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United Technologies to Boost MRO Unit with Digital Solutions

Zacks

Industrial goods manufacturer United Technologies Corporation UTX recently unveiled its plans to take UTC Aerospace Systems’ performance to the next level by augmenting the maintenance, repair and overhaul (MRO) services. These include a comprehensive portfolio of digital solutions along with a new customizable self-service portal to maximize the operational efficiencies of its aftermarket customers.

In tune with the dynamic industry trends and evolving needs of the clients, UTC Aerospace Systems decided to refurbish its operations with a digital edge. At the core of this endeavor, there was a unique collaboration between UTC Aerospace Systems and United Technologies Digital, the latter specifically focused on rapidly expanding the digital capabilities and optimizing software development processes. The digital focus is likely to achieve higher levels of productivity by creating a simple data-driven innovative workplace that delivers intelligent products and services.

United Technologies Digital has brought together data scientists and user experience experts to offer integrated digital solutions for customers by leveraging the size and scale of its parent firm along with greater connectivity to the Internet of Things applications. The new suite of MRO services will include simple and easy-to-use customer interfaces with higher transparency around order and shipping status and improved responsiveness in customer service. It would also support industry standard electronic data interchange connections and offer easy access to current capabilities lists, contacts, pricing and other metrics.

With these initiatives, UTC Aerospace Systems expects to exceed its current 97% on-time repair performance level, when its customers and MRO sites migrate to the new customer service platform by 2018. Over the years, UTC Aerospace systems has created a niche market for itself with 50 MRO facilities worldwide, servicing more than 400,000 aircraft components each year on a 24/7/365 schedule for customer response center.

Such focused efforts is likely to significantly improve the revenues of parent firm United Technologies. The company has outperformed the Diversified Operations industry with an average year-to-date return of 9.8% compared with 4.3% gain for the latter. In order to further improve its operations, United Technologies has also revamped its aerospace unit. This included an overhaul of its organizational structure in the aerospace business along with some key changes in the leadership positions within it. United Technologies anticipates that the streamlined organizational set-up would enable it to better serve its customers.



Incorporating its improved expectations for organic sales growth in the near future, United Technologies also affirmed its guidance for 2017. The company expects adjusted earnings in the range of $6.30 to $6.60 per share on revenues of $57.5 billion to $59 billion. The company’s acquisition pool is expected to be within $1 billion to $2 billion, while free cash flow is expected in the range of 90–100% of net income. It also plans to repurchase shares worth $3.5 billion in 2017.

We remain impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock. Some other stocks in the industry worth considering include 3M Company MMM, Crane Co. CR and Federal Signal Corporation FSS, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3M has a long-term earnings growth expectation of 9.7%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 1.3%.

Crane has a long-term earnings growth expectation of 10.1%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 8.4%.

Federal Signal surpassed estimates twice in the trailing four quarters for an average positive earnings surprise of 3.1%

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