Good news for investors in Rockwelll Collins earnings forecast

Rockwell Collins had some good news for its investors Wednesday in financial guidance for its upcoming fiscal year.

The aerospace electronics company, which has seen its share price slip among concerns about defense spending cuts, said it expects higher revenues and profits in the company's 2012 fiscal year that begins next month. Rockwell Collins also reaffirmed its earnings outlook for the current fiscal year ending Sept. 30, and increased its share repurchase authorization by $700 million.

Rockwell Collins expects fiscal 2012 earings per share of $4.40 to $4.60, up from fiscal 2011 earnings guidance of $4 to $4.10.  Revenues are expected to rise to a range of $4.9 billion to $5 billion from fiscal 2011 projections of $4.8 to $4.85 billion.

While the analysts haven't been entirely wrong about slipping defense sales, the company said the overall picture remains strong.

"Strong growth in Commercial Systems is anticipated to more than offset a modest revenue decline for Government Systems in fiscal year 2012," Rockwell Collins chairman, president and CEO Clay Jones said.

The company's Government Systems business sells electronics primarily to defense markets, while the company's Commercial Systems unit sells electronics primarily to aircraft manufacturers and airlines.

"While we anticipate revenue volatility to continue in  Government Systems, we believe the high margin and cash flow that is typical of this business can be maintained," Jones added. He said the incremental improvement in profits in the Commercial Systems business  and the company's "more aggressive" share repurchase program are expected to increase earnings per share at a rate more than three times that of overall revenue growth.

Rockwell Collins is Cedar Rapids' largest private employer and one of the largest manufacturing companies in Iowa. It has 20,000 employees worldwide.

 The company said it expects sales to aircraft original equipment manufacturers in fiscal 2012 to rise in the "low teens." It expects OEM sales to benefit from the introduction of the Boeing 787 and 747-8 aircraft and production rate increases in other Beoing and Airbus aircraft. Production of business aircraft is also expected to increase, the company said.

Aftermarket sales into commercial markets are expected to rise in the "low double digits," due in part to initial spare parts orders for new Boeing aircraft and stronger orders from airlines as their profits recover.

Government Systems sales are expected to decrease by "low single digits," including a $75 million reduction in Defense Advanced GPS Receiver (DAGR) products and a $60 million decline in sales due to three previously announced defense program cancellations.

Rockwell Collins plans $900 million in research and development expenditures in fiscal 2012, equal to 18 percent of overall sales.

The earnings forecast was released after the close of markets on Wednesday, Sept. 14. Rockwell Collins shares were trading up $1.67, or 3.3 percent higher at 10 a.m. on Thursday, Sept. 15, at $51.61 per share.