Rockwell Collins Inc. (NYSE:COL) reported financial results for second-quarter fiscal 2017 (ended Mar 31, 2017). The company’s adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.31 by 2.3%. Reported earnings also grew 3.1% from $1.30 per share earned a year ago.
Revenues
In the fiscal second quarter, Rockwell Collins’ total sales were $1,342 million, which beat the Zacks Consensus Estimate of $1,330 million by 0.9%. Revenues also grew 2.4% year over year on higher sales at Government Systems and Information Management Services.
Operational Highlights
Total segment operating income during the quarter was $282 million, up 3.7% from $272 million in the year-ago quarter.
Operating margin during the quarter expanded 30 basis points (bps) year over year to 21%.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $255 million, up 5.4%. The figure represented 19% of total quarterly sales compared with 18.5% in the year-ago period.
Segment Performance
Commercial Systems: In the quarter under review, segmental sales of $594 million were down 2.8% year over year, primarily due lower business aircraft OEM production rates.
Operating earnings for the quarter were $132 million compared with $135 in the year-ago quarter. Operating margin expanded 10 bps to 22.2%.
Government Systems: The segment reported sales of $565 million, up 5% on the back of higher simulation and training program revenues, and higher fixed-wing platform revenues.
Operating earnings for the quarter were $114 million, up 5.6% from $108 million in the year-ago period. Operating margin expanded 10 bps to 20.2% primarily driven by higher sales volume and cost-saving initiatives.
Information Management Services: Segment sales were $183 million, up from $162 million in the year-ago period on the back of double-digit growth in aviation-related sales.
Operating earnings for the quarter were $36 million, up from $29 million in the year-ago period. Operating margin was 19.7% compared with 17.9% a year ago. The increase was primarily due to higher sales volume.
Rockwell Collins, Inc. Price, Consensus and EPS Surprise
Rockwell Collins, Inc. Price, Consensus and EPS Surprise | Rockwell Collins, Inc. Quote
Financial Condition
As of Mar 31, 2017, Rockwell Collins’ cash and cash equivalents were $281 million compared with $340 million as of Sep 30, 2016.
Long-term debt (net) was $1,354 million as of Mar 31, 2017, down from $1,374 million as of Sep 30, 2016.
Cash used for operating activities in the first six months of fiscal 2017 was $1 million, compared with $45 million a year ago.
Fiscal 2017 Guidance
Adjusted earnings per share are expected in the range of $5.95–$6.15.
The company has increased its fiscal 2017 revenue guidance in the range of $6.7–$6.8 billion compared to the prior guidance of $5.3–$5.4 billion.
Total segment operating margin is now expected to be in the band of 19%–20% compared with the previous guidance of 21%.
The company expects free cash flow in the range of $650−$750 million compared with previous guided range of $600−$700 million. Its R&D expenditure guidance is projected in the $1.05−$1.15 billion band, up from the prior $900−$950 million band.
The full-year tax rate is anticipated to be in the range of 27%–28% compared with 28%–29% guided earlier.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Peer Releases
Raytheon Company (NYSE:RTN) is scheduled to release first-quarter 2017 earnings on Apr 27. This Zacks Rank #3 company’s Zacks Consensus Estimate is pegged at $1.60.
Spirit AeroSystems Holdings, Inc. (NYSE:SPR) , another Zacks Rank #3 stock, is scheduled to release first-quarter earnings on May 5. The Zacks Consensus Estimate is pegged at $1.16.
Triumph Group, Inc. (NYSE:TGI) is expected to release first-quarter earnings on May 3. Its Zacks Consensus Estimate is pegged at $1.60. This company also carries a Zacks Rank #3.
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Rockwell Collins, Inc. (COL): Free Stock Analysis Report
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