Rockwell Collins Inc. (COL) reported results for first-quarter fiscal 2015 ending Dec 31, 2014. The company’s adjusted fourth-quarter earnings per share of $1.10 missed the Zacks Consensus Estimate by 1.8% despite witnessing top-line growth and higher operating income. Earnings, however, improved 14.6% year over year.
Revenues
In the fiscal first quarter, Rockwell Collins’ total sales were $1,226 million, beating the Zacks Consensus Estimate of $1,217 million by 0.74%. The top line also increased 16.3% year over year, primarily on higher sales at Information Management Services that came on the back of the ARINC acquisition.
Operational Highlights
Total segment operating income during the quarter was $252 million compared with $218 million in the year-ago quarter, reflecting 15.6% year-over-year growth.
Rockwell Collins’ total research and development investment was $231 million, up 5.5% year over year. It represented 18.8% of the quarterly sales.
Interest expenses increased to $15 million from $12 million a year ago, primarily due to an increase in debt level.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $568 million were up 9% year over year, primarily due to higher customer-funded development program sales, which were partially offset by lower hardware delivery rates for Boeing 787.
Government Systems: The segment reported sales of $509 million, down almost 1% from the prior-year figure mainly due to lower deliveries of the JTRS Manpack radios and partially offset by higher hardware deliveries of ARC-210.
Information Management Services: Segment sales were $149 million, up from $18 million in the year-ago period primarily due to the acquisition of ARINC Inc.
Financial Condition
As of Dec 31, 2014, Rockwell Collins’ cash and cash equivalents were $315 million compared with $323 million as of Dec 31, 2013.
Long-term debt (net) was $1,670 million as of Dec 31, 2014, up from $1663 million as of Dec 31, 2013.
Cash from operating activities during fiscal first-quarter 2015 was $60 million, up from $24 million in the prior year period.
During the first quarter of fiscal 2015, Rockwell Collins repurchased 2.2 million shares of common stock for $174 million. In addition, the company shelled out $40 million as dividends in the reported quarter.
Fiscal 2015 Guidance
Rockwell Collins expects earnings for fiscal 2015 in the range of $5.10–$5.30 from the previous expectation 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%.
The company expects cash flow from operations between $700–800 million from the previous $675–$775 million range, R&D investment of approximately $1 billion from the previous $950 million and capital expenditure of $200 million for fiscal 2015.
Our Take
Rockwell Collins continues to witness immense traction from the ARINC acquisition. It is committed to enhance the quality of its product offering by investing heavily on research and development. This will boost the top line of the company, going forward.
At the Peers
Spirit AeroSystems Holdings, Inc. (SPR) is expected to release its fourth-quarter 2014 results on Feb 5, 2015. It has an Earnings ESP of +7.79% and carries a Zacks Rank #1 (Strong Buy).
Textron Inc. (TXT) is expected to release its fourth-quarter 2014 results on Jan 28. It has an Earnings ESP of +12.16% and carries a Zacks Rank #2 (Buy).
The Boeing Company (BA) is expected to release its fourth-quarter 2014 results on Jan 28. It has an Earnings ESP of +1.44% and carries a Zacks Rank #2.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #2.
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