Rockwell Collins Inc. (COL) reported fourth-quarter as well as fiscal year 2014 earnings results ending Sep 30, 2014. The company’s adjusted fourth-quarter earnings per share of $1.30 surpassed the Zacks Consensus Estimate by 3.2% and improved 8.3% year over year, buoyed by higher sales.
Fiscal 2014 earnings came in at $4.51 per share, in line with the Zacks Consensus Estimate, but up 6.9% year over year.
Revenues
In the fiscal fourth quarter, Rockwell Collins’ total sales were $1,402 million, beating the Zacks Consensus Estimate of $1,343 million by 4.4%. The top line also increased 15% year over year, primarily on the back of the ARINC Inc. acquisition.
In fiscal 2014, total sales jumped 11.3% to $4,979 million, surpassing the consensus estimate of $4,931 million.
Operational Highlights
Total segment operating income during the quarter was $299 million compared with $273 million in the year-ago quarter, reflecting 9.5% year-over-year growth.
Rockwell Collins’ total research and development (R&D) expenses were $251 million, up 9.1% year over year. It represented 17.9% of the quarterly sales.
Interest expenses increased to $16 million from $7 million a year ago, primarily due to a rise in long-term debt.
Quarterly Segmental Revenue
Commercial Systems: In the quarter under review, segmental sales of $639 million were up 11.9% year over year, primarily due to higher hardware delivery rates for the Boeing 787 and 737 aircraft and customer funded development program sales. Higher sales originating from Chinese regional aircraft OEM programs and initial hardware deliveries for Airbus A350 also contributed to the improvement.
Government Systems: The segment reported sales of $605 million, down almost 6% from the prior-year figure mainly due to the closure of the development effort on programs such as KC-46, KC-10 and E-2.
Information Management Services: Segment sales were $158 million, up from $12 million in the year-ago period primarily due to the acquisition of ARINC Inc.
Financial Condition
As of Sep 30, 2014, Rockwell Collins’ cash and cash equivalents were $323 million compared with $391 million as of Sep 30, 2013.
Long-term debt (net) was $1,663 million as of Sep 30, 2014, up from $563 million as of Sep 30, 2013.
Cash from operating activities during fiscal 2014 was $660 million, up from $593 million in the prior fiscal year.
In Sep 2014, Rockwell Collins announced that its board has approved an additional $500 million to expand the company's share repurchase program.
Fiscal 2015 Guidance
Rockwell Collins expects earnings for fiscal 2015 in the range of $4.90–$5.10 per share on total revenues of $5.2–$5.3 billion. Total segment operating margin is expected in the band of 20.5% to 21.5% for the fiscal year.
The company expects cash flow from operations between $675 million and $775 million, R&D investment at approximately $950 million and capital expenditure of $200 million for fiscal 2015.
At the Peer
Alliant Techsystems Inc. (ATK) reported second-quarter fiscal 2015 adjusted earnings of $3.00 per share, surpassing the Zacks Consensus Estimate of $2.94 by around 2%. Quarterly earnings increased 6.4% year over year primarily on the back of higher sales and a decline in pension expenses.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #3 (Buy). Investors can however consider better-ranked stocks like Orbital Sciences Corp. (ORB) and Spirit AeroSystems Holdings, Inc. (SPR), both carrying a Zacks Rank #1 (Strong Buy).
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