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Rockwell Automation Reports First Quarter 2011 Results

01/26/2011

MILWAUKEE -- Rockwell Automation, Inc.today reported fiscal 2011 first quarter revenue of $1,365.8 million, up 28 percent compared to $1,067.5 million in the first quarter of fiscal 2010. The year-over-year impact of currency translation was negligible in the quarter. Fiscal 2011 first quarter net income was $150.1 million or $1.04 per share, compared to $76.6 million or $0.53 per share in the first quarter of fiscal 2010.

Total segment operating earnings were $222.0 million in the first quarter of fiscal 2011, up from $136.8 million in the same period of 2010. Total segment operating margin in the first quarter of fiscal 2011 increased to 16.3 percent from 12.8 percent a year ago, primarily due to volume leverage.

Free cash flow was $4.4 million in the first quarter of fiscal 2011, low relative to net income, primarily due to payouts of performance-based compensation earned in fiscal 2010. Return on invested capital was 25.7 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, "We saw strong sales growth in the quarter across all regions, led by emerging markets. Operating margin continued to expand and this was the fifth consecutive quarter of operating earnings improvement. Return on invested capital of 25.7 percent is now well above our long-term goal of 20 percent and is approaching the 26 percent peak that we saw in the last cycle. Our results in the first quarter reflect solid underlying market conditions and great execution of our growth and performance strategy. I am extremely pleased with the excellent start to the fiscal year."

Outlook

Commenting on the outlook, Nosbusch added, "Our strong revenue performance in the first quarter, along with positive macroeconomic trends and forecasts, indicates that the global industrial recovery is continuing. We now project revenues for fiscal 2011 to range from $5.5 billion to $5.7 billion. Based on this revenue outlook, we are revising our fiscal 2011 earnings per share guidance to $4.30 to $4.60. A result in this range would represent record earnings per share for the company."

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

Architecture & Software: Architecture & Software fiscal 2011 first quarter sales were $613.9 million, an increase of 31 percent from $469.0 million in the first quarter of fiscal 2010. Fiscal 2011 first quarter sales were up 7 percent sequentially compared to $575.9 million in the fourth quarter of fiscal 2010. Segment operating earnings were $153.1 million in the first quarter of fiscal 2011, compared to $99.0 million in the first quarter of fiscal 2010. Architecture & Software segment operating margin was 24.9 percent in the first quarter of fiscal 2011, compared to 21.1 percent a year ago.

Control Products & Solutions: Control Products & Solutions fiscal 2011 first quarter sales were $751.9 million, an increase of 26 percent from $598.5 million in the first quarter of fiscal 2010. Fiscal 2011 first quarter sales were down 4 percent sequentially, a typical fourth quarter to first quarter pattern in this segment. Segment operating earnings were $68.9 million in the first quarter of fiscal 2011, up from $37.8 million in the first quarter of fiscal 2010. Control Products & Solutions segment operating margin was 9.2 percent in the first quarter of fiscal 2011, compared to 6.3 percent a year ago.

Other Information: Fiscal 2011 first quarter general corporate net expense was $15.7 million, down from $19.5 million in the first quarter of 2010, primarily due to a gain on the sale of an investment. The effective tax rate for the first quarter of fiscal 2011 was 19.6 percent; the company continues to expect the full-year tax rate to be in the range of 20 to 22 percent. During the first quarter of 2011, the Company repurchased 0.7 million shares of its common stock at a cost of $48.9 million. The Company had $452.3 million available at December 31, 2010 under its $1.0 billion share repurchase authorization