Pratt & Whitney Sikorsky UTC Aerospace Systems UTC Building & Industrial Systems
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January 25, 2012

UTC Reports Fourth Quarter and Full Year EPS of $1.47 and $5.49, Up 12 Percent and 16 Percent, Respectively; Affirms 2012 Outlook

Conference call begins at 9:00 a.m. ET (877) 280-7280.

HARTFORD, Conn., – United Technologies Corp. (NYSE:UTX) today reported fourth quarter 2011 earnings per share of $1.47 and net income attributable to common shareowners of $1.3 billion, up 12 percent and 11 percent, respectively, over the year ago quarter. Sales of $15.0 billion for the quarter were 1 percent above prior year including 2 points of organic growth and 1 point of net divestitures. Cash flow from operations was $2.0 billion and capital expenditures were $378 million in the quarter.

Results for the quarter included $0.11 per share of restructuring charges, offset by $0.12 of net favorable one-time items. The prior year quarter included charges for restructuring and net one-time items of $0.03 per share. Before these items, earnings per share increased $0.12 or 9 percent year over year. Foreign currency translation net of currency impact at Pratt & Whitney Canada did not have an impact on earnings per share.

Fourth quarter segment operating margin was 14.7 percent. Adjusted for restructuring costs and net one-time items, segment operating margin of 15.4 percent was 20 basis points higher than prior year. Research and development increased year over year by $95 million to $552 million.

Full year earnings per share of $5.49 and net income attributable to common shareowners of $5.0 billion increased 16 and 14 percent, respectively, from 2010. Sales of $58.2 billion were 7 percent above prior year including organic growth (6 points), favorable foreign currency translation (2 points), and net divestitures (1 point). Segment operating margin of 15.4 percent was 80 basis points higher than prior year; adjusted for restructuring and one-time items, segment operating margin of 15.7 percent was 30 basis points higher than prior year. All segments were at or above 10 percent operating margins. Cash flow from operations was $6.6 billion, including $551 million of global pension contributions. Capital expenditures were $983 million for the year. Cash flow from operations less capital expenditures exceeded net income attributable to common shareowners.

“UTC closed a solid 2011 despite tough compares in the commercial aerospace aftermarket and shorter cycle Carrier businesses and significant research and development investment in the quarter,” said Louis Chênevert, UTC Chairman & Chief Executive Officer. “For the year, all business units grew organically and achieved double digit operating margins. This performance, together with the announcements to acquire Goodrich and Rolls-Royce’s share of the IAE joint venture, positions the company for future earnings growth.” Chênevert added, “As expected, cash generation was strong in both the quarter and full year.”

New equipment orders at Otis were up 2 percent over the year ago fourth quarter with no impact from foreign exchange. Commercial HVAC new equipment orders at Carrier grew 5 percent excluding 1 point of unfavorable foreign exchange. Commercial spares orders at Hamilton Sundstrand were up 17 percent and at Pratt & Whitney’s large engine business declined 16 percent, after growing 45 percent in the year ago fourth quarter.

“We remain confident in our ability to deliver 2012 earnings per share of $5.80 to $6.00, up 6 to 9 percent, for our base business excluding the pending Goodrich transaction, which remains on track to close mid-year,” Chênevert stated. “While we see ongoing volatility in foreign exchange rates, we continue to see strength in commercial aerospace and growth in emerging markets.

“We continue to expect sales of between $59 billion and $60 billion and cash flow from operations less capital expenditures to equal or exceed net income attributable to common shareowners for our base business in 2012,” Chênevert added.

Acquisition spending was $357 million for the year, of which $128 million was in the fourth quarter. Share repurchase was $2.2 billion for the year, of which none was in the fourth quarter.

United Technologies Corp., based in Hartford, Connecticut, is a diversified company providing 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.

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 release includes statements that constitute “forward-looking statements” under the securities laws. Forward-looking statements often contain words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. Forward-looking statements may include, among other things, statements relating to future and estimated sales, earnings, cash flow, results of operations, uses of cash and other measures of financial performance. 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, without limitation, 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 indebtedness and capital and research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial difficulties of commercial airlines; the impact of weather conditions and natural disasters; the financial condition of our customers and suppliers; delays and disruption in delivery of materials and services from suppliers; cost reduction efforts and restructuring costs and savings and other consequences thereof; the scope, nature or impact of acquisitions, dispositions, joint ventures and other business arrangements, including integration of acquired businesses; the expected timing of completion of the previously announced transactions with Goodrich and Rolls-Royce; the development and production of new products and services; the anticipated benefits of diversification and balance of operations across product lines, regions and industries; the impact of the negotiation of collective bargaining agreements, and labor disputes; the outcome of legal proceedings and other contingencies; future availability of credit; pension plan assumptions and future contributions; and the effect of changes in tax, environmental and other laws and regulations and political conditions in countries in which we operate and other factors beyond our control. The closing of the Goodrich acquisition is subject to customary closing conditions, including regulatory and Goodrich shareholder approvals. The transaction with Rolls-Royce is also subject to customary closing conditions, including regulatory approvals. These forward-looking statements speak only as of the date of this release and we undertake no obligation to update or revise any forward-looking statements after we distribute this release. For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K filed with 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.

Financial tables [PDF]

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