United Technologies’ aerospace businesses drive 20 percent increase in 1st-quarter revenue

United Technologies Corp.’s big bet in aviation is paying off as it posted a 20 percent rise in first-quarter revenue, driven by double-digit increases in its aerospace businesses and prompting the conglomerate to raise its profit expectations for 2019.

Sales of $18.4 billion in the January-to-March period were driven by its two aerospace businesses, UTC reported Tuesday.

It posted revenue of $4.8 billion at jet engine manufacturer Pratt & Whitney, up 11 percent from the first quarter of 2018, and $6.5 billion at Collins Aerospace Systems, up 71 percent.

Chief Executive Officer Gregory Hayes told industry analysts on a conference call the acquisition of Rockwell Collins Inc. in 2018 added profit of 20 cents per share in the quarter.

“Really solid performance across each of their legacy businesses,” he said. “This, of course, exceeded even our expectations.”

Carter Copeland of Melius Research said in an interview on CNBC that the strong performance by aerospace — the business UTC is keeping as it spins off Otis elevator and Carrier heating and cooling — “is nice for the overall narrative.”

Hayes said much of the attention is paid to UTC’s commercial airline equipment and components manufacturing business. The defense side of UTC’s business accounts for 25 percent of revenue, he said.

Collins Aerospace, formed from the Rockwell Collins acquisition, combines UTC’s intelligence, surveillance and reconnaissance and space businesses with the communications and navigation expertise of Rockwell Collins, Hayes said.

In contrast to the double-digit revenue increase in aviation, UTC’s two building systems businesses, Otis and Carrier, lagged. Equipment orders fell during the first quarter.

Otis generated sales of $3.1 billion, up about 2 percent, while sales at Carrier declined from the first quarter of 2018, to $4.32 billion from $4.38 billion.

Farmington-based UTC paid $30 billion last year to buy Rockwell Collins, an Iowa manufacturer of aerospace parts and components ranging from cabins to cockpit equipment. UTC established its acquisition internally as Collins Aerospace.

UTC is spinning off Carrier and Otis as it focuses on the growing aerospace business. Hayes said more than 500 people are preparing the two companies to operate as standalone companies.

UTC expects both businesses to be “operationally ready” for separation by the end of 2019 and the spinoff should be completed by next year, he said.

Chief Financial Officer Akhil Johri said profit could be cut by 10 cents per share related to the Boeing 737Max program. Hayes called it an “outer limit.”

The Boeing jetliner has been grounded around the world since mid-March after two fatal crashes.

Overall, UTC posted net income of $1.35 billion, or $1.56 per share, up about 4 percent in the quarter over the same three-month period in 2018.

Revenue, net income and earnings per share all beat Wall Street estimates of analysts surveyed by Bloomberg News.

UTC raised the low end of its 2019 profit guidance to between $7.80 and $8 per share, up from a previous $7.70 to $8. It made no change in its revenue guidance of $75.5 billion to $77 billion.

UTC’s shares closed higher, at $140.02, a 3.1 percent increase.

Stephen Singer can be reached at ssinger@courant.com.