Rockwell Automation Reports Second Quarter Fiscal 2020 Results

  • Supporting customers in critical industries globally
  • Reported sales up 1.5 percent year over year; organic sales flat
  • Inorganic investments contributed 3 percent to reported sales growth
  • Diluted EPS of $1.13; Adjusted EPS of $2.43
  • Cash Flow from Operations of $217.4 million, up 51 percent; Free Cash Flow of $197.8 million, up 89 percent
  • Updating fiscal 2020 Diluted and Adjusted EPS guidance

MILWAUKEE — (BUSINESS WIRE) — April 28, 2020 — Rockwell Automation, Inc. (NYSE: ROK) today reported second quarter fiscal 2020 results.

"Our first priority is protecting the health and safety of our employees. They are doing outstanding work keeping our customers’ operations up and running during this crisis. Rockwell is an essential business to support critical infrastructure because our customers cannot build their products at scale without automation. This pandemic will change how we live our lives and operate our businesses in the future. Rockwell's financial strength positions us well to overcome the current challenges and to be more valuable than ever as our customers learn to operate in the new environment," said Blake Moret, Chairman and CEO.

Q2 Fiscal 2020 Financial Results

Second quarter fiscal 2020 sales were $1,681.3 million, up 1.5 percent from $1,657.2 million in the second quarter of fiscal 2019. Organic sales declined 0.2 percent, currency translation decreased sales by 1.5 percentage points, and acquisitions increased sales by 3.2 percent.

Second quarter fiscal 2020 net income attributable to Rockwell Automation was $132.2 million or $1.13 per share, compared to $346.0 million or $2.88 per share in the second quarter of fiscal 2019. The decreases in net income attributable to Rockwell Automation and EPS were primarily due to fair-value adjustments recognized in the second quarter of fiscal 2020 and 2019 in connection with our investment in PTC (the "PTC adjustments"). Second quarter fiscal 2020 Adjusted EPS was $2.43, up 19 percent compared to $2.04 in the second quarter of fiscal 2019, largely due to lower incentive compensation expense.

Pre-tax margin was 10.0 percent in the second quarter of fiscal 2020 compared to 24.3 percent in the same period last year. The decrease in pre-tax margin was primarily due to the PTC adjustments.

Total segment operating margin was 22.1 percent compared to 21.3 percent a year ago. The increase in total segment operating margin was primarily due to lower incentive compensation expense, partially offset by the impacts of currency and acquisitions. Total segment operating earnings were $371.5 million in the second quarter of fiscal 2020, up 5.0 percent from $353.8 million in the same period of fiscal 2019.

Cash flow provided by operating activities in the second quarter of fiscal 2020 was $217.4 million, compared to $143.8 million in the second quarter of fiscal 2019. Free cash flow was $197.8 million, compared to $104.9 million in the second quarter of fiscal 2019.

Outlook

The COVID-19 pandemic and global efforts to respond to it are rapidly evolving. The duration, severity, and geographic scope of its impacts on our supply chain, business operations and financial condition, and those of our suppliers, distributors, business partners and customers are highly uncertain.

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 2020, including the previously announced acquisitions of ASEM, S.p.A. and Kalypso, LP, which are expected to close in the next few weeks. The midpoint of the guidance range assumes a reported sales decline of ~15 percent and an organic sales decline of ~20 percent in the third quarter, with sequential improvement in Q4:

Sales Growth Guidance

 

   

EPS Guidance

Reported sales growth

 

(6.5)% - (3.0)%

 

   

Diluted EPS

 

$6.05 - $6.85

Organic sales growth

 

(9.5)% - (6.5)%

 

   

Adjusted EPS

 

$6.90 - $7.70

Inorganic sales growth1

 

4.0% - 4.5%

 

   

 

 

 

Currency translation

 

~(1)%

 

   

 

 

 

1Estimate for Sensia, MESTECH Services, Avnet Data Security, ASEM, S.p.A., and Kalypso, LP.

"We are focused on delivering value to all of our stakeholders through the crisis. That means protecting our people and our business resources, forging deeper partnerships, and helping our customers recover and thrive," Moret concluded.

Architecture & Software

Architecture & Software quarterly sales were $757.1 million, an increase of 2.4 percent compared to $739.7 million in the same period last year. Organic sales increased 4.0 percent, currency translation decreased sales by 1.7 percentage point, and an acquisition increased sales by 0.1 percentage points. Segment operating earnings were $232.8 million compared to $209.9 million in the same period last year. Segment operating margin increased to 30.7 percent from 28.4 percent a year ago.

Control Products & Solutions

Control Products & Solutions quarterly sales were $924.2 million, an increase of 0.7 percent compared to $917.5 million in the same period last year. Organic sales decreased 3.6 percent, currency translation decreased sales by 1.5 percent, and inorganic investments increased sales by 5.8 percent. Segment operating earnings were $138.7 million compared to $143.9 million in the same period last year. Segment operating margin decreased to 15.0 percent from 15.7 percent a year ago.

Supplemental Information

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