10-KPeriod: FY2013

ROCKWELL AUTOMATION, INC Annual Report, Year Ended Sep 30, 2013

Filed November 18, 2013For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported record sales of $6.35 billion for the fiscal year ended September 29, 2013, an increase of 1.5% from the previous year. The company operates through two segments: Architecture & Software and Control Products & Solutions. While overall sales showed modest growth, the company achieved this in a sluggish market environment by expanding its segment operating margin. The U.S. market accounted for 50% of total sales, with international sales making up the other half, spread across various regions including Canada, China, the UK, Italy, Mexico, Germany, and Brazil. The company highlighted its long-term strategy focused on achieving growth exceeding the automation market, diversifying sales streams, and enhancing market access through technology innovation and domain expertise. Investments in emerging markets and strengthening its global footprint are key components of this strategy. ROK also emphasized its commitment to cost productivity and continuous improvement initiatives to offset inflation and fund growth investments.

Financial Highlights

54 data points
Beta

Revenue

$6.35B

40.5% Gross Margin

Net Income

$756.30M

11.9% Net Margin

EPS (Diluted)

$5.36

Total Assets

$5.84B

Cash & Equivalents

$1.20B

Free Cash Flow

$868.60M

Financial Statements
Beta
Revenue$6.35B
Cost of Revenue$3.78B
Gross Profit$2.57B
R&D Expenses$260.70M
SG&A Expenses$1.54B
Operating Income$756.30M
Interest Expense$60.90M
Net Income$756.30M
EPS (Basic)$5.43
EPS (Diluted)$5.36
Shares Outstanding (Basic)139.20M
Shares Outstanding (Diluted)140.90M

Key Highlights

  • 1Record sales of $6.35 billion in fiscal year 2013, a 1.5% increase year-over-year.
  • 2Operating segments are Architecture & Software ($2.7 billion sales) and Control Products & Solutions ($3.7 billion sales).
  • 3Global sales distribution: 50% from the United States, 50% from international markets.
  • 4Latin America was the highest growth region, with 12% organic sales growth, driven by Brazil and Mexico.
  • 5The company expanded segment operating margin by nearly a full point despite a low-growth environment.
  • 6Research and Development spending was $260.7 million in 2013.
  • 7Total order backlog at September 30, 2013, was $1.28 billion.

Frequently Asked Questions

Rockwell Automation's revenue in fiscal year 2013 was driven by its two operating segments: Architecture & Software and Control Products & Solutions. Sales were also influenced by global industrial production, customer capital spending, and specific industry trends. The oil and gas sector showed the strongest sales growth for the year, and Latin America was the leading geographic region for sales growth.

Key risks highlighted by Rockwell Automation include macroeconomic factors (global economic conditions, currency exchange rates), competitive pressures, technological advancements, disruptions to operations (natural disasters, geopolitical events), cybersecurity threats to IT systems, intellectual property protection, regulatory changes, and the ability to attract and retain qualified personnel. The company also faces risks related to its global operations and supply chain.

In fiscal year 2013, Rockwell Automation generated $1,014.8 million in cash from operating activities, resulting in a free cash flow of $900.5 million. This was an increase from the previous year, partly due to a discretionary contribution to its U.S. qualified pension trust in 2012 and lower incentive compensation payments in 2013. The company repurchased approximately 4.7 million shares of common stock for $401.5 million and had $535.1 million remaining under its stock repurchase authorization as of September 30, 2013.

Rockwell Automation's growth strategy focuses on expanding its served market and strengthening competitive differentiation, diversifying sales streams by broadening its product and service portfolio, and growing market share. It also emphasizes enhancing market access through its channel and partner network, making strategic acquisitions to catalyze organic growth, investing in technology leadership, continuously improving quality and customer experience, and driving annual cost productivity. The company aims for sales growth of 6-8% and double-digit EPS growth.