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Rockwell Collins Inc. reported financial results for first-quarter fiscal 2017 ended Dec 31, 2016. The company’s adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3%. Reported earnings, however, slipped 0.8% from $1.21 per share earned a year ago.
Revenues
In the fiscal first quarter, Rockwell Collins’ total sales was $1,193 million, missing the Zacks Consensus Estimate of $1,204 million by 0.9%. Revenues, however, grew 2.1% year over year driven by higher sales at Government Systems and Information Management Services.
Total segment operating income during the quarter was $251 million, up 6.8% from $235 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $210 million, down 7.9%. The figure represented 17.6% of total quarterly sales, compared with 19.5% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $549 million were down 2.3% year over year primarily due lower business aircraft OEM production rates.
Operating earnings for the quarter were $125 million, same as the year-ago number. Operating margin expanded 60 basis points (bps) to 22.8%. Margins were driven by lower research and development expense, and cost saving initiatives.
Government Systems: The segment reported sales of $475 million, up 5.3% on the back of higher simulation and training program revenues, and higher fixed-wing platform revenues.
Operating earnings for the quarter were $96 million, up 11.6% from $86 million in the year-ago period. Operating margin expanded 110 bps to 20.2% primarily driven by higher sales volume and cost savings initiatives.
Information Management Services: Segment sales were $169 million, up from $156 million in the year-ago period on the back of double-digit growth in aviation-related sales.
Operating earnings for the quarter were $30 million, up from $24 million in the year-ago period. Operating margin was 17.8%, compared to 15.4% a year ago. The increase was primarily due to higher sales volume.
Financial Condition
As of Dec 31, 2016, Rockwell Collins’ cash and cash equivalents were $308 million, compared with $340 million as of Sep 30, 2016.
Long-term debt (net) was $1,356 million as of Dec 31, 2016, down from $1,374 million as of Sep 30, 2016.
Cash used for operating activities in first-quarter fiscal 2017 was $101 million, compared with $91 million a year ago.
Fiscal 2017 Guidance
The company has reiterated its fiscal 2017 revenue guidance in the range of $5.3–$5.4 billion.
Total segment operating margin is still expected to be about 21%.
The company still expects cash flow from operations in the range of $600−$700 million. Its R&D expenditure guidance was reiterated in the $900−$950 million band.
The full-year tax rate is still projected to be 28–29%.
Price Movement
Rockwell Collins’ stock has gained about 5.6% in the last three months, underperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain of 7.8%. This is probably due to tough competition faced by the company, its exposure to fixed-price contract, and vulnerability to foreign currency fluctuations.
Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , another Zacks Rank #3 stock, is scheduled to release fourth-quarter earnings on Feb 1. The Zacks Consensus Estimate stands at $1.02.
Triumph Group, Inc. (TGI - Free Report) is scheduled to release fourth-quarter earnings on Feb 2. Its Zacks Consensus Estimate stands at $1.26. The company carries a Zacks Rank #3 too.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #4 (Sell).
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Rockwell Collins (COL) Tops Q1 Earnings, Keeps FY17 View
Rockwell Collins Inc. reported financial results for first-quarter fiscal 2017 ended Dec 31, 2016. The company’s adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3%. Reported earnings, however, slipped 0.8% from $1.21 per share earned a year ago.
Revenues
In the fiscal first quarter, Rockwell Collins’ total sales was $1,193 million, missing the Zacks Consensus Estimate of $1,204 million by 0.9%. Revenues, however, grew 2.1% year over year driven by higher sales at Government Systems and Information Management Services.
Operational Highlights
Total segment operating income during the quarter was $251 million, up 6.8% from $235 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $210 million, down 7.9%. The figure represented 17.6% of total quarterly sales, compared with 19.5% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $549 million were down 2.3% year over year primarily due lower business aircraft OEM production rates.
Operating earnings for the quarter were $125 million, same as the year-ago number. Operating margin expanded 60 basis points (bps) to 22.8%. Margins were driven by lower research and development expense, and cost saving initiatives.
Government Systems: The segment reported sales of $475 million, up 5.3% on the back of higher simulation and training program revenues, and higher fixed-wing platform revenues.
Operating earnings for the quarter were $96 million, up 11.6% from $86 million in the year-ago period. Operating margin expanded 110 bps to 20.2% primarily driven by higher sales volume and cost savings initiatives.
Information Management Services: Segment sales were $169 million, up from $156 million in the year-ago period on the back of double-digit growth in aviation-related sales.
Operating earnings for the quarter were $30 million, up from $24 million in the year-ago period. Operating margin was 17.8%, compared to 15.4% a year ago. The increase was primarily due to higher sales volume.
Financial Condition
As of Dec 31, 2016, Rockwell Collins’ cash and cash equivalents were $308 million, compared with $340 million as of Sep 30, 2016.
Long-term debt (net) was $1,356 million as of Dec 31, 2016, down from $1,374 million as of Sep 30, 2016.
Cash used for operating activities in first-quarter fiscal 2017 was $101 million, compared with $91 million a year ago.
Fiscal 2017 Guidance
The company has reiterated its fiscal 2017 revenue guidance in the range of $5.3–$5.4 billion.
Total segment operating margin is still expected to be about 21%.
The company still expects cash flow from operations in the range of $600−$700 million. Its R&D expenditure guidance was reiterated in the $900−$950 million band.
The full-year tax rate is still projected to be 28–29%.
Price Movement
Rockwell Collins’ stock has gained about 5.6% in the last three months, underperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain of 7.8%. This is probably due to tough competition faced by the company, its exposure to fixed-price contract, and vulnerability to foreign currency fluctuations.
Upcoming Peer Releases
Raytheon Company is scheduled to release fourth-quarter earnings on Jan 26. This Zacks Rank #3 (Hold) company’s Zacks Consensus Estimate stands at $1.86. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , another Zacks Rank #3 stock, is scheduled to release fourth-quarter earnings on Feb 1. The Zacks Consensus Estimate stands at $1.02.
Triumph Group, Inc. (TGI - Free Report) is scheduled to release fourth-quarter earnings on Feb 2. Its Zacks Consensus Estimate stands at $1.26. The company carries a Zacks Rank #3 too.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #4 (Sell).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>