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Rockwell Collins (COL) Q4 Earnings in Line, Sales Up Y/Y

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Rockwell Collins Inc.  reported results for fourth-quarter fiscal 2017 (ended Sep 30, 2017). The company’s adjusted earnings per share of $1.80 came in line with the Zacks Consensus Estimate. Reported earnings grew 10.4% from $1.63 per share a year ago.

For fiscal 2017, the company reported adjusted earnings of $6.15, which beat the Zacks Consensus Estimate of $6.11 by 0.7%. Full-year earnings increased 7.9% from the year-ago figure of $5.70.

Revenues

In the reported quarter, Rockwell Collins’ total sales was $2,193 million, which missed the Zacks Consensus Estimate of $2,241 million by 2.1%. Revenues however grew 51.8% year over year, driven by higher sales at Interior Systems, Commercial Systems, Government Systems and Information Management Services.

For fiscal 2017, the company reported total sales of $6.82 billion, which also missed the Zacks Consensus Estimate of $6.88 billion by 0.9%. Full-year revenues increased 29.7% from the year-ago figure of $5.26 billion.

Operational Highlights

Total segment operating income during the quarter was $407 million, up 24.8% from $326 million in the year-ago quarter.

Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $340 million, up 31.3%. The figure represented 15.5% of total quarterly sales compared with 17.9% in the year-ago period.

Interest expense during the quarter was $65 million compared with $16 million in the year-ago quarter.

Segment Performance

Commercial Systems: In the quarter under review, segmental sales of $617 million were up 1.1% year over year primarily owing to higher original equipment and aftermarket sales.

Operating earnings for the quarter were $118 million compared with $130 in the year-ago quarter. However, operating margin contracted 220 bps to 21.9%.

Government Systems: The segment reported sales of $682 million, up 3% on the back of higher communication and navigation revenues.

Operating earnings for the quarter were $163 million, down 3% from $168 million in the year-ago period. Operating margin also contracted 150 bps to 23.9%, primarily driven by higher employee incentive compensation costs.

Information Management Services: Segment sales were $183 million, up from $173 million in the year-ago period backed by growth in aviation related revenues.

Operating earnings for the quarter were $32 million, up from $28 million in the year-ago period. Operating margin was 17.5% compared with 16.2% a year ago. The increase was primarily owing to higher sales volume.

Financial Condition

As of Sep 30, Rockwell Collins’ cash and cash equivalents were $703 million compared with $340 million as of Sep 30, 2016.

Long-term debt (net) was $6,676 million as of Sep 30 up from $1,374 million as of Sep 30, 2016.

Cash used for operating activities at the end of fiscal 2017 was $1,264 million, compared with $723 million a year ago.

Fiscal 2018 Guidance

Considering its pending acquisition by United Technologies Corporation , the company has not provided any financial guidance for fiscal 2018.

Zacks Rank

Rockwell Collins currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Peer Release

Raytheon Company reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%. The figure also improved 7.1% from $1.84 recorded in the year-ago quarter.

General Dynamics Corporation (GD - Free Report) reported third-quarter 2017 earnings from continuing operations of $2.52 per share, beating the Zacks Consensus Estimate of $2.43 by 3.7%. Its third-quarter total revenues of $7,580 million missed the Zacks Consensus Estimate of $7,892 million by 4%.

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