MILWAUKEE — Rockwell Automation, Inc. today reported fiscal 2023 fourth quarter and full-year results and introduced fiscal 2024 guidance.
“Our strong execution and continued improvement in lead times helped us deliver over 20% year-over-year growth in both sales and earnings this quarter, with double-digit sales growth in all regions and business segments. Rockwell’s resilient operating model, continued investments in new ways to win, and customer-focused culture enabled us to significantly exceed our full-year FY23 growth and performance targets,” said Blake Moret, Chairman and CEO.
Fiscal Q4 2023 Financial Results
Fiscal 2023 fourth quarter sales were $2,563 million, up 20.5% compared to $2,126 million in the fourth quarter of fiscal 2022. Organic sales increased 17.7%, currency translation increased sales by 1.4%, and acquisitions increased sales by 1.4%.
Fiscal 2023 fourth quarter net income attributable to Rockwell Automation was $303 million or $2.61 per share, compared to $338.9 million or $2.91 per share in the fourth quarter of fiscal 2022. The decreases in net income attributable to Rockwell Automation and EPS were primarily due to a non-cash accounting charge for impairment of goodwill for our Sensia joint venture (“the Sensia goodwill impairment”), partially offset by higher total segment operating earnings. Fiscal 2023 fourth quarter adjusted EPS was $3.64, up 19.7% compared to $3.04 in the fourth quarter of fiscal 2022, primarily due to higher sales, partially offset by higher investment spend and incentive compensation.
Pre-tax margin was 12.4% in the fourth quarter of fiscal 2023 compared to 19.1% in the same period last year. The decrease was primarily due to the Sensia goodwill impairment.
Total segment operating earnings were $572 million in the fourth quarter of fiscal 2023, up 15.5% compared to $495 million in the same period of fiscal 2022. Total segment operating margin was 22.3% in the fourth quarter compared to 23.3% a year ago. The decrease in segment operating margin was primarily due to higher investment spend and incentive compensation, mostly offset by higher sales volume.
Cash flow generated by operating activities in the fourth quarter of fiscal 2023 was $840 million, compared to $399 million in the fourth quarter of fiscal 2022. Free cash flow was $776 million compared to $359 million in the fourth quarter of fiscal 2022. Increases in cash flow provided by operating activities and free cash flow were primarily due to improvements in working capital and higher pre-tax income.
Fiscal 2023 Full Year Financial Results
Sales were $9,058 million in fiscal 2023, up 16.7% from $7,760 million in fiscal 2022. Organic sales increased 16.9%, currency translation decreased sales by 1.4%, and acquisitions increased sales by 1.2%.
Fiscal 2023 net income attributable to Rockwell Automation was $1,387 million or $11.95 per share, compared to $932 million or $7.97 per share in fiscal 2022. The increases in net income and EPS attributable to Rockwell Automation were primarily due to higher total segment operating earnings and fair value adjustments related to our previous investment in PTC (“the PTC adjustments”), partially offset by the Sensia goodwill impairment. Fiscal 2023 Adjusted EPS was $12.12, up 27.7% compared to $9.49 in fiscal 2022. The increase in adjusted EPS was primarily due to higher sales partially offset by higher investment spend and higher incentive compensation.
Pre-tax margin was 17.8% in fiscal 2023, compared to 13.8% last year. The increase was primarily due to higher sales and the PTC adjustments, partially offset by higher investment spend, higher incentive compensation, and the Sensia goodwill impairment.
Total segment operating earnings were $1,930 million in fiscal 2023, up 25.1% from $1,543 million in fiscal 2022. Total segment operating margin was 21.3% compared to 19.9% a year ago. The increase was due to higher sales, partially offset by higher investment spend and higher incentive compensation.
Cash flow generated by operating activities in fiscal year 2023 was $1,375 million, compared to $823 million in fiscal 2022. Free cash flow was $1,214 million compared to $682 million last year. Increases in cash flow provided by operating activities and free cash flow were driven by higher pre-tax income.
Fiscal Year 2024 Outlook
The table below provides guidance for sales growth and earnings per share for fiscal 2024. Our guidance reflects our year-end backlog, improving product lead times, and our assumptions on order normalization.
“As we look to FY24, we are confident in Rockwell’s ability to grow share by helping customers scale new production facilities, address workforce challenges, and strengthen overall business resilience with new technologies and services. Even in this dynamic macro environment, our streamlined organization and strong focus on productivity enable us to continue to grow earnings while investing in key areas of growth. We are especially excited about the new value from our recent acquisitions of Clearpath autonomous mobile robot hardware and software, and Verve cybersecurity solutions,” Moret continued.
Following is a discussion of quarter and full year results for our business segments.
Intelligent Devices
Intelligent Devices fiscal 2023 fourth quarter sales were $1,171 million, an increase of 22.3% compared to $957 million in the same period last year. Organic sales increased 17.8%, currency translation increased sales by 1.7%, and the acquisition of CUBIC increased sales by 2.8%. Segment operating earnings were $249 million in the fourth quarter of fiscal 2023 compared to $213 million in the same period last year. Segment operating margin decreased to 21.3% in the fourth quarter of fiscal 2023 from 22.3% a year ago.
Intelligent Devices fiscal 2023 sales were $4,098 million, an increase of 15.6% from $3,545 million last year. Organic sales increased 14.6%, currency translation decreased sales by 1.3% and the acquisition of CUBIC increased sales by 2.3%. Segment operating earnings were $828 million in fiscal 2023 compared to $718 million in fiscal 2022. Segment operating margin was 20.2% in fiscal 2023, unchanged from a year ago.
Software & Control
Software & Control fiscal 2023 fourth quarter sales were $821 million, an increase of 24.9% compared to $657 million in the same period last year. Organic sales increased 23.4% and currency translation increased sales by 1.5%. Segment operating earnings were $275 million in the fourth quarter of fiscal 2023 compared to $227 million in the same period last year. Segment operating margin decreased to 33.5% in the fourth quarter of fiscal 2023 from 34.5% a year ago.
Software & Control fiscal 2023 sales were $2,886 million, an increase of 24.8% from $2,313 million last year. Organic sales increased 26.1% and currency translation decreased sales by 1.3%. Segment operating earnings were $953 million in fiscal 2023 compared to $667 million in fiscal 2022. Segment operating margin increased to 33.0% in fiscal 2023 from 28.8% a year ago, primarily due to higher sales, partially offset by higher investment spend, and higher incentive compensation.
Lifecycle Services
Lifecycle Services fiscal 2023 fourth quarter sales were $571 million, an increase of 11.6% compared to $512 million in the same period last year. Organic sales increased 10.2%, currency translation increased sales by 0.9%, and an acquisition increased sales by 0.5%. Segment operating earnings were $47.8 million in the fourth quarter of fiscal 2023 compared to $54.7 million in the same period last year. Segment operating margin decreased to 8.4% in the fourth quarter of fiscal 2023 from 10.7% a year ago, primarily due to higher incentive compensation and restructuring costs, partially offset by higher sales volume.
Lifecycle Services fiscal 2023 sales were $2,074 million, an increase of 9.0% from $1,903 million last year. Organic sales increased 10.0%, currency translation decreased sales by 1.6%, and acquisitions increased sales by 0.6%. Segment operating earnings were $148 million in fiscal 2023 compared to $158 million in fiscal 2022. Segment operating margin decreased to 7.2% in fiscal 2023 from 8.3% a year ago. The benefit of higher sales was more than offset by higher incentive compensation costs and one-time expenses to expand future profitability.
Supplemental Information
ARR – Total ARR and Organic ARR grew 16% compared to the end of the fourth quarter of fiscal 2022.
Corporate and Other – Fiscal 2023 fourth quarter corporate and other expense was $39.1 million compared to $35.1 million in the fourth quarter of 2022. Corporate and other expense was $128 million for the full fiscal year 2023 compared to $105 million in fiscal 2022 The increase was primarily due to the mark-to-market adjustments related to our deferred and non-qualified compensation plans.
Purchase accounting depreciation and amortization, and impairment – Fiscal 2023 fourth quarter Purchase accounting depreciation and amortization, and impairment expense was $185 million, up $159 million from the fourth quarter of fiscal 2022. Full year fiscal 2023 Purchase accounting depreciation and amortization, and impairment expense was $264 million, up $161 million from fiscal 2022. The increases were primarily due to the Sensia goodwill impairment.
Tax – On a GAAP basis, the effective tax rate in the fourth quarter of fiscal 2023 was 35.2% compared to 17.2% in the fourth quarter of 2022. The adjusted effective tax rate for the fourth quarter of fiscal 2023 was 17.0% compared to 17.8% in the fourth quarter of 2022. The effective tax rate for the full fiscal year 2023 was 20.5% compared to 14.4% in fiscal 2022. The adjusted effective tax rate for the full fiscal year 2023 was 16.4% compared to 16.0% in fiscal 2022. The increases in the effective tax rate in the fourth quarter and full year were primarily due to a valuation allowance established on certain deferred tax assets of our Sensia joint venture and tax effects of the related goodwill impairment.
Share Repurchases – The Company repurchased 0.2 million shares of its common stock at a cost of $54.7 million during the fourth quarter of fiscal 2023. For the full fiscal year 2023, the Company repurchased 1.2 million shares of its common stock at a cost of $311 million. At September 30, 2023, $0.9 billion remained available under our existing share repurchase authorization.
Return on Invested Capital (ROIC) – ROIC was 20.9% for fiscal year 2023 compared to 15.2% for fiscal year 2022. The increase was primarily driven by higher pre-tax income, partially offset by a higher effective tax rate and higher invested capital.
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