10-QPeriod: Q3 FY2011

RTX Corp Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 24, 2011For Securities:RTX

Summary

United Technologies Corporation (RTX) reported solid financial results for the nine months ended September 30, 2011. Net sales increased by 9.5% to $43.22 billion compared to the same period in 2010. Net income attributable to common shareholders rose by 15.1% to $3.65 billion, leading to a diluted EPS of $4.02, up from $3.43 in the prior year. The company highlighted strong organic sales growth across all six segments, driven by demand in emerging markets and the aerospace aftermarket. Financially, RTX demonstrated robust operational cash flow generation, increasing to $4.58 billion for the nine months ended September 30, 2011. The company's liquidity remains strong, with cash and cash equivalents at $5.97 billion. A significant event disclosed is the pending acquisition of Goodrich Corporation for $18.4 billion, expected to close in mid-2012, which will be financed through a combination of debt and equity. To manage the financial impact, RTX has suspended share repurchases until September 30, 2012, and plans to reduce future acquisition spending. The company is also actively managing restructuring costs to position for future earnings growth.

Financial Highlights

46 data points
Beta

Revenue

$14.23B

27.4% Gross Margin

Net Income

$1.32B

9.3% Net Margin

EPS (Diluted)

$1.47

Total Assets

$61.95B

Free Cash Flow

$1.96B

Financial Statements
Beta
Revenue$14.23B
Cost of Revenue$7.52B
Gross Profit$3.90B
R&D Expenses$465.00M
SG&A Expenses$1.51B
Operating Expenses$12.31B
Operating Income$2.15B
Net Income$1.32B
EPS (Basic)$1.49
EPS (Diluted)$1.47
Shares Outstanding (Basic)888.80M
Shares Outstanding (Diluted)901.90M

Key Highlights

  • 1Net sales for the nine months ended September 30, 2011, increased by 9.5% to $43.22 billion.
  • 2Net income attributable to common shareholders grew by 15.1% to $3.65 billion, with diluted EPS reaching $4.02.
  • 3Operating cash flow increased to $4.58 billion for the nine months, indicating strong cash generation.
  • 4The company announced a significant agreement to acquire Goodrich Corporation for $18.4 billion, expected to close in mid-2012.
  • 5RTX is suspending share repurchases until September 30, 2012, to preserve capital for the Goodrich acquisition.
  • 6Restructuring costs were $188 million for the nine months ended September 30, 2011, as the company implements cost reduction initiatives.
  • 7Cash and cash equivalents stood at a healthy $5.97 billion as of September 30, 2011.

Frequently Asked Questions

RTX experienced strong organic sales growth across all six segments, driven by demand in emerging markets (especially in China and Russia for Otis, and general growth in Carrier's transport refrigeration business) and a robust aerospace aftermarket. Sikorsky also saw significant growth due to international military aircraft shipments and aftermarket support.

The acquisition of Goodrich is a significant event with an enterprise value of $18.4 billion. RTX expects to finance it through a combination of debt and equity. To manage liquidity and capital for this transaction, RTX has suspended share repurchases until September 30, 2012, and will reduce future acquisition spending, excluding strategic deals like Goodrich and the IAE transactions. The acquisition is expected to close in mid-2012.

RTX is actively undertaking restructuring efforts, with $188 million in restructuring costs reported for the nine months ended September 30, 2011. These actions include workforce reductions and facility consolidations aimed at driving cost savings and positioning the company for future earnings growth. The company is also increasing its full-year 2011 restructuring cost estimate.

RTX maintains a strong liquidity position with $5.97 billion in cash and cash equivalents as of September 30, 2011. The primary source of liquidity is operating cash flow, which increased to $4.58 billion for the nine months. The company also has access to substantial credit facilities. Funding for operations and strategic initiatives, including the Goodrich acquisition, will be managed through a combination of operating cash flow, debt, and equity issuances, with a strategic pause on share repurchases.