United Technologies Corporation (NYSE:UTX) Q1 2019 Earnings Conference Call Transcript

Apr 23, 2019 • 08:30 am ET


United Technologies Corporation (NYSE:UTX) Q1 2019 Earnings Conference Call Transcript


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Good morning and welcome to United Technologies First Quarter 2019 Earnings Conference Call. On the call today are, Greg Hayes, Chairman and Chief Executive Officer; Akhil Johri, Executive Vice President and Chief Financial Officer; and Carroll Lane, Vice President, Investor Relations. This call is being carried live on the Internet and there is a presentation available to download from UTC's website at www.utc.com. Please note, except or otherwise noted, the Company will be speaking to results from continuing operations, excluding restructuring costs and other significant items of a nonrecurring and/or nonoperational nature often referred to by management as other significant items. The Company also reminds listeners that the earnings and cash flow expectations and any other forward-looking statements provided in the call is subject to risk and uncertainties. UTC's SEC filings including Forms 10-Q and 10-K provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

Once the call becomes open for questions, we ask that you limit your first round to one question per caller, to give everyone the opportunity to participate. You may ask further questions by re-inserting yourself into the queue if time permits. Please go ahead, Mr. Hayes.

Gregory J. Hayes

All right, thanks, Kevin, and good morning, everyone. As you guys all saw on the press release, had a really good start to the year. Our reported EPS adjusted of $1.91, that's up 8% versus the prior year, and even above our expectations for the quarter. And that was driven primarily by better than expected segment operating profit results. As you saw on the press release, sales were up 20% with organic growth of 8% and that was driven by double-digit growth at the Aerospace businesses. Free cash flow, a really good start to the year at $1.1 billion. In the quarter, a couple of notable highlights. At Pratt & Whitney, the GTF engine reached 2 million revenue flight hours with 36 operators now benefiting from lower fuel burn emissions and noise. At Otis, the Otis team completed the largest modernization project to date in China for one of the country's most iconic landmarks. You guys will all recognize, of course, the Shanghai Pearl Tower.

Additionally, United Technologies launched a hybrid electric propulsion technology demonstrator program. This demonstrator program is expected to yield an average fuel savings for regional sized aircraft of 30% and we're targeting first flight within three years. Importantly, this project combines the engineering expertise and experience of the Collins Aerospace team, Pratt & Whitney and our own research center. We, of course, also remain laser focused on the integration of Rockwell Collins. In the first quarter, we saw $0.20 of accretion from the Rockwell Collins acquisition, really solid performance across each of their legacy businesses. This, of course, exceeded even our expectations. Having worked as a combined team for a full quarter, I'm even more confident in the long-term value that the acquisition is going to bring to our shareowners and our employees. From avionics