Rockwell Collins Profit Slips, Raises 2014 Outlook
By George C. Ford, Reporter
CEDAR RAPIDS, Iowa - Rockwell Collins on Tuesday reported a lower quarterly profit but raised its full-year outlook saying its Government Systems sales should not fall as much as previously expected.
The Cedar Rapids-based provider of avionics and communications equipment posted net income of $131 million, or 96 cents a share, in the quarter that ended on Dec. 31, compared with $132 million, or 94 cents a share, a year earlier. The earnings topped analysts' consensus forecast of 95 cents per share.
Sales for the first quarter of 2014 were $1.07 billion, an increase of 1 percent from $1.06 billion for the same period in 2013. ARINC, a supplier of information management systems that Rockwell Collins acquired for $1.42 billion on Dec. 23, contributed $6 million of sales to the first-quarter tally.
Rockwell Collins increased its earnings outlook for all of fiscal 2014 to be in the range of $4.35 to $4.55 per share, compared with its previous forecast of $4.30 to $4.50 per share. The company raised its full-year sales projection to a range of $4.95 billion to $5.05 billion from the previous range of $4.5 billion to $4.6 billion.
Kelly Ortberg, Rockwell Collins president and CEO, said two factors prompted the company to boost its earnings and sales forecasts -- the passage of the Murray-Ryan Bipartisan Budget Act and the addition of ARINC earnings and sales.
"You have to put the budget deal that happened in Congress in context," Ortberg said. "It's still a significant reduction from the budget request by the Department of Defense, but it's better than sequestration level.
"We had planned our 2014 budget assuming that sequestration would happen as it did last year, so incrementally this provides us with some good news. It allows us to update our guidance for the full year incorporating ARINC and Government Systems.
"We expect Government Systems sales to be down mid-single digits compared with the prior guidance of being down mid-to-high single digits."
Rockwell Collins supplies avionics and communications equipment to the nation's air transport industry through its Commercial Systems division. Customers include business and regional aircraft manufacturers and airlines worldwide.
The company's Government Systems division provides products, systems and services to customers including the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and ministries of defense around the world.
Ortberg said ARINC sales for the nine months it will be owned by Rockwell Collins are estimated to be in the range of $400 million to $430 million. He said ARINC, combined with Rockwell Collins' flight services business to form Information Management Services, will provide a global growth opportunity in the commercial and business aviation markets.
Information Management Services provides air-to-ground data and voice communication services, business aviation flight support services, airport information technology systems, and infrastructure security capabilities.
Ortberg said employment has been stable at Rockwell Collins, which has about about 21,000 employees worldwide with the addition of ARINC.
"I feel real good about our employment levels," Ortberg said. "We've gotten a preliminary look at the (federal) budget and none of our (Government Systems) programs are subject to termination and that's where we see impact to our workforce.
"We're always hiring critical skills, so we will be more in a hiring mode than a declining mode going forward."