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HARTFORD, Conn. – United Technologies Corp. (NYSE:UTX) today reported second quarter 2010 earnings per share of $1.20 and net income attributable to common shareowners of $1.1 billion, both up 14 percent over the year ago second quarter. Results for the current quarter include a net charge of $0.12 per share for restructuring and one time items. Earnings per share in the year ago quarter included a net charge of $0.16 for restructuring and a one time item. Before these charges, earnings per share increased 9 percent year over year. Currency hedges, net of translation, at Pratt & Whitney Canada contributed $0.03 to the earnings per share increase.
Revenues of $13.9 billion for the quarter were 5 percent above prior year, including 4 points of organic growth and 1 point of net acquisitions. Segment operating margin at 14.6 percent was 160 basis points higher than prior year. Adjusted for restructuring and one time items, segment operating margin of 15.7 percent was 80 basis points higher than prior year. Cash flow from operations was $1.4 billion and, after capital expenditures of $155 million, exceeded net income attributable to common shareowners.
“UTC’s results this quarter reflect strong execution in an improved end market environment,” said Louis Chênevert, UTC Chairman & Chief Executive Officer. “The return of revenue growth, combined with our cost reduction actions, led to solid earnings growth. Our relentless focus on cost drove the segment operating margin to a record high.”
“Based on the strong first half performance and continuing improvement in order rates, we are increasing our 2010 earnings per share guidance to a range of $4.60 to $4.70, up from $4.50 to $4.65. Earnings per share is now expected to grow 12 to 14 percent over 2009 on revenues of $54 billion,” Chênevert added. This range still includes $0.20 of net charges for anticipated restructuring and one time items.
New equipment orders at Otis were up 12 percent over the year ago second quarter, including favorable foreign exchange of 1 point. Commercial HVAC new equipment orders grew 6 percent (including favorable foreign exchange 1 point) and Carrier Transicold’s organic orders were up 39 percent. Commercial spares orders at Pratt & Whitney’s large engine business grew 8 percent and at Hamilton Sundstrand were up 7 percent over the year ago second quarter.
“Cash generation remains strong and working capital performance improved both sequentially and from the second quarter last year. We continue to expect cash flow from operations less capital expenditures to meet or exceed net income attributable to common shareowners for the year,” Chênevert said. “With year to date share repurchases already over $1.1 billion, we now expect share repurchases for the year to be around $2 billion, up from our prior guidance of $1.5 billion.”
Acquisition spend was $260 million in the quarter and $2.4 billion year to date. UTC continues to anticipate that acquisition spend for the year will be around $3 billion.
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.
This release includes "forward looking statements" concerning expected revenue, earnings, cash flow, share repurchases, restructuring; anticipated benefits of UTC’s diversification, cost reduction efforts and business model; and other matters that are subject to risks and uncertainties. These statements often contain words such as “expect”, “anticipate”, “plan”, “estimate”, “believe”, “will”, “should”, “see”, “guidance” and similar terms. Important uncertainties that could cause actual results to differ materially from those anticipated or implied in forward looking statements include the severity and duration of global recessionary conditions, including limited availability of credit; the impact of volatility and deterioration in financial markets on overall levels of economic activity; declines in end market demand in construction and in both the commercial and defense segments of the aerospace industry; fluctuation in foreign currency exchange rates, commodity prices, interest rates, and the impact of weather conditions; and company specific items including the impact of further deterioration or extended weakness in global economic conditions on demand for our products and services, the financial strength of customers and suppliers and on levels of air travel; financial difficulties, including bankruptcy, of commercial airlines; the availability and impact of acquisitions; the rate and ability to effectively integrate these acquired businesses; the ability to achieve cost reductions at planned levels; challenges in the design, development, production and support of advanced technologies and new products and services; delays and disruption in delivery of materials and services from suppliers; labor disputes; and the outcome of legal proceedings. The level of share repurchases may vary depending on the level of other investing activities. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC's SEC filings as submitted from time to time, including but not limited to, the information included in UTC's 10-K and 10-Q Reports under the headings "Business", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Cautionary Note Concerning Factors that May Affect Future Results", as well as the information included in UTC's Current Reports on Form 8-K.