10-QPeriod: Q3 FY2021

ROCKWELL AUTOMATION, INC Quarterly Report for Q3 Ended Jun 30, 2021

Filed July 27, 2021For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported strong sales growth for the nine months ended June 30, 2021, with a 9.0% increase year-over-year, driven by a 4.7% organic sales increase and favorable currency translation. The company's net income attributable to Rockwell Automation significantly increased to $1,279.6 million for the nine-month period, up from $760.7 million in the prior year. This improvement was largely influenced by favorable adjustments related to their investment in PTC Inc. and a significant legal settlement. The company provided an updated fiscal year 2021 outlook, projecting reported sales growth of approximately 12% and diluted EPS between $12.85 and $13.05. Management highlighted the ongoing supply chain challenges, including increased demand, component shortages, and rising costs, which are being actively managed. The company also announced its agreement to acquire Plex Systems for $2.22 billion, expected to close in the fourth quarter of fiscal 2021, which will be financed through a combination of cash and debt.

Financial Highlights

52 data points
Beta

Revenue

$1.85B

41.4% Gross Margin

Net Income

$271.30M

14.7% Net Margin

EPS (Diluted)

$2.32

Total Assets

$8.57B

Cash & Equivalents

$913.80M

Free Cash Flow

$437.00M

Financial Statements
Beta
Revenue$1.85B
Cost of Revenue$1.08B
Gross Profit$764.40M
SG&A Expenses$436.90M
Interest Expense$22.40M
Net Income$271.30M
EPS (Basic)$2.34
EPS (Diluted)$2.32
Shares Outstanding (Basic)116.00M
Shares Outstanding (Diluted)117.00M

Key Highlights

  • 1Total sales increased by 32.6% to $1.85 billion in the three months ended June 30, 2021, and by 9.0% to $5.19 billion for the nine months ended June 30, 2021, compared to the prior year periods.
  • 2Net income attributable to Rockwell Automation surged to $1.28 billion for the nine months ended June 30, 2021, a substantial increase from $760.7 million in the same period last year.
  • 3Diluted Earnings Per Share (EPS) for the nine months ended June 30, 2021, was $10.91, significantly up from $6.52 in the prior year.
  • 4The company announced an agreement to acquire Plex Systems for $2.22 billion, expected to close in the fourth quarter of fiscal 2021.
  • 5Fiscal year 2021 guidance projects reported sales growth of approximately 12% and diluted EPS in the range of $12.85 - $13.05.
  • 6Operating segments showed strong performance: Intelligent Devices segment operating margin increased to 21.9%, Software & Control to 25.2%, and Lifecycle Services to 10.3% in the third quarter.
  • 7Free cash flow for the nine months ended June 30, 2021, was $980.3 million, an increase from $702.8 million in the prior year period.

Frequently Asked Questions

For fiscal year 2021, Rockwell Automation updated its guidance to project reported sales growth of approximately 12%, with organic sales growth around 8%. Diluted Earnings Per Share (EPS) is expected to be in the range of $12.85 to $13.05.

The substantial increase in net income for the nine months ended June 30, 2021, was primarily driven by favorable adjustments related to Rockwell Automation's investment in PTC Inc., higher operating earnings across segments due to increased sales, and a $70 million favorable legal settlement recognized in the first quarter of fiscal 2021.

Rockwell Automation is actively monitoring and managing the impacts of supply chain stress, which includes disruptions, difficulties in procuring components, increased costs for materials and freight, and potential delivery delays. The company is focusing on managing its end-to-end supply chain, with a particular emphasis on critical and at-risk suppliers globally.

The acquisition of Plex Systems, a leading cloud-native smart manufacturing platform, is expected to enhance Rockwell Automation's capabilities in information solutions and digital transformation for its customers. While the specific strategic rationale is detailed in the full filing, it aligns with the company's strategy to drive double-digit growth in information solutions and connected services and integrate control and information across the enterprise.