UTC Q2 Earnings: Company Beats Earnings And Revenue Estimates; Reaffirms Guidance

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UTX
United Technologies

As United Technologies (NYSE: UTX) released earnings for Q2 2016 recently. The company posted an adjusted EPS of $1.82, beating consensus estimates by a mammoth 17 cents. Net consolidated sales were $14,874 million (after $211 million in intra-company eliminations) and total segment sales were $15,085 million.  All sements performed well except Otis, which generated lower profits on flat sales due to continued pricing pressures in Asia and EMEA. Despite this, the company is expecting great things from 2016. Management revised guidance upwards, now hoping to rake in an EPS in the range of $6.45 to $6.60 and revenues between $57 billion to $58 billion.

Highlights From The Quarter:

  • China’s slowdown has driven sales in Asia down by 3%. Despite increasing property transactions and home prices, the elevator new equipment market is down significantly. Furthermore, pricing pressure in the region has eaten into revenues this time around. To put this into perspective, Otis sales were down 7%, while Climate Control and Security (CCS) sales were down 2%.
  • Aftermarket sales helped drive aerospace sales figures this quarter, despite a slow start in Q1. Sales were up at Pratt & Whitney by 4% organically. However, Pratt Canada reported dampened sales primarily due to reduced shipments caused by weaker demand in the general aviation and commercial helicopter space.
  • UTC is on track to return about $6 billion to investors through an accelerated share repurchase program by the third quarter. This is part of a plan to return about $22 billion to shareholders by 2017.
  • Within the quarter, UTC has announced two important strategic acquisitions. Otis will acquire Schindler’s service business in Japan. Addtionally, CCS acquired a 70% stake in Riello – a heating and cooling company based in Europe. The Riello deal is expected to increase services to customers in Europe.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis of UTC

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