[caption id="attachment_79" align="alignleft" width="142"] Rockwell Collins President and CEO Kelly Ortberg. Photo: Rockwell Collins[/caption] Rockwell Collins [COL] on Tuesday posted a slight gain in its first quarter sales while net income was largely unchanged and the aerospace and defense company raised its guidance for this year on an improved outlook for its government business and the recent acquisition of ARINC. Sales increased 1 percent to $1.1 billion mainly due to $6 million in sales generated from ARINC, which was acquired in late December, and to a lesser degree from growth in its Commercial Systems segment. Net income of $131 million, 96 cents earnings per share (EPS), was essentially level with the $132 million (94 cents EPS), a year ago, topping consensus estimates by two cents. The company has fewer shares of stock outstanding than a year ago due to its ongoing share repurchase program, which lifted the EPS results. To account for the ARINC purchase and the recent congressional bipartisan budget deal, Rockwell Collins increased its sales guidance for FY ’14 by $450 million to between $5 billion and $5.1 billion. ARINC is expected to contribute between $400 and $430 million in sales while Rockwell Collins’ Government Systems segment is expected to see a mid-single digit decline in revenue versus prior guidance of mid to high-single digit declines. Kelly Ortberg, Rockwell Collins’ president and CEO, said that the new budget deal “reinforces our belief that our government business will be flat in 201 before returning to some modest level of growth.” He said on the company’s first quarter earnings call that the deal means that Pentagon spending will rise about $22 billion in 2014 versus expectations under sequestration and another $9 billion in 2015. Earnings guidance was raised a nickel to between $4.35 and $4.55 due to the improved outlook at Government Systems. Driven by higher delivery rates for the Boeing [BA] 787 passenger plane and a large spare parts delivery for the same aircraft, the Commercial Systems segment increased sales by 3 percent to $521 million while operating earnings jumped 6 percent to $111 million. The growth related to the 787 was partially offset by continued weakness in the light end of the business jet market, Ortberg said, a trend that is expected to continue. Government Systems revenues were off 3 percent to $532 million on declines in communications products sales stemming from troop drawdowns in the Middle East and lower Defense Advanced GPS Receiver deliveries. Operating income in the segment fell 6 percent to $101 million on the lower sales. Rockwell Collins introduced its new reporting segment, Information Management Services, which consists of ARINC and the flight services business that was peeled from the commercial segment. Sales were $18 million, $6 million from ARINC, and operating earnings $2 million. With ARINC expected to contribute more than $400 million this year, the IMS segment looks like it would do at least $450 million in business in 2014. Ortberg said that the acquisition of ARINC accelerates the company’s vision of becoming a leader in the “fast-growing aviation information management space.” Before acquisition-related synergies are factored in, Rockwell Collins expects the IMS segment to achieve high-single digit growth. ARINC cost Rockwell Collins $1.4 billion. Ortberg said that while the company still has an appetite for additional deals, they will not be the size of ARINC and will be done to fill niches.