10-QPeriod: Q1 FY2008

RTX Corp Quarterly Report for Q1 Ended Mar 31, 2008

Filed April 22, 2008For Securities:RTX

Summary

United Technologies Corporation (UTC) reported strong first-quarter 2008 results, with revenues increasing 11.6% year-over-year to $13.7 billion and net income growing significantly to $1.0 billion, or $1.03 per diluted share, up from $819 million, or $0.82 per diluted share, in the prior year period. This growth was driven by solid organic revenue increases across its diverse segments, particularly in aerospace and commercial businesses, as well as favorable foreign currency translation and strategic acquisitions. The company's operational efficiency improvements, cost containment efforts, and benefits from past restructuring actions contributed to an 11% increase in consolidated operating profit. Despite some economic headwinds in the U.S. residential market, UTC's global diversification and strong product demand across most segments allowed it to navigate challenging conditions effectively. The company also continued its commitment to returning capital to shareholders through significant share repurchases and dividend payments.

Key Highlights

  • 1Revenues increased 11.6% to $13.7 billion in Q1 2008 compared to Q1 2007.
  • 2Net income rose 22.1% to $1.0 billion ($1.03 diluted EPS) in Q1 2008, up from $819 million ($0.82 diluted EPS) in Q1 2007.
  • 3Consolidated operating profit increased 11% to $1.67 billion.
  • 4Strong organic revenue growth of 7% was supplemented by a 4% favorable foreign currency impact and 3% from acquisitions.
  • 5The company repurchased $820 million of common stock and paid $293 million in dividends during the quarter.
  • 6Restructuring charges totaled $34 million in Q1 2008, with ongoing actions expected to yield significant annual savings.
  • 7UTC's diverse segment performance helped mitigate weaknesses in the U.S. residential market.

Frequently Asked Questions

Revenue growth was driven by a combination of factors including organic growth of 7% across its segments, a favorable 4% impact from foreign currency translation due to the weakening U.S. dollar, and a 3% contribution from acquisitions completed in the past year. Strong performance in commercial aerospace OEM markets and a robust new equipment backlog at Otis were key contributors.

Profitability saw a significant improvement. Net income increased by 22.1% to $1.0 billion, and diluted earnings per share grew to $1.03 from $0.82 in the prior year period. This was supported by operational efficiencies, cost containment, savings from restructuring actions, and a favorable comparison to the prior year which was impacted by a significant civil fine against Otis.

The company expects to invest approximately $2 billion in acquisitions for 2008, dependent on opportunity and value, including a significant proposal made for Diebold. UTC also demonstrated a strong commitment to returning capital to shareholders by repurchasing $820 million of common stock and paying $293 million in dividends during the first quarter. They expect total share repurchases for 2008 to be around $2 billion.

While the company reported strong results, it noted headwinds such as the continued deterioration of the U.S. residential market impacting Carrier and UTC Fire & Security's residential businesses. The company also mentioned the adverse impact of high fuel prices on airline carriers and potential moderation in revenue passenger mile growth. Additionally, risks related to government contracting, international operations, raw material availability, and integration of acquisitions were noted.