10-QPeriod: Q1 FY2016

RTX Corp Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 29, 2016For Securities:RTX

Summary

United Technologies Corporation (RTX) reported its first-quarter 2016 results, showcasing a slight increase in net sales to $13.357 billion from $13.320 billion in the prior year, largely driven by organic growth in its aerospace businesses. However, operating profit saw a decrease of 10.9% to $1.945 billion from $2.182 billion, impacted by various factors including unfavorable mix in commercial OEM sales and increased engine margins at Pratt & Whitney. The company also incurred significant restructuring costs. The sale of Sikorsky Aircraft in November 2015 continues to influence the financial statements, with its results reclassified to discontinued operations. RTX utilized a portion of the proceeds from this sale for substantial share repurchases. The company maintained a strong liquidity position with a considerable amount of cash and cash equivalents, though total debt increased due to recent debt issuances and share repurchase activities.

Financial Highlights

47 data points
Beta

Revenue

$13.36B

27.7% Gross Margin

Net Income

$1.18B

8.9% Net Margin

EPS (Diluted)

$1.42

Total Assets

$88.57B

Cash & Equivalents

$7.21B

Free Cash Flow

$798.00M

Financial Statements
Beta
Revenue$13.36B
Cost of Revenue$7.09B
Gross Profit$3.70B
R&D Expenses$541.00M
SG&A Expenses$1.36B
Operating Expenses$11.56B
Operating Income$1.95B
Interest Expense$223.00M
Net Income$1.18B
EPS (Basic)$1.43
EPS (Diluted)$1.42
Shares Outstanding (Basic)825.00M
Shares Outstanding (Diluted)831.30M

Key Highlights

  • 1Net sales for Q1 2016 were $13.357 billion, a marginal increase of 0.2% compared to $13.320 billion in Q1 2015.
  • 2Operating profit decreased by 10.9% to $1.945 billion in Q1 2016 from $2.182 billion in Q1 2015.
  • 3Diluted earnings per share from continuing operations were $1.42 in Q1 2016, down from $1.51 in Q1 2015.
  • 4The company recorded $62 million in pre-tax restructuring costs in Q1 2016.
  • 5Cash and cash equivalents stood at $7.215 billion as of March 31, 2016, up from $7.075 billion at December 31, 2015.
  • 6Total debt increased to $23.051 billion as of March 31, 2016, from $20.425 billion at December 31, 2015, largely due to debt issuances and share repurchases.
  • 7The sale of Sikorsky Aircraft in November 2015 continues to impact financial reporting, with its results classified under discontinued operations.

Frequently Asked Questions

The primary driver for the slight increase in net sales was organic growth, particularly in the aerospace businesses (Pratt & Whitney and UTC Aerospace Systems), which was partially offset by declines in the commercial businesses (UTC Climate, Controls & Security).

The decrease in operating profit was influenced by several factors including unfavorable sales mix in commercial OEM sales, higher engine margins at Pratt & Whitney, and the impact of restructuring costs. Specifically, Otis and UTC Climate, Controls & Security saw declines in operating profit, while Pratt & Whitney's profit was also down despite higher sales.

The sale of Sikorsky Aircraft in November 2015 resulted in its operations and cash flows being reclassified to 'Discontinued Operations' for all periods presented. This impacts the comparability of year-over-year net income from continuing operations and introduces specific line items related to the gain on disposal and associated tax impacts.

RTX maintained a strong liquidity position as of March 31, 2016, with $7.215 billion in cash and cash equivalents. The company also has significant undrawn revolving credit facilities available. However, total debt has increased due to recent debt issuances and share repurchase activities.