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HARTFORD, Conn. – United Technologies Corp. (NYSE:UTX) today reported second quarter 2009 earnings per share of $1.05 and net income attributable to common shareowners of $976 million, down 20 percent and 23 percent, respectively, over the year ago quarter. Results for the current quarter include $0.22 per share in restructuring costs and $0.06 per share from a one time gain. Earnings per share in the year ago quarter included $0.06 in restructuring costs. Before these items, earnings per share declined 12 percent year over year. Adverse foreign currency translation and currency hedges at Pratt & Whitney Canada totaled $0.11 per share in the second quarter of 2009.
Revenues for the quarter at $13.2 billion were 17 percent below prior year reflecting organic decline (11 points), adverse foreign currency translation (5 points), and net divestitures (1 point). Segment operating margin at 13.0 percent was 90 basis points below prior year. Adjusted for restructuring costs and the one time gain, segment operating margin was 50 basis points higher than prior year. Cash flow from operations was $1.5 billion, including $401 million of domestic pension contributions. Capital expenditures were $173 million in the quarter.
“UTC’s operating performance reflects solid execution in the face of difficult market conditions,” said Louis Chênevert, UTC President and Chief Executive Officer. “Benefits from cost reduction actions, including restructuring, accelerated in the quarter and substantially offset the impact of a $2.7 billion revenue decline. All business units achieved double digit operating margins, with four of six – Otis, UTC Fire & Security, Sikorsky and Pratt & Whitney – increasing margins by 100 basis points or more, excluding restructuring costs and the one time gain.” Chênevert continued, “Cash flow from operations less capital expenditures substantially exceeded net income attributable to common shareowners for the quarter. A relentless focus on working capital across the businesses drove this performance.”
New equipment orders at Otis declined 42 percent over the year ago quarter, including 4 points from the stronger dollar. On the same basis, Carrier’s commercial HVAC new equipment orders were down 26 percent, including 6 points from the stronger dollar. Commercial spares orders were down 25 percent at Pratt & Whitney’s large engine business and down 14 percent at Hamilton Sundstrand.
“The year over year rate of decline in orders across the business appears to have stabilized, although orders remain lower than previously anticipated,” Chênevert stated. “We now expect full year revenues to be $53 billion, $2 billion lower than our earlier expectations. In spite of lower revenues, we reaffirm the bottom end of our earlier 2009 EPS guidance of $4.00 based on higher savings from cost actions and the favorable impact of a weaker U.S. dollar. We are tightening the EPS range with the top end at $4.20, compared with $4.50 previously, for an expected EPS range of $4.00 to $4.20, excluding the impact of acquisition related costs resulting from the application of SFAS 141(R). This range continues to include $750 million of restructuring spend and now assumes one time gains of $200 million, at the low end of our prior range of $200 to $350 million.
“We expect UTC’s cash flow from operations less capital expenditures to meet or exceed net income attributable to common shareowners for the year,” Chênevert added. “Our aggressive cost actions are positioning UTC to outperform even in this environment and resume earnings growth in 2010.”
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 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 extended weakness in global economic conditions; 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 further deterioration and extended weakness in global economic conditions on the financial strength of customers and suppliers and on levels of air travel; financial difficulties, including bankruptcy, of commercial airlines; 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.