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United Technologies

UTX's four business segments are broadly classified under "commercial" and "aerospace" businesses. Commercial is a higher margin set of businesses with UTC Climate, Controls & Security being the largest segment (29% of FY17 sales with adj. profit margin of 17.6%) along with Otis (20% of revenues, margins of 16.8%). The aerospace businesses rounds out the rest of UTX's sales with UTC Aerospace Systems comprising 24% of sales and boasting a 16.7% margin, while P&W accounts for the remaining 26% of sales with a more modest 10.0% margin. UTX also maintains a balanced revenue mix. In 2017, net sales in the U.S. were 57% of operations with the International business rounded out by exposure to Europe ~20% of revenues, Asia-Pacific at 15% and other 9%. UTX has very solid global franchises in its commercial business portfolio with Otis holding a leadership position in the elevator and escalator space. UTC Climate, Controls & Security maintains market leading positions in the HVAC and refrigeration solutions arena through its legacy Carrier franchise and its security and fire safety products (Chubb and Kidde). P&W is also among the leading suppliers of commercial, general aviation and military aircraft engines. (16 Nov 2018)

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November 2018 US Company Recommendation Changes

US Company Recommendation Changes: 02 Dec 2018, 9:51 PM ET - Our monthly report provides executive summaries for the forty company recommendation changes made on North American companies during the month of November.
Focused

United Technologies: Murky Waters

IG Note: 28 Nov 2018, 4:09 AM ET - Although management offered no clarity on the capital structure of the SpinCos, we shift to a Market perform on UTX as de-levering is the near-term priority and all three entities are to retain IG ratings.
Focused

United Technologies: Do All Good Things Come in 3s?

Worth Watching: 26 Nov 2018, 7:54 PM ET - United Technologies (Baa1/BBB+) announced, after the close, that it would indeed be breaking up into three separate companies (Aero, Otis and CCS/Carrier) as the deconsolidation theme across the Industrial space is gaining unprecedented momentu ..

3M: 3Q18 | Event Risk Brewing?

Worth Watching: 23 Oct 2018, 9:51 PM ET - 3M (A1/AA-) had a downright ugly quarter especially when compared to other Industrial behemoths that were on the screen today including United Technologies and Caterpillar. Reported revenue sank 0.2% $8.15 bn, due primarily to currency, and cam ..
Focused

UTX: 3Q18 | Portfolio in Flux, Otis in Focus

Worth Watching: 23 Oct 2018, 12:57 PM ET - UTX: On a day when CAT and 3M rattled Industrial investors, United Technologies (Baa1/BBB+) is looking rather pretty in comparison by posting solidly better than expected results, strong organic growth and lifting full-year 2018 guidance to be ..
Focused

United Technologies: Multi-Tranche USD Issuance

IG Note: 13 Aug 2018, 9:31 AM ET - Following market rumblings late last week, UTX is in the market this morning with a multi-tranche issuance to wrap up its funding needs for the Rockwell Collins deal.
Focused

United Technologies: Debt Issuance Pending?

IG Note: 13 Aug 2018, 4:38 AM ET - We share our updated thoughts on UTX ahead of what could be USD debt issuance as soon as today.

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.
Focused

UTX: 2Q18 | Capital Structure Questions Remain

Earnings Note: 24 Jul 2018, 10:23 PM ET - Aerospace was the shining segment within the UTX portfolio this quarter and a driver behind higher 2018 guidance. Still it was a mixed quarter, at the segment level, and we maintain our Underperform on the credit.

US IG Strategy: Picks and Pans (July 2018)

Strategy Analysis: 23 Jul 2018, 4:36 AM ET - In this document we summarize our sector recommendations, and provide a few names within each that we like (picks) and dislike (pans). Our Picks and Pans reflect our analysts' current views. 

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

United Technologies: EPG Conference Highlights

Worth Watching: 07 Jun 2018, 2:36 PM ET - United Technologies (A3▼/A-▼): In addition to discussing key macro takeaways from the EPG conference at the end of May and featuring more than fifteen other Industrial credits in our sector report, we highlight color specifically from UTX. ..
Focused

US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.
Focused

UTX: Attractive Euro M&A Issuance

IG Note: 14 May 2018, 9:52 AM ET - While we are cautious on the credit story of UTX, we feel investors are getting compensated for that risk in today’s EUR denominated issuance.
Focused

United Technologies: EUR Debt Issuance Pending?

IG Note: 13 May 2018, 10:16 PM ET - We share our updated thoughts on UTX ahead of what could be EUR debt issuance as soon as Monday.
Focused

UTX: 1Q18 | Strong Quarter Ahead of Debt Issuance

Worth Watching: 24 Apr 2018, 10:40 AM ET - UTX (A3▼/A-▼) reported dramatically better than expected sales and earnings, although adjusted operating margins did slump somewhat due to performance at the Otis and Climate, Controls & Security segments. Other highlights include the firm post ..
Focused

United Technologies Scenarios: United to Divided?

Company Spotlight: 16 Apr 2018, 4:15 AM ET - We see a modest multiple expansion opportunity if management does go down the break-up route and while there is also a case whereby the SpinCos could have IG ratings, we would not rule out seeing the Climate division move into HY territory.

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

JCI: Power Solutions in Play

IG Note: 12 Mar 2018, 9:44 PM ET - We had been flagging JCI as a credit with high event risk. Now JCI is joining other Industrials under pressure by putting Power Solutions under strategic review. We maintain our Underperform until we obtain more capital structure clarity.

Honeywell: Capital Allocation Update

IG Note: 06 Mar 2018, 8:18 PM ET - The message from HON's Investor Day last week was that capital will be allocated in a prudent manner. However, we remain guarded on the credit at current levels with a “new” CEO legacy building and there being an activist in the scene.

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