Rockwell Collins, Inc. reported impressive results in the final
quarter of fiscal 2014 as both earnings and revenues beat the Zacks
Consensus Estimate. Moreover, both top and bottom lines registered
a year-over-year improvement, primarily due to a strong
contribution from the Information Management Services segment,
higher commercial aftermarket & original equipment sales, and
an effective share buyback program. Rockwell Collins' stable
financial position, focus on research & development, and
systematic investments in inorganic growth programs should boost
its future performance. However, dependence on international sales,
delays in funding authorizations by the U.S. government and higher
exposure to the fixed-price contracts raise concerns. Thus, we have
maintained our Neutral recommendation on the stock.
Cedar Rapids, IA-based Rockwell Collins, Inc. was incorporated
in Mar 2001. The company designs, manufactures and supports
software and hardware solutions for aircraft communication,
navigation, signals intelligence and weapons systems as well as
surveillance systems for the government, military and commercial
Rockwell Collins has operations in the U.S., France, Canada, UK,
Germany, China, Japan, Singapore, India, Israel, Australia, Chile
and Brazil. The company also has engineering facilities, sales
offices, warehouses and service locations in 27 countries
In Dec 2013, Rockwell Collins acquired airline communications
and information processing solution major, ARINC Inc., a portfolio
company of The Carlyle Group, for a whopping $1.42 billion. Hence,
beginning first quarter of fiscal 2014, Rockwell Collins created a
new Information Management Services segment. Certain amounts
previously included in the Commercial Systems segment have been
reclassified to the newly formed segment.
Earlier, Rockwell Collins served its worldwide customer base
through two business segments: Government Systems and Commercial
Systems. The company currently has three segments Government
Systems, Commercial Systems and Information Management
Government Systems business supplies defense electronics and
integrated systems, including communication, navigation, and
displays for airborne, ground, and shipboard applications to the
U.S. Department of Defense (DoD), foreign militaries, and
manufacturers of military aircraft and helicopters. These systems,
products and services support airborne (fixed and rotary wing),
ground and shipboard applications. Government Systems product
category sales are divided into airborne and surface solutions.
Airborne solutions focus on tanker, rotary wing, fighter/bomber,
unmanned aerial vehicles (UAV) and precision weaponry
Surface solutions focus on handheld cum vehicle-mounted
navigation devices, communications and navigation products.
Commercial Systems business supplies air transport aviation
electronics (original and after market equipment and wide-body
in-flight entertainment) and business and regional aviation
electronics (original and after market equipment).
During first-quarter 2014, Rockwell Collins formed a new
business division, Information Management Services segment,
clubbing up the newly acquired operations of ARINC Inc. and the
existing flight services business.
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