Rockwell Collins Inc.
) reported fourth quarter fiscal 2013 earnings results ending Sep
30, 2013. The company reported adjusted earnings per share of
$1.28, missing the Zacks Consensus Estimate by 3 cents. Earnings
were however up 20.8% year over year.
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The upcast in earnings reflects the absence of a restructuring
and asset impairment charge that was incurred in fiscal 2012 and
a lower share count. These positives were partially offset by
higher employee incentive compensation costs in 2013.
Fiscal year 2013 earnings per share of the company were $4.58, up
10.4% year over year.
Rockwell Collins' total sales in the fourth quarter of fiscal
2013 were down 1.1% year over year to $1,252 million. However,
revenues easily surpassed the Zacks Consensus Estimate by $28
million. Lower sales at Government Systems were partially offset
by higher sales at Commercial Systems.
Rockwell Collins' total sales in fiscal 2013 were down 2.5% year
over year to $4,610 million. Revenues missed the Zacks Consensus
Estimate by $11 million.
Total research and development (R&D) expenses in the fourth
quarter of fiscal 2013 were $199 million, flat year over year.
Total operating income during the quarter was $273 million, down
8% year over year.
In the reported period, Commercial Systems sales of $583 million
were up 3.2% year over year.
By product category, sales related to aircraft original equipment
manufacturers were up 0.97% year over year to $310 million driven
by higher deliveries for the Bombardier Global and Challenger
aircraft partially offset by fewer deliveries for Cessna business
Aftermarket sales at Commercial Systems were $254 million, up
6.3% driven by regulatory mandate upgrades.
Wide-body in-flight entertainment sales were $19 million, flat
year over year.
Government Systems sales were $669 million, down 4.6% year over
By product category, Avionics sales were up 2.5% year over year
to $205 million due to higher international tanker/transport
hardware sales partially offset by the impact of lower simulator
Communication product sales decreased 15.9% year over year to
$148 million due to lower satellite and secure communication
product sales, partially offset by increased deliveries of JTRS
Surface solutions sales increased 8.6% year over year to $63
million driven by higher international Firestorm targeting
Navigation products sales declined 26% to $54 million. The
significant decline was due to lower deliveries of airborne and
ground navigation products as a result of the withdrawal of
troops from Afghanistan and Iraq.
As of Sep 30, 2013, cash and cash equivalents were $391 million
versus $335 million as of Sep 30, 2012. Long-term debt, net was
$563 million, down from $779 million as of Sep 30, 2012.
Cash flow from operation at the end of the year was $617 million,
up from $537 million in the year-ago period.
During the quarter, the company repurchased 0.9 million shares of
common stock at a total cost of $62 million.
Fiscal 2014 Guidance
The company maintained its fiscal 2014 guidance provided on Sep
20, 2013. The company expects revenue in the range of $4.5
billion to $4.6 billion and earnings per share in the range of
$4.30 to $4.50 for FY14. Total segment operating margins are
expected in the range of 21% to 22% and cash flow from operations
in the range of $550 million to $650 million. The guidance
excludes the impact of the proposed acquisition of ARINC Inc. The
transaction will be closed after receiving the requisite
The company expects R&D investment to be approximately $950
million in fiscal 2014.
Rockwell posted a mixed performance this quarter with revenues
topping and earnings missing the Zacks Consensus Estimate.
Rockwell's strong operating performance is however helping it to
sustain its investments in R&D. Going forward, these actions
would likely help the company in generating savings that are
required to sustain margins despite the continued headwinds in
the government business.
The company's short-cycle products, the U.S. government's delayed
funding authorizations, program execution risk, dependence on
international sales, high exposure to fixed price contracts and
high research & development overhead still keep us concerned.
The company presently has a short-term Zacks Rank #5 (Strong
However, stocks to look out for in the space are
B/E Aerospace Inc.
), all with a Zacks #2 Rank (Buy).