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Rockwell Collins Inc. reported financial results for fourth-quarter fiscal 2016 ended Sep 30, 2016. The company’s adjusted earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings also improved 14.5% from $1.38 per share earned a year ago.
Fiscal 2016 adjusted earnings per share of $5.50 came in line with the Zacks Consensus Estimate. Adjusted earnings improved 6% from the year-ago tally of $5.19 per share.
Revenues
In the fiscal fourth quarter, Rockwell Collins’ total sales was $1,445 million, missing the Zacks Consensus Estimate of $1,479 million by 2.3%. Revenues, however, grew 4.4% year over year driven by higher sales at Government Systems and Information Management Services.
In the fiscal 2016, Rockwell Collins reported total sales of $5,259 million, missing the Zacks Consensus Estimate of $5,295 million by 0.7%. Nevertheless, revenues inched up 0.3% from the year-ago figure of $5,244 million.
Total segment operating income during the quarter was $326 million, up 7.2% from $304 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $259 million, up 1.6%. The figure represented 17.9% of the total quarterly sales, compared with 18.4% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $610 million were down 4.1% year over year primarily due lower sales of original equipment and wide-body in-flight entertainment.
Operating earnings for the quarter were $130 million, down from $146 million in the year-ago period. Operating margin contracted 170 basis points (bps) to 21.3%. The decline was mainly driven by lower business jet sales, a $4 million charge related to headcount reduction, and higher research and development expense and amortization of pre-production engineering costs.
Government Systems: The segment reported sales of $662 million, up 13.9%, due to higher contributions from Avionics and Communication and Navigation.
Operating earnings for the quarter were $168 million, up 30.2% from $129 million in the year-ago period. Operating margin expanded 320 bps to 25.4%. The increase was primarily driven by higher sales volume, cost savings from previously announced restructuring plans, and lower company-funded research and development expenses.
Information Management Services: Segment sales were $173 million, up from $167 million in the year-ago period on the back of aviation-related business growth and higher non-aviation related sales.
Operating earnings for the quarter were $28 million, down from $29 million in the year-ago period. Operating margin was 16.2%, compared to 17.4% a year ago. The decline was primarily due to certain favorable adjustments recorded in the aviation related businesses in the prior year, partially offset by higher earnings from increased sales volume.
Financial Condition
As of Sep 30, 2016, Rockwell Collins’ cash and cash equivalents were $340 million, compared with $252 million as of Sep 30, 2015.
Long-term debt (net) was $1,382 million, as of Sep 30, 2016, down from $1,680 million as of Sep 30, 2015.
Cash used for operating activities in fiscal 2016 was $723 million, compared with $749 million a year ago.
Fiscal 2017 Guidance
The company has provided its fiscal 2017 revenue guidance in the range of $5.3–$5.4 billion.
Total segment operating margin is projected at about 21%.
The company expects cash flow from operations in the range of $600−$700 million. R&D investment is anticipated in the $900−$950 million band.
The full-year tax rate is projected to be 28–29%.
Business Update
Separately, Rockwell Collins announced that it has entered into a definitive agreement with B/E Aerospace Inc. , under which the former will acquire the latter for around $6.4 billion in cash and stock, in addition to the assumption of $1.9 billion in net debt.
Rockwell Collins said that its guidance for fiscal 2017 does not reflect the impact of the acquisition.
Upcoming Peer Releases
Raytheon Company is scheduled to release third-quarter earnings on Oct 27. The Zacks Consensus Estimate stands at $1.64 and has a Zacks Rank #4 (Sell).
Rockwell Collins currently has a Zacks Rank #4 (Sell).
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Rockwell Collins (COL) Tops Q4 Earnings, Gives FY17 View
Rockwell Collins Inc. reported financial results for fourth-quarter fiscal 2016 ended Sep 30, 2016. The company’s adjusted earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings also improved 14.5% from $1.38 per share earned a year ago.
Fiscal 2016 adjusted earnings per share of $5.50 came in line with the Zacks Consensus Estimate. Adjusted earnings improved 6% from the year-ago tally of $5.19 per share.
Revenues
In the fiscal fourth quarter, Rockwell Collins’ total sales was $1,445 million, missing the Zacks Consensus Estimate of $1,479 million by 2.3%. Revenues, however, grew 4.4% year over year driven by higher sales at Government Systems and Information Management Services.
In the fiscal 2016, Rockwell Collins reported total sales of $5,259 million, missing the Zacks Consensus Estimate of $5,295 million by 0.7%. Nevertheless, revenues inched up 0.3% from the year-ago figure of $5,244 million.
ROCKWELL COLLIN Price, Consensus and EPS Surprise
ROCKWELL COLLIN Price, Consensus and EPS Surprise | ROCKWELL COLLIN Quote
Operational Highlights
Total segment operating income during the quarter was $326 million, up 7.2% from $304 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $259 million, up 1.6%. The figure represented 17.9% of the total quarterly sales, compared with 18.4% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $610 million were down 4.1% year over year primarily due lower sales of original equipment and wide-body in-flight entertainment.
Operating earnings for the quarter were $130 million, down from $146 million in the year-ago period. Operating margin contracted 170 basis points (bps) to 21.3%. The decline was mainly driven by lower business jet sales, a $4 million charge related to headcount reduction, and higher research and development expense and amortization of pre-production engineering costs.
Government Systems: The segment reported sales of $662 million, up 13.9%, due to higher contributions from Avionics and Communication and Navigation.
Operating earnings for the quarter were $168 million, up 30.2% from $129 million in the year-ago period. Operating margin expanded 320 bps to 25.4%. The increase was primarily driven by higher sales volume, cost savings from previously announced restructuring plans, and lower company-funded research and development expenses.
Information Management Services: Segment sales were $173 million, up from $167 million in the year-ago period on the back of aviation-related business growth and higher non-aviation related sales.
Operating earnings for the quarter were $28 million, down from $29 million in the year-ago period. Operating margin was 16.2%, compared to 17.4% a year ago. The decline was primarily due to certain favorable adjustments recorded in the aviation related businesses in the prior year, partially offset by higher earnings from increased sales volume.
Financial Condition
As of Sep 30, 2016, Rockwell Collins’ cash and cash equivalents were $340 million, compared with $252 million as of Sep 30, 2015.
Long-term debt (net) was $1,382 million, as of Sep 30, 2016, down from $1,680 million as of Sep 30, 2015.
Cash used for operating activities in fiscal 2016 was $723 million, compared with $749 million a year ago.
Fiscal 2017 Guidance
The company has provided its fiscal 2017 revenue guidance in the range of $5.3–$5.4 billion.
Total segment operating margin is projected at about 21%.
The company expects cash flow from operations in the range of $600−$700 million. R&D investment is anticipated in the $900−$950 million band.
The full-year tax rate is projected to be 28–29%.
Business Update
Separately, Rockwell Collins announced that it has entered into a definitive agreement with B/E Aerospace Inc. , under which the former will acquire the latter for around $6.4 billion in cash and stock, in addition to the assumption of $1.9 billion in net debt.
Rockwell Collins said that its guidance for fiscal 2017 does not reflect the impact of the acquisition.
Upcoming Peer Releases
Raytheon Company is scheduled to release third-quarter earnings on Oct 27. The Zacks Consensus Estimate stands at $1.64 and has a Zacks Rank #4 (Sell).
Spirit AeroSystems Holdings, Inc. (SPR - Free Report) scheduled to release third-quarter earnings on Nov 1. The Zacks Consensus Estimate stands at $1.06 and has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #4 (Sell).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>