UTC First Quarter Earnings Per Share Increase 6 Percent To $1.39, Up 16 Percent Adjusted For Restructuring And One-Time Items; Reaffirms 2013 EPS Outlook Of $5.85 To $6.15

HARTFORD, Conn., April 23, 2013 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) reported first quarter earnings per share of $1.39 and net income attributable to common shareowners of $1.3 billion, up 6 percent and 7 percent, respectively, over the year ago quarter.  Results for the current quarter include $0.11 per share of favorable one-time items net of restructuring costs.  Earnings per share in the year ago quarter included a $0.21 benefit from one-time items net of restructuring costs.  Before these items, earnings per share increased 16 percent year over year.  Net foreign currency translation and hedges at Pratt & Whitney Canada had an adverse impact of $0.01 in the quarter.

Sales for the quarter of $14.4 billion were 16 percent above prior year driven by the benefit of net acquisitions. Organic sales decreased 2 percent from the year ago quarter reflecting ongoing weakness in both Europe and the commercial aerospace aftermarket, and the impact of defense cuts at Sikorsky. First quarter segment operating profit increased 14 percent over the prior year quarter. Adjusted for restructuring costs and net one-time items, segment operating profit grew 15 percent.

"Our focus on integration and execution led to solid performance as we continue to build momentum," said Louis Chenevert, UTC Chairman & Chief Executive Officer. "The Goodrich and IAE acquisitions are exceeding our expectations and creating new opportunities for long term organic growth."

New equipment orders at Otis increased 24 percent over the year ago first quarter, led by 29 percent growth in China. Foreign currency had a 2 point favorable impact in China. UTC Climate, Controls & Security equipment orders increased 5 percent organically.  Large commercial engine spares orders were up 14 percent at Pratt & Whitney including the benefit from the incremental International Aero Engines share. Organically, commercial spares orders were down 28 percent at Pratt & Whitney.  On a pro-forma basis, adjusted to include Goodrich in both years, commercial spares orders increased 2 percent at UTC Aerospace Systems.

"Macroeconomic indicators coupled with order improvement in our commercial businesses point towards a gradual resumption of organic growth during the course of the year," Chenevert added. "Our ongoing focus on cost reduction provides strong operating leverage and we continue to expect 2013 earnings per share of $5.85 to $6.15 on sales of $64 to $65 billion." 

Cash flow from operations was $1.4 billion and capital expenditures were $295 million in the quarter. Share repurchase was $335 million and UTC continues to anticipate share repurchase and acquisitions of $1 billion each in 2013. The company continues to expect cash flow from operations less capital expenditures to meet or exceed net income attributable to common shareowners for the year.

"We started our share repurchase program and closed additional divestitures this quarter in accordance with our plan," Chenevert said. "Our strong cash position will allow us to pay down $2 billion of debt in 2013, up from our prior estimate of $1 billion, as we execute our deleveraging strategy."

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. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

All financial results and projections reflect continuing operations unless otherwise noted. 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, charges, expenditures, anticipated benefits of acquisitions and divestitures, results of operations, share repurchases, 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 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; changes in government procurement priorities and availability of funding; 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, timing or impact of acquisitions, dispositions, joint ventures and other business arrangements, including integration of acquired businesses; the timing and amount of gains, losses, impairments and charges related to anticipated dispositions; the timing and impact of anticipated debt reduction following the Goodrich acquisition; 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, political conditions in countries in which we operate and other factors beyond our control. The completion of the proposed divestitures of businesses is subject to uncertainties, including the ability to secure regulatory approvals on acceptable terms, and satisfaction of other customary conditions. The timing and amount of share repurchases depends upon UTC's evaluation of market conditions and the level of other investing activities and uses of cash. The 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 the date of 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.

UTC-IR

Details of the non-recurring items for the quarters ended March 31, 2013 and 2012 above are as follows:

Quarter Ended March 31, 2013

UTC Climate, Controls & Security: Approximately $38 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of a business in Hong Kong.

Income Tax Expense: Approximately $95 million of favorable income tax adjustments as a result of the enactment of the American Taxpayer Relief Act of 2012 in January 2013. The $95M is primarily related to the retroactive extension of the research and development credit to 2012.

Quarter Ended March 31, 2012

UTC Climate, Controls & Security: Approximately $112 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation. This net gain includes approximately $215 million from the sale of a controlling interest in a manufacturing and distribution joint venture in Asia, partially offset by $103 million of impairment charges related to planned business dispositions.

Eliminations and other: An additional $10 million of reserves were established for the export licensing compliance matters recorded in the fourth quarter 2011.

Interest Expense, Net: Approximately $15 million of favorable pre-tax interest adjustments related to the conclusion of the IRS's examination of the Company's 2006 - 2008 tax years.

Income Tax Expense: Approximately $203 million of favorable income tax adjustments related to the conclusion of the IRS's examination of the Company's 2006 - 2008 tax years.

Discontinued Operations:

• Approximately $360 million and $590 million of pre-tax goodwill impairment charges ($220 million and $410 million after tax) related to Rocketdyne and Clipper, respectively.
• Approximately $235 million of unfavorable income tax adjustments related to the recognition of a deferred tax liability on the existing difference between the expected accounting versus tax gain on the planned disposition of legacy Hamilton Sundstrand's Industrial businesses.

The following page provides segment net sales, operating profits and operating profit margins as adjusted for the aforementioned restructuring costs and non-recurring items. Management believes these adjusted results more accurately portray the ongoing operational performance and fundamentals of the underlying businesses. The amount and timing of restructuring costs and non-recurring activity can vary substantially from period to period with no assurances of comparable activity or amounts being incurred in future periods. These amounts have therefore been adjusted out in the following schedule in order to provide a more representative comparison of current year operating performance to prior year performance.

Notes to Condensed Consolidated Financial Statements

1. Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total
   debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents.
2. Organic sales growth represents the total reported increase within the Corporation's ongoing businesses less the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and significant non-recurring items.
3. Free cash flow, which represents cash flow from operations less capital expenditures, is the principal cash performance measure used by UTC. Management believes free cash flow provides a relevant measure of liquidity and a useful basis for assessing UTC's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of UTC's common stock and distribution of earnings to shareholders. Other companies that use the term free cash flow may calculate it differently. The reconciliation of net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is shown above.
4. Prior period amounts reported within these Condensed Consolidated Financial Statements have been revised for discontinued operations related to the actual and planned divestiture of the UTC Power business.

SOURCE United Technologies Corp.