-
Reported sales up 6.5 percent year over year; organic sales up 5.3
percent
-
Diluted loss per share of $(1.84); Adjusted EPS of $1.96
-
Diluted loss per share includes $(3.68) of provisional charges related
to the Tax Cuts and Jobs Act of 2017 (the "Tax Act")
-
Updating fiscal 2018 Diluted EPS guidance: $3.67 - $3.97
-
Increasing fiscal 2018 Adjusted EPS guidance: $7.60 - $7.90
MILWAUKEE--(BUSINESS WIRE)--
Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2018 first
quarter sales of $1,586.6 million, up 6.5 percent from $1,490.3 million
in the first quarter of fiscal 2017. Organic sales grew 5.3 percent.
Currency translation increased sales by 2.5 percentage points, and the
prior year divestiture reduced sales by 1.3 percentage points.
Fiscal 2018 first quarter net loss was $(236.4) million or $(1.84) per
share, compared to net income of $214.7 million or $1.65 per share in
the first quarter of fiscal 2017. The decrease in EPS was due to charges
associated with the Tax Act, totaling $(479.7) million or $(3.68) per
share. Fiscal 2018 first quarter Adjusted EPS was $1.96, up 12 percent
compared to $1.75 in the first quarter of fiscal 2017. The increase in
Adjusted EPS was primarily due to higher sales, partially offset by
higher investment spending.
Pre-tax margin was 18.8 percent in the first quarter of fiscal 2018
compared to 17.3 percent in the same period last year. Total segment
operating margin was 22.4 percent compared to 21.2 percent a year ago.
The increases in pre-tax margin and total segment operating margin were
primarily due to higher sales, partially offset by higher investment
spending. Total segment operating earnings were $355.5 million in the
first quarter of fiscal 2018, up 12 percent from $316.6 million in the
same period of fiscal 2017.
Commenting on the results, Blake D. Moret, chairman and chief executive
officer, said, “We had a good start to the fiscal year, with more than
five percent organic sales growth in the first quarter. Growth continued
to be broad-based across geographies. Heavy industry verticals performed
well, supported by recovery in oil and gas. I am very pleased with our
twelve percent Adjusted EPS growth in the quarter."
Outlook
The following table provides updated guidance as it relates to sales
growth and earnings per share for fiscal 2018:
|
|
|
|
|
|
|
|
Sales Growth Guidance
|
|
|
|
|
EPS Guidance
|
|
Reported sales growth
|
|
|
4.5% to 7.5%
|
|
|
|
|
Diluted EPS
|
|
|
$3.67 - $3.97
|
|
Organic sales growth
|
|
|
3.5% to 6.5%
|
|
|
|
|
Adjusted EPS
|
|
|
$7.60 - $7.90
|
|
Currency translation
|
|
|
~ 2%
|
|
|
|
|
|
|
|
|
|
Divestiture
|
|
|
~ (1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commenting on the outlook, Moret added, "Global macroeconomic conditions
continue to provide a solid backdrop for customer demand. Given our
unique offering and deep customer relationships, we are well-positioned
to execute on our Connected Enterprise strategy and take advantage of
the attractive opportunities in the industrial automation and
information market. While we are optimistic that the impact of U.S. tax
reform on our customers’ investment decisions could provide an
additional tailwind to our future performance, it is too early to
quantify the benefits."
Moret continued, "As a result of our strong first quarter and a lower
tax rate for the year, we are increasing our full year Adjusted EPS
guidance. We are also increasing investments in fiscal 2018 in order to
accelerate profitable growth and other long-term objectives. These
include accelerated software development, investments to help our
employees be more engaged and productive, and importantly, spending to
enable customer innovation and complement our existing workforce
development initiatives. We are also actively engaged in the evaluation
of inorganic opportunities to accelerate our Connected Enterprise
strategy.
“I would like to thank our employees, partners, and suppliers for their
contributions to another successful quarter.”
Following is a discussion of fiscal 2018 first quarter results for both
segments.
Architecture & Software
Architecture & Software quarterly sales were $746.9 million, an increase
of 7.3 percent compared to $696.4 million in the same period last year.
Organic sales increased 4.6 percent, and currency translation increased
sales by 2.7 percentage points. Segment operating earnings were $224.6
million compared to $208.6 million in the same period last year. Segment
operating margin increased to 30.1 percent from 30.0 percent a year ago,
primarily due to higher sales, partially offset by higher investment
spending.
Control Products & Solutions
Control Products & Solutions quarterly sales were $839.7 million, an
increase of 5.8 percent compared to $793.9 million in the same period
last year. Organic sales increased 5.9 percent, currency translation
increased sales by 2.3 percentage points, and the prior year divestiture
reduced sales by 2.4 percentage points. Segment operating earnings were
$130.9 million compared to $108.0 million in the same period last year.
Segment operating margin increased to 15.6 percent from 13.6 percent a
year ago, primarily due to higher sales.
Other Information
In the first quarter of fiscal 2018, cash flow provided by operating
activities was $212.7 million and free cash flow was $178.6 million.
Return on invested capital was 40.8 percent.
Fiscal 2018 first quarter general corporate-net expense was $16.2
million compared to $14.9 million in the first quarter of fiscal 2017.
On a GAAP basis, the effective tax rate in the first quarter of fiscal
2018 was 179.4 percent compared to 16.7 percent in the first quarter of
fiscal 2017. The higher effective tax rate was due to provisional
charges related to the tax effect of deemed repatriation of foreign
earnings ($385.5 million or 129.5 percentage points) and the revaluation
of net deferred tax assets ($94.2 million or 31.6 percentage points)
associated with the Tax Act. The Adjusted Effective Tax Rate for the
first quarter of fiscal 2018 was 18.9 percent compared to 18.1 percent a
year ago. The increase in the Adjusted Effective Tax Rate was primarily
due to lower favorable discrete tax items in the current quarter
compared to the prior year, partially offset by the lower tax rate under
the Tax Act. For fiscal 2018, the Company now expects an effective tax
rate of approximately 59 percent and an Adjusted Effective Tax Rate of
approximately 21 percent.
During the first quarter of fiscal 2018, the Company repurchased 1.1
million shares of its common stock at a cost of $208.6 million. At
December 31, 2017, $399.8 million remained available under the April 6,
2016 share repurchase authorization. On January 15, 2018, the Board of
Directors authorized the Company to expend up to an additional $1.0
billion to repurchase shares of its common stock.
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 our financial results will take place at
8:30 a.m. Eastern Time on Wednesday, January 24, 2018. The call and
related financial charts will be webcast and accessible via the Rockwell
Automation website (http://www.rockwellautomation.com/investors/).
This news release contains statements (including certain projections
and business trends) that are “forward-looking statements” as defined in
the Private Securities Litigation Reform Act of 1995. Words such as
“believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”,
“will”, “intend” and other similar expressions may identify
forward-looking statements. Actual results may differ materially from
those projected as a result of certain risks and uncertainties, many of
which are beyond our control, including but not limited to:
-
macroeconomic factors, including global and regional business
conditions, the availability and cost of capital, commodity prices,
the cyclical nature of our customers’ capital spending, sovereign debt
concerns and currency exchange rates;
-
laws, regulations and governmental policies affecting our
activities in the countries where we do business;
-
the successful development of advanced technologies and demand for
and market acceptance of new and existing products;
-
the availability, effectiveness and security of our information
technology systems;
-
competitive products, solutions and services and pricing pressures,
and our ability to provide high quality products, solutions and
services;
-
a disruption of our business due to natural disasters, pandemics,
acts of war, strikes, terrorism, social unrest or other causes;
-
our ability to manage and mitigate the risk related to security
vulnerabilities and breaches of our products, solutions and services;
-
intellectual property infringement claims by others and the ability
to protect our intellectual property;
-
the uncertainty of claims by taxing authorities in the various
jurisdictions where we do business;
-
our ability to attract, develop, and retain qualified personnel;
-
our ability to manage costs related to employee retirement and
health care benefits;
-
the uncertainties of litigation, including liabilities related to
the safety and security of the products, solutions and services we
sell;
-
our ability to manage and mitigate the risks associated with our
solutions and services businesses;
-
disruptions to our distribution channels or the failure of
distributors to develop and maintain capabilities to sell our products;
-
the successful integration and management of acquired businesses
and technologies;
-
the availability and price of components and materials;
-
the successful execution of our cost productivity initiatives; and
-
other risks and uncertainties, including but not limited to those
detailed from time to time in our Securities and Exchange Commission
(SEC) filings.
These forward-looking statements reflect our beliefs as of the date
of filing this release. We undertake no obligation to update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise.
Rockwell Automation, Inc. (NYSE: ROK), the world’s largest company
dedicated to industrial automation and information, makes its customers
more productive and the world more sustainable. Headquartered in
Milwaukee, Wis., Rockwell Automation employs approximately 22,000 people
serving customers in more than 80 countries.
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
SALES AND EARNINGS INFORMATION
|
|
(in millions, except per share amounts and percentages)
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Sales
|
|
|
|
|
|
Architecture & Software (a)
|
|
$
|
746.9
|
|
|
$
|
696.4
|
|
|
Control Products & Solutions (b)
|
|
839.7
|
|
|
793.9
|
|
|
Total sales (c)
|
|
$
|
1,586.6
|
|
|
$
|
1,490.3
|
|
|
|
|
|
|
|
|
Segment operating earnings
|
|
|
|
|
|
Architecture & Software (d)
|
|
$
|
224.6
|
|
|
$
|
208.6
|
|
|
Control Products & Solutions (e)
|
|
130.9
|
|
|
108.0
|
|
|
Total segment operating earnings1 (f)
|
|
355.5
|
|
|
316.6
|
|
|
|
|
|
|
|
|
Purchase accounting depreciation and amortization
|
|
(4.4
|
)
|
|
(5.6
|
)
|
|
General corporate—net
|
|
(16.2
|
)
|
|
(14.9
|
)
|
|
Non-operating pension costs
|
|
(5.9
|
)
|
|
(19.8
|
)
|
|
Costs related to unsolicited Emerson proposals
|
|
(11.2
|
)
|
|
—
|
|
|
Interest expense
|
|
(20.0
|
)
|
|
(18.7
|
)
|
|
Income before income taxes (g)
|
|
297.8
|
|
|
257.6
|
|
|
Income tax provision
|
|
(534.2
|
)
|
|
(42.9
|
)
|
|
Net (loss) income
|
|
$
|
(236.4
|
)
|
|
$
|
214.7
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(1.84
|
)
|
|
$
|
1.65
|
|
|
|
|
|
|
|
|
Adjusted EPS2
|
|
$
|
1.96
|
|
|
$
|
1.75
|
|
|
|
|
|
|
|
|
Average diluted shares for diluted EPS
|
|
128.2
|
|
|
129.7
|
|
|
|
|
|
|
|
|
Average diluted shares for adjusted EPS2
|
|
130.1
|
|
|
129.7
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
|
|
|
|
Architecture & Software (d/a)
|
|
30.1
|
%
|
|
30.0
|
%
|
|
Control Products & Solutions (e/b)
|
|
15.6
|
%
|
|
13.6
|
%
|
|
Total segment operating margin1 (f/c)
|
|
22.4
|
%
|
|
21.2
|
%
|
|
|
|
|
|
|
|
Pre-tax margin (g/c)
|
|
18.8
|
%
|
|
17.3
|
%
|
1Total segment operating earnings and total segment operating
margin are non-GAAP financial measures. We exclude purchase accounting
depreciation and amortization, general corporate – net, non-operating
pension costs, costs related to the unsolicited Emerson proposals,
interest expense and income tax provision because we do not consider
these costs to be directly related to the operating performance of our
segments. We believe that these measures are useful to investors as
measures of operating performance. We use these measures to monitor and
evaluate the profitability of our Company. Our measures of total segment
operating earnings and total segment operating margin may be different
from those used by other companies.
2Adjusted EPS is a non-GAAP earnings measure that excludes
the non-operating pension costs and their related income tax effects,
costs related to the unsolicited Emerson proposals in the first quarter
of fiscal 2018 and their related tax effects, and the provisional tax
effect of deemed repatriation of foreign earnings and the revaluation of
net deferred tax assets due to the enactment of the Tax Act. See "Other
Supplemental Information - Adjusted Income, Adjusted EPS and Adjusted
Effective Tax Rate" section for more information regarding non-operating
pension costs and a reconciliation to GAAP measures. Average diluted
shares for adjusted EPS is a non-GAAP measure that includes 1.9 million
of dilutive shares that are excluded from GAAP average diluted shares in
the first quarter of fiscal 2018 because we recorded a net loss.
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
|
(in millions)
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Sales
|
|
$
|
1,586.6
|
|
|
$
|
1,490.3
|
|
|
Cost of sales
|
|
(889.5
|
)
|
|
(848.0
|
)
|
|
Gross profit
|
|
697.1
|
|
|
642.3
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
(389.3
|
)
|
|
(370.0
|
)
|
|
Other income
|
|
10.0
|
|
|
4.0
|
|
|
Interest expense
|
|
(20.0
|
)
|
|
(18.7
|
)
|
|
Income before income taxes
|
|
297.8
|
|
|
257.6
|
|
|
Income tax provision
|
|
(534.2
|
)
|
|
(42.9
|
)
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(236.4
|
)
|
|
$
|
214.7
|
|
|
|
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED BALANCE SHEET INFORMATION
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,547.0
|
|
|
$
|
1,410.9
|
|
Short-term investments
|
|
1,100.5
|
|
|
1,124.6
|
|
Receivables
|
|
1,149.9
|
|
|
1,135.5
|
|
Inventories
|
|
570.8
|
|
|
558.7
|
|
Property, net
|
|
565.8
|
|
|
583.9
|
|
Goodwill and intangibles
|
|
1,316.3
|
|
|
1,315.7
|
|
Other assets
|
|
908.4
|
|
|
1,032.4
|
|
Total
|
|
$
|
7,158.7
|
|
|
$
|
7,161.7
|
|
|
|
|
|
|
|
Liabilities and Shareowners’ Equity
|
|
|
|
|
|
Short-term debt
|
|
$
|
840.0
|
|
|
$
|
600.4
|
|
Accounts payable
|
|
582.2
|
|
|
623.2
|
|
Long-term debt
|
|
1,239.3
|
|
|
1,243.4
|
|
Other liabilities
|
|
2,341.0
|
|
|
2,031.1
|
|
Shareowners’ equity
|
|
2,156.2
|
|
|
2,663.6
|
|
Total
|
|
$
|
7,158.7
|
|
|
$
|
7,161.7
|
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
CONDENSED CASH FLOW INFORMATION
|
|
(in millions)
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Operating activities:
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
(236.4
|
)
|
|
$
|
214.7
|
|
|
Depreciation and amortization
|
|
39.6
|
|
|
40.4
|
|
|
Retirement benefits expense
|
|
28.3
|
|
|
43.0
|
|
|
Pension contributions
|
|
(11.6
|
)
|
|
(13.5
|
)
|
|
Receivables/inventories/payables
|
|
(74.4
|
)
|
|
(32.3
|
)
|
|
Advance payments from customers and deferred revenue
|
|
27.9
|
|
|
16.8
|
|
|
Compensation and benefits
|
|
(77.0
|
)
|
|
22.4
|
|
|
Income taxes
|
|
508.0
|
|
|
22.3
|
|
|
Other
|
|
8.3
|
|
|
(3.0
|
)
|
|
Cash provided by operating activities
|
|
212.7
|
|
|
310.8
|
|
|
Investing activities:
|
|
|
|
|
|
Capital expenditures
|
|
(34.1
|
)
|
|
(39.4
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
(9.9
|
)
|
|
(1.1
|
)
|
|
Purchases of investments
|
|
(275.2
|
)
|
|
(191.3
|
)
|
|
Proceeds from maturities and sales of investments
|
|
286.0
|
|
|
193.9
|
|
|
Proceeds from sale of property
|
|
0.2
|
|
|
0.3
|
|
|
Cash used for investing activities
|
|
(33.0
|
)
|
|
(37.6
|
)
|
|
Financing activities:
|
|
|
|
|
|
Net issuance (repayment) of short-term debt
|
|
489.6
|
|
|
(40.0
|
)
|
|
Repayment of long-term debt
|
|
(250.0
|
)
|
|
—
|
|
|
Cash dividends
|
|
(107.3
|
)
|
|
(97.5
|
)
|
|
Purchases of treasury stock
|
|
(190.8
|
)
|
|
(82.0
|
)
|
|
Proceeds from the exercise of stock options
|
|
30.1
|
|
|
67.6
|
|
|
Other financing activities
|
|
1.8
|
|
|
—
|
|
|
Cash used for financing activities
|
|
(26.6
|
)
|
|
(151.9
|
)
|
|
Effect of exchange rate changes on cash
|
|
(17.0
|
)
|
|
(53.1
|
)
|
|
Increase in cash and cash equivalents
|
|
$
|
136.1
|
|
|
$
|
68.2
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
OTHER SUPPLEMENTAL INFORMATION
|
|
(in millions)
|
|
|
Organic Sales
Our press release contains information regarding organic sales, which we
define as sales excluding the effect of changes in currency exchange
rates and acquisitions. We believe this non-GAAP measure provides useful
information to investors because it reflects regional and operating
segment performance from our activities without the effect of changes in
currency exchange rates and/or acquisitions. We use organic sales as one
measure to monitor and evaluate our regional and operating segment
performance. We determine the effect of changes in currency exchange
rates by translating the respective period’s sales using the currency
exchange rates that were in effect during the prior year. When we
acquire businesses, we exclude sales in the current period for which
there are no comparable sales in the prior period. When we divest a
business, we exclude sales in the prior period for which there are no
comparable sales in the current period. Organic sales growth is
calculated by comparing organic sales to reported sales in the prior
year, excluding divestitures. We attribute sales to the geographic
regions based on the country of destination.
The following is a reconciliation of reported sales to organic sales for
the three months ended December 31, 2017 compared to sales for the three
months ended December 31, 2016:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
Sales
|
|
Effect of
Changes in
Currency
|
|
Sales
Excluding
Effect of
Changes
in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Sales
|
|
Sales
|
|
Effect of
Divestitures
|
|
Sales
Excluding
Divestitures
|
|
United States
|
|
$
|
851.9
|
|
|
$
|
(0.7
|
)
|
|
$
|
851.2
|
|
|
$
|
—
|
|
|
$
|
851.2
|
|
|
$
|
820.1
|
|
|
$
|
(12.3
|
)
|
|
$
|
807.8
|
|
Canada
|
|
92.0
|
|
|
(4.4
|
)
|
|
87.6
|
|
|
—
|
|
|
87.6
|
|
|
82.7
|
|
|
(4.1
|
)
|
|
78.6
|
|
EMEA
|
|
307.4
|
|
|
(23.4
|
)
|
|
284.0
|
|
|
—
|
|
|
284.0
|
|
|
270.7
|
|
|
—
|
|
|
270.7
|
|
Asia Pacific
|
|
214.5
|
|
|
(5.8
|
)
|
|
208.7
|
|
|
—
|
|
|
208.7
|
|
|
205.6
|
|
|
—
|
|
|
205.6
|
|
Latin America
|
|
120.8
|
|
|
(2.1
|
)
|
|
118.7
|
|
|
—
|
|
|
118.7
|
|
|
111.2
|
|
|
(1.8
|
)
|
|
109.4
|
|
Total
|
|
$
|
1,586.6
|
|
|
$
|
(36.4
|
)
|
|
$
|
1,550.2
|
|
|
$
|
—
|
|
|
$
|
1,550.2
|
|
|
$
|
1,490.3
|
|
|
$
|
(18.2
|
)
|
|
$
|
1,472.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of reported sales to organic sales for
our operating segments for the three months ended December 31, 2017
compared to sales for the three months ended December 31, 2016:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
Sales
|
|
Effect of
Changes in
Currency
|
|
Sales
Excluding
Effect of
Changes
in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Sales
|
|
Sales
|
|
Effect of
Divestitures
|
|
Sales
Excluding
Divestitures
|
|
Architecture & Software
|
|
$
|
746.9
|
|
|
$
|
(18.2
|
)
|
|
$
|
728.7
|
|
|
$
|
—
|
|
|
$
|
728.7
|
|
|
$
|
696.4
|
|
|
$
|
—
|
|
|
$
|
696.4
|
|
Control Products & Solutions
|
|
839.7
|
|
|
(18.2
|
)
|
|
821.5
|
|
|
—
|
|
|
821.5
|
|
|
793.9
|
|
|
(18.2
|
)
|
|
775.7
|
|
Total
|
|
$
|
1,586.6
|
|
|
$
|
(36.4
|
)
|
|
$
|
1,550.2
|
|
|
$
|
—
|
|
|
$
|
1,550.2
|
|
|
$
|
1,490.3
|
|
|
$
|
(18.2
|
)
|
|
$
|
1,472.1
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
OTHER SUPPLEMENTAL INFORMATION
|
|
(in millions, except per share amounts and percentages)
|
|
|
Adjusted Income, Adjusted EPS and Adjusted
Effective Tax Rate
Our press release contains financial information and earnings guidance
regarding Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate,
which are non-GAAP earnings measures that exclude non-operating pension
costs and their related income tax effects, costs related to the
unsolicited Emerson proposals in the first quarter of fiscal 2018 and
their related tax effects, and the provisional tax effect of deemed
repatriation of foreign earnings and the revaluation of net deferred tax
assets due to the enactment of the Tax Act. We define non-operating
pension costs as defined benefit plan interest cost, expected return on
plan assets, amortization of actuarial gains and losses and the impact
of any plan curtailments or settlements. These components of net
periodic benefit cost primarily relate to changes in pension assets and
liabilities that are a result of market performance; we consider these
and other excluded costs to be unrelated to the operating performance of
our business. We believe that Adjusted Income, Adjusted EPS and Adjusted
Effective Tax Rate provide useful information to our investors about our
operating performance and allow management and investors to compare our
operating performance period over period. Adjusted EPS is also used as a
financial measure of performance for our annual incentive compensation.
Our measures of Adjusted Income, Adjusted EPS and Adjusted Effective Tax
Rate may be different from measures used by other companies. These
non-GAAP measures should not be considered a substitute for income from
continuing operations, diluted EPS and effective tax rate.
The following are the components of operating and non-operating pension
costs for the three months ended December 31, 2017 and 2016:
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Service cost
|
|
$
|
22.2
|
|
|
$
|
24.1
|
|
|
Amortization of prior service cost (credit)
|
|
0.2
|
|
|
(0.8
|
)
|
|
Operating pension costs
|
|
22.4
|
|
|
23.3
|
|
|
|
|
|
|
|
|
Interest cost
|
|
38.8
|
|
|
37.8
|
|
|
Expected return on plan assets
|
|
(61.2
|
)
|
|
(56.2
|
)
|
|
Amortization of net actuarial loss
|
|
28.3
|
|
|
38.0
|
|
|
Settlements
|
|
—
|
|
|
0.2
|
|
|
Non-operating pension costs
|
|
5.9
|
|
|
19.8
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
28.3
|
|
|
$
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
The following are reconciliations of income from continuing operations,
diluted EPS from continuing operations, and effective tax rate to
Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate:
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Income from continuing operations
|
|
$
|
(236.4
|
)
|
|
$
|
214.7
|
|
|
Non-operating pension costs
|
|
5.9
|
|
|
19.8
|
|
|
Tax effect of non-operating pension costs
|
|
(1.8
|
)
|
|
(7.2
|
)
|
|
Costs related to unsolicited Emerson proposals
|
|
11.2
|
|
|
—
|
|
|
Tax effect of costs related to unsolicited Emerson proposals
|
|
(3.1
|
)
|
|
—
|
|
|
Effect of deemed repatriation of foreign earnings due to the Tax Act1
|
|
385.5
|
|
|
—
|
|
|
Effect of net deferred tax asset revaluation due to the Tax Act1
|
|
94.2
|
|
|
—
|
|
|
Adjusted Income
|
|
$
|
255.5
|
|
|
$
|
227.3
|
|
|
|
|
|
|
|
|
Diluted EPS from continuing operations
|
|
$
|
(1.84
|
)
|
|
$
|
1.65
|
|
|
Non-operating pension costs per diluted share
|
|
0.06
|
|
|
0.15
|
|
|
Tax effect of non-operating pension costs per diluted share
|
|
(0.01
|
)
|
|
(0.05
|
)
|
|
Costs related to unsolicited Emerson proposals
|
|
0.09
|
|
|
—
|
|
|
Tax effect of costs related to unsolicited Emerson proposals
|
|
(0.02
|
)
|
|
—
|
|
|
Effect of deemed repatriation of foreign earnings due to the Tax Act1
|
|
2.96
|
|
|
—
|
|
|
Effect of net deferred tax asset revaluation due to the Tax Act1
|
|
0.72
|
|
|
—
|
|
|
Adjusted EPS
|
|
$
|
1.96
|
|
|
$
|
1.75
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
179.4
|
%
|
|
16.7
|
%
|
|
Tax effect of non-operating pension costs
|
|
0.3
|
%
|
|
1.4
|
%
|
|
Tax effect of costs related to unsolicited Emerson proposals
|
|
0.3
|
%
|
|
—
|
%
|
|
Effect of deemed repatriation of foreign earnings due to the Tax Act1
|
|
(129.5
|
)%
|
|
—
|
%
|
|
Effect of net deferred tax asset revaluation due to the Tax Act1
|
|
(31.6
|
)%
|
|
—
|
%
|
|
Adjusted Effective Tax Rate
|
|
18.9
|
%
|
|
18.1
|
%
|
1These amounts, which are based on reasonable estimates, will
require further adjustments as additional guidance from the U.S.
Department of Treasury is provided, the Company’s assumptions change, or
as further information and interpretations become available.
|
|
|
Fiscal 2018 Guidance
|
|
Year Ended September 30, 2017
|
|
|
|
|
|
Diluted EPS from continuing operations
|
|
$3.67 - $3.97
|
|
$
|
6.35
|
|
|
Non-operating pension costs per diluted share
|
|
0.18
|
|
0.64
|
|
|
Tax effect of non-operating pension costs per diluted share
|
|
(0.06)
|
|
(0.23
|
)
|
|
Costs related to unsolicited Emerson proposals
|
|
0.09
|
|
—
|
|
|
Tax effect of costs related to unsolicited Emerson proposals
|
|
(0.02)
|
|
—
|
|
|
Effect of deemed repatriation of foreign earnings due to the Tax Act1
|
|
3.00
|
|
—
|
|
|
Effect of net deferred tax asset revaluation due to the Tax Act1
|
|
0.74
|
|
—
|
|
|
Adjusted EPS
|
|
$7.60 - $7.90
|
|
$
|
6.76
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
~ 59
|
%
|
|
20.4
|
%
|
|
Tax effect of non-operating pension costs
|
|
~ —
|
%
|
|
1.1
|
%
|
|
Tax effect of costs related to unsolicited Emerson proposals
|
|
~ —
|
%
|
|
—
|
%
|
|
Effect of deemed repatriation of foreign earnings due to the Tax Act1
|
|
~ (31
|
)%
|
|
—
|
%
|
|
Effect of net deferred tax asset revaluation due to the Tax Act1
|
|
~ (7
|
)%
|
|
—
|
%
|
|
Adjusted Effective Tax Rate
|
|
~ 21
|
%
|
|
21.5
|
%
|
1These amounts, which are based on reasonable estimates, will
require further adjustments as additional guidance from the U.S.
Department of Treasury is provided, the Company’s assumptions change, or
as further information and interpretations become available.
|
|
|
ROCKWELL AUTOMATION, INC.
|
|
OTHER SUPPLEMENTAL INFORMATION
|
|
(in millions, except percentages)
|
|
|
Free Cash Flow
Our definition of free cash flow, which is a non-GAAP financial measure,
takes into consideration capital investments required to maintain the
operations of our businesses and execute our strategy. In our opinion,
free cash flow provides useful information to investors regarding our
ability to generate cash from business operations that is available for
acquisitions and other investments, service of debt principal, dividends
and share repurchases. We use free cash flow, as defined, as one measure
to monitor and evaluate our performance, including as a financial
measure for our annual incentive compensation. Our definition of free
cash flow may be different from definitions used by other companies.
The following table summarizes free cash flow by quarter:
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Dec. 31,
2016
|
|
Mar. 31,
2017
|
|
Jun. 30,
2017
|
|
Sep. 30,
20171
|
|
Dec. 31,
2017
|
|
Cash provided by continuing operating activities
|
|
$
|
310.8
|
|
|
$
|
301.0
|
|
|
$
|
315.3
|
|
|
$
|
106.9
|
|
|
$
|
212.7
|
|
|
Capital expenditures
|
|
(39.4
|
)
|
|
(28.0
|
)
|
|
(30.1
|
)
|
|
(44.2
|
)
|
|
(34.1
|
)
|
|
Free cash flow
|
|
$
|
271.4
|
|
|
$
|
273.0
|
|
|
$
|
285.2
|
|
|
$
|
62.7
|
|
|
$
|
178.6
|
|
1Free cash flow for the fourth quarter of fiscal 2017
includes a discretionary pre-tax contribution of $200 million to the
Company's U.S. pension trust.
Return On Invested Capital
Our press release contains information regarding Return On Invested
Capital (ROIC), which is a non-GAAP financial measure. We believe that
ROIC is useful to investors as a measure of performance and of the
effectiveness of the use of capital in our operations. We use ROIC as
one measure to monitor and evaluate our performance, including as a
financial measure for our annual incentive compensation. Our measure of
ROIC may be different from that used by other companies. We define ROIC
as the percentage resulting from the following calculation:
(a) Income from continuing operations, before interest expense, income
tax provision, and purchase accounting depreciation and amortization,
for the most recent twelve months; divided by
(b) average invested capital for the year, calculated as a five quarter
rolling average using the sum of short-term debt, long-term debt,
shareowners’ equity, and accumulated amortization of goodwill and other
intangible assets, minus cash and cash equivalents and short-term and
long-term investments; multiplied by
(c) one minus the effective tax rate for the twelve-month period.
ROIC is calculated and reconciled to GAAP measures as follows:
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
(a) Return
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
374.6
|
|
|
$
|
758.9
|
|
|
Interest expense
|
|
77.5
|
|
|
72.6
|
|
|
Income tax provision
|
|
703.0
|
|
|
204.9
|
|
|
Purchase accounting depreciation and amortization
|
|
20.2
|
|
|
19.3
|
|
|
Return
|
|
1,175.3
|
|
|
1,055.7
|
|
|
(b) Average invested capital
|
|
|
|
|
|
Short-term debt
|
|
664.2
|
|
|
380.0
|
|
|
Long-term debt
|
|
1,241.5
|
|
|
1,457.0
|
|
|
Shareowners’ equity
|
|
2,249.1
|
|
|
2,122.6
|
|
|
Accumulated amortization of goodwill and intangibles
|
|
842.3
|
|
|
815.5
|
|
|
Cash and cash equivalents
|
|
(1,508.5
|
)
|
|
(1,495.2
|
)
|
|
Short-term and long-term investments
|
|
(1,206.1
|
)
|
|
(879.7
|
)
|
|
Average invested capital
|
|
2,282.5
|
|
|
2,400.2
|
|
|
(c) Effective tax rate
|
|
|
|
|
|
Income tax provision1
|
|
223.3
|
|
|
204.9
|
|
|
Income from continuing operations before income taxes
|
|
$
|
1,077.6
|
|
|
$
|
963.8
|
|
|
Effective tax rate
|
|
20.7
|
%
|
|
21.3
|
%
|
|
(a) / (b) * (1-c) Return On Invested Capital
|
|
40.8
|
%
|
|
34.6
|
%
|
1The income tax provision used to calculate the effective tax
rate is adjusted to remove the provisional effect of the $385.5 million
tax on deemed repatriation of foreign earnings and the $94.2 million
revaluation of net deferred tax assets due to the enactment of the Tax
Cuts and Jobs Act of 2017 in the first quarter of fiscal 2018.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180124005297/en/
Source: Rockwell Automation, Inc.