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Rockwell Automation Reports Third Quarter 2013 Results

Fiscal 2013 third quarter general corporate-net expense was $20.9 million compared to $18.3 million in 2012.

The effective tax rate in the third quarter of 2013 was 20.9 percent compared to 22.1 percent in the third quarter of 2012. The Adjusted Effective Tax Rate for the third quarter of fiscal 2013 was 22.0 percent compared to 22.6 percent a year ago. The Company now expects the full-year Adjusted Effective Tax Rate for fiscal 2013 to be approximately 24 percent.

During the third quarter of fiscal 2013, the Company repurchased 1.2 million shares of its common stock at a cost of $104.3 million. At June 30, 2013, $618.6 million remained available under the $1.0 billion share repurchase authorization. On April 3, 2013, the Board of Directors declared an 11 percent increase in the quarterly dividend to 52 cents per share on common stock, which was paid on June 10, 2013.

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 our financial results will take place at 8:30 A.M. Eastern Time on July 30, 2013. The call and related financial charts will be webcast and accessible via the Rockwell Automation website ( http://www.rockwellautomation.com/investors/ ).

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:

  • macroeconomic factors, including global and regional business conditions, the availability and cost of capital, 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;
  • the successful development of advanced technologies and demand for and market acceptance of new and existing products;
  • the availability, effectiveness and security of our information technology systems;
  • competitive products, services and solutions and pricing pressures, and our ability to provide high quality products, services and solutions;
  • a disruption of our operations and supply chain due to natural disasters, acts of war, strikes, terrorism, social unrest or other causes;
  • our ability to protect confidential information and enforce our intellectual property rights;
  • 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;
  • our ability to manage costs related to employee retirement and health care benefits;
  • the uncertainties of litigation, including liabilities related to the safety and security of the products, services and solutions we sell or to alleged intellectual property infringements;
  • our ability to manage and mitigate the risks associated with our solutions business;
  • a disruption of our distribution channels;
  • the availability and price of components and materials;
  • the successful integration and management of acquired businesses;
  • the successful execution of our cost productivity 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 over 22,000 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,
2013   2012 2013   2012
Sales
Architecture & Software (a) $ 671.0 $ 663.8 $ 1,967.7 $ 1,979.1
Control Products & Solutions (b) 953.2   896.6   2,668.5   2,616.3  
Total sales (c) $ 1,624.2   $ 1,560.4   $ 4,636.2   $ 4,595.4  
 
Segment operating earnings
Architecture & Software (d) $ 188.6 $ 185.2 $ 541.7 $ 545.0
Control Products & Solutions (e) 129.2   106.9   337.3   315.5  
Total segment operating earnings 1 (f) 317.8 292.1 879.0 860.5
 
Purchase accounting depreciation and amortization (4.6 ) (5.0 ) (14.8 ) (14.9 )
General corporate—net (20.9 ) (18.3 ) (57.5 ) (63.0 )
Non-operating pension costs 2 (19.6 ) (8.8 ) (59.0 ) (26.4 )
Interest expense (15.3 ) (15.2 ) (46.0 ) (45.2 )
Income before income taxes (g) 257.4 244.8 701.7 711.0
Income tax provision (53.7 ) (54.1 ) (160.7 ) (169.2 )
Net income $ 203.7   $ 190.7   $ 541.0   $ 541.8  
 
Diluted EPS $ 1.45   $ 1.33   $ 3.83   $ 3.76  
 
Adjusted EPS 2 $ 1.54   $ 1.37   $ 4.09     $ 3.87  
 
Average diluted shares 140.4   143.5   141.1   144.0  
 
Segment operating margin
Architecture & Software (d/a) 28.1 % 27.9 % 27.5 % 27.5 %
Control Products & Solutions (e/b) 13.6 % 11.9 % 12.6 % 12.1 %
Total segment operating margin 1 (f/c) 19.6 % 18.7 % 19.0 % 18.7 %
 
Pre-tax margin (g/c) 15.8 % 15.7 % 15.1 % 15.5 %

1Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We believe that these measures are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our Company. Our measures of total segment operating earnings and total segment operating margin may be different from those used by other companies.

2Beginning in fiscal 2013, we reclassified for all periods presented non-operating pension costs to a separate line item within the above table. Previously, these costs were included in segment operating earnings and general corporate, net. Adjusted EPS is a non-GAAP earnings measure that excludes the non-operating pension costs and their related income tax effects. See "Other Supplemental Information - Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate" section for more information regarding non-operating pension costs and a reconciliation to GAAP measures.

   
ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions)
 
Three Months Ended Nine Months Ended
June 30, June 30,
2013   2012 2013   2012
Sales $ 1,624.2 $ 1,560.4 $ 4,636.2 $ 4,595.4
Cost of sales (971.3 ) (928.9 ) (2,759.6 ) (2,726.9 )
Gross profit 652.9 631.5 1,876.6 1,868.5
 
Selling, general and administrative expenses (383.7 ) (369.8 ) (1,134.0 ) (1,105.3 )
Other income (expense) 3.5 (1.7 ) 5.1 (7.0 )
Interest expense (15.3 ) (15.2 ) (46.0 ) (45.2 )
Income before income taxes 257.4 244.8 701.7 711.0
Income tax provision (53.7 ) (54.1 ) (160.7 ) (169.2 )
 
Net income $ 203.7   $ 190.7   $ 541.0   $ 541.8  
   
ROCKWELL AUTOMATION, INC.
CONDENSED BALANCE SHEET INFORMATION
(in millions)
 
June 30, September 30,
2013 2012
Assets
Cash and cash equivalents $ 1,024.7 $ 903.9
Short-term investments 372.3 350.0
Receivables 1,155.1 1,187.3
Inventories 619.0 619.0
Property, net 581.4 587.1
Goodwill and intangibles 1,219.4 1,158.3
Other assets 799.4   830.9
 
Total $ 5,771.3   $ 5,636.5
 
Liabilities and Shareowners’ Equity
Short-term debt $ 220.0 $ 157.0
Accounts payable 499.3 547.6
Long-term debt 905.1 905.0
Other liabilities 2,139.1 2,175.2
Shareowners’ equity 2,007.8   1,851.7
 
Total $ 5,771.3   $ 5,636.5
 
ROCKWELL AUTOMATION, INC.
CONDENSED CASH FLOW INFORMATION
(in millions)
 
Nine Months Ended
June 30,
2013   2012
Continuing operations:
Operating activities:
Income from continuing operations $ 541.0 $ 541.8
Depreciation and amortization 109.1 102.9
Retirement benefits expense 127.8 78.6
Pension trust contributions (29.9 ) (328.5 )
Receivables/inventories/payables (43.3 ) (78.7 )
Advanced payments from customers and deferred revenue 26.0 42.6
Compensation and benefits (55.5 ) (128.7 )
Income taxes 20.0 79.6
Other (31.4 ) 19.0  
Cash provided by operating activities 663.8   328.6  
Investing activities:
Capital expenditures (86.9 ) (94.9 )
Acquisition of businesses, net of cash acquired (84.8 ) (16.2 )
Purchases of short-term investments (284.6 ) (400.0 )
Proceeds from maturities of short-term investments 262.5 50.0
Proceeds from sale of property and investments 0.3 2.4
Other investing activities (4.1 )  
Cash used for investing activities (197.6 ) (458.7 )
Financing activities:
Net issuance of short-term debt 63.0 270.0
Cash dividends (203.9 ) (181.5 )
Purchases of treasury stock (319.3 ) (168.3 )
Proceeds from the exercise of stock options 115.8 44.4
Excess income tax benefit from share-based compensation 22.6 17.3
Other financing activities (1.8 ) (0.3 )
Cash used for financing activities (323.6 ) (18.4 )
Effect of exchange rate changes on cash (14.8 ) (34.1 )
Cash provided by (used for) continuing operations 127.8 (182.6 )
Discontinued operations:
Cash used for discontinued operations (7.0 ) (0.7 )
Increase (decrease) in cash and cash equivalents $ 120.8   $ (183.3 )
 

ROCKWELL AUTOMATION, INC.

OTHER SUPPLEMENTAL INFORMATION

(in millions)

 

Organic Sales

Our press release contains information regarding organic sales, which we define as sales excluding the effect of changes in currency exchange rates and acquisitions. We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and/or acquisitions. We use organic sales as one measure to monitor and evaluate our regional and operating segment 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.

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