(Source: Business Wire)
Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2009 third quarter revenue of $1,010.8 million, down 31 percent compared to $1,475.0 million in the third quarter of fiscal 2008. Currency translation contributed 5 percentage points to the decline, partially offset by 1 percentage point of growth from acquisitions. Fiscal 2009 third quarter revenue was down 4 percent sequentially compared to the second quarter of this fiscal year. Fiscal 2009 third quarter net income was $32.8 million or $0.23 per share, compared to $152.6 million or $1.03 per share in the third quarter of fiscal 2008.
Segment operating earnings were $86.3 million in the third quarter of fiscal 2009, down from $258.3 million in the same period of 2008. Earnings decreased primarily due to the significant revenue decline, partially offset by cost reductions. Segment operating margin in the third quarter of fiscal 2009 was 8.5 percent, 9.0 percentage points lower than the third quarter of fiscal 2008.
Third quarter of fiscal 2009 free cash flow from continuing operations was $168.5 million versus $151.2 million in the third quarter of fiscal 2008. Free cash flow in the quarter benefited primarily from working capital reductions and lower capital expenditures. Return on invested capital was 14.8 percent.
Free cash flow 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 fiscal third quarter results, chairman and chief executive officer Keith D. Nosbusch said, "Revenue and earnings were largely in line with our expectations, although the revenue decline in our solutions business was somewhat higher than anticipated. Despite lower sequential revenue in the third quarter, segment operating margin improved, primarily due to favorable revenue mix and cost savings. We were pleased that we generated strong free cash flow again this quarter. Our employees have responded well in this challenging environment by remaining focused on our customers' needs while delivering operational improvements."
Outlook
Commenting on the outlook for fiscal 2009, Nosbusch said, "Based on mixed results in macroeconomic indicators and stabilization in our own demand trends, it appears that we may be approaching the bottom of the cycle. However, the outlook for the global economy is still uncertain, and we have yet to see evidence of an upturn. We are reaffirming our fiscal 2009 earnings per share guidance of $1.40 to $1.70, excluding any restructuring charges related to actions that we may take in the fiscal fourth quarter."
Nosbusch added, "In this difficult business environment, we remain focused on cost control and cash management while continuing to invest in our core technologies. As markets recover, we will benefit from the combination of our talented and dedicated employees and partners, differentiated technology, increasingly diverse revenue base and strong balance sheet."
Following is a discussion of third quarter results for both segments.
Architecture & Software
Architecture & Software fiscal 2009 third quarter sales were $399.5 million, a decrease of 36 percent from $625.7 million in the third quarter of fiscal 2008. Currency translation contributed 5 percentage points to the decline. Fiscal 2009 third quarter sales were up 2 percent sequentially compared to $393.5 million in the second quarter of this fiscal year. Segment operating earnings were $43.3 million in the third quarter of fiscal 2009 compared to $154.7 million in the third quarter of fiscal 2008. Architecture & Software segment operating margin was 10.8 percent in the third quarter of fiscal 2009 compared to 24.7 percent in the same period of 2008.
Control Products & Solutions
Control Products & Solutions fiscal 2009 third quarter sales were $611.3 million, a decrease of 28 percent from $849.3 million in the third quarter of fiscal 2008. Currency translation contributed 5 percentage points to the decline, partially offset by about 1 percentage point of growth from acquisitions. Fiscal 2009 third quarter sales were down 8 percent sequentially compared to $664.6 million in the second quarter of this fiscal year. Segment operating earnings were $43.0 million in the third quarter of fiscal 2009 compared to $103.6 million in the third quarter of fiscal 2008. Control Products & Solutions segment operating margin was 7.0 percent in the third quarter of fiscal 2009 compared to 12.2 percent in the same period of 2008.
General Corporate -- Net
Fiscal 2009 third quarter general corporate net expense was $16.3 million, $5.6 million lower than the third quarter of fiscal 2008.
Income Taxes
The effective tax rate for the third quarter of fiscal 2009 was 34.7 percent, compared to 28.5 percent for the third quarter of fiscal 2008. The tax rate for the quarter was unfavorably impacted by tax on a dividend related to the planned disposal of a non-U.S. subsidiary. For fiscal 2009, the Company now expects the full year tax rate to be in the range of 22 to 25 percent.
Conference Call
A conference call to discuss our financial results will take place at 8:30 A.M. Eastern Time on July 28. The call and related financial charts 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", "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:
economic changes in global markets where we compete, such as currency exchange rates, inflation rates, recession, interest rates and the volatility and disruption of the capital and credit markets for us, our customers and our suppliers;
laws, regulations and governmental policies affecting our activities in the countries where we do business;
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 distribution channels;
the availability and price of components and materials;
successful execution of our cost productivity, restructuring and globalization initiatives; 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), the world's largest company dedicated to industrial automation and information, makes its customers more productive and the world more sustainable. Headquartered in Milwaukee, Wis., Rockwell Automation 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, 2009 2008 2009 2008 Sales Architecture & Software $ 399.5 $ 625.7 $ 1,299.4 $ 1,802.6 Control Products & Solutions 611.3 849.3 1,958.7 2,410.9 Total sales $ 1,010.8 $ 1,475.0 $ 3,258.1 $ 4,213.5 Segment operating earnings Architecture & Software $ 43.3 $ 154.7 $ 186.1 $ 443.1 Control Products & Solutions 43.0 103.6 164.0 313.0 Total segment operating earnings 86.3 258.3 350.1 756.1 Purchase accounting depreciation and amortization (4.4 ) (6.3 ) (14.2 ) (19.1 ) General corporate - net (16.3 ) (21.9 ) (49.1 ) (52.7 ) Interest expense (15.4 ) (16.6 ) (45.7 ) (52.1 ) Special items - - 4.0 - Gain on sale of investment - - - - Income from continuing operations before income taxes 50.2 213.5 245.1 632.2 Income tax provision (17.4 ) (60.9 ) (56.1 ) (180.2 ) Income from continuing operations 32.8 152.6 189.0 452.0 Income from discontinued operations - - 2.8 - Income tax benefit on pending divestiture - - - - Cumulative effect of accounting change - - - - Net income $ 32.8 $ 152.6 $ 191.8 $ 452.0 Diluted earnings per share Continuing operations $ 0.23 $ 1.03 $ 1.33 $ 3.03 Discontinued operations - - 0.02 - Cumulative effect of accounting change - - - - Net income $ 0.23 $ 1.03 $ 1.35 $ 3.03 Average diluted shares 142.4 148.1 142.2 149.3 -------------------------------------------------------------------------------
ROCKWELL AUTOMATION, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in millions) Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 Sales $ 1,010.8 $ 1,475.0 $ 3,258.1 $ 4,213.5 Cost of sales (640.6 ) (869.4 ) (2,053.9 ) (2,461.1 ) Gross profit 370.2 605.6 1,204.2 1,752.4 Selling, general and administrative expenses (305.0 ) (377.6 ) (911.2 ) (1,084.5 ) Other income (expense) 0.4 2.1 (2.2 ) 16.4 Interest expense (15.4 ) (16.6 ) (45.7 ) (52.1 ) Income from continuing operations 50.2 213.5 245.1 632.2 Income tax provision (17.4 ) (60.9 ) (56.1 ) (180.2 ) Income from continuing operations 32.8 152.6 189.0 452.0 Income from discontinued operations - - 2.8 - Net income $ 32.8 $ 152.6 $ 191.8 $ 452.0 -------------------------------------------------------------------------------
ROCKWELL AUTOMATION, INC. CONDENSED BALANCE SHEET INFORMATION (in millions) June 30, September 30, 2009 2008 Assets Cash and cash equivalents $ 580.5 $ 582.2 Receivables 740.7 959.9 Inventories 460.3 575.5 Property, net 525.8 553.8 Goodwill and intangibles 1,137.2 1,165.8 Other assets 719.5 756.4 Assets available for sale - - Total $ 4,164.0 $ 4,593.6 Liabilities and Shareowners' Equity Short-term debt $ - $ 100.1 Accounts payable 287.6 437.3 Long-term debt 904.8 904.4 Other liabilities 1,364.1 1,463.0 Liabilities associated with assets available for sale Shareowners' equity 1,607.5 1,688.8 Total $ 4,164.0 $ 4,593.6 -------------------------------------------------------------------------------
ROCKWELL AUTOMATION, INC. CONDENSED CASH FLOW INFORMATION (in millions) Nine Months Ended June 30, 2009 2008 Continuing operations: Operating activities: Income from continuing operations $ 189.0 $ 452.0 Depreciation and amortization 98.8 100.9 Retirement benefits expense 36.4 33.5 Pension trust contributions (22.7 ) (31.6 ) Receivables/inventories/payables 172.4 (150.0 ) Compensation and benefits (56.8 ) (2.0 ) Other (8.5 ) (50.5 ) Cash provided by operating activities 408.6 352.3 Investing activities: Capital expenditures (67.5 ) (102.8 ) Acquisition of businesses, net of cash acquired (30.1 ) (112.4 ) Proceeds from sale of property and securities 3.0 43.2 Purchases of short-term investments (8.4 ) - Proceeds from return of investment - Other investing activities (4.1 ) (2.9 ) Cash used for investing activities (107.1 ) (174.9 ) Financing activities: Net (repayment) issuance of debt (100.0 ) 303.1 Cash dividends (123.3 ) (128.4 ) Purchases of treasury stock (53.5 ) (226.9 ) Proceeds from the exercise of stock options 7.4 12.2 Excess income tax benefit from share-based compensation 1.3 3.9 Other financing activities (3.0 ) (0.3 ) Cash used for financing activities (271.1 ) (36.4 ) Effect of exchange rate changes on cash (31.6 ) 46.8 Cash (used for) provided by continuing operations (1.2 ) 187.8 Discontinued operations: Cash used for discontinued operations (0.5 ) (6.1 ) (Decrease) increase in cash and cash equivalents $ (1.7 ) $ 181.7 -------------------------------------------------------------------------------
ROCKWELL AUTOMATION, INC. OTHER SUPPLEMENTAL INFORMATION (in millions) Organic Sales Our press release contains information regarding sales excluding the effect of changes in currency and organic sales, which we define as sales excluding the effect of changes in currency exchange rates and acquisitions.We believe these non-GAAP measures provide useful information to investors because they reflect regional performance from our activities without the effect of changes in currency exchange rates and/or acquisitions.We use organic sales and sales excluding the effect of changes in currency as two measures 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 during 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, 2009 compared to sales for the three and nine months ended June 30, 2008: Three Months Ended June 30, 2009 2008 Sales Excluding Effect of Effect of Changes in Changes in Effect of Organic Sales Currency Currency Acquisitions Sales Sales United States $ 518.2 $ 3.0 $ 521.2 $ (1.3 ) $ 519.9 $ 731.7 Canada 60.3 8.0 68.3 (6.9 ) 61.4 104.5 Europe, Middle East, Africa 219.3 32.2 251.5 (0.5 ) 251.0 338.4 Asia-Pacific 144.7 15.2 159.9 (0.1 ) 159.8 189.5 Latin America 68.3 14.8 83.1 - 83.1 110.9 Total $1,010.8 $ 73.2 $ 1,084.0 $ (8.8 ) $1,075.2 $ 1,475.0 Nine Months Ended June 30, 2009 2008 Sales Excluding Effect of Effect of Changes in Changes in Effect of Organic Sales Currency Currency Acquisitions Sales Sales United States $1,697.7 $ 13.5 $ 1,711.2 $ (4.1 ) $1,707.1 $ 2,120.1 Canada 188.6 38.8 227.4 (6.9 ) 220.5 296.6 Europe, Middle East, Africa 712.5 102.3 814.8 (3.9 ) 810.9 980.8 Asia-Pacific 420.3 51.5 471.8 (0.2 ) 471.6 518.4 Latin America 239.0 51.2 290.2 - 290.2 297.6 A service of YellowBrix, Inc.
