Rockwell Automation(US:ROK)2022-01-27 18:16Financial Data and Key Metrics Changes - Total orders grew by over 40% to over $2.5 billion, reflecting strong demand across the portfolio [7] - Total revenue of $1.9 billion grew 19%, with organic sales increasing 17% year-over-year [8][28] - Adjusted EPS for the quarter was $2.14, representing an 11% growth compared to the prior year when excluding a non-recurring legal settlement [29][36] - Segment operating margin was 19.1%, better than expected, but declined 70 basis points year-over-year due to higher planned spending and negative price/cost dynamics [28] Business Line Data and Key Metrics Changes - Intelligent Devices segment saw organic sales increase by 26%, with margins expanding 430 basis points to 23.7% [32] - Software & Control organic sales grew by 8%, but segment margins declined 730 basis points due to higher investment spending and acquisition integration costs [33] - Lifecycle Services organic sales increased by 10%, with a segment margin of 5.5%, which declined 340 basis points driven by higher planned investment spending [34] Market Data and Key Metrics Changes - North America organic sales grew by 16%, with strong double-digit growth across all industry segments [23] - EMEA sales increased by 15%, driven by strength in Food and Beverage and Tire and Metals [23] - Asia-Pacific was the fastest-growing region, with a 25% increase, led by Semiconductor and Food and Beverage [23] Company Strategy and Development Direction - The company expects orders for the year to exceed $9 billion, indicating a strong growth trajectory [24] - Continued investment in capacity, technology, and talent is planned to support future growth [47] - The company is focused on organic growth, followed by inorganic activities and capital returns to shareholders [45] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain constraints remain dynamic, but demand is not expected to be a constraint for the foreseeable future [71] - The company anticipates continued double-digit growth in both Core Automation and Information Solutions and Connected Services [25] - Management expressed confidence in the ongoing investments in automation and digital transformation, positioning the company for a significant multi-year growth cycle [51] Other Important Information - The company repurchased 151,000 shares at a cost of $49 million during the quarter [31] - Free cash flow was negative by $50 million due to bonus payouts and increased working capital [30] - The company expects full-year adjusted effective tax rate to be around 17% [42] Q&A Session Summary Question: Is Emulate3D becoming the new standard for factory simulation? - Management indicated that adoption is still growing, accelerated by the pandemic, allowing for better simulation of production systems before actual implementation [59][60] Question: How does the current cycle differ from previous ones regarding project pricing? - Management believes this cycle may be elongated due to significant capital investments in semiconductors, with ongoing demand despite supply chain constraints [62][63] Question: Why was the first quarter stronger than expected? - The company managed to receive more chips than anticipated, leading to better-than-expected performance in the first quarter [70][72] Question: What is the outlook for orders and revenue growth? - Management expects continued order growth in the second quarter, with a strong backlog supporting future revenue [114] Question: How is the company managing price/cost dynamics? - Price/cost is expected to negatively impact margins in the first half, but management anticipates improvements in the second half due to pricing actions [86][90] Question: Are there indications of shifting manufacturing footprints due to supply chain issues? - Management noted that while North America is seeing increased investment, there is no significant shift of manufacturing from Asia [125]