Rockwell Collins Inc.
), the supplier of avionics and military equipment, outpaced the
Zacks Consensus Estimate of 90 cents with earnings of 94 cents
per share in the first quarter of fiscal year 2013 ending
December 31, 2012. Results also came in higher than the year-ago
quarterly earning per share of 86 cents.
Rockwell Collins' total sales fell 3% year over year to $1.06
billion, beating the Zacks Consensus Estimate of $1.04 billion.
In the reported quarter, Government Systems sales slipped,
partially offset by higher Commercial Systems sales. Total
operating earnings decreased 2.3% to $213 million, or 20.1% of
sales, in the reported quarter from $218 million, or 19.9% of
sales, in the year-ago quarter.
Meanwhile, operating margins rose to 20.1% versus 19.9% in the
year-ago period. Overall, Rockwell Collins reported net income of
$132 million, a decrease of $2 million, or 1.5% as compared to
the year-ago quarter.
Government Systems sales were $546 million, a decrease of 6% from
$583 million reported for the same period last year.
By product category, Avionics sales decreased $9 million, or
3%, year over year, driven by lower sales from development
programs, which are completing or transitioning to production.
This was partially offset by higher tanker aircraft program
Communication product sales declined $11 million, or 8%,
driven by lower airborne and satellite communication product
sales. This was partially offset by increased deliveries of
ground network radios.
Surface solutions sales were $10 million, or 17%, lower than
last year, resulting primarily from development programs either
completing or transitioning to production. This was partially
offset by increased international sales of Firestorm targeting
Fewer deliveries of Defense Advanced GPS Receiver products
drove a $7 million, or 13%, decline in Navigation product
In the reported quarter, Government Systems operating earnings
of $107 million resulted in an operating margin of 19.6%,
compared with operating earnings of $117 million, and an
operating margin of 20.1%, for the same period last year. The
decrease in operating earnings and margin was primarily due to
lower sales. This was partially offset by the completion of
certain company-funded development programs related to GPS and
In the reported period, Commercial Systems sales of $516 million
rose $5 million, or 1%, from sales of $511 million reported for
the same period last year.
By product category, sales related to aircraft original
equipment manufacturers increased $17 million, or 6%, to $282
million year over year. This was primarily due to higher product
deliveries for its commercial aerospace customers. This includes
the likes of
) for its 787 series aircrafts, Airbus A330 series aircrafts and
Canadian aircraft manufacturer Bombardier Inc.'s Global series
aircrafts. This was partially offset by lower deliveries at the
light end of the business jet market.
Aftermarket sales decreased $14 million to $207 million due to
lower sales of spares year over year,
Commercial Systems operating earnings increased $5 million, or
5%, to $106 million, resulting in an operating margin of 20.5%,
compared with operating earnings of $101 million, and an
operating margin of 19.8%, for the same period a year ago. The
increase in operating earnings and margin was primarily due to
lower company-funded research and development expense.
However, total research and development investment increased
$7 million as resources were redirected to pre-production
engineering programs, including the Boeing 737 Max, Bombardier
CSeries and Global 7000/8000.
Rockwell Collins ended the quarter with cash and cash
equivalents of $337 million. At year-end fiscal 2012, ending on
September 30, 2012, the company had $335 million in cash.
Long-term debt excluding current maturity was $573 million versus
$779 million at fiscal-end 2012, ending on September 30,
Cash provided by operating activities for the first quarter of
2013 totaled $63 million, an increase of $127 million, compared
to a $64 million use of cash in the first quarter of last year.
The improvement in cash from operations was primarily driven by
increased collections from customers, improved inventory
performance and lower employee incentive compensation
During the first quarter of 2013, the company repurchased 6
million shares of common stock at a total cost of $333 million.
The company also paid a dividend on its common stock of $42
million, or 30 cents per share, in the first quarter of 2013.
Rockwell Collins raised its fiscal 2013 earnings per share
guidance range to $4.45-$4.65 versus its earlier range of
Rockwell Collins currently retains its Zacks Rank #3, which
translates into a short-term Hold rating. Considering the
fundamentals, we are maintaining our Neutral recommendation on
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