Final quarterly earnings presentation q1

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Final quarterly earnings presentation q1

  1. 1. Insert pictures into these angled boxes. Height should be 3.44 inches. 1st Quarter FY 2014 Conference Call January 21, 2014 © 2014 Rockwell Collins All rights reserved. Proprietary Information
  2. 2. Safe Harbor Statement This presentation contains statements, including certain projections and business trends, that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the financial condition of our customers, including bankruptcies; the health of the global economy, including potential deterioration in economic and financial market conditions; adjustments to the commercial OEM production rates and the aftermarket; the impacts of natural disasters, including operational disruption, potential supply shortages and other economic impacts; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; delays related to the award of domestic and international contracts; delays in customer programs; unanticipated impacts of sequestration and other provisions of the Budget Control Act of 2011 as modified by the Bipartisan Budget Act of 2013; the continued support for military transformation and modernization programs; potential adverse impact of oil prices on the commercial aerospace industry; the impact of terrorist events on the commercial aerospace industry; declining defense budgets resulting from budget deficits in the U.S. and abroad; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; market acceptance of our new and existing technologies, products and services; reliability of and customer satisfaction with our products and services; favorable outcomes on or potential cancellation or restructuring of contracts, orders or program priorities by our customers; recruitment and retention of qualified personnel; regulatory restrictions on air travel due to environmental concerns; effective negotiation of collective bargaining agreements by us and our customers; performance of our customers and subcontractors; risks inherent in development and fixed-price contracts, particularly the risk of cost overruns; risk of significant reduction to air travel or aircraft capacity beyond our forecasts; our ability to execute to our internal performance plans such as our productivity and quality improvements and cost reduction initiatives; achievement of ARINC integration and synergy plans as well as our other acquisition and related integration plans; continuing to maintain our planned effective tax rates; our ability to develop contract compliant systems and products on schedule and within anticipated cost estimates; risk of fines and penalties related to noncompliance with laws and regulations including export control and environmental regulations; risk of asset impairments; our ability to win new business and convert those orders to sales within the fiscal year in accordance with our annual operating plan; and the uncertainties of the outcome of lawsuits, claims and legal proceedings, as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof and the company assumes no obligation to update any forward-looking statement. © 2014 Rockwell Collins All rights reserved. Proprietary Information 2
  3. 3. © 2014 Rockwell Collins, Inc. All rights reserved. Proprietary Information
  4. 4. © 2014 Rockwell Collins, Inc. All rights reserved. Proprietary Information
  5. 5. © 2014 Rockwell Collins, Inc. All rights reserved. Proprietary Information
  6. 6. © 2014 Rockwell Collins, Inc. All rights reserved. Proprietary Information
  7. 7. Research and Development ($ in millions) R & D Investment $227 71 120 111 36 Customer funded R&D declined due to development programs winding down in Government Systems Increased investment in pre-production engineering programs driven by: • Boeing 737MAX • Bombardier C-Series • Global 7000/8000 43 1Q FY13 Company-funded R&D declined as Commercial Systems development programs were completed • 65 • • $219 1Q FY14 Increase in Pre-production Engineering, Net Customer Funded R&D Company Funded R&D % of Sales 21.4% © 2014 Rockwell Collins All rights reserved. 20.4% Proprietary Information 7
  8. 8. Capital Structure Status ($ in millions) 9/30/13 $ Cash 12/31/13 $ 391 439 Short-term Debt (436) (917) Long-term Debt (563) (1,658) (608) $ (2,136) Net (Debt) / Cash $ Equity $ Debt To Total Capital Debt To EBITDA (1) See (1) 1,623 38% 0.9x $ 1,730 60% 2.4x slide 12 for non-GAAP disclosures © 2014 Rockwell Collins All rights reserved. Proprietary Information 8
  9. 9. Status of Share Repurchases (shares in millions) Common Shares Outstanding 0.2 million shares repurchased in fiscal year 2014 first quarter 136.8 135.3 • Cost of Purchases - $17 Million • Average Cost per Share - $71.48 1% decrease 86 million shares repurchased since January 2002 • Cost of Purchases - $4.3 Billion $395 million authorization remaining at the end of Q1 1Q FY13 © 2014 Rockwell Collins All rights reserved. 1Q FY14 Proprietary Information 9
  10. 10. Projected FY 2014 ARINC Results ($ in millions) The Non-GAAP financial projections included in the table below for earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted EBITDA are believed to be useful to an investor's understanding and assessment of the recently completed ARINC acquisition. The Company does not intend for the Non-GAAP information to be considered in isolation or as a substitute for the related GAAP measures. The table below explains the impact that certain non-cash depreciation and amortization charges, and certain transaction and integration expenses, are expected to have on the projected financial results for ARINC during the Company's fiscal year 2014. The ASES business is treated as discontinued operations and is therefore excluded from the table (unaudited, in millions). Income before income taxes Depreciation and amortization expense Interest expense EBITDA Corporate Costs $ - $ $ Sales (midpoint of range for ARINC FY 2014 projection) ARINC Business $ 415 $ $ Transaction and integration costs 5 EBITDA, adjusted $ Total EBITDA, adjusted as a percentage of sales © 2014 Rockwell Collins All rights reserved. 40 45 85 Proprietary Information 90 (45) 25 (20) 15 $ (5) Total 415 (5) 45 25 65 20 $ 85 20% 10
  11. 11. FY 2014 Guidance $4.95 Bil. to $5.05 Bil. (from $4.5 Bil. to $4.6 Bil.) Total Sales Total Segment Operating Margins $4.35 to $4.55 (from $4.30 to $4.50) Earnings Per Share Cash Provided by Operating Activities Research & Development Investment $600 Mil. to $700 Mil. (from $550 Mil. to $650 Mil.) About $950 Mil. About $160 Mil. (from about $140 Mil.) Capital Expenditures © 2014 Rockwell Collins All rights reserved. 20% to 21% (from 21% to 22%) Proprietary Information 11
  12. 12. Non-GAAP Financial Information The Non-GAAP ratio of debt to EBITDA information included on slide eight is believed to be useful to investors’ understanding and assessment of the Company’s total capital structure and liquidity. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. The table below explains the debt to EBITDA calculation in more detail for the twelve-month period from October 1, 2012 through September 30, 2013 and the twelve-month period from January 1, 2013 through December 31, 2013 (unaudited, in millions): 12 months ended 9/30/13 Income from continuing operations before income taxes Interest expense 12/31/13 $ $ 868 28 Amortization of intangible assets and pre-production engineering costs Earnings before interest, taxes, depreciation and amortization (EBITDA) 34 124 Depreciation 126 56 56 $ 1,076 $ 1,076 9/30/13 Total debt 12/31/13 $ 999 Proprietary Information $ 2,575 0.9x Debt to EBITDA © 2014 Rockwell Collins All rights reserved. 860 2.4x 12
  13. 13. © 2014 Rockwell Collins All rights reserved. Proprietary Information 13

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