10-QPeriod: Q1 FY2011

RTX Corp Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 25, 2011For Securities:RTX

Summary

United Technologies Corporation (UTC) demonstrated robust financial performance in the first quarter of 2011, with net sales increasing by 11% year-over-year to $13.34 billion and net income attributable to common shareholders rising by 17% to $1.10 billion. This growth was primarily driven by broad-based organic sales increases across its diverse segments, including strong performance in Carrier's transport refrigeration and residential HVAC markets, and growth in the commercial aerospace aftermarket. The company also saw improvements in operating profit margins, indicating effective cost management and operational efficiencies. UTC's strong liquidity position was maintained, with substantial cash and cash equivalents, and its strategic acquisition and share repurchase activities underscore a commitment to enhancing shareholder value and adapting to market dynamics.

Financial Highlights

46 data points
Beta

Revenue

$12.67B

27.8% Gross Margin

Net Income

$1.01B

8.0% Net Margin

EPS (Diluted)

$1.11

Total Assets

$60.66B

Free Cash Flow

$1.36B

Financial Statements
Beta
Revenue$12.67B
Cost of Revenue$6.47B
Gross Profit$3.52B
R&D Expenses$470.00M
SG&A Expenses$1.46B
Operating Expenses$11.09B
Operating Income$1.69B
Net Income$1.01B
EPS (Basic)$1.13
EPS (Diluted)$1.11
Shares Outstanding (Basic)898.70M
Shares Outstanding (Diluted)914.90M

Key Highlights

  • 1Net sales for the quarter rose 11% to $13.34 billion, with organic sales growth contributing 9%.
  • 2Net income attributable to common shareholders increased by 17% to $1.10 billion.
  • 3Diluted earnings per share (EPS) improved to $1.11 from $0.93 in the prior year period.
  • 4Operating profit margin expanded to 13.3% from 12.6% in the prior year quarter.
  • 5The company repurchased $727 million of its common stock during the quarter as part of its ongoing share repurchase program.
  • 6Acquisition activity continued, with $106 million invested in smaller acquisitions across commercial and aerospace businesses.
  • 7Significant liquidity maintained with $4.44 billion in cash and cash equivalents as of March 31, 2011.

Frequently Asked Questions

The primary driver of the year-over-year sales growth was a combination of strong organic sales growth (9%), a beneficial impact from foreign currency translation (1%), and contributions from net acquisitions (1%). Key segments contributing to organic growth included Carrier (18%), Sikorsky (15%), and robust performance in the commercial aerospace aftermarket across Pratt & Whitney and Hamilton Sundstrand.

UTC managed its costs effectively, leading to an improvement in operating profit margin. While cost of goods sold increased in line with sales volume, it grew at a slower pace than organic sales, indicating improved product/service mix and operational efficiencies. Research and development expenses increased, particularly in aerospace, due to new product development, and selling, general, and administrative expenses also rose, partly due to acquisitions, but as a percentage of sales, they decreased due to higher revenues and cost-saving measures.

For the full year 2011, the company expected approximately $150 million to $200 million in restructuring costs. The company also planned to invest approximately $1.5 billion in acquisitions for 2011, following $106 million in smaller acquisitions during the first quarter. These activities are part of the company's strategy to drive growth, improve efficiency, and enhance shareholder value.

Cash flow from operating activities was strong, increasing to $1.36 billion from $1.15 billion in the prior year quarter. This increase was primarily driven by higher net income. Investing activities showed a significant decrease in cash used, largely due to reduced acquisition spending compared to Q1 2010. Financing activities used more cash due to substantial share repurchases and dividend payments.