Rockwell Collins Inc.
), the supplier of avionics and military equipment, outpaced the
Zacks Consensus Estimate of 85 cents with earnings of 86 cents per
share in the first quarter of fiscal year 2012 ending December 31,
2011. However, results came in below the year-ago quarterly earning
per share of 96 cents.
Rockwell Collins' total sales fell 1% year over year to $1.09
billion, in line with the Zacks Consensus Estimate. In the reported
quarter, Government Systems sales slipped, partially offset by
higher Commercial Systems sales.
Total operating earnings increased 2% to $218 million, or 19.9%
of sales, in the reported quarter from $213 million, or 19.3% of
sales, in the year-ago quarter. Overall, Rockwell Collins reported
net income of $130 million, a decrease of $21 million, or 13.9% as
compared to the year-ago quarter.
Government Systems sales were $583 million, a decrease of $67
million, or 10%, compared with $650 million reported for the same
period last year.
By product category, Avionics sales increased $9 million, or 3%,
year over year, due to increased sales of tanker and rotary-wing
programs. This was partially offset by a decline resulting from the
completion of deliveries for the KC-135 GATM program and a
reduction in simulation and training program revenues.
Communication product sales declined by $12 million, or 8%,
primarily due to lower Joint Tactical Radio System revenue for the
Ground Mobile Radio variant as well as lower deliveries of
satellite communication terminals.
Surface solutions sales decreased $46 million, or 43%, resulting
from the impact of two programs terminated in the third quarter of
2011 and fewer deliveries of public safety vehicle systems.
Sales of Navigation products decreased by $18 million, or 25%,
driven by fewer deliveries of Defense Advanced GPS Receiver
In the reported quarter, Government Systems operating earnings
of $117 million resulted in an operating margin of 20.1%, compared
with operating earnings of $131 million, and an operating margin of
20.2%, for the same period last year. The decrease in operating
earnings was primarily due to lower sales volume.
In the reported period, Commercial Systems sales of $511 million
rose $57 million, or 13%, compared with sales of $454 million
reported for the same period last year.
By product category, sales related to aircraft original
equipment manufacturers increased $32 million, or 14%, to $265
million year over year. This was primarily due to higher product
deliveries for its commercial aerospace customers. This includes
the likes of
) for its 777 and 747-8 series jetliners; and multiple platforms
for Canadian aircraft manufacturer, Bombardier Inc.
Aftermarket sales increased $27 million, or 14%, to $221 million
year over year. This was primarily driven by increased sales of
spares to Boeing, para-military programs, Chinese regional aircraft
and higher service-cum-support sales.
Commercial Systems operating earnings increased $19 million, or
23%, to $101 million, resulting in an operating margin of 19.8%,
compared with operating earnings of $82 million, and an operating
margin of 18.1%, for the same period a year ago. The increase in
operating earnings and margin was primarily attributable to higher
Rockwell Collins ended the quarter with cash and cash
equivalents of $286 million. At year-end fiscal 2011, ending on
September 30, 2011, the company had $530 million in cash. Long-term
debt excluding current maturity was $777 million versus $528
million at fiscal-end 2011, ending on September 30, 2011. This was
due to the issue of $250 million of unsecured ten-year notes at an
interest rate of 3.10%.
Rockwell Collins used $64 million of cash for operating
activities in the reported quarter. At the end of the year-ago
period the company generated $57 million of cash from operating
activities. In the reported quarter, the company repurchased 7.1
million shares of its common stock at a total cost of $385 million,
leaving $318 million of authorized share repurchase pending.
Rockwell Collins reaffirmed its fiscal 2012, ending on September
30, 2011, guidance.
The company expects fiscal year 2012 total sales to be between
$4.9 billion and $5.0 billion, with earnings from continuing
operations in the range of $4.40 to $4.60 per share.
Rockwell Collins currently retains its Zacks #3 Rank, which
translates into a short-term Hold rating. Considering the
fundamentals, we are maintaining our Neutral recommendation on the
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