UTX Beats Estimates - Analyst Blog

United Technologies Corp. (UTX) reported fourth-quarter earnings per share from continuing operations of $1.31, above the Zacks Consensus Estimate of $1.29. The year-over-year increase in the company's earnings, along with improved margin, was led by the sustained cost reduction efforts of the company.

Total revenue in the quarter increased by 6% year over year to $14.9 billion, including organic growth of 6%. Revenue was above the Zacks Consensus Estimate of $14.7 billion.

New equipment orders at Otis were up 11% over the year ago fourth quarter. Commercial HVAC new equipment orders at Carrier grew 21% including favorable foreign exchange of 1%. Commercial spares orders at Pratt & Whitney's large engine business grew 45% and at Hamilton Sundstrand were up 31% over the year-ago quarter.

Total segment operating margin at 14.6% was 140 basis points higher than prior year, with five of six segments above the 10% mark. Adjusted for restructuring and one-time items, segment operating margin of 15.4% was 100 basis points higher than the prior year.  

Cash flow from operations was $5.9 billion, including $1.3 billion of pension contributions. Capital expenditures were $865 million for FY2010. Share repurchase in the quarter was $556 million and totaled $2.2 billion for the year. Acquisition spending was $207 million in the quarter and $2.8 billion for FY2010.  

Balance Sheet and Cash Flow

The company continues to maintain a strong cash flow position. Cash and cash equivalents were $4 billion with long-term debt of $10 billion and shareowners equity of $21.3 billion.

Outlook

A solid performance delivered in FY 2010 led the company to increase its 2011 sales outlook to $56-$57 billion. It expects its strong operating leverage will help drive further margin expansion and will allow it to deliver earnings growth of 7%-13% with 2011 earnings per share of $5.05 to $5.35.

United Technologies has strong market positions in aerospace/defense and global infrastructure with a portfolio that includes: Carrier, Otis, Hamilton Sundstrand, Pratt & Whitney, Sikorsky and Fire & Security. The company continues to invest in game-changing technology across the business. UTC Fire & Security is a global provider of security and fire safety products and services.

The company designs, manufactures and services products that incorporate advanced technologies. The introduction of new products and technologies involves risks, and the degree or timing of benefits may not be correctly anticipated.

Further, the company's international operations are subject to economic risks, and results of operations may be adversely affected by changes in economic conditions, foreign currency fluctuations and changes in local government regulation.

Headquartered in Connecticut, U.S, United Technologies Corporation was incorporated in Delaware in 1934. The company provides high technology products and services to the building systems and aerospace industries worldwide.

Growth is attributable to acquisitions and the internal development of existing businesses. United Technologies Corp.'s operating units include businesses with operations throughout the world. Major competitors of UTX are The Boeing Co. (BA) and General Electric Co. (GE).

We currently maintain our Neutral rating on United Technologies, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

 
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