United Technologies (UTX - Get Report) CEO Gregory Hayes displayed a good bit of confidence in his company's future when in February he unilaterally dismissed a $90 billion offer from Honeywell International (HON - Get Report) . On Wednesday, the company posted first-quarter results and guidance that go a long way toward justifying that decision.
Farmington, Conn.-based United Technologies reported first-quarter earnings per share of $1.42, beating Wall Street's estimate of $1.39, on sales of $13.36 billion. The results included 5 cents a share worth of restructuring items, so adjusted earnings per share came in at $1.47.
Revenue for the quarter was flat year over year, with UTX achieving about 2% sales growth, which was offset by unfavorable foreign exchange. Ahead of its earnings, the company raised its dividend by 3.1%.
Management reiterated full-year guidance of $6.30 to $6.60 a share on revenue of between $56 billion and $58 billion, but Jefferies analyst Howard A. Rubel noted the guidance might be viewed as "slightly conservative." The company also said it was setting aside upward of $2 billion for potential acquisitions in 2016, indicating that United Technologies was more interested in bolt-on deals than it is a larger portfolio reshaping transaction.
Shares of UTX, which traded in the mid $80-range prior to the Honeywell bid, traded Wednesday at $105.71, up 0.9%.
The maker of jet engines, air conditioners, elevators and aerospace parts has been flying into significant headwinds in recent quarters, battling a slowdown in China and emerging markets, a strong U.S. dollar and self-inflicted issues in its Pratt & Whitney engine unit. Hayes was installed as CEO in late 2014 with a mandate to restructure, and last year sold the company's Sikorsky Aircraft unit to Lockheed Martin for $9 billion.
While the pressures on United Technologies aren't likely to disappear for some time, investors and analysts were looking for indications in the quarterly release that conditions had stabilized. While Honeywell seems unlikely to return even if UTX shares fall back below $90, the bid, if nothing else, did illustrate how far out of favor the company had fallen after trading north of $120 in early 2015.
Hayes called the quarter "a solid start to 2016" but said there is still work to be done. In the first quarter, UTX's various divisions reported mixed success, with Otis elevator orders up 1%, or 6% without China, but climate controls declined 8% year over year.
"We are also making progress on our strategic priorities, particularly our ability to invest in innovation as we continue to focus on structural cost reduction," the CEO said. "As we look to the future, our focused portfolio of industry leading franchises is well-positioned to deliver on our commitments and create significant long-term shareowner value."