(Reuters) - Rockwell Collins Inc (COL.N), a supplier of avionics and other electronic systems for commercial and military airplanes, reported higher quarterly profit on Friday, aided by share buybacks and cost controls.
The company also raised its earnings outlook for the full year, citing the extension of a federal tax credit.
Rockwell Collins, which counts government agencies, planemakers and airlines as customers, has reduced its business in some defense segments and cut jobs as the United States has moved to curb spending. It is also merging facilities and looking to boost sales of commercial technologies amid a cloudy defense outlook.
“We’ll see more benefit in the latter part of the year as the full value of the restructuring activity flows through our results,” Chairman and Chief Executive Clay Jones said in an interview.
He said more clarity on defense spending coupled with growth in commercial markets should set Rockwell Collins up for “accelerating growth” over the next several years.
Jones said it was “too early to tell” what the potential impact to his company could be from the problems with Boeing’s (BA.N) 787 Dreamliner, which has been grounded by regulators while battery-related problems are investigated.
Rockwell Collins provides displays, communications and surveillance and other systems for the 787.
“If Boeing gets to the root cause of the matter and resolves it quickly, I‘m highly confident there will be no impact to us,” Jones said. “But I can’t speak to that with certainty now because we’ve not seen what that cause is or what the remedy might be.”
He added, though, that he was confident Boeing would resolve the issue so that the planes could return to the air.
Net income at Rockwell Collins was $132 million, or 94 cents a share, in the fiscal first quarter ended December 31, compared with $130 million, or 86 cents a share, a year earlier. Analysts expected 89 cents a share, according to Thomson Reuters I/B/E/S.
Repurchases reduced the share count by 4 percent in the quarter, aiding per share profit.
RBC Capital Markets analyst Robert Stallard called the results “a decent first quarter” for Rockwell.
“We also view Collins as a beneficiary of a pickup in the business jet market, which could (finally) start to recover this year,” Stallard said in a note to clients.
Quarterly sales fell 3 percent to $1.06 billion. Government system sales dropped 6 percent to $546 million, while sales tied to commercial systems rose 1 percent to $516 million.
The company said the extension of a federal research and development tax credit led it to increase its full-year outlook to $4.45 to $4.65 a share from the prior view of $4.30 to $4.50. Analysts currently expect profit of $4.43 a share for the year.
Shares of Rockwell Collins were off 1.4 percent to $59.29 in afternoon trading.
Reporting by Karen Jacobs; Editing by Gerald E. McCormick, Jeffrey Benkoe and Phil Berlowitz