United Technologies Q2 Adj. Profit Beats View, But Lowers 2015 Outlook

(RTTNews) - Diversified conglomerate United Technologies Corp. (UTX) on Tuesday reported an 8 percent decline in profit for the second quarter from last year, reflecting lower revenues and one-time charges.

However, adjusted earnings per share topped analysts' expectations, while quarterly sales missed their estimates. Looking ahead, the company lowered its financial outlook for fiscal 2015, citing weakness in the commercial aftermarket at UTC Aerospace, softness in Otis Europe and a slowing China.

The Hartford, Connecticut-based parent company of jet engine manufacturer Pratt & Whitney, Otis elevator, and Sikorsky aircraft reported net income for the second quarter of $1.54 billion or $1.73 per share, down from $1.68 billion or $1.84 per share in the prior-year quarter.

Results for the latest quarter include unfavorable one-time items and restructuring charges of $0.08 per share. Foreign currency had an unfavorable impact of $0.06 per share.

Excluding items, adjusted earnings for the latest quarter were $1.81 per share. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.71 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 5 percent to $16.33 billion from $17.19 billion in the same quarter last year, and missed analysts' consensus estimate of $16.52 billion.

The decline in sales reflects the impact of adverse foreign exchange and absence of the prior-year Sikorsky Canadian Maritime Helicopter Program adjustment. These were partially offset by the benefit of organic growth and acquisitions.

The company's segment operating profit margin improved 340 basis points from the year-ago period to 16.2 percent.

New equipment orders at Otis rose 5 percent at constant currency, while UTC climate, controls & security equipment orders grew 4 percent from last year.

Commercial aerospace aftermarket sales increased 1 percent at Pratt & Whitney, while it was flat at UTC Aerospace Systems on an organic basis.

UTC said on Monday that it has agreed to sell Sikorsky Aircraft business to defense contractor Lockheed Martin Corp. (LMT) for $9 billion, subject to regulatory approvals and customary closing conditions. As a result, Sikorsky will be reported in discontinued operations beginning in the third quarter.

Looking ahead, Gregory Hayes, UTC President and CEO said, "With six months of trends behind us, it is now clear the commercial aftermarket at UTC Aerospace Systems will be significantly below our expectations for the year. This, along with continuing softness in Otis Europe and a slowing China, led us to reassess our 2015 outlook for UTC Aerospace Systems and Otis."

For fiscal 2015, UTC now expects full-year earnings of $6.45 to $6.60 per share from operations, including Sikorsky, but excluding an expected gain related to its sale. The company had earlier forecast earnings for the year in a range of $6.55 to $6.85 per share.

The company also lowered its forecast for full-year earnings from continuing operations to a range of $6.15 to $6.30 per share from the prior range of $6.35 to $6.55 per share.

Further, the company lowered its outlook for sales from continuing operations to a range of $57 billion to $58 billion, from the prior range of $58 billion to $59 billion.

The Street is currently looking for full-year earnings of $6.85 per share on revenues of $64.73 billion.

UTX closed Monday's trading at $110.48. In Tuesday's pre-market activity, the stock is down $5.05 or 4.06 percent to $106.00.