Rockwell Collins [COL] on Thursday reported higher net income in its second quarter driven by a lower tax rate, lower research and development expense and higher profit in its information management business while sales dipped slightly.
Net income in the quarter climbed 9 percent to $171 million, $1.29 earnings per share (EPS), from $157 million ($1.17 EPS) a year ago. Excluding results from discontinued operations, adjusted earnings were $1.30 EPS, topping consensus estimates by a penny.
Sales fell 2 percent to $1.3 billion.
The company maintained its guidance for FY ’16, with sales forecast between $5.3 billion and $5.4 billion and earnings between $5.45 and $5.65 EPS.
At the segment level operating profit at Government Systems fell 5 percent to $108 million on a 5 percent drop in sales to $538 million, which was due to declines in deliveries of avionics for helicopters, lower simulation and training sales, lower international deliveries of targeting systems, and a wind down of an international electronic warfare program. Operating profit also fell on higher operating costs due to expansion in international emerging markets.
Commercial Systems profit was down 5 percent to $135 million on a shift in sales toward lower margin business. Sales dipped a percent to $611 million on lower business aircraft production rates, lower production of Airbus A330 aircraft, and an unfavorable airline selectable equipment mix.
Rockwell Collins’ Information Management Services segment, which includes ARINC, saw operating profits soar 32 percent to $29 million while sales increased 5 percent to $162 million. Sales were up on growth in aviation-related business while operating earnings were up on the higher sales and the favorable resolution of prior year claims related to international business jet support services.