Communications and aviation electronics maker Rockwell Collins, Inc. (COL: Quote) Friday issued guidance for fiscal 2013 that came below analysts' expectations. The guidance reflects uncertainty due to the required cut to the U.S. defense budget beginning in January.
Rockwell Collins noted that the Budget Control Act of 2011 requires reductions or sequestration to U.S. defense spending and the resulting impact is included in the guidance.
Clay Jones, chairman, president and chief executive officer said, "Given the legal requirements set forth in the Budget Control Act of 2011 and the challenges facing the U.S. Congress for the balance of this year, it is more than reasonable to assume sequestration impacts will occur and we have incorporated what we believe them to be in our fiscal year 2013 guidance," Jones stated.
Government Systems fiscal year 2013 revenues are expected to decline by about 10 percent from last year, with about half of the decline resulting from the impact of sequestration. The segment provides avionics, communication and navigation products, and surface solutions to the U.S. Department of Defense, state and local governments and other government agencies.
However, Commercial Systems segment revenues are expected to increase by about 7 percent from the year 2012.
For the fiscal ending September 2013, the company expects earnings per share to be in the range of $4.30 to $4.50. Revenues are anticipated to be between $4.6 billion and $4.7 billion. Analysts polled by Thomson Reuters expect earnings per share of $4.62, on $4.87 billion revenue for the fiscal. Analysts' estimates typically exclude one-time items.
Rockwell Collins expects cash flow from operations of $500 million to $600 million. Total segment operating margins are estimated to be in the range of 21 to 22 percent range.
Jones added that the company will take appropriate actions to reduce costs, including a restructuring charge in the fourth quarter of fiscal year 2012.
"As I look beyond 2013, I expect government programs transitioning from development into production along with the strong air transport OEM backlog, the launch of new air transport and business aircraft, and our continued focus on shareowner value creation to drive results more in line with our long-term growth targets," Jones added.
COL is currently trading at $52.87, up $0.49 or 0.92 percent, on a volume of 361 thousand shares on the NYSE.
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by RTT Staff Writer
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