10-QPeriod: Q3 FY2008

RTX Corp Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 21, 2008For Securities:RTX

Summary

United Technologies Corporation (UTC) reported solid financial results for the nine months ended September 30, 2008, demonstrating resilience amidst a challenging economic environment. Total revenues increased by 10.3% to $44.18 billion, driven by organic growth and favorable foreign currency translation. Net income grew to $3.54 billion, a 12.0% increase from the prior year, with diluted earnings per share rising to $3.68 from $3.19. The company's diversified segments, including Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand, and Sikorsky, collectively contributed to this growth, with notable strength in aerospace original equipment manufacturing (OEM) and military helicopter demand. Despite macroeconomic headwinds such as financial market volatility and a weakening housing market, UTC maintained a strong balance sheet with total assets of $56.81 billion and total shareholders' equity of $21.08 billion. The company generated robust operating cash flows of $4.14 billion, enabling it to fund investments, dividends, and significant share repurchases totaling $2.47 billion in the first nine months of the year. UTC also actively managed its cost structure through ongoing restructuring actions, aiming for approximately $260 million in annual pre-tax savings from 2008 actions.

Financial Highlights

23 data points
Beta

Revenue

$15.09B

45.3% Gross Margin

Net Income

$1.27B

8.4% Net Margin

EPS (Diluted)

$1.33

Free Cash Flow

$1.83B

Financial Statements
Beta
Revenue$15.09B
Cost of Revenue$8.25B
Gross Profit$6.84B
R&D Expenses$436.00M
SG&A Expenses$1.67B
Operating Income$2.05B
Interest Expense$177.00M
Net Income$1.27B
EPS (Basic)$1.36
EPS (Diluted)$1.33
Shares Outstanding (Basic)933.00M
Shares Outstanding (Diluted)951.00M

Key Highlights

  • 1Revenues increased 10.3% to $44.18 billion for the nine months ended September 30, 2008, compared to $40.04 billion in the prior year.
  • 2Net income rose 12.0% to $3.54 billion for the nine months ended September 30, 2008, compared to $3.16 billion in the prior year.
  • 3Diluted earnings per share improved to $3.68 for the nine months ended September 30, 2008, from $3.19 in the prior year.
  • 4Operating cash flow remained strong at $4.14 billion for the nine months ended September 30, 2008.
  • 5The company repurchased approximately $2.47 billion of its common stock during the first nine months of 2008.
  • 6Restructuring actions are expected to yield approximately $260 million in annual pre-tax savings from initiatives started in 2008 and 2007.
  • 7The company maintained a healthy debt-to-capitalization ratio of 33% as of September 30, 2008.

Frequently Asked Questions

Despite a challenging economic environment marked by financial market volatility and a weakening housing market, UTC demonstrated resilience. While organic growth moderated slightly in the third quarter, total revenues still grew by 6.9% year-over-year, supported by a 3% favorable foreign currency translation. The company's diversified business segments and global reach helped mitigate some of the adverse impacts, with strong performance in aerospace OEM and military helicopters offsetting some weakness in commercial refrigeration and residential international businesses.

UTC continues to return capital to shareholders through both dividends and share repurchases. For the first nine months of 2008, the company repurchased approximately $2.47 billion of its common stock under a new 60 million share repurchase program. Dividends paid on Common Stock for the first nine months of 2008 totaled $869 million. The company expects total share repurchases for 2008 to be around $3 billion, aiming to at least offset the dilutive effect of employee stock plans.

UTC is actively engaged in restructuring initiatives aimed at cost reduction and operational efficiency. During the first nine months of 2008, the company recorded $221 million in net pre-tax restructuring and related charges. These actions, initiated in 2006, 2007, and 2008, are expected to result in significant workforce reductions and facility consolidations. The company anticipates recurring pre-tax savings to increase over the two-year period following initiation, with total annual savings expected to reach approximately $260 million from 2008 actions and $110 million from 2007 actions.

UTC maintains a solid liquidity position, with cash and cash equivalents of $3.615 billion as of September 30, 2008. The company has access to significant credit facilities, totaling $2.5 billion in commitments, and continues to access the commercial paper market. The debt-to-total capitalization ratio was 33% as of September 30, 2008, indicating a well-managed leverage profile. The company's principal source of liquidity remains its strong operating cash flows.