Summary
United Technologies Corporation (UTC) in its 2018 10-K filing detailed its diversified business segments: Otis (elevators/escalators), Carrier (HVAC, refrigeration, fire/security), Pratt & Whitney (aerospace engines), and Collins Aerospace Systems (aerospace products and services, including the recently acquired Rockwell Collins). The company announced a significant strategic shift to separate into three independent, publicly traded entities: a focused aerospace company (Pratt & Whitney and Collins Aerospace), Otis, and Carrier, with this separation anticipated by mid-2020. This restructuring is a key event for investors to consider, aiming to unlock value by creating more specialized businesses. The filing highlights the substantial scale of UTC's operations, with aerospace businesses comprising about 53% of 2018 sales, and international sales accounting for 62%. The significant acquisition of Rockwell Collins in November 2018 is a major development, creating the Collins Aerospace Systems segment and impacting the company's financial structure and operational integration plans. Investors should note the considerable backlog in the aerospace segment, particularly Pratt & Whitney's $71.1 billion RPO, which indicates future revenue streams but also carries associated development and production risks. The company also detailed various risk factors, including economic sensitivities in the construction and aerospace industries, geopolitical risks, foreign currency fluctuations, and the complexities and potential disruptions associated with the pending separation and integration of Rockwell Collins.
Financial Highlights
52 data points| Revenue | $34.70B |
| R&D Expenses | $1.88B |
| SG&A Expenses | $2.86B |
| Operating Expenses | $32.21B |
| Operating Income | $2.88B |
| Interest Expense | $1.03B |
| Net Income | $5.27B |
| EPS (Basic) | $6.58 |
| EPS (Diluted) | $6.50 |
| Shares Outstanding (Basic) | 800.40M |
| Shares Outstanding (Diluted) | 810.10M |
Key Highlights
- 1Announced intention to separate into three independent companies: a dedicated aerospace company (Pratt & Whitney, Collins Aerospace), Otis, and Carrier, with completion expected by mid-2020.
- 2Completed the acquisition of Rockwell Collins in November 2018, integrating it into a new segment named Collins Aerospace Systems.
- 3Aerospace businesses (Pratt & Whitney and Collins Aerospace) represented approximately 53% of total sales in 2018.
- 4International sales accounted for a significant 62% of net sales in 2018.
- 5Pratt & Whitney reported a substantial Remaining Performance Obligation (RPO) of $71.1 billion as of December 31, 2018, indicating strong future contracted sales.
- 6Otis segment had an RPO of $16.4 billion, with $8.8 billion expected to be realized in 2019.
- 7Carrier segment had an RPO of $5.3 billion, with approximately 70% expected to be realized in 2019.