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Q4 Results
The Cedar Rapids, Iowa-based company's fourth-quarter net income was $134 million, or $0.84 per share, a decline of 26%, compared to $182 million or $1.13 per share in the year-ago quarter. Total sales dropped 7% from last year and missed the Street view.
The company noted that the latest quarter results encompassed a charge of $21 million primarily related to the closing of the company's San Jose, California facility, asset impairments and other restructuring activities. Results for the year-ago quarter included a benefit related to a retroactive catch up for the renewal of the Federal R&D Tax Credit, which, net of related incentive compensation cost, increased earnings per share by about 8 cents.
Excluding the impact of the items, earnings per share fell 11% to $0.93 from $1.05 in the fourth quarter of 2008. On average, 16 analysts polled by Thomson Reuters expected the company to post earnings of $0.87 per share. Analysts' estimates typically exclude special items.
Quarterly sales declined 7% to $1.19 billion from the previous year's sales of $1.28 billion, and fell short of the $1.22 billion revenue consensus estimate of twelve analysts polled by Thomson Reuters.
Clay Jones said, "During a year defined by significant challenges in the commercial aerospace environment, our company continued to benefit from its structural balance and diversification."
Government Systems
The company's Government Systems, which provides communication and electronic systems, products and services for airborne and surface applications to the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and foreign ministries of defense, generated fourth quarter sales of $741 million, an increase of 17%, compared to the $636 million reported in the year-earlier quarter. Incremental sales from the acquisitions of DataPath Inc. and SEOS Group Ltd. contributed a total of $66 million to Government Systems' revenue growth.
Segment operating earnings grew 27% to $159 million, resulting in an operating margin of 21.5%, compared to operating earnings of $125 million, or an operating margin of 19.7%, in the fourth quarter of fiscal 2008. The increase in operating earnings and margin were primarily due to higher sales and lower employee incentive compensation costs, partially offset by an increase in research and development costs.
Commercial Systems
Fourth-quarter sales at the Commercial Systems division, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, totaled $449 million, down 30% from the previous year's sales of $641 million.
Segment operating earnings decreased to $71 million, resulting in an operating margin of 15.8%, compared to operating earnings of $144 million, or an operating margin of 22.5%, for the same period a year ago, reflecting lower sales volumes, which were partially offset by reduced research and development expenses, lower employee incentive compensation costs and other cost savings.
FY09 Highlights
For the fiscal year 2009, the company reported net income of $594 million or $3.73 per share, compared to $678 million or $4.16 per share in the prior year. Analysts expected the company to post earnings of $3.76 per share for the full year.
Annual sales for fiscal 2009 were $4.47 billion, lower than the $4.77 billion reported in the previous year. Fourteen Wall Street analysts had a consensus revenue estimate of $4.50 billion for fiscal 2009.
Road Ahead
Looking ahead, the company still projects fiscal 2010 earnings to range between $3.35 and $3.55 per share, with sales in the range of $4.6 billion - $4.8 billion. Analysts are looking for earnings of $3.50 per share on revenues of $4.65 billion for fiscal 2010.
Total segment operating margins is still expected to be in a range of 18.5% - 19.5%, and cash flow from operations in the range of $600 million - $700 million for fiscal 2010. Further, Rockwell continues to see full year research & development costs in the range of $870 million - $900 million, while capital expenditures are estimated to be about $135 million.
Stock Quotes
Rockwell Collins shares, which have been trading between $27.67 and $53.07 in the past 52 weeks, closed Monday's trading session at $50.78.
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