Summary
United Technologies Corporation (UTC) reported robust financial performance for the second quarter and first half of 2018, demonstrating significant year-over-year growth in net sales and net income. This growth was driven by organic sales increases across all four segments: Otis, UTC Climate, Controls & Security, Pratt & Whitney, and UTC Aerospace Systems. The company also benefited from a substantial gain on the sale of Taylor Company, which boosted other income. Operationally, the company is managing its costs effectively, though gross margin saw some pressure, particularly in Pratt & Whitney due to higher engine margins and adverse mix. The company has adopted new revenue recognition standards (ASC 606), which have led to reclassifications and balance sheet adjustments, but are not expected to materially impact overall net income. UTC is also actively managing its debt, including preparations for the significant acquisition of Rockwell Collins, which is expected to close in the third quarter of 2018. The company maintains a strong liquidity position and anticipates sufficient cash flow to meet its obligations.
Financial Highlights
49 data points| Revenue | $16.70B |
| Gross Profit | $4.28B |
| R&D Expenses | $589.00M |
| SG&A Expenses | $1.76B |
| Operating Expenses | $14.77B |
| Operating Income | $2.88B |
| Interest Expense | $234.00M |
| Net Income | $2.05B |
| EPS (Basic) | $2.59 |
| EPS (Diluted) | $2.56 |
| Shares Outstanding (Basic) | 790.50M |
| Shares Outstanding (Diluted) | 799.60M |
Key Highlights
- 1Net sales increased by 9% to $16.7 billion for the quarter and 10% to $31.9 billion for the first six months of 2018, driven by organic growth across all segments.
- 2Net income attributable to common shareowners grew significantly, up 42% to $2.05 billion for the quarter and 18% to $3.35 billion for the first six months.
- 3UTC Climate, Controls & Security reported a substantial operating profit increase of 97% for the quarter, largely due to a significant gain from the sale of Taylor Company.
- 4Pratt & Whitney experienced strong organic sales growth of 12% in the quarter, driven by commercial aftermarket, commercial OEM, and military sales.
- 5The company adopted new revenue recognition standards (ASC 606) effective January 1, 2018, resulting in balance sheet reclassifications and some adjustments to cost and revenue recognition, with an immaterial expected impact on 2018 net income.
- 6UTC is preparing for the acquisition of Rockwell Collins, expected to close in Q3 2018, which will be funded through debt issuances and cash on hand.
- 7The company maintained a strong balance sheet with $11.1 billion in cash and cash equivalents at June 30, 2018, and a debt-to-total-capitalization ratio of 46%.