10-QPeriod: Q2 FY2010

RTX Corp Quarterly Report for Q2 Ended Jun 30, 2010

Filed July 26, 2010For Securities:RTX

Summary

United Technologies Corporation (RTX) reported a solid performance for the second quarter and first half of 2010, demonstrating a recovery from the 2009 economic downturn. Revenues increased by 5.3% year-over-year for the quarter and 2.1% for the six-month period, driven by organic growth and strategic acquisitions, notably the GE Security business. Net income attributable to common shareholders rose by approximately 13.7% for the quarter and 16.4% for the six months, indicating improved profitability. The company also managed its costs effectively, with Selling, General & Administrative expenses decreasing as a percentage of sales, and gross margins improving significantly. The company's aerospace businesses, including Pratt & Whitney and Sikorsky, showed strength, particularly with increased military revenues at Sikorsky. Commercial businesses also exhibited signs of recovery, with Carrier seeing organic revenue growth and UTC Fire & Security benefiting significantly from the GE Security acquisition. RTX's commitment to shareholder returns is evident through continued share repurchases and dividend payments, while maintaining a solid financial position with healthy operating cash flows and manageable debt levels.

Financial Highlights

46 data points
Beta

Revenue

$13.80B

27.4% Gross Margin

Net Income

$1.11B

8.0% Net Margin

EPS (Diluted)

$1.20

Total Assets

$58.34B

Free Cash Flow

$1.40B

Financial Statements
Beta
Revenue$13.80B
Cost of Revenue$7.47B
Gross Profit$3.79B
R&D Expenses$459.00M
SG&A Expenses$1.49B
Operating Income$1.88B
Interest Expense$192.00M
Net Income$1.11B
EPS (Basic)$1.22
EPS (Diluted)$1.20
Shares Outstanding (Basic)910.40M
Shares Outstanding (Diluted)925.40M

Key Highlights

  • 1Total revenues increased by 5.3% in Q2 2010 and 2.1% for the first six months of 2010 compared to the prior year periods.
  • 2Net income attributable to common shareowners grew by 13.7% to $1.11 billion for Q2 2010 and by 16.4% to $1.98 billion for the first six months of 2010.
  • 3The acquisition of GE Security business for approximately $1.8 billion was a significant investment in the first half of 2010, contributing to revenue growth.
  • 4Operating profit margins improved across most segments, indicating effective cost management and operational efficiencies.
  • 5Shareholders received dividends totaling $0.85 per share for the first six months of 2010, an increase from $0.77 in the prior year.
  • 6The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.
  • 7Sikorsky experienced a significant 22% revenue increase in Q2 2010, primarily driven by higher military revenues.

Frequently Asked Questions

Revenue growth was driven by a combination of organic revenue growth of 4% and a 1% contribution from net acquisitions. Key contributors to organic growth included improvements in Carrier's transport refrigeration and U.S. residential systems businesses, increased military revenues at Sikorsky, and beneficial impacts from currency hedges at Pratt & Whitney Canada (P&WC). The acquisition of GE Security also significantly contributed to revenue, particularly within the UTC Fire & Security segment.

Profitability improved significantly. Net income attributable to common shareowners increased by 13.7% to $1.11 billion in the second quarter of 2010 and by 16.4% to $1.98 billion for the first six months of 2010 compared to the same periods in 2009. This improvement was supported by increased revenues, effective cost controls leading to improved gross margins, and decreased selling, general, and administrative expenses as a percentage of sales.

Acquisitions, most notably the GE Security business for approximately $1.8 billion and an equity stake in Clipper Windpower Plc for approximately $270 million, were significant. These acquisitions contributed positively to revenue growth, particularly in the UTC Fire & Security segment. The company also undertook strategic divestitures, primarily within Carrier, as part of its portfolio transformation, which resulted in asset impairment charges but was part of a strategy to focus on higher-return businesses.

The company maintained a strong liquidity position, with cash and cash equivalents increasing to $4.997 billion as of June 30, 2010. Debt-to-total capitalization remained at a manageable 37%. The company generated robust operating cash flows and had access to significant credit facilities. It also strategically issued new long-term debt in February 2010 to fund acquisitions and repay commercial paper, while simultaneously repaying maturing debt, indicating active debt management.