United Technologies Corp. [UTX] yesterday reported lower earnings from continuing operations that still topped consensus estimates while sales increased to due an acquisition during the summer of an interest in an aircraft engine company.
Earnings from continuing operations in the third quarter were $1.3 billion, $1.37 earnings per share (EPS), versus $1.4 billion ($1.43 EPS) a year ago. Analysts estimated that earnings would be $1.19 per share. Free cash flow in the quarter was $1.3 billion.
Earnings were dampened by foreign currency translation and hedges at UTC’s Pratt Canada engine unit, which lopped 7 cents from EPS.
Sales in the quarter increased 6 percent to $15 billion from $14.2 billion, with the gain coming from UTC’s acquisition in June of Rolls-Royce’s share of the International Aero Engines (IAE) joint venture. Excluding the impact from the acquisition, organic revenues fell 2 percent.
The acquisition of all of IAE boosted sales at UTC’s Pratt & Whitney engine division, which grew 16 percent in the quarter to $3.6 billion. However, absent the acquisition, P&W’s organic sales dropped 25 percent. Operating profit at Pratt fell 10 percent.
UTC Aerospace, which combines the company’s recent acquisition of Goodrich with Hamilton Sundstrand, posted a 125 percent jump in sales to $2.7 billion, with 6 percent of the increase organic due to aftermarket revenues. The Goodrich deal, which closed just before the end of the third quarter, did not impact results.
UTC’s Sikorsky helicopter segment posted lower sales and operating profits on lower international military aircraft volume.
For the year, UTC still expects per share earnings between $5.25 to $5.35 while the sales guidance is pegged at $58 billion, the low end of the previous range that topped out at $59 billion. The sales guidance reflects a lack of recovery in the commercial aerospace aftermarket and uncertainty in the global economy, the company said.
Following UTC’s acquisition of Goodrich, the portfolio reshaping at the company is “substantially complete,” Louis Chenevert, UTC’s chairman and CEO, said in a statement.