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Rockwell Collins (COL) Beats on Q1 Earnings, Sales Up Y/Y

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Rockwell Collins Inc. reported results for first-quarter fiscal 2018 (ended Dec 31, 2017). The company’s adjusted earnings per share of $1.59 beat the Zacks Consensus Estimate of $1.53 by 3.9%. Reported earnings grew 30.3% from $1.22 a year ago.

Excluding one-time adjustments, the company’s earnings of $1.69 per share reflected a year-over-year improvement of 53.6%.

Rockwell Collins, Inc. Price, Consensus and EPS Surprise

Rockwell Collins, Inc. Price, Consensus and EPS Surprise | Rockwell Collins, Inc. Quote

The year-over-year bottom-line growth was primarily driven by a tax benefit of 37 cents on account of the recent Tax Cuts and Jobs Act.

Revenues

In the reported quarter, Rockwell Collins’ total sales were $2,011 million, which beat the Zacks Consensus Estimate of $1,988 million by 1.2%. Revenues grew 69% year over year, driven by higher sales at Commercial Systems, Government Systems and Information Management Services segments.

Excluding revenues worth $716 million from the acquisition of B/E Aerospace, the company witnessed 9% organic sales growth.

Operational Highlights

Total segment operating income during the quarter was $371 million, up 47.8% from $251 million in the year-ago quarter.

Rockwell Collins’ total research and development investment (including increase in pre-production engineering costs) was $318 million, up 51.4%. The figure represented 15.8% of total sales compared with 17.6% in the year-ago quarter.

Interest expense during the quarter was $64 million compared with $20 million in the year-ago quarter.

Segment Performance

Commercial Systems: In the quarter under review, sales of $608 million were up 11% year over year owing to higher original equipment and aftermarket sales.

Operating earnings for the quarter were $139 million compared with $125 million in the year-ago quarter. Consequently, operating margin expanded 10 basis points (bps) to 22.9%.

Government Systems: The segment reported sales of $573 million, up 21% on the back of higher communication and navigation as well as avionics revenues.

Operating earnings for the quarter were $109 million, up 14% from $96 million in the year-ago quarter. However, operating margin contracted 120 bps to 19%.

Information Management Services: Segment sales were $174 million, up 3% from $169 million in the year-ago quarter, backed by growth in aviation related revenues.

Operating earnings for the quarter were $29 million, down from $30 million in the year-ago period. Operating margin was 16.7% compared with 17.8% a year ago. The downside was caused by asset disposition and customer bankruptcy costs.

Financial Condition

As of Dec 31, 2017, Rockwell Collins’ cash and cash equivalents were $583 million compared with $703 million as of Sep 30, 2017.

Long-term debt (net) was $6,498 million as of Dec 31, 2017, up from $6.676 million as of Sep 30, 2017.

Cash used for operating activities at the end of the quarter was $259 million, compared with 101 million in the prior-year quarter.

Zacks Rank

Rockwell Collins currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Press Release

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