UTC Reports 4% Growth for Climate, Controls & Security Unit

UTC cut its full-year profit outlook as it warned of pressures in its aerospace systems and Otis elevators businesses.

HARTFORD, Conn. –  United Technologies Corp. (NYSE: UTX) on Tuesday (July 21) reported second-quarter net income of $1.54 billion.

The company, based here, said it had profit of $1.73 per share. Earnings, adjusted for one-time gains and costs, came to $1.81 per share. The results exceeded Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.71 per share.

The maker of elevators, jet engines, security products and more posted revenue of $16.33 billion in the period, which did not meet Street forecasts. Six analysts surveyed by Zacks expected $16.66 billion.

The company reported equipment orders for its UTC Climate, Controls & Security unit increased 4%, with growth in U.S. residential HVAC and Transicold offset by a 15% orders decline in China.

UTC expects full-year earnings to be $6.15 to $6.30 per share. Its shares have decreased nearly 4% since the beginning of the year, while the Standard & Poor’s 500 index has increased slightly more than 3%. The stock has dropped almost 6% in the last 12 months.

“Through the first half of the year, the businesses delivered 3 percent organic sales growth in what continues to be a slow growth global economy. This solid growth contributed to a 6 percent increase in EPS on a constant currency basis, excluding the impact of gains and restructuring,” Gregory Hayes, UTC President and CEO, stated in a press release. “Continued strength in the U.S. dollar has had a significant adverse impact on our results this year.”

Earlier this week, UTC agreed to sell its helicopter division, Black Hawk maker Sikorsky, to Lockheed for $9 billion, reportedly marking the defense industry’s largest deal in 20 years. Without Sikorsky, UTC is squarely focused in two areas: jet engines and other commercial aerospace systems and components; and elevators, climate control units and security systems for commercial buildings.

Some analysts have speculated UTC could use some of the proceeds from the Sikorsky deal to make a sizeable acquisition in the security sector or other industry. Potential targets include security firm Allegion, electrical and lighting systems company Hubbell and British aircraft parts supplier Meggitt, Credit Suisse analysts said in a research note on Monday. On Tuesday, Bloomberg speculated possible targets for UTC include Allegion or even Tyco Int’l.

Still other analysts said UTC was more likely to use its cash held overseas for a foreign takeover, leaving the Sikorsky proceeds for buybacks, Reuters reported.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

Security Is Our Business, Too

For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Commercial Integrator + Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add to your bottom line.

A FREE subscription to the top resource for security and integration industry will prove to be invaluable.

Subscribe Today!

Get Our Newsletters