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Rockwell Automation reports third quarter 2010 results

07/28/2010

MILWAUKEE--Rockwell Automation, Inc. reported fiscal 2010 third quarter revenue of $1,268.1 million, up 25 percent compared to $1,010.8 million in the third quarter of fiscal 2009. The year-over-year impact from currency translation was negligible in the quarter. Fiscal 2010 third quarter revenue was up 9 percent sequentially compared to the second quarter of fiscal 2010. Fiscal 2010 third quarter net income was $119.4 million ($0.83 per share), compared to $32.8 million ($0.23 per share) in the third quarter of fiscal 2009.

Total segment operating earnings were $198.0 million in the third quarter of fiscal 2010, up from $86.3 million in the same period of 2009. Total segment operating margin in the third quarter of fiscal 2010 increased to 15.6 percent from 8.5 percent a year ago, primarily due to higher segment operating margin in the Architecture & Software segment.

Free cash flow was $116.7 million in the third quarter of fiscal 2010. Return on invested capital was 17.7 percent.

Organic sales, total segment operating earnings, total segment operating margin, free cash flow and return on invested capital are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, "I am pleased with the strong revenue and earnings performance this quarter. Our revenue growth was broad-based across all regions. China had an exceptional quarter with 42 percent year-over-year organic growth and Latin America rebounded strongly. Operating margin expanded and we increased spending to fuel future growth."

Outlook
Commenting on the outlook, Nosbusch added, "We expect fourth quarter revenue to grow sequentially on the strength of our solutions and services business and emerging markets. Based on our third quarter results and this outlook, we are raising our full-year fiscal 2010 guidance to earnings per share of $2.95 to $3.05 on revenue of approximately $4.8 billion."

Nosbusch continued, "We have performed very well in the early part of the recovery. Although macroeconomic conditions are uncertain, we are optimistic that the global recovery will continue. I am confident in our strategy and our ability to execute. We are well-positioned to take advantage of improving market conditions as we proceed through the cycle."

Following is a discussion of third quarter results for both segments.

Architecture & Software
Architecture & Software fiscal 2010 third quarter sales were $553.9 million, an increase of 39 percent from $399.5 million in the third quarter of fiscal 2009. Fiscal 2010 third quarter sales were up 7 percent sequentially from the second quarter of fiscal 2010. Segment operating earnings were $125.4 million in the third quarter of fiscal 2010, up from $43.3 million in the third quarter of fiscal 2009. Architecture & Software segment operating margin was 22.6 percent in the third quarter of fiscal 2010 compared to 10.8 percent a year ago. Segment operating margin increased primarily due to volume leverage.

Control Products & Solutions

Control Products & Solutions fiscal 2010 third quarter sales were $714.2 million, an increase of 17 percent from $611.3 million in the third quarter of fiscal 2009. Currency translation contributed less than 1 percentage point to the increase. Fiscal 2010 third quarter sales were up 10 percent sequentially from the second quarter of fiscal 2010. Segment operating earnings were $72.6 million in the third quarter of fiscal 2010, up from $43.0 million in the third quarter of fiscal 2009. Control Products & Solutions segment operating margin was 10.2 percent in the third quarter of fiscal 2010 compared to 7.0 percent a year ago. Segment operating margin increased primarily due to volume leverage.

Other Information
Fiscal 2010 third quarter general corporate net expense was $23.1 million, up from $16.3 million in the third quarter of fiscal 2009, primarily due to performance-based compensation.

The effective tax rate for the third quarter of fiscal 2010 was 23.2 percent; the Company now expects the full-year tax rate to be in the range of 19 to 20 percent.

During the third quarter of 2010, the Company repurchased 1.2 million shares of its common stock at a cost of $67.7 million. The Company had $528.1 million available at June 30, 2010 under its $1.0 billion share repurchase authorization.