* Per-share profit of $1.20 vs estimate $1.15
* Sequestration impact seen less than original forecast
* Shares up 2.4 pct
July 19 Rockwell Collins Inc reported
higher-than-expected quarterly profit as it sold more parts to
commercial jet makers and benefited from share buybacks and cost
cuts, and its shares rose 2.4 percent, above their year high.
Rockwell Collins said on Friday the impact from automatic
U.S. budget cuts known as sequestration would be less than it
previously forecast, based on its assessment of orders against
The company said it now expects a $70 million impact from
the cuts, compared with its original view of $120 million. It
expects defense revenue to weaken 7 percent for the fiscal year
that ends in September, compared with a prior outlook of a 10
The supplier of avionics and other electronic systems for
commercial and military aircraft is counting on commercial
demand to drive growth as the United States curbs defense
spending. The company's sales are roughly split 51 percent-49
percent between government sales and commercial sales.
Rockwell Collins has reduced its business in some defense
segments, curbed unnecessary research and development expenses
and cut jobs as U.S. military spending came under pressure.
"We're taking costs out where we need to," Chief Executive
Clay Jones said in an interview on Friday. "What we're doing is
basically trying to anticipate and match the market, so that our
spending is consistent where it should be" based on business
Jones will be retiring at the end of July, and President
Kelly Ortberg will take over as CEO.
In the fiscal third quarter ended June 30, cost cuts helped
to partly offset a 3 percent decline in overall sales.
Government-related sales fell 11 percent while commercial sales
rose 7 percent. Segment operating profit before effects of
interest expense and stock-based pay was up 3 percent, and
commercial margins expanded.
Jones said airlines looking to improve operations were
retiring more planes, slowing the rate of growth for some
service and support sales. But he said other commercial service
segments were "still very strong."
Net income was $164 million, or $1.20 a share, for the
fiscal third quarter, compared with $166 million, or $1.14 a
share, a year earlier.
Analysts had expected a profit of $1.15 a share, according
to Thomson Reuters I/B/E/S.
Robert Stallard, an RBC Capital Markets analyst, said in a
note to clients that Rockwell had "a good operating quarter"
with healthy margins in the commercial business.
There were fewer shares outstanding in the latest period as
Rockwell Collins bought back 1.4 million shares for $90 million.
The company said it had $473 million left on its share
repurchase program that will fund buybacks for the rest of 2013
and into 2014.
The company said it expects a full fiscal-year profit of
$4.55 a share to $4.60 a share, compared with a prior range of
$4.45 to $4.65 a share. Analysts currently expect $4.58 a share.