Rockwell Collins Backs FY13 Earnings Forecast Below View; Issues FY14 Forecast

(RTTNews) - Communications and aviation electronics maker Rockwell Collins Inc. (COL) Friday reaffirmed its fiscal year 2013 guidance, with earnings expected to be below analysts' estimates, and sales above view. The company also issued fiscal 2014 forecast for earnings and sales, both below estimates.

For fiscal 2013, the company continues to expect earnings per share in the range of $4.55 to $4.60, sales of approximately $4.65 billion, and operating cash flow of about $600 million. Analysts polled by Thomson Reuters expect the company to report earnings of $4.62 per share and revenues of $4.64 billion for fiscal 2013. Analysts' estimates typically exclude special items.

Further ahead for fiscal year 2014, the company expects earnings per share to be in the range of $4.30 to $4.50, sales of $4.5 billion to $4.6 billion, and cash flow from operations of $550 million to $650 million. Analysts expect the company to report earnings of $4.85 per share and revenues of $4.99 billion for fiscal 2014.

For 2014, total segment operating margins are expected to be in the range of 21 percent to 22 percent.

The company said its forecast excludes the impact of the planned acquisition of flight systems company Arinc Inc., which is expected to close shortly after receiving regulatory approval and other customary conditions. It was on August 11 that the company agreed to acquire Annapolis, Maryland-based ARINC, a portfolio company of private-equity giant Carlyle Group (CG), for $1.39 billion.

Rockwell Collins said that it will update the guidance ranges once the transaction has closed.

Rockwell Collins President and Chief Executive Officer, Kelly Ortberg, said, "For fiscal year 2014, we expect market conditions to be similar to what we experienced this year. Our assumption is that sequestration is here to stay and, in accordance with the Budget Control Act, 2014 represents the bottom for this defense cycle. We've been proactive in planning our business and controlling costs to sustain profitability, while positioning the business to grow as the market recovers."

The company expects commercial systems revenue in fiscal year 2014 to increase by mid-single digits. Sales to aircraft Original Equipment Manufacturers are expected to increase by mid-single digits. Aftermarket sales for 2014 are expected to increase by mid-single digits as well.

Government Systems revenue in 2014 is expected to decrease by mid-to-high single digits. The decline is primarily driven by an anticipated $200 million impact from a full-year of sequestration cuts.

Ortberg added, "Looking out longer-term, I remain confident that our plan will return the company to growth in fiscal 2015 with defense stabilizing, a continued robust air transport market and the benefits of new aircraft entering into service across our commercial markets. Moreover, the pending acquisition of ARINC creates a whole new growth platform for Rockwell Collins, enabling us to capitalize on the fast-growing information management market."

Rockwell Collins shares closed Thursday's trading at $74.28, up $0.29 or 0.39 percent.