10-QPeriod: Q1 FY2018

ROCKWELL AUTOMATION, INC Quarterly Report for Q1 Ended Dec 31, 2017

Filed January 31, 2018For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported its financial results for the fiscal quarter ending December 31, 2017. The company experienced a net loss of $236.4 million, or -$1.84 per diluted share, a significant shift from the net income of $214.7 million, or $1.65 per diluted share, in the same period last year. This loss was primarily influenced by the provisional tax effects of the Tax Cuts and Jobs Act of 2017, including a deemed repatriation tax on foreign earnings and the revaluation of deferred tax assets, which together amounted to a substantial expense. Despite the reported net loss, the company's operations showed underlying strength. Total sales increased by 6.5% to $1.59 billion, driven by a 5.3% increase in organic sales, reflecting broad-based regional growth and strength in heavy industries. Both the Architecture & Software and Control Products & Solutions segments reported sales growth, with improved segment operating margins. Adjusted Diluted EPS, which excludes certain one-time charges including those related to the Tax Act, increased to $1.96 from $1.75 in the prior year, indicating operational resilience.

Financial Highlights

49 data points
Beta

Revenue

$1.59B

44.1% Gross Margin

Net Income

-$236.40M

-14.9% Net Margin

EPS (Diluted)

$-1.84

Total Assets

$7.16B

Cash & Equivalents

$1.55B

Free Cash Flow

$178.60M

Financial Statements
Beta
Revenue$1.59B
Cost of Revenue$886.40M
Gross Profit$700.20M
SG&A Expenses$386.60M
Interest Expense$20.00M
Net Income-$236.40M
EPS (Basic)$-1.84
EPS (Diluted)$-1.84
Shares Outstanding (Basic)128.20M
Shares Outstanding (Diluted)128.20M

Key Highlights

  • 1Reported a net loss of $236.4 million ($1.84/share) for the quarter, a significant decline from a net income of $214.7 million ($1.65/share) in the prior year, largely due to tax reform impacts.
  • 2Total sales increased 6.5% to $1.59 billion, with organic sales up 5.3%, showing broad-based demand across regions and industries.
  • 3Architecture & Software segment sales grew 7.3%, with a segment operating margin of 30.1%.
  • 4Control Products & Solutions segment sales increased 5.8%, with segment operating margin improving to 15.6% from 13.6%.
  • 5Adjusted Diluted EPS (excluding tax reform impacts and other charges) increased to $1.96 from $1.75 in the prior year, highlighting operational performance.
  • 6Cash provided by operating activities was $212.7 million, though free cash flow decreased to $178.6 million from $271.4 million year-over-year, mainly due to higher incentive compensation payments.
  • 7The company announced an additional $1.0 billion share repurchase authorization, underscoring its commitment to returning capital to shareholders.

Frequently Asked Questions

The net loss of $236.4 million is primarily attributable to significant provisional tax expenses related to the Tax Cuts and Jobs Act of 2017. These include a deemed repatriation tax on foreign earnings ($385.5 million) and the revaluation of net deferred tax assets ($94.2 million).

Despite the net loss, sales showed robust growth. Total sales increased by 6.5% to $1.59 billion, with organic sales (excluding currency effects and divestitures) increasing by 5.3%. This growth was broad-based across geographic regions and driven by demand in heavy industries.

While the tax reform created a significant one-time charge, the underlying operational performance remains strong, as indicated by the growth in sales and improved segment operating margins. The increase in Adjusted Diluted EPS to $1.96 from $1.75 demonstrates the company's ability to generate earnings from its core business operations, excluding these extraordinary tax items. The company also continues to return capital through share repurchases.

Both segments performed well in terms of sales. The Architecture & Software segment saw sales increase by 7.3%, maintaining a strong operating margin of 30.1%. The Control Products & Solutions segment's sales grew by 5.8%, and its operating margin improved significantly to 15.6% from 13.6% in the prior year.