Rockwell Collins Ekes Out 4% Earnings Gain on Lower Sales
By Dave DeWitte, Reporter
CEDAR RAPIDS, Iowa- Fourth-quarter earnings were up at Rockwell Collins, but not as much as analysts had estimated.
Earnings for the quarter for the Cedar Rapids-based avionics company climbed 4 percent, to $1.06 per share. The result compared with analyst estimates of $1.12 per share, which would have been a 9.8 percent rise.
Earnings were weighed down by restructuring and asset impairment charges related to layoffs and facility closings, officials said.
Sales declined 2 percent to $1.27 billion for the quarter, which ended Sept. 30, the company reported. The results included 26 cents in restructuring and asset impairment charges, related to ongoing layoffs.
The charges included $29 million for employee severance and $28 million in asset impairment charges, related mainly to accounts receivable write-offs or write downs due to the bankruptcy of aircraft manufacturer Hawker Beechcraft.
Job reductions could total 1,000 across all Rockwell Collins locations on top of 250 job reductions in recent months, Chairman and CEO Clay Jones told employees last month as the company ended its fiscal year.
Consolidation of facilities in Europe and reduction of some employee benefits also are part of the company's strategic plans to deal with market "headwinds."
The fact that onetime charges factored heavily into the earnings "miss" seemed to satisfy Wall Street, and shares climbed Friday in early trading.
Rockwell Collins's Government Systems business, which supplies defense and public safety products, reported 10 percent lower sales than a year ago, at $779 million. The sales slowdown was concentrated in avionics sales (-5 percent), navigation products (- 9 percent) and surface solutions (-4 percent).
Sales in Rockwell Collins Commercial systems increased 9 percent, to $565 million. The biggest improvements were seen in sales to aircraft manufacturers (15 percent), due in large part to sales for the Boeing 787 and higher deliveries for the Bombardier Global and Cessna platforms.
Chairman and CEO Clay Jones described market conditions as "very challenging as customer bankruptcies, slower global economic recovery and multiple defense order delays and cutbacks impacted our revenue growth."
The company's operating margin, a key measure of financial performance, improved significantly, however. Jones said he is was pleased with the way the company's people managed the business through a series of unpredictable events.
Rockwell Collins 2013 fiscal year began Oct. 1. Jones said the company expects continued growth this fiscal year from the Commercial Systems side of its business, but continued challenges in Government Systems, "including the dramatic costs to the U.S. military spending anticipated to go into effect in January."
Jones was referring to the nearly across-the-board federal sequestration cuts that are expected to result due to the failure of a bipartisan federal "supercommittee" to agree on specific budget cuts needed to achieve spending reduction targets.
Rockwell Collins released earnings guidance of $4.30 to $4.50 per share, up from 2012 earnings per share of $4.15.
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