final col q4 fy15 quarterly earnings presentation

© 2015 Rockwell Collins All rights reserved.

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4th Quarter FY 2015Conference Call

October 30, 2015


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Safe Harbor Statement

This presentation contains statements, including certain projections and business trends, 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 thepotential 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 on the commercial aerospace industry; declining defense budgets resulting from budget deficits in the U.S. and abroad;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 ourproducts 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 ARINC integration and synergy plans as wellas our other acquisition and related integration 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; and the uncertainties of the outcome of lawsuits, claims and legal proceedings, as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof and the company assumes no obligation to update any forward-looking statement.

The fourth quarter fiscal 2015 and full year fiscal 2015 financial results in this presentation are unaudited.


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(in millions, except EPS amounts)4th Quarter FY 2015 Results

$173 $184

4Q FY14 4Q FY15

Income from Continuing Operations, net of taxes

6% increase

$1.27 $1.38

4Q FY14 4Q FY15

EPS from Continuing Operations

9% increase

$1,402 $1,384

4Q FY14 4Q FY15

Sales

1% decrease

136.2 133.2

4Q FY14 4Q FY15

Diluted Average Shares Outstanding

2% decrease


$639 $636

4Q FY14 4Q FY15

CS Sales

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($ in millions)

Sales$8 million OEM decrease: (2)%

• Lower sales for Chinese regional aircraft OEM programs

• Partially offset by higher deliveries in support of A350 and Legacy 500 entries in to service

$8 million Aftermarket increase: 3%• Higher regulatory mandate sales• Partially offset by lower spares provisioning for

Boeing 787

Operating EarningsIncrease in operating earnings and operating margin primarily due to:

• Lower company-funded research and development expense and cost savings initiatives

• Partially offset by higher employee incentive compensation expense

Commercial Systems

23.0%22.1%Operating Margins

$141 $146

4Q FY14 4Q FY15

CS Operating Earnings

4% increase


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22.6% 22.2%

($ in millions)Government Systems

SalesSales decrease 24 million: (4)%• Lower JTRS Manpack sales• Lower rotary wing hardware sales• Lower sales due to the impact of a stronger U.S.

dollar• Partially offset by higher tanker/transport hardware

deliveries and increased sales due to development effort on modernized GPS products

Sales by category:• Avionics increase 2%• Communication Products decrease (28)%• Surface Solutions increase 2%• Navigation Products increase 10%

Operating EarningsDecrease in operating earnings and operating margin primarily due to: • Lower sales• Higher investment in company-funded research

and development expense• Higher employee incentive compensation expense• Partially offset by favorable hardware product mix

and cost savings initiativesOperating Margins

$605 $581

4Q FY14 4Q FY15

GS Sales

4% decrease

$137 $129

4Q FY14 4Q FY15

GS Operating Earnings

6% decrease


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($ in millions)

SalesSales increase $9 million: 6%• Low double-digit growth in the aviation related

businesses• Partially offset by lower sales due to the timing of

certain airport programs and the exit of a government program

Operating EarningsIncrease in operating earnings and operating margin primarily due to:• Higher sales volume• More favorable mix of higher margin aviation

related sales• Absence of certain licensing costs incurred in the

prior year

Information Management Services

17.4%13.3%Operating Margins

$158 $167

4Q FY14 4Q FY15

IMS Sales

6% increase

$21

$29

4Q FY14 4Q FY15

IMS Operating Earnings

38% increase


$660 $749

FY14 FY15

Operating Cash Flow from Continuing Operations

13% increase

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($ in millions, except EPS amounts)FY 2015 Results

$4,979 $5,244

FY14 FY15

Sales

5% increase$618

$694

FY14 FY15

Income from Continuing Operations, net of taxes

12% increase

$4.52 $5.19

FY14 FY15

EPS from Continuing Operations

15% increase


162 136

504 578

268272

FY14 FY15

R & D Investment

Company Funded R&DCustomer Funded R&DIncrease in Pre-production Engineering, Net

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$934$986

($ in millions)Research and Development

• Company funded R&D increased due to efforts associated with positioning Government Systems business for new growth opportunities, offset by lower A350 development costs in Commercial Systems

• Customer funded R&D increased primarily due to the following:

• Higher development costs for international programs in Commercial Systems

• Higher costs for next generation avionics programs in Government Systems

• Higher amortization of pre-production engineering costs

• Decreased investment in pre-production engineering driven by lower development costs for A350

18.8% 18.8%% of Sales


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09/30/14 09/30/15

Cash and cash equivalents 323$ 252$

Short-term Debt (504) (448)

Long-term Debt (1,663) (1,680)

Net Debt (1,844)$ (1,876)$

Equity 1,889$ 1,880$

Debt To Total Capital 53% 53%

Debt To EBITDA (1) 1.9x 1.7x

($ in millions)Capital Structure Status

(1) See slide 11 for non-GAAP disclosures.


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Total Sales $5.3 Bil. to $5.4 Bil.

Total Segment Operating Margins About 21.0%

Earnings Per Share $5.20 to $5.40

Cash Flow from Operations $700 Mil. To $800 Mil.

Research & Development Investment About $1 Bil.

Capital Expenditures About $200 Mil.

FY 2016 Guidance


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The Non-GAAP ratio of debt to EBITDA information included on slide nine is believed to be useful to investors’ understanding and assessment of the Company’s total capital structure and liquidity. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. The table below explains the debt to EBITDA calculation in more detail for the twelve-month period from October 1, 2013 through September 30, 2014 and the twelve-month period from October 1, 2014 through September 30, 2015 (unaudited, in millions). All businesses reported as discontinued operations have been excluded from the debt to EBITDA calculation.

Non-GAAP Financial Information

12 months ended9/30/14 9/30/15

Income from continuing operations before income taxes $ 882 $ 962Interest expense 59 61Depreciation 141 152

Amortization of intangible assets and pre-production engineering costs 84 100

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$ 1,166 $ 1,275

9/30/14 9/30/15Total debt $ 2,167 $ 2,128

Debt to EBITDA 1.9x 1.7x


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final col q4 fy15 quarterly earnings presentation

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