Rockwell Collins (NYSE:COL)

Rockwell Collins (NYSE:COL) | Products & Business Units

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Rockwell Collins designs, produces and supports communications and aviation systems for commercial and military customers and provides information management services through voice and data communication networks and solutions worldwide. The company's integrated system solutions and products are oriented around a set of core competencies: communications, navigation, automated flight control, displays/surveillance, simulation and training, integrated electronics and information management systems. Rockwell Collins also provides a wide range of services and support to its customers through a worldwide network of service centers, including equipment repair and overhaul, service parts, field service engineering, training, technical information services and aftermarket used equipment sales.

Rockwell Collins operates in multiple countries and is headquartered in Cedar Rapids, Iowa. The company's heritage is rooted in the Collins Radio Company, established in 1933. Rockwell Collins, Inc., the parent company, is incorporated in Delaware. Rockwell Collins' corporate offices are located in Cedar Rapids, Iowa.

On August 11, 2013, Rockwell Collins announced the acquisition of ARINC Incorporated, a leading global provider of air-to-ground data and voice communication services. ARINC develops and operates communications and information processing systems and provides systems engineering and integration solutions to five key industries: commercial aviation, business aviation, airports, rail and nuclear security. On December 23, 2013, the $1,405 million deal (net of cash acquired) closed when Rockwell Collins acquired 100% of the outstanding common stock and voting interests of Radio Holdings, Inc., the holding company of ARINC.

On October 23, 2016, Rockwell Collins entered into an agreement to acquire B/E Aerospace, a leading manufacturer of aircraft cabin interior products, for $8.3 billion. The deal is expected to close in the spring of 2017.

Rockwell Collins serves a worldwide customer base through its two principal business segments:


Commercial Systems
Government Systems
Information Management Services



The following table highlights Rockwell Collins' sales from 2014 to 2016 by segment:
Rockwell Collins' Segment Sales

Rockwell Collins' segments are described in detail below.


Commercial Systems

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Rockwell Collins' Commercial Systems segment supplies aviation electronics systems, products and services to customers located throughout the world. The customer base is comprised of original equipment manufacturers (OEMs) of commercial air transport, business and regional aircraft, commercial airlines and business aircraft operators. Rockwell Collins' systems and products are used in both OEM applications as well as in retrofit and upgrade applications designed to increase the efficiency and enhance the value of existing aircraft.

The company's commercial aviation electronics systems, products and services include:



• integrated avionics systems, such as Pro Line Fusion®, which provide advanced avionics capabilities to meet the challenges of operating in the next generation global airspace. Pro Line Fusion® capabilities include; touch control primary flight displays, advanced flight and performance management, flight guidance and information management;

• integrated cabin electronics solutions, including cabin management systems with touch-screen controls, wireless connectivity, high definition video and audio, and entertainment and information content such as Airshow moving maps;

• communications systems and products, such as data link, high frequency (HF), very high frequency (VHF) and satellite communications systems;

• navigation systems and products, including landing sensors to enable fully automatic landings, radio navigation and geophysical sensors, as well as flight management systems;

• situational awareness and surveillance systems and products, such as synthetic and enhanced vision systems, surface surveillance and guidance solutions, head-up guidance systems, weather radar and collision avoidance systems;

• integrated flight controls including fly-by-wire, advanced flight guidance with auto-land capability, pilot controls, and primary and secondary electro-mechanical actuation;

• simulation and training systems, including full-flight simulators for crew training, visual system products, training systems and engineering services;

• maintenance, repair, parts, after-sales support services and aftermarket used equipment.



Commercial Systems' sales are categorized into air transport aviation electronics and business and regional aviation electronics. Product category sales are delineated based upon the difference in the underlying customer base, size of aircraft and markets served.

Air transport aviation electronics include avionics, cabin systems and flight control systems for large commercial transport aircraft platforms. Rockwell Collins designs these items as sub-systems and works with OEMs to integrate with other suppliers' products into the flight deck and broader aircraft systems. Rockwell Collins' products offered for OEM applications in the air transport category are marketed directly to aircraft OEMs and airline operators, while our products offered for aftermarket applications are primarily marketed to the airline operators.

Business and regional aviation electronics include integrated avionics, cabin management and flight control systems for application on regional and business aircraft platforms. Rockwell Collins develops integrated avionics, cabin and flight control solutions for business and regional aircraft OEMs and supports them with integration into other aircraft systems. Products offered for OEM applications in the business and regional aircraft category are marketed directly to the aircraft OEMs. Products offered for aftermarket applications are primarily marketed through distributors for business aviation and directly to regional airline operators.

     Financial results for Rockwell Collins' Commercial Systems segment were as follows:
Performance of Rockwell Collins' principal lines of business

Total air transport aviation electronics sales increased $45 million (+3%) primarily due to the following:
1) original equipment sales increased $44 million (+5%) primarily due to higher Airbus A350 and Boeing 787 production rates, and higher customer-funded development program revenues, partially offset by lower Airbus A330 production rates and unfavorable customer timing for airline selectable equipment; 2) aftermarket sales increased $20 million (+4%) primarily due to inorganic sales growth from ICG and Pacific Avionics, partially offset by lower service and support activity and the absence of a large used aircraft equipment sale that occurred in the prior year; and 3) wide-body IFE sales decreased $19 million (-33%) as airlines decommissioned their legacy IFE systems

Total business and regional aviation electronics sales decreased $84 million (-8%) primarily due to the following:
1) original equipment sales decreased $106 million (-17%) primarily due to certain lower business aircraft OEM production rates, partially offset by higher product deliveries for the Bombardier CSeries and Embraer Legacy business jet programs and higher customer-funded development program revenues; and 2) aftermarket sales increased $22 million (+5%) primarily due to higher regulatory mandate upgrade and flight deck retrofit activity, as well as higher simulation hardware deliveries, partially offset by lower cabin retrofit activity

2017 Outlook: Commercial Systems' sales are expected to be about flat in 2017 compared to 2016.


Government Systems

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Rockwell Collins' Government Systems segment provides a broad range of electronic products, systems and services to customers including the U.S. Department of Defense, various ministries of defense, other government agencies and defense contractors around the world. Rockwell Collins' defense electronic solutions are designed to meet a wide range of customer requirements, but tend to share certain characteristics including design for rugged environments and use in size, weight and power constrained applications. These applications also typically have stringent product integrity and certification requirements with a high degree of customer oversight. These products, systems and services support airborne, precision weapon, ground and maritime applications on new equipment as well as in retrofit and upgrade applications designed to extend the service life and enhance the capability of existing aircraft, vehicle and weapon platforms.

The company's defense-related systems, products and services include:



• communications systems and products designed to enable the transmission of information across the communications spectrum;

• navigation products and systems, including radio navigation products, Global Positioning System (GPS) equipment and multi-mode receivers;

• avionics systems for aircraft flight decks, including cockpit display products (multipurpose flat panel head-down displays, wide field of view head-up and helmet-mounted displays), flight controls, information/data processing and communications, navigation, safety and surveillance systems;

• precision targeting, electronic warfare and range and training system;

• simulation and training systems, including visual system products, training systems and services;

• space wheels for satellite stabilization;

• maintenance, repair, parts, after-sales support services and aftermarket used equipment.



Beginning in 2016, product category sales for Government Systems have been consolidated as a result of an internal reorganization and are delineated based upon underlying product technologies. The previously reported sales categories of Communication products, Surface solutions and Navigation products are now primarily consolidated into Communication and navigation.

Avionics consists of electronic solutions for a broad range of airborne platforms including fixed wing aircraft and military and civil rotary wing aircraft, unmanned aerial systems (UAS) and the associated aircrew and maintenance training devices and services. Rockwell Collins provides complete avionics solutions, including cockpit avionics, mission system applications and system integration, and also provides individual avionics products to platform integrators. Rockwell Collins serves various roles within these markets including system and sub-systems integrator as well as provider of various electronic products. For the UAS market, the company provides cost effective, high performance integrated flight control, navigation, communication and sensor capabilities. Simulation and training solutions are provided for both fixed and rotary wing aircraft.

Communication and navigation products include full spectrum communication solutions for voice and data connectivity for government and military use in the air, on the ground and at sea. These communication products support military user requirements for high availability, highly secure, jam-resistant wireless communication. Products include radio communication, data links, electronic warfare and networked communication systems. The navigation products are primarily comprised of Global Positioning System (GPS) based products used for precision navigation and targeting applications. These applications include airborne, vehicular, maritime, soldier navigation devices, precision targeting subsystems, precision-guided weapons products, range and training systems and a variety of embedded GPS applications.

     Financial results for Rockwell Collins' Government Systems segment were as follows:
Performance of Rockwell Collins' principal lines of business

Avionics sales increased $47 million (+3%) primarily due to the following: 1) an $80 million increase from higher deliveries and service revenue on various fixed wing platforms; 2) an $8 million increase from higher simulation and training sales; and 3) partially offset by $41 million in other net decreases to revenue, including lower deliveries on various rotary wing platforms.

Communication and navigation sales decreased $28 million (-4%) primarily due to the following: 1) a $32 million decrease due to lower international deliveries of targeting systems; 2) a $28 million decrease due to the wind-down of an international electronic warfare program; and 3) partially offset by $32 million in other net increases to revenue, including increases in data link and ARC-210 radio sales.

2017 Outlook: Government Systems' 2017 revenues are expected to be up low to mid-single digits when compared to 2016.


Information Management Services

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Rockwell Collins' Information Management Services segment was formed with the December 2013 acquisition of ARINC Inc. and provides communications services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets to customers located around the world. The customer base includes commercial airlines, business aircraft operators, the U.S. Federal Aviation Administration (FAA), airport and critical infrastructure operators and major passenger and freight railroads.

The company's information management services include:



• voice and data communication services, such as air-to-ground GLOBALinkSM and ground-to-ground AviNet® services, which enable satellite, VHF and HF transmissions between the cockpit, air traffic control, airline operation centers, reservation systems and other third parties ensuring safety and efficiency for commercial airlines and other related entities in the aviation ecosystem;

• around the clock global flight support services for business aircraft operators, under the ARINCDirectSM brand, including flight planning and datalink, international trip support, cabin connectivity solutions and flight operations management software;

• airport communications and information systems designed to ease congestion and improve airport efficiency via airline agent and self-service check-in, airport operations, baggage management, boarding and access control solutions;

• train dispatching and information systems including solutions to support positive train control as mandated by the 2008 Railroad Safety Improvement Act;

• mission critical security command and control systems for nuclear power facilities with functions such as intrusion detection, access control, video and credential management and vehicle identification;

• global, high throughput cabin connectivity solutions enabling airlines to provide an enhanced experience for their passengers and improved operational efficiency for crews.



     

Financial results for Rockwell Collins' Information Management Services segment were as follows:
Performance of Rockwell Collins' principal lines of business

Total Information Management Services sales increased $35 million (+6%), primarily due to 6% growth in aviation-related sales, and 4% growth in non-aviation related sales for airport and rail programs. Aviation-related sales growth was offset by the absence of certain favorable adjustments recorded in 2015.

2017 Outlook: Information Management Services' 2017 sales are expected to grow mid to high-single digits when compared to 2016.

Company Information

Revenues ('16): $5,259M +0.3%

R&D ('16): $224M -17.7%

Net Profit ('16): $728M +6.1%

CAPEX ('16): $193M -8.1%

Rockwell Collins - Tier I

Products News Subsidiaries Acquisitions Competitors Customers R&D Spending 5-Year Financials

Aerospace Sector:


   

Avionics; C4ISR Systems; Communication Systems/RF

Products:


Communications Systems and products including data link, high frequency (HF), very high frequency (VHF) and satellite communications; Navigation systems and products, including radio navigation products, global positioning system (GPS) equipment, handheld navigation devices, multi-mode receivers; landing sensors to enable fully automatic landings, radio navigation and geophysical sensors, as well as flight management systems; Situational awareness and surveillance systems and products, such as synthetic and enhanced vision systems, surface surveillance and guidance solutions, head-up guidance systems, weather radar and collision avoidance systems; Integrated avionics systems; Avionics sub-systems for aircraft flight decks that combine flight operations with navigation and guidance functions that can include flight controls and displays, information/data processing and communications, navigation, safety and surveillance systems; Integrated flight controls, including fly-by-wire, advanced flight guidance with auto-land capability, pilot controls, and primary and secondary electro-mechanical actuation; Precision targeting and range and training systems; Cockpit display products, including multipurpose flat panel head-down displays, wide field of view head-up and helmet-mounted displays; Integrated cabin electronics systems, including cabin management systems, passenger connectivity and entertainment solutions, business support systems to improve passenger productivity and passenger flight information systems; Simulation and training systems, including full-flight simulators for crew training and visual system products; and Maintenance, repair, parts, after-sales support services and aftermarket used equipment.

Major DoD Defense Programs:


| C-17 | DAGR | E-2 | E-6B (upgrade) | FAB-T | F/A-18E/F | F-22 Raptor | F-35 Lightning II |
| JDAM | JPALS | DoD Prime ContractorJTRS | KC-10 | KC-46A | MQ-8B |

Rockwell Collins' Commercial Programs:


| Airbus: A320 Family, A330, A350 XWB, A380 | Boeing: 737, 747-8, 767, 777, 777X, 787 |
| Bombardier: CSeries, Dash 8, CRJ, Challenger, Global | Embraer: E-Jet E2, E-Jet, ERJ, Legacy | COMAC: C919 | Gulfstream: G280, G450, G550, G650 | Mitsubishi: MRJ |

Sales 2012-2016 Net Income 2012-2016 R&D Spending 2012-2016 # Employees 2012-2016

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