Investor Presentation

Transcription

1 Investor Presentation Credit Suisse Aerospace & Defense Conference November 29, Rockwell Collins. All rights reserved.

2 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 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, including bankruptcies; the health of the global economy, including potential deterioration in economic and financial market conditions; the rate of recovery of the commercial OEM production rates and the aftermarket; the impacts of natural disasters, including operational disruption, potential supply shortages and other economic impacts; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; delays related to the award of domestic and international contracts; unanticipated impacts of sequestration and other provisions of the Budget Control Act of 2011 that are set to be implemented in January 2013; the discontinuance of support for military transformation and modernization programs; potential adverse impact of oil prices on the commercial aerospace industry; 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 our products and services; favorable outcomes on or potential cancellation or restructuring of contracts, orders or program priorities by our customers; timing of international contract awards; recruitment and retention of qualified personnel; regulatory restrictions on air travel due to environmental concerns; effective negotiation of collective bargaining agreements by us and our customers, including our collective bargaining agreements set to expire in May 2013; 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 our internal performance plans such as our productivity and quality improvements and cost reduction initiatives; achievement of our 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 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. 2

3 What We Do Communications and electronics products, systems and solutions for commercial aviation and military applications worldwide 2013E Sales: $4.6 - $4.7 Billion (1) Communications Navigation Automated flight control Displays/surveillance Government ~50% ~50% Commercial Aviation services Integrated electronic solutions Avionics ~55% Air transport ~48% Information management systems Comm products ~25% Nav products~10% Business & regional ~48% Simulation and training Surface sys ~10% Wide-body IFE 4% (1) FY 2013 financial guidance issued September 21, Inclusion of this information in today s presentation is not an update or reaffirmation of that financial guidance. 3

4 Year of Transition 2013 Revenue $4.6 - $4.7 billion Commercial Systems: 7% growth Growth rate increases across the year Government Systems: 10% decline Incorporates impact of sequestration Earnings per share $ $4.50 Segment operating margins 21% - 22% Operating cash flow $500 - $600 million Total R&D investment About $1.0 billion Capital expenditures About $140 million Note: 2013 guidance unchanged since originally issued on September 21,

5 Improving Five-Year Outlook 2016/ /2015 Accelerating Growth Returning to Growth 2013 Year of Transition 5

6 Return to Growth - Government Systems 2015 Domestic budgets reset Growth in selected international markets Portfolio reshaping actions implemented Core positions provide platforms for growth Avionics E-6, KC-10, C-130 & legacy platform upgrades Networked communications JTRS HMS, ARC-210 Gen 5 International products Firestorm targeting systems 6

7 Accelerating Growth Government Systems Modest growth in addressed markets 2017 International revenue grows at 6% CAGR to 35% of total Government Systems sales Revenue growth of 3-4% driven by Tankers & Transports Rotary Wing Networked Communication Next Generation GPS Targeting Systems Government Systems is 42% of Rockwell Collins revenue 7

8 Commercial Systems Outlook Strong markets across entire period Growth led by Air Transport OEM backlog & new aircraft introductions Business jet recovery lags through period Significant market share gains fuel higher than market rate of revenue growth Efficiency upgrades, aircraft modernization and a growing install base drive aftermarket revenue 8

9 New Aircraft Introductions Boeing Airbus Irkut COMAC 787 Rate Increase A350 ARJ Max Displays MC-21 C919 Mitsubishi MRJ* Bombardier Gulfstream G280* & G650 CSeries* & Learjet 85* Global 7000* & 8000* Embraer Legacy 500* Legacy 450* Unannounced platforms 4 Platforms* 2 Platforms* * Pro Line Fusion Platforms 9

10 Returning to Growth - Air Transport OE Revenue CAGR 14% Growth $600 million 7% Growth New Aircraft EIS 10

11 Accelerating Growth - Air Transport OE Revenue CAGR 14% Growth $600 million 6% Growth 11

12 Returning to Growth Bus. & Reg. Jet OE Revenue CAGR 4% Growth 2015 $600 million -3% Growth New Aircraft EIS 12

13 Accelerating Growth Bus. & Reg. Jet OE Revenue CAGR 7% Growth $600 million -1% Growth 13

14 Returning to Growth Aftermarket Revenue CAGR 12% Growth $900 million New Aircraft EIS 7% Growth 14

15 Accelerating Growth Aftermarket Revenue CAGR 11% Growth $900 million 7% Growth 15

16 Five-Year Revenue Growth Summary Rockwell Collins Growth (1%-3%) 5% 8% Government Systems (10%) ~Flat 3-4% Commercial Systems 7% 10% >10% % Sales Commercial 50% 54% 58% Accelerating revenue growth and continued shift to commercial markets 16

17 Revenue Growth Fueled by R&D Investment Invested $4.8 billion (20.4% of sales) in R&D from 2008 through 2012 Plan to invest about $1 billion (22% sales) in 2013 $100 million increase in discretionary R&D from 2012 Boeing 737 Max displays Bombardier Global 7000/8000 Expect 2013 to be peak spending Return to sustaining level of R&D 18%-19% Completion of development programs A350 (2014) CSeries (2014) Bombardier Global (2016) 737 Max (2017) 17

18 Value Creation Combination of increased revenue and normalized R&D spend through 2017 will generate: Total segment operating margin increase 150 to 200 basis points to 23% Operating cash flow generation accelerates from 90% to 120% of net income Earnings per share grows low double digit CAGR 18

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