Rockwell Collins Inc.
), the supplier of avionics and military equipment, posted second
quarter fiscal year 2013 earnings of $1.17 per share, surpassing
the Zacks Consensus Estimate by a penny and 7% above the year-ago
Rockwell Collins' total sales were $1.13 billion, down 2.5%
year over year. However, the figure surpassed the Zacks
Consensus Estimate by $5 million. In the reported quarter,
Government Systems sales slipped as expected, partially offset by
higher Commercial Systems sales.
In the reported quarter, total research and development
expense was $197 million, down 7.9% year over year. Total segment
operating earnings decreased 4.58% to $229 million.
Overall, Rockwell Collins reported net income of $161 million,
flat year over year.
Government Systems sales were $578 million, a decrease of $50
million from $628 million from the same period last year.
By product category, Avionics sales decreased $41 million, or
11%, year over year, due to lower sales for development programs
and reduced sales for Eurofighter.
Communication product sales declined $2 million or 1%, due to
lower satellite communication product sales. However, this was
mostly offset by increased deliveries of JTRS Manpack radios.
Surface solutions sales declined by $1 million or 2%, due to
lower sales from development programs. However, this was
partially offset by increased international sales of Firestorm
Navigation products sales declined $6 million or 12% due to fewer
deliveries of Defense Advanced GPS Receiver products.
In the reported quarter, Government Systems generated
operating income of $112 million, down from $128 million in the
second quarter of 2012. The results reflect lower sales, absence
of a favorable warranty adjustment recorded in the prior year and
higher compensation costs. However, these were partially offset
by the benefit from cost reduction actions and the completion of
certain company-funded development programs.
In the reported period, Commercial Systems sales of $553 million
were up $20 million from sales of $533 million reported for the
same period last year.
By product category, sales related to aircraft original
equipment manufacturers increased $23 million, or 8%, to $312
million year over year driven by
The Boeing Company
) 787 and 737 aircrafts, the Bombardier Global and Challenger
Aftermarket sales also increased $3 million to $223 million
driven by higher business jet retrofits. However, this positive
was partially offset by lower air transport service and support
and higher spares sales last year.
In the second quarter of fiscal 2013, Commercial Systems'
operating earnings increased $5 million to $117 million driven by
higher sales volume. Moreover, increased compensation costs were
offset by lower company-funded research and development
Rockwell Collins ended the quarter with cash and cash
equivalents of $337 million. At the end of fiscal 2012, ending on
Sep 30, 2012, the company had $335 million in cash. Long-term
debt, net was $570 million versus $779 million at fiscal-end
2012, ending on Sep 30, 2012.
During the quarter under review, Rockwell repurchased 1.4
million shares of common stock for $84 million. During the
quarter, the company was sanctioned the repurchase of its common
stock worth $500 million from its board of directors. The
current approval takes the share authorization amount to $604
million. Going forward, the company intends to maintain an active
share repurchase program.
Rockwell Collins expects fiscal 2013 earnings per share in the
range of $4.45-$4.65. It expects total sales in the range of $4.6
billion to $4.7 billion. It expects total research &
development investment to be approximately $950 million.
Rockwell Collins succeeded in beating the Zacks Consensus
Estimate on the back of a few contract wins and product
innovations. Going forward, the company's ongoing share
repurchase program and its strong balance sheet would drive the
bottom line of the company. However, we are concerned about the
U.S. government's delayed funding authorizations, high exposure
to fixed price contracts and high research & development
overhead. The company presently retains a short-term Zacks Rank
Stocks worth considering are
B/E Aerospace Inc.
Triumph Group, Inc.
), both with a Zacks Rank #2 (Buy).
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