Rockwell Automation, Inc. reported third quarter fiscal 2021 results.
"Rockwell delivered an outstanding quarter, with record orders and organic sales growth of 26% exceeding our expectations. These results reflect the high demand we are seeing for Rockwell's core automation and digital transformation solutions, which provide our customers with the resiliency, agility and sustainability they need to be successful for the long term," said Blake Moret, Chairman and CEO.
Fiscal 2021 Q3 Financial Results
Fiscal 2021 third quarter sales were $1,848.2 million, up 32.6 percent from $1,394.0 million in the third quarter of fiscal 2020. Organic sales increased 26.4 percent, currency translation increased sales by 5.1 percent, and acquisitions increased sales by 1.1 percent.
Fiscal 2021 third quarter GAAP net income attributable to Rockwell Automation was $271.3 million or $2.32 per share, compared to $317.8 million or $2.73 per share in the third quarter of fiscal 2020. The decreases in GAAP net income attributable to Rockwell Automation and Diluted EPS were primarily due to lower fair-value gains in fiscal 2021 versus fiscal 2020 in connection with our investment in PTC (the "PTC adjustments"). Fiscal 2021 third quarter Adjusted EPS was $2.31, up 75.0 percent compared to $1.32 in the third quarter of fiscal 2020, primarily driven by higher sales.
Pre-tax margin was 17.0 percent in the third quarter of fiscal 2021 compared to 24.0 percent in the same period last year. The decrease in pre-tax margin was primarily due to the PTC adjustments.
Total segment operating earnings were $368.7 million in the third quarter of fiscal 2021, up 60.7 percent from $229.4 million in the same period of fiscal 2020. Total segment operating margin was 19.9 percent compared to 16.5 percent a year ago, primarily driven by higher sales.
Cash flow provided by operating activities in the third quarter of fiscal 2021 was $461.5 million, compared to $346.2 million in the third quarter of fiscal 2020. Free cash flow in the third quarter of fiscal 2021 was $437.0 million, compared to $310.9 million in the same period last year, primarily due to higher Adjusted Income partially offset by higher income tax payments.
Fiscal Year 2021 Outlook
The COVID-19 pandemic and global efforts to respond to it continue to evolve. We are updating our guidance considering our performance through the first three quarters of the year, our expectation of continued orders strength, and anticipation of continued supply chain constraints.
The following table provides guidance for projected sales growth and earnings per share for fiscal 2021:
|
Updated Guidance |
|
Prior Guidance |
|
|
Reported sales growth |
~12% |
|
9.0% - 12.0% |
|
Organic sales growth |
~8% |
|
5.5% - 8.5% |
|
Inorganic sales growth1 |
~1.5% |
|
~1.5% |
|
Currency translation |
~2.5% |
|
~2.0% |
|
Diluted EPS |
$12.85 - $13.05 |
|
$12.53 - $12.93 |
|
Adjusted EPS |
$9.10 - $9.30 |
|
$8.95 - $9.35 |
|
Estimated impact of pending Plex acquisition2 |
~$(0.15) |
|
— |
|
1Estimate for incremental sales resulting from businesses acquired in fiscal year 2020 and Oylo and Fiix acquired in the first quarter of fiscal 2021 |
|
2 Assuming the acquisition of Plex Systems closes on August 31, 2021 |
"Our strong quarterly performance and raised outlook reflect our high level of execution and the organic and inorganic investments we continue to make to accelerate our strategy. As always, the foundation of our success lies in our talented, engaged employees around the world. Across all three business segments and in each functional area, the dedication to our customers’ success sets us apart," Moret concluded.
Intelligent Devices
Intelligent Devices third quarter fiscal 2021 sales were $882.9 million, an increase of 33.8 percent compared to $659.9 million in the same period last year. Organic sales increased 28.8 percent and currency translation increased sales by 5.0 percent. Segment operating earnings were $193.6 million compared to $111.6 million in the same period last year. Segment operating margin increased to 21.9 percent from 16.9 percent a year ago, mainly due to higher sales.
Software & Control
Software & Control third quarter fiscal 2021 sales were $509.6 million, an increase of 39.7 percent compared to $364.7 million in the same period last year. Organic sales increased 31.5 percent, currency translation increased sales by 5.5 percent, and acquisitions increased sales by 2.7 percent. Segment operating earnings were $128.3 million compared to $82.1 million in the same period last year. Segment operating margin increased to 25.2 percent from 22.5 percent a year ago, driven by higher sales partially offset by higher investment spend.
Lifecycle Services
Lifecycle Services third quarter fiscal 2021 sales were $455.7 million, a increase of 23.4 percent compared to $369.4 million in the same period last year. Organic sales increased 17.2 percent, currency translation increased sales by 4.6 percent, and acquisitions increased sales by 1.6 percent. Segment operating earnings were $46.8 million compared to $35.7 million in the same period last year. Segment operating margin increased to 10.3 percent from 9.7 percent a year ago, primarily due to higher sales, partially offset by the reinstatement of incentive compensation.
Supplemental Information
Corporate and Other - Fiscal 2021 third quarter corporate and other expense was $29.2 million compared to $26.4 million in the third quarter of fiscal 2020.
Purchase Accounting Depreciation and Amortization - Fiscal 2021 third quarter purchase accounting depreciation and amortization expense was $12.9 million, up $2.3 million from the third quarter of fiscal 2020.
Tax - On a GAAP basis, the effective tax rate in the third quarter of fiscal 2021 was 14.2 percent compared to 6.1 percent in the third quarter of fiscal 2020. The higher effective tax rate in the third quarter of fiscal 2021 was primarily due to the tax effects of the fair-value adjustments recognized in fiscal 2021 and fiscal 2020 in connection with our investment in PTC, partially offset by other discrete items. The Adjusted Effective Tax Rate for the third quarter of fiscal 2021 was 14.6 percent compared to 14.1 percent in the prior year.
Share Repurchases - During the third quarter of fiscal 2021, the Company repurchased approximately 0.2 million shares of its common stock at a cost of $60.5 million. At June 30, 2021, $613.5 million remained available under our existing share repurchase authorization.
ROIC - Return on invested capital was 40.4 percent for the twelve months ended June 30, 2021.
Non-GAAP Measures - Organic sales, total segment operating earnings, total segment operating margin, Adjusted Income, Adjusted EPS, Adjusted Effective Tax Rate, free cash flow, and return on invested capital are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.
Conference Call
A conference call to discuss the quarterly results will be held at 8:30 a.m. Eastern Time on July 27, 2021. The call will be an audio webcast and accessible on the Rockwell Automation website. Presentation materials will also be available on the website prior to the call.
Interested parties can access the conference call by dialing the following numbers: (833) 714-0916 in the U.S. and Canada; (778) 560-2692 for other countries. Use the following passcode: 3676006. Please dial in 10 minutes prior to the start of the call.
Both the presentation materials and a replay of the call will be available on the Investor Relations section of the Rockwell Automation website through August 27, 2021.
