23-Sep-2013 11:25 AM

Rockwell Collins expects EPS of USD4.30 to USD4.50 for FY2014

Rockwell Collins announced (20-Sep-2013) its guidance for FY2014, excluding the impact of the planned acquisition of ARINC:

  • Revenue: Between USD4.5 billion and USD4.6 billion;
  • Earnings per share: Range of USD4.30 to USD4.50;
  • Cash flow from operations: Between USD550 million and USD650 million. 
    • USD55 million contribution to the company’s qualified defined benefit pension plan.
    • USD170 million net increase in pre-production engineering costs as the company continues to fund development projects on which customers have provided contractual guarantees for reimbursement. The net increase is primarily driven by development for the Boeing 737 MAX, and Bombardier CSeries and Global 7000/8000 programmes.
  • Total segment operating margins: Expected to be in the range of 21% to 22%. Government Systems operating margins are expected to remain stable above 20%, while Commercial Systems operating margins are anticipated to expand approximately 50 basis points. Commercial margin expansion was tempered slightly as a majority of the revenue growth in 2014 results from new air transport aircraft entering into service, which typically generate lower initial incremental operating margins.
  • Total research & development investment: USD950 million, or 21% of sales. Company and customer-funded R&D expenditures are expected to remain relatively flat compared to 2013.
  • Capital expenditures: About USD140 million.

Rockwell Collins president and CEO, Kelly Ortberg said the company expects market conditions for FY2014 "to be similar to what we experienced this year” and that 2014 "represents the bottom for this defence cycle". Mrs Ortberg expects the 787 and Airbus A350 aircraft "should provide strong revenue growth for our air transport business” in the commercial airliner market. Additionally, announced delays for several new aircraft programmes over the past year have "negatively impacted the revenue growth profile we originally expected" in FY2014. Details by segment:

  • Commercial systems: FY2014 revenue is expected to increase by mid-single digits when compared with 2013.
  • Original equipment manufacturer (OEM) sales; Expected to increase by mid-single digits, when compared to 2013. Air transport aircraft OEM sales should increase in the low-teens from higher Boeing 787 production and initial sales related to the A350. Business and regional jets OEM sales are expected to be down low single digits as initial deliveries for the Embraer Legacy 500 aircraft only partially offset the impact from a full year of lower production rates at Cessna.
  • Aftermarket: Sales expected to increase by mid-single digits, driven by increased revenue from airspace mandates, as both airlines and business jet owners continue to incorporate these retrofits onto their aircraft in anticipation of the 2015 mandate. Additionally, Rockwell-Collins expects growth from business jet cockpit upgrades and air transport spares for 787 and A350 aircraft. Tempering that growth is a low single digit increase in service and support as the continued impact of aircraft recycling offsets the benefit from aircraft rolling out of warranty.
  • Widebody in-flight entertainment: Sales of wide-body in-flight entertainment products and services are expected to decrease by about 25%, or approximately USD20 million, due to the company’s decision in 2005 to cease investing in this product area. [more - original PR]

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