
|
1,511
|
|
Total Current
Assets
|
37,816
|
|
|
35,503
|
|
Fixed assets,
net
|
12,200
|
|
|
12,297
|
|
Operating lease
right-of-use assets
|
2,556
|
|
|
—
|
|
Goodwill
|
48,041
|
|
|
48,112
|
|
Intangible assets,
net
|
25,686
|
|
|
26,424
|
|
Other
assets
|
12,710
|
|
|
11,875
|
|
Total
Assets
|
$
|
139,009
|
|
|
$
|
134,211
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Short-term
debt
|
$
|
6,822
|
|
|
$
|
4,345
|
|
Accounts
payable
|
10,840
|
|
|
11,080
|
|
Accrued
liabilities
|
11,672
|
|
|
10,223
|
|
Contract liabilities,
current
|
6,233
|
|
|
5,720
|
|
Total Current
Liabilities
|
35,567
|
|
|
31,368
|
|
Long-term
debt
|
37,782
|
|
|
41,192
|
|
Operating lease
liabilities
|
2,105
|
|
|
—
|
|
Other long-term
liabilities
|
20,629
|
|
|
20,932
|
|
Total
Liabilities
|
96,083
|
|
|
93,492
|
|
Redeemable
noncontrolling interest
|
107
|
|
|
109
|
|
Shareowners'
Equity:
|
|
|
|
Common
Stock
|
22,806
|
|
|
22,438
|
|
Treasury
Stock
|
(32,588)
|
|
|
(32,482)
|
|
Retained
earnings
|
61,069
|
|
|
57,823
|
|
Accumulated other
comprehensive loss
|
(10,819)
|
|
|
(9,333)
|
|
Total Shareowners'
Equity
|
40,468
|
|
|
38,446
|
|
Noncontrolling
interest
|
2,351
|
|
|
2,164
|
|
Total
Equity
|
42,819
|
|
|
40,610
|
|
Total Liabilities
and Equity
|
$
|
139,009
|
|
|
$
|
134,211
|
|
|
|
|
|
|
|
Debt
Ratios:
|
|
|
|
|
|
Debt to total
capitalization
|
|
51
|
%
|
|
|
53
|
%
|
Net debt to net
capitalization
|
|
47
|
%
|
|
|
49
|
%
|
|
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.
|
United
Technologies Corporation
|
Condensed
Consolidated Statement of Cash Flows
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net income from
operations
|
$
|
1,257
|
|
|
$
|
1,349
|
|
|
$
|
4,681
|
|
|
$
|
4,856
|
|
Adjustments to
reconcile net income from operations to net cash flows
provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
967
|
|
|
593
|
|
|
2,831
|
|
|
1,766
|
|
Deferred income tax
provision
|
(25)
|
|
|
25
|
|
|
(19)
|
|
|
70
|
|
Stock compensation
cost
|
105
|
|
|
64
|
|
|
261
|
|
|
181
|
|
Portfolio separation
tax cost
|
518
|
|
|
—
|
|
|
618
|
|
|
—
|
|
Gain on sale of
Taylor Company
|
—
|
|
|
(4)
|
|
|
—
|
|
|
(799)
|
|
Change in working
capital
|
(15)
|
|
|
(154)
|
|
|
(571)
|
|
|
(643)
|
|
Global pension
contributions
|
(10)
|
|
|
(13)
|
|
|
(89)
|
|
|
(72)
|
|
Canadian government
settlement
|
—
|
|
|
—
|
|
|
(38)
|
|
|
(221)
|
|
Other operating
activities, net
|
(307)
|
|
|
(98)
|
|
|
(1,573)
|
|
|
(821)
|
|
Net cash flows
provided by operating activities
|
2,490
|
|
|
1,762
|
|
|
6,101
|
|
|
4,317
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(529)
|
|
|
(413)
|
|
|
(1,359)
|
|
|
(1,122)
|
|
Acquisitions and
dispositions of businesses, net
|
(6)
|
|
|
(38)
|
|
|
95
|
|
|
922
|
|
Customer financing
assets, net
|
(113)
|
|
|
(109)
|
|
|
(444)
|
|
|
(453)
|
|
Increase in
collaboration intangible assets
|
(90)
|
|
|
(121)
|
|
|
(259)
|
|
|
(302)
|
|
Receipts (payments)
from settlements of derivative contracts
|
97
|
|
|
(11)
|
|
|
158
|
|
|
71
|
|
Other investing
activities, net
|
(115)
|
|
|
(89)
|
|
|
(164)
|
|
|
(135)
|
|
Net cash flows used
in investing activities
|
(756)
|
|
|
(781)
|
|
|
(1,973)
|
|
|
(1,019)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
(Repayment) issuance
of long-term debt, net
|
(629)
|
|
|
10,979
|
|
|
(638)
|
|
|
11,316
|
|
Increase (decrease)
in short-term borrowings, net
|
223
|
|
|
586
|
|
|
(104)
|
|
|
1,228
|
|
Dividends paid on
Common Stock
|
(611)
|
|
|
(536)
|
|
|
(1,830)
|
|
|
(1,606)
|
|
Repurchase of Common
Stock
|
(42)
|
|
|
(20)
|
|
|
(111)
|
|
|
(72)
|
|
Other financing
activities, net
|
(69)
|
|
|
41
|
|
|
(211)
|
|
|
(27)
|
|
Net cash flows (used
in) provided by financing activities
|
(1,128)
|
|
|
11,050
|
|
|
(2,894)
|
|
|
10,839
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(81)
|
|
|
(93)
|
|
|
(65)
|
|
|
(111)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
525
|
|
|
11,938
|
|
|
1,169
|
|
|
14,026
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
6,856
|
|
|
11,106
|
|
|
6,212
|
|
|
9,018
|
|
Cash, cash
equivalents and restricted cash, end of period
|
7,381
|
|
|
23,044
|
|
|
7,381
|
|
|
23,044
|
|
Less: Restricted
cash
|
40
|
|
|
9,245
|
|
|
40
|
|
|
9,245
|
|
Cash and cash
equivalents, end of period
|
$
|
7,341
|
|
|
$
|
13,799
|
|
|
$
|
7,341
|
|
|
$
|
13,799
|
|
|
Certain
reclassifications have been made to conform to current
presentation.
|
United
Technologies Corporation
|
Free Cash Flow
Reconciliation
|
|
|
Quarter Ended
September 30,
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
Net income
attributable to common shareowners
|
$
|
1,148
|
|
|
|
$
|
1,238
|
|
|
Net cash flows
provided by operating activities
|
$
|
2,490
|
|
|
|
$
|
1,762
|
|
|
Net cash flows
provided by operating activities as a percentage of net
income attributable to common shareowners
|
|
217
|
%
|
|
|
142
|
%
|
Capital
expenditures
|
(529)
|
|
|
|
(413)
|
|
|
Capital expenditures
as a percentage of net income attributable to
common shareowners
|
|
(46)
|
%
|
|
|
(33)
|
%
|
Free cash
flow
|
$
|
1,961
|
|
|
|
$
|
1,349
|
|
|
Free cash flow as a
percentage of net income attributable to common
shareowners
|
|
171
|
%
|
|
|
109
|
%
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
Net income
attributable to common shareowners
|
$
|
4,394
|
|
|
|
$
|
4,583
|
|
|
Net cash flows
provided by operating activities
|
$
|
6,101
|
|
|
|
$
|
4,317
|
|
|
Net cash flows
provided by operating activities as a percentage of net
income attributable to common shareowners
|
|
139
|
%
|
|
|
94
|
%
|
Capital
expenditures
|
(1,359)
|
|
|
|
(1,122)
|
|
|
Capital expenditures
as a percentage of net income attributable to
common shareowners
|
|
(31)
|
%
|
|
|
(24)
|
%
|
Free cash
flow
|
$
|
4,742
|
|
|
|
$
|
3,195
|
|
|
Free cash flow as a
percentage of net income attributable to common
shareowners
|
|
108
|
%
|
|
|
70
|
%
|
View original
content:http://www.prnewswire.com/news-releases/united-technologies-reports-third-quarter-2019-results-raises-2019-adjusted-eps-and-free-cash-flow-outlook-300942501.html
SOURCE United Technologies Corp.