Rockwell Collins reports FY'18 first quarter financial results

  • Sales increase 69% year-over-year (9% organically)

CEDAR RAPIDS, Iowa (January 26, 2018) - Rockwell Collins, Inc. (NYSE: COL) today reported sales for the first quarter of fiscal year 2018 of $2.011 billion, a 69% increase from the same period in fiscal year 2017, or 9% organic growth excluding $716 million of revenue from the acquisition of B/E Aerospace. First quarter fiscal year 2018 earnings per share was $1.69 compared to $1.10 in the prior year's first quarter. Earnings per share for the first quarter of fiscal year 2018 included a 37 cent discrete income tax benefit from the enactment of the Tax Cuts and Jobs Act. Adjusted earnings per share for the first quarter of fiscal year 2018 was $1.59 compared to $1.22 in the prior year's first quarter (see the supplemental schedule in this press release for a reconciliation between GAAP earnings per share and adjusted earnings per share).

"I'm proud of our execution this quarter, as we achieved 9% organic revenue growth, highlighted by strong sales performance in our Commercial Systems and Government Systems businesses. Our fiscal year 2018 is off to a great start," said Rockwell Collins Chief Executive Officer and President, Kelly Ortberg. "In addition, Rockwell Collins' shareowners overwhelmingly approved the acquisition of Rockwell Collins by United Technologies Corporation. This milestone brings us one step closer to combining our capabilities to offer more integrated and innovative solutions to our customers."

Following is a discussion of fiscal year 2018 first quarter sales and earnings for each business segment.

Commercial Systems

Commercial Systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, achieved 2018 first quarter results as summarized below.

Interior Systems

Our Interior Systems segment was created with the acquisition of B/E Aerospace on April 13, 2017. Interior Systems supplies a comprehensive portfolio of cabin interior products and services to aircraft manufacturers and airlines worldwide. Beginning in 2018, thermal and electronic systems product lines previously included in Interior products and services within the Interior Systems segment are now being reported in the Government Systems segment. See the supplemental schedule included in this press release for revised fiscal year 2017 quarterly sales that conform to the current presentation. Results from the first quarter of 2018 are summarized below.

Interior Systems contributed $656 million of sales and $94 million of operating earnings to the first quarter of 2018. Interior Systems operating earnings for the first quarter of 2018 includes $58 million of intangible asset amortization expense partially offset by $30 million of income from the amortization of acquired contract liabilities.

On a pro-forma basis, excluding the product lines now reported in Government Systems referenced above, sales for Interior Systems decreased 4% in the first quarter compared to the same period in the prior year. The decrease in pro-forma sales was primarily attributable to the timing of retrofit seating sales and the decline in super first class seating sales, partially offset by higher original equipment deliveries for Boeing 737 advanced lavatories, higher linefit seating sales, and higher oxygen system deliveries across multiple platforms.

Government Systems

Government Systems provides a broad range of electronic products, systems and services to customers including the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and ministries of defense around the world. Beginning in 2018, the product lines referenced above previously included in the Interior Systems segment are now being reported in Communication and navigation within the Government Systems segment. See the supplemental schedule included in this press release for revised fiscal year 2017 quarterly sales that conform to the current presentation. Results from the first quarter of 2018 are summarized below.

Information Management Services

Information Management Services (IMS) provides communication services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets. Results from the first quarter of 2018 are summarized below.

Corporate and Financial Highlights

Income Taxes

The company's effective income tax rate on GAAP earnings was (8.9%) for the first quarter of fiscal year 2018 compared to a rate of 28.6% for the same period last year. The lower current year effective income tax rate was primarily due to the enactment of the Tax Cuts and Jobs Act. This legislation favorably impacted the company's effective tax rate in the first quarter of 2018 due to a $102 million reduction in deferred tax liabilities and a lower US federal statutory tax rate, partially offset by a $40 million tax obligation related to unremitted foreign earnings.

The company's effective income tax rate on adjusted earnings was 18.3% in the first quarter of 2018, compared to 28.8% in the same period in the prior year. See the supplemental schedule included in this press release for a reconciliation between GAAP earnings and adjusted earnings.

Cash Flow

Cash used for operating activities was $259 million for the first quarter of fiscal year 2018, compared to a use of cash of $101 million in the first quarter of fiscal year 2017. The increase in cash used for operating activities was due primarily to higher payments for production inventory and other operating costs, as well as higher employee incentive payments, partially offset by higher cash receipts from customers.

The Company paid a dividend on its common stock of 33 cents per share, or $54 million, in the first quarter of 2018.

Conference Call

In light of the pending acquisition of Rockwell Collins by United Technologies Corporation ("UTC"), the Company will not hold a conference call for its quarterly results for the first quarter of fiscal year 2018. The Company plans to file its Form 10-Q for the first quarter with the SEC on or about January 26, 2018.

Non-GAAP Financial Information

See the supplemental schedule included in this press release for a reconciliation of non-GAAP measures including adjusted earnings per share, adjusted income from continuing operations, and effective income tax rate on adjusted earnings.

Business Highlights

Azerbaijan Airlines gets connected from the cockpit to cabin with help from Rockwell Collins
Azerbaijan Airlines selected Rockwell Collins to provide its global, high-speed broadband in-flight connectivity, overhead in-flight entertainment and a full suite of advanced avionics for 10 Boeing 737 MAX aircraft.

Emirates’ 777X fleet to feature dual HGS™ from Rockwell Collins
Rockwell Collins’ Head-up Guidance System was selected by Emirates for the airline's 150 777X aircraft on order.

U.S. Air Force to advance its F-16 communications capabilities with next-generation radio from Rockwell Collins
A U.S. Air Force F-16 will be the first to be equipped with Rockwell Collins’ next-generation ARC-210 RT-2036(C) networked communications airborne radio, the first ever to include Mobile User Objective System and support Soldier Radio Waveform capabilities.

Rockwell Collins selected by U.S. Navy for new E-2D Advanced Hawkeye Tactics Trainer
Rockwell Collins was selected by the U.S. Navy to provide a new E-2D Advanced Hawkeye Tactics Trainer in support of the E-2D Hawkeye Integrated Training Systems III program.

Rockwell Collins selected to support avionics for U.S. Special Operations Command
Rockwell Collins was awarded a five-year, $30.7 million contract by the Technology Application Contracting Office to provide avionics repair and logistics, field service support and spares management for Rockwell Collins’ Common Avionics Architecture System.

U.S. Air Force to preserve KC-10 avionics upgrade investment through sustainment contract with Rockwell Collins
The U.S. Air Force Lifecycle Management Center awarded Rockwell Collins a contract to provide maintenance and sustainment of KC-10 avionics systems and engineering services over the next nine years.

U.S. Army to enhance AVCATT collective training system with upgraded Rockwell Collins helmet mounted display
The U.S. Army selected a new version of Rockwell Collins’ SimEye™ Helmet Mounted Display to be used within Aviation Combined Arms Tactical Trainer systems.

Rockwell Collins to supply next generation of forward observer training for Australian Defence
Rockwell Collins will supply and install eight customized domes and 11 desktop trainer simulation solutions for the Australian Army and Air Force Joint Terminal Attack Controllers and Joint Forward Observer communities.

Rockwell Collins named one of America’s Most JUST Companies in 2017 by Forbes and JUST Capital
Rockwell Collins was named America’s Most JUST Company in the Aerospace & Defense industry, according to Forbes and JUST Capital, a nonprofit that ranks the largest publicly traded corporations in the United States on the issues Americans care about most.

Maldives’ main airports deploy Rockwell Collins’ passenger processing platform to streamline the passenger experience
Velana International Airport and Gan International Airport selected Rockwell Collins’ ARINC vMUSE™ Common Use Passenger Processing System to improve airport processes while expediting the check-in process for passengers.

About Rockwell Collins

Rockwell Collins (NYSE: COL) is a leader in aviation and high-integrity solutions for commercial and military customers around the world. Every day we help pilots safely and reliably navigate to the far corners of the earth; keep warfighters aware and informed in battle; deliver millions of messages for airlines and airports; and help passengers stay connected and comfortable throughout their journey. As experts in flight deck avionics, cabin electronics, cabin interiors, information management, mission communications, and simulation and training, we offer a comprehensive portfolio of products and services that can transform our customers' futures. To find out more, please

Safe Harbor Statement

This press release contains statements, including statements regarding certain projections, business trends and the proposed acquisition of Rockwell Collins by United Technologies 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 and suppliers, 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 and pandemics, 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, including new aircraft programs entering service later than anticipated; the continued support for military transformation and modernization programs; potential impact of volatility in oil prices, currency exchange rates or interest rates on the commercial aerospace industry or our business; the impact of terrorist events, regional conflicts, or governmental sanctions on other nations on the commercial aerospace industry; 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; potential unavailability of our mission-critical data and voice communication networks; unfavorable 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, our customers, and our suppliers; 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 internal performance plans such as restructuring activities, productivity and quality improvements and cost reduction initiatives; achievement of B/E Aerospace integration and synergy 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 compliance requirements associated with U.S. Government work, 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; the uncertainties of the outcome of lawsuits, claims and legal proceedings; the ability of Rockwell Collins and United Technologies to receive the required regulatory approvals for the proposed acquisition of Rockwell Collins by United Technologies (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and to satisfy the other conditions to the closing of the transaction on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of the parties to terminate the merger agreement; negative effects of the announcement or the consummation of the transaction on the market price of United Technologies and/or Rockwell Collins common stock and/or on their respective businesses, financial conditions, results of operations and financial performance; risks relating to the value of United Technologies’s shares to be issued in the transaction, significant transaction costs and/or unknown liabilities; the possibility that the anticipated benefits from the proposed transaction cannot be realized in full or at all or may take longer to realize than expected; risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transaction; risks associated with transaction-related litigation; the possibility that costs or difficulties related to the integration of Rockwell Collins’ operations with those of United Technologies will be greater than expected; the outcome of legally required consultation with employees, their works councils or other employee representatives; and the ability of Rockwell Collins and the combined company to retain and hire key personnel. There can be no assurance that the proposed acquisition will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the reports of United Technologies and Rockwell Collins on forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission from time to time. These forward-looking statements are made only as of the date hereof.

Additional Information

In connection with the proposed transaction, United Technologies has filed a registration statement on Form S-4 (File No. 333-220883), which includes a prospectus of United Technologies and a proxy statement of Rockwell Collins (the "proxy statement/prospectus"), and each party will file other documents regarding the proposed transaction with the SEC. The proxy statement/prospectus was declared effective by the SEC and was mailed to Rockwell Collins shareowners. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS FILED THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain the proxy statement/prospectus free of charge from the SEC's website or from United Technologies or Rockwell Collins. The documents filed by United Technologies with the SEC may be obtained free of charge at United Technologies' website at or at the SEC's website at These documents may also be obtained free of charge from United Technologies by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at 1-860-728-7870 or by email at The documents filed by Rockwell Collins with the SEC may be obtained free of charge at Rockwell Collins' website at or at the SEC's website at These documents may also be obtained free of charge from Rockwell Collins by requesting them by mail at Investor Relations, 400 Collins Road NE, Cedar Rapids, Iowa 52498, or by telephone at 1-319-295-7575.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Media contact

Pam Tvrdy-Cleary

Corporate & Financial, Commercial & Business Aviation Flight Deck, Cabin Management, Diversity

Office: +1.319.295.0591

Mobile: +1.319.431.0951


Investor Relations contact

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