UTC reports first quarter EPS growth of 19% on 11% higher sales

Sales for the quarter increased 11 percent to $13.3 billion with 9 percent organic growth. Favorable foreign currency translation and net acquisitions each contributed 1 percent to the sales growth.

Results for the current quarter include $0.02 per share in restructuring costs. Earnings per share in the year ago quarter included $0.05 in restructuring costs. Before these items, earnings per share increased 15 percent year over year. Foreign currency translation and currency hedges at Pratt & Whitney Canada accounted for $0.01 of the earnings per share increase.

First quarter segment operating margin at 14.7 percent was 100 basis points higher than prior year. Adjusted for restructuring costs, segment operating margin at 15.0 percent was 80 basis points higher than prior year. Research and development costs increased year over year by $88 million to $485 million. Cash flow from operations was $1.36 billion and, after capital expenditures of $180 million, exceeded net income attributable to common shareowners.

"This was another solid quarter for UTC with broad-based acceleration in organic growth, as well as strong earnings momentum and cash generation," said Louis Chênevert, UTC Chairman & Chief Executive Officer. "Nearly 20 percent growth in earnings per share reflects excellent conversion, especially as we continued to increase our investments in game changing products and technologies."

"Based on the strong start to the year, particularly in Carrier's short cycle businesses, we are raising the full year earnings per share expectation to $5.25 to $5.40, from $5.20 to $5.35 previously. We now anticipate 2011 EPS growth to be 11 to 14 percent on sales growth of 5 percent," Chênevert added. "The global economic recovery continues to gain traction as evidenced by the momentum of our end markets and we now expect 2011 sales of $57 billion, at the high end of our prior range of $56 billion to $57 billion."

New equipment orders at Otis were up 17 percent over the year ago first quarter including favorable foreign exchange of 3 percentage points. Commercial HVAC new equipment orders at Carrier grew 26 percent including favorable foreign exchange of 2 points. Commercial spares orders at Pratt & Whitney's large engine business grew 33 percent and at Hamilton Sundstrand were up 23 percent over the year ago first quarter.

"Continued focus on working capital drove strong cash generation even with the increase in inventory. We continue to expect UTC's cash flow from operations less capital expenditures to meet or exceed net income attributable to common shareowners for the year," Chênevert said.

Share repurchase in the quarter was $750 million and acquisition spending was $106 million. Full year expectations remain unchanged for both share repurchase and acquisitions at $2.5 billion and $1.5 billion, respectively.

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.

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.

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