Quarterly Earnings Presentation Q4

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Quarterly Earnings Presentation Q4

  1. 1. Insert pictures into these angled boxes. Height should be 3.44 inches. 4th Quarter FY 2013 Conference Call October 25, 2013 © 2013 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; the rate of recovery of 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; 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 our 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. © 2013 Rockwell Collins All rights reserved. Proprietary Information 2
  3. 3. 4th Quarter FY 2013 Results ($ in millions except EPS amounts) $1,266 Sales Net Income $1,252 $175 1% decrease $152 15% increase 4Q FY12 4Q FY13 EPS 4Q FY12 Diluted Average Shares Outstanding $1.28 143.8 $1.06 © 2013 Rockwell Collins All rights reserved. 136.7 5% decrease 21% increase 4Q FY12 4Q FY13 4Q FY13 Proprietary Information 4Q FY12 4Q FY13 3
  4. 4. Commercial Systems ($ in millions) CS Sales $583 $565 $15 million Aftermarket increase: 6% • Increased retrofits for regulatory mandate upgrades 3% increase 4Q FY12 4Q FY13 $3 million OEM growth: 1% • Increased deliveries for Bombardier Global and Challenger aircrafts • Partially offset by fewer deliveries for Cessna business jets CS Operating Earnings $122 $122 4Q FY12 Decrease in operating margin of 70 basis points • Higher R&D expense and employee incentive compensation costs • Partially offset by higher sales 4Q FY13 Operating 21.6% Margins © 2013 Rockwell Collins All rights reserved. 20.9% Proprietary Information 4
  5. 5. Government Systems ($ in millions) $701 GS Sales $669 5% decline 4Q FY12 4Q FY13 GS Operating Earnings $175 $151 14% decline Operating Margins 4Q FY12 Sales by product category: • Avionics increase 3% • Communication Products decrease 16% • Surface Solutions increase 9% • Navigation Products decrease 26% $24 million decrease in operating earnings • Lower sales • Higher employee incentive compensation costs 4Q FY13 25.0% Sales decline $32 million (5%) • Lower deliveries of airborne and ground navigation products • Lower satellite communication and secure communication product sales • Reduction in simulator sales • Partially offset by increased sales: • JTRS Manpack radios • Firestorm targeting systems • Tanker/transport hardware sales 22.6% © 2013 Rockwell Collins All rights reserved. Proprietary Information 5
  6. 6. Full FY 2013 Results ($ in millions except EPS amounts) $4,726 Net Income Sales $4,610 $609 4% increase 2% decrease FY12 FY12 FY13 $4.58 $617 $534 10% increase FY12 © 2013 Rockwell Collins All rights reserved. FY13 Operating Cash Flow EPS $4.15 $632 16% increase FY13 FY12 Proprietary Information FY13 6
  7. 7. Research and Development ($ in millions) R & D Investment $946 $921 • • Customer funded R&D declined due to programs winding down in Government Systems such as E-6 and E-2D • 503 Company-funded R&D declined as development programs were completed • 320 Maintained R&D investment as a percent of sales Increased investment in pre-production engineering programs driven by: 295 481 123 FY12 • • • 145 FY13 Boeing 737MAX Bombardier C-Series Airbus A350 Company Funded R&D Customer Funded R&D % of Sales Increase in Pre-production Engineering, Net 20.0% © 2013 Rockwell Collins All rights reserved. 20.0% Proprietary Information 7
  8. 8. Capital Structure Status ($ in millions) 09/30/12 Cash $ Short-term Debt 335 $ - Long-term Debt $ Equity $ 1,264 Debt To Total Capital Debt To EBITDA (1) (444) 38% 0.7x 391 (436) (779) Net (Debt) / Cash (1) See 09/30/13 (563) $ (608) $ 1,623 38% 0.9x slide 11 for non-GAAP disclosures © 2013 Rockwell Collins All rights reserved. Proprietary Information 8
  9. 9. Status of Share Repurchases ($ in millions) Common Shares Outstanding 9.8 million shares repurchased in fiscal year 2013 142.2 • Cost of Purchases - $569 Million • Average Cost per Share - $58.38 135.1 5% decrease 86 million shares repurchased since January 2002 • Cost of Purchases - $4.3 Billion $411 million authorization remaining at the end of Q4 4Q FY12 © 2013 Rockwell Collins All rights reserved. 4Q FY13 Proprietary Information 9
  10. 10. FY 2014 Guidance Total Sales $4.5B to $4.6B Total Segment Operating Margins Earnings Per Share 21% to 22% $4.30 to $4.50 Cash Provided by Operating Activities $550M to $650M Research & Development Investment About $950M Capital Expenditures About $140M This guidance range excludes the planned acquisition of ARINC, which is expected to close shortly after receiving regulatory approval. Guidance ranges will be updated after the transaction has closed. © 2013 Rockwell Collins All rights reserved. Proprietary Information 10
  11. 11. 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, 2011 through September 30, 2012 and the twelve-month period from October 1, 2012 through September 30, 2013 (unaudited, in millions): Income before income taxes Interest expense Depreciation Amortization of intangible assets and pre-production engineering costs Earnings before interest, taxes, depreciation and amortization (EBITDA) Proprietary Information 56 $ 1,058 $ 1,076 9/30/13 $ 999 0.7x Debt to EBITDA 57 9/30/12 $ 779 Total debt © 2013 Rockwell Collins All rights reserved. 12 months ended 9/30/12 9/30/13 $ 857 $ 868 27 28 117 124 0.9x 11
  12. 12. © 2013 Rockwell Collins All rights reserved. Proprietary Information 12

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