Rockwell Automation, Inc. (NYSE: ROK):
-
Revenue growth of 15 percent
-
Diluted EPS of $1.03
-
Company expects fiscal 2008 diluted EPS of $4.00 - $4.10
Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2008 third
quarter revenue of $1,475.0 million, up 15 percent compared to $1,280.6
million in 2007. Foreign currency translation contributed 5 percentage
points and acquisitions contributed 4 percentage points to the growth
rate. Fiscal 2008 third quarter income from continuing operations was
$152.6 million ($1.03 per share) compared to $167.5 million ($1.07 per
share) in 2007. Segment operating earnings were $258.3 million, down 2
percent compared to $262.3 million in 2007. Third quarter 2008 free cash
flow from continuing operations was $151.2 million. Return on invested
capital expanded 0.8 percentage points to 24.5 percent.
Free cash flow, organic growth and return on invested capital are
non-GAAP measures that are defined in the attachments to this release
under “Other Supplemental Information”.
Commenting on the results, Keith D. Nosbusch, chairman and chief
executive officer, said, “We delivered solid
top line results despite slower than expected growth in Europe and the
U.S. Revenue growth was particularly strong in Asia-Pacific, Latin
America and our solutions businesses, demonstrating strength in the
on-going diversification of our revenue base. Operating margins and EPS
grew sequentially but came in lower than 2007, largely driven by
continued slower growth in our higher margin product businesses. Given
the current environment, we are proactively implementing the appropriate
actions to control costs.”
Outlook
Commenting on the outlook, Nosbusch added, “For
the remainder of the fiscal year we expect to see continued strength in
Asia-Pacific and Latin America as well as in resource-based industries.
However, macro-economic conditions in Europe and the U.S. are weakening.
We have begun to see a change in buying behavior by some of our
customers in consumer related industries, including project delays and
curtailed capital spending. In the current environment, we expect fiscal
2008 EPS to be $4.00 - $4.10.
“We continue to monitor market conditions
with a view toward rebalancing spending, as well as positioning
ourselves to address a potential contraction, should it materialize. We
remain committed to executing our growth and performance strategy,
including continued investment in core technologies and the
globalization of our business.”
Following is a discussion of third quarter results for each of the
segments.
Architecture & Software
Architecture & Software third quarter sales were $625.7 million, an
increase of 7 percent compared to $582.5 million in the third quarter of
2007. Acquisitions added 1 percentage point and foreign currency
translation added 5 percentage points to the growth rate. Segment
operating earnings were $154.7 million compared to $164.7 million in the
third quarter of 2007. Architecture & Software segment operating margin
was 24.7 percent in the third quarter of 2008 compared to 28.3 percent
in 2007.
Control Products & Solutions
Control Products & Solutions third quarter sales were $849.3 million, an
increase of 22 percent compared to sales of $698.1 million in the third
quarter of 2007. Acquisitions added 6 percentage points and foreign
currency translation added 5 percentage points to the growth rate.
Segment operating earnings were $103.6 million compared to $97.6 million
in the third quarter of 2007. Control Products & Solutions segment
operating margin was 12.2 percent in the third quarter of 2008 compared
to 14.0 percent in 2007.
General Corporate –
Net
Third quarter general corporate net expense was $21.9 million compared
to $17.6 million in the third quarter of 2007. The third quarter of 2007
benefited from $5.0 million of interest income earned on proceeds of the
Power Systems sale.
Income Taxes
The effective tax rate for the third quarter of 2008 was 28.5 percent
compared to 26.2 percent in 2007. The tax rate in the third quarter of
2007 was lower due primarily to the resolution of certain federal and
state income tax matters. For 2008, the Company expects the full year
tax rate to be in a range of 28 to 29 percent.
Share Repurchase
During the quarter, the Company repurchased 1.2 million shares at a cost
of $57.4 million. The Company had $774.6 million available at June 30,
2008 under its existing $1.0 billion share repurchase authorization.
Conference Call
A conference call to discuss our financial results will take place at
8:30 A.M. Eastern Time on July 22. The call will be webcast and
accessible via the Rockwell Automation website (www.rockwellautomation.com).
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”, “expect”,
“project”, “plan”,
“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:
-
economic and political changes in global markets where we compete,
such as currency exchange rates, inflation rates, interest rates,
recession, policies of foreign governments and other external factors
we cannot control, and U.S. and local laws affecting our activities
abroad and compliance therewith;
-
successful development of advanced technologies and demand for and
market acceptance of new and existing products;
-
general global and regional economic, business or industry
conditions, including levels of capital spending in industrial markets;
-
the availability, effectiveness and security of our information
technology systems;
-
competitive product and pricing pressures;
-
disruption of our operations due to natural disasters, acts of war,
strikes, terrorism, or other causes;
-
intellectual property infringement claims by others and the ability
to protect our intellectual property;
-
our ability to successfully address claims by taxing authorities in
the various jurisdictions where we do business;
-
our ability to attract and retain qualified personnel;
-
the uncertainties of litigation;
-
disruption of our North American distribution channel;
-
the availability and price of components and materials;
-
successful execution of our cost productivity and globalization
initiatives;
-
our ability to execute strategic actions, including acquisitions
and integration of acquired businesses; and
-
other risks and uncertainties, including but not limited to those
detailed from time to time in our Securities and Exchange Commission
filings.
These forward-looking statements reflect our beliefs as of the date
of filing this release. We undertake no obligation to update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
Rockwell Automation, Inc. (NYSE: ROK), is a leading global provider
of industrial automation power, control and information solutions that
help manufacturers achieve a competitive advantage for their businesses.
The company brings together leading global brands in industrial
automation that include Allen-Bradley®
controls and services and Rockwell Software®
factory management software. Headquartered in Milwaukee, Wisc., the
company employs about 20,000 people serving customers in more than 80
countries.
|
ROCKWELL AUTOMATION, INC.
|
|
SALES AND EARNINGS INFORMATION
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Sales
|
|
|
|
|
|
|
|
|
|
Architecture & Software
|
$ 625.7
|
|
|
$ 582.5
|
|
|
$ 1,802.6
|
|
|
$ 1,651.8
|
|
|
|
Control Products & Solutions
|
849.3
|
|
|
698.1
|
|
|
2,410.9
|
|
|
1,981.6
|
|
|
Total sales
|
$ 1,475.0
|
|
|
$ 1,280.6
|
|
|
$ 4,213.5
|
|
|
$ 3,633.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Earnings
|
|
|
|
|
|
|
|
|
|
Architecture & Software
|
$ 154.7
|
|
|
$ 164.7
|
|
|
$ 443.1
|
|
|
$ 442.4
|
|
|
|
Control Products & Solutions
|
103.6
|
|
|
97.6
|
|
|
313.0
|
|
|
267.1
|
|
|
Total segment operating earnings
|
258.3
|
|
|
262.3
|
|
|
756.1
|
|
|
709.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting depreciation and amortization
|
(6.3
|
)
|
|
(3.8
|
)
|
|
(19.1
|
)
|
|
(9.5
|
)
|
|
General corporate - net
|
(21.9
|
)
|
|
(17.6
|
)
|
|
(52.7
|
)
|
|
(50.6
|
)
|
|
Special charges (1)
|
-
|
|
|
-
|
|
|
-
|
|
|
(43.5
|
)
|
|
Interest expense
|
(16.6
|
)
|
|
(13.8
|
)
|
|
(52.1
|
)
|
|
(48.5
|
)
|
|
Income from continuing operations before income taxes
|
213.5
|
|
|
227.1
|
|
|
632.2
|
|
|
557.4
|
|
|
Income tax provision
|
(60.9
|
)
|
|
(59.6
|
)
|
|
(180.2
|
)
|
|
(151.9
|
)
|
|
Income from continuing operations
|
152.6
|
|
|
167.5
|
|
|
452.0
|
|
|
405.5
|
|
|
Income from discontinued operations
|
-
|
|
|
(3.3
|
)
|
|
-
|
|
|
917.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 152.6
|
|
|
$ 164.2
|
|
|
$ 452.0
|
|
|
$ 1,322.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
$ 1.03
|
|
|
$ 1.07
|
|
|
$ 3.03
|
|
|
$ 2.47
|
|
|
|
Discontinued operations
|
-
|
|
|
(0.02
|
)
|
|
-
|
|
|
5.60
|
|
|
|
Net Income
|
$ 1.03
|
|
|
$ 1.05
|
|
|
$ 3.03
|
|
|
$ 8.07
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Diluted Shares
|
148.1
|
|
|
156.5
|
|
|
149.3
|
|
|
163.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the second quarter of 2007, the Company recorded charges of
$43.5 million ($27.7 million after tax, or $0.17 per diluted share)
related to various restructuring actions designed to execute on its
cost productivity initiatives and to advance its globalization
strategy. Actions include workforce reductions, realignment of
administrative functions, and rationalization and consolidation of
global operations.
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007 (1)
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$ 1,475.0
|
|
|
$ 1,280.6
|
|
|
$ 4,213.5
|
|
|
$ 3,633.4
|
|
|
Cost of sales
|
(869.4
|
)
|
|
(729.5
|
)
|
|
(2,461.1
|
)
|
|
(2,110.2
|
)
|
|
|
Gross profit
|
605.6
|
|
|
551.1
|
|
|
1,752.4
|
|
|
1,523.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
(377.6
|
)
|
|
(319.7
|
)
|
|
(1,084.5
|
)
|
|
(938.4
|
)
|
|
Other income
|
2.1
|
|
|
9.5
|
|
|
16.4
|
|
|
21.1
|
|
|
Interest expense
|
(16.6
|
)
|
|
(13.8
|
)
|
|
(52.1
|
)
|
|
(48.5
|
)
|
|
Income from continuing operations before income taxes
|
213.5
|
|
|
227.1
|
|
|
632.2
|
|
|
557.4
|
|
|
Income tax provision
|
(60.9
|
)
|
|
(59.6
|
)
|
|
(180.2
|
)
|
|
(151.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
152.6
|
|
|
167.5
|
|
|
452.0
|
|
|
405.5
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations
|
|
|
|
|
|
|
|
|
|
Income from discontinued operating activities of Power Systems
|
-
|
|
|
-
|
|
|
-
|
|
|
42.3
|
|
|
|
Gain on sale of Power Systems
|
-
|
|
|
(0.7
|
)
|
|
-
|
|
|
866.5
|
|
|
|
Other
|
-
|
|
|
(2.6
|
)
|
|
-
|
|
|
8.3
|
|
|
|
(Loss) income from discontinued operations
|
-
|
|
|
(3.3
|
)
|
|
-
|
|
|
917.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 152.6
|
|
|
$ 164.2
|
|
|
$ 452.0
|
|
|
$ 1,322.6
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the second quarter of 2007, the Company recorded special
charges of $21.8 million in Cost of sales and $21.7 million in
Selling, general, and administrative expenses.
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED BALANCE SHEET INFORMATION
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
September 30,
|
|
|
|
2008
|
|
2007
|
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
$ 805.9
|
|
$ 624.2
|
|
Receivables
|
990.3
|
|
927.7
|
|
Inventories
|
602.2
|
|
504.7
|
|
Property, net
|
535.6
|
|
510.3
|
|
Goodwill and intangibles
|
1,209.8
|
|
1,101.9
|
|
Other assets
|
967.5
|
|
877.0
|
|
|
|
|
|
|
|
Total
|
|
$ 5,111.3
|
|
$ 4,545.8
|
|
|
|
|
|
|
|
Liabilities and Shareowners' Equity
|
|
|
|
|
Short-term debt
|
$ 334.1
|
|
$ 521.4
|
|
Accounts payable
|
490.7
|
|
498.5
|
|
Long-term debt
|
904.2
|
|
405.7
|
|
Other liabilities
|
1,485.7
|
|
1,377.4
|
|
Shareowners' equity
|
1,896.6
|
|
1,742.8
|
|
|
|
|
|
|
|
Total
|
|
$ 5,111.3
|
|
$ 4,545.8
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED CASH FLOW INFORMATION
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
June 30,
|
|
|
|
2008
|
|
2007
|
|
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
Income from continuing operations
|
$ 452.0
|
|
|
$ 405.5
|
|
|
|
Depreciation and amortization
|
100.9
|
|
|
86.1
|
|
|
|
Retirement benefits expense
|
33.5
|
|
|
44.7
|
|
|
|
Pension trust contributions
|
(31.6
|
)
|
|
(26.0
|
)
|
|
|
Receivables/inventories/payables
|
(150.0
|
)
|
|
(133.1
|
)
|
|
|
Other
|
(52.5
|
)
|
|
(113.0
|
)
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
352.3
|
|
|
264.2
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
Capital expenditures
|
(102.8
|
)
|
|
(82.1
|
)
|
|
Acquisition of businesses, net of cash acquired
|
(112.4
|
)
|
|
(44.6
|
)
|
|
Proceeds from sale of property, securities and business
|
43.2
|
|
|
1,744.6
|
|
|
Other investing activities
|
(2.9
|
)
|
|
(3.2
|
)
|
|
|
|
|
|
|
|
Cash (used for) provided by investing activities
|
(174.9
|
)
|
|
1,614.7
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
Net issuance (repayment) of debt
|
303.1
|
|
|
(170.0
|
)
|
|
Cash dividends
|
(128.4
|
)
|
|
(140.8
|
)
|
|
Purchases of treasury stock
|
(226.9
|
)
|
|
(1,263.8
|
)
|
|
Proceeds from the exercise of stock options
|
12.2
|
|
|
51.8
|
|
|
Excess income tax benefit from the exercise of stock options
|
3.9
|
|
|
21.4
|
|
|
Other financing activities
|
(0.3
|
)
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
Cash used for financing activities
|
(36.4
|
)
|
|
(1,501.8
|
)
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
46.8
|
|
|
18.3
|
|
|
|
|
|
|
|
|
Cash provided by continuing operations
|
187.8
|
|
|
395.4
|
|
|
|
|
|
|
|
|
Discontinued Operations:
|
|
|
|
|
Cash used for discontinued operations
|
(6.1
|
)
|
|
(9.2
|
)
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
$ 181.7
|
|
|
$ 386.2
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
OTHER SUPPLEMENTAL INFORMATION
|
|
(in millions)
|
|
|
|
|
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.
We account for share-based compensation under SFAS 123(R), which
requires that we report the excess income tax benefit from the
exercise of stock options as a financing cash flow rather than as an
operating cash flow. We have added this benefit back to our
calculation of free cash flow in order to generally classify cash
flows arising from income taxes as operating cash flows.
|
|
|
|
|
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
performance. Our definition of free cash flow may be different from
definitions used by other companies.
|
|
|
|
|
Our definition of free cash flow excludes the operating cash flows
and capital expenditures related to our discontinued operations.
Operating, investing and financing cash flows of our discontinued
operations are presented separately in our statement of cash flows.
Cash flows from the operating activities of our discontinued
operations are reported in our statement of cash flows net of their
separately calculated income tax effects. U.S. federal and state
income taxes paid as a result of the gain on sale of our former
Power Systems operating segment have been classified within
continuing operations consistent with the cash proceeds. These taxes
paid in the third and fourth quarters of fiscal 2007 and the second
and third quarters of fiscal 2008 have been excluded from free cash
flow to present free cash flow that is representative of the
performance of our continuing businesses.
|
|
|
|
|
The following table summarizes free cash flow by quarter:
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Dec. 31,
|
|
March 31,
|
|
June 30,
|
|
Sept. 30,
|
|
Dec. 31,
|
|
March 31,
|
|
June 30,
|
|
|
|
2006
|
|
2007
|
|
2007
|
|
2007
|
|
2007
|
|
2008
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by continuing operating activities
|
98.2
|
|
108.2
|
|
57.8
|
|
180.7
|
|
101.5
|
|
58.6
|
|
192.2
|
|
Capital expenditures of continuing operations
|
(29.2)
|
|
(24.0)
|
|
(28.9)
|
|
(48.9)
|
|
(26.3)
|
|
(33.5)
|
|
(43.0)
|
|
Tax payments related to the gain on divestiture of Power Systems
|
-
|
|
-
|
|
142.2
|
|
47.8
|
|
-
|
|
6.1
|
|
1.6
|
|
Excess income tax benefit from the exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
of stock options
|
4.7
|
|
4.3
|
|
12.4
|
|
5.7
|
|
2.9
|
|
0.6
|
|
0.4
|
|
Free cash flow
|
$ 73.7
|
|
$ 88.5
|
|
$ 183.5
|
|
$ 185.3
|
|
$ 78.1
|
|
$ 31.8
|
|
$ 151.2
|
|
Organic Sales
|
|
|
|
|
Our press release contains information regarding organic sales,
which we define as sales excluding the effects of changes in
currency exchange rates and acquisitions. Management believes this
non-GAAP measure provides useful information to investors because it
reflects regional performance from our activities without the effect
of changes in currency exchange rates or acquisitions. Management
uses organic sales as one measure to monitor and evaluate our
regional performance. We determine the effect of changes in currency
exchange rates by translating the respective period's sales using
the currency exchange rates that were in effect in the prior year.
When we acquire businesses, we exclude sales in the current year for
which there are no comparable sales in the prior period. Organic
sales growth is calculated by comparing organic sales to reported
sales in the prior year. Sales are attributed 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 nine months ended June 30, 2008 compared to sales
for the three and nine months ended June 30, 2007:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
Effect of
|
|
Sales
Excluding
|
|
|
|
|
|
|
|
|
|
|
|