- Reported sales down 6.6% year over year; organic sales down
8.1% year over year
- Acquisitions contributed 1.4% to growth
- Total ARR up 20% year over year
- Diluted EPS of $2.31 and adjusted EPS of $2.50; down (11)% and
(17)% year over year, respectively
- Updates fiscal 2024 reported sales growth guidance to (6.0)% -
(4.0)%; organic sales growth to (8.0)% - (6.0)%
- Updates fiscal 2024 diluted EPS guidance to $8.80 - $9.80;
adjusted EPS guidance to $10.00 - $11.00
- Announces upcoming retirement of Nicholas Gangestad, Senior
Vice President and Chief Financial Officer
Rockwell Automation, Inc. (NYSE: ROK) today reported second
quarter fiscal 2024 results.
"Execution in the second quarter was solid, and we continue to
see sequential order improvement. However, there is more excess
inventory at our customers, particularly machine builders, than we
originally expected. As a result, we are not yet seeing the
accelerated order ramp this fiscal year and are reducing our
full-year guidance. Despite the lower FY24 outlook, we are gaining
share across many of our most important product lines and in North
America, our largest market," said Blake Moret, Chairman and
CEO.
Fiscal Q2 2024 Financial
Results
Fiscal 2024 second quarter sales were $2,126 million, down 6.6%
from $2,275 million in the second quarter of fiscal 2023. Organic
sales decreased 8.1%, currency translation increased sales by 0.1%,
and acquisitions increased sales by 1.4%.
Fiscal 2024 second quarter Net income attributable to Rockwell
Automation was $266 million or $2.31 per share, compared to $300
million or $2.59 per share in the second quarter of fiscal 2023.
The decreases in Net income attributable to Rockwell Automation and
diluted EPS were primarily due to lower pre-tax margin. Fiscal 2024
second quarter adjusted EPS was $2.50, down 16.9% compared to $3.01
in the second quarter of fiscal 2023 primarily due to lower segment
operating margin.
Pre-tax margin was 14.6% in the second quarter of fiscal 2024
compared to 15.4% in the same period last year. The decrease in
pre-tax margin was primarily due to lower sales volume, partially
offset by lower non-operating pension expense.
Total segment operating earnings were $404 million in the second
quarter of fiscal 2024, down 16.5% from $484 million in the same
period of fiscal 2023. Total segment operating margin was 19.0%
compared to 21.3% a year ago. The decrease in segment operating
margin was primarily due to lower sales volume, partially offset by
lower incentive compensation.
Cash flow generated by operating activities in the second
quarter of fiscal 2024 was $120 million, compared to $187 million
in the second quarter of fiscal 2023. Free cash flow in the second
quarter of fiscal 2024 was $68.6 million, compared to $156 million
in the same period last year. Decreases in cash flow provided by
operating activities and free cash flow were primarily due to lower
pre-tax income and higher tax payments, partially offset by
decreases in working capital.
Fiscal Year 2024 Outlook
The table below provides updated guidance for sales growth and
earnings per share for fiscal 2024.
Updated Guidance
Prior Guidance
Reported sales growth
(6.0)% - (4.0)%
0.5% - 6.5%
Organic sales growth (1)
(8.0)% - (6.0)%
(2.0)% - 4.0%
Inorganic sales growth
~1.5%
~1.5%
Currency translation
~0.5%
~1.0%
Diluted EPS
$8.80- $9.80
$11.24 - $12.74
Adjusted EPS (1)
$10.00 - $11.00
$12.00 - $13.50
(1) Organic sales growth and Adjusted EPS
are non-GAAP measures. See Other Supplemental Information for
detail on these non-GAAP measures.
"The reduced guide for the fiscal year only strengthens our
commitment to building a strong foundation for future growth and
profitability. We have built an unmatched portfolio with both our
traditional offerings and new sources of value. As we couple this
with our focus on margin expansion through cost discipline,
operational excellence, and organic growth, we will achieve the
longer-range targets introduced in November and create significant
shareowner value,” Moret continued.
Following is a discussion of second quarter results for our
business segments.
Intelligent Devices
Intelligent Devices second quarter fiscal 2024 sales were $974
million, a decrease of 4.9% compared to $1,023 million in the same
period last year. Organic sales decreased 7.4%, currency
translation increased sales by 0.2%, and acquisitions increased
sales by 2.3%. Segment operating earnings were $161 million
compared to $207 million in the same period last year. Segment
operating margin decreased to 16.5% from 20.2% a year ago. The
decrease from prior year was driven by lower sales volume and
unfavorable mix, partially offset by lower incentive
compensation.
Software & Control
Software & Control second quarter fiscal 2024 sales were
$570 million, a decrease of 23.1% compared to $741 million in the
same period last year. Organic sales decreased 23.2% and currency
translation increased sales by 0.1%. Segment operating earnings
were $146 million compared to $249 million in the same period last
year. Segment operating margin decreased to 25.7% from 33.6% a year
ago, driven by lower sales volume partially offset by lower
incentive compensation, positive price/cost, and favorable mix.
Lifecycle Services
Lifecycle Services second quarter fiscal 2024 sales were $583
million, an increase of 14.0% compared to $511 million in the same
period last year. Organic sales increased 12.4% and acquisitions
increased sales by 1.6%. Segment operating earnings were $96.9
million compared to $27.9 million in the same period last year.
Segment operating margin was 16.6% compared to 5.5% a year ago
driven by lower incentive compensation, higher sales volume, and
higher margins in Sensia.
CFO Transition
Rockwell Automation also announced today that Nicholas
Gangestad, Senior Vice President and Chief Financial Officer, will
retire from the Company. A search for his successor has been
underway, and Mr. Gangestad will continue to serve in his role
until the new CFO is appointed. Mr. Gangestad will work with the
Board and management team to help ensure a smooth transition.
Supplemental Information
ARR - Total ARR grew 20% and Organic ARR grew 17% compared to
the end of the second quarter of fiscal 2023.
Corporate and other - Fiscal 2024 second quarter Corporate and
other expense was $28.2 million compared to $29.2 million in the
second quarter of fiscal 2023.
Purchase accounting depreciation and amortization - Fiscal 2024
second quarter Purchase accounting depreciation and amortization
expense was $37.1 million, up $10.5 million from the second quarter
of fiscal 2023 primarily related to the acquisitions of Clearpath
Robotics and Verve Industrial Protection.
Tax - On a GAAP basis, the effective tax rate in the second
quarter of fiscal 2024 was 14.5% compared to 16.1% in the second
quarter of fiscal 2023. The adjusted effective tax rate for the
second quarter of fiscal 2024 was 14.8% compared to 17.4% in the
prior year. These decreases were related to the impact of discrete
items recognized in the current quarter.
Share repurchases - During the second quarter of fiscal 2024,
the Company repurchased approximately 0.7 million shares of its
common stock at a cost of $194.7 million. At March 31, 2024, $0.6
billion remained available under our existing share repurchase
authorization.
Return on Invested Capital (ROIC) - ROIC was 18.0% for the
twelve months ended March 31, 2024, compared to 19.7% for the
twelve months ended March 31, 2023. The decrease is primarily
driven by a higher trailing twelve month effective tax rate and
higher invested capital.
Definitions
Non-GAAP Measures - Organic sales, total segment operating
earnings, total segment operating margin, adjusted income, adjusted
EPS, adjusted effective tax rate, free cash flow, free cash flow
conversion, and ROIC are non-GAAP measures that are reconciled to
GAAP measures in the attachments to this release.
Total ARR - Annual recurring revenue (ARR) is a key metric that
enables measurement of progress in growing our recurring revenue
business. It represents the annual contract value of all active
recurring revenue contracts at any point in time. Recurring revenue
is defined as a revenue stream that is contractual, typically for a
period of 12 months or more, and has a high probability of renewal.
The probability of renewal is based on historical renewal
experience of the individual revenue streams, or management's best
estimates if historical renewal experience is not available. Total
ARR growth is calculated as the dollar change in ARR, adjusted to
exclude the effects of currency, divided by ARR as of the prior
period. The effects of currency translation are excluded by
calculating Total ARR on a constant currency basis. Total ARR
includes acquisitions even if there was no comparable ARR in the
prior period. We believe that Total ARR provides useful information
to investors because it reflects our recurring revenue performance
period over period including the effect of acquisitions. Our
measure of ARR may be different from measures used by other
companies. Because ARR is based on annual contract value, it does
not represent revenue recognized during a particular reporting
period or revenue to be recognized in future reporting periods and
is not intended to be a substitute for revenue, contract
liabilities, or backlog.
Organic ARR - Organic ARR growth is calculated as the dollar
change in ARR, adjusted to exclude the effects of currency
translation and acquisitions, divided by ARR as of the prior
period. The effects of currency translation are excluded by
calculating Organic ARR on a constant currency basis. When we
acquire businesses, we exclude the effect of ARR in the current
period for which there was no comparable ARR in the prior period.
We believe that Organic ARR provides useful information to
investors because it reflects our recurring revenue performance
period over period without the effect of acquisitions and changes
in currency exchange rates. Organic ARR growth is also used as a
financial measure of performance for our annual incentive
compensation.
Conference Call
A conference call to discuss the quarterly results will be held
at 8:30 a.m. Eastern Time on May 7, 2024. The call will be an audio
webcast and accessible on the Rockwell Automation website
(www.rockwellautomation.com/en-us/investors.html). Presentation
materials will also be available on the website prior to the
call.
Interested parties can access the conference call by using the
following numbers: (888) 330-2022 in the U.S. and Canada; (646)
960-0690 for other countries. Use the following passcode: 5499533.
Please call in 10 minutes prior to the start of the call.
Both the presentation materials and a replay of the call will be
available on the Investor Relations section of the Rockwell
Automation website through June 7, 2024.
This news release contains statements (including certain
projections and business trends) that are “forward-looking
statements” as defined in the Private Securities Litigation Reform
Act of 1995. Words such as “believe”, “estimate”, “project”,
“plan”, “expect”, “anticipate”, “will”, “intend”, and other similar
expressions may identify forward-looking statements. Actual results
may differ materially from those projected as a result of certain
risks and uncertainties, many of which are beyond our control,
including but not limited to:
- macroeconomic factors, including inflation, global and regional
business conditions (including adverse impacts in certain markets,
such as Oil & Gas), commodity prices, currency exchange rates,
the cyclical nature of our customers’ capital spending, and
sovereign debt concerns;
- the severity and duration of disruptions to our business due to
pandemics, natural disasters (including those as a result of
climate change), acts of war, strikes, terrorism, social unrest or
other causes, liquidity and financial markets, demand for our
hardware and software products, solutions, and services, our supply
chain, our work force, our liquidity and the value of the assets we
own;
- the availability and price of components and materials;
- the availability, effectiveness, and security of our
information technology systems;
- our ability to attract, develop, and retain qualified
employees;
- our ability to manage and mitigate the risk related to security
vulnerabilities and breaches of our hardware and software products,
solutions, and services;
- the successful integration and management of strategic
transactions and achievement of the expected benefits of these
transactions;
- laws, regulations, and governmental policies affecting our
activities in the countries where we do business, including those
related to tariffs, taxation, trade controls, cybersecurity, and
climate change;
- the successful development of advanced technologies and demand
for and market acceptance of new and existing hardware and software
products;
- our ability to manage and mitigate the risks associated with
our solutions and services businesses;
- the successful execution of our cost productivity
initiatives;
- competitive hardware and software products, solutions, and
services, pricing pressures, and our ability to provide high
quality products, solutions, and services;
- the availability and cost of capital;
- disruptions to our distribution channels or the failure of
distributors to develop and maintain capabilities to sell our
products;
- intellectual property infringement claims by others and the
ability to protect our intellectual property;
- the uncertainty of claims by taxing authorities in the various
jurisdictions where we do business;
- the uncertainties of litigation, including liabilities related
to the safety and security of the hardware and software products,
solutions, and services we sell;
- our ability to manage costs related to employee retirement and
health care benefits; and
- other risks and uncertainties, including but not limited to
those detailed from time to time in our Securities and Exchange
Commission (SEC) filings.
Rockwell Automation, Inc. (NYSE: ROK), is a global leader in
industrial automation and digital transformation. We connect the
imaginations of people with the potential of technology to expand
what is humanly possible, making the world more productive and more
sustainable. Headquartered in Milwaukee, Wisconsin, Rockwell
Automation employs approximately 29,000 problem solvers dedicated
to our customers in more than 100 countries. To learn more about
how we are bringing The Connected Enterprise(R) to life across
industrial enterprises, visit www.rockwellautomation.com.
ROCKWELL AUTOMATION,
INC.
CONDENSED STATEMENT OF
OPERATIONS INFORMATION
(in millions, except
percentages)
Three Months Ended
March 31,
Six Months Ended March
31,
2024
2023
2024
2023
Sales (a)
$
2,126.0
$
2,275.4
$
4,178.1
$
4,256.4
Cost of sales
(1,292.6
)
(1,342.9
)
(2,550.1
)
(2,510.3
)
Gross profit (b)
833.4
932.5
1,628.0
1,746.1
Selling, general and administrative
expenses (c)
(501.4
)
(501.2
)
(1,015.1
)
(970.7
)
Change in fair value of investments
(1)
2.8
63.0
5.9
203.6
Other income (expense)
14.8
(107.1
)
23.7
(89.8
)
Interest expense
(39.2
)
(35.8
)
(72.5
)
(69.9
)
Income before income taxes
310.4
351.4
570.0
819.3
Income tax provision
(45.1
)
(56.5
)
(92.0
)
(145.7
)
Net income
265.3
294.9
478.0
673.6
Net loss attributable to noncontrolling
interests
(0.9
)
(5.4
)
(3.4
)
(10.7
)
Net income attributable to Rockwell
Automation, Inc.
$
266.2
$
300.3
$
481.4
$
684.3
Gross profit as percent of sales
(b/a)
39.2
%
41.0
%
39.0
%
41.0
%
SG&A as percent of sales
(c/a)
23.6
%
22.0
%
24.3
%
22.8
%
(1) Amount in the three and six months
ended March 31, 2023, primarily relates to the change in fair value
of our previous investment in PTC.
ROCKWELL AUTOMATION,
INC.
SALES AND EARNINGS
INFORMATION
(in millions, except per share
amounts and percentages)
Three Months Ended
March 31,
Six Months Ended March
31,
2024
2023
2024
2023
Sales
Intelligent Devices (a)
$
973.5
$
1,023.2
$
1,900.8
$
1,959.4
Software & Control (b)
570.0
741.1
1,173.6
1,314.4
Lifecycle Services (c)
582.5
511.1
1,103.7
982.6
Total sales (d)
$
2,126.0
$
2,275.4
$
4,178.1
$
4,256.4
Segment operating earnings
Intelligent Devices (e)
$
161.0
$
206.9
$
311.2
$
416.3
Software & Control (f)
146.3
249.3
297.3
416.6
Lifecycle Services (g)
96.9
27.9
151.2
52.2
Total segment operating earnings (1)
(h)
404.2
484.1
759.7
885.1
Purchase accounting depreciation and
amortization
(37.1
)
(26.6
)
(72.7
)
(52.6
)
Corporate and other
(28.2
)
(29.2
)
(68.2
)
(56.5
)
Non-operating pension and postretirement
benefit credit (cost)
4.9
(105.4
)
9.8
(93.0
)
Change in fair value of investments
2.8
63.0
5.9
203.6
Interest expense, net
(36.2
)
(34.5
)
(64.5
)
(67.3
)
Income before income taxes (i)
310.4
351.4
570.0
819.3
Income tax provision
(45.1
)
(56.5
)
(92.0
)
(145.7
)
Net income
265.3
294.9
478.0
673.6
Net loss attributable to noncontrolling
interests
(0.9
)
(5.4
)
(3.4
)
(10.7
)
Net income attributable to Rockwell
Automation, Inc.
$
266.2
$
300.3
$
481.4
$
684.3
Diluted EPS
$
2.31
$
2.59
$
4.17
$
5.90
Adjusted EPS (2)
$
2.50
$
3.01
$
4.54
$
5.48
Diluted weighted average outstanding
shares
114.8
115.6
115.0
115.6
Pre-tax margin (i/d)
14.6
%
15.4
%
13.6
%
19.2
%
Intelligent Devices segment operating
margin (e/a)
16.5
%
20.2
%
16.4
%
21.2
%
Software & Control segment operating
margin (f/b)
25.7
%
33.6
%
25.3
%
31.7
%
Lifecycle Services segment operating
margin (g/c)
16.6
%
5.5
%
13.7
%
5.3
%
Total segment operating margin (1)
(h/d)
19.0
%
21.3
%
18.2
%
20.8
%
(1) Total segment operating earnings and
total segment operating margin are non-GAAP financial measures. We
exclude purchase accounting depreciation and amortization,
corporate and other, non-operating pension and postretirement
benefit credit, change in fair value of investments, interest
expense, net, and income tax provision because we do not consider
these items to be directly related to the operating performance of
our segments. We believe total segment operating earnings and total
segment operating margin are useful to investors as measures of
operating performance. We use these measures to monitor and
evaluate the profitability of our operating segments. Our measures
of total segment operating earnings and total segment operating
margin may be different from measures used by other companies.
(2) Adjusted EPS is a non-GAAP earnings
measure that excludes purchase accounting depreciation and
amortization, non-operating pension and postretirement benefit
credit (cost), change in fair value of investments, and net loss
attributable to noncontrolling interests, including their
respective tax effects. See "Other Supplemental Information -
Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate"
section for more information regarding non-operating pension and
postretirement benefit credit (cost) and a reconciliation to GAAP
measures.
ROCKWELL AUTOMATION,
INC.
CONDENSED BALANCE SHEET
INFORMATION
(in millions)
March 31, 2024
September 30,
2023
Assets
Cash and cash equivalents
$
470.3
$
1,071.8
Receivables
1,960.2
2,167.4
Inventories
1,384.7
1,404.9
Property, net
715.4
684.2
Operating lease right-of-use assets
405.5
349.4
Goodwill and intangibles
5,105.1
4,381.6
Other assets
1,326.1
1,244.7
Total
$
11,367.3
$
11,304.0
Liabilities and Shareowners’
Equity
Short-term debt
$
1,086.8
$
103.3
Accounts payable
903.2
1,150.2
Long-term debt
2,584.5
2,862.9
Operating lease liabilities
333.2
285.3
Other liabilities
2,737.6
3,158.9
Shareowners' equity attributable to
Rockwell Automation, Inc.
3,543.6
3,561.6
Noncontrolling interests
178.4
181.8
Total
$
11,367.3
$
11,304.0
ROCKWELL AUTOMATION,
INC.
CONDENSED CASH FLOW
INFORMATION
(in millions)
Six Months Ended March
31,
2024
2023
Operating activities:
Net income
$
478.0
$
673.6
Depreciation and amortization
157.7
119.9
Change in fair value of investments
(1)
(5.9
)
(203.6
)
Retirement benefits expense
9.0
114.4
Pension contributions
(12.0
)
(13.4
)
Receivables/inventories/payables
76.9
(507.2
)
Contract liabilities
22.5
85.1
Compensation and benefits
(284.8
)
14.1
Income taxes
(227.8
)
(30.8
)
Other operating activities
(61.2
)
1.3
Cash provided by operating activities
152.4
253.4
Investing activities:
Capital expenditures
(119.1
)
(55.7
)
Acquisition of businesses, net of cash
acquired
(748.7
)
(168.0
)
Purchases of investments
(7.9
)
(5.2
)
Proceeds from sale of investments
—
205.2
Other investing activities
(0.6
)
4.2
Cash used for investing activities
(876.3
)
(19.5
)
Financing activities:
Net issuance of short-term debt
705.9
162.2
Repayment of debt
—
(18.8
)
Cash dividends
(287.3
)
(271.4
)
Purchases of treasury stock
(313.7
)
(195.2
)
Proceeds from the exercise of stock
options
26.7
48.7
Other financing activities
(23.0
)
(22.0
)
Cash provided by (used for) financing
activities
108.6
(296.5
)
Effect of exchange rate changes on
cash
5.2
19.3
Decrease in cash, cash equivalents, and
restricted cash (2)
$
(610.1
)
$
(43.3
)
(1) Amount in the six months ended March
31, 2023, primarily relates to the change in fair value of our
previous investment in PTC.
(2) Cash, cash equivalents, and restricted
cash at March 31, 2023, includes restricted cash of $8.6 million
recorded in Other assets in the Condensed Balance Sheet.
ROCKWELL AUTOMATION,
INC.
OTHER SUPPLEMENTAL
INFORMATION
(in millions, except
percentages)
Organic
Sales
We translate sales of subsidiaries
operating outside of the United States using exchange rates
effective during the respective period. Therefore, changes in
currency exchange rates affect our reported sales. Sales by
acquired businesses also affect our reported sales. We believe that
organic sales, defined as sales excluding the effects of
acquisitions and changes in currency exchange rates, which is a
non-GAAP financial measure, provides useful information to
investors because it reflects regional and operating segment
performance from the activities of our businesses without the
effect of acquisitions and changes in currency exchange rates. We
use organic sales as one measure to monitor and evaluate our
regional and operating segment performance. When we acquire
businesses, we exclude sales in the current period for which there
are no comparable sales in the prior period. We determine the
effect of changes in currency exchange rates by translating the
respective period’s sales using the same currency exchange rates
that were in effect during the prior year. When we divest a
business, we exclude sales in the prior period for which there are
no comparable sales in the current period. Organic sales growth is
calculated by comparing organic sales to reported sales in the
prior year, excluding divestitures. We attribute sales to the
geographic regions based on the country of destination.
The following is a reconciliation of
reported sales to organic sales for the three and six months ended
March 31, 2024, compared to sales for the three and six months
ended March 31, 2023:
Three Months Ended March
31,
2024
2023
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
North America
$
1,293.6
$
28.8
$
0.9
$
1,263.9
$
1,310.6
EMEA
398.9
1.3
3.7
393.9
486.5
Asia Pacific
269.9
1.4
(8.9
)
277.4
334.2
Latin America
163.6
—
8.0
155.6
144.1
Total
$
2,126.0
$
31.5
$
3.7
$
2,090.8
$
2,275.4
Six Months Ended March
31,
2024
2023
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
North America
$
2,540.7
$
47.6
$
0.7
$
2,492.4
$
2,489.5
EMEA
787.2
7.6
21.1
758.5
859.3
Asia Pacific
545.5
4.1
(10.6
)
552.0
630.7
Latin America
304.7
—
16.9
287.8
276.9
Total
$
4,178.1
$
59.3
$
28.1
$
4,090.7
$
4,256.4
The following is a reconciliation of
reported sales to organic sales for our operating segments for the
three and six months ended March 31, 2024, compared to sales for
the three and six months ended March 31, 2023:
Three Months Ended March
31,
2024
2023
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
Intelligent Devices
$
973.5
$
23.4
$
2.7
$
947.4
$
1,023.2
Software & Control
570.0
—
1.2
568.8
741.1
Lifecycle Services
582.5
8.1
(0.2
)
574.6
511.1
Total
$
2,126.0
$
31.5
$
3.7
$
2,090.8
$
2,275.4
Six Months Ended March
31,
2024
2023
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
Intelligent Devices
$
1,900.8
$
44.5
$
14.6
$
1,841.7
$
1,959.4
Software & Control
1,173.6
—
8.7
1,164.9
1,314.4
Lifecycle Services
1,103.7
14.8
4.8
1,084.1
982.6
Total
$
4,178.1
$
59.3
$
28.1
$
4,090.7
$
4,256.4
The following is a reconciliation of
reported sales growth to organic sales growth for the three and six
months ended March 31, 2024, compared to sales for the three and
six months ended March 31, 2023:
Three Months Ended March 31,
2024
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
North America
(1.3
)%
2.2
%
0.1
%
(3.6
)%
EMEA
(18.0
)%
0.3
%
0.7
%
(19.0
)%
Asia Pacific
(19.2
)%
0.4
%
(2.6
)%
(17.0
)%
Latin America
13.5
%
—
%
5.5
%
8.0
%
Total
(6.6
)%
1.4
%
0.1
%
(8.1
)%
Six Months Ended March 31,
2024
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
North America
2.1
%
1.9
%
0.1
%
0.1
%
EMEA
(8.4
)%
0.9
%
2.4
%
(11.7
)%
Asia Pacific
(13.5
)%
0.7
%
(1.7
)%
(12.5
)%
Latin America
10.0
%
—
%
6.1
%
3.9
%
Total
(1.8
)%
1.4
%
0.7
%
(3.9
)%
The following is a reconciliation of
reported sales growth to organic sales growth for our operating
segments for the three and six months ended March 31, 2024,
compared to sales for the three and six months ended March 31,
2023:
Three Months Ended March 31,
2024
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
Intelligent Devices
(4.9
)%
2.3
%
0.2
%
(7.4
)%
Software & Control
(23.1
)%
—
%
0.1
%
(23.2
)%
Lifecycle Services
14.0
%
1.6
%
—
%
12.4
%
Total
(6.6
)%
1.4
%
0.1
%
(8.1
)%
Six Months Ended March 31,
2024
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
Intelligent Devices
(3.0
)%
2.3
%
0.7
%
(6.0
)%
Software & Control
(10.7
)%
—
%
0.7
%
(11.4
)%
Lifecycle Services
12.3
%
1.5
%
0.5
%
10.3
%
Total
(1.8
)%
1.4
%
0.7
%
(3.9
)%
ROCKWELL AUTOMATION,
INC.
OTHER SUPPLEMENTAL
INFORMATION
(in millions, except per share
amounts and percentages)
Adjusted Income,
Adjusted EPS, and Adjusted Effective Tax Rate
Adjusted income, adjusted EPS, and
adjusted effective tax rate are non-GAAP earnings measures that
exclude non-operating pension and postretirement benefit (credit)
cost, purchase accounting depreciation and amortization
attributable to Rockwell Automation, change in fair value of
investments, and Net loss attributable to noncontrolling interests,
including their respective tax effects.
We believe that adjusted income, adjusted
EPS, and adjusted effective tax rate provide useful information to
our investors about our operating performance and allow management
and investors to compare our operating performance period over
period. Adjusted EPS is also used as a financial measure of
performance for our annual incentive compensation. Our measures of
adjusted income, adjusted EPS, and adjusted effective tax rate may
be different from measures used by other companies. These non-GAAP
measures should not be considered a substitute for Net income
attributable to Rockwell Automation, diluted EPS, and effective tax
rate.
The following are the components of
operating and non-operating pension and postretirement benefit
(credit) cost:
Three Months Ended
March 31,
Six Months Ended March
31,
2024
2023
2024
2023
Service cost
$
9.4
$
10.7
$
18.8
$
21.4
Operating pension and postretirement
benefit cost
9.4
10.7
18.8
21.4
Interest cost
37.4
40.0
74.6
79.8
Expected return on plan assets
(42.5
)
(51.7
)
(84.7
)
(103.0
)
Amortization of net actuarial loss
(gain)
0.2
(0.8
)
0.3
(1.7
)
Settlement charge
—
117.9
—
117.9
Non-operating pension and postretirement
benefit (credit) cost
(4.9
)
105.4
(9.8
)
93.0
Net periodic pension and postretirement
benefit cost
$
4.5
$
116.1
$
9.0
$
114.4
The components of net periodic pension and
postretirement benefit (credit) cost other than the service cost
component are included in Other income (expense) in the Condensed
Statement of Operations.
The following are reconciliations of Net
income attributable to Rockwell Automation, diluted EPS, and
effective tax rate to adjusted income, adjusted EPS, and adjusted
effective tax rate, respectively:
Three Months Ended
March 31,
Six Months Ended March
31,
2024
2023
2024
2023
Net income attributable to Rockwell
Automation
$
266.2
$
300.3
$
481.4
$
684.3
Non-operating pension and postretirement
benefit (credit) cost
(4.9
)
105.4
(9.8
)
93.0
Tax effect of non-operating pension and
postretirement benefit (credit) cost
1.0
(25.6
)
2.0
(22.8
)
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
34.4
23.6
67.1
46.6
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(6.0
)
(5.8
)
(11.5
)
(11.4
)
Change in fair value of investments
(1)
(2.8
)
(63.0
)
(5.9
)
(203.6
)
Tax effect of change in fair value of
investments (1)
0.1
15.2
0.7
49.3
Adjusted income
$
288.0
$
350.1
$
524.0
$
635.4
Diluted EPS
$
2.31
$
2.59
$
4.17
$
5.90
Non-operating pension and postretirement
benefit (credit) cost
(0.04
)
0.90
(0.09
)
0.80
Tax effect of non-operating pension and
postretirement benefit (credit) cost
0.01
(0.22
)
0.02
(0.20
)
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.29
0.20
0.58
0.40
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.05
)
(0.05
)
(0.10
)
(0.10
)
Change in fair value of investments
(1)
(0.02
)
(0.54
)
(0.05
)
(1.75
)
Tax effect of change in fair value of
investments (1)
—
0.13
0.01
0.43
Adjusted EPS
$
2.50
$
3.01
$
4.54
$
5.48
Effective tax rate
14.5
%
16.1
%
16.1
%
17.8
%
Tax effect of non-operating pension and
postretirement benefit (credit) cost
(0.1
)%
1.9
%
—
%
0.7
%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
0.3
%
0.4
%
0.1
%
0.5
%
Tax effect of change in fair value of
investments (1)
0.1
%
(1.0
)%
—
%
(1.7
)%
Adjusted effective tax rate
14.8
%
17.4
%
16.2
%
17.3
%
(1) Amount in the three and six months
ended March 31, 2023, primarily relates to the change in fair value
of our previous investment in PTC.
Fiscal 2024 Guidance
Diluted EPS (1)
$8.80- $9.80
Non-operating pension and postretirement
benefit credit
(0.17)
Tax effect of non-operating pension and
postretirement benefit credit
0.04
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
1.17
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.20)
Change in fair value of investments
(2)
(0.05)
Tax effect of change in fair value of
investments (2)
0.01
Restructuring costs
0.52
Tax effect of restructuring costs
(0.12)
Adjusted EPS (1)
$10.00 - $11.00
Effective tax rate
~ 16.8%
Tax effect of non-operating pension and
postretirement benefit credit
~ (0.1)%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
~ —%
Tax effect of change in fair value of
investments (2)
~ —%
Tax effect of restructuring costs
~ 0.3%
Adjusted effective tax rate
~ 17.0%
(1) Fiscal 2024 guidance based on adjusted
income attributable to Rockwell, which includes an adjustment for
SLB's non-controlling interest in Sensia.
(2) The actual year-to-date adjustments
are used for guidance, as estimates of these adjustments on a
forward-looking basis are not available due to variability,
complexity, and limited visibility of these items.
Note: Guidance as of May 7, 2024
ROCKWELL AUTOMATION,
INC.
OTHER SUPPLEMENTAL
INFORMATION
(in millions, except
percentages)
Free Cash
Flow
Our definition of free cash flow, which is
a non-GAAP financial measure, takes into consideration capital
investments required to maintain the operations of our businesses
and execute our strategy. In our opinion, free cash flow provides
useful information to investors regarding our ability to generate
cash from business operations that is available for acquisitions
and other investments, service of debt principal, dividends, and
share repurchases. We use free cash flow, as defined, as one
measure to monitor and evaluate our performance, including as a
financial measure for our annual incentive compensation. Our
definition of free cash flow may be different from definitions used
by other companies.
The following table summarizes free cash
flow by quarter:
Jun. 30, 2022
Sep. 30, 2022
Dec. 31, 2022
Mar. 31, 2023
Jun. 30, 2023
Sep. 30, 2023
Dec. 30, 2023
March 31, 2024
Cash provided by operating activities
$
344.9
$
399.4
$
66.3
$
187.1
$
281.7
$
839.5
$
32.6
$
119.8
Capital expenditures
(18.3
)
(40.8
)
(24.2
)
(31.5
)
(41.6
)
(63.2
)
(67.9
)
(51.2
)
Free cash flow
$
326.6
$
358.6
$
42.1
$
155.6
$
240.1
$
776.3
$
(35.3
)
$
68.6
Free cash flow conversion (free cash flow
as a percentage of adjusted income) is a non-GAAP financial
measure, which reflects our ability to generate cash from the
operations of our business while considering the capital
investments required to maintain operations and execute our
strategy as a ratio of our operating performance. We believe free
cash flow conversion provides useful information to investors about
our ability to convert operating performance into cash generation.
Our measure of free cash flow conversion may be different from
measures used by other companies.
The table below provides free cash flow
conversion for the three months ended March 31, 2024 and 2023:
Quarter Ended
March 31, 2024
Mar. 31, 2023
Free cash flow (a)
$
68.6
$
155.6
Adjusted income (b)
288.0
350.1
Free cash flow conversion (a/b)
24
%
44
%
Return On Invested
Capital
Our press release contains information regarding ROIC, which is
a non-GAAP financial measure. We believe that ROIC is useful to
investors as a measure of performance and of the effectiveness of
the use of capital in our operations. We use ROIC as one measure to
monitor and evaluate our performance. Our measure of ROIC may be
different from that used by other companies. We define ROIC as the
percentage resulting from the following calculation:
(a) Net income, before Interest expense,
Income tax provision, and purchase accounting depreciation and
amortization, divided by;
(b) average invested capital for the year,
calculated as a five quarter rolling average using the sum of
Short-term debt, Long-term debt, Shareowners’ equity, and
accumulated amortization of goodwill and other intangible assets,
minus Cash and cash equivalents, short-term investments, and
long-term investments (fixed income securities), multiplied by;
(c) one minus the effective tax rate for the
period.
ROIC is calculated as follows (in millions, except
percentages):
Twelve Months Ended
March 31,
2024
2023
(a) Return
Net income
$
1,082.4
$
1,304.4
Interest expense
138.0
133.5
Income tax provision
276.8
264.9
Purchase accounting depreciation and
amortization
284.5
104.3
Return
$
1,781.7
$
1,807.1
(b) Average invested capital
Short-term debt
$
740.2
$
898.0
Long-term debt
2,809.1
3,106.5
Shareowners’ equity
3,662.0
3,051.1
Accumulated amortization of goodwill and
intangibles
1,230.2
1,023.4
Cash and cash equivalents
(576.2
)
(466.5
)
Short-term and long-term investments
(0.5
)
(7.6
)
Average invested capital
$
7,864.8
$
7,604.9
(c) Effective tax rate
Income tax provision
276.8
264.9
Income before income taxes
$
1,359.2
$
1,569.3
Effective tax rate
20.4
%
16.9
%
(a) / (b) * (1-c) Return On Invested
Capital
18.0
%
19.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507603343/en/
Ed Moreland Media Relations Rockwell Automation 571.296.0391
Aijana Zellner Investor Relations Rockwell Automation
414.382.8510
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