UTC Reports First Quarter EPS Increase of 19 Percent on 13 Percent Revenue Growth; Increases 2006 EPS Outlook
HARTFORD, Conn., April 19 /PRNewswire-FirstCall/ — United Technologies Corp. today reported first quarter 2006 earnings per share increased 19 percent to $0.76 compared with the year ago first quarter. Consolidated revenues for the quarter increased 13 percent to $10.6 billion, reflecting organic growth of 9 percent and the impact of 2005 acquisitions, primarily Kidde.
“This is a great start to 2006 and supports increasing our full year earnings outlook. We now expect earnings per share in a range of $3.50 to $3.60 for the year, up from the prior range of $3.40 to $3.55. Given the organic growth in the quarter and current backlogs, revenues for the year should be in the range of $46 billion,” said UTC Chairman and Chief Executive Officer George David. “We confirm expectations for cash flow after capital expenditures equal to net income for the year,” he added.
First quarter net income increased 18 percent to $768 million. In the quarter, foreign currency translation reduced earnings by $0.02 per share and revenues by 2 percent.
“Revenues grew organically in the quarter at 9 percent in spite of lower revenues at Sikorsky due to the strike which has now been settled. Cost reductions and productivity continued to fuel margin expansions at Carrier and UTC Fire & Security. Overcoming the adverse impacts of the Sikorsky strike, stronger dollar and R&D calendarization, this is as good a quarter as we have seen in a long time,” David said.
Cash flow from operations was $975 million and, after capital expenditures of $201 million, slightly exceeded net income for the quarter. Share repurchase in the quarter was $375 million, on track with share repurchase guidance of $1.5 billion for the year.
First quarter results include restructuring costs of $31 million offset by an equal gain on the sale of marketable securities. Additional favorable items are anticipated in 2006 which will be used to offset trailing costs from prior restructuring actions as well as to fund potential new actions initiated throughout the year. Total restructuring for 2006 should equal or exceed one time favorable items.
The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow.
United Technologies Corp., based in Hartford, Connecticut, is a diversified company that provides a broad range of high technology products and support services to the building systems and aerospace industries.
This release is supplemented by presentation materials that are available on UTC’s website at http://www.utc.com/ , and includes “forward looking statements” concerning expected revenue, earnings, cash flow and other matters that are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those anticipated or implied in forward looking statements include the health of the global economy; strength of end market demand in building construction and in both the commercial and defense segments of the aerospace industry; fluctuation in commodity prices, interest rates, foreign currency exchange rates, and the impact of weather conditions; and company specific items including the availability and impact of acquisitions, the rate and ability to effectively integrate these acquired businesses, the ability to achieve cost reductions at planned levels, and the outcome of legal proceedings. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC’s SEC filings as submitted from time to time, including but not limited to, the information included in UTC’s 10-K and 10-Q Reports under the headings “Business”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Note Concerning Factors that May Affect Future Results”, as well as the information included in UTC’s Current Reports on Form 8-K.
United Technologies Corporation Condensed Consolidated Statement of Operations Quarter Ended March 31, (Millions, except per share amounts) (Unaudited) 2006 2005 Revenues $10,615 $9,407 Cost and Expenses Cost of goods and services sold 7,650 6,815 Research and development 369 291 Selling, general and administrative 1,314 1,213 Operating Profit 1,282 1,088 Interest expense 142 100 Income before income taxes and minority interests 1,140 988 Income taxes 319 277 Minority interests 53 60 Net Income $768 $651 Earnings Per Share of Common Stock Basic $0.78 $0.66 Diluted $0.76 $0.64 Average Shares Basic 984 992 Diluted 1,009 1,016 As described on the following pages, consolidated results for the quarters ended March 31, 2006 and 2005 include restructuring and related charges and non-recurring items. See accompanying Notes to Condensed Consolidated Financial Statements. United Technologies Corporation Segment Revenues and Operating Profit Quarter Ended March 31, (Unaudited) (Millions) 2006 2005 Revenues Otis $2,348 $2,322 Carrier 2,904 2,705 UTC Fire & Security 1,112 764 Pratt & Whitney 2,568 2,013 Hamilton Sundstrand 1,164 1,028 Sikorsky 512 605 Segment Revenues 10,608 9,437 Eliminations and other 7 (30) Consolidated Revenues $10,615 $9,407 Operating Profit Otis $439 $422 Carrier 204 152 UTC Fire & Security 65 39 Pratt & Whitney 430 340 Hamilton Sundstrand 181 152 Sikorsky 3 53 Segment Operating Profit 1,322 1,158 Eliminations and other 45 11 General corporate expenses (85) (81) Consolidated Operating Profit $1,282 $1,088 As described on the following pages, consolidated results for the quarters ended March 31, 2006 and 2005 include restructuring and related charges and non-recurring items. United Technologies Corporation Consolidated Operating Profit Consolidated operating profit for the quarters ended March 31, 2006 and 2005 includes restructuring and related charges as follows: Quarter Ended March 31, (Millions) (Unaudited) Restructuring and Related Charges 2006 2005 Otis $2 $5 Carrier 7 25 UTC Fire & Security 2 1 Pratt & Whitney 12 10 Hamilton Sundstrand 8 9 Sikorsky – – Segment Operating Profit 31 50 Eliminations and other – – General corporate expenses – – Consolidated Operating Profit $31 $50 Consolidated results for the quarters ended March 31, 2006 and 2005 include the following non-recurring items: 2006 Q1 — Pratt & Whitney: Approximately $25 million gain realized on the sale of a partnership interest in an engine program at Pratt Canada. — Eliminations and Other: Approximately $25 million gain from the sale of marketable securities. 2005 Q1 — Eliminations and Other: Approximately $30 million gain from the sale of marketable securities. United Technologies Corporation Condensed Consolidated Balance Sheet March 31, December 31, 2006 2005 (Millions) (Unaudited) (Unaudited) Assets Cash and cash equivalents $2,417 $2,247 Accounts receivable, net 7,128 7,240 Inventories and contracts in progress, net 6,472 5,659 Other current assets 2,104 2,060 Total Current Assets 18,121 17,206 Fixed assets, net 5,677 5,623 Goodwill, net 13,254 13,007 Intangible assets, net 3,030 3,059 Other assets 6,949 7,030 Total Assets $47,031 $45,925 Liabilities and Shareowners’ Equity Short-term debt $2,319 $2,305 Accounts payable 4,017 3,820 Accrued liabilities 9,657 9,220 Total Current Liabilities 15,993 15,345 Long-term debt 5,954 5,935 Other liabilities 6,926 6,876 Total Liabilities 28,873 28,156 Minority interest in subsidiary companies 801 778 Shareowners’ Equity: Common Stock 8,737 8,552 Treasury Stock (7,789) (7,418) Retained Earnings 16,601 16,051 Accumulated other non-shareowners’ changes in equity (192) (194) 17,357 16,991 Total Liabilities and Shareowners’ Equity $47,031 $45,925 Debt Ratios: Debt to total capitalization 32% 33% Net debt to net capitalization 25% 26% United Technologies Corporation Condensed Statement of Cash Flows Quarter Ended March 31, (Millions) (Unaudited) 2006 2005 Operating Activities Net Income $768 $651 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 264 226 Deferred income taxes and minority interest 32 98 Stock compensation cost 44 35 Changes in working capital (174) (104) Voluntary contributions to pension plans – (65) Other, net 41 5 Net Cash Provided by Operating Activities 975 846 Investing Activities Capital expenditures (201) (152) Acquisitions and disposal of businesses, net (90) (120) Other, net (36) 98 Net Cash Used in Investing Activities (327) (174) Financing Activities Decrease in borrowings, net (14) (735) Dividends paid on Common Stock (207) (208) Repurchase of Common Stock (375) (115) Other, net 112 82 Net Cash Used in Financing Activities (484) (976) Effect of foreign exchange rates 6 2 Net increase (decrease) in cash and cash equivalents 170 (302) Cash and cash equivalents – beginning of period 2,247 2,265 Cash and cash equivalents – end of period $2,417 $1,963 United Technologies Corporation Notes to Condensed Consolidated Financial Statements (1) Certain reclassifications have been made to prior year amounts to conform to current year presentation. (2) 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. (3) Organic growth represents the total reported revenue 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. Non- recurring revenues that are not included in organic growth in 2006 include approximately $25 million from the sale of marketable securities. Non-recurring revenues that are not included in organic growth in 2005 include approximately $30 million from the sale of marketable securities. Constant currency represents reported revenues or operating profit less the impact of foreign currency translation. Contact: Paul Jackson (860) 728-7912 http://www.utc.com/
United Technologies Corp.
CONTACT: Paul Jackson, +1-860-728-7912, for United Technologies Corp.
Web site: http://www.utc.com/
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