Rockwell Automation (ROK)
Q2 2012 Earnings Call
April 25, 2012 8:30 am ET
Rondi Rohr-Dralle - Vice President of Investor Relations & Corporate Development
Keith D. Nosbusch - Chairman, Chief Executive Officer and President
Theodore D. Crandall - Chief Financial officer and Senior Vice President
Richard M. Kwas - Wells Fargo Securities, LLC, Research Division
Shannon O'Callaghan - Nomura Securities Co. Ltd., Research Division
Winifred Clark - UBS Investment Bank, Research Division
Terry Darling - Goldman Sachs Group Inc., Research Division
Julian Mitchell - Crédit Suisse AG, Research Division
Scott R. Davis - Barclays Capital, Research Division
Steven E. Winoker - Sanford C. Bernstein & Co., LLC., Research Division
Nigel Coe - Morgan Stanley, Research Division
Jeffrey T. Sprague - Vertical Research Partners Inc.
Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division
Previous Statements by ROK
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Thank you for holding, and welcome to Rockwell Automation's Quarterly Conference Call. I need to remind everyone that today's conference call is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Rondi Rohr-Dralle, Vice President of Investor Relations. Ms. Rohr-Dralle, please go ahead.
Thanks, Deanna. Good morning. Thank you for joining us for Rockwell Automation's Second Quarter Fiscal 2012 Earnings Release Conference Call. Our results were released this morning, and the press release and charts have been posted to our website at www.rockwellautomation.com. Please note that both the press release and charts include reconciliations to non-GAAP measures. Additionally, a webcast of this call is accessible at that website and will be available for replay for the next 30 days.
With me today as always are Keith Nosbusch; our Chairman and CEO; and Ted Crandall, our Chief Financial Officer. Our agenda includes opening remarks by Keith that will include highlights on the company's performance in the second quarter and the first half of the fiscal year, as well as some full year outlook commentary. Then Ted will provide more details around the second quarter and our guidance for fiscal 2012, and we'll take questions at the end of Ted's remarks.
We know it's been a busy earnings week for all of you, so we appreciate you dialing in today. We expect the call to take about an hour, maybe a little bit less.
As is always the case on these calls, I need to remind you that our comments will include statements related to the expected future results of our company and are, therefore, forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all of our SEC filings.
So with that, I'll hand over the call to Keith.
Keith D. Nosbusch
Thanks, Rondi. Good morning, everyone, and thank you for joining us on the call today. I appreciate your time and interest in Rockwell Automation. The first portion of my remarks will cover some highlights for the quarter and a summary of our performance in the first half of the year. Please turn to Page 4 in the slide deck. We had solid 8% growth excluding currency in Q2 and 7% organic growth.
I was really pleased to see solid organic growth in every region. North American market conditions have remained healthy. Our reported sales growth in the U.S. was 5% this quarter. But because of an unusually large project that shipped in quarter 2 last year, we believe that understates the strength of market conditions in the U.S. If we carved that large project out, growth in the U.S. would have been several points higher. Canada was a standout with 25% growth. We are successfully capitalizing on the strength of resource-based industries there.
Europe had another strong quarter despite macroeconomic headwinds. Our team there is executing very well in a difficult environment.
I was encouraged to see Asia return to double-digit growth in the quarter. China improved to high single-digit growth, and we are optimistic that market conditions will continue to improve in the second half of the year. Our outlook for India is more cautious. Sales in India were flat in the quarter, and we have yet to see evidence of improvement in the economy.
Lastly, while Latin America organic sales were only up 4% in the quarter, they have difficult comparison to a great quarter last year. Orders were strong in the quarter, and we continue to expect double-digit growth for the full year. I hope that regional color was helpful. I have a few other second quarter highlights to share before I move on to the first half.
Our Process business continued to gain traction and delivered another quarter of over 20% sales growth. We continue to expand our integrator network, which is enabling us to pursue a broader spectrum of applications in all regions. Process remains our greatest growth opportunity, and we are executing well. We introduced 2 new Logix mid-range controller platforms that improved scalability and Ethernet connectivity, plus enhanced motion for our OEM customers.
For the fourth time, we were recognized by the Ethisphere Institute as one of the World's Most Ethical Companies. This award is a real tribute to the efforts of all of our employees and the importance of ethics in our culture.
Ted will provide more detail on second quarter financial performance in his remarks. So I'd like to provide a few highlights on the first half of the fiscal year.
I am pleased with our year-over-year performance through the end of March. Sales grew over 8%, excluding currency. Operating margin expanded 1.7 points, and segment conversion margin was over 40%. Earnings per share in the first half grew 12% in spite of a pretty significant headwind from taxes, and we continue to generate best-in-class return on invested capital.