10-QPeriod: Q3 FY2009

ROCKWELL AUTOMATION, INC Quarterly Report for Q3 Ended Jun 30, 2009

Filed August 4, 2009For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported a significant year-over-year decline in sales for the third quarter of fiscal 2009, down 31% to $1.01 billion, reflecting the impact of the global recession. This downturn affected all geographic regions and industries, with organic sales decreasing across the board. Consequently, income from continuing operations fell sharply to $32.8 million, or $0.23 per diluted share, compared to $152.6 million, or $1.03 per diluted share, in the prior year period. The company's performance was impacted by reduced customer demand and a higher effective tax rate. Despite the challenging environment, Rockwell Automation demonstrated resilience in cash flow generation, with free cash flow increasing to $342.4 million for the first nine months of fiscal 2009 due to improved working capital management and reduced capital expenditures.

Financial Statements
Beta

Key Highlights

  • 1Total sales decreased by 31% to $1.01 billion for the three months ended June 30, 2009, compared to $1.47 billion in the same period of 2008, driven by a broad decline in customer demand due to weak economic conditions.
  • 2Income from continuing operations for the quarter was $32.8 million, a substantial decrease from $152.6 million in the prior year's quarter, resulting in diluted earnings per share of $0.23 compared to $1.03.
  • 3Both operating segments, Architecture & Software and Control Products & Solutions, experienced significant sales declines, with operating margins contracting considerably.
  • 4The company maintained a strong free cash flow generation, increasing to $342.4 million for the nine months ended June 30, 2009, up from $261.1 million in the comparable period of 2008, attributed to working capital improvements and lower capital expenditures.
  • 5Total assets decreased to $4.16 billion as of June 30, 2009, from $4.59 billion as of September 30, 2008, primarily due to decreases in current assets like receivables and inventories.
  • 6The company's debt-to-total-capital ratio remained relatively stable at 36.0% as of June 30, 2009, indicating a solid balance sheet despite the economic downturn.
  • 7Rockwell Automation continues to manage costs and invest in core technologies, positioning itself to benefit from market recovery.

Frequently Asked Questions

The primary driver for the significant decline in sales was the weak global economic conditions and the resulting decrease in customer demand across all regions and industries. The company experienced a broad slowdown in manufacturing activity, which directly impacted its sales of industrial automation products and solutions.

Profitability was significantly impacted by the sales decline. Income from continuing operations dropped sharply, and diluted earnings per share decreased substantially compared to the prior year. This was further exacerbated by a higher effective tax rate in the third quarter of fiscal 2009.

The company highlighted its strong free cash flow generation. For the first nine months of fiscal 2009, free cash flow increased due to improvements in working capital management and lower capital expenditures, demonstrating the company's ability to generate cash even in a difficult economic climate.

Rockwell Automation remains focused on cost control and cash management while continuing to invest in its core technologies. The company believes that its strong balance sheet, differentiated technology, and diverse revenue base will enable it to benefit as markets recover.