United Technologies Corp. (UTX) reported fourth-quarter earnings per share from continuing operations of $1.47; EPS was a penny above the Zacks Consensus Estimate and is up 12% year over year.
Total revenue for the quarter was almost flat year over year increasing marginally by 1% year over year to $15.0 billion, including organic growth of 2% and 1% favorable impact from divestitures. Revenue was in line with the Zacks Consensus Estimate.
New equipment orders at Otis were up 2% over the year ago fourth quarter. Commercial HVAC new equipment orders at Carrier grew 5% excluding favorable foreign exchange of 1%. Commercial spares orders at Pratt & Whitney's large engine business declined 16% while at Hamilton Sundstrand were up 17% over the year-ago quarter.
Segment Results
Carrier posted a quarter of solid profit growth and strong margin expansion. Profits were up a robust 57% resulting in 520 basis points of margin expansion. But revenues declined 8.8% during the quarter. UTC Fire & Security delivered operating margin decline of 580 basis points in the quarter on a 1.6% decline in sales. Pratt & Whitney sales increased only marginally by 1.3%, while Hamilton Sundstrand sales were up 11.1% year over year. Sikorsky sales were higher 1.1% year over year.
Total segment operating margin at 14.7% was 90 basis points higher than prior year, with four out of the six segments reporting margin expansion.
Cash flow from operations was $2.0 billion, while capital expenditures were $378 million for the fourth quarter of 2011. During fiscal 2011, the company spent $357 million for acquisitions, out of which $128 million was spent during the fourth quarter alone.
Balance Sheet and Cash Flow
The company continues to maintain a strong cash flow position. Cash and cash equivalents were $6.0 billion up 46.0% with long-term debt of $9.5 billion and equity of $22.8 billion. The company had a debt to capital ratio of 29.3%.
Outlook
United Technologies is confident about its better than expected performance in fiscal 2012. The company expects earnings of $5.80 to $6.00 a share, up 6% to 9% compared to fiscal 2011. Revenues are expected to range between $59 billion and $60 billion.
Speaking about the company’s performance in 2012, management stated that it expects a moderate economic growth, driven primarily by emerging markets. In addition, the company is positive about strong organic growth in four of its five business units.
Further, the Goodrich acquisition comes at an opportune time, just as commercial aerospace OEMs are increasing production. Therefore, we expect the company to see revenue synergies from the combination of Goodrich and Hamilton Sundstrand (the existing aerospace business).
United Technologies currently holds a Zacks Rank # 3 which implies short term ‘Hold’ rating on the stock.
UTD TECHS CORP (UTX): Free Stock Analysis Report
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