[This story was updated at 1:50 p.m. Thursday to include comments from UTC’s annual meeting]
Hartford manufacturing conglomerate United Technologies Corp. indicated late Wednesday that it is considering spinning off its Stratford-based Sikorsky Aircraft business, which makes military and commercial helicopters.
UTC said it hopes to announce before the end of the year what it intends to do with Sikorsky. Options include keeping the company, spinning it off as its own publicly traded unit, or selling it.
UTC has owned Sikorsky for 86 years. That longevity has made pursuing strategic options a difficult choice, CEO Gregory Hayes said during the UTC’s annual meeting Thursday afternoon, which was available by webcast.
But Hayes feels it’s the right move for shareholders, customers and employees alike.
Hayes repeatedly called Sikorsky a good business, with a strong backlog and a series of program wins in 2014.
“Sikorsky brings strong margins,” Hayes said. “Just not quite as attractive as the rest of [UTC’s subsidiaries].”
Sikorsky had net sales of $7.45 billion in 2014 with an operating profit of $219 million.
Hayes said Sikorsky would have a strong future as a $7 billion standalone company, and he said UTC would not laden the Sikorsky with debt if it spins off subsidiary.
Hayes, appointed president and CEO in November following the resignation of Louis Chênevert, promised a review of UTC’s portfolio in December.
He told analysts and investors at the time that Sikorsky was not for sale, but that it may be in the future.
“There are no sacred cows,” he said at that investor meeting.
What do with Sikorsky is just one decision UTC has ahead of it.
Hayes said that UTC expects to generate $45 billion in free cash flow between now and 2020, and is trying to find the right acquisition targets. It is mainly investigating overseas opportunities, as much of its free cash is generated outside of the U.S.
But finding the right investments has proven challenging.
“With pricing what it is today, M&A is very difficult,” Hayes said. “It’s got to meet the financial hurdles we have established.”
He said he’s willing to be as patient as necessary.
“At the end of the day UTX still remains the best investment for us in terms of available cash,” he said.
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