Summary
United Technologies Corporation (UTC) reported its second-quarter and first-half 2015 financial results, showing a decline in net sales for both periods compared to 2014. This decrease was primarily driven by negative foreign currency translation effects and the absence of a large prior-year cumulative adjustment related to the Sikorsky helicopter program. Despite lower sales, the company demonstrated resilience with positive organic sales growth across most segments and an improved gross margin percentage due to the non-recurrence of the Sikorsky program's prior-year adjustment. Key financial highlights include a focus on capital allocation, with significant share repurchases executed through accelerated share repurchase agreements and continued dividend payments. The company also announced its agreement to sell the Sikorsky Aircraft business to Lockheed Martin, which will be reported as discontinued operations beginning in Q3 2015. Management expressed confidence in the company's liquidity, underpinned by strong operating cash flow and access to credit facilities.
Financial Highlights
48 data points| Revenue | $14.69B |
| Cost of Revenue | $7.84B |
| Gross Profit | $4.22B |
| R&D Expenses | $558.00M |
| SG&A Expenses | $1.43B |
| Operating Expenses | $12.46B |
| Operating Income | $2.42B |
| Interest Expense | $217.00M |
| Net Income | $1.54B |
| EPS (Basic) | $1.76 |
| EPS (Diluted) | $1.73 |
| Shares Outstanding (Basic) | 877.30M |
| Shares Outstanding (Diluted) | 889.40M |
Key Highlights
- 1Net sales decreased by 5% to $16.3 billion for the quarter and by 3% to $30.9 billion for the first six months of 2015 compared to the prior year, largely due to foreign currency headwinds and the absence of a prior-year accounting adjustment.
- 2Gross profit margin improved to 27.6% for both the quarter and the first six months of 2015, up from 24.8% and 26.0% respectively in the prior year, primarily due to the non-recurrence of a significant negative adjustment in the Sikorsky helicopter program.
- 3The company announced the agreement to sell its Sikorsky Aircraft business to Lockheed Martin for $9 billion, expected to close by year-end 2015 or early 2016, and will be reported as discontinued operations.
- 4Significant share repurchase activity occurred, including accelerated share repurchase (ASR) agreements totaling $2.65 billion, underscoring a commitment to returning capital to shareholders.
- 5Operating profit saw a mixed performance across segments, with Pratt & Whitney showing a strong increase driven by favorable contract adjustments and military engine sales, while UTC Aerospace Systems experienced a slight decrease.
- 6Restructuring costs totaled $155 million for the first six months of 2015, reflecting ongoing cost reduction efforts across various segments.
- 7The company maintains a strong liquidity position, with $5.9 billion in cash and cash equivalents and access to substantial credit facilities, enabling continued investment in growth and capital return initiatives.