10-QPeriod: Q1 FY2011

ROCKWELL AUTOMATION, INC Quarterly Report for Q1 Ended Dec 31, 2010

Filed February 3, 2011For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported a strong performance in the first quarter of fiscal year 2011, ending December 31, 2010, showing significant year-over-year growth across key financial metrics. Total sales increased by 28%, driven by robust demand in both product and service segments, with organic sales mirroring this growth. This surge is attributed to the ongoing global economic recovery and increased industrial production, particularly in emerging markets. Profitability also saw substantial improvement, with income from continuing operations before income taxes nearly doubling compared to the prior year. This was fueled by higher sales volumes and improved operational leverage, partially offset by increased compensation costs and investments in growth initiatives. The company's effective tax rate remained favorable, benefiting from the retroactive extension of the U.S. federal research tax credit. Investors should note the strong sales performance in segments like Architecture & Software and Control Products & Solutions, indicating healthy demand for Rockwell's industrial automation solutions.

Financial Highlights

47 data points
Beta

Revenue

$1.37B

39.8% Gross Margin

Net Income

$150.10M

11.0% Net Margin

EPS (Diluted)

$1.04

Total Assets

$4.78B

Cash & Equivalents

$769.30M

Free Cash Flow

-$7.70M

Financial Statements
Beta
Revenue$1.37B
Cost of Revenue$821.90M
Gross Profit$543.90M
SG&A Expenses$347.00M
Operating Income$150.10M
Interest Expense$14.80M
Net Income$150.10M
EPS (Basic)$1.06
EPS (Diluted)$1.04
Shares Outstanding (Basic)141.80M
Shares Outstanding (Diluted)144.50M

Key Highlights

  • 1Total sales increased by 28% year-over-year to $1.37 billion, driven by a strong recovery in global industrial production.
  • 2Organic sales also grew by 28%, indicating genuine business growth without currency or acquisition impacts.
  • 3Income from continuing operations before income taxes surged by 92% to $186.7 million, reflecting improved operating leverage.
  • 4Diluted earnings per share (EPS) from continuing operations significantly increased to $1.04, up from $0.54 in the prior year.
  • 5Both the Architecture & Software and Control Products & Solutions segments demonstrated robust sales growth, with operating margins improving in both.
  • 6Free cash flow for the quarter was $4.4 million, a decrease from the prior year but reflecting increased performance-based compensation payments.
  • 7The company's debt-to-total-capital ratio improved to 36.3% from 38.3% at the prior quarter end, indicating a strengthened balance sheet.

Frequently Asked Questions

The primary driver was the continuing recovery in worldwide macroeconomic conditions and industrial production, leading to increased demand for Rockwell Automation's industrial automation and information solutions. This was further supported by strong performance in both product and services businesses across all regions.

All regions showed positive sales performance, with emerging markets, particularly Latin America, showing exceptional growth (47% increase in sales). Mature markets also performed strongly, with Europe, Middle East, and Africa (EMEA) seeing a significant 21% increase year-over-year.

Free cash flow for the quarter was $4.4 million, down from $108.0 million in the prior year. This decrease is primarily attributed to higher performance-based compensation payments made in the current quarter, reflecting strong 2010 results, compared to the prior year when such payments were lower due to the economic downturn.

While the company faces various lawsuits and claims (including asbestos-related cases and FCPA matters), management believes the disposition of these matters will not have a material adverse effect on the company's financial condition. They have insurance coverage and believe they have meritorious defenses in asbestos cases, and the DOJ declined to pursue charges related to the FCPA investigation.