In the second quarter of fiscal year 2012 ending March 31, 2012,
Rockwell Collins Inc.
), the supplier of avionics and military equipment, reported
earnings in line with the Zacks Consensus Estimate of $1.09.
Results however came higher than the year-ago quarterly earning per
share of 96 cents.
Rockwell Collins' total sales fell 5% year over year to $1.16
billion, failing to meet both the Zacks Consensus Estimate of $1.18
billion and year-ago revenue of $1.22 billion. Total segment
operating earnings were relatively flat at $240 million, but total
segment operating margins increased to 20.7% of sales, up from
19.8% of sales in the year-ago quarter. Overall, Rockwell Collins
reported net income of $161 million, an increase of $11 million,
compared to $150 million in the year-ago quarter.
In the reported period, Commercial Systems sales of $533 million
rose $33 million, or 7%, compared with sales of $500 million
reported for the same period last year.
By product category, sales related to aircraft original
equipment manufacturers increased $19 million, or 7%, to $289
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; Global platform for
Canadian aircraft manufacturer, Bombardier Inc. and Airbus for its
Aftermarket sales increased $19 million, or 9%, to $220 million
year over year. This was primarily driven by increased sales of
spares to Boeing, and increased air transport retrofit sales.
Commercial Systems operating earnings increased $21 million, or
23%, to $112 million, resulting in an operating margin of 21.0%,
compared with operating earnings of $91 million, and an operating
margin of 18.2%, for the same period a year ago. The increase in
operating earnings and margin was primarily attributable to higher
Government Systems sales were $628 million, a decrease of $88
million, or 12%, compared to the $716 million reported for the same
period last year.
Avionics sales increased $13 million, or 4%, year over year, due
to increased sales of F-15 fighters for Saudi Arabia, military
aerial refueling and strategic transport aircraft KC-46, and KC-10
tanker programs. This was partially offset by the completion of
deliveries for the KC-135 Global Air Traffic Management
Communication product sales declined by $36 million, or 19%, due
to the completion of a contract to provide transportable cellular
equipment for Afghanistan and fewer deliveries of satellite
Surface solutions sales decreased $34 million, or 37%, resulting
from the impact of two programs terminated for convenience in the
third quarter of 2011.
Sales of Navigation products decreased by $31 million, or 38%,
driven primarily by fewer deliveries of Defense Advanced GPS
In the reported quarter, Government Systems operating earnings
of $128 million resulted in an operating margin of 20.4%, compared
with operating earnings of $150 million, and an operating margin of
20.9%, for the same period last year. The decrease in operating
earnings and margin was primarily due to lower sales volume. This
was partially offset by lower company funded research and
development costs, a favorable warranty adjustment and the benefit
realized from prior-year restructuring actions.
Rockwell Collins ended the quarter with cash and cash
equivalents of $297 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 $774 million versus $528
million at fiscal-end 2011, ending on September 30, 2011. Rockwell
Collins generated $45 million of cash from operating activities
over the last six months. At the end of the year-ago period the
company generated $127 million of cash from operating activities.
In the reported quarter, the company repurchased 1.9 million shares
of common stock at a total cost of $112 million, leaving $206
million authorized for additional share repurchases. The company
also paid dividends on its common stock totaling $35 million, or 24
cents per share.
On April 18, 2012, the Board of Directors approved an increase
in the quarterly dividend paid on its common stock by 25% to 30
cents per share. The new rate would be effective with the next
dividend payable on June 4, 2012, to shareholders of record at the
close of business on May 14, 2012.
Rockwell Collins reaffirmed its fiscal 2012, ending on September
30, 2012, earnings guidance range of $4.40 to $4.60 per share. The
company however reduced its fiscal 2012 revenue guidance to about
$4.85 billion versus its earlier guidance range of $4.9 billion -
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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