United Technologies Reports Third Quarter 2019 Results; Raises 2019 Adjusted EPS And Free Cash Flow Outlook

FARMINGTON, Conn., Oct. 22, 2019 /PRNewswire/ -- United Technologies Corp. (NYSE: UTX) reported third quarter 2019 results and increased its full year adjusted EPS and free cash flow outlook for 2019.

"United Technologies delivered another strong quarter with 5 percent organic sales growth, as well as margin expansion across all four businesses," said UTC Chairman and Chief Executive Officer Gregory Hayes. "Our strong performance through the first three quarters gives us confidence in the improved adjusted EPS range of $8.05 to $8.15 and free cash flow range of $5.3 to $5.7 billion for the year.* Continued strength at Collins Aerospace, including the integration of Rockwell Collins, and a lower tax rate are expected to more than offset softness we are seeing at Carrier."

Hayes continued, "Looking ahead, our transformational merger with Raytheon Company, which was overwhelmingly approved by both companies' shareowners this month, positions Raytheon Technologies as a premier aerospace and defense systems provider and a leader in high technology segments. We also remain on track to establish Otis and Carrier as independent companies in the first half of 2020, with the end of the first quarter as our target."

Third quarter sales of $19.5 billion were up 18 percent over the prior year, including 5 points of organic sales growth and 14 points of acquisition benefit offset by 1 point of foreign exchange headwind. GAAP EPS of $1.33 was down 14 percent versus the prior year and included 82 cents of net nonrecurring charges and 6 cents of restructuring charges. Adjusted EPS of $2.21 was up 15 percent.

Net income in the quarter was $1.1 billion, down 7 percent versus the prior year and included $760 million of net nonrecurring charges. Cash flow from operations was $2.5 billion and capital expenditures were $529 million, resulting in free cash flow of $2.0 billion.

Collins Aerospace commercial aftermarket sales were up 78 percent and up 20 percent organically. On a pro forma basis, Collins Aerospace commercial aftermarket sales were up 17 percent including Rockwell Collins. Pratt & Whitney commercial aftermarket sales were up 6 percent. Equipment orders at Carrier were down 11 percent organically. Otis new equipment orders were up 6 percent at constant currency in the quarter and down 1 percent on a rolling twelve month basis.

UTC updates its 2019 outlook* and now anticipates:

    --  Adjusted EPS of $8.05 to $8.15, up from $7.90 to $8.05;
    --  Sales of $76.0 to $76.5 billion versus the prior outlook of $75.5 to
        $77.0 billion;
    --  Free cash flow of $5.3 to $5.7 billion including $1.0 billion of
        one-time cash payments related to the portfolio separation, up from $4.5
        to $5.0 billion;
    --  There is no change in the Company's previously provided 2019
        expectations for organic sales growth of 4 to 5 percent.

*Note: When we provide expectations for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

United Technologies Corp., based in Farmington, Connecticut, provides high technology products and services to the building and aerospace industries. By combining a passion for science with precision engineering, the company is creating smart, sustainable solutions the world needs. Additional information, including a webcast, is available at www.utc.com or https://edge.media-server.com/mmc/p/bkoavkkk, or to listen to the earnings call by phone, dial (877) 280-7280 between 8:10 a.m. and 8:30 a.m. ET. To learn more about UTC, visit the website or follow the company on Twitter: @UTC

Use and Definitions of Non-GAAP Financial Measures
United Technologies Corporation ("UTC") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").

We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Adjusted net sales, organic sales, adjusted operating profit, adjusted net income, adjusted earnings per share ("EPS"), and the adjusted effective tax rate are non-GAAP financial measures. Adjusted net sales represents consolidated net sales from continuing operations (a GAAP measure), excluding significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as "other significant items"). Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items. Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs and other significant items. For the business segments, when applicable, adjustments of net sales, operating profit and margins similarly reflect continuing operations, excluding restructuring and other significant items. Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Free cash flow is a non-GAAP financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional 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.

A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

When we provide our expectation for adjusted EPS, adjusted operating profit, adjusted effective tax rate, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, the effective tax rate, sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement
This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "on track" and other words of similar meaning. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates, R&D spend, other measures of financial performance, potential future plans, strategies or transactions, credit ratings and net indebtedness, other anticipated benefits of the Rockwell Collins acquisition, the proposed merger with Raytheon Company ("Raytheon") or the spin-offs by UTC of Otis and Carrier into separate independent companies (the "separation transactions"), including estimated synergies and customer cost savings resulting from the proposed merger with Raytheon, the expected timing of completion of the proposed merger and the separation transactions, estimated costs associated with such transactions and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which UTC and Raytheon operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters, the financial condition of our customers and suppliers, and the risks associated with U.S. government sales (including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration, a government shutdown, or otherwise, and uncertain funding of programs); (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services; (3) the scope, nature, impact or timing of the proposed merger with Raytheon and the separation transactions and other merger, acquisition and divestiture activity, including among other things the integration of or with other businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses; (4) future levels of indebtedness, including indebtedness that may be incurred in connection with the proposed merger with Raytheon and the separation transactions, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases by the companies of their respective common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs); (9) new business and investment opportunities; (10) the ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and regulations (including, among other things, export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements, including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations) in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate; (17) negative effects of the announcement or pendency of the proposed merger or the separation transactions on the market price of UTC' and/or Raytheon's respective common stock and/or on their respective financial performance; (18) the ability of the parties to receive the required regulatory approvals for the proposed merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and to satisfy the other conditions to the closing of the merger on a timely basis or at all; (19) the occurrence of events that may give rise to a right of UTC or Raytheon or both to terminate the merger agreement; (20) risks relating to the value of the UTC's shares to be issued in the proposed merger with Raytheon, significant transaction costs and/or unknown liabilities; (21) the possibility that the anticipated benefits from the proposed merger with Raytheon cannot be realized in full or at all or may take longer to realize than expected, including risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transaction; (22) risks associated with transaction-related litigation; (23) the possibility that costs or difficulties related to the integration of UTC's and Raytheon's operations will be greater than expected; (24) risks relating to completed merger, acquisition and divestiture activity, including UTC's integration of Rockwell Collins, including the risk that the integration may be more difficult, time-consuming or costly than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all; (25) the ability of each of UTC, Raytheon and the companies resulting from the separation transactions and the combined company to retain and hire key personnel; (26) the expected benefits and timing of the separation transactions, and the risk that conditions to the separation transactions will not be satisfied and/or that the separation transactions will not be completed within the expected time frame, on the expected terms or at all; (27) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions as tax-free to UTC and UTC's shareowners, in each case, for U.S. federal income tax purposes; (28) the possibility that any opinions, consents, approvals or rulings required in connection with the separation transactions will not be received or obtained within the expected time frame, on the expected terms or at all; (29) expected financing transactions undertaken in connection with the proposed merger with Raytheon and the separation transactions and risks associated with additional indebtedness; (30) the risk that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the separation transactions will exceed UTC's estimates; and (31) the impact of the proposed merger and the separation transactions on the respective businesses of UTC and Raytheon and the risk that the separation transactions may be more difficult, time-consuming or costly than expected, including the impact on UTC's resources, systems, procedures and controls, diversion of its management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties. There can be no assurance that the proposed merger, the separation transactions or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the joint proxy statement/prospectus (defined below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission (the "SEC") from time to time. Any forward-looking statement speaks only as of the date on which it is made, and UTC assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Additional Information
In connection with the proposed merger, on September 4, 2019, UTC filed with the SEC an amendment to the registration statement on Form S-4 originally filed on July 17, 2019, which includes a joint proxy statement of UTC and Raytheon that also constitutes a prospectus of UTC (the "joint proxy statement/prospectus"). The registration statement was declared effective by the SEC on September 9, 2019, and UTC and Raytheon commenced mailing the joint proxy statement/prospectus to shareowners of UTC and stockholders of Raytheon on or about September 10, 2019. Each party will file other documents regarding the proposed merger with the SEC. In addition, in connection with the separation transactions, subsidiaries of UTC will file registration statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain copies of the registration statements and the joint proxy statement/prospectus free of charge from the SEC's website or from UTC or Raytheon. The documents filed by UTC with the SEC may be obtained free of charge at UTC's website at www.utc.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from UTC by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at 1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents filed by Raytheon with the SEC may be obtained free of charge at Raytheon's website at www.raytheon.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from Raytheon by requesting them by mail at Raytheon Company, Investor Relations, 870 Winter Street, Waltham, MA, 02451, by telephone at 1-781-522-5123 or by email at invest@raytheon.com.

No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.



            Contact:                   Media Inquiries, UTC


                               
            (860) 493-4364




                                        Investor Relations, UTC


                               
            (860) 728-7608

UTC-IR



     
                United Technologies Corporation



     
                Condensed Consolidated Statement of Operations




                                                                                                        Quarter Ended September 30,                                 Nine Months Ended September 30,


                                                                                      
              (Unaudited)                            
            (Unaudited)



     
                
                  (dollars in millions, except per share amounts)  2019                              2018                 2019                             2018

                                                                                                                                                                         ---


     
                Net Sales                                                              $
              19,496                                   $
              16,510                                   $
         57,495    $
         48,457



     
                Costs and Expenses:


        
              Cost of products and services sold                              14,211                                        12,536                                   42,331                              36,238


        
              Research and development                                           732                                           586                                    2,203                               1,729


        
              Selling, general and administrative                              2,104                                         1,681                                    6,207                               5,151



        
              Total Costs and Expenses                                        17,047                                        14,803                                   50,741                              43,118



     Other income, net                                                              37                                           131                                      361                               1,303




     Operating profit                                                            2,486                                         1,838                                    7,115                               6,642


        
              Non-service pension (benefit)                                    (303)                                        (188)                                   (727)                              (571)


        
              Interest expense, net                                              401                                           258                                    1,192                                 721




     Income from operations before income taxes                                  2,388                                         1,768                                    6,650                               6,492


        
              Income tax expense                                               1,131                                           419                                    1,969                               1,636




     Net income from operations                                                  1,257                                         1,349                                    4,681                               4,856


        
              Less: Noncontrolling interest in subsidiaries' earnings            109                                           111                                      287                                 273
        from operations




     Net income attributable to common shareowners                                        $
              1,148                                    $
              1,238                                    $
         4,394     $
         4,583




     
                Earnings Per Share of Common Stock:


        
              Basic                                                                      $
              1.34                                     $
              1.56                                     $
         5.14      $
         5.80


        
              Diluted                                                                    $
              1.33                                     $
              1.54                                     $
         5.09      $
         5.72



     
                Weighted Average Number of Shares Outstanding:


        
              Basic shares                                                       855                                           791                                      854                                 791


        
              Diluted shares                                                     864                                           802                                      863                                 801



     
                United Technologies Corporation



     
                Segment Net Sales and Operating Profit




                                                                                       
             
         Quarter Ended September 30,                                                                 
     
              Nine Months Ended September 30,


                                                                                                     
       (Unaudited)                                                                                     
              (Unaudited)


                                                                                             2019                                                          2018                                                                        2019                                          2018



     
                
                  (dollars in millions)        Reported       Adjusted                                  Reported         Adjusted           Reported      Adjusted                     Reported                           Adjusted

                                                                                                                                                                                                                                               ---


     
                Net Sales



     Otis                                                               $
          3,307                                              $
           3,307                                     $
        3,223                                                      $
        3,223                        $
             9,751                        $
      9,751  $
      9,604  $
      9,604



     Carrier                                                     4,822                         4,822                                                4,880                      4,880                                                           14,107                        14,107                   14,291              14,291



     Pratt & Whitney                                             5,283                         5,283                                                4,789                      4,789                                                           15,250                        15,250                   13,854              13,854



     Collins Aerospace Systems                                   6,495                         6,495                                                3,955                      3,955                                                           19,584                        19,584                   11,734              11,734




     Segment Sales                                              19,907                        19,907                                               16,847                     16,847                                                           58,692                        58,692                   49,483              49,483



     Eliminations and other                                      (411)                        (411)                                               (337)                     (337)                                                         (1,197)                      (1,197)                 (1,026)            (1,026)




     
                Consolidated Net Sales                               $
          19,496                                             $
           19,496                                    $
        16,510                                                     $
        16,510                       $
             57,495                       $
      57,495 $
      48,457 $
      48,457






     
                Operating Profit



     Otis                                                                 $
          508                                                $
           512                                       $
        486                                                        $
        489                        $
             1,449                        $
      1,493  $
      1,424  $
      1,476



     Carrier                                                       685                           861                                                  844                        857                                                            2,050                         2,289                    3,081               2,334



     Pratt & Whitney                                               471                           471                                                  109                        409                                                            1,328                         1,345                      919               1,222



     Collins Aerospace Systems                                   1,167                         1,195                                                  610                        627                                                            3,195                         3,485                    1,767               1,892




     Segment Operating Profit                                    2,831                         3,039                                                2,049                      2,382                                                            8,022                         8,612                    7,191               6,924



     Eliminations and other                                      (232)                         (64)                                               (102)                      (58)                                                           (572)                        (150)                   (210)              (116)



     General corporate expenses                                  (113)                        (112)                                               (109)                     (109)                                                           (335)                        (332)                   (339)              (335)




     
                Consolidated Operating Profit                         $
          2,486                                              $
           2,863                                     $
        1,838                                                      $
        2,215                        $
             7,115                        $
      8,130  $
      6,642  $
      6,473






     
                Segment Operating Profit Margin



     Otis                                                         15.4                          15.5                                                 15.1                       15.2                                                             14.9                          15.3                     14.8                15.4
                                                                      %                            %                                                   %                         %                                                               %                            %                       %                  %



     Carrier                                                      14.2                          17.9                                                 17.3                       17.6                                                             14.5                          16.2                     21.6                16.3
                                                                      %                            %                                                   %                         %                                                               %                            %                       %                  %



     Pratt & Whitney                                     8.9
            %                 8.9
           %                                                 2.3
                                                                                                                                                       %             8.5
            %                                                   8.7
            %                 8.8
           %            6.6
           %       8.8
           %



     Collins Aerospace Systems                                    18.0                          18.4                                                 15.4                       15.9                                                             16.3                          17.8                     15.1                16.1
                                                                      %                            %                                                   %                         %                                                               %                            %                       %                  %




     
                Segment Operating Profit Margin                 14.2                          15.3                                                 12.2                       14.1                                                             13.7                          14.7                     14.5                14.0
                                                                      %                            %                                                   %                         %                                                               %                            %                       %                  %



              
                United Technologies Corporation



              
                Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results



              
                Adjusted Operating Profit & Operating Profit Margin




                                                                                                            Quarter Ended September 30,                                    Nine Months Ended
                                                                                                                                                     September 30,


                                                                                                 
          (Unaudited)                             
              (Unaudited)



              
                
                  (dollars in millions - Income (Expense))           2019                          2018             2019                                 2018

                                                                                                                                                                                ---


              
                Otis



              Net sales                                                                           $
            3,307                                 $
              3,223                           $
           9,751     $
          9,604





              Operating profit                                                                      $
            508                                   $
              486                           $
           1,449     $
          1,424



              Restructuring                                                                   (4)                                      (3)                                    (44)                    (52)




              Adjusted operating profit                                                             $
            512                                   $
              489                           $
           1,493     $
          1,476




              Adjusted operating profit margin                                               15.5                                      15.2                                     15.3                     15.4
                                                                                                 %                                        %                                       %                       %



              
                Carrier



              Net sales                                                                           $
            4,822                                 $
              4,880                          $
           14,107    $
          14,291





              Operating profit                                                                      $
            685                                   $
              844                           $
           2,050     $
          3,081



              Restructuring                                                                  (34)                                     (17)                                    (97)                    (52)



              Gain on sale of Taylor Company                                                    -                                        4                                                              799



              Investment impairment                                                         (108)                                                                            (108)



              Consultant contract termination                                                (34)                                                                             (34)



              Adjusted operating profit                                                             $
            861                                   $
              857                           $
           2,289     $
          2,334




              Adjusted operating profit margin                                               17.9                                      17.6                                     16.2                     16.3
                                                                                                 %                                        %                                       %                       %



              
                Pratt & Whitney



              Net sales                                                                           $
            5,283                                 $
              4,789                          $
           15,250    $
          13,854





              Operating profit                                                                      $
            471                                   $
              109                           $
           1,328       $
          919



              Restructuring                                                                     -                                                                             (17)                     (3)



              Charge resulting from customer contract matters                                   -                                    (300)                                                           (300)




              Adjusted operating profit                                                             $
            471                                   $
              409                           $
           1,345     $
          1,222




              Adjusted operating profit margin                                                8.9                                       8.5
                                                                                                 %                                        %                           8.8
            %              8.8
         %



              
                Collins Aerospace Systems



              Net sales                                                                           $
            6,495                                 $
              3,955                          $
           19,584    $
          11,734





              Operating profit                                                                    $
            1,167                                   $
              610                           $
           3,195     $
          1,767



              Restructuring                                                                  (27)                                     (17)                                    (83)                    (77)



              Loss on sale of business                                                          -                                                                             (25)



              Amortization of Rockwell Collins inventory fair value                             -                                                                            (181)
    adjustment



              Asset impairment                                                                  -                                                                                                     (48)



              Costs associated with the Company's intention to separate                       (1)                                                                              (1)
    its commercial businesses




              Adjusted operating profit                                                           $
            1,195                                   $
              627                           $
           3,485     $
          1,892




              Adjusted operating profit margin                                               18.4                                      15.9                                     17.8                     16.1
                                                                                                 %                                        %                                       %                       %



              
                Eliminations and other general corporate expenses



              Operating profit                                                                    $
            (345)                                $
              (211)                          $
           (907)    $
          (549)



              Restructuring                                                                   (1)                                                                              (3)                     (4)



              Transaction and integration costs related to merger                            (11)                                     (21)                                    (30)                    (71)
    agreement with Rockwell Collins, Inc.



              Costs associated with the Company's intention to separate                     (132)                                     (23)                                   (341)                    (23)
    its commercial businesses



              Transaction expenses associated with the Raytheon Merger                       (25)                                                                             (51)



              Adjusted operating profit                                                           $
            (176)                                $
              (167)                          $
           (482)    $
          (451)




              
                UTC Consolidated



              Operating profit                                                                    $
            2,486                                 $
              1,838                           $
           7,115     $
          6,642



              Restructuring                                                                  (66)                                     (37)                                   (244)                   (188)



              Total significant non-recurring and non-operational items                     (311)                                    (340)                                   (771)                     357
    included in Operating Profit above




              Consolidated Adjusted operating profit                                              $
            2,863                                 $
              2,215                           $
           8,130     $
          6,473



              
                United Technologies Corporation



              
                Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results



              
                Adjusted Net Income, Earnings Per Share, and Effective Tax Rate




                                                                                                        Quarter Ended September 30,                                 Nine Months Ended
                                                                                                                                                          September 30,


                                                                                                     
        (Unaudited)                                 
              (Unaudited)



              
                
                  (dollars in millions - Income (Expense))            2019                                 2018         2019                                       2018

                                                                                                                                                                                          ---


              
                Income from operations attributable to common shareowners               $
        
                1,148                           $
              
                1,238            $
      
        4,394      $
      
      4,583






              
                Restructuring Costs                                                (66)                                        (37)                                         (244)           (188)





              
                Total significant non-recurring and non-operational               (311)                                       (340)                                         (771)             357
    items included in Operating Profit





              
                Significant non-recurring and non-operational items
    included in Non-service Pension



              Pension curtailment                                                               98                                                                                         98



              Non-service pension cost restructuring                                             -                                                                                                         2





                                                                                                 98                                                                                         98                2



              
                Significant non-recurring and non-operational items
    included in Interest Expense, Net



              Rockwell Collins pre-acquisition interest                                          -                                        (22)                                                          (22)



              Interest on tax settlements                                                        5                                                                                         63



                                                                                                  5                                         (22)                                            63             (22)





              
                Tax effect of restructuring and significant non-recurring            24                                           96                                            141             (58)
    and non-operational items above





              
                Significant non-recurring and non-operational items
    included in Income Tax Expense



              Tax settlements                                                                    8                                                                                        272



              Tax expenses related to separation of commercial businesses                    (518)                                                                                     (618)



              Income tax adjustments related to the estimated impact of                          -                                         (6)                                                          (52)
    the U.S. tax reform legislation enacted on December 22,
    2017



                                                                                              (510)                                         (6)                                         (346)            (52)




              Less: Impact on Net Income Attributable to Common                              (760)                                       (309)                                       (1,059)              39
    Shareowners




              
                Adjusted net income attributable to common shareowners                  $
        
                1,908                           $
              
                1,547            $
      
        5,453      $
      
      4,544






              
                Diluted Earnings Per Share                                               $
        
                1.33                            $
              
                1.54             $
      
        5.09       $
      
      5.72



              Impact on Diluted Earnings Per Share                                          (0.88)                                      (0.39)                                        (1.23)            0.05




              
                Adjusted Diluted Earnings Per Share                                      $
        
                2.21                            $
              
                1.93             $
      
        6.32       $
      
      5.67






              
                Effective Tax Rate                                                 47.3                                         23.7                                           29.6             25.2

                                                                                                  %                                           %                                             %               %



              Impact on Effective Tax Rate                                                  (23.1)                                       (0.2)                                         (6.1)           (1.1)
                                                                                                  %                                           %                                             %               %

                                                                                                                                                                                                                 ---


              
                Adjusted Effective Tax Rate                                        24.2                                         23.5                                           23.5             24.1

                                                                                                  %                                           %                                             %               %

                                                                                                                                                                                                                 ===


                                                                                                                            
              
                United Technologies Corporation


                                                                                                                           
              
                Components of Changes in Net Sales





     
                
                  Quarter Ended September 30, 2019 Compared with Quarter Ended September 30, 2018




                                                                                                              Factors Contributing to Total % Change in Net Sales


                                                                                                              Organic                    
              
                FX                     
              
                Acquisitions /                                           Other  Total
                                                                                                                                                Translation                                        Divestitures, net




     Otis                                                                                                         4%                                            (2)%                                                         -%                                           1%     3%



     Carrier                                                                                                      -%                                           (2)%                                                         1%                                            -%  (1)%



     Pratt & Whitney                                                                                             11%                                            (1)%                                                         -%                                           -%   10%



     Collins Aerospace Systems                                                                                    7%                                            (1)%                                                        58%                                            -%   64%



     Consolidated                                                                                                 5%                                            (1)%                                                        14%                                            -%   18%





     Collins Aerospace Systems



          Commercial aftermarket sales*                                                                          20%                                              -%                                                       58%                                            -%   78%


                   *On a pro forma basis, Collins Aerospace Systems commercial aftermarket sales increased 17% calculated by combining the results of UTC with the stand-alone results of Rockwell Collins for the pre-acquisition periods adjusted for conformity, as if the
                    acquisition had been completed on January 1, 2017.









     
                
                  Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018




                                                                                                              Factors Contributing to Total % Change in Net Sales


                                                                                                              Organic                    
              
                FX                     
              
                Acquisitions /                                           Other  Total
                                                                                                                                                Translation                                        Divestitures, net




     Otis                                                                                                         5%                                            (3)%                                                         -%                                           -%    2%



     Carrier                                                                                                      2%                                            (2)%                                                       (1)%                                            -%  (1)%



     Pratt & Whitney                                                                                             11%                                            (1)%                                                         -%                                           -%   10%



     Collins Aerospace Systems                                                                                    9%                                            (1)%                                                        59%                                            -%   67%





     Consolidated                                                                                                 6%                                            (1)%                                                        14%                                            -%   19%



       
                United Technologies Corporation



       
                Condensed Consolidated Balance Sheet




                                                                                                                    September 30,                                                 December 31,


                                                                                                                             2019                                                          2018



       
                
                  (dollars in millions)                                                      (Unaudited)                                                  (Unaudited)

                                                                                                                                                                                           ---


       
                
                  Assets

    ---


       Cash and cash equivalents                                                                                                     $
              7,341                                                     $
       6,152



       Accounts receivable, net                                                                                           13,607                                                                  14,271



       Contract assets, current                                                                                            4,316                                                                   3,486



       Inventory, net                                                                                                     11,242                                                                  10,083



       Other assets, current                                                                                               1,310                                                                   1,511




       Total Current Assets                                                                                               37,816                                                                  35,503



       Fixed assets, net                                                                                                  12,200                                                                  12,297



       Operating lease right-of-use assets                                                                                 2,556



       Goodwill                                                                                                           48,041                                                                  48,112



       Intangible assets, net                                                                                             25,686                                                                  26,424



       Other assets                                                                                                       12,710                                                                  11,875




       
                Total Assets                                                                                                   $
              139,009                                                   $
       134,211






       
                
                  Liabilities and Equity

    ---


       Short-term debt                                                                                                               $
              6,822                                                     $
       4,345



       Accounts payable                                                                                                   10,840                                                                  11,080



       Accrued liabilities                                                                                                11,672                                                                  10,223



       Contract liabilities, current                                                                                       6,233                                                                   5,720




       Total Current Liabilities                                                                                          35,567                                                                  31,368



       Long-term debt                                                                                                     37,782                                                                  41,192



       Operating lease liabilities                                                                                         2,105



       Other long-term liabilities                                                                                        20,629                                                                  20,932




       Total Liabilities                                                                                                  96,083                                                                  93,492




       Redeemable noncontrolling interest                                                                                    107                                                                     109



       Shareowners' Equity:



       Common Stock                                                                                                       22,806                                                                  22,438



       Treasury Stock                                                                                                   (32,588)                                                               (32,482)



       Retained earnings                                                                                                  61,069                                                                  57,823



       Accumulated other comprehensive loss                                                                             (10,819)                                                                (9,333)




       Total Shareowners' Equity                                                                                          40,468                                                                  38,446



       Noncontrolling interest                                                                                             2,351                                                                   2,164




       Total Equity                                                                                                       42,819                                                                  40,610




       
                Total Liabilities and Equity                                                                                   $
              139,009                                                   $
       134,211






       
                Debt Ratios:



       Debt to total capitalization                                                                                                               51                                                             53
                                                                                                                                                      %                                                             %



       Net debt to net capitalization                                                                                                             47                                                             49
                                                                                                                                                      %                                                             %




        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.



              
                United Technologies Corporation



              
                Condensed Consolidated Statement of Cash Flows




                                                                                                               Quarter Ended                            Nine Months Ended
                                                                                                    September 30,                            September 30,


                                                                                                 
            (Unaudited)                     
             (Unaudited)



              
                
                  (dollars in millions)                               2019                          2018           2019                              2018

                                                                                                                                                                            ---


              
                Operating Activities:



              Net income from operations                                                           $
              1,257                              $
              1,349               $
         4,681   $
      4,856



              Adjustments to reconcile net income from operations to net cash flows
    provided by operating activities:



              Depreciation and amortization                                                    967                                   593                                   2,831          1,766



              Deferred income tax provision                                                   (25)                                   25                                    (19)            70



              Stock compensation cost                                                          105                                    64                                     261            181



              Portfolio separation tax cost                                                    518                                                                          618



              Gain on sale of Taylor Company                                                     -                                  (4)                                                (799)



              Change in working capital                                                       (15)                                (154)                                  (571)         (643)



              Global pension contributions                                                    (10)                                 (13)                                   (89)          (72)



              Canadian government settlement                                                     -                                                                        (38)         (221)



              Other operating activities, net                                                (307)                                 (98)                                (1,573)         (821)




              Net cash flows provided by operating activities                                2,490                                 1,762                                   6,101          4,317




              
                Investing Activities:



              Capital expenditures                                                           (529)                                (413)                                (1,359)       (1,122)



              Acquisitions and dispositions of businesses, net                                 (6)                                 (38)                                     95            922



              Customer financing assets, net                                                 (113)                                (109)                                  (444)         (453)



              Increase in collaboration intangible assets                                     (90)                                (121)                                  (259)         (302)



              Receipts (payments) from settlements of derivative contracts                      97                                  (11)                                    158             71



              Other investing activities, net                                                (115)                                 (89)                                  (164)         (135)




              Net cash flows used in investing activities                                    (756)                                (781)                                (1,973)       (1,019)




              
                Financing Activities:



              (Repayment) issuance of long-term debt, net                                    (629)                               10,979                                   (638)        11,316



              Increase (decrease) in short-term borrowings, net                                223                                   586                                   (104)         1,228



              Dividends paid on Common Stock                                                 (611)                                (536)                                (1,830)       (1,606)



              Repurchase of Common Stock                                                      (42)                                 (20)                                  (111)          (72)



              Other financing activities, net                                                 (69)                                   41                                   (211)          (27)




              Net cash flows (used in) provided by financing activities                    (1,128)                               11,050                                 (2,894)        10,839




              Effect of foreign exchange rate changes on cash and cash equivalents            (81)                                 (93)                                   (65)         (111)




              Net increase in cash, cash equivalents and restricted cash                       525                                11,938                                   1,169         14,026



              Cash, cash equivalents and restricted cash, beginning of period                6,856                                11,106                                   6,212          9,018




              Cash, cash equivalents and restricted cash, end of period                      7,381                                23,044                                   7,381         23,044



              Less: Restricted cash                                                             40                                 9,245                                      40          9,245




              Cash and cash equivalents, end of period                                             $
              7,341                             $
              13,799               $
         7,341  $
      13,799






              Certain reclassifications have been made to conform to current presentation.



              
                United Technologies Corporation



              
                Free Cash Flow Reconciliation




                                                                                        
            
           Quarter Ended September 30,


                                                                                                   
           (Unaudited)



              
                (dollars in millions)                                                    2019                              2018





              Net income attributable to common shareowners                                   $
         1,148                                           $
     1,238




              Net cash flows provided by operating activities                                 $
         2,490                                           $
     1,762



              Net cash flows provided by operating activities as a percentage of net                 217                                        142

                                                                                                          %                                         %
    income attributable to common shareowners



              Capital expenditures                                                      (529)                                           (413)




              Capital expenditures as a percentage of net income attributable to                    (46)                                      (33)

                                                                                                          %                                         %
    common shareowners




              Free cash flow                                                                  $
         1,961                                           $
     1,349




              Free cash flow as a percentage of net income attributable to common                    171                                        109

                                                                                                          %                                         %
    shareowners





                                                                                      
            
           Nine Months Ended September 30,


                                                                                                   
           (Unaudited)



              
                
                  (dollars in millions)                                     2019                              2018





              Net income attributable to common shareowners                                   $
         4,394                                           $
     4,583




              Net cash flows provided by operating activities                                 $
         6,101                                           $
     4,317



              Net cash flows provided by operating activities as a percentage of net                 139
                                                                                                                                                    %
                                                                                                          %                                        94
    income attributable to common shareowners



              Capital expenditures                                                    (1,359)                                         (1,122)




              Capital expenditures as a percentage of net income attributable to                    (31)                                      (24)

                                                                                                          %                                         %
    common shareowners




              Free cash flow                                                                  $
         4,742                                           $
     3,195




              Free cash flow as a percentage of net income attributable to common                    108
                                                                                                                                                    %
                                                                                                          %                                        70
    shareowners

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SOURCE United Technologies Corp.