10-QPeriod: Q1 FY2014

ROCKWELL AUTOMATION, INC Quarterly Report for Q1 Ended Dec 31, 2013

Filed February 6, 2014For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported strong performance for the fiscal quarter ended December 31, 2013, with a notable increase in sales and net income compared to the prior year. Total sales grew by 7% to $1.59 billion, driven by a robust 8% increase in product sales and a significant 9% rise in solutions and services. Profitability also improved, with net income up 22.7% to $198.1 million, leading to a diluted EPS of $1.41, a substantial increase from $1.14 in the prior year. The company highlighted strong performance in its Architecture & Software and Control Products & Solutions segments, both showing increased sales and improved operating margins. Strategic acquisitions, including vMonitor LLC, are contributing to the company's growth and market expansion, particularly in the oil and gas sector. Financially, the company demonstrated solid cash flow generation, with operating activities providing $203.5 million and free cash flow at $178.6 million, up from the previous year. The balance sheet remains healthy, with total assets growing to $5.94 billion and total shareowners' equity increasing to $2.69 billion. Rockwell Automation's strategic focus on expanding its served market, diversifying sales streams, and enhancing market access appears to be yielding positive results, positioning the company for continued growth.

Financial Highlights

48 data points
Beta

Revenue

$1.59B

41.7% Gross Margin

Net Income

$198.10M

12.4% Net Margin

EPS (Diluted)

$1.41

Total Assets

$5.94B

Cash & Equivalents

$1.25B

Free Cash Flow

$167.90M

Financial Statements
Beta
Revenue$1.59B
Cost of Revenue$928.00M
Gross Profit$663.70M
SG&A Expenses$385.40M
Interest Expense$14.90M
Net Income$198.10M
EPS (Basic)$1.43
EPS (Diluted)$1.41
Shares Outstanding (Basic)138.60M
Shares Outstanding (Diluted)140.40M

Key Highlights

  • 1Total sales increased by 7% to $1.59 billion compared to the prior year's quarter, with organic sales growth also at 7%.
  • 2Net income rose by 22.7% to $198.1 million, resulting in a diluted Earnings Per Share (EPS) of $1.41, up from $1.14 in the prior year.
  • 3Both major segments, Architecture & Software and Control Products & Solutions, experienced sales growth and improved operating margins.
  • 4Acquisitions, notably vMonitor LLC, are contributing to revenue and strategic expansion, especially in the oil and gas industry.
  • 5Cash provided by operating activities increased to $203.5 million, and free cash flow improved to $178.6 million.
  • 6The company repurchased approximately 1.0 million shares of common stock for $110.7 million during the quarter.
  • 7Long-term debt remained stable at $905.1 million, while short-term debt increased to $251.0 million from $179.0 million.

Frequently Asked Questions

Sales growth was primarily driven by broad-based strength across both product sales (up 6%) and solutions and services (up 9%). The company saw significant contributions from industries like oil and gas and food and beverage, and positive performance in key regions such as the United States and EMEA.

Profitability saw a substantial improvement. Net income increased by 22.7% to $198.1 million, and diluted EPS grew to $1.41 from $1.14 in the same period last year. This was supported by higher sales and improved segment operating margins, as well as a reduction in non-operating pension costs.

Recent acquisitions, such as vMonitor LLC in November 2013, are contributing to the company's growth and strategic objectives. vMonitor is expected to strengthen Rockwell's offerings in the oil and gas sector and accelerate the development of similar process solutions. Acquisitions contributed 1 percentage point to emerging markets sales growth.

Rockwell Automation demonstrated strong cash flow generation, with cash provided by operating activities increasing to $203.5 million and free cash flow at $178.6 million. The company also actively engaged in share repurchases, buying back nearly a million shares during the quarter. The balance sheet remains solid with adequate liquidity and access to credit facilities.