UTC Reports 14 Percent Fourth Quarter EPS Growth On 6 Percent Higher Sales; Affirms 2011 Outlook
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HARTFORD, Conn. – United Technologies Corp. (NYSE:UTX) today reported fourth quarter 2010 earnings per share of $1.31, up 14 percent over prior year. Results for the current and prior year quarters included net charges for restructuring and one-time items of $0.03 and $0.08 per share, respectively. Before these charges, earnings per share increased 9 percent year over year. Currency hedges at Pratt & Whitney Canada, net of all foreign exchange translation, contributed $0.02 to the earnings per share increase.
Consolidated sales for the quarter of $14.9 billion were 6 percent above prior year, including 6 percent of organic growth. Net income attributable to common shareowners of $1.2 billion increased 12 percent year over year. Cash flow from operations was $1.7 billion, including $600 million of global pension contributions. Capital expenditures were $386 million in the quarter.
Full year earnings per share of $4.74 and net income attributable to common shareowners of $4.4 billion increased 15 and 14 percent, respectively, from 2009 results. Consolidated sales of $54.3 billion were 4 percent above prior year including organic growth (2 points), net acquisitions (1 point), and foreign currency translation (1 point). On a reported basis, segment operating margin at 14.6 percent was 140 basis points higher than prior year, with five of six segments above 10 percent operating margins. Adjusted for restructuring and one-time items, segment operating margin of 15.4 percent was 100 basis points higher than prior year. Cash flow from operations was $5.9 billion, including $1.3 billion of global pension contributions. Capital expenditures were $865 million for the year.
“UTC’s fourth quarter results reflect strong sales growth, particularly in the commercial aerospace aftermarket and shorter cycle Carrier businesses,” said Louis Chênevert, UTC Chairman & Chief Executive Officer. “Our proactive focus on structural cost reduction resulted in solid conversion on higher sales and exceptional margin expansion for the year. For the first time in UTC’s history, all six business units delivered double digit operating margins for the full year, adjusted for restructuring and one-time items. In typical UTC fashion, cash generation was strong in the quarter and throughout the year.”
New equipment orders at Otis were up 11 percent over the year ago fourth quarter. Commercial HVAC new equipment orders at Carrier grew 21 percent including favorable foreign exchange of 1 point. Commercial spares orders at Pratt & Whitney’s large engine business grew 45 percent and at Hamilton Sundstrand were up 31 percent over the year ago fourth quarter.
“End markets are recovering consistent with our expectations, supporting our 2011 sales outlook of $56 billion to $57 billion,” Chênevert continued. “We expect our strong operating leverage will drive further margin expansion and will allow us to deliver earnings growth of 7 percent to 13 percent with 2011 earnings per share of $5.05 to $5.35, even as we increase investment in transformational technologies.
“We again expect cash flow from operations less capital expenditures to equal or exceed net income attributable to common shareowners in 2011. Share repurchase is expected to be $2.5 billion and our acquisition placeholder is $1.5 billion,” Chênevert added.
Share repurchase in the fourth 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 the year.
The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow, including a reconciliation of differences between non-GAAP measures used in this release and the comparable financial measures calculated in accordance with generally accepted accounting principles in the United States.
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 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 materials 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,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance” and other words of similar meaning in connection with a discussion of future operating or financial performance. These include, among others, statements relating to: future sales, earnings, cash flow, results of operations, uses of cash and other measures of financial performance; the effect of economic conditions in the markets in which we operate and in the United States and globally and any changes therein, including financial market conditions, fluctuation 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 difficulties (including bankruptcy) of commercial airlines; the impact of weather conditions and the financial condition of our customers and suppliers; delays and disruption in delivery of materials and services from suppliers; new business opportunities; cost reduction efforts and restructuring costs and savings and other consequences thereof; the scope, nature or impact of acquisition and divestiture activity, including integration of acquired businesses into our existing businesses; the development, production and support of advanced technologies and new products and services; the anticipated benefits of diversification and balance of operations across product lines, regions and industries; the impact of the negotiation of collective bargaining agreements, and labor disputes; the outcome of legal proceedings and other contingencies; future repurchases of common stock; future levels of indebtedness and capital and research and development spending; future availability of credit; pension plan assumptions and future contributions; and the effect of changes in tax, environmental and other laws and regulations in the United States and other countries in which we operate. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with the SEC from time to time, including, but not limited to, the information included in UTC’s Forms 10-K and 10-Q under the headings “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Legal Proceedings” and in the notes to the financial statements included in UTC’s Forms 10-K and 10-Q.
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