Rockwell Automation(US:ROK)2023-04-26 16:00Financial Guidance - Reported sales growth guidance for 2023 is projected at 12.5% - 16.5% with organic sales growth expected to be between 13.0% - 17.0%[114] - Diluted EPS guidance is set at $11.71 - $12.41, while adjusted EPS is forecasted to be $11.50 - $12.20[114] - The effective tax rate for fiscal 2023 is expected to be approximately 17.5%[140] Sales Performance - Total sales for the three months ended March 31, 2023, were $2,275.4 million, a 25.8% increase year over year, while sales for the six months were $4,256.4 million, up 16.1% year over year[116] - Organic sales increased by 27.3% for the three months and 18.5% for the six months ended March 31, 2023, with pricing contributing approximately 6.5% and 7.0% to total sales, respectively[117] - International sales accounted for less than 50% of total sales, with persistent supply chain disruptions and labor shortages impacting performance[109][110] Segment Performance - Intelligent Devices segment sales rose 26.5% for the three months and 14.7% for the six months ended March 31, 2023, with organic sales increasing by 26.8% and 16.2%, respectively[128] - Software & Control segment sales increased by 38.5% for the three months and 25.3% for the six months ended March 31, 2023, with organic sales growth of 41.6% and 28.8%, respectively[131] - Lifecycle Services sales grew by 10.0% and 8.3% year over year for the three and six months ended March 31, 2023, with organic sales increasing by 11.7% and 11.0%[133] Income and Earnings - Net income attributable to Rockwell Automation was $300.3 million or $2.59 per share for the three months ended March 31, 2023, compared to $53.9 million or $0.46 per share in the same period of 2022[125] - Adjusted EPS for the three months ended March 31, 2023, was $3.01, an 81.3% increase from $1.66 in the same period of 2022[125] - Total segment operating earnings increased by 70.8% for the three months ended March 31, 2023, driven by higher sales volume and pricing increases[122] Cash Flow and Debt - Cash provided by operating activities was $253.4 million for the six months ended March 31, 2023, compared to $78.8 million for the same period in 2022[142] - Free cash flow for the six months ended March 31, 2023, was $197.7 million, compared to $(3.2) million for the same period in 2022[142] - As of March 31, 2023, short-term debt included commercial paper borrowings of $434.5 million with a weighted average interest rate of 4.84%[144] Strategic Initiatives - The company aims for free cash flow to equal about 100% of adjusted income and expects acquisitions to contribute at least one percentage point to long-term sales growth annually[105] - The company is focused on enhancing market access through building channel capabilities and expanding its partner network[106] - Supply chain management includes securing longer-term supply agreements and diversifying the supplier base to mitigate risks associated with component procurement[111][115] Market Conditions - In the second quarter of 2023, U.S. sales accounted for over 50% of total sales, with Manufacturing PMI readings below 50 indicating contraction in the manufacturing sector[107][110] - The Producer Price Index (PPI) year-over-year increase has declined over the past four quarters, with March 2023 PPI showing a 2.7% increase compared to the previous year[108] - The company anticipates continued improvement in electronic component availability, which is critical for meeting demand and reducing backlog[113] Future Outlook - Future revenue growth rates are expected to reflect significant growth over the next five years before moderating to long-term average inflationary rates[163] - Margin assumptions indicate that recent cost pressures will be compensated through pricing on future orders[163] - Demand for Sensia products is sensitive to industry volatility, including commodity prices and supply and demand dynamics[163] Compliance and Risk - Environmental compliance and claims have not materially changed as of March 31, 2023[166] - The company believes there has been no material change in exposure to foreign currency risk and interest rate risk as of March 31, 2023[168]