10-QPeriod: Q2 FY2019

ROCKWELL AUTOMATION, INC Quarterly Report for Q2 Ended Mar 31, 2019

Filed April 25, 2019For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported its second quarter fiscal year 2019 results, showing modest sales growth driven by organic expansion and offset by currency headwinds. The company's strategic initiatives, particularly in Process and emerging markets, are showing positive traction, contributing to a 3.6% organic sales increase for the quarter. Profitability saw a significant boost, largely influenced by a substantial gain on the company's investment in PTC Inc., which compensated for some planned investments in growth initiatives. Despite a slight decrease in sales for the Architecture & Software segment, the Control Products & Solutions segment demonstrated solid growth. The company's financial condition remains robust, with strong cash flow generation and prudent management of debt, including the successful issuance of new long-term notes. Rockwell Automation is actively managing its capital structure through share repurchases and dividend payments.

Financial Highlights

51 data points
Beta

Revenue

$1.66B

42.7% Gross Margin

Net Income

$346.00M

20.9% Net Margin

EPS (Diluted)

$2.88

Total Assets

$6.25B

Cash & Equivalents

$780.00M

Free Cash Flow

$104.90M

Financial Statements
Beta
Revenue$1.66B
Cost of Revenue$949.00M
Gross Profit$708.20M
SG&A Expenses$385.00M
Interest Expense$23.70M
Net Income$346.00M
EPS (Basic)$2.91
EPS (Diluted)$2.88
Shares Outstanding (Basic)118.90M
Shares Outstanding (Diluted)120.00M

Key Highlights

  • 1Total sales for the quarter increased by 0.4% to $1.66 billion, with organic sales growing by 3.6%.
  • 2The Architecture & Software segment experienced a slight sales decline of 2.2%, while the Control Products & Solutions segment saw a healthy increase of 2.5%.
  • 3Income before income taxes significantly increased by 34% to $402.4 million, primarily driven by a $98.2 million gain on the company's investment in PTC Inc.
  • 4Diluted Earnings Per Share (EPS) increased to $2.88 from $1.77 in the prior year's quarter.
  • 5The company's financial condition is strong, with $780.0 million in cash and cash equivalents and $1.93 billion in long-term debt as of March 31, 2019.
  • 6Rockwell Automation repurchased approximately 1.38 million shares of common stock for $236.0 million during the quarter.
  • 7The company announced a joint venture, Sensia, with Schlumberger, expected to close in 2019, focusing on digital oilfield automation solutions.

Frequently Asked Questions

The primary driver for the significant increase in net income for the three months ended March 31, 2019, was a gain of $98.2 million related to the company's investment in PTC Inc. This gain more than offset other operational factors and contributed substantially to the reported profitability.

During the six months ended March 31, 2019, Rockwell Automation issued $1 billion in new long-term notes, comprising $425.0 million of 3.500% notes due in 2029 and $575.0 million of 4.200% notes due in 2049. These proceeds were primarily used to repay outstanding commercial paper, reducing short-term debt significantly and extending the maturity profile.

For the six months ended March 31, 2019, organic sales grew by 4.6% year-over-year, indicating positive momentum. While specific forward guidance isn't detailed in this report excerpt, the trend suggests continued focus on driving organic growth through strategic initiatives and market penetration.

Rockwell Automation generated $355.8 million in cash from operating activities for the six months ended March 31, 2019. The company is actively managing its capital structure by repurchasing shares and paying dividends, and has a remaining authorization of approximately $579.6 million for future share repurchases. They also plan to repatriate additional funds from foreign subsidiaries.