Commenting on the third quarter results and current business conditions, Blake Moret, Chairman and CEO, said "We continue to build resiliency for ourselves and for our customers. Year-over-year results are down, and conditions remain difficult, but our employees have responded extraordinarily well, and we remain focused on keeping them safe. Our earnings were higher than expected for the quarter, primarily driven by better organic sales."
Moret also announced, “We are taking the next step in accelerating profitable growth by organizing our business in a way that better aligns us with the evolving needs of our customers. Beginning next fiscal year, we will operate with three operating segments - Intelligent Devices, Software & Control, and Lifecycle Services. These new segments will simplify our structure around essential offerings, leverage our sharpened industry focus, and add software talent, which will play a larger role in our future value.”
Moret continued, “We are confident that this model will enable us to provide even more value. Nobody is better positioned to bring Information Technology (IT) and industrial Operational Technology (OT) together than Rockwell and our partners.”
“This change builds on our success and accelerates our progress to bring the Connected Enterprise to life. It’s the right time to make these changes, as we strengthen the resilience of our business model. Our growth framework remains gaining share in our core, growing double digits in information solutions and connected services, and adding a point or more of growth through inorganic investments.”
Fiscal 2020 Q3 Financial Results
Fiscal 2020 third quarter sales were $1,394.0 million, down 16.3 percent from $1,665.1 million in the third quarter of fiscal 2019. Organic sales declined 17.6 percent, currency translation decreased sales by 1.9 percentage points, and acquisitions increased sales by 3.2 percent.
Fiscal 2020 third quarter net income attributable to Rockwell Automation was $317.8 million or $2.73 per share, compared to $261.4 million or $2.20 per share in the third quarter of fiscal 2019. The increases in net income attributable to Rockwell Automation and EPS were primarily due to fair-value adjustments recognized in the third quarter of fiscal 2020 and 2019 in connection with our investment in PTC (the "PTC adjustments"), partially offset by lower sales. Fiscal 2020 third quarter Adjusted EPS was $1.27, down 47 percent compared to $2.40 in the third quarter of fiscal 2019, primarily due to lower sales. These results include restructuring charges of approximately $15 million, which are offset by a one-time gain from the sale of an asset.
Pre-tax margin was 24.0 percent in the third quarter of fiscal 2020 compared to 19.3 percent in the same period last year. The increase in pre-tax margin was primarily due to the PTC adjustments partially offset by lower sales volume leverage.
Total segment operating margin was 16.5 percent compared to 23.8 percent a year ago. The decrease in total segment operating margin was primarily due to lower sales. Total segment operating earnings were $229.4 million in the third quarter of fiscal 2020, down 42.1 percent from $395.9 million in the same period of fiscal 2019.
Cash flow provided by operating activities in the third quarter of fiscal 2020 was $346.2 million, compared to $351.2 million in the third quarter of fiscal 2019. Free cash flow was $310.9 million, compared to $323.4 million in the third quarter of fiscal 2019.
