Rockwell Collins posts higher earnings, sales

Rockwell Collins on Monday reported higher third-quarter earnings and sales from continuing operations, but narrowed its profit and revenue projections for the year due to ongoing softness in the business jet market.

The Cedar Rapids-based avionics, communications and information management services provider posted net income of $214 million, or $1.63 per share, for the quarter that ended on June 30 - up 23 percent from $178 million, or $1.33 per share, for the same quarter in fiscal year 2015.

Revenue from continuing operations rose 3 percent from $1.3 billion in the third quarter of fiscal year 2015 to $1.33 billion in the same period of fiscal year 2016.

The results topped Thomson Reuters consensus estimates for earnings per share of $1.59, but missed on the consensus projection of $1.35 billion in revenues.

The company's government systems unit posted a 5 percent increase in sales and 6 percent higher operating earnings, marking a return to growth. The commercial systems segment recorded flat sales and operating earnings.

'Lower-than-anticipated business aircraft original equipment manufacturing production rates and air transport aftermarket service and support sales have impacted our commercial systems revenue outlook,” said Rockwell Collins President and CEO Kelly Ortberg. 'We expect commercial systems sales to be down about 1 percent for the year.”

Ortberg said the business jet segment continued to decline in the most recent quarter.

'I think the global uncertainty in the overall economy, regional uncertainty with Brexit today, Russia yesterday and China three months ago, all seem to have a dampening effect on business jet demand,” Ortberg said. 'As we've gone through our summer quarter, we have seen lower demand forecasts from virtually all of the business jet manufacturers.”

Ortberg said the information management services business segment recorded a 10 percent increase in sales and a 13 percent jump in operating earnings.

Rockwell Collins reduced its earnings per share forecast for fiscal year 2016 to be in the range of $5.50 to $5.55 from $5.45 to $5.65. Total sales are expected to be about $5.3 billion.

Ortberg said early retirement incentives offered to employees in the first quarter of the fiscal year are starting to reduce headcounts and overall costs.