Rockwell Automation, Inc. reported second quarter fiscal 2024 results.
"Execution in the second quarter was solid, and we continue to see sequential order improvement. However, there is more excess inventory at our customers, particularly machine builders, than we originally expected. As a result, we are not yet seeing the accelerated order ramp this fiscal year and are reducing our full-year guidance. Despite the lower FY24 outlook, we are gaining share across many of our most important product lines and in North America, our largest market," said Blake Moret, Chairman and CEO.
Fiscal Q2 2024 Financial Results
Fiscal 2024 second quarter sales were $2,126 million, down 6.6% from $2,275 million in the second quarter of fiscal 2023. Organic sales decreased 8.1%, currency translation increased sales by 0.1%, and acquisitions increased sales by 1.4%.
Fiscal 2024 second quarter Net income attributable to Rockwell Automation was $266 million or $2.31 per share, compared to $300 million or $2.59 per share in the second 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 second quarter adjusted EPS was $2.50, down 16.9% compared to $3.01 in the second quarter of fiscal 2023 primarily due to lower segment operating margin.
Pre-tax margin was 14.6% in the second quarter of fiscal 2024 compared to 15.4% in the same period last year. The decrease in pre-tax margin was primarily due to lower sales volume, partially offset by lower non-operating pension expense.
Total segment operating earnings were $404 million in the second quarter of fiscal 2024, down 16.5% from $484 million in the same period of fiscal 2023. Total segment operating margin was 19.0% compared to 21.3% a year ago. The decrease in segment operating margin was primarily due to lower sales volume, partially offset by lower incentive compensation.
Cash flow generated by operating activities in the second quarter of fiscal 2024 was $120 million, compared to $187 million in the second quarter of fiscal 2023. Free cash flow in the second quarter of fiscal 2024 was $68.6 million, compared to $156 million in the same period last year. Decreases in cash flow provided by operating activities and free cash flow were primarily due to lower pre-tax income and higher tax payments, partially offset by decreases in working capital.
Fiscal Year 2024 Outlook
The table below provides updated guidance for sales growth and earnings per share for fiscal 2024.
|
Updated Guidance |
Prior Guidance |
||
|
Reported sales growth |
(6.0)% - (4.0)% |
0.5% - 6.5% |
|
|
Organic sales growth (1) |
(8.0)% - (6.0)% |
(2.0)% - 4.0% |
|
|
Inorganic sales growth |
~1.5% |
~1.5% |
|
|
Currency translation |
~0.5% |
~1.0% |
|
|
Diluted EPS |
$8.80- $9.80 |
$11.24 - $12.74 |
|
|
Adjusted EPS (1) |
$10.00 - $11.00 |
$12.00 - $13.50 |
|
(1) Organic sales growth and Adjusted EPS are non-GAAP measures. See Other Supplemental Information for detail on these non-GAAP measures. |
"The reduced guide for the fiscal year only strengthens our commitment to building a strong foundation for future growth and profitability. We have built an unmatched portfolio with both our traditional offerings and new sources of value. As we couple this with our focus on margin expansion through cost discipline, operational excellence, and organic growth, we will achieve the longer-range targets introduced in November and create significant shareowner value,” Moret continued.
Following is a discussion of second quarter results for our business segments.
Intelligent Devices
Intelligent Devices second quarter fiscal 2024 sales were $974 million, a decrease of 4.9% compared to $1,023 million in the same period last year. Organic sales decreased 7.4%, currency translation increased sales by 0.2%, and acquisitions increased sales by 2.3%. Segment operating earnings were $161 million compared to $207 million in the same period last year. Segment operating margin decreased to 16.5% from 20.2% a year ago. The decrease from prior year was driven by lower sales volume and unfavorable mix, partially offset by lower incentive compensation.
Software & Control
Software & Control second quarter fiscal 2024 sales were $570 million, a decrease of 23.1% compared to $741 million in the same period last year. Organic sales decreased 23.2% and currency translation increased sales by 0.1%. Segment operating earnings were $146 million compared to $249 million in the same period last year. Segment operating margin decreased to 25.7% from 33.6% a year ago, driven by lower sales volume partially offset by lower incentive compensation, positive price/cost, and favorable mix.
Lifecycle Services
Lifecycle Services second quarter fiscal 2024 sales were $583 million, an increase of 14.0% compared to $511 million in the same period last year. Organic sales increased 12.4% and acquisitions increased sales by 1.6%. Segment operating earnings were $96.9 million compared to $27.9 million in the same period last year. Segment operating margin was 16.6% compared to 5.5% a year ago driven by lower incentive compensation, higher sales volume, and higher margins in Sensia.
CFO Transition
Rockwell Automation also announced today that Nicholas Gangestad, Senior Vice President and Chief Financial Officer, will retire from the Company. A search for his successor has been underway, and Mr. Gangestad will continue to serve in his role until the new CFO is appointed. Mr. Gangestad will work with the Board and management team to help ensure a smooth transition.
Conference Call
A conference call to discuss the quarterly results will be held at 8:30 a.m. Eastern Time on May 7, 2024. The call will be an audio webcast and accessible on the Rockwell Automation website (www.rockwellautomation.com/en-us/investors.html). Presentation materials will also be available on the website prior to the call.
Interested parties can access the conference call by using the following numbers: (888) 330-2022 in the U.S. and Canada; (646) 960-0690 for other countries. Use the following passcode: 5499533. Please call 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 June 7, 2024.
