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Rockwell Automation reports fourth quarter 2010 results

11/09/2010

MILWAUKEE -- Rockwell Automation, Inc.  today reported fiscal 2010 fourth quarter revenue of $1,356.9 million, up 26 percent compared to $1,074.4 million in the fourth quarter of fiscal 2009. Currency translation negatively impacted revenue growth by 1 percentage point. Fiscal 2010 fourth quarter net income was $131.3 million or $0.91 per share, compared to $28.9 million or $0.20 per share in the fourth quarter of fiscal 2009.

Total segment operating earnings were $205.1 million in the fourth quarter of fiscal 2010, up from $79.6 million in the same period of 2009. Total segment operating margin in the fourth quarter of fiscal 2010 increased to 15.1 percent from 7.4 percent a year ago, primarily due to higher segment operating margin in the Architecture & Software segment.

Free cash flow was $19.2 million in the fourth quarter of fiscal 2010 after a discretionary pre-tax contribution of $150 million to the company's U.S. pension trust.

Full Fiscal Year 2010
Sales for the full fiscal year were $4,857.0 million, up 12 percent compared to $4,332.5 million in fiscal 2009. Foreign currency translation contributed 2 percentage points to the increase. Income from continuing operations was $440.4 million or $3.05 per share, compared to $217.9 million or $1.53 per share in fiscal 2009. Segment operating earnings were $717.2 million, up 67 percent compared to $429.7 million in fiscal 2009. Full fiscal year 2010 free cash flow from continuing operations was $410.7 million, after the previously-mentioned pension contribution in the fourth quarter. Return on invested capital was 22.8 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, "We capped the year with another quarter of strong revenue growth in all regions. I was particularly pleased to see very strong year-over-year growth again this quarter in China and India and strong sequential growth in Latin America and Europe. Logix grew 36 percent in the quarter.

"Our results confirm that our growth and performance strategy is working. For the full year, we grew revenue 12 percent and doubled earnings per share compared to fiscal 2009. Operating margin improved by 5 points, a great result in light of the compensation cost headwinds and growth investments we made in the second half of the year. Strong cash flow during the year enabled us to resume share repurchases, increase the dividend by 21 percent and make a $150 million discretionary U.S. pension contribution. We ended the year with a very strong balance sheet.

"Our performance this year is evidence that we are executing well as the recovery progresses and I want to thank our employees, customers and partners for their support throughout the year."

Outlook
Commenting on the outlook, Nosbusch added, "We believe that the global economic recovery will continue in fiscal 2011. We are starting to see signs that large capital project spending will improve, but timing remains somewhat uncertain. The growth investments we made in 2010 improve our ability to outperform the market in 2011 and beyond. For fiscal 2011 we are projecting revenue growth of 8 percent to 12 percent excluding currency, plus 1 percent growth from currency translation. Based on this revenue outlook, we are providing fiscal 2011 earnings per share guidance of $3.80 to $4.20."

Nosbusch continued, "Increased exposure to mid- and late-cycle markets should help as the recovery continues. Our strong balance sheet positions us to fund organic growth, make catalytic acquisitions and return capital to shareowners. Our strategy is to capitalize on expanded growth opportunities and technology differentiation. We remain committed to innovation, deepening our domain expertise and thought leadership - all key ingredients for helping our customers achieve their productivity and sustainability goals."

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

Architecture & Software
Architecture & Software fiscal 2010 fourth quarter sales were $575.9 million, an increase of 36 percent from $424.1 million in the fourth quarter of fiscal 2009. Currency translation negatively impacted revenue growth by 2 percentage points. Fiscal 2010 fourth quarter sales were up 4 percent sequentially compared to $553.9 million in the third quarter of fiscal 2010. Segment operating earnings were $128.4 million in the fourth quarter of fiscal 2010 compared to $36.9 million in the fourth quarter of fiscal 2009. Architecture & Software segment operating margin was 22.3 percent in the fourth quarter of fiscal 2010 compared to 8.7 percent a year ago. Segment operating margin increased primarily due to volume leverage.

Control Products & Solutions
Control Products & Solutions fiscal 2010 fourth quarter sales were $781.0 million, an increase of 20 percent from $650.3 million in the fourth quarter of fiscal 2009. Currency translation negatively impacted revenue growth by 1 percentage point. Fiscal 2010 fourth quarter sales were up 9 percent sequentially compared to $714.2 million in the third quarter of this fiscal year. Segment operating earnings were $76.7 million in the fourth quarter of fiscal 2010, up from $42.7 million in the fourth quarter of fiscal 2009. Control Products & Solutions segment operating margin was 9.8 percent in the fourth quarter of fiscal 2010 compared to 6.6 percent a year ago. Segment operating margin increased primarily due to volume leverage.

Other Information
Fiscal 2010 fourth quarter general corporate net expense was $27.4 million. General corporate net expense for the full year was $93.6 million compared to $80.3 million in 2009 with the increase primarily due to performance-based compensation.

The effective tax rate for the fourth quarter of fiscal 2010 was 16.8 percent. The effective tax rate for the full year was 19.1 percent compared to 20.4 percent in 2009.

During the fourth quarter of 2010, the Company repurchased 0.5 million shares of its common stock at a cost of $26.9 million. The Company had $501.2 million available at September 30, 2010 under its $1.0 billion share repurchase authorization.

More details about the fourth-quarter earnings report are available here.