Rockwell Collins Inc. (NYSE:COL) reported results for second-quarter fiscal 2018 (ended Mar 31, 2018). The company’s adjusted earnings per share of $1.81 beat the Zacks Consensus Estimate of $1.53 by 3.4%. Earnings grew 30.2% from $1.39 a year ago.
Excluding one-time adjustments, the company’s earnings of $1.43 per share reflected a year-over-year improvement of 12.6%.
The year-over-year upside in bottom line was primarily driven by robust revenue growth.
Revenues
In the reported quarter, Rockwell Collins’ total sales were $2,180 million, which beat the Zacks Consensus Estimate of $2,141 million by 1.8%. Revenues grew 62.4% year over year, driven by higher sales at all segments, except Information Management Services unit.
Excluding revenues worth $776 million from the acquisition of B/E Aerospace, the company witnessed 5% organic sales growth.
Operational Highlights
Total segment operating income during the quarter was $428 million, up 51.8% from $282 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including increase in pre-production engineering costs) was $346 million, up 35.7%. The figure represented 15.9% of total sales compared with 19% in the year-ago quarter.
Interest expense during the quarter was $66 million compared with $25 million in the year-ago quarter.
Segment Performance
Commercial Systems: In the quarter under review, sales of $644 million were up 8% year over year, owing to higher original equipment and aftermarket sales.
Operating earnings for the quarter were $151 million compared with $132 million in the year-ago quarter. Consequently, operating margin expanded 120 basis points (bps) to 23.4%.
Government Systems: The segment reported sales of $654 million, up 16% on the back of higher communication and navigation sales.
Operating earnings for the quarter were $131 million, up 15% from $114 million in the year-ago quarter. However, operating margin contracted 20 bps to 20%.
Information Management Services: Segment sales were $181 million, down 1% from $183 million in the year-ago quarter, on account of decline in non-aviation sales.
Operating earnings for the quarter were $41 million, up from $36 million in the year-ago period. Operating margin was 22.7% compared with 19.7% a year ago. The upside was driven by favorable resolution of certain claims associated with a divested business.
Financial Condition
As of Mar 31, 2018, Rockwell Collins’ cash and cash equivalents were $668 million compared with $703 million as of Sep 30, 2017.
Long-term debt (net) was $6,456 million as of Mar 31, 2018, up from $6,676 million as of Sep 30, 2017.
Cash used for operating activities at the end of the quarter was $77 million, compared with cash provided by operating activities of $1 million in the prior-year quarter.
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 Releases
Boeing (NYSE:BA) reported adjusted earnings of $3.64 per share for first-quarter 2018, beating the Zacks Consensus Estimate of $2.59 by 40.5%. The quarterly bottom line improved 68% from the year-ago quarter figure of $2.17.
Lockheed Martin (NYSE:LMT) reported first-quarter 2018 earnings from continuing operations of $4.02 per share, which surpassed the Zacks Consensus Estimate of $3.35 by 20%. The earnings figure was higher than the year-ago figure of $2.69 per share, by 49%.
Raytheon Company (NYSE:RTN) reported first-quarter 2018 earnings from continuing operations of $2.20 per share, beating the Zacks Consensus Estimate of $2.10 by 4.8%. The reported figure also came in higher than the year-ago quarter’s earnings of $1.73 per share by 27.2%.
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