United Technologies Corp. (UTX) reported second-quarter earnings per share from continuing operations of $1.45, above the Zacks Consensus Estimate of $1.41 and up 20% year-over-year.
The year-over-year increase in the company’s earnings was primarily attributable to favorable foreign currency translation.
Total revenue for the quarter increased 9.2% year over year to $15.1 billion, including organic growth of 6% and a 4% favorable impact from foreign currency translation.
New equipment orders at Otis were up 23% over the year ago second quarter. Commercial HVAC new equipment orders at Carrier grew 13% including favorable foreign exchange of 4%. Commercial spares orders at Pratt & Whitney's large engine business grew 23% and at Hamilton Sundstrand were up 25% over the year-ago quarter.
Segment Results
Carrier posted a quarter of solid profit growth and strong margin expansion. Profits were up 38% on 9.7% higher sales, resulting in 270 basis points of margin expansion. UTC Fire & Security delivered operating margin expansion of 140 basis points in the quarter on 8.1% higher sales. Pratt & Whitney sales were up 5.3%, including a 6 cent favorable currency conversion at Pratt & Whitney Canada. Hamilton Sundstrand sales were up 10.5% year over year. Sikorsky sales were higher by 5.6% year over year.
Total segment operating margin at 15.9% was 120 basis points higher than prior year, with all the six segments above the 10% mark. Adjusted for restructuring and one-time items, segment operating margin of 15.9% was 20 basis points higher than the prior year.
Cash flow from operations was $1.2 billion, while capital expenditures were $201 million for the first half of 2011. Share repurchase year to date was $1.5 billion. Acquisition spending was $184 million for the first six months of 2011.
Balance Sheet and Cash Flow
The company continues to maintain a strong cash flow position. Cash and cash equivalents were $5.4 billion with long-term debt of $9.5 billion and equity of $23.7 billion.
Outlook
Based on strong performance of the company for the first six months of 2011, management has raised its guidance for fiscal 2011. Earnings are now expected to be in the range of $5.35 to $5.45 per share compared to $5.25 to $5.40 a share. Sales for the year are expected to increase 7% year-over-year.
United Technologies currently holds a Zacks Rank #2, which implies short-term (1-3 months) ‘Buy’ rating on the stock.
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