10-QPeriod: Q3 FY2009

RTX Corp Quarterly Report for Q3 Ended Sep 30, 2009

Filed October 23, 2009For Securities:RTX

Summary

United Technologies Corporation (UTC) reported a decline in revenues and net income for the third quarter and first nine months of 2009 compared to the same periods in 2008, primarily driven by challenging global economic conditions impacting its commercial businesses. Total revenues decreased by 11.3% and 13.7% for the respective periods. Net income attributable to common shareowners fell by 16.6% for the quarter and 22.6% for the nine months. The company continued to implement significant restructuring actions to mitigate the impact of the downturn, incurring substantial charges in both periods. Despite revenue headwinds, UTC demonstrated strong operational efficiency and cost management, with some segments showing operational profit improvements. The company also highlighted strategic acquisitions, including the increased stake in GST Holdings Limited, to strengthen its presence in key markets.

Financial Highlights

45 data points
Beta

Revenue

$13.38B

25.1% Gross Margin

Net Income

$1.06B

7.9% Net Margin

EPS (Diluted)

$1.14

Total Assets

$57.58B

Free Cash Flow

$1.85B

Financial Statements
Beta
Revenue$13.38B
Cost of Revenue$7.35B
Gross Profit$3.35B
R&D Expenses$344.00M
SG&A Expenses$1.42B
Operating Income$1.77B
Interest Expense$170.00M
Net Income$1.06B
EPS (Basic)$1.15
EPS (Diluted)$1.14
Shares Outstanding (Basic)917.00M
Shares Outstanding (Diluted)929.00M

Key Highlights

  • 1Revenues for the third quarter decreased by 11.3% to $13.375 billion, and for the first nine months by 13.7% to $38.820 billion, compared to the prior year, primarily due to challenging economic conditions.
  • 2Net income attributable to common shareowners declined by 16.6% to $1.058 billion in Q3 2009 and by 22.6% to $2.756 billion for the first nine months of 2009 compared to the prior year.
  • 3The company incurred significant restructuring and related charges of $695 million for the first nine months of 2009, up from $221 million in the same period of 2008, to manage costs amid economic slowdown.
  • 4Operating profit margins saw a slight compression, with consolidated operating profit margin at 13.2% for Q3 2009 (vs. 13.6% in Q3 2008) and 12.0% for the nine months (vs. 12.9% in the nine months of 2008).
  • 5Acquisition activity included a significant investment in GST Holdings Limited in China, increasing UTC Fire & Security's stake to 99%.
  • 6Sikorsky segment showed robust growth, with revenues increasing 15% in Q3 2009 driven by higher military aircraft shipments.
  • 7The company maintained a strong liquidity position with $4.632 billion in cash and cash equivalents as of September 30, 2009, and significant undrawn credit facilities.

Frequently Asked Questions

The primary driver behind the decline in UTC's revenues for both the third quarter and the first nine months of 2009 was challenging global economic conditions, which significantly impacted its commercial businesses. This resulted in lower sales volumes across most segments, with particular weakness in areas like new equipment sales at Otis, transport refrigeration at Carrier, and declines in both fire safety and electronic security at UTC Fire & Security.

UTC is actively managing the impact of the economic downturn through significant restructuring and cost reduction actions. This includes workforce reductions, consolidation of operations, and other efficiency measures. The company incurred substantial restructuring charges in 2009 to mitigate volume declines and reduce structural costs, while also benefiting from ongoing cost controls in areas like travel, R&D timing, and employee attrition.

The aerospace businesses are facing a challenging operating environment due to weak global economic conditions and reduced air travel impacting commercial airlines. This has led to lower orders for aircraft and reduced aftermarket volume. However, government military spending continued to drive growth at Sikorsky, which experienced a 15% revenue increase in Q3 2009. Pratt & Whitney Canada is also facing headwinds from the business jet market. The company expects continued weakness in the commercial aerospace aftermarket but relies on military demand for stability.

The company continues to pursue strategic acquisitions as part of its growth strategy. During the first nine months of 2009, it invested approximately $557 million in businesses, with a significant portion in the third quarter focused on increasing its stake in GST Holdings Limited in China to 99%, thereby strengthening its presence in the fire safety industry. These investments are expected to enhance its market position and future growth prospects, even amidst current economic challenges.