RAYTHEON TECHNOLOGIES CORP - FORM 8-K - EX-99 - EXHIBIT 99 - April 21, 2015

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8-K - 2015-03-31 8-K EARNINGS RELEASE - RAYTHEON TECHNOLOGIES CORPa2015-03x318xker.htm


Exhibit 99

UTC REPORTS FIRST QUARTER 2015 RESULTS

•
EPS of $1.58, up 20% (up 7% ex. restructuring and one-time items)
•
Sales of $14.5 billion, including 3% organic growth
•
2015 EPS range of $6.85 to $7.05 reaffirmed

HARTFORD, Conn., April. 21, 2015 - United Technologies Corp. (NYSE:UTX) today reported first quarter earnings per share of $1.58 and net income attributable to common shareowners of $1.4 billion, up 20 percent and 18 percent respectively versus the prior year. Results for the current quarter include favorable one-time items of $0.07 per share net of restructuring costs. Earnings per share in the year ago quarter included $0.09 of net restructuring costs. Excluding these items in both quarters, earnings per share of $1.51 increased 7 percent year over year. Foreign currency had an unfavorable impact of $0.07.
Sales of $14.5 billion decreased by 1 percent, reflecting the impact of adverse foreign exchange (4 points), which was partially offset by the benefit of organic growth (3 points). First quarter segment operating profit increased 8 percent over the prior year quarter. Adjusted for restructuring costs and net one-time items, segment operating profit was flat, including an unfavorable impact from foreign exchange (5 points).
“We had a good start to the year, despite headwinds from a stronger U.S. dollar,” said Gregory Hayes, UTC President and Chief Executive Officer. “The fundamentals of all of our businesses remained solid, continuing to drive strong organic sales growth and allowing us to increase EPS by 13 percent on a constant currency basis, excluding the impact of gains and restructuring.”
Otis new equipment orders in the quarter increased 8 percent over the prior year at constant currency. Equipment orders at UTC Climate, Controls & Security increased 6 percent. Commercial aerospace aftermarket sales were up 2 percent at Pratt & Whitney and up 4 percent at UTC Aerospace Systems on an organic basis.
“Although commercial aerospace aftermarket growth was slower in the quarter than we anticipate for the year,” Hayes added, “the commercial building business in the U.S. is looking better and I’m encouraged by the signs of growth that we’re seeing in Europe. We remain confident in our expectations of 3 to 5 percent organic top line growth and sales of $65 to $66 billion, and this continues to support our earnings per share guidance of $6.85 to $7.05 in 2015.”
Cash flow from operations was $1.3 billion and capital expenditures were $348 million in the quarter. The planned share repurchase of $3.0 billion for the year has been completed. UTC continues to assume a placeholder for full year acquisition spend of $1 billion and expects cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners for 2015.
United Technologies Corp., based in Hartford, Connecticut, provides high technology products and services to the building and aerospace industries. Additional information, including a webcast, is available on the Internet at http://www.utc.com. To learn more about UTC, visit the website or follow the company on Twitter: @UTC




All financial results and projections reflect continuing operations unless otherwise noted. Foreign currency impact includes currency translation as well as hedging activity at Pratt & Whitney Canada. The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow, including a reconciliation of differences between non-GAAP measures used in this release and the comparable financial measures calculated in accordance with generally accepted accounting principles in the United States.
This press release includes statements that constitute “forward-looking statements” under the securities laws. Forward-looking statements often contain words such as “believe,” “expect,” “plans,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. Forward-looking statements may include, among other things, statements relating to the plans, strategies, and objectives of UTC for future operations, including statements relating to a potential strategic alternative transaction relating to Sikorsky, or the terms, timing or structure of any such transaction (or whether any such transaction will take place at all); the future performance of UTC or Sikorsky if any such transaction is completed; future and estimated sales, earnings, cash flow, charges, expenditures and share repurchases; anticipated growth in sales; new products and their entry into service; anticipated benefits of organizational changes; and other measures of financial or operational performance. There can be no assurance that any transaction or future events will occur as anticipated, if at all, or that actual results will be as expected. All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties include risks related to a potential separation of, or any other transaction relating to, Sikorsky; the effect of economic conditions in the markets in which we operate, including financial market conditions; fluctuation in commodity prices, interest rates and foreign currency exchange rates; future levels of research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial condition of commercial airlines; the impact of government budget and funding decisions on the economy; changes in government procurement priorities and funding; weather conditions and natural disasters; delays and disruption in delivery of materials and services from suppliers; company- and customer- directed cost reduction efforts and restructuring costs and consequences thereof; the impact of acquisitions, dispositions, joint ventures and similar transactions; challenges in the development and production of new products and services; the impact of diversification across product lines, regions and industries; the impact of legal proceedings, investigations and other contingencies; pension plan assumptions and future contributions; the effect of changes in tax, environmental and other laws and regulations and political conditions; and other factors beyond our control. The level of share repurchases depends upon market conditions and the level of other investing activities and uses of cash. The forward-looking statements speak only as of the date of this presentation and we undertake no obligation to update or revise any forward-looking statements as of a later date. For additional information identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time, including, but not limited to, the information included in UTC's Forms 10-K and 10-Q under the headings “Business,” “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Legal Proceedings” and in the notes to the financial statements included in UTC's Forms 10-K and 10-Q.

UTC-IR
# # #




United Technologies Corporation
Condensed Consolidated Statement of Operations
 
 
Quarter Ended March 31,
 
 
(Unaudited)
(Millions, except per share amounts)
2015
 
2014
Net Sales
$
14,541

 
$
14,745

Costs and Expenses:
 
 
 
 
Cost of products and services sold
10,523

 
10,690

 
Research and development
602

 
624

 
Selling, general and administrative
1,563

 
1,596

 
Total Costs and Expenses
12,688

 
12,910

Other income, net
421

 
263

Operating profit
2,274

 
2,098

 
Interest expense, net
218

 
225

Income before income taxes
2,056

 
1,873

 
Income tax expense
558

 
567

Net income
1,498

 
1,306

 
Less: Noncontrolling interest in subsidiaries' earnings
72

 
93

Net income attributable to common shareowners
$
1,426

 
$
1,213

Earnings Per Share of Common Stock:
 
 
 
 
Basic
$
1.60

 
$
1.35

 
Diluted
1.58

 
1.32

Weighted Average Number of Shares Outstanding:
 
 
 
 
Basic shares
890

 
901

 
Diluted shares
904

 
917


As described on the following pages, consolidated results for the quarters ended March 31, 2015 and 2014 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.
See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Segment Net Sales and Operating Profit
 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2015
 
2014
Net Sales
 
 
 
Otis
$
2,745

 
$
2,955

UTC Climate, Controls & Security
3,852

 
3,851

Pratt & Whitney
3,332

 
3,329

UTC Aerospace Systems
3,548

 
3,450

Sikorsky
1,267

 
1,361

Segment Sales
14,744

 
14,946

Eliminations and other
(203
)
 
(201
)
Consolidated Net Sales
$
14,541

 
$
14,745

 
 
 
 
Operating Profit
 
 
 
Otis
$
527

 
$
570

UTC Climate, Controls & Security
729

 
537

Pratt & Whitney
419

 
388

UTC Aerospace Systems
569

 
590

Sikorsky
92

 
86

Segment Operating Profit
2,336

 
2,171

Eliminations and other
48

 
39

General corporate expenses
(110
)
 
(112
)
Consolidated Operating Profit
$
2,274

 
$
2,098

Segment Operating Profit Margin
 
 
 
Otis
19.2
%
 
19.3
%
UTC Climate, Controls & Security
18.9
%
 
13.9
%
Pratt & Whitney
12.6
%
 
11.7
%
UTC Aerospace Systems
16.0
%
 
17.1
%
Sikorsky
7.3
%
 
6.3
%
Segment Operating Profit Margin
15.8
%
 
14.5
%

As described on the following pages, consolidated results for the quarters ended March 31, 2015 and 2014 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.




United Technologies Corporation
Restructuring Costs and Non-Recurring Items Included in Consolidated Results
 
Quarter Ended March 31,
 
(Unaudited)
In Millions - Income (Expense)
2015
 
2014
Restructuring Costs included in Operating Profit:
 
 
 
Otis
$
(6
)
 
$
(17
)
UTC Climate, Controls & Security
(24
)
 
(43
)
Pratt & Whitney
(13
)
 
(42
)
UTC Aerospace Systems
(50
)
 
(6
)
Sikorsky
—

 
(17
)
 
(93
)
 
(125
)
Non-Recurring items included in Operating Profit:
 
 
 
UTC Climate, Controls & Security
126

 
—

Total impact on Consolidated Operating Profit
33

 
(125
)
Tax effect of restructuring and non-recurring items above
30

 
42

Impact on Net Income Attributable to Common Shareowners
$
63

 
$
(83
)
Impact on Diluted Earnings Per Share
$
0.07

 
$
(0.09
)


Details of the non-recurring items for the quarter ended March 31, 2015 above are as follows:
Quarter Ended March 31, 2015
UTC Climate, Controls & Security: Approximately $126 million gain as a result of a fair value adjustment related to the acquisition of a controlling interest in a joint venture investment.





United Technologies Corporation
Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and Non-Recurring Items (as reflected on the previous page)

 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2015
 
2014
Net Sales
 
 
 
Otis
$
2,745

 
$
2,955

UTC Climate, Controls & Security
3,852

 
3,851

Pratt & Whitney
3,332

 
3,329

UTC Aerospace Systems
3,548

 
3,450

Sikorsky
1,267

 
1,361

Segment Sales
14,744

 
14,946

Eliminations and other
(203
)
 
(201
)
Consolidated Net Sales
$
14,541

 
$
14,745

 
 
 
 
Adjusted Operating Profit
 
 
 
Otis
$
533

 
$
587

UTC Climate, Controls & Security
627

 
580

Pratt & Whitney
432

 
430

UTC Aerospace Systems
619

 
596

Sikorsky
92

 
103

Segment Operating Profit
2,303

 
2,296

Eliminations and other
48

 
39

General corporate expenses
(110
)
 
(112
)
Adjusted Consolidated Operating Profit
$
2,241

 
$
2,223

Adjusted Segment Operating Profit Margin
 
 
 
Otis
19.4
%
 
19.9
%
UTC Climate, Controls & Security
16.3
%
 
15.1
%
Pratt & Whitney
13.0
%
 
12.9
%
UTC Aerospace Systems
17.4
%
 
17.3
%
Sikorsky
7.3
%
 
7.6
%
Adjusted Segment Operating Profit Margin
15.6
%
 
15.4
%





United Technologies Corporation
Condensed Consolidated Balance Sheet
 
March 31,
 
December 31,
 
2015
 
2014
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
5,281

 
$
5,235

Accounts receivable, net
11,512

 
11,317

Inventories and contracts in progress, net
10,336

 
9,865

Other assets, current
2,829

 
3,341

Total Current Assets
29,958

 
29,758

Fixed assets, net
9,175

 
9,276

Goodwill
27,557

 
27,796

Intangible assets, net
15,571

 
15,560

Other assets
9,066

 
8,899

Total Assets
$
91,327

 
$
91,289

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
4,184

 
$
1,922

Accounts payable
6,929

 
6,967

Accrued liabilities
14,616

 
14,006

Total Current Liabilities
25,729

 
22,895

Long-term debt
17,809

 
17,872

Other long-term liabilities
17,487

 
17,818

Total Liabilities
61,025

 
58,585

Redeemable noncontrolling interest
135

 
140

Shareowners' Equity:
 
 

Common Stock
14,919

 
15,185

Treasury Stock
(24,520
)
 
(21,922
)
Retained earnings
45,462

 
44,611

Accumulated other comprehensive loss
(7,211
)
 
(6,661
)
Total Shareowners' Equity
28,650

 
31,213

Noncontrolling interest
1,517

 
1,351

Total Equity
30,167

 
32,564

Total Liabilities and Equity
$
91,327

 
$
91,289

Debt Ratios:
 
 
 
Debt to total capitalization
42
%
 
38
%
Net debt to net capitalization
36
%
 
31
%

See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2015
 
2014
Operating Activities:
 
 
 
Net income
$
1,498

 
$
1,306

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
479

 
467

Deferred income tax provision
145

 
44

Stock compensation cost
51

 
60

Change in working capital
(639
)
 
(521
)
Global pension contributions
(45
)
 
(84
)
Other operating activities, net
(179
)
 
63

Net cash flows provided by operating activities
1,310

 
1,335

Investing Activities:
 
 
 
Capital expenditures
(348
)
 
(333
)
Acquisitions and dispositions of businesses, net
(72
)
 
106

Increase in collaboration intangible assets
(132
)
 
(142
)
Receipts (payments) from settlements of derivative contracts
569

 
(113
)
Other investing activities, net
156

 
40

Net cash flows provided by (used in) investing activities
173

 
(442
)
Financing Activities:
 
 
 
Issuance of long-term debt, net
10

 
6

Increase (decrease) in short-term borrowings, net
2,177

 
(200
)
Dividends paid on Common Stock
(553
)
 
(514
)
Repurchase of Common Stock
(3,000
)
 
(335
)
Other financing activities, net
(18
)
 
48

Net cash flows used in financing activities
(1,384
)
 
(995
)
Effect of foreign exchange rate changes on cash and cash equivalents
(53
)
 
(40
)
Net increase (decrease) in cash and cash equivalents
46

 
(142
)
Cash and cash equivalents, beginning of period
5,235

 
4,619

Cash and cash equivalents, end of period
$
5,281

 
$
4,477

 
See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2015
 
2014
 
 
 
 
 
 
Net income attributable to common shareowners
$
1,426

 
 
$
1,213

 
Net cash flows provided by operating activities
$
1,310

 
 
$
1,335

 
Net cash flows provided by operating activities as a percentage of net income attributable to common shareowners
 
92
 %
 
 
110
 %
Capital expenditures
(348
)
 
 
(333
)
 
Capital expenditures as a percentage of net income attributable to common shareowners
 
(24
)%
 
 
(27
)%
Free cash flow
$
962

 
 
$
1,002

 
Free cash flow as a percentage of net income attributable to common shareowners
 
67
 %
 
 
83
 %
Notes to Condensed Consolidated Financial Statements
(1)
Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents.
(2)
Organic sales growth represents the total reported increase within the Corporation's ongoing businesses less the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and significant non-recurring items.
(3)
Free cash flow, which represents cash flow from operations less capital expenditures, is the principal cash performance measure used by UTC. Management believes free cash flow provides a relevant measure of liquidity and a useful basis for assessing UTC's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of UTC's common stock and distribution of earnings to shareholders. Other companies that use the term free cash flow may calculate it differently. The reconciliation of net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is shown above.



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