Rockwell Automation Reports First Quarter 2015 Results

• Sales down 1.1 percent year over year; up 2.1 percent organically
• Adjusted EPS of $1.64 ; diluted EPS of $1.56
• Company revises fiscal 2015 Adjusted EPS guidance to $6.50 to $6.80 due to currency headwinds

MILWAUKEE --(BUSINESS WIRE)--Jan. 28, 2015-- Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2015 first quarter sales of $1,574.4 million , down 1.1 percent from $1,591.7 million in the first quarter of fiscal 2014. Organic sales grew 2.1 percent, and currency translation reduced sales by 3.4 percent.

Fiscal 2015 first quarter Adjusted EPS was $1.64 , up 12 percent compared to $1.47 in the first quarter of fiscal 2014. Total segment operating earnings were $346.8 million in the first quarter of fiscal 2015, up 6 percent from $328.0 million in the same period of fiscal 2014. Total segment operating margin expanded to 22.0 percent from 20.6 percent a year ago, primarily due to higher organic sales, strong productivity, and favorable mix, partially offset by increased spending.

On a GAAP basis, fiscal 2015 first quarter net income was $214.2 million or $1.56 per share, compared to $198.1 million or $1.41 per share in the first quarter of fiscal 2014. Pre-tax margin increased to 18.3 percent in the first quarter of fiscal 2015 from 17.1 percent in the same period last year.

Commenting on the results, Keith D. Nosbusch , chairman and chief executive officer, said, "Organic sales growth of 2 percent in the quarter was better than we expected, with particular strength in the Architecture & Software segment and the Latin America region. Although total sales were below last year due to the large currency headwind, Adjusted EPS growth of 12 percent provided a good start to the fiscal year."

Outlook

Commenting on the outlook, Nosbusch added, "While most GDP and Industrial Production forecasts continue to call for stable growth in 2015, we are incorporating into our revised outlook a more significant headwind from a stronger U.S. dollar and the anticipated impact of lower oil prices. We now expect fiscal 2015 reported sales of about $6.6 billion , which includes a currency headwind of about 4.5 points and an organic sales growth range of 2.5 to 5.5 percent. Based on that sales outlook, we are revising our Adjusted EPS guidance to a range of $6.50 to $6.80 .

"Our revenue diversification works, and we’re executing very well across the globe. We remain excited about our opportunities across a broad range of industries, in Process, with OEMs and with The Connected Enterprise, and continue to invest in all of these areas."

Following is a discussion of first quarter results for both segments.

Architecture & Software

Architecture & Software fiscal 2015 first quarter sales were $707.8 million , an increase of 1.7 percent from $695.9 million in the same period last year. Organic sales increased 5.1 percent, and currency translation reduced sales by 3.6 percent. Segment operating earnings were $221.4 million in the first quarter of fiscal 2015 compared to $211.9 million in the first quarter of fiscal 2014. Segment operating margin increased to 31.3 percent in the first quarter of fiscal 2015 from 30.4 percent a year ago.

Control Products & Solutions

Control Products & Solutions fiscal 2015 first quarter sales were $866.6 million , a decrease of 3.3 percent compared to $895.8 million in the same period last year. Organic sales decreased 0.3 percent, and currency translation reduced sales by 3.2 percent. Segment operating earnings were $125.4 million in the first quarter of fiscal 2015 compared to $116.1 million in the first quarter of fiscal 2014. Segment operating margin was 14.5 percent in the first quarter of fiscal 2015, up from 13.0 percent a year ago.

Other Information

Free cash flow was $232.6 million in the first quarter of fiscal 2015. Cash flow provided by operating activities was $268.2 million in the first quarter of fiscal 2015. Return on invested capital was 30.7 percent.

Fiscal 2015 first quarter general corporate-net expense was $22.8 million compared to $21.7 million in the first quarter of fiscal 2014.

The Adjusted Effective Tax Rate for the first quarter of fiscal 2015 was 26.0 percent compared to 27.8 percent in the first quarter of fiscal 2014. The Company now expects the full-year Adjusted Effective Tax Rate for fiscal 2015 to be approximately 26.5 percent. On a GAAP basis, the effective tax rate in the first quarter of fiscal 2015 was 25.5 percent compared to 27.4 percent a year ago. Both the quarter and the full-year rates reflect the retroactive extension of the U.S. research and development credit for 2014.

During the first quarter of fiscal 2015, the Company repurchased 1.55 million shares of its common stock at a cost of $167.3 million . At December 31, 2014, $884.0 million remained available under the $1.0 billion share repurchase authorization approved in June 2014 .

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 January 28, 2015. 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, commodity prices, 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 business due to natural disasters, pandemics, acts of war, strikes, terrorism, social unrest or other causes;
• intellectual property infringement claims by others and the ability to protect our intellectual property;
• the uncertainty of 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 (SEC) 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 about 22,500 people serving customers in more than 80 countries.

¹Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We believe that these measures are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our Company. Our measures of total segment operating earnings and total segment operating margin may be different from those used by other companies.

²Adjusted EPS is a non-GAAP earnings measure that excludes the non-operating pension costs and their related income tax effects. See "Other Supplemental Information - Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate" section for more information regarding non-operating pension costs and a reconciliation to GAAP measures.

The following is a reconciliation of reported sales to organic sales for our operating segments for the three months ended December 31, 2014 compared to sales for the three months ended December 31, 2013:

The following are reconciliations of income from continuing operations, diluted EPS from continuing operations, and effective tax rate to Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate:

Return On Invested Capital

Our press release contains information regarding Return On Invested Capital (ROIC), which is a non-GAAP financial measure. We believe that ROIC is useful to investors as a measure of performance and of the effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate performance. Our measure of ROIC may be different from that used by other companies. We define ROIC as the percentage resulting from the following calculation:

(a) Income from continuing operations, before interest expense, income tax provision, and purchase accounting depreciation and amortization, for the most recent twelve months, divided by;

(b) average invested capital for the year, calculated as a five quarter rolling average using the sum of short-term debt, long-term debt, shareowners’ equity, and accumulated amortization of goodwill and other intangible assets, minus cash and cash equivalents and short-term investments, multiplied by;

(c) one minus the effective tax rate for the twelve-month period.

ROIC is calculated as follows:

Source: Rockwell Automation, Inc.

Rockwell Automation
John Bernaden
Media Relations
414.382.2555
or
Rockwell Automation
Rondi Rohr-Dralle
Investor Relations
414.382.8510