Manufacturers

Rockwell Automation Posts 4Q, Full Year 2024 Results

Rockwell Automation, Inc. today reported fiscal 2024 fourth quarter and full year results and introduced fiscal 2025 guidance.

“Orders for the quarter came in lower than expected, reflecting continued softness in many of our end markets. Operating performance was solid, with good sales conversion, margin, and EPS. The performance of our Lifecycle Services segment stands out, with its higher exposure to process end markets, growth in digital services, and continued margin expansion. Reflecting on the full year, our people around the world have demonstrated remarkable dedication to serve our customers and bring new innovation to market, and to make the changes necessary to position us for market-beating growth and profit,” said Blake Moret, Chairman and CEO.

Fiscal Q4 2024 Financial Results

Fiscal 2024 fourth quarter sales were $2,036 million, down (21)% compared to $2,563 million in the fourth quarter of fiscal 2023. Organic sales decreased (21)% and acquisitions increased sales by 1%, which was mostly offset by currency translation.

Fiscal 2024 fourth quarter net income attributable to Rockwell Automation was $239 million or $2.09 per share, compared to $303 million or $2.61 per share in the fourth quarter of fiscal 2023. The decreases in net income attributable to Rockwell Automation and EPS were primarily due to lower sales volume. Fiscal 2024 fourth quarter adjusted EPS was $2.47, down (32)% compared to $3.64 in the fourth quarter of fiscal 2023, primarily due to lower sales volume and lower segment operating margin.

Pre-tax margin was 13.5% in the fourth quarter of fiscal 2024 compared to 12.4% in the same period last year. The increase was primarily driven by the prior year Sensia goodwill impairment, partially offset by lower sales volume and current year restructuring charges.

Total segment operating earnings were $409 million in the fourth quarter of fiscal 2024, down (28)% compared to $572 million in the same period of fiscal 2023. Total segment operating margin was 20.1% in the fourth quarter compared to 22.3% a year ago. The decrease in segment operating margin was driven by lower sales volume and unfavorable mix, partially offset by the benefits from cost reduction actions and lower incentive compensation.

Cash flow generated by operating activities in the fourth quarter of fiscal 2024 was $432 million, compared to $840 million in the fourth quarter of fiscal 2023. Free cash flow was $367 million compared to $776 million in the fourth quarter of fiscal 2023. Decreases in cash flow provided by operating activities and free cash flow were primarily due to lower pre-tax income.

Fiscal 2024 Full Year Financial Results

Sales were $8,264 million in fiscal 2024, down (9)% from $9,058 million in fiscal 2023. Organic sales decreased (10)% and acquisitions increased sales by 1%.

Fiscal 2024 net income attributable to Rockwell Automation was $953 million or $8.28 per share, compared to $1,387 million or $11.95 per share in fiscal 2023. The decreases in net income and EPS attributable to Rockwell Automation were primarily due to lower sales volume and lower pre-tax margin. Fiscal 2024 Adjusted EPS was $9.71, down (20)% compared to $12.12 in fiscal 2023. The decrease in adjusted EPS was primarily due to lower sales volume and lower segment operating margin.

Pre-tax margin was 13.3% in fiscal 2024, compared to 17.8% last year. The decrease was primarily due to lower sales volume, the prior year PTC investment gain, and restructuring charges, partially offset by lower incentive compensation, the prior year Sensia goodwill impairment, and the benefits from cost reduction actions.

Total segment operating earnings were $1,595 million in fiscal 2024, down (17)% from $1,930 million in fiscal 2023. Total segment operating margin was 19.3% compared to 21.3% a year ago. The decrease was due to lower sales volume and unfavorable mix, partially offset by lower incentive compensation and the benefits from cost reduction actions.

Cash flow generated by operating activities in fiscal year 2024 was $864 million, compared to $1,375 million in fiscal 2023. Free cash flow was $639 million compared to $1,214 million last year. Decreases in cash flow provided by operating activities and free cash flow were driven by lower pre-tax income, higher compensation and benefits payments based on the prior year performance, and higher tax payments, partially offset by decreases in working capital.

Fiscal Year 2025 Outlook

The table below provides guidance for sales growth and earnings per share for fiscal 2025.

(1) Organic sales growth and Adjusted EPS are non-GAAP measures. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on these non-GAAP measures.

 

“Given the uncertainty in the current macroeconomic environment and the typical seasonality in our longer cycle business, we are expecting our fiscal Q1 sales to be down from Q4 levels, followed by a gradual sequential improvement through the year. We will continue to fuel high-growth areas and drive margin expansion projects that increase our business resilience. Our market position remains strong given our portfolio and our leadership in North America, which continues to be the best-performing market,” Moret continued.

Following is a discussion of quarter and full year results for our business segments.

Intelligent Devices

Intelligent Devices fiscal 2024 fourth quarter sales were $946 million, a decrease of (19)% compared to $1,171 million in the same period last year. Organic sales decreased (20)% and acquisitions increased sales by 1%. Segment operating earnings were $195 million in the fourth quarter of fiscal 2024 compared to $249 million in the same period last year. Segment operating margin decreased to 20.6% in the fourth quarter of fiscal 2024 from 21.3% a year ago driven by lower sales volume and unfavorable mix, partially offset by the benefits from cost reduction actions, lower incentive compensation, and an adjustment to an earnout accrual tied to achievement of the seller’s revenue target on our Clearpath Robotics acquisition.

Intelligent Devices fiscal 2024 sales were $3,804 million, a decrease of (7)% from $4,098 million last year. Organic sales decreased (9)% and acquisitions increased sales by 2%. Segment operating earnings were $700 million in fiscal 2024 compared to $828 million in fiscal 2023. Segment operating margin decreased to 18.4% in fiscal 2024, from 20.2% a year ago driven by lower sales volume, partially offset by lower incentive compensation, positive price/cost, and an adjustment to an earnout accrual tied to achievement of the seller’s revenue target on our Clearpath Robotics acquisition.

Software & Control

Software & Control fiscal 2024 fourth quarter total and organic sales were $502 million, a decrease of (39)% compared to $821 million in the same period last year. Segment operating earnings were $112 million in the fourth quarter of fiscal 2024 compared to $275 million in the same period last year. Segment operating margin decreased to 22.3% in the fourth quarter of fiscal 2024 from 33.5% a year ago driven by lower sales volume, partially offset by the benefits from cost reduction actions and lower incentive compensation.

Software & Control fiscal 2024 total and organic sales were $2,187 million, a decrease of (24)% from $2,886 million last year. Segment operating earnings were $530 million in fiscal 2024 compared to $953 million in fiscal 2023. Segment operating margin decreased to 24.2% in fiscal 2024 from 33.0% a year ago driven by lower sales volume, partially offset by lower incentive compensation and positive price/cost.

Lifecycle Services

Lifecycle Services fiscal 2024 fourth quarter sales were $588 million, an increase of 3% compared to $571 million in the same period last year. Organic sales increased 2% and acquisitions increased sales by 1%. Segment operating earnings were $102 million in the fourth quarter of fiscal 2024 compared to $47.8 million in the same period last year. Segment operating margin increased to 17.4% in the fourth quarter of fiscal 2024 from 8.4% a year ago driven by lower incentive compensation, strong project execution, and Sensia margin improvement.

Lifecycle Services fiscal 2024 sales were $2,273 million, an increase of 10% from $2,074 million last year. Organic sales increased 8% and acquisitions increased sales by 2%. Segment operating earnings were $366 million in fiscal 2024 compared to $148 million in fiscal 2023. Segment operating margin increased to 16.1% in fiscal 2024 from 7.2% a year ago driven by higher sales volume, lower incentive compensation, strong project execution, Sensia margin improvement, and ongoing savings from prior year structural actions.

Supplemental Information

ARR – Total ARR grew 16% and Organic ARR grew 14% compared to the end of the fourth quarter of fiscal 2023.

Corporate and Other – Fiscal 2024 fourth quarter corporate and other expense of $39 million was flat compared to the fourth quarter of 2023. Corporate and other expense was $136 million for the full fiscal year 2024 compared to $128 million in fiscal 2023.

Purchase accounting depreciation and amortization, and impairment – Fiscal 2024 fourth quarter purchase accounting depreciation and amortization, and impairment expense was $36 million, down $149 million from the fourth quarter of fiscal 2023. Full year fiscal 2024 purchase accounting depreciation and amortization, and impairment expense was $144 million, down $121 million from fiscal 2023. The decreases were primarily due to the prior year Sensia goodwill impairment, partially offset by amortization related to the acquisitions of Clearpath Robotics and Verve Industrial Production.

Restructuring charges – Fiscal 2024 fourth quarter and full year restructuring charges were $28 million and $97 million, respectively, which primarily relate to severance benefits in conjunction with the continuation of an enterprise-wide comprehensive program to optimize cost structure and expand margins.

Tax – On a GAAP basis, the effective tax rate in the fourth quarter of fiscal 2024 was 13.1% compared to 35.2% in the fourth quarter of 2023. The adjusted effective tax rate for the fourth quarter of fiscal 2024 was 14.9% compared to 17.0% in the fourth quarter of 2023. The effective tax rate for the full fiscal year 2024 was 13.8% compared to 20.5% in fiscal 2023. The adjusted effective tax rate for the full fiscal year 2024 was 15.1% compared to 16.4% in fiscal 2023. The decreases in the effective tax rate in the fourth quarter and full year were primarily due to a valuation allowance established in the prior year on certain deferred tax assets of our Sensia joint venture and tax effects of the related goodwill impairment, and higher discrete tax benefits in 2024 compared to 2023. The decrease in the adjusted effective tax rate was primarily due to higher discrete tax benefits in fiscal 2024 than in fiscal 2023.

Share Repurchases – The Company repurchased approximately 450 thousand shares of its common stock at a cost of $118.0 million during the fourth quarter of fiscal 2024. For the full fiscal year 2024, the Company repurchased 2.2 million shares of its common stock at a cost of $594 million. At September 30, 2024, $1.3 billion remained available under existing share repurchase authorizations.

Return on Invested Capital (ROIC) – ROIC was 15.2% for fiscal year 2024 compared to 20.9% for fiscal year 2023. The decrease was primarily driven by lower pre-tax income, partially offset by a lower effective tax rate.

Tagged with , ,

Comment on the story

Your email address will not be published. Required fields are marked *