Manufacturers

Rockwell Automation Second Quarter Sales Down 7.1 Percent

MILWAUKEE — Rockwell Automation, Inc. reported fiscal 2016 second quarter sales of $1,440.3 million, down 7.1 percent from $1,550.8 million in the second quarter of fiscal 2015. Organic sales declined 3.6 percent, and currency translation reduced sales by 3.5 percent.

Fiscal 2016 second quarter Adjusted EPS was $1.37, down 14 percent compared to $1.59 in the second quarter of fiscal 2015. Total segment operating earnings were $277.5 million in the second quarter of fiscal 2016, down 17 percent from $334.2 million in the same period of fiscal 2015. Total segment operating margin was 19.3 percent compared to 21.6 percent a year ago, primarily due to lower sales, unfavorable mix and currency effects.

On a GAAP basis, fiscal 2016 second quarter net income was $168.0 million or $1.28 per share, compared to $206.0 million or $1.51 per share in the second quarter of fiscal 2015. Pre-tax margin decreased to 15.1 percent in the second quarter of fiscal 2016 from 17.8 percent in the same period last year.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, “Organic sales were in line with our expectations. Challenging heavy industry end markets, particularly oil and gas, outweighed modest growth in the consumer and automotive verticals.

“Segment operating margins were slightly below expectations, however I am pleased to see Control Products & Solutions able to continue to maintain margins despite lower sales. Cash generation was also strong in the quarter.”

Outlook

Commenting on the outlook, Nosbusch added, “Since we provided guidance in January, oil and commodity prices seem to have stabilized, and the most recent projections for economic growth, including Industrial Production, continue to indicate modest improvement in the balance of our fiscal year.

“Based on these factors, we continue to expect fiscal 2016 sales of about $5.9 billion, which includes a currency headwind of about 3 percent, and an organic sales decline in the range of 1.5 to 4.5 percent. We are also narrowing the EPS guidance range to $5.75 to $6.15.

“We are committed to delivering attractive financial returns, balancing short-term financial performance with investments in innovation and long-term profitable growth.

“I would like to thank our employees, partners and suppliers for their continued commitment in serving our customers.”

Architecture & Software

Architecture & Software quarterly sales were $629.5 million, a decrease of 6.6 percent compared to $674.3 million in the same period last year. Organic sales decreased 3.3 percent, and currency translation reduced sales by 3.3 percent. Segment operating earnings were$154.6 million compared to $200.8 million in the same period last year. Segment operating margin decreased to 24.6 percent from 29.8 percent a year ago, primarily due to lower sales, unfavorable mix and currency effects, and increased spending.

Control Products & Solutions

Control Products & Solutions quarterly sales were $810.8 million, a decrease of 7.5 percent compared to $876.5 million in the same period last year. Organic sales decreased 3.9 percent, and currency translation reduced sales by 3.6 percent. Segment operating earnings were $122.9 million compared to $133.4 million in the same period last year. Segment operating margin was 15.2 percent, unchanged from the prior year.

Other Information

In the second quarter of fiscal 2016 free cash flow was $202.6 million and cash flow provided by operating activities was $214.5 million. Return on invested capital was 32.0 percent.

Fiscal 2016 second quarter general corporate-net expense was $19.5 million compared to $21.4 million in the second quarter of fiscal 2015.

The Adjusted Effective Tax Rate for the second quarter of fiscal 2016 was 23.7 percent compared to 26.0 percent in the second quarter of fiscal 2015. On a GAAP basis, the effective tax rate in the second quarter of fiscal 2016 was 22.6 percent compared to 25.5 percent a year ago. The decreases in the effective tax rate and the Adjusted Effective Tax Rate were primarily due to a favorable discrete tax item in the current quarter. The Company still expects a full-year Adjusted Effective Tax Rate for fiscal 2016 of approximately 25 percent.

During the second quarter of fiscal 2016, the Company repurchased 1.3 million shares of its common stock at a cost of $126.5 million. At March 31, 2016, $196.9 million remained available under the June 4, 2014 share repurchase authorization. On April 6, 2016, the Board of Directors authorized the Company to expend up to an additional $1.0 billion to repurchase shares of its common stock.

 

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