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HARTFORD, Conn., Jan. 21, 2009 – United Technologies Corp. (NYSE:UTX) today reported fourth quarter 2008 earnings per share of $1.23 and net income of $1.1 billion, up 14 percent and 8 percent, respectively. Consolidated revenues for the quarter at $14.5 billion were lower than last year by 1 percent, with 3 points of organic growth more than offset by 5 points of adverse foreign exchange translation. Cash flow from operations was $2.0 billion and, after capital expenditures of $406 million, substantially exceeded fourth quarter net income.
Results for the current quarter include a $0.06 per share net benefit from one time gains in excess of restructuring costs. In 2007, restructuring and other costs exceeded one time gains for a net impact of $0.04 per share. Excluding restructuring and other costs and one time gains, earnings per share grew 4 percent year over year. The negative impact of foreign exchange translation and Pratt & Whitney Canada’s currency hedging was $0.06 on earnings per share for the quarter.
Full year earnings per share of $4.90 and net income of $4.7 billion increased 15 and 11 percent, respectively, from 2007 results. Revenues increased 7 percent to $58.7 billion, including 5 points of organic growth, 1 point foreign exchange, and 1 point net acquisitions. Full year cash flow from operations was $6.2 billion and capital expenditures were $1.2 billion.
“UTC had a solid close to 2008 in spite of deteriorating end markets and currency headwinds. Solid margin expansion at the aerospace units and at UTC Fire & Security offset the impact of a sharp decline at Carrier,” said UTC President and Chief Executive Officer Louis R. Chênevert. “Balance works at UTC. While Carrier saw organic revenue decline 7 percent in the quarter, all other units reported organic growth with Sikorsky at an exceptional 25 percent. ”New equipment orders at Otis declined 14 percent in the quarter, including 6 points from the stronger dollar. On a similar basis, Carrier’s Commercial HVAC new equipment orders were down 7 percent (foreign exchange 3 points). Commercial aerospace spares orders in the quarter were just below sales at Pratt & Whitney and just above sales at Hamilton Sundstrand.
“We saw the impact of difficult economic conditions on our order rates and expect tough compares during the first half of 2009,” Chênevert added. “We aggressively continue to reduce our costs and restructure our businesses in line with new market conditions. In the fourth quarter, restructure costs were $136 million and reached $357 million for the full year. We also expect to accelerate 2009 restructuring and launch approximately $150 million of actions in the first quarter.
“We remain confident that UTC’s strong global franchises and experienced management team will continue to outperform even in this environment,” Chênevert continued. “Accordingly, UTC confirms its prior expectation for 2009 earnings per share of $4.65 to $5.15, a range of plus or minus 5 percent, excluding the impact of any acquisition related costs resulting from the adoption of SFAS 141(R).”
Chênevert added, “Cash flow from operations less capital expenditures reached 105 percent of net income in 2008 with strong fourth quarter execution on collections and seasonal inventory reduction. We anticipate being at our usual standard of cash flow from operations less capital expenditures equal to or exceeding net income again in 2009.”
Share repurchase in the quarter was $690 million and totaled $3.2 billion for the year. Acquisition spending, including debt assumed, was $1.4 billion for the year with $725 million in the fourth quarter.
The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow. United Technologies Corp., based in Hartford, Connecticut, is a diversified company providing high technology products and services to the building and aerospace industries. Additional information, including a webcast, is available on the Internet at http://www.utc.com.
This release is supplemented by presentation materials that are available on UTC's website at www.utc.com, and includes "forward looking statements" concerning expected revenue, earnings, cash flow, share repurchases, restructuring; anticipated benefits of UTC’s diversification, cost reduction efforts and business model; and other matters that are subject to risks and uncertainties. These statements often contain words such as “expect”, “anticipate”, “plan”, “estimate”, “believe”, “will”, “should”, “see”, “guidance” and similar terms. Important factors that could cause actual results to differ materially from those anticipated or implied in forward looking statements include further deterioration or extended weakness in global economic conditions; further tightening or extended contraction in credit conditions; the impact of volatility and deterioration in financial markets on overall levels of economic activity; declines in end market demand in construction and in both the commercial and defense segments of the aerospace industry; fluctuation in commodity prices, interest rates, foreign currency exchange rates, and the impact of weather conditions; and company specific items including the impact of financial market volatility and deterioration on the financial strength of customers and suppliers and on levels of air travel; the availability and impact of acquisitions; the rate and ability to effectively integrate these acquired businesses; the ability to achieve cost reductions at planned levels; challenges in the design, development, production and support of advanced technologies and new products and services; delays and disruption in delivery of materials and services from suppliers; labor disputes; and the outcome of legal proceedings. The level of share repurchases may vary depending on the level of other investing activities. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC's SEC filings as submitted from time to time, including but not limited to, the information included in UTC's 10-K and 10-Q Reports under the headings "Business", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Cautionary Note Concerning Factors that May Affect Future Results", as well as the information included in UTC's Current Reports on Form 8-K.