10-KPeriod: FY2014

ROCKWELL AUTOMATION, INC Annual Report, Year Ended Sep 30, 2014

Filed November 18, 2014For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) in its 2014 10-K filing reported solid performance with record sales of $6.62 billion, an increase of 4.3% year-over-year, driven by organic sales growth of 5.1%. The company operates through two segments: Architecture & Software and Control Products & Solutions, with the latter generating higher sales. Geographically, the United States remains the largest market, accounting for 52% of total sales. The company demonstrated strong operational execution, expanding segment operating margin and generating substantial free cash flow of $922.2 million. Investments in technology innovation and global expansion, particularly in emerging markets, are key strategic priorities. Looking ahead, Rockwell Automation aims for continued growth through market expansion, product diversification, and strategic acquisitions, projecting sales growth of 6-8% and double-digit EPS growth. The company's financial condition appears stable, supported by a revolving credit facility and consistent dividend payments. However, investors should note potential risks including macroeconomic volatility, currency fluctuations, competitive pressures, and cybersecurity threats, which are actively managed through their Enterprise Risk Management process.

Financial Highlights

52 data points
Beta

Revenue

$6.62B

41.6% Gross Margin

Net Income

$826.80M

12.5% Net Margin

EPS (Diluted)

$5.91

Total Assets

$6.22B

Cash & Equivalents

$1.19B

Free Cash Flow

$892.30M

Financial Statements
Beta
Revenue$6.62B
Cost of Revenue$3.87B
Gross Profit$2.75B
R&D Expenses$290.10M
SG&A Expenses$1.57B
Interest Expense$59.30M
Net Income$826.80M
EPS (Basic)$5.98
EPS (Diluted)$5.91
Shares Outstanding (Basic)138.00M
Shares Outstanding (Diluted)139.70M

Key Highlights

  • 1Record sales of $6.62 billion in fiscal year 2014, up 4.3% year-over-year.
  • 2Organic sales growth of 5.1% demonstrates underlying business strength.
  • 3Two operating segments: Architecture & Software and Control Products & Solutions.
  • 4United States is the largest market (52% of sales), but global expansion in emerging markets is a key strategy.
  • 5Generated $922.2 million in free cash flow in fiscal year 2014.
  • 6Actively repurchasing shares, with approximately $1.05 billion remaining authorization.
  • 7Increased quarterly dividend by 12% to $0.58 per common share.
  • 8Investments in R&D totaled $290.1 million in fiscal year 2014, indicating a focus on innovation.

Frequently Asked Questions

Rockwell Automation operates through two main segments: Architecture & Software, which accounted for $2.8 billion (43%) of total sales in 2014, and Control Products & Solutions, which generated $3.8 billion (57%) of total sales in 2014. The Control Products & Solutions segment is larger in terms of revenue.

The company's growth strategy focuses on achieving growth rates exceeding the automation market by expanding its served market and strengthening competitive differentiation. This includes diversifying sales streams through a broader portfolio and global presence, growing market share, enhancing market access via channel partners, making strategic acquisitions, investing in technology leadership, improving quality and customer experience, and driving annual cost productivity.

Rockwell Automation identifies several key risks, including macroeconomic factors impacting customer spending, global economic instability, currency exchange rate fluctuations, competition, the ability to develop and market new technologies, cybersecurity threats to their systems and products, and reliance on suppliers. They also mention risks related to litigation and compliance with laws and regulations.

As of September 30, 2014, Rockwell Automation had $325.0 million in short-term debt (primarily commercial paper) and $905.6 million in long-term debt. The company has a $750.0 million unsecured revolving credit facility and maintains access to commercial paper and public debt markets to fund operations. Their debt-to-total-capital ratio was 31.6% at September 30, 2014, indicating a manageable leverage level.