01—Abstract
Summary
Summary of the 10-K filed November 15, 2017. Cited figures are marked; the original filing is the authoritative source.
Rockwell Automation, Inc. (ROK) reported a solid performance for the fiscal year ending September 30, 2017, with total sales reaching $6.31 billiona, a 7.3% increase year-over-year.
This growth was driven by a 6.1%b increase in organic sales, supported by contributions from acquisitions and favorable currency translation. The company's strategic focus on "The Connected Enterprise" appears to be resonating, with its Architecture & Software segment showing robust growth, up 10% in sales. The Control Products & Solutions segment also saw an increase in sales, albeit at a slower pace.
Management highlighted the importance of technology innovation, global expansion, and channel partnerships in driving future growth. Despite a challenging global economic environment, Rockwell Automation's broad industry diversification and strategic acquisitions are positioning it for continued success. Investors can appreciate the company's commitment to returning value through dividends and share repurchases, supported by strong free cash flow generation.
02—Key points
Key Highlights
- Total sales increased by 7.3% to $6.31 billion in fiscal year 2017, with organic sales growing by 6.1%.
- The Architecture & Software segment experienced strong sales growth of 10.0%, indicating success in its integrated architecture strategy.
- Acquisitions contributed positively to sales growth, adding 1.5 percentage points to the total revenue increase.
- Free cash flow remained strong at $892.3 million, supporting dividends and share repurchases.
- The company returned $390.7 million to shareholders through dividends and repurchased approximately $336.6 million of common stock.
- Despite increased incentive compensation and restructuring charges, segment operating earnings increased by 4% to $1,233.1 million.
- The effective tax rate decreased to 20.4% in 2017 from 22.6% in 2016.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed November 15, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $6.31B$5.88B | +7.3% |
| Cost of Revenue | $3.64B$3.40B | +7.0% |
| Gross Profit | $2.67B$2.48B | +7.8% |
| R&D Expenses | $348.20M$319.30M | +9.1% |
| SG&A Expenses | $1.56B$1.47B | +6.1% |
| Interest Expense | $76.20M$71.30M | +6.9% |
| Net Income | $825.70M$729.70M | +13.2% |
| EPS (Basic) | $6.42$5.60 | +14.6% |
| EPS (Diluted) | $6.35$5.56 | +14.2% |
| Shares Outstanding (Basic) | 128.40M130.20M | −1.4% |
| Shares Outstanding (Diluted) | 129.90M131.10M | −0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of Rockwell Automation's sales growth in fiscal year 2017?
Rockwell Automation's sales growth in fiscal year 2017 was driven by a combination of factors, including a broad-based increase in organic sales (up 6.1%), contributions from recent acquisitions (adding 1.5 percentage points), and a small positive impact from currency translation (0.3 percentage points). Key industries contributing to this growth included automotive, semiconductor, and food and beverage.
How did the two operating segments perform in fiscal year 2017?
The Architecture & Software segment showed strong performance with a 10.0% increase in sales, driven by a 9.4% organic sales increase. The Control Products & Solutions segment reported a 5.2% increase in sales, with organic sales growing by 3.4%. While the Architecture & Software segment's operating margin improved, the Control Products & Solutions segment's operating margin decreased due to higher incentive compensation and restructuring charges.
What is the company's approach to returning capital to shareholders?
Rockwell Automation demonstrated a commitment to shareholder returns by paying $3.04 per common share in dividends in fiscal year 2017, an increase from the prior year. The company also actively engaged in share repurchases, buying back approximately $336.6 million worth of its common stock. These activities were supported by robust free cash flow generation.
What are the key risks highlighted by Rockwell Automation in this filing?
Rockwell Automation identified several key risks, including macroeconomic factors affecting customer capital spending, global economic and political instability in the regions where it operates, cybersecurity threats to its IT systems and products, intellectual property infringement, competitive pressures, and the successful integration of acquisitions. The company also noted risks related to supply chain disruptions and managing employee benefits costs.
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