Rockwell Automation Reports Fourth Quarter and Full Year 2013 Results

Press Release:
  Nov 7, 2013 —
- Fourth quarter sales up 3 percent year over year; up 6 percent sequentially
- Fourth quarter Adjusted EPS of $1.62; up 14 percent year over year
- Fourth quarter diluted EPS of $1.53
- Company provides fiscal 2014 Adjusted EPS guidance of $5.95 - $6.35

MILWAUKEE-- Rockwell Automation, Inc. (NYSE: ROK) reported fiscal 2013 fourth quarter sales of $1,715.7 million, up 3 percent from $1,664.0 million in the fourth quarter of fiscal 2012. Organic sales growth was also 3 percent. Fiscal 2013 fourth quarter sales were up 6 percent compared to the third quarter of fiscal 2013.

Fiscal 2013 fourth quarter Adjusted EPS was $1.62, up 14 percent compared to Adjusted EPS of $1.42 in the fourth quarter of fiscal 2012. Total segment operating earnings were $357.8 million in the fourth quarter of fiscal 2013, up from $303.4 million in the same period last year. Total segment operating margin increased to 20.9 percent from 18.2 percent a year ago, primarily due to higher sales, mix, strong productivity and the favorable resolution of certain legal matters.

On a GAAP basis, fiscal 2013 fourth quarter net income was $215.3 million or $1.53 per share, compared to $195.2 million or $1.38 per share in the fourth quarter of fiscal 2012. Pre-tax margin increased to 16.3 percent from 15.3 percent in the same period last year.

Full Fiscal Year 2013

Sales were $6,351.9 million in fiscal 2013, up 1.5 percent compared to $6,259.4 million in fiscal 2012. Organic sales increased 1.7 percent.

Fiscal 2013 Adjusted EPS was $5.71, up 8 percent compared to Adjusted EPS of $5.29 in fiscal 2012. Total segment operating earnings increased 6 percent to $1,236.8 million in fiscal 2013 compared to $1,163.9 million in fiscal 2012. Total segment operating margin increased to 19.5 percent from 18.6 percent a year ago, primarily due to higher sales and strong productivity.

On a GAAP basis, income from continuing operations was $756.3 million or $5.36 per share in fiscal 2013, compared to $737.0 million or $5.13 per share in fiscal 2012. Pre-tax margin was 15.4 percent in both years.

In order to provide transparency into the operating results of its business, effective with the first quarter of fiscal 2013, the Company is providing non-GAAP measures (Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate) that exclude non-operating pension costs and their related tax effects. The Company defines non-operating pension costs as defined benefit plan interest cost, expected return on plan assets, amortization of actuarial gains and losses and the impact of any plan curtailments or settlements. In addition, the Company has redefined segment operating earnings to exclude non-operating pension costs. Prior year results are provided on a comparable basis.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, “We finished the year on a strong note, as both sales and earnings per share came in at the high end of the guidance we provided in July. I was particularly pleased with product sales growth of over 6 percent in the quarter.

“For the full year we achieved record sales and earnings per share despite sluggish market conditions. Our Latin America region had an outstanding year with 12 percent organic growth. For the Company, segment operating margin increased by almost a point - a very good result in a low growth environment.

“Our strong track record of returning cash to shareowners continued in fiscal 2013 with $679 million of cash paid out in dividends and share repurchases. We’ve raised the dividend twice in the past seven months and doubled our dividend per share over the last four years.

“I am proud of our ability to effectively execute in all market conditions, and I want to thank employees, suppliers and partners for their dedication and relentless customer focus throughout the year.”

Outlook

Commenting on the outlook, Nosbusch said, “Our second half sales performance, along with forecasts of improved macroeconomic conditions, cause us to project organic sales growth of 2 percent to 6 percent in fiscal 2014, with midpoint sales of about $6.6 billion. Based on this sales outlook, we are initiating fiscal 2014 Adjusted EPS guidance of $5.95 to $6.35.

“Automation remains a great market and we have the right strategy to capitalize on growth opportunities and gain share. Our strong operating performance and healthy balance sheet enable us to continue to invest in differentiation, particularly in innovative technology and domain expertise. We are confident that our focus on intellectual capital will continue to fuel attractive returns for our shareowners.”

Following is a discussion of fourth quarter and full year results for both segments.

Architecture & Software

Architecture & Software fiscal 2013 fourth quarter sales were $714.3 million, an increase of 6 percent from $671.3 million in the same period last year. Fiscal 2013 fourth quarter sales were up 6 percent sequentially from the third quarter of fiscal 2013. Segment operating earnings were $217.7 million in the fourth quarter of fiscal 2013 compared to $169.4 million in the fourth quarter of fiscal 2012. Segment operating margin increased to 30.5 percent in the fourth quarter of fiscal 2013 from 25.2 percent a year ago, primarily due to higher sales, strong productivity and the favorable resolution of certain legal matters. The legal matters contributed about 2 percentage points to the segment operating margin in the quarter.

Architecture & Software fiscal 2013 sales were $2,682.0 million, an increase of 1 percent from $2,650.4 million last year. Fiscal 2013 organic sales were up 2 percent, and currency translation reduced sales by 1 percentage point. Segment operating earnings were $759.4 million in fiscal 2013 compared to $714.4 million in fiscal 2012. Segment operating margin increased to 28.3 percent in fiscal 2013 from 27.0 percent a year ago.

Control Products & Solutions

Control Products & Solutions fiscal 2013 fourth quarter sales were $1,001.4 million, an increase of 1 percent from $992.7 million in the same period last year. Fiscal 2013 fourth quarter sales were up 5 percent sequentially from the third quarter of fiscal 2013. Segment operating earnings increased to $140.1 million in the fourth quarter of fiscal 2013 compared to $134.0 million in the fourth quarter of fiscal 2012. Segment operating margin was 14.0 percent in the fourth quarter of fiscal 2013, compared to 13.5 percent a year ago.

Control Products & Solutions fiscal 2013 sales were $3,669.9 million, an increase of 2 percent from $3,609.0 million last year. Segment operating earnings increased to $477.4 million in fiscal 2013 compared to $449.5 million in fiscal 2012. Segment operating margin was 13.0 percent in fiscal 2013 compared to 12.5 percent a year ago.

Other Information

Free cash flow was $301.0 million in the fourth quarter of fiscal 2013. Cash flow provided by operating activities was $351.0 million in the fourth quarter of fiscal 2013. Full fiscal year 2013 free cash flow was $900.5 million. Cash flow provided by operating activities for the full fiscal year 2013 was $1,014.8 million. Return on invested capital was 31.4 percent.

Fiscal 2013 fourth quarter general corporate net expense was $39.7 million compared to $19.9 million in the fourth quarter of 2012. General corporate net expense was $97.2 million for the full fiscal year 2013 compared to $82.9 million in fiscal 2012. The largest contributor to the year-over-year increases in both the quarter and the full year were legacy environmental charges.

The Adjusted Effective Tax Rate for the fourth quarter of fiscal 2013 was 23.7 percent compared to 23.9 percent in the fourth quarter of 2012. The Adjusted Effective Tax Rate for the full fiscal year 2013 was 23.9 percent compared to 24.1 percent in fiscal 2012.

The effective tax rate for the fourth quarter of fiscal 2013 was 22.9 percent compared to 23.4 percent in the fourth quarter of 2012. The effective tax rate for the full fiscal year 2013 was 22.9 percent compared to 23.7 percent in fiscal 2012.

During the fourth quarter of fiscal 2013, the Company repurchased 0.9 million shares of its common stock at a cost of $83.5 million. During fiscal year 2013, the Company repurchased 4.7 million shares of its common stock at a cost of $401.5 million. At September 30, 2013, $535.1 million remained available under the $1.0 billion share repurchase authorization.

On November 6, 2013, the Board of Directors declared a 12 percent increase in the quarterly dividend to 58 cents per share on common stock payable on December 10, 2013.

Organic sales, total segment operating earnings, total segment operating margin, Adjusted Income, Adjusted EPS, Adjusted Effective Tax Rate, free cash flow and return on invested capital are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.

Conference Call

A conference call to discuss our financial results will take place at 8:30 A.M. Eastern Time on November 7, 2013. The call and related financial charts will be webcast and accessible via the Rockwell Automation website (http:www.rockwellautomation.com/investors/).

This news release contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”, “will”, “intend” and other similar expressions may identify forward-looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:

- macroeconomic factors, including global and regional business conditions, the availability and cost of capital, the cyclical nature of our customers’ capital spending, sovereign debt concerns and currency exchange rates;
-laws, regulations and governmental policies affecting our activities in the countries where we do business;
-the successful development of advanced technologies and demand for and market acceptance of new and existing products;
-the availability, effectiveness and security of our information technology systems;
-competitive products, solutions and services and pricing pressures, and our ability to provide high quality products, solutions and services;
-a disruption of our operations due to natural disasters, acts of war, strikes, terrorism, social unrest or other causes;
-intellectual property infringement claims by others and the ability to protect our intellectual property;
-our ability to address claims by taxing authorities in the various jurisdictions where we do business;
-our ability to attract and retain qualified personnel;
-our ability to manage costs related to employee retirement and health care benefits;
-the uncertainties of litigation, including liabilities related to the safety and security of the products, solutions and services we sell;
-our ability to manage and mitigate the risks associated with our solutions and services businesses;
-a disruption of our distribution channels;
-the availability and price of components and materials;
-the successful integration and management of acquired businesses;
-the successful execution of our cost productivity and globalization initiatives; and
-other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission filings.

These forward-looking statements reflect our beliefs as of the date of filing this release. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Rockwell Automation, Inc. (NYSE: ROK), the world’s largest company dedicated to industrial automation and information, makes its customers more productive and the world more sustainable. Headquartered in Milwaukee, Wis., Rockwell Automation employs over 22,000 people serving customers in more than 80 countries.
 
   
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Tags: Rockwell, automation, earnings, industrial, manufacturing
 
Company Details:
 Contact:John A. Bernaden 
 E-mail:jabernaden -at- ra -dot- rockwell -dot- com 
   
 Company:Rockwell Automation, Inc. View Company Profile 
 Address:work1201 South Second Street 
 Location:workMilwaukee, WI 53204-2496  United States 
 Phone:workpref414-382-2000 
 Fax:fax414-382-4444 
 Web Site:http://www.rockwellautomation.com