- Reported sales down 7.1 percent year over year; organic sales
down 9.7 percent
- Total orders up double digits sequentially, exceeding
pre-pandemic levels
- Inorganic investments contributed 1.8 percent to reported sales
growth
- Diluted EPS of $5.06 and Adjusted EPS of $2.38 include $0.45
from a favorable legal settlement
- Cash Flow from Operations of $346.5 million; Free Cash Flow
conversion of 115%
- Updating fiscal 2021 Diluted EPS guidance to $11.07 - $11.47
and Adjusted EPS guidance to $8.70 - $9.10
Rockwell Automation, Inc. (NYSE: ROK) today reported first
quarter fiscal 2021 results.
"The recovery in manufacturing is happening at a much faster
pace than we were anticipating, with our total orders exceeding
pre-pandemic levels. Demand was especially strong for Intelligent
Devices and Information Solutions, which is expected to drive
higher growth for the balance of the year. We continue to increase
capacity and are expanding our manufacturing workforce to meet this
sharp uptick in demand," said Blake Moret, Chairman and CEO.
"In addition, our focus on protecting our intellectual property
resulted in an important legal win in the quarter. We are using a
portion of the gain that resulted from this ruling to make
additional investments this year. This includes investments to pull
forward key software product launches, which will increase
recurring revenue in fiscal 2022 and beyond, as well as
sustainability-related investments to drive our ESG goals," he
said.
Fiscal 2021 Q1 Financial
Results
Fiscal 2021 first quarter sales were $1,565.3 million, down 7.1
percent from $1,684.5 million in the first quarter of fiscal 2020.
Organic sales declined 9.7 percent, currency translation increased
sales by 0.8 percentage points percent, and acquisitions increased
sales by 1.8 percent.
Fiscal 2021 first quarter net income attributable to Rockwell
Automation was $593.3 million or $5.06 per share, compared to
$310.7 million or $2.66 per share in the first quarter of fiscal
2020. The increases in net income attributable to Rockwell
Automation and EPS were primarily due to fair-value adjustments
recognized in the first quarter of fiscal 2021 and fiscal 2020 in
connection with our investment in PTC (the "PTC adjustments").
Fiscal 2021 first quarter Adjusted EPS was $2.38, up 11 percent
compared to $2.15 in the first quarter of fiscal 2020, primarily
due to a $70 million pre-tax favorable legal settlement in the
quarter ($0.45 EPS), partially offset by a higher tax rate and
higher incentive compensation expense.
Pre-tax margin was 44.8 percent in the first quarter of fiscal
2021 compared to 19.9 percent in the same period last year. The
increase in pre-tax margin was primarily due to the PTC adjustments
and a favorable legal settlement in the quarter.
Total segment operating margin was 19.8 percent compared to 20.1
percent a year ago. Total segment operating earnings were $309.3
million in the first quarter of fiscal 2021, down 8.8 percent from
$339.1 million in the same period of fiscal 2020.
Cash flow provided by operating activities in the first quarter
of fiscal 2021 was $346.5 million, compared to $231.1 million in
the first quarter of fiscal 2020. Free cash flow was $319.4
million, compared to $194.1 million in the first quarter of fiscal
2020. Cash flow provided by operating activities and free cash flow
include $70 million of cash received in the quarter related to the
legal settlement.
Outlook
The COVID-19 pandemic and global efforts to respond to it
continue to evolve. Our projections reflect the strong order
performance we saw in the first quarter and assume no increase in
pandemic-related facility closures or disruptions to the supply
chain.
Based on the information available to us at the time of this
release, the following table provides guidance for projected sales
growth and earnings per share for fiscal 2021:
Sales Growth Guidance
EPS Guidance
Reported sales growth
8.5% - 11.5%
Diluted EPS
$11.07 - $11.47
Organic sales growth
4.5% - 7.5%
Adjusted EPS
$8.70 - $9.10
Inorganic sales growth1
~1.5%
Currency translation
~2.5%
1Estimate for incremental sales resulting
from businesses acquired in fiscal year 2020 and Oylo and Fiix
acquired in the first quarter of fiscal 2021.
“We continue to expand our capabilities and software expertise,
as demonstrated by our recent acquisitions and today's announcement
about additions to my leadership team. As the world recovers, the
strong demand we are seeing is testament to our value helping
customers increase their resilience, agility, and sustainability,”
Moret concluded.
Intelligent Devices
Intelligent Devices first quarter fiscal 2021 sales were $721.7
million, a decrease of 7.1 percent compared to $776.6 million in
the same period last year. Organic sales decreased 7.9 percent and
currency translation increased sales by 0.8 percentage points.
Segment operating earnings were $140.2 million compared to $160.6
million in the same period last year. Segment operating margin
decreased to 19.4 percent from 20.7 percent a year ago primarily
due to lower sales, partially offset by temporary and structural
cost savings.
Software & Control
Software & Control first quarter fiscal 2021 sales were
$441.0 million, a decrease of 2.5 percent compared to $452.5
million in the same period last year. Organic sales decreased 6.2
percent, currency translation increased sales by 1.0 percent, and
acquisitions increased sales by 2.7 percent. Segment operating
earnings were $133.1 million compared to $140.4 million in the same
period last year. Segment operating margin decreased to 30.2
percent from 31.0 percent a year ago primarily due to lower sales,
partially offset by temporary and structural cost savings.
Lifecycle Services
Lifecycle Services first quarter fiscal 2021 sales were $402.6
million, a decrease of 11.6 percent compared to $455.4 million in
the same period last year. Organic sales decreased 16.3 percent,
currency translation increased sales by 0.8 percent, and
acquisitions increased sales by 3.9 percent. Segment operating
earnings were $36.0 million compared to $38.1 million in the same
period last year. Segment operating margin increased to 8.9 percent
from 8.4 percent a year ago despite lower sales. Contributing to
the year-over-year margin improvement were temporary and structural
cost savings, and the absence of Sensia one-time items recognized
in the first quarter of fiscal 2020.
Supplemental Information
Corporate and Other - Fiscal 2021 first quarter corporate and
other expense was $28.0 million compared to $32.8 million in the
first quarter of fiscal 2020.
Purchase Accounting Depreciation and Amortization - Fiscal 2021
first quarter purchase accounting depreciation and amortization
expense was $11.7 million, up $1.7 million from the first quarter
of fiscal 2020.
Tax - On a GAAP basis, the effective tax rate in the first
quarter of fiscal 2021 was 15.8 percent compared to 5.7 percent in
the first quarter of fiscal 2020. The Adjusted Effective Tax Rate
for the first quarter of fiscal 2021 was 15.4 percent compared to
8.3 percent in the prior year. The higher effective tax rate and
Adjusted Effective Tax Rate in the first quarter of fiscal 2021 was
primarily due to the absence of a tax benefit related to Sensia in
the first quarter of fiscal 2020 and other discrete items.
Share Repurchases - During the first quarter of fiscal 2021, the
Company repurchased approximately 0.4 million shares of its common
stock at a cost of $87.7 million. At December 31, 2020, $766.0
million remained available under our existing share repurchase
authorization.
ROIC - Return on invested capital was 39.7 percent.
Non-GAAP Measures - Organic sales, total segment operating
earnings, total segment operating margin, Adjusted Income, Adjusted
EPS, Adjusted Effective Tax Rate, free cash flow, and return on
invested capital are non-GAAP measures that are reconciled to GAAP
measures in the attachments to this release.
Conference Call
A conference call to discuss the quarterly results will be held
at 8:30 a.m. Eastern Time on January 26, 2021. The call will be an
audio webcast and accessible on the Rockwell Automation website
(https://www.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: (833) 714-0916 in the U.S. and Canada; (778)
560-2692 for other countries. Use the following passcode: 9438568.
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 26, 2021.
This news release contains statements (including certain
projections, guidance, 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, 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;
- macroeconomic factors, including global and regional business
conditions (including adverse impacts in certain markets, such as
Oil & Gas), the availability and cost of capital, commodity
prices, the cyclical nature of our customers’ capital spending,
sovereign debt concerns and currency exchange rates;
- laws, regulations and governmental policies affecting our
activities in the countries where we do business, including those
related to tariffs, taxation, and trade controls;
- the availability and price of components and materials;
- 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;
- our ability to attract, develop, and retain qualified
personnel;
- disruptions to our distribution channels or the failure of
distributors to develop and maintain capabilities to sell our
products;
- the successful integration and management of strategic
transactions and achievement of the expected benefits of these
transactions;
- 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 23,500 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,
2020
2019
Sales
Intelligent Devices (a)
$
721.7
$
776.6
Software & Control (b)
441.0
452.5
Lifecycle Services (c)
402.6
455.4
Total sales (d)
$
1,565.3
$
1,684.5
Segment operating earnings
Intelligent Devices (e)
$
140.2
$
160.6
Software & Control (f)
133.1
140.4
Lifecycle Services (g)
36.0
38.1
Total segment operating earnings1 (h)
309.3
339.1
Purchase accounting depreciation and
amortization
(11.7
)
(10.0
)
Corporate and other
(28.0
)
(32.8
)
Non-operating pension and postretirement
benefit cost
(7.0
)
(8.7
)
Gain on investments
390.4
71.0
Legal settlement
70.0
—
Interest (expense) income, net
(22.3
)
(24.0
)
Income before income taxes (i)
700.7
334.6
Income tax provision
(110.3
)
(19.2
)
Net income
590.4
315.4
Net (loss) income attributable to
noncontrolling interests
(2.9
)
4.7
Net income attributable to Rockwell
Automation, Inc.
$
593.3
$
310.7
Diluted EPS
$
5.06
$
2.66
Adjusted EPS2
$
2.38
$
2.15
Average diluted shares for diluted EPS
117.1
116.6
Segment operating margin
Intelligent Devices (e/a)
19.4
%
20.7
%
Software & Control (f/b)
30.2
%
31.0
%
Lifecycle Services (g/c)
8.9
%
8.4
%
Total segment operating margin1 (h/d)
19.8
%
20.1
%
Pre-tax margin (i/d)
44.8
%
19.9
%
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 cost, gains and losses on investments, the $70 million
legal settlement in fiscal 2021, certain corporate initiatives,
interest (expense) income - 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 net income (loss) attributable to
noncontrolling interests, purchase accounting depreciation and
amortization expense attributable to Rockwell Automation,
non-operating pension and postretirement benefit cost, and gains
and losses on 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 cost and
a reconciliation to GAAP measures.
ROCKWELL AUTOMATION,
INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(in millions)
Three Months Ended
December 31,
2020
2019
Sales (a)
$
1,565.3
$
1,684.5
Cost of sales
(918.8
)
(981.6
)
Gross profit (b)
646.5
702.9
Selling, general and administrative
expenses (c)
(374.6
)
(403.2
)
Change in fair value of investments1
390.4
71.0
Other income (expense)
61.0
(9.7
)
Interest expense
(22.6
)
(26.4
)
Income before income taxes
700.7
334.6
Income tax provision2
(110.3
)
(19.2
)
Net income
590.4
315.4
Net (loss) income attributable to
noncontrolling interests
(2.9
)
4.7
Net income attributable to Rockwell
Automation, Inc.
$
593.3
$
310.7
Gross profit as percent of sales
(b/a)
41.3
%
41.7
%
SG&A as percent of sales
(c/a)
23.9
%
23.9
%
1Primarily relates to the change in value
of our investment in PTC.
2Income tax provision includes the tax
effects on the change in value of our investment in PTC.
ROCKWELL AUTOMATION,
INC.
CONDENSED BALANCE SHEET
INFORMATION
(in millions)
December 31,
2020
September 30,
2020
Assets
Cash and cash equivalents
$
730.4
$
704.6
Receivables
1,379.0
1,249.1
Inventories
640.6
584.0
Property, net
567.7
574.4
Operating lease right-of-use assets
341.4
342.9
Goodwill and intangibles
2,442.5
2,129.6
Long-term investments
1,345.9
953.5
Other assets
723.5
726.6
Total
$
8,171.0
$
7,264.7
Liabilities and Shareowners’
Equity
Short-term debt
$
150.5
$
24.6
Accounts payable
721.1
687.8
Long-term debt
1,980.3
1,974.7
Operating lease liabilities
268.2
274.7
Other liabilities
3,177.1
2,956.1
Shareowners' equity attributable to
Rockwell Automation, Inc.
1,557.6
1,027.8
Noncontrolling Interests
316.2
319.0
Total
$
8,171.0
$
7,264.7
ROCKWELL AUTOMATION,
INC.
CONDENSED CASH FLOW
INFORMATION
(in millions)
Three Months Ended
December 31,
2020
2019
Operating activities:
Net income
$
590.4
$
315.4
Depreciation and amortization
44.0
41.9
Change in fair value of investments1
(390.4
)
(71.0
)
Retirement benefits expense
30.0
31.8
Pension contributions
(8.8
)
(7.1
)
Receivables/inventories/payables
(104.9
)
(83.7
)
Contract liabilities
51.4
37.3
Compensation and benefits
7.3
(38.6
)
Income taxes
72.8
(17.3
)
Other
54.7
22.4
Cash provided by operating activities
346.5
231.1
Investing activities:
Capital expenditures
(27.1
)
(37.0
)
Acquisition of businesses, net of cash
acquired
(283.1
)
(238.5
)
Purchases of investments
—
(1.0
)
Proceeds from maturities and sales of
investments
—
43.3
Proceeds from sale of property
0.1
0.2
Cash used for investing activities
(310.1
)
(233.0
)
Financing activities:
Net issuance of short-term debt
125.9
23.5
Cash dividends
(124.3
)
(117.9
)
Purchases of treasury stock
(83.5
)
(106.0
)
Proceeds from the exercise of stock
options
48.9
104.8
Other financing activities
(4.2
)
—
Cash used for financing activities
(37.2
)
(95.6
)
Effect of exchange rate changes on
cash
26.6
5.3
Increase (decrease) in cash, cash
equivalents, and restricted cash2
$
25.8
$
(92.2
)
1Primarily relates to the change in value
of our investment in PTC.
2Cash and 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)
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, 2020, compared to
sales for the three months ended December 31, 2019:
Three Months Ended December
31,
2020
2019
Sales
Effect of
Acquisitions
Effect of Changes
in Currency
Organic Sales
Sales
North America
$
912.3
$
(11.1
)
$
(1.3
)
$
899.9
$
1,006.9
EMEA
320.7
(18.5
)
(16.4
)
285.8
310.1
Asia Pacific
221.9
(0.3
)
(8.4
)
213.2
229.6
Latin America
110.4
—
11.7
122.1
137.9
Total
$
1,565.3
$
(29.9
)
$
(14.4
)
$
1,521.0
$
1,684.5
The following is a reconciliation of reported sales to organic
sales for our operating segments for the three months ended
December 31, 2020, compared to sales for the three months ended
December 31, 2019:
Three Months Ended December
31,
2020
2019
Sales
Effect of Acquisitions
Effect of Changes
in Currency
Organic Sales
Sales
Intelligent Devices
$
721.7
$
—
$
(6.4
)
$
715.3
$
776.6
Software & Control
441.0
(12.0
)
(4.5
)
424.5
452.5
Lifecycle Services
402.6
(17.9
)
(3.5
)
381.2
455.4
Total
$
1,565.3
$
(29.9
)
$
(14.4
)
$
1,521.0
$
1,684.5
The following is a reconciliation of reported sales growth to
organic sales growth for the three months ended December 31, 2020,
compared to sales for the three months ended December 31, 2019:
Three Months Ended December
31, 2020
Reported Sales Growth
Effect of Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
North America
(9.4)
%
1.1
%
0.1
%
(10.6)
%
EMEA
3.4
%
6.0
%
5.2
%
(7.8)
%
Asia Pacific
(3.4)
%
0.1
%
3.6
%
(7.1)
%
Latin America
(19.9)
%
—
%
(8.4)
%
(11.5)
%
Total
(7.1)
%
1.8
%
0.8
%
(9.7)
%
The following is a reconciliation of reported sales growth to
organic sales growth for our operating segments for the three
months ended December 31, 2020, compared to sales for the three
months ended December 31, 2019:
Three Months Ended December
31, 2020
Reported Sales Growth
Effect of Acquisitions
Effect of Changes
in Currency
Organic Sales Growth
Intelligent Devices
(7.1)
%
—
%
0.8
%
(7.9)
%
Software & Control
(2.5)
%
2.7
%
1.0
%
(6.2)
%
Lifecycle Services
(11.6)
%
3.9
%
0.8
%
(16.3)
%
Total
(7.1)
%
1.8
%
0.8
%
(9.7)
%
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 net income (loss)
attributable to noncontrolling interests, purchase accounting
depreciation and amortization expense attributable to Rockwell
Automation, non-operating pension and postretirement benefit cost,
and gains and losses on investments, 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
December 31,
2020
2019
Service cost
$
23.0
$
23.1
Operating pension and postretirement
benefit cost
23.0
23.1
Interest cost
31.6
34.6
Expected return on plan assets
(60.4
)
(61.2
)
Amortization of prior service credit
(1.0
)
(1.2
)
Amortization of net actuarial loss
37.0
37.2
Settlements
(0.2
)
(0.7
)
Non-operating pension and postretirement
benefit cost
7.0
8.7
Net periodic pension and postretirement
benefit cost
$
30.0
$
31.8
The components of net periodic pension and postretirement
benefit cost other than the service cost component are included in
the line "Other income (expense)" 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:
Three Months Ended
December 31,
2020
2019
Net Income attributable to Rockwell
Automation
$
593.3
$
310.7
Non-operating pension and postretirement
benefit cost
7.0
8.7
Tax effect of non-operating pension and
postretirement benefit cost
(2.0
)
(2.4
)
Change in fair value of investments1
(390.4
)
(71.0
)
Tax effect of the change in fair value of
investments1
64.2
—
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
8.7
7.0
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(2.1
)
(1.6
)
Adjusted Income
$
278.7
$
251.4
Diluted EPS
$
5.06
$
2.66
Non-operating pension and postretirement
benefit cost
0.06
0.08
Tax effect of non-operating pension and
postretirement benefit cost
(0.02
)
(0.02
)
Change in fair value of investments1
(3.33
)
(0.61
)
Tax effect of the change in fair value of
investments1
0.55
—
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.08
0.06
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.02
)
(0.02
)
Adjusted EPS
$
2.38
$
2.15
Effective tax rate
15.8
%
5.7
%
Tax effect of non-operating pension and
postretirement benefit cost
0.1
0.6
Tax effect of the change in fair value of
investments1
(0.7
)
1.6
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
0.2
0.4
Adjusted Effective Tax Rate
15.4
%
8.3
%
1Primarily relates to the change in value
of our investment in PTC.
Fiscal 2021 Guidance
Diluted EPS
$11.07 - $11.47
Non-operating pension and postretirement
benefit cost
0.23
Tax effect of non-operating pension and
postretirement benefit cost
(0.07)
Change in fair value of investments1
(3.33)
Tax effect of change in fair value of
investments
0.55
Purchase accounting depreciation and
amortization attributable to Rockwell Automation
0.33
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
(0.08)
Adjusted EPS2
$8.70 - $9.10
Effective tax rate
~ 14.1%
Tax effect of non-operating pension and
postretirement benefit cost
~ 0.2%
Tax effect of change in fair value of
investments1
~ (0.7)%
Tax effect of purchase accounting
depreciation and amortization attributable to Rockwell
Automation
~ 0.4%
Adjusted Effective Tax Rate
~ 14.0%
1The actual year-to-date adjustments,
which are based on PTC's share price at December 31, 2020, 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.
2Fiscal 2021 guidance based on Adjusted
Income attributable to Rockwell, which includes an adjustment for
Schlumberger's non-controlling interest in Sensia.
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, 2019
Jun. 30, 2019
Sep. 30, 2019
Dec. 31, 2019
Mar. 31, 2020
Jun. 30, 2020
Sep. 30, 20201
Dec. 31, 20202
Cash provided by operating activities
$
143.8
$
351.2
$
475.0
$
231.1
$
217.4
$
346.2
$
325.8
$
346.5
Capital expenditures
(38.9
)
(27.8
)
(24.1
)
(37.0
)
(19.6
)
(35.3
)
(22.0
)
(27.1
)
Free cash flow
$
104.9
$
323.4
$
450.9
$
194.1
$
197.8
$
310.9
$
303.8
$
319.4
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.
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, 2019, and December 31, 2020 :
Quarter Ended
Dec. 31 2019
Dec. 31 2020
Free cash flow (a)
$
194.1
$
319.4
Adjusted Income (b)
251.4
278.7
Free cash flow conversion (a) / (b)
77
%
115
%
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, 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
December 31,
2020
2019
(a) Return
Net Income
$
1,298.2
$
930.9
Interest expense
99.7
103.9
Income tax provision
204.0
183.9
Purchase accounting depreciation and
amortization
43.1
22.5
Return
1,645.0
1,241.2
(b) Average invested capital
Short-term debt
200.8
370.9
Long-term debt
1,970.5
1,803.7
Shareowners’ equity
1,256.8
1,041.6
Accumulated amortization of goodwill and
intangibles
936.2
890.1
Cash and cash equivalents
(782.6
)
(829.1
)
Short-term and long-term investments
(0.6
)
(126.7
)
Average invested capital
3,581.1
3,150.5
(c) Effective tax rate
Income tax provision
204.0
183.9
Income before income taxes
$
1,502.2
$
1,114.8
Effective tax rate
13.6
%
16.5
%
(a) / (b) * (1-c) Return On Invested
Capital
39.7
%
32.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210126005411/en/
Marci Pelzer Media Relations Rockwell Automation
414.382.5679
Jessica Kourakos Investor Relations Rockwell Automation
414.382.8510
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