- Total orders up 37% year over year and up sequentially
- Reported sales up 1.8% year over year; organic sales up
1.3%
- Acquisitions contributed 2.3% to reported sales growth
- Total ARR up over 50%; Organic ARR up 17%
- Diluted EPS of $0.46 and Adjusted EPS of $1.66
- Updates fiscal 2022 reported sales growth guidance to 11% -
15%; organic sales growth to 10% - 14%
- Updates fiscal 2022 Diluted EPS guidance to $7.60 - $8.20;
Adjusted EPS guidance to $9.20 - $9.80
- Board authorized additional $1.0 billion for share
repurchases
Rockwell Automation, Inc. (NYSE: ROK) today reported second
quarter fiscal 2022 results.
"Despite a volatile global supply chain environment that
impacted sales in the quarter, we continued to see extremely strong
demand in all key end markets and regions around the world," said
Blake Moret, Chairman and CEO.
Fiscal 2022 Q2 Financial
Results
Fiscal 2022 second quarter sales were $1,808 million, up 1.8%
from $1,776 million in the second quarter of fiscal 2021. Organic
sales increased 1.3%, currency translation decreased sales by 1.8%,
and acquisitions increased sales by 2.3%.
Fiscal 2022 second quarter net income attributable to Rockwell
Automation was $53.9 million or $0.46 per share, compared to $415
million or $3.54 per share in the second quarter of fiscal 2021.
The decreases in net income attributable to Rockwell Automation and
Diluted EPS are primarily due to fair value adjustments recognized
in fiscal 2022 and fiscal 2021 in connection with our investment in
PTC (the "PTC adjustments"). Fiscal 2022 second quarter Adjusted
EPS was $1.66, down 31.1% compared to $2.41 in the second quarter
of fiscal 2021 primarily due to higher input costs and higher
investment spend, partially offset by lower incentive compensation
and better price realization.
Pre-tax margin was 2.3% in the second quarter of fiscal 2022
compared to 28.6% in the same period last year. The decrease in
pre-tax margin was primarily due to the PTC adjustments.
Total segment operating earnings were $283 million in the second
quarter of fiscal 2022, down 27.4% from $390 million in the same
period of fiscal 2021. Total segment operating margin was 15.7%
compared to 22.0% a year ago primarily due to higher input costs
and higher investment spend, partially offset by lower incentive
compensation and better price realization.
Cash flow generated by operating activities in the second
quarter of fiscal 2022 was $90.8 million, compared to $249 million
in the second quarter of fiscal 2021. Free cash flow in the second
quarter of fiscal 2022 was $45.9 million, compared to $224 million
in the same period last year. Decreases in cash flow from operating
activities and free cash flow were due to lower pre-tax income and
higher 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 our strong demand
and record backlog along with our latest view of supply chain
constraints. However, the global supply chain remains volatile with
new pressures from COVID-19 related shutdowns in China and war in
Ukraine that are difficult to quantify.
Guidance
Prior Guidance
Reported sales growth
11% - 15%
16% - 19%
Organic sales growth
10% - 14%
14% - 17%
Inorganic sales growth
~2.5%
~2%
Currency translation
~(1.5)%
~0%
Diluted EPS
$7.60 - $8.20
$10.01 - $10.61
Adjusted EPS
$9.20 - $9.80
$10.50 - $11.10
"We are navigating significant supply chain volatility with
actions to increase component supply, mitigate inflation, and
improve our resiliency over the coming quarters. Strong continuing
demand driven by capital investment, the increasing importance of
automation and digital transformation, and our unmatched position
set the stage for market-beating growth this year and beyond,"
Moret continued.
Following is a discussion of second quarter results for our
business segments.
Intelligent Devices
Intelligent Devices second quarter fiscal 2022 sales were $809
million, a decrease of 4.9% compared to $850 million in the same
period last year. Organic sales decreased 3.0% and currency
translation decreased sales by 1.9%. Segment operating earnings
were $118 million compared to $202 million in the same period last
year. Segment operating margin decreased to 14.6% from 23.8% a year
ago, driven by higher input costs, higher investment spend, and
lower sales.
Software & Control
Software & Control second quarter fiscal 2022 sales were
$535 million, an increase of 6.5% compared to $502 million in the
same period last year. Organic sales increased 0.7%, currency
translation decreased sales by 1.8%, and an acquisition increased
sales by 7.6%. Segment operating earnings were $132 million
compared to $150 million in the same period last year. Segment
operating margin decreased to 24.6% from 29.8% a year ago, driven
by higher investment spend, higher input costs, and the impact of
acquisition integration costs.
Lifecycle Services
Lifecycle Services second quarter fiscal 2022 sales were $465
million, an increase of 9.7% compared to $424 million in the same
period last year. Organic sales increased 10.8%, currency
translation decreased sales by 1.7%, and acquisitions increased
sales by 0.6%. Segment operating earnings were $33.7 million
compared to $38.3 million in the same period last year. Segment
operating margin decreased to 7.3% from 9.0% a year ago, driven by
lower labor utilization caused by supply chain constraints,
partially offset by higher sales and lower incentive
compensation.
Supplemental Information
ARR - Total ARR grew 58% and organic ARR grew 17% compared to
the end of the second quarter of fiscal 2021.
Corporate and Other - Fiscal 2022 second quarter corporate and
other expense was $24.6 million compared to $30.4 million in the
second quarter of fiscal 2021. The decrease was primarily due to
mark-to-market adjustments related to our deferred and
non-qualified compensation plans.
Purchase Accounting Depreciation and Amortization - Fiscal 2022
second quarter purchase accounting depreciation and amortization
expense was $26.1 million, up $13.0 million from the second quarter
of fiscal 2021 primarily related to the August 2021 acquisition of
Plex Systems.
Tax - On a GAAP basis, the effective tax rate in the second
quarter of fiscal 2022 was (20.2)% compared to 19.2% in the second
quarter of fiscal 2021. The lower effective tax rate in the second
quarter of fiscal 2022 was primarily due to the tax effects of the
fair value adjustments recognized in fiscal 2022 and fiscal 2021 in
connection with our investment in PTC. The Adjusted Effective Tax
Rate for the second quarter of fiscal 2022 was 16.0% compared to
16.7% in the prior year.
Share Repurchases - During the second quarter of fiscal 2022,
there were no repurchases of the Company's common stock. At March
31, 2022, $503 million remained available under our existing share
repurchase authorization. Yesterday, the Board of Directors
authorized the Company to deploy an additional $1.0 billion for
repurchase of its common stock.
ROIC - Return on invested capital was 13.2% compared to 44.6% in
the second quarter of fiscal 2021. The decrease is primarily due to
lower pre-tax income primarily related to the PTC adjustments.
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 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's 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 May 3, 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 June 3, 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 availability and price of components and materials;
- 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
(including the Russia and Ukraine conflict), 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;
- 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 (including sanctions
placed on Russia), 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, 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 25,000 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.
SALES AND EARNINGS
INFORMATION
(in millions, except per share
amounts and percentages)
Three Months Ended March
31,
Six Months Ended March
31,
2022
2021
2022
2021
Sales
Intelligent Devices (a)
$
808.6
$
850.2
$
1,708.9
$
1,571.9
Software & Control (b)
534.9
502.3
1,048.8
943.3
Lifecycle Services (c)
464.6
423.6
907.7
826.2
Total sales (d)
$
1,808.1
$
1,776.1
$
3,665.4
$
3,341.4
Segment operating earnings
Intelligent Devices (e)
$
118.2
$
202.0
$
331.2
$
342.2
Software & Control (f)
131.5
149.8
249.1
282.9
Lifecycle Services (g)
33.7
38.3
58.2
74.3
Total segment operating earnings1 (h)
283.4
390.1
638.5
699.4
Purchase accounting depreciation and
amortization
(26.1
)
(13.1
)
(52.2
)
(24.8
)
Corporate and other
(24.6
)
(30.4
)
(54.0
)
(58.4
)
Non-operating pension and postretirement
benefit cost
(21.3
)
(7.0
)
(16.9
)
(14.0
)
Change in fair value of investments
(140.7
)
190.9
(133.1
)
581.3
Legal settlement
—
—
—
70.0
Interest expense, net
(29.6
)
(22.8
)
(58.7
)
(45.1
)
Income before income taxes (i)
41.1
507.7
323.6
1,208.4
Income tax benefit (provision)
8.3
(97.4
)
(35.3
)
(207.7
)
Net income
49.4
410.3
288.3
1,000.7
Net loss attributable to noncontrolling
interests
(4.5
)
(4.7
)
(7.1
)
(7.6
)
Net income attributable to Rockwell
Automation, Inc.
$
53.9
$
415.0
$
295.4
$
1,008.3
Diluted EPS
$
0.46
$
3.54
$
2.51
$
8.59
Adjusted EPS2
$
1.66
$
2.41
$
3.79
$
4.79
Average diluted shares for diluted EPS
117.1
117.1
117.2
117.1
Segment operating margin
Intelligent Devices (e/a)
14.6
%
23.8
%
19.4
%
21.8
%
Software & Control (f/b)
24.6
%
29.8
%
23.8
%
30.0
%
Lifecycle Services (g/c)
7.3
%
9.0
%
6.4
%
9.0
%
Total segment operating margin1 (h/d)
15.7
%
22.0
%
17.4
%
20.9
%
Pre-tax margin (i/d)
2.3
%
28.6
%
8.8
%
36.2
%
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 cost, change in fair value of investments, the $70 million
legal settlement in fiscal 2021, interest expense, net, and income
tax benefit (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.
2 Adjusted EPS is a non-GAAP earnings
measure that excludes purchase accounting depreciation and
amortization, non-operating pension and postretirement benefit
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 cost and a reconciliation to GAAP
measures.
ROCKWELL AUTOMATION,
INC.
CONDENSED STATEMENT OF
OPERATIONS INFORMATION
(in millions, except
percentages)
Three Months Ended March
31,
Six Months Ended March
31,
2022
2021
2022
2021
Sales (a)
$
1,808.1
$
1,776.1
$
3,665.4
$
3,341.4
Cost of sales
(1,144.0
)
(1,008.7
)
(2,252.2
)
(1,927.5
)
Gross profit (b)
664.1
767.4
1,413.2
1,413.9
Selling, general and administrative
expenses (c)
(428.5
)
(421.3
)
(876.0
)
(795.9
)
Change in fair value of investments1
(140.7
)
190.9
(133.1
)
581.3
Other (expense) income
(23.7
)
(6.0
)
(20.8
)
55.0
Interest expense
(30.1
)
(23.3
)
(59.7
)
(45.9
)
Income before income taxes
41.1
507.7
323.6
1,208.4
Income tax benefit (provision)
8.3
(97.4
)
(35.3
)
(207.7
)
Net income
49.4
410.3
288.3
1,000.7
Net loss attributable to noncontrolling
interests
(4.5
)
(4.7
)
(7.1
)
(7.6
)
Net income attributable to Rockwell
Automation, Inc.
$
53.9
$
415.0
$
295.4
$
1,008.3
Gross profit as percent of sales
(b/a)
36.7
%
43.2
%
38.6
%
42.3
%
SG&A as percent of sales
(c/a)
23.7
%
23.7
%
23.9
%
23.8
%
1 Primarily relates to the change in fair
value of investment in PTC.
ROCKWELL AUTOMATION,
INC.
CONDENSED BALANCE SHEET
INFORMATION
(in millions)
March 31, 2022
September 30,
2021
Assets
Cash and cash equivalents
$
443.0
$
662.2
Receivables
1,572.5
1,424.5
Inventories
931.2
798.1
Property, net
576.8
581.9
Operating lease right-of-use assets
347.9
377.7
Goodwill and intangibles
4,588.7
4,647.7
Long-term investments
1,272.6
1,363.5
Other assets
982.8
846.0
Total
$
10,715.5
$
10,701.6
Liabilities and Shareowners’
Equity
Short-term debt
$
641.0
$
509.7
Accounts payable
932.1
889.8
Long-term debt
3,466.0
3,464.6
Operating lease liabilities
288.2
313.6
Other liabilities
2,458.3
2,829.8
Shareowners' equity attributable to
Rockwell Automation, Inc.
2,632.2
2,389.6
Noncontrolling interests
297.7
304.5
Total
$
10,715.5
$
10,701.6
ROCKWELL AUTOMATION,
INC.
CONDENSED CASH FLOW
INFORMATION
(in millions)
Six Months Ended March
31,
2022
2021
Operating activities:
Net income
$
288.3
$
1,000.7
Depreciation and amortization
121.4
89.9
Change in fair value of investments1
133.1
(581.3
)
Retirement benefits expense
58.0
60.1
Pension contributions
(15.8
)
(18.7
)
Receivables/inventories/payables
(226.5
)
(155.1
)
Contract liabilities
79.4
63.6
Compensation and benefits
(145.0
)
62.6
Income taxes
(229.7
)
33.3
Other operating activities
15.6
40.3
Cash provided by operating activities
78.8
595.4
Investing activities:
Capital expenditures
(82.0
)
(52.1
)
Acquisition of businesses, net of cash
acquired
(16.4
)
(283.0
)
Purchases of investments
(47.6
)
(0.2
)
Other investing activities
1.3
(1.4
)
Cash used for investing activities
(144.7
)
(336.7
)
Financing activities:
Net issuance of short-term debt
341.3
—
Repayment of debt
(210.0
)
(0.4
)
Cash dividends
(260.2
)
(248.7
)
Purchases of treasury stock
(51.2
)
(176.9
)
Proceeds from the exercise of stock
options
42.0
97.0
Other financing activities
(4.4
)
(10.1
)
Cash used for financing activities
(142.5
)
(339.1
)
Effect of exchange rate changes on
cash
(10.8
)
17.7
Decrease in cash, cash equivalents, and
restricted cash2
$
(219.2
)
$
(62.7
)
1 Primarily relates to the change in fair
value of investment in PTC.
2 Cash, cash equivalents, and restricted
cash at March 31, 2022, includes restricted cash of $17.2 million
recorded in Other assets in the Condensed Balance Sheet. Cash, cash
equivalents, and restricted cash at March 31, 2021, includes
restricted cash of $25.8 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, 2022, compared
to sales for the three and six months ended March 31, 2021:
Three Months Ended March
31,
2022
2021
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes in
Currency
Organic Sales
Reported Sales
North America
$
1,071.6
$
39.9
$
—
$
1,031.7
$
1,065.7
EMEA
348.9
0.8
(27.5
)
375.6
354.8
Asia Pacific
266.2
—
(3.6
)
269.8
246.9
Latin America
121.4
—
(1.3
)
122.7
108.7
Total
$
1,808.1
$
40.7
$
(32.4
)
$
1,799.8
$
1,776.1
Six Months Ended March
31,
2022
2021
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes in
Currency
Organic Sales
Reported Sales
North America
$
2,172.3
$
80.3
$
3.2
$
2,088.8
$
1,978.0
EMEA
703.6
0.8
(41.0
)
743.8
675.5
Asia Pacific
545.1
—
(1.7
)
546.8
468.8
Latin America
244.4
—
(4.5
)
248.9
219.1
Total
$
3,665.4
$
81.1
$
(44.0
)
$
3,628.3
$
3,341.4
The following is a reconciliation of reported sales to organic
sales for our operating segments for the three and six months ended
March 31, 2022, compared to sales for the three and six months
ended March 31, 2021:
Three Months Ended March
31,
2022
2021
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
Intelligent Devices
$
808.6
$
—
$
(16.1
)
$
824.7
$
850.2
Software & Control
534.9
38.3
(9.0
)
505.6
502.3
Lifecycle Services
464.6
2.4
(7.3
)
469.5
423.6
Total
$
1,808.1
$
40.7
$
(32.4
)
$
1,799.8
$
1,776.1
Six Months Ended March
31,
2022
2021
Reported Sales
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Reported Sales
Intelligent Devices
$
1,708.9
$
—
$
(22.1
)
$
1,731.0
$
1,571.9
Software & Control
1,048.8
77.2
(12.1
)
983.7
943.3
Lifecycle Services
907.7
3.9
(9.8
)
913.6
826.2
Total
$
3,665.4
$
81.1
$
(44.0
)
$
3,628.3
$
3,341.4
The following is a reconciliation of reported sales growth to
organic sales growth for the three and six months ended March 31,
2022, compared to sales for the three and six months ended March
31, 2021:
Three Months Ended March 31,
2022
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
North America
0.6 %
3.8 %
— %
(3.2) %
EMEA
(1.7) %
0.2 %
(7.8) %
5.9 %
Asia Pacific
7.8 %
— %
(1.5) %
9.3 %
Latin America
11.7 %
— %
(1.2) %
12.9 %
Total
1.8 %
2.3 %
(1.8) %
1.3 %
Six Months Ended March 31,
2022
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
North America
9.8 %
4.1 %
0.1 %
5.6 %
EMEA
4.2 %
0.1 %
(6.0) %
10.1 %
Asia Pacific
16.3 %
— %
(0.3) %
16.6 %
Latin America
11.5 %
— %
(2.1) %
13.6 %
Total
9.7 %
2.4 %
(1.3) %
8.6 %
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, 2022, compared to sales for the three
and six months ended March 31, 2021:
Three Months Ended March 31,
2022
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
Intelligent Devices
(4.9) %
— %
(1.9) %
(3.0) %
Software & Control
6.5 %
7.6 %
(1.8) %
0.7 %
Lifecycle Services
9.7 %
0.6 %
(1.7) %
10.8 %
Total
1.8 %
2.3 %
(1.8) %
1.3 %
Six Months Ended March 31,
2022
Reported Sales Growth
Less: Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
Intelligent Devices
8.7 %
— %
(1.4) %
10.1 %
Software & Control
11.2 %
8.2 %
(1.3) %
4.3 %
Lifecycle Services
9.9 %
0.5 %
(1.2) %
10.6 %
Total
9.7 %
2.4 %
(1.3) %
8.6 %
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 cost, change in fair value of
investments, purchase accounting depreciation and amortization
attributable to Rockwell Automation, 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 cost (in millions):
Three Months Ended
March 31,
Six Months Ended March
31,
2022
2021
2022
2021
Service cost
$
20.5
$
23.1
$
41.1
$
46.1
Operating pension and postretirement
benefit cost
20.5
23.1
41.1
46.1
Interest cost
32.7
31.8
65.4
63.4
Expected return on plan assets
(59.3
)
(60.7
)
(118.7
)
(121.1
)
Amortization of prior service cost
(credit)
0.6
(1.0
)
0.4
(2.0
)
Amortization of net actuarial loss
22.4
37.1
44.9
74.1
Settlements
24.9
(0.2
)
24.9
(0.4
)
Non-operating pension and postretirement
benefit cost
21.3
7.0
16.9
14.0
Net periodic pension and postretirement
benefit cost
$
41.8
$
30.1
$
58.0
$
60.1
The components of net periodic pension and postretirement
benefit cost other than the service cost component are included in
the line "Other (expense) income" 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,
2022
2021
2022
2021
Net income attributable to Rockwell
Automation
$
53.9
$
415.0
$
295.4
$
1,008.3
Non-operating pension and postretirement
benefit cost
21.3
7.0
16.9
14.0
Tax effect of non-operating pension and
postretirement benefit cost
(5.5
)
(2.0
)
(4.7
)
(4.0
)
Change in fair value of investments
(1)
140.7
(190.9
)
133.1
(581.3
)
Tax effect of change in fair value of
investments (1)
(33.4
)
46.1
(29.9
)
110.3
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
23.1
10.1
46.2
18.8
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(5.6
)
(2.5
)
(11.2
)
(4.6
)
Adjusted Income
$
194.5
$
282.8
$
445.8
$
561.5
Diluted EPS
$
0.46
$
3.54
$
2.51
$
8.59
Non-operating pension and postretirement
benefit cost
0.19
0.06
0.15
0.12
Tax effect of non-operating pension and
postretirement benefit cost
(0.05
)
(0.02
)
(0.04
)
(0.03
)
Change in fair value of investments
(1)
1.20
(1.63
)
1.14
(4.96
)
Tax effect of change in fair value of
investments (1)
(0.29
)
0.39
(0.26
)
0.95
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.20
0.09
0.39
0.16
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.05
)
(0.02
)
(0.10
)
(0.04
)
Adjusted EPS
$
1.66
$
2.41
$
3.79
$
4.79
Effective tax rate
(20.2
) %
19.2
%
10.9
%
17.2
%
Tax effect of non-operating pension and
postretirement benefit cost
15.7
%
0.1
%
0.8
%
0.1
%
Tax effect of change in fair value of
investments (1)
19.5
%
(2.9
)%
3.0
%
(1.5
)%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
1.0
%
0.3
%
0.9
%
0.3
%
Adjusted Effective Tax Rate
16.0
%
16.7
%
15.6
%
16.1
%
1 Primarily relates to the change in fair
value of investment in PTC.
Fiscal 2022 Guidance
Diluted EPS1
$7.60 - $8.20
Non-operating pension and postretirement
benefit cost
0.17
Tax effect of non-operating pension and
postretirement benefit cost
(0.04)
Change in fair value of investments2
1.14
Tax effect of change in fair value of
investments2
(0.26)
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
$9.20 - $9.80
Effective tax rate
~ 15.5%
Tax effect of non-operating pension and
postretirement benefit cost
~ 0.5%
Tax effect of change in fair value of
investments2
~ 0.5%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
~ 0.5%
Adjusted Effective Tax Rate
~ 17.0%
1 Fiscal 2022 guidance based on Adjusted
Income attributable to Rockwell, which includes an adjustment for
Schlumberger's non-controlling interest in Sensia.
2 The actual year-to-date adjustments,
which are based on PTC's share price at March 31, 2022, 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
Jun. 30, 2020
Sep. 30, 20201
Dec. 31, 20202
Mar. 31, 2021
Jun. 30, 2021
Sep. 30, 20213
Dec. 31, 2021
Mar. 31, 2022
Cash provided by (used for) operating
activities
$
346.2
$
325.8
$
346.5
$
248.9
$
461.5
$
204.1
$
(12.0
)
$
90.8
Capital expenditures
(35.3
)
(22.0
)
(27.1
)
(25.0
)
(24.5
)
(43.7
)
(37.1
)
(44.9
)
Free cash flow
$
310.9
$
303.8
$
319.4
$
223.9
$
437.0
$
160.4
$
(49.1
)
$
45.9
1 Includes a discretionary pre-tax
contribution of $50.0 million to the Company's U.S. pension
trust.
2 Includes $70.0 million pre-tax legal
settlement gain.
3 Includes 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 March 31, 2022, and 2021:
Quarter Ended
Mar. 31, 2021
Mar. 31, 2022
Free cash flow (a)
$
223.9
$
45.9
Adjusted Income (b)
282.8
194.5
Free cash flow conversion (a/b)
79
%
24
%
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
March 31,
2022
2021
(a) Return
Net income
$
631.9
$
1,578.6
Interest expense
108.4
97.5
Income tax provision
9.5
263.9
Purchase accounting depreciation and
amortization
82.5
46.7
Return
$
832.3
$
1,986.7
(b) Average invested capital
Short-term debt
$
361.4
$
141.0
Long-term debt
2,871.0
1,975.6
Shareowners’ equity
2,627.5
1,475.3
Accumulated amortization of goodwill and
intangibles
1,008.3
952.3
Cash and cash equivalents
(640.2
)
(725.7
)
Short-term and long-term investments
(1.8
)
(0.6
)
Average invested capital
$
6,226.2
$
3,817.9
(c) Effective tax rate
Income tax provision
9.5
263.9
Income before income taxes
$
641.4
$
1,842.5
Effective tax rate
1.5
%
14.3
%
(a) / (b) * (1-c) Return On Invested
Capital
13.2
%
44.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220503005412/en/
Marci Pelzer Media Relations Rockwell Automation
414.382.5679
Jessica Kourakos Investor Relations Rockwell Automation
414.382.8510
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