Rockwell Automation Reports Fourth Quarter and Full Year 2015 Results
Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2015 fourth quarter sales of US$1,607.5 million, down 9.8 per cent from US$1,781.8 million in the fourth quarter of fiscal 2014.
- (1888PressRelease) November 16, 2015 - Organic sales decreased 2.3 per cent, and currency translation reduced sales by 7.6 per cent.
• Fourth quarter sales down 10 per cent year over year; down 2 per cent organically
• Fourth quarter Adjusted EPS of US$1.57; diluted EPS of US$1.50
• Full year Adjusted EPS of US$6.40, up 4 per cent despite 5 per cent lower sales; diluted EPS of $6.09
• Record fiscal year free cash flow and ROIC
• Company increases dividend 12 per cent
• Company provides fiscal 2016 Adjusted EPS guidance of US$5.90 - US$6.40
Fiscal 2015 fourth quarter Adjusted EPS was US$1.57, down 16 per cent compared to Adjusted EPS of US$1.86 in the fourth quarter of fiscal 2014. Total segment operating earnings were US$335.8 million in the fourth quarter of fiscal 2015, down 15 per cent compared to US$395.8 million in the same period last year. Results in the fourth quarter of fiscal 2015 included US$12 million of restructuring charges. Total segment operating margin decreased to 20.9 per cent from 22.2 per cent a year ago, primarily due to lower operating margin in the Architecture & Software segment.
On a GAAP basis, fiscal 2015 fourth quarter net income was US$201.3 million or US$1.50 per share, compared to US$248.7 million or US$1.79 per share in the fourth quarter of fiscal 2014. Pre-tax margin decreased to 17.3 per cent from 19.0 per cent in the same period last year.
Full Fiscal Year 2015
Sales were US$6,307.9 million in fiscal 2015, down 4.8 per cent compared to US$6,623.5 million in fiscal 2014. Organic sales increased 1.1 per cent, and currency translation reduced sales by 6.0 per cent.
Fiscal 2015 Adjusted EPS was US$6.40, up 3.7 per cent compared to Adjusted EPS of US$6.17 in fiscal 2014. Total segment operating earnings increased to US$1,360.5 million in fiscal 2015 compared to US$1,352.0 million in fiscal 2014. Total segment operating margin increased to 21.6 per cent from 20.4 per cent a year ago, primarily due to higher organic sales and strong productivity.
On a GAAP basis, fiscal 2015 net income was US$827.6 million or US$6.09 per share, compared to US$826.8 million or US$5.91 per share in fiscal 2014. Pre-tax margin increased to 17.9 per cent from 17.1 per cent a year ago.
Commenting on the results, Keith D. Nosbusch, Chairman and Chief Executive Officer, said, "Both sales and earnings were below our expectations in the quarter. Sales softened through the quarter and September was especially weak, particularly in the U.S."
"For the full year, we overcame significant headwinds from heavy industry end markets and delivered organic growth of 1.1 per cent. I am pleased that segment operating margin expanded 120 basis points. Strong productivity, particularly in the Control Products & Solutions segment, was a key contributor. I am also pleased that we were able to grow our earnings per share despite lower sales."
"We generated record free cash flow of about US$1.1 billion and continued our track record of returning cash to shareowners. We returned over US$950 million in fiscal 2015, a 19 per cent increase compared to fiscal 2014. And today we are announcing a 12 per cent dividend increase, the seventh consecutive double-digit percentage increase since the beginning of 2010. This increase reflects confidence in our sustainable cash generation."
"I would like to thank our employees, partners and suppliers for their continued commitment to serve our customers. Their dedication is key to our success."
Outlook
Commenting on the outlook, Nosbusch added, "We are experiencing weak market conditions as we enter fiscal 2016. Heavy industry end markets, including oil and gas, have not yet stabilised, and we see continued softness in key emerging markets. In our largest market, the U.S., the strong dollar is adversely affecting producers and OEMs. As a result, our customers are being more cautious with capital expenditures and operating spending. We, therefore, expect a particularly weak start to the fiscal year and do not believe we will see year-over-year growth until later in fiscal 2016."
"Based on these factors, we are projecting fiscal 2016 organic sales to be flat to down 4 per cent year over year. Including the impact of currency, we are initiating fiscal 2016 sales guidance of approximately US$6.0 billion and Adjusted EPS guidance of US$5.90 to US$6.40."
"We have a proven track record of managing costs whilst protecting our technology investments and domain expertise during challenging market conditions. We have already initiated restructuring actions and will continue to balance short-term financial performance with investments that will enable long-term growth and sustainable competitive differentiation."
"The long-term prospects for Rockwell Automation are very attractive. The secular drivers for industrial automation and information remain intact, and we will continue to expand the value we provide our customers and gain market share."
Following is a discussion of fourth quarter and full year results for both segments.
Architecture & Software
Architecture & Software fiscal 2015 fourth quarter sales were US$683.9 million, a decrease of 8.5 per cent from US$747.4 million in the same period last year. Organic sales decreased 0.4 per cent, and currency translation reduced sales by 8.1 per cent. Segment operating earnings were US$186.5 million in the fourth quarter of fiscal 2015 compared to US$232.7 million in the fourth quarter of fiscal 2014. Segment operating margin decreased to 27.3 per cent in the fourth quarter of fiscal 2015 from 31.1 per cent a year ago, primarily due to unfavourable currency effects and increased research and development project spending.
Architecture & Software fiscal 2015 sales were US$2,749.5 million, a decrease of 3.4 per cent from US$2,845.3 million last year. Fiscal 2015 organic sales were up 3.1 per cent, and currency translation reduced sales by 6.6 per cent. Segment operating earnings were US$808.6 million in fiscal 2015 compared to US$839.6 million in fiscal 2014. Segment operating margin was 29.4 per cent in fiscal 2015 compared to 29.5 per cent in fiscal 2014.
Control Products & Solutions
Control Products & Solutions fiscal 2015 fourth quarter sales were US$923.6 million, a decrease of 10.7 per cent from US$1,034.4 million in the same period last year. Organic sales decreased 3.6 per cent, and currency translation reduced sales by 7.2 per cent. Segment operating earnings decreased 8.5 per cent to US$149.3 million in the fourth quarter of fiscal 2015 compared to US $163.1 million in the fourth quarter of fiscal 2014. Segment operating margin was 16.2 per cent in the fourth quarter of fiscal 2015, compared to 15.8 per cent a year ago.
Control Products & Solutions fiscal 2015 sales were US$3,558.4 million, a decrease of 5.8 per cent from US$3,778.2 million last year. Organic sales decreased 0.4 per cent, and currency translation reduced sales by 5.6 per cent. Segment operating earnings increased to US$551.9 million in fiscal 2015 compared to US$512.4 million in fiscal 2014. Despite lower sales, segment operating margin was 15.5 per cent in fiscal 2015 compared to 13.6 per cent a year ago, primarily due to very strong productivity.
Other Information
Free cash flow was US$308.5 million in the fourth quarter of fiscal 2015. Cash flow provided by operating activities was US$348.0 million in the fourth quarter of fiscal 2015. Full fiscal year 2015 free cash flow was US$1,077.2 million, 124 per cent of Adjusted Income. Cash flow provided by operating activities for the full fiscal year 2015 was US$1,187.7 million. Return on invested capital was 32.6 per cent.
Fiscal 2015 fourth quarter general corporate net expense was US$19.5 million compared to US$22.3 million in the fourth quarter of 2014. General corporate net expense was US$85.6 million for the full fiscal year 2015 compared to US$81.0 million in fiscal 2014.
The Adjusted Effective Tax Rate for the fourth quarter of fiscal 2015 was 28.2 per cent compared to 27.0 per cent in the fourth quarter of 2014. The Adjusted Effective Tax Rate for the full fiscal year 2015 was 27.0 per cent compared to 27.5 per cent in fiscal 2014.
The effective tax rate for the fourth quarter of fiscal 2015 was 27.8 per cent compared to 26.6 per cent in the fourth quarter of 2014. The effective tax rate for the full fiscal year 2015 was 26.6 per cent compared to 27.1 per cent in fiscal 2014.
During the fourth quarter of fiscal 2015, the Company repurchased 1.8 million shares of its common stock at a cost of US$196.5 million. During fiscal year 2015, the Company repurchased 5.4 million shares of its common stock at a cost of US$606.2 million. As of 30 September 2015, US$445.2 million remained available under the existing share repurchase authorisation.
Today the Board of Directors declared a quarterly dividend of 72.5 cents per share on the company's common stock, payable on 10 December 2015 to shareowners of record at the close of business on 23 November 2015.
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 took place on Tuesday, 10 November 2015. The call and related financial charts are 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 and retain qualified personnel;
• Our ability to manage costs related to employee retirement and healthcare 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;
• A disruption of our distribution channels;
• The availability and price of components and materials;
• The successful integration and management of acquired businesses;
• The successful execution of our cost productivity and globalisation 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.
About Rockwell Automation
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, Wisconsin, Rockwell Automation employs over 22,500 people serving customers in more than 80 countries.
Rockwell Automation Statements link:
http://apconnections.com/images/Rockwell_Automation_Reports_Fourth_Quarter_and_Full_Year_2015_Results.pdf
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