Bolstered by its acquisition of ARINC, strong results in its commercial aviation business, and the retroactive extension of a federal tax credit, Rockwell Collins [COL] on Friday posted positive top and bottom line gains in its first quarter and increased its financial guidance for FY ’15.

Net income increased 27 percent to $167 million, $1.24 earnings per share (EPS), from $131 million (96 cents EPS) a year ago. Excluding impacts from discontinued operations, per share earnings in the quarter were $1.26, 12 cents higher than consensus estimates.

Head up display for the C-130 Avionics Modernization Program. Rockwell Collin's avionics sales to government customer were up slightly. Photo: Rockwell Collins
Head up display for the C-130 Avionics Modernization Program. Rockwell Collin’s avionics sales to government customer were up slightly. Photo: Rockwell Collins

The biggest driver for the higher per share earnings was the application of the federal research and development tax credit, which added 16 cents EPS to the results. The acquisition of ARINC in late 2013 contributed $20 million to operating earnings as part of the company’s Information Management Services segment while the Commercial Systems segment benefited from strong sales and boosted its operating earnings by 13 percent to $125 million.

Sales in the quarter increased 16 percent, 4 percent organically, to just over $1.2 billion from nearly $1.1 billion a year ago, driven primarily from the ARINC deal but also by a 9 percent increase in the top line at Commercial Systems to $568 million. Sales at the Government Systems segment were down a percent to $509 million on lower deliveries of JTRS Manpack radios.

Due to the tax credit, Rockwell Collins increased its earnings guidance for FY ’15 by 20 cents EPS to between $5.10 and $5.30. The company also boosted its expectations for cash flow from operations by $25 million to between $700 million and $800 million. The tax rate for the year is also expected to be lower than prior guidance.