10-QPeriod: Q1 FY2009

ROCKWELL AUTOMATION, INC Quarterly Report for Q1 Ended Dec 31, 2008

Filed February 6, 2009For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported its financial results for the fiscal quarter ended December 31, 2008. The company experienced a notable decrease in sales and net income compared to the same period in the prior year, reflecting the challenging global economic conditions. Sales declined by 11% to $1.19 billion, while net income fell to $118.4 million from $156.6 million in the prior year. Earnings per diluted share also decreased to $0.83 from $1.04. Despite the revenue and profit decline, the company demonstrated resilience in certain areas. Operating cash flow was $48.8 million, though free cash flow was significantly lower year-over-year at $21.8 million, impacted by special charges and a change in timing of certain payments. Management cited deteriorating economic, financial, and credit market conditions globally as the primary drivers of reduced customer demand. The company is actively managing costs and pursuing strategic initiatives to navigate the current economic environment.

Financial Highlights

27 data points
Beta

Revenue

$1.19B

39.6% Gross Margin

Net Income

$118.40M

10.0% Net Margin

EPS (Diluted)

$0.83

Cash & Equivalents

$554.00M

Free Cash Flow

$21.40M

Financial Statements
Beta
Revenue$1.19B
Cost of Revenue$718.80M
Gross Profit$470.40M
SG&A Expenses$313.40M
Operating Income$115.60M
Interest Expense$15.00M
Net Income$118.40M
EPS (Basic)$0.83
EPS (Diluted)$0.83
Shares Outstanding (Basic)141.60M
Shares Outstanding (Diluted)142.10M

Key Highlights

  • 1Total sales decreased by 11% to $1.19 billion for the quarter ended December 31, 2008, compared to $1.33 billion in the prior year, impacted by global economic conditions and currency translation effects.
  • 2Net income from continuing operations declined by 26% to $115.6 million, resulting in diluted earnings per share of $0.83, down from $1.04 in the prior year.
  • 3The company recorded special charges of $50.7 million in the fourth quarter of 2008 related to restructuring actions aimed at aligning resources and reducing costs.
  • 4Operating cash flow for the quarter was $48.8 million, a decrease from $101.5 million in the prior year.
  • 5Free cash flow significantly decreased to $21.8 million from $78.1 million year-over-year, impacted by lower earnings, special charges, and payment timing.
  • 6The Architecture & Software segment saw sales decrease by 12% and operating margin contract to 21.6% from 25.7%.
  • 7The Control Products & Solutions segment experienced a sales decrease of 9% and its operating margin fell to 10.0% from 14.5%.

Frequently Asked Questions

The primary drivers for the quarter ended December 31, 2008, were the significant deterioration in global economic, financial, and credit market conditions, which led to a substantial decline in customer demand across most regions and industries. Currency translation effects also negatively impacted reported sales.

The company recorded special charges of $50.7 million related to restructuring actions. These actions included workforce reductions to streamline administrative functions, realign selling resources, and consolidate business units to better align resources with growth opportunities and reduce costs.

The company had $554.0 million in cash and cash equivalents as of December 31, 2008. It maintains access to financing through its $600 million unsecured revolving credit facility, which was undrawn, and commercial paper borrowings. The company was in compliance with its debt covenants and stated it was in active discussions to replace its expiring credit facility.

Sales declined across most regions, with the most significant impacts seen in Canada (31% sales decline) and Europe, Middle East and Africa (18% sales decline), due to widespread industrial slowdowns. Asia-Pacific saw a 13% decline, while Latin America showed a modest 7% decrease in sales but 10% organic growth, benefiting from demand in resource-based industries.