Stock Update (NYSE:UTX): United Technologies Corporation Reports Full Year 2015 Results, Affirms 2016 Outlook

United Technologies Corporation (NYSE:UTX) reported full year 2015 Adjusted EPS of $6.30.  All results in this release reflect continuing operations unless otherwise noted.

“I’m pleased to report UTC’s 2015 earnings reached the top end of expectations we set months ago,” said UTC President and Chief Executive Officer Gregory Hayes. “Solid execution on our strategic priorities has set a strong foundation for future growth.

“In line with our 2015 strategic priorities, we took decisive actions to streamline our portfolio with the divestiture of Sikorsky and return over $12 billion to shareowners. Returning cash to shareowners continues to be a top priority and we are still targeting $22 billion of total shareowner returns through share repurchases and dividends from 2015 through 2017,” Hayes said.  “We also streamlined UTC’s organizational structure and initiated a $1.5 billion multi-year restructuring plan to improve competitiveness.

“UTC is now more focused than ever on innovative new technologies for the aerospace and buildings industries.  This week Pratt & Whitney’s Geared Turbofan entered into service on the first A320neo – making aviation history by meeting all of its key performance requirements from day one,” Hayes added.

Full year 2015 Adjusted EPS of $6.30 decreased 2 percent year over year, with foreign currency having an unfavorable impact of $0.19, or 3 percent.  Excluding the unfavorable impact of foreign exchange rates, Adjusted EPS was up slightly year over year.  GAAP earnings per share were $4.53, reflecting $0.31 in restructuring and $1.46 of net charges related to other significant non-recurring and non-operational items.

Full year sales of $56.1 billion decreased by 3 percent, as 1 point of organic sales growth was more than offset by 4 points of adverse foreign exchange.  Free cash flow for the year was 126 percent of net income attributable to common shareowners, including slightly more than 25 points of benefit associated with restructuring and other significant items.

Fourth quarter Adjusted EPS of $1.53 was down 8 percent.  GAAP earnings for the fourth quarter reflected a loss of $0.30 per share, including $0.16 of restructuring costs and $1.67 of net unfavorable other significant items.  Sales of $14.3 billion were down 5 percent driven primarily by 4 points of unfavorable foreign exchange, with organic sales up slightly in the quarter.

Otis new equipment orders in the quarter increased 2 percent over the prior year at constant currency, and grew 11 percent excluding China.  Equipment orders at UTC Climate, Controls & Security decreased by 5 percent.  Commercial aftermarket sales were up 11 percent at Pratt & Whitney, and up 8 percent at UTC Aerospace Systems.

“As we enter 2016, the tough actions that we’ve taken, and will continue to take, put us in position to achieve our financial objectives.  We remain confident in our full year 2016 Adjusted EPS expectations of $6.30 to $6.60on sales of $56 billion to $58 billion, despite a difficult macro environment,” Hayes added.

UTC continues to anticipate 2016 free cash flow in the range of 90 to 100 percent of net income attributable to common shareowners.  The company also continues to expect share repurchase of $3 billion in 2016, beyond the repurchases that will be completed in 2016 under the previously announced $6 billion accelerated share repurchase program.  UTC continues to assume a $1 billion to $2 billion placeholder for acquisitions in 2016. (Original Source)

Shares of United Technologies closed yesterday at $85.65. UTX has a 1-year high of $124.45 and a 1-year low of $83.39. The stock’s 50-day moving average is $91.95 and its 200-day moving average is $94.91.

On the ratings front, United Technologies has been the subject of a number of recent research reports. In a report issued on January 8, Bernstein Research analyst Douglas Harned downgraded UTX to Hold, with a price target of $104, which implies an upside of 21.4% from current levels. Separately, on January 6, Sterne Agee CRT’s Josh Sullivan downgraded the stock to Hold and has a price target of $100.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Douglas Harned and Josh Sullivan have a total average return of 14.3% and 1.8% respectively. Harned has a success rate of 60.0% and is ranked #488 out of 3607 analysts, while Sullivan has a success rate of 50.0% and is ranked #1626.

The street is mostly Neutral on UTX stock. Out of 5 analysts who cover the stock, 4 suggest a Hold rating and one recommends to Buy the stock. The 12-month average price target assigned to the stock is $106.40, which implies an upside of 24.2% from current levels.

United Technologies Corporation provides high technology products and services to the building systems and aerospace industries. Its business segments are Otis, UTC Climate, Controls & Security, Pratt & Whitney, UTC Aerospace Systems and Sikorsky.


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