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Similar to Quarterly Earnings Presentation Q4
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Quarterly Earnings Presentation Q4
- 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. 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
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2
- 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
$1.06
© 2013 Rockwell Collins
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136.7
5% decrease
21% increase
4Q FY12
4Q FY13
4Q FY13
Proprietary Information
4Q FY12
4Q FY13
3
- 4. Commercial Systems
($ 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
$122
4Q FY12
Decrease in operating margin of 70
basis points
• Higher R&D expense and employee
incentive compensation costs
• Partially offset by higher sales
4Q FY13
Operating
21.6%
Margins
© 2013 Rockwell Collins
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20.9%
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4
- 5. Government Systems
($ 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 $32 million (5%)
•
Lower deliveries of airborne and ground
navigation products
•
Lower satellite communication and secure
communication product sales
•
Reduction in simulator sales
•
Partially offset by increased sales:
•
JTRS Manpack radios
•
Firestorm targeting systems
•
Tanker/transport hardware sales
22.6%
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5
- 6. Full FY 2013 Results
($ 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
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FY13
Operating Cash Flow
EPS
$4.15
$632
16% increase
FY13
FY12
Proprietary Information
FY13
6
- 7. Research and Development
($ in millions)
R & D Investment
$946
$921
•
•
Customer funded R&D declined due to
programs winding down in Government
Systems such as E-6 and E-2D
•
503
Company-funded R&D declined as
development programs were completed
•
320
Maintained R&D investment as a percent
of sales
Increased investment in pre-production
engineering programs driven by:
295
481
123
FY12
•
•
•
145
FY13
Boeing 737MAX
Bombardier C-Series
Airbus A350
Company Funded R&D
Customer Funded R&D
% of
Sales
Increase in Pre-production Engineering, Net
20.0%
© 2013 Rockwell Collins
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20.0%
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7
- 8. Capital Structure Status
($ 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
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8
- 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
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4Q FY13
Proprietary Information
9
- 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
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Proprietary Information
10
- 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
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12 months ended
9/30/12
9/30/13
$ 857
$ 868
27
28
117
124
0.9x
11
- 12. © 2013 Rockwell Collins
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Proprietary Information
12