CEDAR RAPIDS, Iowa - For first quarter of FY17, Rockwell Collins reported sales of $1.19 billion, a 2% increase from t$1.17 billion in the same period in fiscal year 2016. Net income for the quarter was $145 million compared to $135 million a year ago.
"I'm pleased to report a very strong quarter of operating performance with total segment margins increasing 90 basis points and adjusted earnings per share growing 17% over the prior year," said Rockwell Collins Chairman, President, and Chief Executive Officer, Kelly Ortberg. "First quarter sales were as anticipated with solid growth in our Government Systems and Information Management Services segments as well as a decline in Commercial Systems sales due to headwinds from lower business jet and aftermarket sales. As a result, we are reaffirming our financial guidance for the full year."
Ortberg continued, "We are making good progress with our pending acquisition of B/E Aerospace, which will strengthen our position as a leading supplier of cockpit and cabin solutions. Our integration planning teams are moving full speed ahead and all of our targets remain intact. I continue to be confident in our ability to achieve our synergy targets while focusing on successfully integrating these two great companies. The next major milestones include shareholder and various regulatory approvals, all of which we expect to complete in the coming months."
INDUSTRY SEGMENTS
Commercial Systems
Commercial Systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, achieved 2017 first quarter sales of $$549 million down two percent from $562 million in 2016. Net income was $125 million for the quarter, the same as last year.
Original equipment sales increased due to higher product deliveries in support of the Airbus A350 and Bombardier CSeries production rate increases, favorable customer timing for airline selectable equipment, and higher customer-funded development program revenues, partially offset by lower business aircraft OEM production rates. Aftermarket sales decreased due to lower regulatory mandate sales, lower spares provisioning, and lower head-up display retrofit sales to customers in China.
Commercial Systems operating earnings were flat and operating margin improved 60 basis points over the prior year. Operating margin was favorably impacted by lower research and development expense and cost saving initiatives, partially offset by a $13 million decrease in sales and sales mix, as lower margin customer-funded development revenues increased and higher margin business jet OEM sales decreased.
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. For the first quarter of 2017 the segment reported sales of $475 million, up 5 percent from sales of $451 million in 2016. Operating income was $96 million, up 12 percent form 86 million in 2016. Avionics sales increased due to higher simulation and training program revenues and higher fixed-wing platform revenues. Communication and Navigation sales decreased due to lower communication revenues partially offset by higher datalink program sales. Operating earnings and operating margin increased due to higher sales volume and cost savings initiatives.
Information Management Services
Information Management Services (IMS) provides communication services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets. Revenues from the first quarter of 2017 were $169 million, up 8 percent from $156 million in 2016. Net income rose 25 percent to $30 million from $24 million a year prior.
IMS sales increased primarily due to double-digit growth in aviation related sales. Operating earnings and operating margin increased due to higher sales volume.
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