UTC posts 18% jump in revenue

Second-quarter results fueled by aerospace deal

United Technologies Corp. on Tuesday posted a doubledigit increase in second-quarter revenue, powered by its acquisition of aerospace manufacturer Rockwell Collins Inc.

The conglomerate increased its profit forecast for the year on strong performance by its aerospace business.

Profit for the period ended June 30 was down from the same period in 2018, due partly to charges related to restructuring. Still, the Farmington-based manufacturer of aerospace parts and components, elevators and cooling and heating equipment beat Wall Street estimates.

UTC posted net income of $1.9 billion, or $2.20 per share, on revenue of $19.6 billion. Net income was down 7 percent, but sales jumped 18 percent. Analysts surveyed by Bloomberg expected net income of $1.77 billion, or $2.05 per share on revenue of $19.5 billion.

Chief Executive Officer Greg Hayes credited Collins Aerospace, the unit established with the $30 billion acquisition of Rockwell Collins, for its “outperformance.” Integrating the manufacturer “more than offset softness in Carrier’s end markets,” he said.

Carrier, which makes heating and cooling equipment for homes and businesses, posted second-quarter revenue of $4.9 billion, down 1.4 percent from the year-ago quarter. It was the only unit of UTC to deliver lower sales in the second quarter.

Chief Financial Officer Akhil Johri told industry analysts on a conference call that a cooler start to summer was a blow to Carrier business. In contrast, the more recent blanketing of intense heat in much of the East Coast of the U.S. could boost sales of air conditioners.

“The early part of the summer has not been great, but the heat in the last couple of weeks should help the movement of the residential business in the U.S.,” he said.

The market overall is posting sales that are flat to “slightly down,” below UTC’s expectations, though growth at Carrier is a bit faster, Johri said.

Sales at UTC’s two aerospace businesses were up significantly: 8.7 percent at jet engine manufacturer Pratt & Whitney, or $5.15 billion, and a 66 percent revenue increase at Collins Aerospace, at $6.58 billion.

Sales at Otis elevator for the quarter were $3.3 billion, up 4 percent from the same period last year.

UTC raised its profit outlook for 2019, to a range of $7.90 per share to $8.05, from previous guidance of $7.80 to $8. That’s above the $7.97 per share expected by analysts.

It left unchanged its sales outlook for the year, at between $75.5 billion to $77 billion, which is slightly below the $77.11 billion expected by analysts.

Hayes reiterated that UTC’s proposed merger with defense giant Raytheon Inc. will create a leading aerospace and defense systems company. He has taken heat from two large investors who oppose the tie-up, saying it undermines UTC’s pure-play aerospace business strategy. The headquarters of the combined combine will relocate from Farmington to the Boston area.

UTC is set to spin off Carrier and Otis in the first half of 2020.

Shares of UTC closed Tuesday at $134.94, up 1.5 percent.