Rockwell Automation(US:ROK)2023-01-26 17:42Financial Data and Key Metrics Changes - Total sales grew almost 7% year-over-year, with organic sales up 10% [104] - Adjusted EPS grew 15% year-over-year, reaching $2.46 [124] - Segment operating margin expanded to 20.2%, a 110 basis point increase year-over-year [124] - Free cash flow of $42 million was $91 million higher compared to last year [124] Business Line Data and Key Metrics Changes - Intelligent Devices organic sales increased about 7% year-over-year [105] - Software and Control organic sales grew almost 16% year-over-year, driven by redesign efforts [105] - Lifecycle Services organic sales were up 10% year-over-year, with a book-to-bill ratio of 1.21 [106] - Information Solutions and Connected Services saw double-digit year-over-year growth [106] Market Data and Key Metrics Changes - North America organic sales grew 8% year-over-year, while EMEA sales increased by over 13% [121] - Semiconductor sales grew over 20% year-over-year, reflecting strong demand [117] - Food and beverage sales were up over 15% year-over-year, indicating robust market activity [119] Company Strategy and Development Direction - The company is focusing on automation to address customer challenges and enhance productivity [68] - There is an emphasis on expanding the annual recurring revenue (ARR) streams through software and services [5] - The company is positioning itself for a resilient and sustainable future, leveraging strong market share in the U.S. [68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving supply chain landscape, although challenges remain [12] - The company anticipates a high backlog at the end of fiscal 2023, setting up for strong growth in 2024 [38] - There is a recognition of macroeconomic concerns, but the company expects continued strong demand across key verticals [82] Other Important Information - The company is increasing its adjusted EPS guidance to $10.70 to $11.50, representing 17% growth [66] - The fiscal 2023 guidance projects total reported sales growth of 12% and organic sales growth of 13% [122] - The company repurchased approximately 600,000 shares at a cost of $156 million during the quarter [133] Q&A Session Summary Question: How is the current cycle for CapEx affecting recurring revenues? - Management highlighted a focus on adding annual recurring revenue (ARR) and noted double-digit growth in this area, although it remains a small part of the total business [4][5] Question: What is the status of electronics availability? - Management characterized the landscape as generally improving, with ongoing efforts to mitigate supply chain risks [11][12] Question: Are customer order patterns still impacted by lead times? - Management indicated that while lead times are still a factor, they are seeing improvements and strong demand continues [24][82] Question: How is the Inflation Reduction Act impacting customer investment decisions? - Management acknowledged that some customers are waiting for clarity on treasury guidance, which could influence their investment decisions [20] Question: What are the expectations for backlog and CapEx plans? - Management confirmed that backlog levels will remain high, driven by strong demand across various industries [38][130]