Rockwell Automation(US:ROK)2025-05-07 17:17PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited Consolidated Financial Statements for Rockwell Automation, Inc. for the quarterly period ended March 31, 2025, showing a year-over-year decrease in sales and net income but a significant increase in cash from operations Consolidated Balance Sheet As of March 31, 2025, total assets were $10.99 billion, a slight decrease from $11.23 billion at September 30, 2024, primarily due to lower inventories and currency translation effects on goodwill, with total liabilities and shareowners' equity also showing slight changes Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,770 | $3,881 | | Inventories | $1,175 | $1,293 | | Goodwill | $3,938 | $3,993 | | Total Assets | $10,993 | $11,232 | | Total Current Liabilities | $3,584 | $3,604 | | Long-term debt | $2,568 | $2,561 | | Total Liabilities | $7,388 | $7,557 | | Total Shareowners' Equity | $3,605 | $3,675 | Consolidated Statement of Operations For the three months ended March 31, 2025, total sales decreased to $2.00 billion from $2.13 billion in the prior-year period, with net income attributable to Rockwell Automation at $252 million, or $2.22 per diluted share, reflecting a similar declining trend for the six-month results Statement of Operations Summary (in millions, except per share amounts) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Sales | $2,001 | $2,126 | $3,882 | $4,178 | | Gross Profit | $810 | $833 | $1,532 | $1,628 | | Income before income taxes | $299 | $310 | $512 | $570 | | Net income attributable to Rockwell | $252 | $266 | $436 | $481 | | Diluted EPS | $2.22 | $2.31 | $3.83 | $4.17 | Consolidated Statement of Cash Flows For the six months ended March 31, 2025, cash provided by operating activities significantly increased to $563 million from $153 million in the prior-year period, primarily due to favorable changes in working capital, while cash used for investing and financing activities totaled $122 million and $445 million respectively Cash Flow Summary (in millions) | Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $563 | $153 | | Cash used for investing activities | ($122) | ($876) | | Cash (used for) provided by financing activities | ($445) | $109 | | Decrease in cash and cash equivalents | ($21) | ($609) | Notes to Consolidated Financial Statements The notes provide detailed information on accounting policies, including revenue recognition, 2024 acquisitions of Clearpath Robotics and Verve Industrial Protection, goodwill balances, debt structure, restructuring activities, and segment-level performance, with $1.365 billion in unfulfilled performance obligations as of March 31, 2025 - As of March 31, 2025, the company expects to recognize approximately $1.365 billion of revenue from unfulfilled performance obligations, with about $805 million expected in the next 12 months45 - In fiscal 2024, the company acquired Clearpath Robotics for a net consideration of $609 million and Verve Industrial Protection for $183 million5559 - In 2024, the company recorded restructuring charges of $97 million related to an enterprise-wide cost optimization program, primarily for severance benefits90 Segment Sales (in millions) | Segment | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Intelligent Devices | $896 | $974 | $1,702 | $1,901 | | Software & Control | $568 | $569 | $1,097 | $1,173 | | Lifecycle Services | $537 | $583 | $1,083 | $1,104 | | Total | $2,001 | $2,126 | $3,882 | $4,178 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results, highlighting a 6% decrease in sales for Q2 2025 driven by volume declines, an improved total segment operating margin due to cost reduction actions, and a substantial year-over-year increase in free cash flow, with expectations for sequential improvement in sales and margins through 2025 Results of Operations Total sales for Q2 2025 decreased 6% to $2.0 billion, with organic sales down 4%, primarily due to lower volumes, while total segment operating margin for Q2 improved to 20.4% from 19.0% year-over-year, driven by strong performance in the Software & Control segment Sales Change vs. Prior Year (Q2 2025) | Metric | Total Company | Intelligent Devices | Software & Control | Lifecycle Services | | :--- | :--- | :--- | :--- | :--- | | Reported Sales Change | (6)% | (8)% | <(1)% | (8)% | | Organic Sales Change | (4)% | (6)% | 2% | (6)% | Segment Operating Margin (Q2) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Intelligent Devices | 17.7% | 16.5% | | Software & Control | 30.1% | 25.7% | | Lifecycle Services | 14.5% | 16.6% | | Total Segment Operating Margin | 20.4% | 19.0% | - The company expects over $250 million of year-over-year benefits from cost reduction and margin expansion actions in 2025118 Financial Condition, Liquidity and Capital Resources The company's financial condition remains solid, with operating cash flow significantly increasing to $563 million and free cash flow rising sharply to $464 million for the first six months of fiscal 2025, while maintaining a $1.5 billion undrawn revolving credit facility Free Cash Flow (in millions) | Description | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $563 | $153 | | Capital expenditures | ($99) | ($119) | | Free cash flow | $464 | $34 | - In the first six months of 2025, the company repurchased approximately 0.8 million shares for $228 million. As of March 31, 2025, $1.119 billion remained available for share repurchases under board authorizations149 - The company has a $1.5 billion unsecured revolving credit facility expiring in June 2027, which was not borrowed against during the period152 Quantitative and Qualitative Disclosures About Market Risk The company states that there has been no material change to the information regarding its exposure to foreign currency risk and interest rate risk since its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - There has been no material change in the company's exposure to market risks, including foreign currency and interest rate risk, as of March 31, 2025167 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes in internal control over financial reporting during the period - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025168 - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2025169 PART II. OTHER INFORMATION Legal Proceedings The company reports no material changes to the information on its legal proceedings since its Annual Report on Form 10-K for the year ended September 30, 2024 - As of March 31, 2025, there has been no material change to the company's legal proceedings information171 Risk Factors The company states that there have been no material changes to its most significant risk factors since its last Annual Report, with the exception of an updated risk factor concerning the potential adverse impact of changes in trade policies on its cost structure and profitability - The risk factor related to trade policies has been updated to emphasize that changes in tariffs between the U.S., Mexico, Canada, China, or other countries could adversely affect the company's cost structure, supply chain, and profitability173 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for the three months ended March 31, 2025, with a total of 467,848 shares repurchased at an average price of $275.35 per share, and approximately $1.12 billion remaining available for future repurchases Share Repurchases (Three Months Ended March 31, 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | Jan 2025 | 147,029 | $281.90 | $1,205,897,454 | | Feb 2025 | 119,424 | $284.80 | $1,171,979,031 | | Mar 2025 | 201,395 | $264.97 | $1,118,615,185 | | Total | 467,848 | $275.35 | | Other Information During the quarter ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter175 Exhibits This section lists the exhibits filed with the Form 10-Q, including the letter from the independent registered public accounting firm, certifications by the CEO and CFO, and Interactive Data Files (XBRL)