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Ahead of Rockwell Automation (ROK) Q1 Earnings: Get Ready With Wall Street Estimates for Key Metrics
Zacks Investment Research· 2024-01-26 15:21
The upcoming report from Rockwell Automation (ROK) is expected to reveal quarterly earnings of $2.61 per share, indicating an increase of 6.1% compared to the year-ago period. Analysts forecast revenues of $2.07 billion, representing an increase of 4.5% year over year.The consensus EPS estimate for the quarter has been revised 0.1% higher over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.P ...
What's in Store for Rockwell Automation (ROK) in Q1 Earnings?
Zacks Investment Research· 2024-01-25 18:21
Rockwell Automation Inc. (ROK) is scheduled to report first-quarter fiscal 2024 results on Jan 31, before the opening bell.Q4 PerformanceIn the last reported quarter, the company’s earnings and revenues improved year over year. The top and the bottom line also surpassed the Zacks Consensus Estimate.The company’s earnings surpassed estimates thrice in the last trailing four quarters while missing once, the average surprise being 12.4%.Q1 EstimatesThe Zacks Consensus Estimate for fiscal first-quarter revenues ...
Rockwell Automation (ROK) Reports Next Week: Wall Street Expects Earnings Growth
Zacks Investment Research· 2024-01-24 16:06
Wall Street expects a year-over-year increase in earnings on higher revenues when Rockwell Automation (ROK) reports results for the quarter ended December 2023. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on Jan ...
Rockwell Automation (ROK) Registers a Bigger Fall Than the Market: Important Facts to Note
Zacks Investment Research· 2024-01-18 00:21
Rockwell Automation (ROK) closed the most recent trading day at $295.38, moving -1.01% from the previous trading session. The stock trailed the S&P 500, which registered a daily loss of 0.56%. Meanwhile, the Dow lost 0.25%, and the Nasdaq, a tech-heavy index, lost 0.59%.The the stock of industrial equipment and software maker has fallen by 3.9% in the past month, lagging the Industrial Products sector's loss of 0.85% and the S&P 500's gain of 1.2%.Analysts and investors alike will be keeping a close eye on ...
Rockwell Automation to Report First Quarter Fiscal 2024 Results
Businesswire· 2024-01-17 12:00
MILWAUKEE--(BUSINESS WIRE)--Rockwell Automation, Inc. (NYSE: ROK) is scheduled to report its first quarter fiscal 2024 results on Wednesday, Jan. 31, before the market opens. The release will be posted on the Rockwell Investor Relations website at www.rockwellautomation.com/en-us/investors.html. A conference call to discuss the quarterly results will be held at 7:30 a.m. CST on Jan. 31. This call will be audio webcast and accessible on the Rockwell Automation Investor Relations website. Presentation materi ...
Rockwell Automation announces registration is now open for ROKLive EMEA 2024, its flagship technology training event in Europe
Prnewswire· 2024-01-09 07:00
Early registration discounts are available as well as a reduced rate for young professionalsMADRID, Jan. 9, 2024 /PRNewswire/ -- Rockwell Automation, the world's largest company dedicated to industrial automation and digital transformation, today announced registration is now open for its flagship European event, ROKLive EMEA 2024, which will take place 26 to 29 February 2024 in Madrid.ROKLive EMEA brings together operations, maintenance and engineering professionals to explore how Rockwell Automation's int ...
Rockwell Automation(ROK) - 2023 Q4 - Annual Report
2023-11-07 16:00
PART I [Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements, noting actual results may differ due to risks and no obligation to update - The report contains forward-looking statements, and **actual results may differ materially** due to various risks and uncertainties[11](index=11&type=chunk) - The company does not undertake to update or revise any forward-looking statement[12](index=12&type=chunk) [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Rockwell Automation, a global leader in industrial automation, operates through three segments, facing strong competition and relying on global distributors - Rockwell Automation is the **world's largest company** dedicated to industrial automation and digital transformation, aiming to simplify complex production challenges for customers[14](index=14&type=chunk) - The company operates through three segments: **Intelligent Devices** (drives, motion, safety), **Software & Control** (control/visualization software, digital twin), and **Lifecycle Services** (digital consulting, professional services, recurring services, Sensia joint venture)[19](index=19&type=chunk) - The company conducts business in **over 100 countries**, with major sales outside the U.S. in China, Canada, Italy, Mexico, the UK, and Germany[21](index=21&type=chunk) - Competition is influenced by portfolio breadth, technology differentiation, industry expertise, installed base, partner ecosystem, global presence, and price[22](index=22&type=chunk) [Item 1A. Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company manages strategic, operational, compliance, and financial risks through its ERM process, including macroeconomic, supply chain, and cybersecurity threats - The company's **Enterprise Risk Management (ERM) process** identifies, assesses, manages, and monitors significant risks, with Board oversight[32](index=32&type=chunk)[33](index=33&type=chunk) - Key industry and economic risks include **macroeconomic factors** (inflation, business conditions, currency exchange rates), natural disasters, pandemics, acts of war, and **intense competition**[35](index=35&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Business and operational risks encompass **reliance on suppliers**, challenges in **attracting and retaining qualified employees**, complexities of global operations, potential failures or **security breaches of IT/OT systems**, and the need to adapt to changing customer preferences[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[50](index=50&type=chunk) - Legal, tax, and regulatory risks include **new legislative actions** (e.g., BEPS Pillar Two, ESG factors), **claims from taxing authorities**, and **potential liabilities from litigation** (including asbestos and environmental remediation)[58](index=58&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Item 1B. Unresolved Staff Comments](index=13&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[68](index=68&type=chunk) [Item 2. Properties](index=13&type=section&id=Item%202.%20Properties) Rockwell Automation's global headquarters is owned in Milwaukee, with approximately 50 leased manufacturing and distribution locations worldwide - Global headquarters is in **Milwaukee, Wisconsin (owned facility)**, encompassing product development, sales, manufacturing, and administrative functions[69](index=69&type=chunk) - The company has **approximately 50 manufacturing and distribution locations** globally, with most other facilities leased and shared across operating segments[69](index=69&type=chunk) [Item 3. Legal Proceedings](index=13&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is contained in Note 17 of the Consolidated Financial Statements - Information on legal proceedings is referenced to **Note 17** in the Consolidated Financial Statements[71](index=71&type=chunk) [Item 4. Mine Safety Disclosures](index=14&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[72](index=72&type=chunk) [Item 4A. Information about our Executive Officers](index=14&type=section&id=Item%204A.%20Information%20about%20our%20Executive%20Officers) This section lists the name, age, office, and principal occupations of the company's executive officers as of November 1, 2023 Executive Officers as of November 1, 2023 | Name | Office and Position | Age | | :--- | :--- | :--- | | Blake D. Moret | Chairman of the Board, President and Chief Executive Officer | 60 | | Robert L. Buttermore | Senior Vice President and Chief Supply Chain Officer | 50 | | Matthew W. Fordenwalt | Senior Vice President, Lifecycle Services | 47 | | Nicholas C. Gangestad | Senior Vice President and Chief Financial Officer | 59 | | Scott A. Genereux | Senior Vice President and Chief Revenue Officer | 60 | | Rebecca W. House | Senior Vice President, Chief People and Legal Officer and Secretary | 50 | | Frank C. Kulaszewicz | Senior Vice President | 59 | | Veena M. Lakkundi | Senior Vice President, Strategy and Corporate Development | 54 | | John M. Miller | Vice President and Chief Intellectual Property Counsel | 56 | | Tessa M. Myers | Senior Vice President Intelligent Devices | 47 | | Christopher Nardecchia | Senior Vice President and Chief Information Officer | 61 | | Cyril P. Perducat | Senior Vice President and Chief Technology Officer | 54 | | Terry L. Riesterer | Vice President and Controller | 55 | | Brian A. Shepherd | Senior Vice President Software and Control | 58 | | Isaac R. Woods | Vice President and Treasurer | 38 | PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Rockwell Automation's common stock (ROK) is listed on the NYSE, with share repurchases and cumulative total return performance detailed - Rockwell Automation's common stock (ROK) is listed on the New York Stock Exchange, with **11,960 shareowners of record** as of October 31, 2023[75](index=75&type=chunk) Company Share Purchases (Q3 Fiscal 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Approx. Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | July 1 – 31, 2023 | 56,822 | $336.07 | $975,955,429 | | August 1 – 31, 2023 | 82,698 | $298.05 | $951,307,019 | | September 1 – 30, 2023 | 37,732 | $291.47 | $940,309,320 | | **Total** | **177,252** | **$308.84** | | Cumulative Total Shareowner Return (2018-2023) | | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Rockwell Automation | $100.00 | $89.94 | $122.91 | $166.43 | $123.89 | $167.41 | | S&P 500 Index | $100.00 | $104.25 | $120.02 | $156.01 | $131.85 | $160.31 | | S&P Selected GICS groups | $100.00 | $107.60 | $148.77 | $189.73 | $159.25 | $207.01 | | Cash dividends per common share | $3.51 | $3.88 | $4.08 | $4.28 | $4.48 | $4.72 | [Item 6. Reserved](index=17&type=section&id=Item%206.%20Reserved) This item is not required - Not required[81](index=81&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Rockwell Automation's financial performance, condition, and operations, covering strategy, segment results, economic trends, and critical accounting estimates [Non-GAAP Measures](index=17&type=section&id=Non-GAAP%20Measures) This section defines and explains non-GAAP measures like organic sales, adjusted income, and free cash flow, with reconciliations provided - Non-GAAP measures used include **organic sales**, **total segment operating earnings and margin**, **adjusted income**, **adjusted EPS**, **adjusted effective tax rate**, and **free cash flow**[82](index=82&type=chunk) [Overview](index=17&type=section&id=Overview) Rockwell Automation's 'Connected Enterprise' strategy drives industrial automation and digital transformation, addressing customer needs and influenced by megatrends like AI and sustainability - Rockwell Automation's long-term strategy is to expand human possibility and create the future of industrial operations by bringing the '**Connected Enterprise**' to life[83](index=83&type=chunk) - Overall demand is driven by investments in manufacturing, customer needs for faster time to market, agility, operational productivity, asset management, business resilience, quality, safety, and sustainability[84](index=84&type=chunk) - The company's strategy is influenced by converging megatrends: **digitization and artificial intelligence**, **energy transition and sustainability**, **shifting demographics**, and an increased need for **resiliency**[83](index=83&type=chunk) [Long-term Strategy](index=17&type=section&id=Long-term%20Strategy) The long-term strategy focuses on accelerating secular growth, expanding market share through technology and new markets, and achieving **1% annual growth from acquisitions** - The long-term strategy includes achieving faster secular growth in traditional markets by addressing customer needs for **resiliency, agility, sustainability**, and mitigating labor shortages[85](index=85&type=chunk) - Key strategic pillars are growing market share through **technology differentiation, industry focus, go-to-market acceleration, expanded offerings**, and **new markets**[85](index=85&type=chunk) - The company aims to accelerate growth in **annual recurring revenue** and add **1% growth from acquisitions annually**[85](index=85&type=chunk) [Sustainability](index=18&type=section&id=Sustainability) Rockwell Automation's sustainability strategy focuses on enabling sustainable customers, operating as a sustainable company, and fostering sustainable communities - Sustainability priorities are focused on three outcomes: **Sustainable Customers, Sustainable Company**, and **Sustainable Communities**[86](index=86&type=chunk) - The company's technologies provide **data transparency** and enable partners to scale sustainable solutions across **energy, water, and waste management**[86](index=86&type=chunk) [Differentiation through Technology Innovation and Domain Expertise](index=18&type=section&id=Differentiation%20through%20Technology%20Innovation%20and%20Domain%20Expertise) Rockwell Automation differentiates through its industry-leading portfolio, integrated control architecture (Logix), open architecture, partner ecosystem, and deep domain expertise - The company offers an **industry-leading portfolio of hardware, software, and services** with flexible on-premises, edge, and cloud-native solutions[87](index=87&type=chunk) - A key differentiator is its **integrated control and information architecture**, with **Logix** at its core, supporting multiple production disciplines in a single hardware and software environment[88](index=88&type=chunk) - Differentiation is also achieved through an **open architecture, strong partner ecosystem**, and **deep domain expertise** in industry and application knowledge[89](index=89&type=chunk)[90](index=90&type=chunk) [Market Access and Expansion](index=18&type=section&id=Market%20Access%20and%20Expansion) The addressed market has expanded to over **$120 billion**, with **70% of global sales** through distributors, and emerging markets in Asia Pacific and EMEA showing fastest growth - The addressed market has expanded to over **$120 billion**, with expectations for continued growth[91](index=91&type=chunk) - Approximately **70% of global sales** are through independent distributors, with the two largest distributors contributing about **20% of total sales**[92](index=92&type=chunk) - Emerging markets in **Asia Pacific and EMEA** are projected to be the fastest-growing, driven by infrastructure investment and expanding consumer markets[94](index=94&type=chunk)[95](index=95&type=chunk) [Acquisitions and Investments](index=19&type=section&id=Acquisitions%20and%20Investments) The company's acquisition strategy focuses on hardware, software, and services to catalyze organic growth, prioritizing annual recurring revenue, market expansion, and differentiated technology - Acquisition and investment strategy focuses on **hardware and software products, solutions, and services** that catalyze organic growth[96](index=96&type=chunk) - Key priorities for inorganic investments include **annual recurring revenue, market expansion in Europe and Asia**, and **application-specific differentiated technology** in focus industries[101](index=101&type=chunk) - Venture investments enable access to **leading-edge technologies**, accelerate internal development, reduce time to market, and provide insights into disruptive technologies[96](index=96&type=chunk) [Attracting, Developing, and Retaining Highly Qualified Employees](index=19&type=section&id=Attracting,%20Developing,%20and%20Retaining%20Highly%20Qualified%20Employees) The company prioritizes attracting and retaining employees through safety, feedback, development (over **650,000 learning hours** in 2023), comprehensive benefits, and DEI initiatives - The company focuses on attracting, developing, and retaining highly engaged employees through **safety, feedback, growth opportunities**, and **comprehensive benefits**[98](index=98&type=chunk)[102](index=102&type=chunk) - In fiscal 2023, the company achieved **0.27 recordable cases per 100 employees** and an employee engagement index (EEI) of **76**, eight points higher than the industry norm[102](index=102&type=chunk) - In fiscal 2023, the majority of employees completed one or more training programs, representing over **650,000 learning hours**[102](index=102&type=chunk) Total Employees by Region (September 30, 2023) | Region | Employees | | :--- | :--- | | North America | 10,000 | | Europe, Middle East and Africa | 5,500 | | Asia Pacific | 7,500 | | Latin America | 6,000 | | **Total employees** | **29,000** | Global Gender Demographics (September 30, 2023) | | Women | Men | Undisclosed | | :--- | :--- | :--- | :--- | | All employees | 33% | 67% | —% | | Individual Contributors | 34% | 66% | —% | | People Managers | 27% | 73% | —% | | Technical Talent | 19% | 81% | —% | | Manufacturing Associates | 46% | 53% | 1% | [Continuous Improvement](index=21&type=section&id=Continuous%20Improvement) Continuous improvement programs focus on process, functional, material cost, and manufacturing productivity to enhance profitability, fund growth, and offset inflation - The company has programs for ongoing **process improvement, functional streamlining, material cost savings**, and **manufacturing productivity**[105](index=105&type=chunk) - These initiatives aim to **improve profitability, fund growth investments**, and **offset inflation**[105](index=105&type=chunk) [U.S. Economic Trends](index=22&type=section&id=U.S.%20Economic%20Trends) U.S. sales were over **half of total sales** in 2023, with mixed IP Index and soft Manufacturing PMI results, while PPI growth decelerated to low single digits - **U.S. sales accounted for over half of total sales in 2023**[107](index=107&type=chunk) U.S. Economic Indicators (Fiscal 2021-2023) | | IP Index | PMI | | :--- | :--- | :--- | | **Fiscal 2023 quarter ended:** | | | | September 2023 | 99.6 | 49.0 | | June 2023 | 99.6 | 46.0 | | March 2023 | 99.5 | 46.3 | | December 2022 | 99.6 | 48.4 | | **Fiscal 2022 quarter ended:** | | | | September 2022 | 102.4 | 50.9 | | June 2022 | 101.9 | 53.0 | | March 2022 | 101.1 | 57.1 | | December 2021 | 100.1 | 58.8 | | **Fiscal 2021 quarter ended:** | | | | September 2021 | 98.8 | 60.5 | | June 2021 | 97.9 | 60.9 | | March 2021 | 96.7 | 63.7 | | December 2020 | 96.1 | 60.5 | - Producer Price Index (PPI) growth decelerated to **low single digits** in the last three quarters of fiscal 2023, following **double-digit growth in 2022**[108](index=108&type=chunk) [Non-U.S. Economic Trends](index=22&type=section&id=Non-U.S.%20Economic%20Trends) Non-U.S. sales were less than **half of total sales** in 2023, with international demand driven by industrial economy strength and mixed industrial output in Q4 fiscal 2023 - Sales to customers outside the U.S. accounted for **less than half of total sales in 2023**[109](index=109&type=chunk) - International demand is driven by **industrial economy strength, infrastructure investments**, and **expanding consumer markets**, with mixed industrial output in Q4 fiscal 2023[109](index=109&type=chunk) [Supply Chain](index=23&type=section&id=Supply%20Chain) The global supply chain faces stress, leading to procurement challenges; the company manages this through extended visibility, long-term agreements, and diversification, reducing backlog from **$5,197.0 million** to **$4,108.9 million** - The global supply chain has been stressed, leading to **procurement difficulties, increased costs**, and **delivery delays**[110](index=110&type=chunk)[112](index=112&type=chunk) Total Order Backlog (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Intelligent Devices | $1,464.1 | $2,086.1 | | Software & Control | $897.5 | $1,456.8 | | Lifecycle Services | $1,747.3 | $1,654.1 | | **Total Company** | **$4,108.9** | **$5,197.0** | - Actions taken to manage the supply chain include **extending order visibility, securing long-term supply agreements, re-engineering products, capacity investments**, and **diversifying the supplier base**[111](index=111&type=chunk)[113](index=113&type=chunk) [Summary of Results of Operations](index=24&type=section&id=Summary%20of%20Results%20of%20Operations) Fiscal 2023 saw **16.7% total sales growth** to **$9,058.0 million** and **$1,387.4 million net income**, with **Adjusted EPS up 27.7%** to **$12.12**, and varied segment margin performance Sales and Operating Results (in millions, except per share amounts and percentages) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | **Sales** | | | | | Intelligent Devices | $4,098.2 | $3,544.6 | $3,311.9 | | Software & Control | $2,886.0 | $2,312.9 | $1,947.0 | | Lifecycle Services | $2,073.8 | $1,902.9 | $1,738.5 | | **Total sales** | **$9,058.0** | **$7,760.4** | **$6,997.4** | | **Total segment operating earnings** | **$1,929.8** | **$1,542.6** | **$1,391.3** | | Income before income taxes | $1,608.5 | $1,073.6 | $1,526.2 | | Net income attributable to Rockwell Automation | $1,387.4 | $932.2 | $1,358.1 | | Diluted EPS | $11.95 | $7.97 | $11.58 | | Adjusted EPS | $12.12 | $9.49 | $9.43 | | Pre-tax margin | 17.8 % | 13.8 % | 21.8 % | | Intelligent Devices segment operating margin | 20.2 % | 20.2 % | 21.2 % | | Software & Control segment operating margin | 33.0 % | 28.8 % | 27.3 % | | Lifecycle Services segment operating margin | 7.2 % | 8.3 % | 9.1 % | | **Total segment operating margin** | **21.3 %** | **19.9 %** | **19.9 %** | - Total sales in fiscal 2023 increased **16.7%** compared to 2022, with organic sales increasing **16.9%**[115](index=115&type=chunk) - Income before income taxes increased to **$1,608.5 million** in 2023 from **$1,073.6 million** in 2022, primarily due to higher sales and fair value adjustments in connection with the PTC investment, partially offset by a **$157.5 million goodwill impairment charge** for Sensia[119](index=119&type=chunk) - Adjusted EPS was **$12.12** in fiscal 2023, up **27.7%** from **$9.49** in fiscal 2022, driven by higher sales, partially offset by increased investment spend and incentive compensation[124](index=124&type=chunk) - Software & Control segment operating margin increased to **33.0%** in 2023 from **28.8%** in 2022, primarily due to higher sales[128](index=128&type=chunk) - Lifecycle Services segment operating margin decreased to **7.2%** in 2023 from **8.3%** in 2022, due to higher incentive compensation costs and one-time expenses[130](index=130&type=chunk) [Supplemental Segment Information](index=27&type=section&id=Supplemental%20Segment%20Information) This section details unallocated purchase accounting depreciation, amortization, impairment, and non-operating pension costs by segment for informational purposes Supplemental Segment Costs (in millions) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | **Purchase accounting depreciation and amortization, and impairment** | | | | | Intelligent Devices | $4.7 | $2.5 | $2.7 | | Software & Control | $68.5 | $69.0 | $19.2 | | Lifecycle Services | $190.2 | $31.4 | $32.1 | | **Non-operating pension and postretirement benefit cost (credit)** | | | | | Intelligent Devices | $21.2 | $(3.5) | $14.1 | | Software & Control | $21.2 | $(3.5) | $14.1 | | Lifecycle Services | $28.3 | $(4.8) | $18.8 | [Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation](index=28&type=section&id=Adjusted%20Income,%20Adjusted%20EPS,%20and%20Adjusted%20Effective%20Tax%20Rate%20Reconciliation) Adjusted Income, EPS, and Effective Tax Rate are non-GAAP measures excluding specific non-operating and non-recurring items, used for evaluating performance and incentive compensation - Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP measures that exclude specific non-operating and non-recurring items to provide a clearer view of operating performance[134](index=134&type=chunk)[135](index=135&type=chunk) Adjusted Income, EPS, and Effective Tax Rate Reconciliation (in millions, except per share amounts and percentages) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | Net income attributable to Rockwell Automation | $1,387.4 | $932.2 | $1,358.1 | | Non-operating pension and postretirement benefit cost | 82.7 | 4.7 | 63.8 | | Tax effect of non-operating pension and postretirement benefit cost | (20.6) | (1.9) | (16.0) | | Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation | 178.3 | 91.9 | 43.2 | | Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation | (9.4) | (22.3) | (10.5) | | Change in fair value of investments | (279.3) | 136.9 | (397.4) | | Tax effect of change in fair value of investments | 67.6 | (30.8) | 64.7 | | **Adjusted Income** | **$1,406.7** | **$1,110.7** | **$1,105.9** | | **Diluted EPS** | **$11.95** | **$7.97** | **$11.58** | | Non-operating pension and postretirement benefit cost | 0.72 | 0.04 | 0.55 | | Tax effect of non-operating pension and postretirement benefit cost | (0.18) | (0.02) | (0.14) | | Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation | 1.54 | 0.78 | 0.37 | | Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation | (0.08) | (0.19) | (0.09) | | Change in fair value of investments | (2.42) | 1.17 | (3.39) | | Tax effect of change in fair value of investments | 0.59 | (0.26) | 0.55 | | **Adjusted EPS** | **$12.12** | **$9.49** | **$9.43** | | **Effective tax rate** | **20.5 %** | **14.4 %** | **11.9 %** | | Tax effect of non-operating pension and postretirement benefit cost | 0.3 % | 0.1 % | 0.5 % | | Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation | (3.7)% | 0.6 % | 0.4 % | | Tax effect of change in fair value of investments | (0.7)% | 0.9 % | (1.2)% | | **Adjusted Effective Tax Rate** | **16.4 %** | **16.0 %** | **11.6 %** | [Annual Recurring Revenue (ARR)](index=29&type=section&id=Annual%20Recurring%20Revenue%20(ARR)) Organic ARR, a key non-GAAP metric, measures recurring revenue growth by excluding currency and acquisition effects, with total and organic ARR growing approximately **16%** in 2023 - Organic ARR is a key metric for measuring progress in growing the recurring revenue business, representing the annual contract value of all active recurring revenue contracts[137](index=137&type=chunk) - Organic ARR growth excludes the effects of acquisitions and changes in currency exchange rates, while Total ARR growth includes acquisitions[137](index=137&type=chunk)[138](index=138&type=chunk) - Total and organic annual recurring revenue grew approximately **16%** at September 30, 2023, compared to September 30, 2022[115](index=115&type=chunk) [Financial Condition](index=30&type=section&id=Financial%20Condition) Cash from operations increased to **$1,374.6 million** in 2023, with **$1,214.1 million free cash flow**, driven by PTC stock sale and managed debt, dividends, and share repurchases Cash Flows Summary (in millions) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | Cash provided by (used for) Operating activities | $1,374.6 | $823.1 | $1,261.0 | | Investing activities | 854.3 | (7.8) | (2,626.6) | | Financing activities | (1,675.6) | (934.2) | 1,297.8 | | Effect of exchange rate changes on cash | 19.2 | (52.6) | 16.8 | | Increase (decrease) in cash, cash equivalents, and restricted cash | $572.5 | $(171.5) | $(51.0) | Free Cash Flow (in millions) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | Cash provided by operating activities | $1,374.6 | $823.1 | $1,261.0 | | Capital expenditures | (160.5) | (141.1) | (120.3) | | **Free cash flow** | **$1,214.1** | **$682.0** | **$1,140.7** | - All remaining PTC Inc. common stock was sold in fiscal 2023, generating **$1,210.4 million** in gross inflow[142](index=142&type=chunk) - The company repurchased approximately **1.2 million shares** of common stock in 2023 at a cost of **$311.0 million**, with **$940.3 million** remaining under existing board authorizations[144](index=144&type=chunk) - Cash dividends declared were **$544.0 million** (**$4.72 per common share**) in 2023, an increase from **$520.8 million** (**$4.48 per common share**) in 2022[157](index=157&type=chunk) [Supplemental Sales Information](index=33&type=section&id=Supplemental%20Sales%20Information) Organic sales, a non-GAAP measure, exclude acquisitions and currency effects to provide a clearer view of regional and segment performance, with reconciliations provided - Organic sales, a non-GAAP measure, exclude the effects of acquisitions and changes in currency exchange rates to reflect regional and operating segment performance[158](index=158&type=chunk) Reconciliation of Reported Sales to Organic Sales by Geographic Region (in millions) | | Year Ended September 30, 2023 Reported Sales | Less: Effect of Acquisitions | Effect of Changes in Currency | Organic Sales | Year Ended September 30, 2022 Reported Sales | | :--- | :--- | :--- | :--- | :--- | :--- | | North America | $5,224.0 | $15.6 | $(23.9) | $5,232.3 | $4,722.0 | | Europe, Middle East and Africa | $1,870.6 | $57.5 | $(26.3) | $1,839.4 | $1,437.6 | | Asia Pacific | $1,358.0 | $18.2 | $(80.5) | $1,420.3 | $1,088.0 | | Latin America | $605.4 | $0.1 | $22.8 | $582.5 | $512.8 | | **Total Company Sales** | **$9,058.0** | **$91.4** | **$(107.9)** | **$9,074.5** | **$7,760.4** | Reconciliation of Reported Sales to Organic Sales by Operating Segment (in millions) | | Year Ended September 30, 2023 Reported Sales | Less: Effect of Acquisitions | Effect of Changes in Currency | Organic Sales | Year Ended September 30, 2022 Reported Sales | | :--- | :--- | :--- | :--- | :--- | :--- | | Intelligent Devices | $4,098.2 | $80.6 | $(46.4) | $4,064.0 | $3,544.6 | | Software & Control | $2,886.0 | $— | $(30.7) | $2,916.7 | $2,312.9 | | Lifecycle Services | $2,073.8 | $10.8 | $(30.8) | $2,093.8 | $1,902.9 | | **Total Company Sales** | **$9,058.0** | **$91.4** | **$(107.9)** | **$9,074.5** | **$7,760.4** | [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include goodwill impairment (Sensia's **$157.5 million charge**), pension costs, revenue recognition for customer incentives, and intangible asset valuation (Plex), all requiring significant judgment - A **$157.5 million goodwill impairment charge** was recorded for the Sensia reporting unit in Q4 fiscal 2023 due to downward revisions in growth and profitability projections, leaving **$160.3 million in goodwill**[165](index=165&type=chunk) - Critical assumptions for goodwill impairment include estimated future revenue growth rates, margins, discount rate, and market multiples, which are sensitive to industry and economic factors[166](index=166&type=chunk) - Pension costs and obligations are actuarially determined, with the U.S. discount rate increasing to **6.10% for 2024** from **5.65% in 2023**, inversely affecting net periodic benefit cost and projected benefit obligation[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Revenue recognition for customer incentives, such as cash rebates to distributors, relies on estimating accruals based on historical experience; a **10% change** in the time period for rebate processing could adjust the accrual by approximately **$24.9 million**[172](index=172&type=chunk)[173](index=173&type=chunk) - Valuation of Plex intangible assets involved critical judgments for customer attrition rate (**5%**), royalty rate (**25%**), and obsolescence factor (**10 years**), with sensitivity analyses showing potential changes of **$63 million** and **$47 million** for customer attrition and royalty rate, respectively[175](index=175&type=chunk)[176](index=176&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20Accounting%20Pronouncements) New accounting standards for CECL and contract assets/liabilities had no material impact, while a new supplier finance program standard will be adopted in Q1 2024 - Adopted new standards for **current expected credit losses (CECL)** and **contract assets/liabilities in business combinations**, with no material impact[246](index=246&type=chunk)[247](index=247&type=chunk) - A new standard on **supplier finance programs**, requiring expanded disclosures, will be adopted in **Q1 2024**[248](index=248&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages foreign currency and interest rate risks using derivatives; a **10% adverse currency change** could reduce pre-tax income by **$73.9 million**, while short-term interest rate risk is not significant - The company manages **foreign currency and interest rate risks** through operating activities and derivative financial instruments, primarily foreign currency forward exchange contracts[180](index=180&type=chunk) - A **10% adverse change** in underlying foreign currency exchange rates for unhedged assets and liabilities could reduce pre-tax income by approximately **$73.9 million**[183](index=183&type=chunk) - Short-term debt includes **$23.5 million** in loans from SLB to Sensia and **$70.0 million** borrowed against a **$75.0 million** line of credit at **6.29% interest** as of September 30, 2023[186](index=186&type=chunk) - A hypothetical **50 basis point increase** in average market interest rates related to short-term debt would not significantly impact results of operations or financial condition[186](index=186&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Rockwell Automation's audited consolidated financial statements and extensive notes for fiscal years 2021-2023, along with the independent auditor's report affirming fairness and internal control effectiveness [Consolidated Balance Sheet](index=39&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) The Consolidated Balance Sheet shows total assets increased to **$11,304.0 million** in 2023 from **$10,758.7 million** in 2022, with shareowners' equity also increasing significantly Consolidated Balance Sheet Summary (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $1,071.8 | $490.7 | | Receivables | $2,167.4 | $1,736.7 | | Inventories | $1,404.9 | $1,054.2 | | Total current assets | $4,910.8 | $3,610.7 | | Goodwill | $3,529.2 | $3,524.0 | | Other intangible assets, net | $852.4 | $902.0 | | Long-term investments | $157.1 | $1,056.0 | | **Total Assets** | **$11,304.0** | **$10,758.7** | | **LIABILITIES AND SHAREOWNERS' EQUITY** | | | | Short-term debt | $94.7 | $359.3 | | Current portion of long-term debt | $8.6 | $609.1 | | Accounts payable | $1,150.2 | $1,028.0 | | Total current liabilities | $3,365.3 | $3,572.2 | | Long-term debt | $2,862.9 | $2,867.8 | | Retirement benefits | $503.6 | $471.2 | | **Total shareowners' equity** | **$3,743.4** | **$3,016.7** | | **Total Liabilities and Shareowners' Equity** | **$11,304.0** | **$10,758.7** | [Consolidated Statement of Operations](index=40&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) Total sales increased to **$9,058.0 million** in 2023 from **$7,760.4 million** in 2022, with net income attributable to Rockwell Automation rising to **$1,387.4 million** (**$11.95 diluted EPS**) Consolidated Statement of Operations Summary (in millions, except per share amounts) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | Sales | $9,058.0 | $7,760.4 | $6,997.4 | | Cost of sales | $(5,341.0) | $(4,658.4) | $(4,099.7) | | Gross profit | $3,717.0 | $3,102.0 | $2,897.7 | | Selling, general and administrative expenses | $(2,023.7) | $(1,766.7) | $(1,680.0) | | Change in fair value of investments | $279.3 | $(136.9) | $397.4 | | Goodwill impairment | $(157.5) | $— | $— | | Income before income taxes | $1,608.5 | $1,073.6 | $1,526.2 | | Income tax provision | $(330.5) | $(154.5) | $(181.9) | | Net income | $1,278.0 | $919.1 | $1,344.3 | | Net loss attributable to noncontrolling interests | $(109.4) | $(13.1) | $(13.8) | | **Net income attributable to Rockwell Automation, Inc.** | **$1,387.4** | **$932.2** | **$1,358.1** | | Diluted EPS | $11.95 | $7.97 | $11.58 | [Consolidated Statement of Comprehensive Income](index=41&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20COMPREHENSIVE%20INCOME) Comprehensive income attributable to Rockwell Automation increased to **$1,514.8 million** in 2023 from **$1,031.8 million** in 2022, driven by higher net income and positive currency adjustments Consolidated Statement of Comprehensive Income Summary (in millions) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | Net income | $1,278.0 | $919.1 | $1,344.3 | | Other comprehensive income (loss) | | | | | Pension and other postretirement benefit plan adjustments (net of tax) | 41.5 | 246.5 | 576.4 | | Currency translation adjustments | 99.4 | (185.4) | 31.4 | | Net change in cash flow hedges (net of tax) | (13.4) | 38.2 | (11.4) | | **Other comprehensive income** | **127.5** | **99.3** | **596.4** | | **Comprehensive income** | **1,405.5** | **1,018.4** | **1,940.7** | | Comprehensive loss attributable to noncontrolling interests | (109.3) | (13.4) | (14.5) | | **Comprehensive income attributable to Rockwell Automation, Inc.** | **$1,514.8** | **$1,031.8** | **$1,955.2** | [Consolidated Statement of Cash Flows](index=42&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) Cash from operating activities increased to **$1,374.6 million** in 2023, with investing activities providing **$854.3 million** and financing activities using **$1,675.6 million** for debt, dividends, and repurchases Consolidated Statement of Cash Flows Summary (in millions) | | Year Ended September 30, 2023 | Year Ended September 30, 2022 | Year Ended September 30, 2021 | | :--- | :--- | :--- | :--- | | **Operating activities:** | | | | | Net income | $1,278.0 | $919.1 | $1,344.3 | | Cash provided by operating activities | $1,374.6 | $823.1 | $1,261.0 | | **Investing activities:** | | | | | Capital expenditures | $(160.5) | $(141.1) | $(120.3) | | Acquisition of businesses, net of cash acquired | $(168.4) | $(16.6) | $(2,488.5) | | Proceeds from sale of investments | $1,210.4 | $210.2 | $— | | Cash provided by (used for) investing activities | $854.3 | $(7.8) | $(2,626.6) | | **Financing activities:** | | | | | Repayment of long-term debt | $(599.8) | $— | $— | | Cash dividends | $(542.4) | $(519.4) | $(497.1) | | Purchases of treasury stock | $(311.5) | $(301.3) | $(299.7) | | Cash (used for) provided by financing activities | $(1,675.6) | $(934.2) | $1,297.8 | | **Increase (decrease) in cash, cash equivalents, and restricted cash** | **$572.5** | **$(171.5)** | **$(51.0)** | | Cash, cash equivalents, and restricted cash at end of year | $1,080.4 | $507.9 | $679.4 | [Consolidated Statement of Shareowners' Equity](index=43&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20SHAREOWNERS'%20EQUITY) Total shareowners' equity increased to **$3,743.4 million** in 2023 from **$3,016.7 million** in 2022, driven by net income and common stock issuances, offset by dividends and repurchases Consolidated Statement of Shareowners' Equity Summary (in millions, except per share amounts) | | Balance at September 30, 2020 | Net income (loss) | Other comprehensive income (loss) | Common stock issued (including share-based compensation impact) | Share repurchases | Cash dividends declared | Change in noncontrolling interest | Balance at September 30, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total attributable to Rockwell Automation, Inc.** | **$1,027.8** | **$1,358.1** | **$597.1** | **$206.2** | **$(301.5)** | **$(497.5)** | **$(0.6)** | **$2,389.6** | | Noncontrolling interests | $319.0 | $(13.8) | $(0.7) | $— | $— | $— | $— | $304.5 | | **Total shareowners' equity** | **$1,346.8** | **$1,344.3** | **$596.4** | **$206.2** | **$(301.5)** | **$(497.5)** | **$(0.6)** | **$2,694.1** | | | Balance at September 30, 2021 | Net income (loss) | Other comprehensive income (loss) | Common stock issued (including share-based compensation impact) | Share repurchases | Cash dividends declared | | Balance at September 30, 2022 | | **Total attributable to Rockwell Automation, Inc.** | **$2,389.6** | **$932.2** | **$99.6** | **$126.1** | **$(301.1)** | **$(520.8)** | | **$2,725.6** | | Noncontrolling interests | $304.5 | $(13.1) | $(0.3) | $— | $— | $— | | $291.1 | | **Total shareowners' equity** | **$2,694.1** | **$919.1** | **$99.3** | **$126.1** | **$(301.1)** | **$(520.8)** | | **$3,016.7** | | | Balance at September 30, 2022 | Net income (loss) | Other comprehensive income (loss) | Common stock issued (including share-based compensation impact) | Share repurchases | Cash dividends declared | | Balance at September 30, 2023 | | **Total attributable to Rockwell Automation, Inc.** | **$2,725.6** | **$1,387.4** | **$127.4** | **$177.2** | **$(312.0)** | **$(544.0)** | | **$3,561.6** | | Noncontrolling interests | $291.1 | $(109.4) | $0.1 | $— | $— | $— | | $181.8 | | **Total shareowners' equity** | **$3,016.7** | **$1,278.0** | **$127.5** | **$177.2** | **$(312.0)** | **$(544.0)** | | **$3,743.4** | [Notes to Consolidated Financial Statements](index=44&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed information on accounting policies, revenue, goodwill, acquisitions, debt, investments, and other financial statement items, offering crucial context for understanding the company's financial position [Note 1. Basis of Presentation and Accounting Policies](index=44&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Accounting%20Policies) This note outlines U.S. GAAP principles, consolidation policies, use of estimates, and specific accounting policies for revenue, goodwill, derivatives, R&D, and other financial areas - Consolidated financial statements are prepared in accordance with **U.S. GAAP**, consolidating wholly-owned and controlled majority-owned subsidiaries[204](index=204&type=chunk)[205](index=205&type=chunk) - Estimates are used for customer returns, rebates, incentives, doubtful accounts, inventory, share-based compensation, acquisitions, goodwill impairment, product warranty, internal-use software, retirement benefits, litigation, leases, and income taxes[206](index=206&type=chunk) - Goodwill impairment is evaluated annually in the **second quarter**, or more frequently if circumstances change, using qualitative and quantitative tests (income and market multiples approaches)[218](index=218&type=chunk)[219](index=219&type=chunk) - Derivative financial instruments (**foreign currency forward exchange contracts, treasury locks**) are used to manage foreign currency and interest rate risks, not for speculative purposes[223](index=223&type=chunk)[224](index=224&type=chunk) - R&D costs are expensed as incurred, totaling **$529.5 million** in 2023, **$440.9 million** in 2022, and **$422.5 million** in 2021[230](index=230&type=chunk) [Note 2. Revenue Recognition](index=50&type=section&id=Note%202.%20Revenue%20Recognition) This note details revenue recognition under ASC 606 for products, solutions, and services, with **$1,100 million** expected from unfulfilled obligations, **$687 million** within 12 months - Revenue is recognized as promised products are transferred or services are performed, reflecting the consideration expected[250](index=250&type=chunk) - Offerings include **industrial automation and information products** (hardware, software), **solutions** (custom-engineered systems), and **services** (technical support, asset management, training)[251](index=251&type=chunk) - Revenue from **Intelligent Devices and Software & Control** is predominantly product sales (point-in-time), while **Lifecycle Services** revenue is primarily solutions and services (over time)[252](index=252&type=chunk) - As of September 30, 2023, approximately **$1,100 million** of revenue is expected from unfulfilled performance obligations, with **$687 million** recognized within the next 12 months[267](index=267&type=chunk) Revenue Disaggregation by Geographic Region and Segment (in millions) - 2023 | | Intelligent Devices | Software & Control | Lifecycle Services | Total | | :--- | :--- | :--- | :--- | :--- | | North America | $2,409.2 | $1,794.8 | $1,020.0 | $5,224.0 | | Europe, Middle East and Africa | $829.1 | $528.0 | $513.5 | $1,870.6 | | Asia Pacific | $568.6 | $393.7 | $395.7 | $1,358.0 | | Latin America | $291.3 | $169.5 | $144.6 | $605.4 | | **Total Company Sales** | **$4,098.2** | **$2,886.0** | **$2,073.8** | **$9,058.0** | [Note 3. Goodwill and Other Intangible Assets](index=53&type=section&id=Note%203.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill increased to **$3,529.2 million** in 2023, offset by a **$157.5 million impairment charge** for Sensia; other intangible assets totaled **$852.4 million**, with **$116.2 million** amortization expected in 2024 Changes in Goodwill Carrying Amount (in millions) | | Intelligent Devices | Software & Control | Lifecycle Services | Total | | :--- | :--- | :--- | :--- | :--- | | Balance as of October 1, 2021 | $543.1 | $2,447.5 | $635.3 | $3,625.9 | | Acquisition of businesses | — | — | 12.1 | 12.1 | | Translation and other | (40.1) | (48.8) | (25.1) | (114.0) | | Balance as of September 30, 2022 | $503.0 | $2,398.7 | $622.3 | $3,524.0 | | Acquisition of businesses | 74.4 | — | 36.9 | 111.3 | | Impairment | — | — | (157.5) | (157.5) | | Translation and other | 18.4 | 21.4 | 11.6 | 51.4 | | **Balance as of September 30, 2023** | **$595.8** | **$2,420.1** | **$513.3** | **$3,529.2** | - A **$157.5 million goodwill impairment charge** was recorded for the Sensia reporting unit in Q4 fiscal 2023 due to revised growth and profitability projections, leaving **$160.3 million in goodwill**[281](index=281&type=chunk) Other Intangible Assets (in millions) - September 30, 2023 | | Carrying Amount | Accumulated Amortization | Net | | :--- | :--- | :--- | :--- | | Software products | $100.4 | $65.1 | $35.3 | | Customer relationships | $606.1 | $141.3 | $464.8 | | Technology | $424.1 | $173.1 | $251.0 | | Trademarks | $86.3 | $29.3 | $57.0 | | Other | $6.0 | $5.4 | $0.6 | | **Total amortized intangible assets** | **$1,222.9** | **$414.2** | **$808.7** | | Allen-Bradley® trademark not subject to amortization | $43.7 | $— | $43.7 | | **Other intangible assets** | **$1,266.6** | **$414.2** | **$852.4** | - Estimated total amortization expense for all amortized intangible assets is **$116.2 million** in 2024[282](index=282&type=chunk) [Note 4. Acquisitions](index=55&type=section&id=Note%204.%20Acquisitions) Fiscal 2023 acquisitions (CUBIC, Knowledge Lens) totaled **$186.2 million** with **$111.3 million** goodwill; 2021's Plex Systems acquisition was **$2,205.5 million**, adding **$1,730.0 million** goodwill - In fiscal 2023, Rockwell Automation acquired **CUBIC** (Intelligent Devices) and **Knowledge Lens** (Lifecycle Services), with a preliminary aggregate purchase price allocation of **$186.2 million**, including **$111.3 million in goodwill**[283](index=283&type=chunk)[284](index=284&type=chunk) - Total sales from 2023 acquisitions were **$88.3 million**, with an immaterial impact on earnings[286](index=286&type=chunk) - In August 2021, the company acquired **Plex Systems** for **$2,205.5 million**, assigning **$1,730.0 million in goodwill** and **$531.4 million in intangible assets** to the Software & Control segment[290](index=290&type=chunk)[291](index=291&type=chunk) - Other fiscal 2021 acquisitions (**Oylo and Fiix Inc.**) contributed **$224.8 million in goodwill**, primarily to the Software & Control segment[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) [Note 5. Inventories](index=57&type=section&id=Note%205.%20Inventories) Total inventories increased to **$1,404.9 million** in 2023 from **$1,054.2 million** in 2022, primarily due to increases in finished goods and work in process Inventories (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Finished goods | $545.9 | $325.0 | | Work in process | $395.7 | $317.3 | | Raw materials | $463.3 | $411.9 | | **Inventories** | **$1,404.9** | **$1,054.2** | [Note 6. Property, net](index=58&type=section&id=Note%206.%20Property,%20net) Total property, net, increased to **$684.2 million** in 2023 from **$586.5 million** in 2022, driven by machinery, internal-use software, and construction in progress Property, net (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Land | $4.6 | $4.6 | | Buildings and improvements | $434.1 | $399.0 | | Machinery and equipment | $1,312.7 | $1,201.6 | | Internal-use software | $569.4 | $540.7 | | Construction in progress | $191.7 | $142.9 | | **Total** | **$2,512.5** | **$2,288.8** | | Less: Accumulated depreciation | $(1,828.3) | $(1,702.3) | | **Property, net** | **$684.2** | **$586.5** | [Note 7. Long-term and Short-term Debt](index=58&type=section&id=Note%207.%20Long-term%20and%20Short-term%20Debt) Total debt decreased to **$2,871.5 million** in 2023 from **$3,476.9 million** in 2022 due to debt repayment, with a **$1.5 billion** undrawn credit facility and **$133.2 million** in interest payments Long-term Debt (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | 0.35% notes, payable in August 2023 | $— | $600.0 | | 2.875% notes, payable in March 2025 | $306.4 | $311.0 | | 6.70% debentures, payable in January 2028 | $250.0 | $250.0 | | 3.50% notes, payable in March 2029 | $425.0 | $425.0 | | 1.75% notes, payable in August 2031 | $450.0 | $450.0 | | 6.25% debentures, payable in December 2037 | $250.0 | $250.0 | | 4.20% notes, payable in March 2049 | $575.0 | $575.0 | | 2.80% notes, payable in August 2061 | $450.0 | $450.0 | | 5.20% debentures, payable in January 2098 | $200.0 | $200.0 | | Unamortized discount, capitalized lease obligations and other | $(34.9) | $(34.1) | | **Total debt** | **$2,871.5** | **$3,476.9** | | Less: Current portion | $(8.6) | $(609.1) | | **Long-term debt** | **$2,862.9** | **$2,867.8** | - Short-term debt at September 30, 2023, includes **$23.5 million** in loans to Sensia and **$70.0 million** borrowed against a **$75.0 million** line of credit at **6.29% interest**[300](index=300&type=chunk) - The company replaced its **$1.25 billion credit facility** with a new five-year **$1.5 billion unsecured revolving credit facility** in June 2022, which was undrawn in 2023 and 2022[305](index=305&type=chunk) - Interest payments were **$133.2 million** in 2023, **$120.4 million** in 2022, and **$91.8 million** in 2021[308](index=308&type=chunk) [Note 8. Other Current Liabilities](index=60&type=section&id=Note%208.%20Other%20Current%20Liabilities) Other current liabilities increased to **$567.4 million** in 2023 from **$403.0 million** in 2022, primarily due to higher income taxes payable and other accruals Other Current Liabilities (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Unrealized losses on foreign exchange contracts | $10.8 | $31.2 | | Product warranty obligations | $18.3 | $16.5 | | Taxes other than income taxes | $56.9 | $65.6 | | Accrued interest | $18.6 | $18.1 | | Income taxes payable | $248.6 | $81.1 | | Operating lease liabilities | $83.4 | $83.3 | | Other | $130.8 | $107.2 | | **Other current liabilities** | **$567.4** | **$403.0** | [Note 9. Product Warranty Obligations](index=60&type=section&id=Note%209.%20Product%20Warranty%20Obligations) Product warranty obligations, accrued at sale based on historical experience, increased to **$18.3 million** in 2023 from **$16.5 million** in 2022 - Product warranty obligations are accrued at the time of sale based on historical experience, with most products covered for **12 months**[311](index=311&type=chunk) Changes in Product Warranty Obligations (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Beginning balance | $16.5 | $18.0 | | Warranties recorded at time of sale | $14.8 | $14.5 | | Adjustments to pre-existing warranties | $2.9 | $(3.6) | | Settlements of warranty claims | $(15.9) | $(12.4) | | **Ending balance** | **$18.3** | **$16.5** | [Note 10. Investments](index=60&type=section&id=Note%2010.%20Investments) Investments decreased to **$157.7 million** in 2023 from **$1,068.6 million** in 2022 due to the sale of PTC Inc. stock, resulting in a **$279.3 million net gain** in 2023 Investments (in millions) | | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Fixed income securities | $0.6 | $12.6 | | Equity securities (level 1) | $— | $928.8 | | Equity securities (other) | $96.0 | $76.4 | | Other | $61.1 | $50.8 | | **Total investments** | **$157.7** | **$1,068.6** | | Less: Short-term investments | $(0.6) | $(12.6) | | **Long-term investments** | **$157.1** | **$1,056.0** | - All **PTC Inc. common stock** (Level 1 equity securities) were sold as of September 30, 2023[313](index=313&type=chunk) Gains and Losses on Investments (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net gain (loss) on equity securities (level 1) | $281.7 | $(136.4) | $392.3 | | Net (loss) gain on equity securities (other) | $(1.3) | $15.1 | $5.1 | | Equity method loss on Other investments | $(1.1) | $(15.6) | $— | | **Change in fair value of investments** | **$279.3** | **$(136.9)** | **$397.4** | [Note 11. Derivative Instruments](index=61&type=section&id=Note%2011.%20Derivative%20Instruments) The company uses derivatives to manage foreign currency and interest rate risks; cash flow hedges resulted in **$35.9 million** reclassified gains, while non-designated derivatives had a **$17.6 million** pre-tax loss in 2023 - Derivative instruments, including **foreign currency forward exchange contracts** and **treasury locks**, are used to manage foreign currency and interest rate risks, not for speculation[316](index=316&type=chunk)[318](index=318&type=chunk) - **Cash flow hedges** for forecasted transactions resulted in **$35.9 million** of pre-tax gains reclassified into the Consolidated Statement of Operations in 2023[320](index=320&type=chunk) - Approximately **$19.4 million** of pre-tax net unrealized gains on cash flow hedges are expected to be reclassified into earnings within the next twelve months[320](index=320&type=chunk) - Derivatives not designated as hedging instruments resulted in a pre-tax loss of **$17.6 million** in 2023[324](index=324&type=chunk) - The total U.S. dollar-equivalent gross notional amount of forward exchange contracts was **$2,254.0 million** at September 30, 2023[326](index=326&type=chunk) [Note 12. Shareowners' Equity](index=63&type=section&id=Note%2012.%20Shareowners'%20Equity) Outstanding common shares decreased to **114.8 million** in 2023, and accumulated other comprehensive loss improved to **$(790.1) million** from **$(917.5) million** in 2022, driven by currency and pension adjustments Changes in Outstanding Common Shares (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Beginning balance | 115.2 | 116.0 | 116.2 | | Treasury stock purchases | (1.2) | (1.3) | (1.1) | | Common stock issued (including share-based compensation impact) | 0.8 | 0.5 | 0.9 | | **Ending balance** | **114.8** | **115.2** | **116.0** | Changes in Accumulated Other Comprehensive Loss (in millions) | | Pension and other postretirement benefit plan adjustments, net of tax | Accumulated currency translation adjustments, net of tax | Net unrealized (losses) gains on cash flow hedges, net of tax | Total accumulated other comprehensive loss, net of tax | | :--- | :--- | :--- | :--- | :--- | | Balance as of September 30, 2020 | $(1,271.2) | $(311.5) | $(31.5) | $(1,614.2) | | Other comprehensive income (loss) | 577.1 | 31.4 | (11.4) | 597.1 | | **Balance as of September 30, 2021** | **$(694.1)** | **$(280.1)** | **$(42.9)** | **$(1,017.1)** | | Other comprehensive income (loss) | 246.3 | (184.9) | 38.2 | 99.6 | | **Balance as of September 30, 2022** | **$(447.8)** | **$(465.0)** | **$(4.7)** | **$(917.5)** | | Other comprehensive income (loss) | 40.7 | 100.1 | (13.4) | 127.4 | | **Balance as of September 30, 2023** | **$(407.1)** | **$(364.9)** | **$(18.1)** | **$(790.1)** | [Note 13. Share-Based Compensation](index=66&type=section&id=Note%2013.%20Share-Based%20Compensation) Share-based compensation expense was **$88.3 million** in 2023, with **$106.5 million** unrecognized; the 2020 plan authorizes **13.0 million shares**, and performance share awards had a **92% payout** for 2023 - Pre-tax share-based compensation expense was **$88.3 million** in 2023, with **$106.5 million** in unrecognized costs expected to be recognized over approximately **1.7 years**[333](index=333&type=chunk) - The **2020 Long-Term Incentives Plan** authorizes up to **13.0 million shares** for stock options, performance shares, restricted stock units, or restricted stock[334](index=334&type=chunk) - The weighted average fair value of stock options granted in 2023 was **$77.62**, with an intrinsic value of **$69.8 million** for exercised options[336](index=336&type=chunk) - Performance share awards for the period ending September 30, 2023, will have a **92% payout** of target shares[340](index=340&type=chunk) - The weighted average fair value of restricted stock and restricted stock unit awards granted in 2023 was **$263.67**[343](index=343&type=chunk) [Note 14. Retirement Benefits](index=69&type=section&id=Note%2014.%20Retirement%20Benefits) Net periodic pension benefit cost was **$122.0 million** in 2023, with pension plans having a **$293.4 million deficit** and postretirement plans a **$46.4 million deficit**; **$26.6 million** is expected for pension contributions in 2024 - Net periodic benefit cost for pension plans was **$122.0 million** in 2023, up from **$74.4 million** in 2022, primarily due to settlement and curtailment charges[350](index=350&type=chunk) - The U.S. pension plan's discount rate for 2024 will increase to **6.10%** from **5.65%** in 2023[357](index=357&type=chunk) Funded Status of Plans (in millions) | | Pension Benefits 2023 | Pension Benefits 2022 | Other Postretirement Benefits 2023 | Other Postretirement Benefits 2022 | | :--- | :--- | :--- | :--- | :--- | | Benefit obligation at end of year | $2,750.8 | $3,165.6 | $46.4 | $44.2 | | Plan assets at end of year | $2,457.4 | $2,903.9 | $— | $— | | **Funded status of plans** | **$(293.4)** | **$(261.7)** | **$(46.4)** | **$(44.2)** | - The company expects to contribute **$26.6 million** to global pension plans and **$7.3 million** to postretirement benefit plans in 2024[358](index=358&type=chunk) Global Weighted Average Targeted and Actual Asset Allocations (September 30) | Asset Category | Target Allocations | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Equity securities | 38% | 50% | 53% | | Debt securities | 52% | 43% | 41% | | Other | 10% | 7% | 6% | [Note 15. Other (Expense) Income](index=76&type=section&id=Note%2015.%20Other%20(Expense)%20Income) Net other expense increased to **$71.3 million** in 2023 from **$1.6 million** in 2022, driven by higher non-operating pension costs and legacy charges, partially offset by interest and royalty income Components of Other (Expense) Income (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Interest income | $9.7 | $4.4 | $1.6 | | Royalty income | $13.2 | $10.9 | $10.2 | | Legacy product liability and environmental charges | $(18.1) | $(15.6) | $(10.6) | | Non-operating pension and postretirement benefit cost | $(82.7) | $(4.7) | $(63.8) | | Legal settlement | $— | $— | $70.0 | | Other | $6.6 | $3.4 | $(1.7) | | **Other (expense) income** | **$(71.3)** | **$(1.6)** | **$5.7** | [Note 16. Income Taxes](index=77&type=section&id=Note%2016.%20Income%20Taxes) Income tax provision increased to **$330.5 million** in 2023, with the effective tax rate rising to **20.5%** due to a valuation allowance on Sensia's deferred tax assets and goodwill impairment Components of Income before Income Taxes (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | United States | $794.2 | $371.3 | $885.1 | | Non-United States | $814.3 | $702.3 | $641.1 | | **Total** | **$1,608.5** | **$1,073.6** | **$1,526.2** | Components of Income Tax Provision (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Current | $430.6 | $188.1 | $366.0 | | Deferred | $(100.1) | $(33.6) | $(184.1) | | **Income tax provision** | **$330.5** | **$154.5** | **$181.9** | Effective Tax Rate Reconciliation | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Statutory tax rate | 21.0 % | 21.0 % | 21.0 % | | State and local income taxes | 1.5 | 0.5 | 1.4 | | Non-United States taxes | (4.7) | (5.4) | (3.8) | | Repatriation of foreign earnings | 0.9 | 1.1 | 0.9 | | Foreign-derived intangible income | (0.6) | (0.5) | (2.8) | | Settlements with taxing authorities | 0.3 | — | (1.0) | | Change in valuation allowance | 4.1 | (0.5) | (1.7) | | Share-based compensation | (0.6) | (1.0) | (1.1) | | Research and development tax credit | (1.3) | (1.0) | (0.6) | | Other | (0.1) | 0.2 | (0.4) | | **Effective income tax rate** | **20.5 %** | **14.4 %** | **11.9 %** | - The effective tax rate increased by **4.1%** in 2023 due to a valuation allowance on certain deferred tax assets of the Sensia joint venture and related goodwill impairment[377](index=377&type=chunk) - Unrecognized tax benefits totaled **$9.8 million** at September 30, 2023, with a potential reduction of up to **$2.3 million** in the next 12 months[382](index=382&type=chunk)[384](index=384&type=chunk) [Note 17. Commitments and Contingent Liabilities](index=80&type=section&id=Note%2017.%20Commitments%20and%20Contingent%20Liabilities) Environmental remediation liabilities were **$44.5 million** and conditional asset retirement obligations **$38.8 million** in 2023; the company faces asbestos lawsuits but expects no material adverse effect - Environmental remediation cost liabilities, net of expected recoveries, were **$44.5 million** at September 30, 2023[389](index=389&type=chunk) - Conditional asset retirement obligations, including asbestos abatement and soil contamination, were **$38.8 million** at September 30, 2023[390](index=390&type=chunk) - The company is a defendant in **asbestos lawsuits** but believes it has meritorious defenses and substantial insurance coverage, expecting no material effect on its financial condition[392](index=392&type=chunk)[393](index=393&type=chunk) - A legal settlement of **$70 million** for a trademark infringement and false advertising matter was received in fiscal 2021[396](index=396&type=chunk) [Note 18. Leases](index=81&type=section&id=Note%2018.%20Leases) Total lease expense was **$124.5 million** in 2023; operating leases have a **5.8-year** weighted average term, with **$399.2 million** in undiscounted payments, and **$52.1 million** in new leases commencing in 2024 - Total lease expense was **$124.5 million** in 2023, including **$100.2 million** for operating leases and **$5.5 million** for finance leases (amortization and interest)[399](index=399&type=chunk) Weighted Average Lease Terms and Discount Rates | | 2023 | 2022 | | :--- | :--- | :--- | | **Weighted average remaining lease term** | | | | Operating leases | 5.8 years | 6.3 years | | Finance leases | 1.6 years | 3.0 years | | **Weighted average discount rate** | | | | Operating leases | 3.03 % | 2.07 % | | Finance leases | 3.27 % | 2.04 % | Undiscounted Maturities of Lease Liabilities (in millions) - September 30, 2023 | | Finance Leases | Operating Leases | | :--- | :--- | :--- | | 2024 | $7.0 | $93.5 | | 2025 | $3.4 | $82.9 | | 2026 | $— | $64.4 | | 2027 | $— | $49.1 | | 2028 | $— | $35.4 | | Thereafter | $— | $73.9 | | **Total undiscounted lease payments** | **$10.4** | **$399.2** | - Additional operating leases for facilities, with undiscounted obligations of approximately **$52.1 million**, will commence in fiscal 2024[400](index=400&type=chunk) [Note 19. Business Segment Information](index=82&type=section&id=Note%2019.%20Business%20Segment%20Information) This note details financial performance for Intelligent Devices (**$4,098.2 million** sales), Software & Control (**$2,886.0 million** sales), and Lifecycle Services (**$2,073.8 million** sales), with North America as the largest region - The three operating segments are **Intelligent Devices** (smart products), **Software & Control** (production automation and operations platforms), and **Lifecycle Services** (professional and recurring services, including Sensia joint venture)[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) Sales and Operating Results by Segment (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Sales** | | | | | Intelligent Devices | $4,098.2 | $3,544.6 | $3,311.9 | | Software & Control | $2,886.0 | $2,312.9 | $1,947.0 | | Lifecycle Services | $2,073.8 | $1,902.9 | $1,738.5 | | **Total** | **$9,058.0** | **$7,760.4** | **$6,997.4** | | **Segment operating earnings** | | | | | Intelligent Devices | $828.2 | $717.6 | $702.1 | | Software & Control | $953.2 | $666.7 | $531.0 | | Lifecycle Services | $148.4 | $158.3 | $158.2 | | **Total** | **$1,929.8** | **$1,542.6** | **$1,391.3** | Sales by Geographic Region (in millions) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | North America | $5,224.0 | $4,722.0 | $4,132.8 | | Europe, Middle East and Africa | $1,870.6 | $1,437.6 | $1,405.7 | | Asia Pacific | $1,358.0 | $1,088.0 | $1,012.2 | | Latin America | $605.4 | $512.8 | $446.7 | | **Total** | **$9,058.0** | **$7,760.4** | **$6,997.4** | - Sales to the two largest distributors in 2023, 2022, and 2021 were approximately **20% of total sales**[412](
Rockwell Automation(ROK) - 2023 Q4 - Earnings Call Presentation
2023-11-02 17:43
FY23 Performance Highlights - Total sales exceeded $9 billion, surpassing the 2019 strategic framework growth rate expectations[92] - Reported sales increased by 167% year-over-year, with organic sales up by 169%[92] - Adjusted EPS reached $1212, a 28% increase year-over-year[92] - Free Cash Flow amounted to $12 billion, representing an 86% conversion rate[92] Q4 FY23 Results - Reported sales increased by 205% year-over-year, with organic sales up by 177%[88] - Acquisitions contributed 14% to sales growth, while currency translation added 14%[88] - Adjusted EPS stood at $364, a 20% increase year-over-year[85] - The company ended FY23 with a backlog exceeding $41 billion, significantly above pre-pandemic levels[88] FY24 Outlook - The company anticipates total sales growth in the range of 05% to 65%, with organic growth between (20)% and 40%[4] - The company expects a segment margin of approximately 215%[4] - Adjusted EPS is projected to be in the range of $1200 to $1350, representing a 5% year-over-year increase at the midpoint[4] - The company anticipates a Free Cash Flow conversion rate of approximately 100%[4]
Rockwell Automation(ROK) - 2023 Q4 - Earnings Call Transcript
2023-11-02 17:40
Start Time: 08:30 January 1, 0000 9:36 AM ET Rockwell Automation, Inc. (NYSE:ROK) Q4 2023 Earnings Conference Call November 02, 2023, 08:30 AM ET Company Participants Blake Moret - Chairman and CEO Nick Gangestad - SVP and CFO Aijana Zellner - Head-IR and Market Strategy Conference Call Participants Scott Davis - Melius Research Andy Kaplowitz - Citi Jeff Sprague - Vertical Research Andrew Obin - Bank of America Julian Mitchell - Barclays Nigel Coe - Wolfe Research Steve Tusa - JPMorgan Noah Kaye - Oppenhei ...
Rockwell Automation(ROK) - 2023 Q3 - Earnings Call Presentation
2023-08-01 18:53
▶ Currency reduced sales 0.7% ▶ Segment margin of 21.1%, up 30 bps YOY Q3 FY23 Organic Industry Segment Performance % of Q3 FY23 Sales Q3 FY23 vs. Q3 FY22 Q3 FY23 vs. Q3 FY22 Automotive up mid teens Semiconductor up high teens ~25% Up ~10% e-Commerce & Warehouse Automation down high teens ~ 45% Up ~15% Tire up ~35% Oil & Gas up mid teens Mining up ~30% Chemicals up low single digits ▶ Currency to reduce sales ~(1.0) pt ▶ Acquisitions to contribute ~1.0 pt of growth ▶ Expect orders of ~$8.5B - $9B and to exi ...