FARMINGTON, Conn., July 23, 2019 /PRNewswire/ -- United Technologies
Corp. (NYSE: UTX) reported second quarter 2019 results and
increased its full year organic sales and adjusted EPS outlook for
2019.
"United Technologies delivered strong second quarter results,"
said UTC Chairman and Chief Executive Officer Gregory Hayes. "Based on a solid first half, we
feel confident raising our outlook for the full year with an
improved organic sales growth outlook of 4 to 5 percent and
adjusted EPS range of $7.90 to
$8.05.* We continued to see
outperformance at Collins Aerospace this quarter as we made
significant progress on the integration of Rockwell Collins, which
more than offset softness in Carrier's end markets."
Hayes continued, "Looking ahead, we remain on track to establish
Otis and Carrier as independent companies in the first half of
2020. We are also excited about the transformational merger with
Raytheon that we announced in June, which will create a leading,
platform-agnostic aerospace and defense systems company. The
combination will enhance our ability to provide high technology
systems that meet the increasingly complex needs of our customers
in rapidly growing segments of the
industry."
Second quarter sales of $19.6 billion were up 18 percent over the
prior year, including 6 points of organic sales growth and 13
points of acquisition benefit offset by 1 point of foreign exchange
headwind. GAAP EPS of $2.20 was
down 14 percent versus the prior year and included 6 cents of net nonrecurring gains and
6 cents of restructuring charges.
Adjusted EPS of $2.20 was up 12
percent.
Net income in the quarter was $1.9
billion, down 7 percent versus the prior year. Cash flow
from operations was $2.1 billion and
capital expenditures were $467
million, resulting in free cash flow of $1.6 billion.
In the quarter, Collins Aerospace commercial aftermarket sales
were up 75 percent and up 18 percent organically. Collins Aerospace
commercial aftermarket sales were up 16 percent on a pro forma
basis including Rockwell Collins. Pratt & Whitney commercial
aftermarket sales were up 2 percent. Equipment orders at Carrier
were down 12 percent organically. Otis new equipment orders were
down 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 $7.90 to
$8.05, up from $7.80 to $8.00;*
- Organic sales growth of 4 to 5 percent, up from 3 to 5
percent;*
- There is no change in the Company's previously provided 2019
expectations for sales of $75.5 to
$77.0 billion and free cash flow of
$4.5 to $5.0
billion, including $1.5
billion of one-time cash payments related to the portfolio
separation.*
*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/6fjdfyhq,
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 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 United Technologies 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 Company, 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 United Technologies and Raytheon Company 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, including in connection with the
proposed merger with Raytheon; (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
United Technologies, 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 United Technologies, 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 United Technologies' 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 approvals of United
Technologies' shareowners and Raytheon's shareholders 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 United Technologies or Raytheon or both to
terminate the merger agreement; (20) risks relating to the
value of the United Technologies' 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 United
Technologies' and Raytheon's operations will be greater than
expected; (24) risks relating to completed merger, acquisition
and divestiture activity, including United Technologies'
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 United Technologies, 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 United Technologies and United
Technologies' 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 United Technologies' estimates;
and (31) the impact of the proposed merger and the separation
transactions on the respective businesses of United
Technologies and Raytheon and the risk that the separation
transactions may be more difficult, time-consuming or costly than
expected, including the impact on United Technologies' 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 reports of United Technologies 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
United Technologies 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, United Technologies has
filed a registration statement on Form S-4, which includes a
preliminary prospectus of United Technologies and a preliminary
joint proxy statement of United Technologies and Raytheon Company
(the "joint proxy statement/prospectus"), and each party will file
other documents regarding the proposed merger with the SEC. In
addition, in connection with the separation transactions,
subsidiaries of United Technologies will file registration
statements on Form 10 or S-1. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A definitive joint
proxy statement/prospectus will be sent to United Technologies'
shareowners and Raytheon Company's shareholders. Investors and
security holders will be able to obtain the registration statements
and the joint proxy statement/prospectus free of charge from the
SEC's website or from United Technologies or Raytheon Company. The
documents filed by United Technologies with the SEC may be obtained
free of charge at United Technologies' 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 United Technologies 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
Company with the SEC may be obtained free of charge at Raytheon
Company'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 Company by requesting them by mail at Raytheon
Company, Investor Relations, 870 Winter Street, Waltham, MA, 02541, by telephone at
1-781-522-5123 or by email at invest@raytheon.com.
Participants in the Solicitation
United Technologies and Raytheon Company and their respective
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed merger. Information about
United Technologies' directors and executive officers is available
in United Technologies' proxy statement dated March 18, 2019, for its 2019 Annual Meeting of
Shareowners. Information about Raytheon Company's directors and
executive officers is available in Raytheon Company's proxy
statement dated April 16, 2019, for
its 2019 Annual Meeting of Shareholders. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the transaction when they become available.
Investors should read the joint proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents
from United Technologies or Raytheon Company as indicated
above.
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 June
30,
|
|
Six Months Ended
June 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions, except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
Sales
|
$
|
19,634
|
|
|
$
|
16,705
|
|
|
$
|
37,999
|
|
|
$
|
31,947
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
Cost of products and
services sold
|
14,413
|
|
|
12,422
|
|
|
28,120
|
|
|
23,702
|
|
|
Research and
development
|
743
|
|
|
589
|
|
|
1,471
|
|
|
1,143
|
|
|
Selling, general and
administrative
|
2,106
|
|
|
1,759
|
|
|
4,103
|
|
|
3,470
|
|
|
Total Costs and
Expenses
|
17,262
|
|
|
14,770
|
|
|
33,694
|
|
|
28,315
|
|
Other income,
net
|
212
|
|
|
941
|
|
|
324
|
|
|
1,172
|
|
Operating
profit
|
2,584
|
|
|
2,876
|
|
|
4,629
|
|
|
4,804
|
|
|
Non-service pension
(benefit)
|
(216)
|
|
|
(192)
|
|
|
(424)
|
|
|
(383)
|
|
|
Interest expense,
net
|
360
|
|
|
234
|
|
|
791
|
|
|
463
|
|
Income from
operations before income taxes
|
2,440
|
|
|
2,834
|
|
|
4,262
|
|
|
4,724
|
|
|
Income tax
expense
|
441
|
|
|
695
|
|
|
838
|
|
|
1,217
|
|
Net income from
operations
|
1,999
|
|
|
2,139
|
|
|
3,424
|
|
|
3,507
|
|
|
Less: Noncontrolling
interest in subsidiaries' earnings
from operations
|
99
|
|
|
91
|
|
|
178
|
|
|
162
|
|
Net income
attributable to common shareowners
|
$
|
1,900
|
|
|
$
|
2,048
|
|
|
$
|
3,246
|
|
|
$
|
3,345
|
|
Earnings Per Share
of Common Stock:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.22
|
|
|
$
|
2.59
|
|
|
$
|
3.80
|
|
|
$
|
4.23
|
|
|
Diluted
|
$
|
2.20
|
|
|
$
|
2.56
|
|
|
$
|
3.76
|
|
|
$
|
4.18
|
|
Weighted Average
Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
shares
|
854
|
|
|
791
|
|
|
854
|
|
|
790
|
|
|
Diluted
shares
|
864
|
|
|
800
|
|
|
862
|
|
|
800
|
|
United
Technologies Corporation
|
Segment Net Sales
and Operating Profit
|
|
|
Quarter Ended June
30,
|
|
Six Months Ended
June 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
Sales
|
|
|
|
|
|
|
|
Otis
|
$
|
3,348
|
|
|
$
|
3,344
|
|
|
$
|
6,444
|
|
|
$
|
6,381
|
|
Carrier
|
4,962
|
|
|
5,035
|
|
|
9,285
|
|
|
9,411
|
|
Pratt &
Whitney
|
5,150
|
|
|
4,736
|
|
|
9,967
|
|
|
9,065
|
|
Collins Aerospace
Systems
|
6,576
|
|
|
3,962
|
|
|
13,089
|
|
|
7,779
|
|
Segment
Sales
|
20,036
|
|
|
17,077
|
|
|
38,785
|
|
|
32,636
|
|
Eliminations and
other
|
(402)
|
|
|
(372)
|
|
|
(786)
|
|
|
(689)
|
|
Consolidated Net
Sales
|
$
|
19,634
|
|
|
$
|
16,705
|
|
|
$
|
37,999
|
|
|
$
|
31,947
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
Otis
|
$
|
515
|
|
|
$
|
488
|
|
|
$
|
941
|
|
|
$
|
938
|
|
Carrier
|
836
|
|
|
1,645
|
|
|
1,365
|
|
|
2,237
|
|
Pratt &
Whitney
|
424
|
|
|
397
|
|
|
857
|
|
|
810
|
|
Collins Aerospace
Systems
|
1,172
|
|
|
569
|
|
|
2,028
|
|
|
1,157
|
|
Segment Operating
Profit
|
2,947
|
|
|
3,099
|
|
|
5,191
|
|
|
5,142
|
|
Eliminations and
other
|
(239)
|
|
|
(97)
|
|
|
(340)
|
|
|
(108)
|
|
General corporate
expenses
|
(124)
|
|
|
(126)
|
|
|
(222)
|
|
|
(230)
|
|
Consolidated
Operating Profit
|
$
|
2,584
|
|
|
$
|
2,876
|
|
|
$
|
4,629
|
|
|
$
|
4,804
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit Margin
|
|
|
|
|
|
|
|
Otis
|
15.4
|
%
|
|
14.6
|
%
|
|
14.6
|
%
|
|
14.7
|
%
|
Carrier
|
16.8
|
%
|
|
32.7
|
%
|
|
14.7
|
%
|
|
23.8
|
%
|
Pratt &
Whitney
|
8.2
|
%
|
|
8.4
|
%
|
|
8.6
|
%
|
|
8.9
|
%
|
Collins Aerospace
Systems
|
17.8
|
%
|
|
14.4
|
%
|
|
15.5
|
%
|
|
14.9
|
%
|
Segment Operating
Profit Margin
|
14.7
|
%
|
|
18.1
|
%
|
|
13.4
|
%
|
|
15.8
|
%
|
United
Technologies Corporation
|
Reconciliation of
Reported (GAAP) to Adjusted (Non-GAAP) Results
|
|
|
Quarter Ended June
30,
|
|
Six Months Ended
June 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions - Income (Expense))
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Income from
operations attributable to common
shareowners
|
$
|
1,900
|
|
|
$
|
2,048
|
|
|
$
|
3,246
|
|
|
$
|
3,345
|
|
Restructuring
Costs included in Operating Profit:
|
|
|
|
|
|
|
|
Otis
|
(15)
|
|
|
(23)
|
|
|
(40)
|
|
|
(49)
|
|
Carrier
|
(30)
|
|
|
(21)
|
|
|
(63)
|
|
|
(35)
|
|
Pratt &
Whitney
|
(3)
|
|
|
(3)
|
|
|
(17)
|
|
|
(3)
|
|
Collins Aerospace
Systems
|
(17)
|
|
|
(33)
|
|
|
(56)
|
|
|
(60)
|
|
Eliminations and
other
|
(1)
|
|
|
(2)
|
|
|
(2)
|
|
|
(4)
|
|
|
(66)
|
|
|
(82)
|
|
|
(178)
|
|
|
(151)
|
|
Non-service pension
cost
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Total
Restructuring Costs
|
(66)
|
|
|
(80)
|
|
|
(178)
|
|
|
(149)
|
|
|
|
|
|
|
|
|
|
Significant
non-recurring and non-operational items
included in Operating Profit:
|
|
|
|
|
|
|
|
Carrier
|
|
|
|
|
|
|
|
Gain on sale of
Taylor Company
|
—
|
|
|
795
|
|
|
—
|
|
|
795
|
|
Collins Aerospace
Systems
|
|
|
|
|
|
|
|
Loss on sale of
business
|
—
|
|
|
—
|
|
|
(25)
|
|
|
—
|
|
Amortization of
Rockwell Collins inventory fair value
adjustment
|
—
|
|
|
—
|
|
|
(181)
|
|
|
—
|
|
Asset impairment
|
—
|
|
|
(48)
|
|
|
—
|
|
|
(48)
|
|
Eliminations and
other
|
|
|
|
|
|
|
|
Transaction and
integration costs related to merger
agreement with Rockwell Collins, Inc.
|
(10)
|
|
|
(20)
|
|
|
(19)
|
|
|
(50)
|
|
Costs associated with
the Company's intention to
separate its commercial businesses
|
(154)
|
|
|
—
|
|
|
(209)
|
|
|
—
|
|
Transaction expenses
associated with the Raytheon
Merger
|
(26)
|
|
|
—
|
|
|
(26)
|
|
|
—
|
|
|
(190)
|
|
|
727
|
|
|
(460)
|
|
|
697
|
|
Total impact on
Consolidated Operating Profit
|
(256)
|
|
|
647
|
|
|
(638)
|
|
|
548
|
|
Significant
non-recurring and non-operational items
included in Interest Expense, Net
|
|
|
|
|
|
|
|
Interest on tax
settlements
|
58
|
|
|
—
|
|
|
58
|
|
|
—
|
|
Tax effect of
restructuring and significant non-
recurring and non-operational items above
|
36
|
|
|
(173)
|
|
|
117
|
|
|
(154)
|
|
Significant
non-recurring and non-operational items
included in Income Tax Expense
|
|
|
|
|
|
|
|
Tax
settlements
|
264
|
|
|
—
|
|
|
264
|
|
|
—
|
|
Tax expenses related
to separation of commercial
businesses
|
(100)
|
|
|
—
|
|
|
(100)
|
|
|
—
|
|
Unfavorable income
tax adjustments related to the
estimated impact of the U.S. tax reform legislation
enacted on December 22, 2017
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(46)
|
|
|
164
|
|
|
(2)
|
|
|
164
|
|
|
(46)
|
|
Less: Impact on Net
Income Attributable to Common
Shareowners
|
2
|
|
|
472
|
|
|
(299)
|
|
|
348
|
|
Adjusted income
attributable to common shareowners
|
$
|
1,898
|
|
|
$
|
1,576
|
|
|
$
|
3,545
|
|
|
$
|
2,997
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Share
|
$
|
2.20
|
|
|
$
|
2.56
|
|
|
$
|
3.76
|
|
|
$
|
4.18
|
|
Impact on Diluted
Earnings Per Share
|
—
|
|
|
0.59
|
|
|
(0.35)
|
|
|
0.44
|
|
Adjusted Diluted
Earnings Per Share
|
$
|
2.20
|
|
|
$
|
1.97
|
|
|
$
|
4.11
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
18.1
|
%
|
|
24.5
|
%
|
|
19.7
|
%
|
|
25.8
|
%
|
Impact on Effective
Tax Rate
|
6.2
|
%
|
|
(0.7)
|
%
|
|
3.4
|
%
|
|
(1.4)
|
%
|
Adjusted Effective
Tax Rate
|
24.3
|
%
|
|
23.8
|
%
|
|
23.1
|
%
|
|
24.4
|
%
|
United
Technologies Corporation
|
Segment Operating
Profit Adjusted for Restructuring Costs and
|
Significant
Non-recurring and Non-operational Items (as reflected on the
previous page)
|
|
|
Quarter Ended June
30,
|
|
Six Months Ended
June 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Adjusted Operating
Profit
|
|
|
|
|
|
|
|
Otis
|
$
|
530
|
|
|
$
|
511
|
|
|
$
|
981
|
|
|
$
|
987
|
|
Carrier
|
866
|
|
|
871
|
|
|
1,428
|
|
|
1,477
|
|
Pratt &
Whitney
|
427
|
|
|
400
|
|
|
874
|
|
|
813
|
|
Collins Aerospace
Systems
|
1,189
|
|
|
650
|
|
|
2,290
|
|
|
1,265
|
|
Segment Operating
Profit
|
3,012
|
|
|
2,432
|
|
|
5,573
|
|
|
4,542
|
|
Eliminations and
other
|
(49)
|
|
|
(77)
|
|
|
(86)
|
|
|
(58)
|
|
General corporate
expenses
|
(123)
|
|
|
(124)
|
|
|
(220)
|
|
|
(226)
|
|
Adjusted
Consolidated Operating Profit
|
$
|
2,840
|
|
|
$
|
2,231
|
|
|
$
|
5,267
|
|
|
$
|
4,258
|
|
|
|
|
|
|
|
|
|
Adjusted Segment
Operating Profit Margin
|
|
|
|
|
|
|
|
Otis
|
15.8
|
%
|
|
15.3
|
%
|
|
15.2
|
%
|
|
15.5
|
%
|
Carrier
|
17.5
|
%
|
|
17.3
|
%
|
|
15.4
|
%
|
|
15.7
|
%
|
Pratt &
Whitney
|
8.3
|
%
|
|
8.4
|
%
|
|
8.8
|
%
|
|
9.0
|
%
|
Collins Aerospace
Systems
|
18.1
|
%
|
|
16.4
|
%
|
|
17.5
|
%
|
|
16.3
|
%
|
Adjusted Segment
Operating Profit Margin
|
15.0
|
%
|
|
14.2
|
%
|
|
14.4
|
%
|
|
13.9
|
%
|
United
Technologies Corporation
|
Components of
Changes in Net Sales
|
Quarter Ended
June 30, 2019 Compared with Quarter Ended June 30,
2018
|
|
|
|
|
|
|
|
|
|
Factors
Contributing to Total % Change in Net Sales
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions /
Divestitures, net
|
|
Other
|
|
Total
|
Otis
|
|
4%
|
|
(4)%
|
|
—%
|
|
—%
|
|
—%
|
Carrier
|
|
2%
|
|
(2)%
|
|
(1)%
|
|
—%
|
|
(1)%
|
Pratt &
Whitney
|
|
9%
|
|
—%
|
|
—%
|
|
—%
|
|
9%
|
Collins Aerospace
Systems
|
|
9%
|
|
—%
|
|
57%
|
|
—%
|
|
66%
|
Consolidated
|
|
6%
|
|
(1)%
|
|
13%
|
|
—%
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
Collins Aerospace
Systems
|
|
|
|
|
|
|
|
|
|
|
Commercial aftermarket
sales*
|
|
18%
|
|
—%
|
|
57%
|
|
—%
|
|
75%
|
|
|
|
|
|
|
|
|
|
|
|
*On a pro
forma basis, Collins Aerospace Systems commercial aftermarket sales
increased 16% 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.
|
|
Six Months
Ended June 30, 2019 Compared with Six Months Ended June 30,
2018
|
|
|
|
|
|
|
|
|
|
Factors
Contributing to Total % Change in Net Sales
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions /
Divestitures, net
|
|
Other
|
|
Total
|
Otis
|
|
6%
|
|
(5)%
|
|
—%
|
|
—%
|
|
1%
|
Carrier
|
|
3%
|
|
(3)%
|
|
(1)%
|
|
—%
|
|
(1)%
|
Pratt &
Whitney
|
|
11%
|
|
(1)%
|
|
—%
|
|
—%
|
|
10%
|
Collins Aerospace
Systems
|
|
10%
|
|
(1)%
|
|
59%
|
|
—%
|
|
68%
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
7%
|
|
(2)%
|
|
14%
|
|
—%
|
|
19%
|
United
Technologies Corporation
|
Condensed
Consolidated Balance Sheet
|
|
|
June 30,
2019
|
|
December 31,
2018
|
(dollars in
millions)
|
(Unaudited)
|
|
(Unaudited)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
6,819
|
|
|
$
|
6,152
|
|
Accounts receivable,
net
|
13,695
|
|
|
14,271
|
|
Contract assets,
current
|
4,334
|
|
|
3,486
|
|
Inventory,
net
|
10,934
|
|
|
10,083
|
|
Other assets,
current
|
1,276
|
|
|
1,511
|
|
Total Current
Assets
|
37,058
|
|
|
35,503
|
|
Fixed assets,
net
|
12,292
|
|
|
12,297
|
|
Operating lease
right-of-use assets
|
2,740
|
|
|
—
|
|
Goodwill
|
48,358
|
|
|
48,112
|
|
Intangible assets,
net
|
25,963
|
|
|
26,424
|
|
Other
assets
|
12,579
|
|
|
11,875
|
|
Total
Assets
|
$
|
138,990
|
|
|
$
|
134,211
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Short-term
debt
|
$
|
7,341
|
|
|
$
|
4,345
|
|
Accounts
payable
|
11,109
|
|
|
11,080
|
|
Accrued
liabilities
|
10,753
|
|
|
10,223
|
|
Contract liabilities,
current
|
6,219
|
|
|
5,720
|
|
Total Current
Liabilities
|
35,422
|
|
|
31,368
|
|
Long-term
debt
|
37,910
|
|
|
41,192
|
|
Operating lease
liabilities
|
2,258
|
|
|
—
|
|
Other long-term
liabilities
|
20,314
|
|
|
20,932
|
|
Total
Liabilities
|
95,904
|
|
|
93,492
|
|
Redeemable
noncontrolling interest
|
109
|
|
|
109
|
|
Shareowners'
Equity:
|
|
|
|
Common
Stock
|
22,647
|
|
|
22,438
|
|
Treasury
Stock
|
(32,549)
|
|
|
(32,482)
|
|
Retained
earnings
|
60,548
|
|
|
57,823
|
|
Accumulated other
comprehensive loss
|
(9,892)
|
|
|
(9,333)
|
|
Total Shareowners'
Equity
|
40,754
|
|
|
38,446
|
|
Noncontrolling
interest
|
2,223
|
|
|
2,164
|
|
Total
Equity
|
42,977
|
|
|
40,610
|
|
Total Liabilities
and Equity
|
$
|
138,990
|
|
|
$
|
134,211
|
|
|
|
|
|
Debt
Ratios:
|
|
|
|
Debt to total
capitalization
|
51
|
%
|
|
53
|
%
|
Net debt to net
capitalization
|
47
|
%
|
|
49
|
%
|
United
Technologies Corporation
|
Condensed
Consolidated Statement of Cash Flows
|
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net income from
operations
|
$
|
1,999
|
|
|
$
|
2,139
|
|
|
$
|
3,424
|
|
|
$
|
3,507
|
|
Adjustments to
reconcile net income from operations to net cash flows
provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
922
|
|
|
592
|
|
|
1,864
|
|
|
1,173
|
|
Deferred income tax
provision
|
(15)
|
|
|
3
|
|
|
6
|
|
|
45
|
|
Stock compensation
cost
|
92
|
|
|
62
|
|
|
156
|
|
|
117
|
|
Gain on sale of
Taylor Company
|
—
|
|
|
(795)
|
|
|
—
|
|
|
(795)
|
|
Change in working
capital
|
(11)
|
|
|
483
|
|
|
(456)
|
|
|
(489)
|
|
Global pension
contributions
|
(47)
|
|
|
(22)
|
|
|
(79)
|
|
|
(59)
|
|
Canadian government
settlement
|
—
|
|
|
—
|
|
|
(38)
|
|
|
(221)
|
|
Other operating
activities, net
|
(829)
|
|
|
(360)
|
|
|
(1,266)
|
|
|
(723)
|
|
Net cash flows
provided by operating activities
|
2,111
|
|
|
2,102
|
|
|
3,611
|
|
|
2,555
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(467)
|
|
|
(372)
|
|
|
(830)
|
|
|
(709)
|
|
Acquisitions and
dispositions of businesses, net
|
(13)
|
|
|
1,050
|
|
|
101
|
|
|
960
|
|
Increase in
collaboration intangible assets
|
(82)
|
|
|
(103)
|
|
|
(169)
|
|
|
(181)
|
|
(Payments) receipts
from settlements of derivative contracts
|
(31)
|
|
|
303
|
|
|
61
|
|
|
82
|
|
Other investing
activities, net
|
(230)
|
|
|
(140)
|
|
|
(380)
|
|
|
(390)
|
|
Net cash flows (used
in) provided by investing activities
|
(823)
|
|
|
738
|
|
|
(1,217)
|
|
|
(238)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
(Payment) issuance of
long-term debt, net
|
(15)
|
|
|
1,312
|
|
|
(9)
|
|
|
337
|
|
Increase (decrease)
in short-term borrowings, net
|
22
|
|
|
(24)
|
|
|
(327)
|
|
|
642
|
|
Dividends paid on
Common Stock
|
(610)
|
|
|
(535)
|
|
|
(1,219)
|
|
|
(1,070)
|
|
Repurchase of Common
Stock
|
(40)
|
|
|
(27)
|
|
|
(69)
|
|
|
(52)
|
|
Other financing
activities, net
|
(46)
|
|
|
(27)
|
|
|
(142)
|
|
|
(68)
|
|
Net cash flows (used
in) provided by financing activities
|
(689)
|
|
|
699
|
|
|
(1,766)
|
|
|
(211)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(25)
|
|
|
(137)
|
|
|
16
|
|
|
(18)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
574
|
|
|
3,402
|
|
|
644
|
|
|
2,088
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
6,282
|
|
|
7,704
|
|
|
6,212
|
|
|
9,018
|
|
Cash, cash
equivalents and restricted cash, end of period
|
6,856
|
|
|
11,106
|
|
|
6,856
|
|
|
11,106
|
|
Less: Restricted
cash
|
37
|
|
|
38
|
|
|
37
|
|
|
38
|
|
Cash and cash
equivalents, end of period
|
$
|
6,819
|
|
|
$
|
11,068
|
|
|
$
|
6,819
|
|
|
$
|
11,068
|
|
United
Technologies Corporation
|
Free Cash Flow
Reconciliation
|
|
|
Quarter Ended June
30,
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
Net income
attributable to common shareowners
|
$
|
1,900
|
|
|
|
$
|
2,048
|
|
|
Net cash flows
provided by operating activities
|
$
|
2,111
|
|
|
|
$
|
2,102
|
|
|
Net cash flows
provided by operating activities as a percentage of net
income attributable to common shareowners
|
|
111
|
%
|
|
|
103
|
%
|
Capital
expenditures
|
(467)
|
|
|
|
(372)
|
|
|
Capital expenditures
as a percentage of net income attributable to
common shareowners
|
|
(25)
|
%
|
|
|
(18)
|
%
|
Free cash
flow
|
$
|
1,644
|
|
|
|
$
|
1,730
|
|
|
Free cash flow as a
percentage of net income attributable to common
shareowners
|
|
87
|
%
|
|
|
84
|
%
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
(Unaudited)
|
(dollars in
millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
Net income
attributable to common shareowners
|
$
|
3,246
|
|
|
|
$
|
3,345
|
|
|
Net cash flows
provided by operating activities
|
$
|
3,611
|
|
|
|
$
|
2,555
|
|
|
Net cash flows
provided by operating activities as a percentage of net
income attributable to common shareowners
|
|
111
|
%
|
|
|
76
|
%
|
Capital
expenditures
|
(830)
|
|
|
|
(709)
|
|
|
Capital expenditures
as a percentage of net income attributable to
common shareowners
|
|
(26)
|
%
|
|
|
(21)
|
%
|
Free cash
flow
|
$
|
2,781
|
|
|
|
$
|
1,846
|
|
|
Free cash flow as a
percentage of net income attributable to common
shareowners
|
|
86
|
%
|
|
|
55
|
%
|
Notes to Condensed
Consolidated Financial Statements
|
|
|
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.
|
View original
content:http://www.prnewswire.com/news-releases/united-technologies-reports-second-quarter-2019-results-raises-2019-organic-sales-and-adjusted-eps-outlook-300889081.html
SOURCE United Technologies Corp.