Rockwell Collins profit, sales dip
R & D tax credit will boost annual earnings
George C. Ford
Rockwell Collins on Friday reported lower first-quarter earnings and revenue, primarily due to lower sales in its government systems business segment and a restructuring charge.
The Cedar Rapids-based avionics and communications provider also raised its annual profit outlook to $5.45 to $5.65 per share due to the permanent reinstatement of a federal research and development tax credit that will boost annual earnings by 25 cents per share.
Rockwell Collins posted net income of $135 million, or $1 per share, from continuing operations in the first quarter of fiscal 2016, down from $167 million, or $1.26 per share, in the same quarter of fiscal 2015.
Earnings per share from continuing operations in the first quarter of fiscal year 2016 included a 21-cents-per-share restructuring charge. The latter is primarily due to a workforce reduction outside of Cedar Rapids resulting from challenging market conditions, mainly in business aviation.
Rockwell Collins reported first-quarter sales of $1.17 billion, down 5 percent from $1.23 billion in the comparable quarter a year earlier,
Kelly Ortberg, Rockwell Collins president and CEO, said the company expected to get off to a “pretty soft start” in the first quarter of the fiscal year.
“Most of our growth is going to be in the second half,” Ortberg said in an interview. “We remain focused on executing programs that will drive double-digit long-term growth in earnings and cash flow from operations.”
Commercial system sales slipped 1 percent to $562 million in the first quarter from $568 million a year earlier. Government systems sales totaled $451 million in the first quarter of fiscal 2016, down 11 percent from $509 million in the same period of fiscal 2015.
Ortberg attributed the drop in government sales to the timing of certain orders and a supplier quality issue that affected late-quarter deliveries of communications products. He said the supplier issue involving “non-conforming material” has been resolved.
Information management services operating earnings rose 14 percent and sales increased 5 percent from a year earlier.