- Record quarterly orders of $2.5 billion, up over 40% year over
year
- Reported sales up 18.7% year over year; organic sales up
16.8%
- Acquisitions contributed 2.6% to reported sales growth
- Total ARR up over 50% with recent Plex acquisition; Organic ARR
up double digits
- Q1 Diluted EPS of $2.05 and Adjusted EPS of $2.14
- Reaffirms fiscal 2022 reported sales growth guidance of 16% -
19%; organic sales growth of 14% - 17%
- Updates fiscal 2022 Diluted EPS guidance from $9.91 - $10.51 to
$10.01 - $10.61
- Reaffirms fiscal 2022 Adjusted EPS guidance of $10.50 -
$11.10
Rockwell Automation, Inc. (NYSE: ROK) today reported first
quarter fiscal 2022 results.
"Rockwell had an excellent start to fiscal 2022, with first
quarter sales up 18.7% and orders up over 40% to a quarterly record
of $2.5 billion. All three business segments delivered double-digit
sales growth and continued exceptional execution in this
challenging supply chain environment," said Blake Moret, Chairman
and CEO.
Fiscal 2022 Q1 Financial
Results
Fiscal 2022 first quarter sales were $1,857 million, up 18.7%
from $1,565 million in the first quarter of fiscal 2021. Organic
sales increased 16.8%, currency translation decreased sales by
0.7%, and acquisitions increased sales by 2.6%.
Fiscal 2022 first quarter net income attributable to Rockwell
Automation was $242 million or $2.05 per share, compared to $593
million or $5.06 per share in the first quarter of fiscal 2021. The
decreases in net income attributable to Rockwell Automation and
Diluted EPS were primarily due to lower fair value gains in fiscal
2022 versus fiscal 2021 in connection with our investment in PTC
(the "PTC adjustments"). Fiscal 2022 first quarter Adjusted EPS was
$2.14, down 10.1% compared to $2.38 in the first quarter of fiscal
2021. First quarter of fiscal 2021 included a non-recurring legal
settlement gain of $0.45. Adjusted EPS was up 11% year over year
excluding the prior year non-recurring legal settlement gain.
Pre-tax margin was 15.2% in the first quarter of fiscal 2022
compared to 44.8% in the same period last year. The decrease in
pre-tax margin was primarily due to the PTC adjustments.
Total segment operating earnings were $355 million in the first
quarter of fiscal 2022, up 14.8% from $309 million in the same
period of fiscal 2021. Total segment operating margin was 19.1%
compared to 19.8% a year ago. The decrease in margin was primarily
driven by higher planned spend and negative price/cost, partially
offset by higher sales.
Cash flow generated by operating activities in the first quarter
of fiscal 2022 was $(12) million, compared to $347 million in the
first quarter of fiscal 2021. Free cash flow in the first quarter
of fiscal 2022 was $(49) million, compared to $319 million in the
same period last year. Decreases in cash flow from operating
activities and free cash flow were due to the payout of the fiscal
2021 bonus in fiscal 2022, higher working capital and timing of
income tax payments.
Fiscal Year 2022 Outlook
The table below provides guidance for sales growth and earnings
per share for fiscal 2022. Our guidance reflects strong demand as
well as record backlog. Supply chain challenges remain dynamic, and
our projections assume gradual improvement over the course of the
year.
Guidance
Prior Guidance
Reported sales growth
16% - 19%
16% - 19%
Organic sales growth
14% - 17%
14% - 17%
Inorganic sales growth
~2%
~2%
Currency translation
~0%
~0%
Diluted EPS1
$10.01 - $10.61
$9.91 - $10.51
Adjusted EPS
$10.50 - $11.10
$10.50 - $11.10
1Updated to include changes in purchase
accounting amortization and the Q1 impact of the change in fair
value of our investments, primarily PTC.
"We expect very strong growth this year, with total sales up
17.5% at the midpoint of our guidance range despite significant
supply chain constraints. I'm proud of how our teams are not only
mitigating these challenges, but also taking our profitable growth
to a whole new level," Moret continued.
Following is a discussion of first quarter results for our
business segments.
Intelligent Devices
Intelligent Devices first quarter fiscal 2022 sales were $900
million, an increase of 24.7% compared to $722 million in the same
period last year. Organic sales increased 25.6% and currency
translation decreased sales by 0.9%. Segment operating earnings
were $213 million compared to $140 million in the same period last
year. Segment operating margin increased to 23.7% from 19.4% a year
ago, primarily due to higher sales, partially offset by negative
price/cost.
Software & Control
Software & Control first quarter fiscal 2022 sales were $514
million, an increase of 16.5% compared to $441 million in the same
period last year. Organic sales increased 8.4%, currency
translation decreased sales by 0.7%, and acquisitions increased
sales by 8.8%. Segment operating earnings were $118 million
compared to $133 million in the same period last year. Segment
operating margin decreased to 22.9% from 30.2% a year ago, driven
by higher planned spend, the impact of acquisition integration
costs, and negative price/cost, partially offset by higher
sales.
Lifecycle Services
Lifecycle Services first quarter fiscal 2022 sales were $443
million, an increase of 10.1% compared to $403 million in the same
period last year. Organic sales increased 10.3%, currency
translation decreased sales by 0.6%, and an acquisition increased
sales by 0.4%. Segment operating earnings were $24.5 million
compared to $36.0 million in the same period last year. Segment
operating margin decreased to 5.5% from 8.9% a year ago, primarily
related to higher planned spend, unfavorable project mix, and
higher input costs, partially offset by higher sales.
Supplemental Information
Corporate and Other - Fiscal 2022 first quarter corporate and
other expense was $29.4 million compared to $28.0 million in the
first quarter of fiscal 2021.
Purchase Accounting Depreciation and Amortization - Fiscal 2022
first quarter purchase accounting depreciation and amortization
expense was $26.1 million, up $14.4 million from the first quarter
of fiscal 2021.
Tax - On a GAAP basis, the effective tax rate in the first
quarter of fiscal 2022 was 15.4% compared to 15.8% in the first
quarter of fiscal 2021. The Adjusted Effective Tax Rate for the
first quarter of fiscal 2022 was 15.3% compared to 15.4% in the
prior year.
Share Repurchases - During the first quarter of fiscal 2022, the
Company repurchased approximately 0.2 million shares of its common
stock at a cost of $49.4 million. At December 31, 2021, $503
million remained available under our existing share repurchase
authorization.
ROIC - Return on invested capital was 20.6%.
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 return on invested capital are non-GAAP measures
that are reconciled to GAAP measures in the attachments to this
release.
Organic 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 best estimates if historical renewal experience is not
available. 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 current period for which there was no comparable
ARR in the prior period. Organic ARR growth is also used as a
financial measure of performance for our annual incentive
compensation. 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.
Conference Call
A conference call to discuss the quarterly results will be held
at 8:30 a.m. Eastern Time on January 27, 2022. The call will be an
audio webcast and accessible on the Rockwell Automation website
(https://ir.rockwellautomation.com/investors/).
Presentation materials will also be available on the website prior
to the call.
Interested parties can access the conference call by dialing the
following numbers: (888) 330-2022 in the U.S. and Canada; (646)
960-0690 for other countries. Use the following passcode: 5499533.
Please dial 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 February 27, 2022.
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:
- the severity and duration of disruptions to our business due to
pandemics, including the COVID-19 pandemic, natural disasters
(including those as a result of climate change), acts of war,
strikes, terrorism, social unrest or other causes, including the
impacts of the COVID-19 pandemic and efforts to manage it on the
global economy, 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;
- macroeconomic factors, including inflation, global and regional
business conditions (including adverse impacts in certain markets,
such as Oil & Gas), commodity prices, the cyclical nature of
our customers’ capital spending, sovereign debt concerns, and
currency exchange rates;
- the availability and cost of capital;
- our ability to attract, develop, and retain qualified
personnel;
- 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, and climate
change;
- the availability, effectiveness, and security of our
information technology systems;
- 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 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 and pricing pressures, and our ability to provide high
quality products, solutions and services;
- 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;
- risks associated with our investment in common stock of PTC
Inc., including the potential for volatility in our reported
quarterly earnings associated with changes in the market value of
such stock;
- 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 24,500 problem solvers dedicated
to our customers in more than 100 countries. To learn more about
how we are bringing The Connected Enterprise to life across
industrial enterprises, visit www.rockwellautomation.com.
ROCKWELL AUTOMATION,
INC.
SALES AND EARNINGS
INFORMATION
(in millions, except per share
amounts and percentages)
Three Months Ended December
31,
2021
2020
Sales
Intelligent Devices (a)
$
900.3
$
721.7
Software & Control (b)
513.9
441.0
Lifecycle Services (c)
443.1
402.6
Total sales (d)
$
1,857.3
$
1,565.3
Segment operating earnings
Intelligent Devices (e)
$
213.0
$
140.2
Software & Control (f)
117.6
133.1
Lifecycle Services (g)
24.5
36.0
Total segment operating earnings1 (h)
355.1
309.3
Purchase accounting depreciation and
amortization
(26.1
)
(11.7
)
Corporate and other
(29.4
)
(28.0
)
Non-operating pension and postretirement
benefit credit (cost)
4.4
(7.0
)
Change in fair value of investments
7.6
390.4
Legal settlement
—
70.0
Interest expense, net
(29.1
)
(22.3
)
Income before income taxes (i)
282.5
700.7
Income tax provision
(43.6
)
(110.3
)
Net income
238.9
590.4
Net loss attributable to noncontrolling
interests
(2.6
)
(2.9
)
Net income attributable to Rockwell
Automation, Inc.
$
241.5
$
593.3
Diluted EPS
$
2.05
$
5.06
Adjusted EPS2
$
2.14
$
2.38
Average diluted shares for diluted EPS
117.3
117.1
Segment operating margin
Intelligent Devices (e/a)
23.7
%
19.4
%
Software & Control (f/b)
22.9
%
30.2
%
Lifecycle Services (g/c)
5.5
%
8.9
%
Total segment operating margin1 (h/d)
19.1
%
19.8
%
Pre-tax margin (i/d)
15.2
%
44.8
%
1Total 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 (cost), change in fair value of investments, the $70
million legal settlement in fiscal 2021, interest expense, net, and
income tax provision because we do not consider these costs 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.
2Adjusted EPS is a non-GAAP earnings
measure that excludes non-operating pension and postretirement
benefit credit (cost), purchase accounting depreciation and
amortization, net loss attributable to noncontrolling interests,
and change in fair value of investments, 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 CONSOLIDATED
STATEMENT OF OPERATIONS
(in millions, except
percentages)
Three Months Ended December
31,
2021
2020
Sales (a)
$
1,857.3
$
1,565.3
Cost of sales
(1,108.2
)
(918.8
)
Gross profit (b)
749.1
646.5
Selling, general and administrative
expenses (c)
(447.5
)
(374.6
)
Change in fair value of investments1
7.6
390.4
Other income
2.9
61.0
Interest expense
(29.6
)
(22.6
)
Income before income taxes
282.5
700.7
Income tax provision
(43.6
)
(110.3
)
Net income
238.9
590.4
Net loss attributable to noncontrolling
interests
(2.6
)
(2.9
)
Net income attributable to Rockwell
Automation, Inc.
$
241.5
$
593.3
Gross profit as percent of sales
(b/a)
40.3
%
41.3
%
SG&A as percent of sales
(c/a)
24.1
%
23.9
%
1Primarily relates to the change in fair
value of investment in PTC.
ROCKWELL AUTOMATION,
INC.
CONDENSED BALANCE SHEET
INFORMATION
(in millions)
December 31,
2021
September 30,
2021
Assets
Cash and cash equivalents
$
540.0
$
662.2
Receivables
1,487.4
1,424.5
Inventories
868.9
798.1
Property, net
584.1
581.9
Operating lease right-of-use assets
370.7
377.7
Goodwill and intangibles
4,616.4
4,647.7
Long-term investments
1,369.8
1,363.5
Other assets
906.0
846.0
Total
$
10,743.3
$
10,701.6
Liabilities and Shareowners’
Equity
Short-term debt
$
605.9
$
509.7
Accounts payable
851.3
889.8
Long-term debt
3,469.1
3,464.6
Operating lease liabilities
306.7
313.6
Other liabilities
2,703.5
2,829.8
Shareowners' equity attributable to
Rockwell Automation, Inc.
2,504.9
2,389.6
Noncontrolling interests
301.9
304.5
Total
$
10,743.3
$
10,701.6
ROCKWELL AUTOMATION,
INC.
CONDENSED CASH FLOW
INFORMATION
(in millions)
Three Months Ended December
31,
2021
2020
Operating activities:
Net income
$
238.9
$
590.4
Depreciation and amortization
58.9
44.0
Change in fair value of investments1
(7.6
)
(390.4
)
Retirement benefits expense
16.2
30.0
Pension contributions
(7.5
)
(8.8
)
Receivables/inventories/payables
(185.7
)
(104.9
)
Contract liabilities
27.1
51.4
Compensation and benefits
(135.3
)
7.3
Income taxes
(37.6
)
72.8
Other
20.6
54.7
Cash (used for) provided by operating
activities
(12.0
)
346.5
Investing activities:
Capital expenditures
(37.1
)
(27.1
)
Acquisition of businesses, net of cash
acquired
(10.5
)
(283.1
)
Purchases of investments
(1.5
)
—
Proceeds from sale of property
0.4
0.1
Cash used for investing activities
(48.7
)
(310.1
)
Financing activities:
Net issuance of short-term debt
99.0
125.9
Cash dividends
(130.1
)
(124.3
)
Purchases of treasury stock
(49.8
)
(83.5
)
Proceeds from the exercise of stock
options
31.8
48.9
Other financing activities
(2.9
)
(4.2
)
Cash used for financing activities
(52.0
)
(37.2
)
Effect of exchange rate changes on
cash
(9.5
)
26.6
(Decrease) increase in cash, cash
equivalents, and restricted cash2
$
(122.2
)
$
25.8
1Primarily relates to the change in fair
value of investment in PTC.
2Cash, cash equivalents, and restricted
cash at December 31, 2021, includes restricted cash of $8.6 million
recorded in Other current assets and $8.6 million in Other assets
in the Condensed balance sheet. Cash, cash equivalents, and
restricted cash at December 31, 2020, includes $25.8 million of
restricted cash 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 months ended December 31, 2021, compared to
sales for the three months ended December 31, 2020:
Three Months Ended December
31,
2021
2020
Sales
Effect of Acquisitions
Effect of Changes in
Currency
Organic Sales
Sales
North America
$
1,100.7
$
(40.4
)
$
(3.2
)
$
1,057.1
$
912.3
EMEA
354.7
—
13.5
368.2
320.7
Asia Pacific
278.9
—
(1.9
)
277.0
221.9
Latin America
123.0
—
3.2
126.2
110.4
Total
$
1,857.3
$
(40.4
)
$
11.6
$
1,828.5
$
1,565.3
The following is a reconciliation of reported sales to organic
sales for our operating segments for the three months ended
December 31, 2021, compared to sales for the three months ended
December 31, 2020:
Three Months Ended December
31,
2021
2020
Sales
Effect of Acquisitions
Effect of Changes in
Currency
Organic Sales
Sales
Intelligent Devices
$
900.3
$
—
$
6.0
$
906.3
$
721.7
Software & Control
513.9
(38.9
)
3.1
478.1
441.0
Lifecycle Services
443.1
(1.5
)
2.5
444.1
402.6
Total
$
1,857.3
$
(40.4
)
$
11.6
$
1,828.5
$
1,565.3
The following is a reconciliation of reported sales growth to
organic sales growth for the three months ended December 31, 2021,
compared to sales for the three months ended December 31, 2020:
Three Months Ended December
31, 2021
Reported Sales Growth
Effect of Acquisitions
Effect of Changes in
Currency
Organic Sales Growth
North America
20.7
%
4.4
%
0.4
%
15.9
%
EMEA
10.6
%
—
%
(4.2
) %
14.8
%
Asia Pacific
25.7
%
—
%
0.9
%
24.8
%
Latin America
11.4
%
—
%
(2.9
) %
14.3
%
Total
18.7
%
2.6
%
(0.7
) %
16.8
%
The following is a reconciliation of reported sales growth to
organic sales growth for our operating segments for the three
months ended December 31, 2021, compared to sales for the three
months ended December 31, 2020:
Three Months Ended December
31, 2021
Reported Sales Growth
Effect of Acquisitions
Effect of Changes in
Currency
Organic Sales Growth
Intelligent Devices
24.7
%
—
%
(0.9
) %
25.6
%
Software & Control
16.5
%
8.8
%
(0.7
) %
8.4
%
Lifecycle Services
10.1
%
0.4
%
(0.6
) %
10.3
%
Total
18.7
%
2.6
%
(0.7
) %
16.8
%
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, change in fair value of
investments, purchase accounting depreciation and amortization
attributable to Rockwell Automation, and net income (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 (in millions):
Three Months Ended December
31,
2021
2020
Service cost
$
20.6
$
23.0
Operating pension and postretirement
benefit cost
20.6
23.0
Interest cost
32.7
31.6
Expected return on plan assets
(59.4
)
(60.4
)
Amortization of prior service credit
(0.2
)
(1.0
)
Amortization of net actuarial loss
22.5
37.0
Settlements
—
(0.2
)
Non-operating pension and postretirement
benefit (credit) cost
(4.4
)
7.0
Net periodic pension and postretirement
benefit cost
$
16.2
$
30.0
The components of net periodic pension and postretirement
benefit cost other than the service cost component are included in
the line "Other income" in the 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 December
31,
2021
2020
Net Income attributable to Rockwell
Automation
$
241.5
$
593.3
Non-operating pension and postretirement
benefit (credit) cost
(4.4
)
7.0
Tax effect of non-operating pension and
postretirement benefit (credit) cost
0.8
(2.0
)
Change in fair value of investments
(1)
(7.6
)
(390.4
)
Tax effect of change in fair value of
investments (1)
3.5
64.2
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
23.1
8.7
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(5.6
)
(2.1
)
Adjusted Income
$
251.3
$
278.7
Diluted EPS
$
2.05
$
5.06
Non-operating pension and postretirement
benefit (credit) cost
(0.04
)
0.06
Tax effect of non-operating pension and
postretirement benefit (credit) cost
0.01
(0.02
)
Change in fair value of investments
(1)
(0.06
)
(3.33
)
Tax effect of change in fair value of
investments (1)
0.03
0.55
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.20
0.08
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.05
)
(0.02
)
Adjusted EPS
$
2.14
$
2.38
Effective tax rate
15.4
%
15.8
%
Tax effect of non-operating pension and
postretirement benefit (credit) cost
—
%
0.1
%
Tax effect of change in fair value of
investments (1)
(0.9
) %
(0.7
) %
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
0.8
%
0.2
%
Adjusted Effective Tax Rate
15.3
%
15.4
%
1Primarily relates to the change in fair
value of investment in PTC.
Fiscal 2022 Guidance
Diluted EPS1
$10.01 - $10.61
Non-operating pension and postretirement
benefit credit
(0.08)
Tax effect of non-operating pension and
postretirement benefit credit
0.01
Change in fair value of investments2
(0.06)
Tax effect of change in fair value of
investments2
0.03
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.78
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.19)
Adjusted EPS
$10.50 - $11.10
Effective tax rate
~ 16.5%
Tax effect of non-operating pension and
postretirement benefit credit
~ —%
Tax effect of change in fair value of
investments2
~ —%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
~ 0.5%
Adjusted Effective Tax Rate
~ 17.0%
1Fiscal 2022 guidance based on Adjusted
Income attributable to Rockwell, which includes an adjustment for
Schlumberger's non-controlling interest in Sensia.
2The actual year-to-date adjustments,
which are based on PTC's share price at December 31, 2021, 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.
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:
Quarter Ended
Mar. 31, 2020
Jun. 30, 2020
Sep. 30, 20201
Dec. 31, 20202
Mar. 31, 2021
Jun. 30, 2021
Sep. 30, 20213
Dec. 31, 2021
Cash provided by (used for) operating
activities
$
217.4
$
346.2
$
325.8
$
346.5
$
248.9
$
461.5
$
204.1
$
(12.0
)
Capital expenditures
(19.6
)
(35.3
)
(22.0
)
(27.1
)
(25.0
)
(24.5
)
(43.7
)
(37.1
)
Free cash flow
$
197.8
$
310.9
$
303.8
$
319.4
$
223.9
$
437.0
$
160.4
$
(49.1
)
1Includes a discretionary pre-tax
contribution of $50.0 million to the Company's U.S. pension
trust.
2Includes $70.0 million pre-tax legal
settlement gain.
3Includes a payment of $28 million pre-tax
to settle hedges executed in connection with our issuance of $1.5
billion of long-term notes in the fourth quarter of fiscal
2021.
The table below provides the calculation of free cash flow as a
percentage of Adjusted Income ("free cash flow conversion") for the
three months ended December 31, 2020, and 2021:
Quarter Ended
Dec. 31, 20202
Dec. 31, 2021
Free cash flow (a)
$
319.4
$
(49.1
)
Adjusted income (b)
278.7
251.3
Free cash flow conversion (a) / (b)
115
%
(20
) %
Return On Invested
Capital
Our press release contains information regarding Return On
Invested Capital (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, and short-term 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
December 31,
2021
2020
(a) Return
Net income
$
992.8
$
1,298.2
Interest expense
101.6
99.7
Income tax provision
115.2
204.0
Purchase accounting depreciation and
amortization
69.5
43.1
Return
1,279.1
1,645.0
(b) Average invested capital
Short-term debt
263.3
200.8
Long-term debt
2,573.9
1,970.5
Shareowners’ equity
2,416.3
1,256.8
Accumulated amortization of goodwill and
intangibles
1,007.8
936.2
Cash and cash equivalents
(697.7
)
(782.6
)
Short-term and long-term investments
(0.6
)
(0.6
)
Average invested capital
5,563.0
3,581.1
(c) Effective tax rate
Income tax provision
115.2
204.0
Income before income taxes
$
1,108.0
$
1,502.2
Effective tax rate
10.4
%
13.6
%
(a) / (b) * (1-c) Return On Invested
Capital
20.6
%
39.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220127005312/en/
Marci Pelzer Media Relations Rockwell Automation 414.382.5679
Jessica Kourakos Investor Relations Rockwell Automation
414.382.8510
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