whitney hayes

HARTFORD, Conn. (AP) ― United Technologies Corp., which manufacturers heating and ventilating equipment as well as jet engines, on Wednesday reported a 20 percent increase in profit for the third quarter, crediting strength in all its businesses except Carrier, which is pressed by the deteriorating housing market.

Net income in the July-September period rose to $1.2 billion, or $1.21 per share, from $1 billion, or 99 cents a share, a year earlier.

That was better than the $1.16 expected by analysts surveyed by Thomson Financial.

Revenue for the quarter that ended Sept. 30 totaled $13.86 billion, up 14 percent from $12.16 billion in the same quarter last year.

The Hartford-based conglomerate controls brands including Carrier, Otis, Pratt & Whitney and Sikorsky. It also has fire and fuel cell divisions.

United Technologies increased its revenue forecast for the year to $54 billion from its previous outlook of $53 billion. Per-share earnings are expected in the range of $4.22 to $4.25, at the top end of the company's previously stated range of $4.15 to $4.25.

Profit rose at double-digit rates in all businesses except Carrier "as markets in general remain healthy and cost reductions continue," George David, chairman and chief executive, said in a statement.

Still, its shares fell $2.82, or 3.5 percent, to $76.83 in midmorning trading.

Paul Nisbet, an analyst at JSA Research Inc. in Newport, R.I., said the investors appeared to be punishing United Technologies for the company's outlook for 2008, which he said was "rather lukewarm."

Greg Hayes, vice president of accounting and finance, told analysts in a conference call that the commercial aerospace market "looks to remain strong" even as aftermarkets slow. He added that emerging markets were likely to expand at "perhaps a more modest rate"

Hayes said United Technologies' aerospace business has "plenty of opportunities for investment." He cited a deal announced last week for a new Pratt & Whitney jet engine by Japanese machinery maker Mitsubishi Heavy.

But investments in the engine product and Hamilton-Sundstrand systems on the Boeing 787 "will put pressure on earnings growth" at Pratt & Whitney and Hamilton-Sundstrand, Hayes said.

Carrier, which manufactures heating, ventilating and air conditioning equipment, reported profit at $420 million, down from $430 million in the third quarter of 2006.

David called market conditions in Carrier's North American residential business "clearly challenging," though he said its other three global businesses delivered double-digit earnings growth.

Hayes said in the conference call that strong earnings growth for Carrier in building systems, residential and light commercial, international and refrigeration businesses more than offset soft residential business in the United States.

The company reiterated Carrier's full-year guidance of $150 million in earnings growth despite continued deterioration in the U.S. residential market.

At helicopter manufacturer Sikorsky Aircraft, profit jumped to $103 million from $70 million in the same quarter last year. It was the second consecutive quarter of significant gains for Sikorsky.

For the first nine months of the year, net income was $3.16 billion, or $3.19 a share, on revenue of $40 billion. That compared with profits of $2.87 billion, or $2.84 a share, on revenue of $35 billion in 2006.
I don't know about a "day," but what a difference three months makes! As recently as July, industrial and aerospace conglomerate United Technologies (NYSE: UTX) was pointing to "solid markets worldwide in commercial aviation and commercial construction," and predicting "these conditions continuing over the balance of the year and into 2008." Well, scratch that "into 2008" part.

UTC reported earnings Wednesday, and the numbers, as usual, were superb:

Sales up 14%, with organic growth contributing nine of those percentage points.
Profits per share up 22%.
And free cash flow coming in at a healthy $1.14 billion, or 95% of GAAP earnings.
Yet as good as 2007 has been so far, CEO George David warns that 2008 will be "challenging." UTC vice president Greg Hayes says that the twin themes of the coming year will be "housing" and "a slowing U.S. economy" (Funny. Following the news coming out of homebuilders like Ryland (NYSE: RYL) and Lennar (NYSE: LEN), and home improvers Home Depot (NYSE: HD) and Lowe's (NYSE: LOW), I had thought those were the themes this year.) Comments like these helped to shave nearly 4% off UTC's market cap yesterday.

Based on the stock price move, and articles in the mainstream press, you might think that David's and Hayes' predictions had already become fact. Yet the way management has changed its tune in just three months' time should remind Fools that these are no more than educated guesses -- and that sometimes, even CEOs guess wrong. Rather than obsess over management's newfound downbeat tone, I suggest we focus instead on facts, such as the following:

Year to date, UTC's biggest business, Carrier, has added 10 basis points to operating margin (in comparison to margins for the first three quarters of 2006). This HVAC business is currently converting 10.3% of its revenues into operating profit.
The Otis elevator business, UTC's third largest, did even better. Its operating margin is up 110 b.p. to 19.6%.
UTC's second-smallest division showed its second-largest improvement in margin, as Fire and Security added 170 b.p., bringing its margin to 7.5%.
UTC's trio of aerospace divisions also did well, with only one showing a decline in profitability (Pratt & Whitney, down 40 b.p. points to 17%), and with another showing the strongest gains in operating margin of all segments (Sikorsky, up 210 b.p. to 7.5%.)
With every business but one earning more profit on its revenue this year than last, and revenue growth strong across the board, UTC now predicts it will earn between $4.22 and $4.25 per share on $54 billion in revenue this year. And with only several weeks left in the year, I'd say that's one prediction you can take to the bank.

Catch up on the latest UTC news with: In the week leading up to the Spotted High School Football Game of the Week, students at both Gladewater and Mineola high schools were given cameras to become honorary Spotted photographers, and asked to answer some questions about themselves. One of the Mineola students who participated was senior Whitney Hays.