Rockwell Collins Reiterates FY15 Outlook, But Sees FY16 Revenue Below View

(RTTNews) - Aerospace company Rockwell Collins Inc. (COL) on Friday reaffirmed its financial outlook for fiscal 2015, but forecast revenue for fiscal 2016 below analysts' expectations, citing continued weak market conditions in its business aviation segment.

For fiscal 2015, the Cedar Rapids, Iowa-based company reiterated its continuing operations outlook for earnings in a range of $5.15 to $5.25 per share and sales of about $5.25 billion to $5.30 billion.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $5.21 per share for the year on revenues of $5.27 billion. Analysts' estimates typically exclude special items.

However, the company narrowed its full-year outlook for operating cash flows to a range of $725 million to $750 million from the prior range of $725 million to $775 million.

Kelly Ortberg, Chief Executive Officer and President of Rockwell Collins said,"As we look to fiscal year 2016, our guidance for our Government Systems, Information Management Services, and Air Transport businesses are all in-line with our long term outlook. I'm encouraged by the progress we are making in all of these businesses, and I expect market conditions will support continued growth in fiscal year 2016."

However, Ortberg added that the company was continuing to experience weak market conditions in business aviation and does not expect to see significant improvement in these conditions in the next year.

Accordingly, Rockwell Collins is re-setting its near-term expectations for that business, and its fiscal 2016 outlook incorporates the previously announced production rate reduction on the Global 5000/6000 aircraft. The company has also assumed additional rate reductions in both the mid-size and light segments of the business jet market in its guidance.

Rockwell Collins now expects its fiscal 2016 overall Business and Regional jet OEM sales to decrease low-double digits from fiscal 2015. In addition, the company anticipates Business and Regional jet aftermarket sales to continue growing at a fairly modest level, similar to that in fiscal 2015.

"While the decline in business aviation will make for a challenging year for our Commercial Systems business, we remain focused on executing the business to drive long-term growth in both operating margin and cash flow. We will be taking action through the first half of fiscal year 2016 to right-size our business to these new market conditions," Ortberg said.

For fiscal 2016, Rockwell Collins forecast earnings in a range of $5.20 to $5.40 per share, revenue between $5.3 billion and $5.4 billion, and cash flow from operations of $700 million to $800 million. Total segment operating margins are expected to be about 21 percent.

The outlook includes the impact of an estimated restructuring charge of $0.10 to $0.15 per share, which is expected to be finalized in the first quarter of fiscal 2016.

The Street expects earnings of $5.45 per share for the year on revenues of $5.44 billion.

The company projects capital expenditures for the year to be about $200 million.

COL closed Thursday's trading at $85.28, up $0.13 or 0.15 percent on a volume of 614,813 shares.