MILWAUKEE — Rockwell Automation, Inc. today reported first quarter fiscal 2024 results.
“Rockwell had an encouraging start to the fiscal year, with both organic and total sales up low single digits year over year. Importantly, we saw an upward inflection in customer order activity, with total orders up double digits sequentially. Q1 orders were up sequentially across all business segments and regions, with particular strength in North America. High levels of channel inventory and some lingering supply chain constraints continue to impact the timing of product shipments, but underlying conditions remain positive. Our Sensia joint venture had a profitable Q1 with over 25% growth in both orders and sales. We also continue to see double-digit growth in our Annual Recurring Revenue, demonstrating the growing value of our recurring software and services,” said Blake Moret, Chairman and CEO.
Fiscal Q1 2024 Financial Results
Fiscal 2024 first quarter sales were $2,052 million, up 3.6% from $1,981 million in the first quarter of fiscal 2023. Organic sales increased 1.0%, currency translation increased sales by 1.2%, and acquisitions increased sales by 1.4%.
Fiscal 2024 first quarter Net income attributable to Rockwell Automation was $215 million or $1.86 per share, compared to $384 million or $3.31 per share in the first quarter of fiscal 2023. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower pre-tax margin. Fiscal 2024 first quarter adjusted EPS was $2.04, down 17.1% compared to $2.46 in the first quarter of fiscal 2023 primarily due to lower segment operating margin.
Pre-tax margin was 12.7% in the first quarter of fiscal 2024 compared to 23.6% in the same period last year. The decrease in pre-tax margin was primarily due to fair value adjustments in the prior year related to our previous investment in PTC and the timing of prior-year investment spend.
Total segment operating earnings were $356 million in the first quarter of fiscal 2024, down 11.3% from $401 million in the same period of fiscal 2023. Total segment operating margin was 17.3% compared to 20.2% a year ago. The decrease in segment operating margin was primarily due to the timing of prior-year investment spend, mix between products and solutions, and lower supply chain utilization.
Cash flow generated by operating activities in the first quarter of fiscal 2024 was $32.6 million, compared to $66.3 million in the first quarter of fiscal 2023. Free cash flow in the first quarter of fiscal 2024 was $(35.3) million, compared to $42.1 million in the same period last year. Decreases in cash flow provided by operating activities and free cash flow include a higher payout of incentive compensation related to fiscal year 2023 performance.
Fiscal Year 2024 Outlook
The table below provides guidance for sales growth and earnings per share for fiscal 2024. Our guidance reflects first quarter performance and continues to include our assumptions for channel inventory normalization and order growth.
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Updated Guidance |
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Prior Guidance |
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Reported sales growth |
0.5% – 6.5% |
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0.5% – 6.5% |
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Organic sales growth (1) |
(2.0)% – 4.0% |
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(2.0)% – 4.0% |
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Inorganic sales growth |
~1.5% |
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~1.0% |
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Currency translation |
~1.0% |
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~1.5% |
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Diluted EPS (2) |
$11.24 – $12.74 |
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$11.49 – $12.99 |
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Adjusted EPS (1) |
$12.00 – $13.50 |
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$12.00 – $13.50 |
(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. |
(2) Diluted EPS updated to include the purchase accounting amortization from the Clearpath Robotics and Verve Industrial Protection acquisitions. |
“We continue to expect low-single-digit topline growth in FY24, with modest EPS growth weighted to the second half of the year as orders continue to rebound. We are focused on winning share, meeting near-term profitability targets, and investing for the most attractive future opportunities,” Moret continued.
Following is a discussion of first quarter results for our business segments.
Intelligent Devices
Intelligent Devices first quarter fiscal 2024 sales were $927 million, a decrease of 1.0% compared to $936 million in the same period last year. Organic sales decreased 4.5%, currency translation increased sales by 1.2%, and acquisitions increased sales by 2.3%. Segment operating earnings were $150 million compared to $209 million in the same period last year. Segment operating margin decreased to 16.2% from 22.4% a year ago. The decrease from prior year was driven by lower sales volume, the timing of prior-year investment spend, and the impact of acquisitions partially offset by positive price/cost.
Software & Control
Software & Control first quarter fiscal 2024 sales were $604 million, an increase of 5.3% compared to $573 million in the same period last year. Organic sales increased 4.0% and currency translation increased sales by 1.3%. Segment operating earnings were $151 million compared to $167 million in the same period last year. Segment operating margin decreased to 25.0% from 29.2% a year ago, driven by the timing of prior-year investment spend and lower supply chain utilization partially offset by positive price/cost.
Lifecycle Services
Lifecycle Services first quarter fiscal 2024 sales were $521 million, an increase of 10.5% compared to $472 million in the same period last year. Organic sales increased 8.1%, currency translation increased sales by 1.0%, and acquisitions increased sales by 1.4%. Segment operating earnings were $54.3 million compared to $24.3 million in the same period last year. Segment operating margin was 10.4% compared to 5.2% a year ago driven by higher sales, lower incentive compensation, and higher margins in Sensia.
Supplemental Information
ARR – Total ARR grew 20% and Organic ARR grew 18% compared to the end of the first quarter of fiscal 2023.
Corporate and other – Fiscal 2024 first quarter Corporate and other expense was $40.0 million compared to $27.3 million in the first quarter of fiscal 2023. The year-over-year increase includes deal costs associated with the acquisition of Clearpath Robotics.
Purchase accounting depreciation and amortization – Fiscal 2024 first quarter Purchase accounting depreciation and amortization expense was $35.6 million, up $9.6 million from the first quarter of fiscal 2023 primarily related to the acquisitions of Clearpath Robotics and Verve Industrial Protection.
Tax – On a GAAP basis, the effective tax rate in the first quarter of fiscal 2024 was 18.1% compared to 19.1% in the first quarter of fiscal 2023. The adjusted effective tax rate for the first quarter of fiscal 2024 was 17.9% compared to 17.1% in the prior year.
Share repurchases – During the first quarter of fiscal 2024, the Company repurchased approximately 0.4 million shares of its common stock at a cost of $120.3 million. At December 31, 2023, $0.8 billion remained available under our existing share repurchase authorization.
Return on Invested Capital (ROIC) – ROIC was 18.5% for the twelve months ended December 31, 2023, compared to 16.8% for the twelve months ended December 31, 2022. The increase is primarily driven by higher pre-tax income partially offset by a higher effective tax rate.
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