United Technologies (UTC)

United Technologies (NYSE:UTX) | Products & Business Units

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Introduction



United Technologies Corporation, incorporated in Delaware in 1934, provides high-technology products and services to the building systems and aerospace industries worldwide. Growth is attributable primarily to the internal development of the company's existing businesses and to acquisitions. The company operates through six business segments (described below). United Technologies is headquartered in Hartford, Connecticut.

On September 21, 2011, UTC announced an agreement to acquire Goodrich Corporation. Under the terms of the agreement, Goodrich shareholders received $127.50 in cash for each share of Goodrich common stock owned at the time of the closing of the transaction. This equates to a total enterprise value of $18.4 billion, including $1.9 billion in net debt. The deal closed on July 26, 2012. Goodrich's products include aircraft nacelles and interior systems, actuation and landing systems, and electronic systems. As a result of the acquisition, Goodrich and Hamilton Sundstrand were combined to form a new segment named UTC Aerospace Systems. According to UTC, the increased scale, financial strength and complementary products of the new combined business strengthens the company's position in the aerospace and defense industry. Furthermore, the acquisition enhances UTC's ability to support customers with more integrated systems.

On September 28, 2011, UTC announced a new organizational structure to better serve customers and to drive growth and achieve efficiencies through greater integration across certain product lines. This new structure combines Carrier and UTC Fire & Security into a new segment called UTC Climate, Controls & Security. Beginning with the first quarter of 2012, Carrier and UTC Fire & Security report combined financial and operational results as part of this new segment. As part of this new organizational structure, the company also created UTC Propulsion & Aerospace Systems, a new organization consisting of Pratt & Whitney and UTC Aerospace Systems (Goodrich + Hamilton Sundstrand). UTC will continue to report the financial and operational results of Pratt & Whitney and UTC Aerospace Systems separately.

On March 14, 2012, the Board of Directors of United Technologies approved a plan for the divestiture of a number of non-core businesses. These non-core businesses include the legacy Hamilton Sundstrand industrial businesses, which manufacture air compressors, metering pumps and heavy duty process pumps for industries involved with chemical and hydrocarbon processing, oil and gas production, water and wastewater treatment, and construction, Clipper Windpower plc, a California-based wind turbine manufacturer, Pratt & Whitney Rocketdyne, a leader in the design, development and manufacture of sophisticated space propulsion systems for military and commercial applications, and Pratt & Whitney Power Systems, which sells aero-derivative engines for industrial applications.

The sale of Clipper was completed in the third quarter of 2012 and the sale of the legacy Hamilton Sundstrand industrial businesses was completed in the fourth quarter of 2012. On July 23, 2012, UTC announced an agreement to sell Pratt & Whitney Rocketdyne to GenCorp Inc. for $550 million. On June 14, 2013, UTC completed the sale of substantially all operations of Rocketdyne to GenCorp for $411 million. On December 12, 2012 UTC announced an agreement to sell Pratt & Whitney Power Systems to Mitsubishi Heavy Industries (MHI) On May 17, 2013, UTC completed the sale MHI for $432 million, excluding contingent consideration valued at approximately $200 million, and entered into a long-term engineering and manufacturing agreement with MHI.

On June 29, 2012, UTC's management approved a plan for the divestiture of UTC Power, a world leader in the application of fuel cell technology for stationary and transportation applications. On December 22, 2012, UTC announced an agreement to sell the UTC Power unit to ClearEdge Power. On February 12, 2013, UTC completed the disposition to ClearEdge Power. The UTC Power disposition resulted in payments by UTC totaling $48 million, which included capitalization of the business prior to the sale and interim funding of operations as the acquiror took control of a loss-generating business. UTC has no continuing involvement with the UTC Power business.

In connection with regulatory approval of the Goodrich acquisition, regulatory authorities required UTC to dispose of the Goodrich electric power systems and the pumps and engine controls businesses. On March 18, 2013, UTC completed the sale of the Goodrich pumps and engine controls business to Triumph Group, Inc., and on March 26, 2013, completed the sale of the Goodrich electric power systems business to Safran S.A. Combined proceeds from the sales of the two businesses were approximately $600 million.

On September 23, 2013, UTC announced the formation of UTC Building & Industrial Systems, a new organizational structure consisting of the Otis and UTC Climate, Controls & Security segments. This new organizational structure is expected to enhance the company's ability to deliver more integrated solutions to its customers and accelerate innovation in smart building technologies and sustainable designs. Otis and UTC Climate, Controls & Security each continue to report their financial and operational results as separate segments.

In January 2015, UTC announced that it is streamlining its aerospace operations by eliminating the UTC Propulsion & Aerospace Systems organization, which had consisted of the Pratt & Whitney and UTC Aerospace Systems segments. Pratt & Whitney and UTC Aerospace Systems will continue as stand-alone businesses.

United Technologies conducts its business through five principal business segments:

 

Pratt & Whitney
UTC Aerospace Systems
Sikorsky
Otis
UTC Climate, Controls & Security.



The following table highlights United Technologies' sales from 2012 to 2014 by segment:
United Technologies' Segment Sales



Each of the above segments group similar operating companies. The management organization of each segment has general operating autonomy over a range of products and services.


Pratt & Whitney

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Pratt & Whitney is among the world's leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney also provides fleet management services and aftermarket maintenance, repair and overhaul services, including the sale of spare parts for large commercial and military engines. Pratt & Whitney produces families of engines for wide and narrow-body and large regional aircraft in the commercial market, and for fighter and transport aircraft in the military market.

Pratt & Whitney Canada (P&WC) is a world leader in the production of engines powering general and business aviation, as well as regional airline, utility and military airplanes and helicopters, and also provides fleet management services and aftermarket maintenance, repair and overhaul services, including the sale of spare parts for such engines. Pratt & Whitney's products are sold principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies, and the U.S. and foreign governments. Pratt & Whitney's products and services must adhere to strict regulatory and market-driven safety and performance standards. The frequently changing nature of these standards, along with the long duration of aircraft engine development, production and support programs, creates uncertainty regarding engine program profitability.

The development of new engines and improvements to current production engines present important growth opportunities. Pratt & Whitney is under contract with the U.S. Government's F-35 Joint Program Office to develop, produce and sustain the F135 engine, a derivative of Pratt & Whitney's F119 engine, to power the single-engine F-35 Lightning II aircraft being developed by Lockheed Martin.

In addition, Pratt & Whitney is currently developing technology intended to enable it to power proposed and future aircraft, including the PurePower PW1000G Geared TurboFan engine. The PurePower PW1000G engine targets a significant reduction in fuel burn and noise levels with lower environmental emissions and operating costs than current production engines. In 2009, Pratt & Whitney successfully completed ground and flight testing of a demonstrator engine for the PurePower PW1000G engine. In December 2010, Airbus announced that it will offer the PurePower PW1000G engine as a new engine option to power its A320neo family of aircraftfamily of aircraft scheduled to enter into service in 2015. The PW1100G-JM is being developed as part of a collaboration with MTU and JAEC. Additionally, PurePower PW1000G engine models have been selected by Bombardier to power the new CSeries passenger aircraft, by Mitsubishi Aircraft Corporation to power the new Mitsubishi Regional Jet, by Irkut Corporation to power the Irkut MC-21 passenger aircraft, and by Embraer to power the next generation of the E-Jet family of aircraft. The CSeries passenger aircraft are scheduled to enter into service in 2015. The Mitsubishi Regional Jet and the Irkut MC-21 are both scheduled to enter into service in 2017, and Embraer's E-Jet family of aircraft is scheduled to enter service in 2018. On October 14, 2014, Gulfstream announced the selection of the PurePower PW800 engine to exclusively power Gulfstream's new G500 and G600 business jets, which are scheduled to enter service in 2018. On December 19, 2014, the geared turbofan engine completed Federal Aviation Agency certification for the Airbus A320neo platform and remains on schedule to enter into service in the fourth quarter of 2015. The success of these aircraft and the PurePower family of engines is dependent upon many factors including technological accomplishments, aircraft demand, and regulatory approval. Based on these factors, as well as the level of success of aircraft program launches by aircraft manufacturers and other conditions, additional investment in the PurePower program may be required. P&WC has developed or is developing the PW210 engine family for helicopters manufactured by Sikorsky, AgustaWestland and Airbus Helicopters. Pratt & Whitney continues to enhance its programs through performance improvement measures and product base expansion.

In view of the risks and costs associated with developing new engines, Pratt & Whitney has entered into collaboration arrangements in which sales, costs and risks are shared. At December 31, 2014, the interests of third party participants in Pratt & Whitney-directed commercial jet engine programs ranged from 14% to 49%. In addition, Pratt & Whitney has interests in other engine programs, including a 50% ownership interest in the Engine Alliance (EA), a joint venture with GE Aviation, which markets and manufactures the GP7000 engine for the Airbus A380 aircraft. Pratt & Whitney has entered into risk and revenue sharing arrangements with third parties for 40% of the products and services that Pratt & Whitney is responsible for providing to the EA. Pratt & Whitney accounts for its interests in the EA joint venture under the equity method of accounting. Pratt & Whitney holds a 61% net program share interest in the IAE International Aero Engines AG (IAE) collaboration with MTU Aero Engines (MTU) and Japanese Aero Engines Corporation (JAEC) and a 49.5% ownership interest in IAE. Pratt & Whitney continues to pursue additional collaboration partners.

Pratt & Whitney's products are sold principally to aircraft manufacturers, airlines and other aircraft operators, aircraft leasing companies and the U.S. and foreign governments. Pratt & Whitney's products and services must adhere to strict regulatory and market-driven safety and performance standards. The frequently changing nature of these standards, along with the long duration of aircraft engine development, production and support programs, creates uncertainty regarding engine program profitability.

     Financial results for United Technologies' Pratt & Whitney segment were as follows:
Performance of United Technologies' principal lines of business

Sales to Airbus (Pratt & Whitney's largest customer by sales) were 41% and 35 percent of total Pratt & Whitney segment sales in 2014 and 2013, respectively, before taking into account discounts or financial incentives offered to customers. Sales to the U.S. Government were 22% and 25% of total Pratt & Whitney segment sales in 2014 and 2013, respectively. Sales generated by Pratt & Whitney’s international operations, including U.S. export sales, were 62% and 64% of total Pratt & Whitney segment sales in 2014 and 2013, respectively.

At December 31, 2014, Pratt & Whitney's backlog was $50.2 billion, including $4.2 billion of U.S. Government-funded contracts and subcontracts. At December 31, 2013, these amounts were $38.5 billion and $3.6 billion, respectively. Of the total Pratt & Whitney backlog at December 31, 2014, approximately $8.6 billion is expected to be realized as sales in 2015.


UTC Aerospace Systems

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As described above, on July 26, 2012, United Technologies acquired Goodrich pursuant to a merger agreement dated September 21, 2011. As a result of the acquisition, Goodrich became a wholly-owned subsidiary of UTC and the company combined the acquired Goodrich business and the legacy Hamilton Sundstrand business to form a new segment named UTC Aerospace Systems.

UTC Aerospace Systems is a leading global provider of technologically advanced aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military, space and undersea operations.

UTC Aerospace Systems' product portfolio includes electric power generation, power management and distribution systems, air data and flight sensing and management systems, engine control systems, electric systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire and ice detection and protection systems, propeller systems, aircraft aerostructures including engine nacelles, thrust reversers, and mounting pylons, interior and exterior aircraft lighting, aircraft seating and cargo systems, actuation systems, landing systems, including landing gears, wheels and brakes, and space products and subsystems. Aftermarket services include spare parts, overhaul and repair, engineering and technical support and fleet management solutions.

UTC Aerospace Systems sells aerospace products to aircraft manufacturers, airlines and other aircraft operators, the U.S. and foreign governments, maintenance, repair and overhaul providers, and independent distributors.

UTC Aerospace Systems had product placements supporting first flight in 2014 of the Airbus A320neo, certification of the Airbus A350 platform, and entry into service of the Boeing 787-9 platform. Significant development activity continues in the commercial and military markets for the Airbus A320neo and A350 aircraft, Boeing 787-10 and 777X aircraft, the Bombardier CSeries and Global 7000/8000 business jet, the COMAC C919 aircraft, the Embraer E-Jet E2 family of aircraft and KC-390 aircraft, the Irkut MC-21 aircraft, SYERS-2 multispectral sensors, the Mitsubishi Regional Jet, and the Lockheed Martin F-35 Lightning II military aircraft. UTC Aerospace Systems is also the operations support prime contractor for NASA's space suit/life support system and produces environmental monitoring and control, life support, mechanical systems, power generation, power management and distribution, and thermal control systems for the International Space Station and the Orion crew exploration vehicle.

     Financial results for the UTC Aerospace Systems segment were as follows:
Performance of United Technologies' principal lines of business

UTC Aerospace Systems' largest customers are Boeing and Airbus with a combined 29% and 28% of total UTC Aerospace Systems segment sales in 2014 and 2013, respectively. Sales to the U.S. Government were 19% and 21 percent of total UTC Aerospace Systems segment sales in 2014 and 2013, respectively. Sales generated by UTC Aerospace Systems’ international operations, including U.S. export sales, were 54% and 55% of total UTC Aerospace Systems segment sales in 2014 and 2013, respectively.

At December 31, 2014, UTC Aerospace Systems' backlog was $11.1 billion, including $2.3 billion of U.S. Government-funded contracts and subcontracts. At December 31, 2013, these amounts were $10.2 billion and $2.5 billion, respectively. Of the total UTC Aerospace Systems backlog at December 31, 2014, approximately $6.8 billion is expected to be realized as sales in 2015.


Sikorsky

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Sikorsky is one of the world's largest helicopter companies. Sikorsky manufactures military and commercial helicopters and also provides aftermarket helicopter and aircraft parts and services.

Current major production programs at Sikorsky include the UH-60M Black Hawk medium-transport helicopters and HH-60M Pave Hawk Medevac helicopters for the U.S. and foreign governments, the S-70 Black Hawk for foreign governments, the MH-60S Seahawk helicopter for the U.S. Navy and the MH-60R Seahawk helicopter for the U.S. and foreign navies, the S-70B Naval Hawk for foreign naval missions, and the S-76 and S-92 helicopters for commercial operations.

The UH-60M helicopter is the latest and most modern in a series of Black Hawk variants that Sikorsky has been delivering to the U.S. Army since 1978 and requires significant additional assembly hours relative to the previous variants. In December 2007, the U.S. government and Sikorsky signed a five-year multi-service contract for 537 H-60 helicopters to be delivered to the U.S. Army and U.S. Navy, which include the UH-60M, HH-60M, MH-60S and MH-60R. In July 2012, the U.S. Government and Sikorsky signed a five-year multi-service contract for approximately 650 H-60 helicopters. Actual production quantities will be determined year-by-year over the life of the program based on funding allocations set by Congress and the U.S. Department of Defense acquisition priorities, as well as the U.S. Foreign Military Sales program. Sikorsky is also developing the CH-53K King Stallion next generation heavy lift helicopter for the U.S. Marine Corps, the VH-92A helicopter for the U.S. Marine One transport mission, the HH-60W combat rescue helicopter for the U.S. Air Force and the CH-148 Cyclone helicopter, for the Canadian Government. The CH-148 is a derivative of the H-92 helicopter, a military variant of the S-92 helicopter. The CH-148 is being developed under a fixed-price contract that provides for the development and production of 28 helicopters, and a related support contract that provides for logistical support. Delivery of the final configuration aircraft, which was scheduled to begin in 2012, has not occurred due to a number of disputes between the Canadian Government and Sikorsky related to contractual requirements and contract performance. On June 18, 2014, Sikorsky and the Canadian Government signed amendments to the CH-148 contracts. The amended contracts finalize the scope of the aircraft, change the governance of the program and establish a phased approach to the delivery of interim and final configuration helicopters starting in 2015. The amended contracts also extend the in-service support contract through approximately 2038. The contract value of the amended contracts is estimated to be approximately $6.4 billion.

Sikorsky's aftermarket business includes spare parts sales, mission equipment, overhaul and repair services, maintenance contracts and logistics support programs for helicopters and other aircraft. Sales are principally made to the U.S. and foreign governments, and commercial helicopter operators. Sikorsky is increasingly engaging in logistics support programs and partnering with its government and commercial customers to manage and provide logistics, maintenance and repair services.

     Financial results for United Technologies' Sikorsky segment were as follows:
Performance of United Technologies' principal lines of business

Sales to the U.S. Government were 52% and 58% of total Sikorsky segment sales in 2014 and 2013, respectively. Sales generated by Sikorsky's international operations, including U.S. export sales, were 48% and 30% of total Sikorsky segment sales in 2014 and 2013, respectively.

At December 31, 2014, Sikorsky's backlog was $15.8 billion, including $5.2 billion of U.S. Government-funded contracts and subcontracts. At December 31, 2013, these amounts were $14.9 billion and $5.4 billion, respectively. Of the total Sikorsky backlog at December 31, 2014, approximately $5.0 billion is expected to be realized as sales in 2015.


Otis

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Otis is the world's largest elevator and escalator manufacturing, installation and service company.

Otis designs, manufactures, sells and installs a wide range of passenger and freight elevators for low-, medium- and high-speed applications, as well as a broad line of escalators and moving walkways. In addition to new equipment, Otis provides modernization products to upgrade elevators and escalators as well as maintenance and repair services for both its products and those of other manufacturers. Otis serves customers in the commercial and residential property industries around the world. Otis sells directly to the end customer and through sales representatives and distributors.

     Financial results for United Technologies' Otis segment were as follows:
Performance of United Technologies' principal lines of business

Sales generated by Otis' international operations were 81 percent and 82 percent of total Otis segment sales in 2014 and 2013, respectively. At December 31, 2014, Otis’ backlog was $15.3 billion as compared to $15.4 billion at December 31, 2013. Of the total Otis backlog at December 31, 2014, approximately $8.4 billion is expected to be realized as sales in 2015.


UTC Climate, Controls & Security

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UTC Climate, Controls & Security is the leading provider of HVAC and refrigeration solutions, including controls for residential, commercial, industrial and transportation applications. These products and services are sold under the Carrier name and other brand names to building contractors and owners, homeowners, transportation companies, retail stores and food service companies. UTC Climate, Controls & Security is also a global provider of security and fire safety products and services.

In 2010, UTC completed the acquisition of the GE Security business from General Electric Company, strengthening UTC Climate, Controls & Security's portfolio of security and fire safety technologies for commercial and residential applications, including fire detection and life safety systems, intrusion alarms, video surveillance and access control systems.

In 2012, UTC implemented a new organizational structure that allows the company to better serve customers, drive growth and achieve further efficiencies through greater integration across certain product lines. As part of this new structure, effective January 1, 2012, the company formed the UTC Climate, Controls & Security segment, which is composed of the former Carrier and UTC Fire & Security segments.

UTC Climate, Controls & Security provides electronic security products such as intruder alarms, access control systems and video surveillance systems, and designs and manufactures a wide range of fire safety products including specialty hazard detection and fixed suppression products, portable fire extinguishers, fire detection and life safety systems, and other firefighting equipment. Services provided to the electronic security and fire safety industries include systems integration, video surveillance, installation, maintenance, and inspection. In certain markets, UTC Climate, Controls & Security also provides monitoring and response services to complement its electronic security and fire safety businesses. Through its venture with Watsco, Inc., UTC Climate, Controls & Security distributes Carrier, Bryant, Payne and Totaline residential and light commercial HVAC products in the U.S. and selected territories in the Caribbean and Latin America. UTC Climate, Controls & Security sells directly to end customers and through manufacturers’ representatives, distributors, wholesalers, dealers and retail outlets. Certain of UTC Climate, Controls & Security’s HVAC businesses are seasonal and can be impacted by weather.

UTC Climate, Controls & Security products and services are used by governments, financial institutions, architects, building owners and developers, security and fire consultants, homeowners and other end-users requiring a high level of security and fire protection for their businesses and residences. UTC Climate, Controls & Security provides its security and fire safety products and services under Chubb, Kidde and other brand names, and sells directly to customers as well as through manufacturer representatives, distributors, dealers and U.S. retail distribution.

     Financial results for the UTC Climate, Controls & Security segment were as follows:
Performance of United Technologies' principal lines of business

Sales generated by UTC Climate, Controls & Security's international operations, including U.S. export sales, were 59% and 61% of total UTC Climate, Controls & Security segment sales in 2014 and 2013, respectively.

At December 31, 2014, UTC Climate, Controls & Security's backlog was $3.4 billion as compared to $3.1 billion at December 31, 2013. Substantially all of the backlog at December 31, 2014 is expected to be realized as sales in 2015.

Company Information

Revenues ('14): $65,100M +4.0%

R&D ('14): $2,635M +4.2%

Net Profit ('14): $6,220M +8.7%

CAPEX ('14): $1,711M +1.4%

United Technologies - OEM

Products News Subsidiaries Acquisitions Competitors Customers R&D Spending 5-Year Financials

Aerospace Sector:

   Major Diversified OEM

United Technologies Products:



Pratt & Whitney: Commercial, military, business jet and general aviation aircraft engines, parts and services, industrial gas generators, sold to a diversified customer base, including international and domestic commercial airlines and aircraft leasing companies, aircraft manufacturers, and U.S. and foreign governments. Pratt & Whitney also provides product support and a full range of overhaul, repair and fleet management services.

UTC Aerospace Systems: Aerospace products and aftermarket services for commercial, military, business jet and general aviation customers worldwide. Products include electric power generation, management and distribution systems, flight control systems, engine control systems, intelligence, surveillance and reconnaissance systems, engine components, environmental control systems, fire protection and detection systems, propeller systems, aircraft nacelles, and interior, actuation, landing and electronic systems.

Sikorsky: Military and commercial helicopters, aftermarket helicopter and aircraft parts and services.

Otis: Elevators, escalators, moving walkways and service sold to customers in the commercial and residential property industries around the world.

UTC Climate, Controls & Security: HVAC and refrigeration systems, building controls and automation, fire and special hazard suppression systems and equipment, security monitoring and rapid response systems, provided to a diversified international customer base principally in the industrial, commercial and residential property and commercial transportation sectors.

UTC's Major DoD Defense Programs:


| DoD Prime ContractorC-17 | C-130 Hercules | DoD Prime ContractorCH-53/MH-53 | E-2D | F/A-18E/F | DoD Prime ContractorF-16 Falcon |
| DoD Prime ContractorF-22 Raptor | DoD Prime ContractorF-35 Lightning II | DoD Prime ContractorHH-60M | DoD Prime ContractorMH-60R | DoD Prime ContractorMH-60S |
| DoD Prime ContractorUH-60M Black Hawk | RQ-4 Global Hawk | SSN 774 | V-22 Osprey | S-97 Raider |

UTC's Commercial Programs:


| Airbus: A320 Series, A330, A350 XWB, A380 |
| Boeing: 737NG, 747-8, 767, 777, 777X, 787 | Irkut: MC-21 |
| Bombardier: CRJ, CSeries | Embraer: ERJ | COMAC: C919 | Sikorsky: S-76, S-92 |

Sales 2010-2014 Net Income 2010-2014 R&D Spending 2010-2014 # Employees 2010-2014

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