Rockwell Automation, Inc. · NYSE:ROK
Rockwell Automation — Investor Day (November 2008)
44 slides from Rockwell Automation's investor day presentation, Nov 19, 2008
Slide 1: 2008 Investor Conference
2008 Investor Conference Keith Nosbusch Chairman and CEO November 19, 2008 Copyright © 2008 Rockwell Automation, Inc. All rights reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement • This presentation 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”,
Slide 3: Notice Regarding Financial Information
Notice Regarding Financial Information • This presentation contains non-GAAP financial information. Reconciliations from GAAP to non-GAAP measures are contained in the appendix of this presentation. • All information should be read in conjunction with the historical financial statements contained in
Slide 4: Rockwell Automation Today
Rockwell Automation Today • Annual Sales: $5.7B – 50% outside the US Leading Leadingglobal globalprovider providerofof • Two Operating Segments – Architecture & Software industrial industrialpower, power,control control – Control Products & Solutions and andinformation informationsolutions solutions
Slide 5: Architecture & Software
Architecture & Software Control & Information Platforms, Automation Software Applications Components Performance & Motion Logix Family Visualization Production Asset Sensing Management Management Small Controllers Safety Data Management $2.4B 2008 Revenues . . . Leading Global Market Positions Copyr
Slide 6: Control Products & Solutions
Control Products & Solutions Motor Control Solutions Services Products Industrial Control Products Automation System Integration Asset Remote Management Support Smart Motor Electronic Information Systems Controllers Overloads Engineering Training & Repair Motor Control Custom OEM Drive Centers Panel
Slide 7: Full Year 2008 Results: Summary
Full Year 2008 Results: Summary 2008 Q4 Full Year Revenue Growth (Excluding Currency Translation) 6% 9% Segment Operating Margin(1) 18% 18% Diluted EPS(1) $1.08 $4.11 Free Cash Flow $197.2M $458.3M ROIC 24.0% 24.0% Stock Repurchased 2.5M shares 6.7M shares (1) Excluding the impact of special charges
Slide 8: Long-Term Growth and Performance Strategy
Long-Term Growth and Performance Strategy Revenue Sustained Sustained secular, secular, organic organic growth growth -- Expanded Expanded served served market market -- Enhanced Enhanced market market access access -- Acquisitions Acquisitions as as catalysts catalysts Generate Generate 3-4% 3-4% a
Slide 9: Long-Term Financial Goals
Long-Term Financial Goals Long Term Goal: Multiple of Global GDP Consolidated Revenue ($B) $5.7 12% 12%CAGR CAGR $5.0 $4.6 $4.1 $3.6 2004 2005 2006 2007 2008 Earnings Per Share from Continuing Return on Invested Capital 24% 24% Operations(1) $4.11 22% $3.70 19% 26% 26%CAGR CAGR $2.87 $2.39 12% $1.65
Slide 10: Global Environment
Global Environment Real GDP Industrial Production Y/Y Change (%) Y/Y Change (%) Source: IMF World Economic Outlook (October 2008). Note: Regional aggregates compiled by Rockwell Automation based on Global Insight data. Source: Global Insight World Industry Service (October 2008). Nominal Cap Ex - Mf
Slide 11: Why RA is Well-Positioned
Why RA is Well-Positioned • Strong Global Market Positions • Technology . . . Focused on Innovation – Logix evolution – Manufacturing convergence • Diversified Revenue Base – Expanded served markets/channels – Stronger solutions/services capability – Extended global footprint/presence in emerging ma
Slide 12: December 2004: Integrated Architecture
December 2004: Integrated Architecture Product Product &&Technology Product& Technology Proliferation: TechnologyProliferation: Integrated Proliferation: Integrated Architecture Architecture Product & Technology Proliferation: 2005 Integrated Integrated Architecture Architecture $3B $3B Batch/Hybrid
Slide 13: Integrated Architecture: Logix Evolution
Integrated Architecture: Logix Evolution $8 $8 BB Integrated Process Safety Advanced Process Control Network Infrastructure Manufacturing Manufacturing Convergence Plant Information Continuous Process Batch Hybrid Ethernet/IP >$3.0 >$3.0 BB Convergence Integrated Machine Safety CompactLogix (Scaling
Slide 14: Process
Process Market Opportunity Revenue • $9B available market; 7.4% CAGR $700 40+% CAGR • Heavy industry and consumer ($ Millions) opportunities • Large market with attractive growth in all regions 2004 2005 2006 2007 2008 Strategy 2008 Highlights • Taking share from traditional DCS players • Sales grow
Slide 15: Information: FactoryTalk
Information: FactoryTalk Market Opportunity • $4.3B available market; 12% CAGR Design & Production Configuration Management Data Management • Highly fragmented, many small players • Replace internally developed systems Quality & Asset Performance • Customers value seamless information flow from Comp
Slide 16: Network Convergence
Network Convergence Market Trends BO BE H W T ST OR OF LD Broad adoption of Ethernet throughout S the Production Environment • Opportunities: Simplified, Open, Plant-wide Infrastructure ― High performance, cost effective, secure ― Multi-mode: Control, Data, Video, Voice, Mobility, ... RA & Cisco Res
Slide 17: Intelligent Motor Control
Intelligent Motor Control Market Trends Revenue • Energy efficiency as a top business driver $ 2 ,0 0 0 18% CAGR • Need for improved power quality and reliability 53% ($ Millions) • Increasing integration of power and control 47% • Increased buying influence by OEMs • Infrastructure investments in e
Slide 18: Solutions & Services
Solutions & Services Market Opportunity Revenue • $16B available market; approximately 8% CAGR $2,000 • Customers outsourcing service and solution 18% CAGR delivery – skilled labor shortage ($ Millions) • Emerging markets have a greater need for solutions and services capabilities 2004 2005 2006 200
Slide 19: Repeatable Solutions for Industry
Repeatable Solutions for Industry Repeatable Solutions: Reusable Engineering, Tools & Processes to Reduce Cost and Time Consumer Packaged Goods • Tracking & Tracing Metals • Production Management • Material Handling • Clean In Place (CIP) • Melting & Forming • Batch Mixing & Blending • Processing &
Slide 20: Solutions Success Story
Solutions Success Story A top three global Oil & Gas company selects Rockwell Automation to upgrade controls on turbo machinery driven compressor station • Customer sought to take advantage of improved control technologies to run turbines more efficiently and reliably. • Reliability, safety, sustain
Slide 21: Solutions Success Story
Solutions Success Story Rockwell Automation earned largest-ever order with a $37.1M contract from FedEx, spanning products, solutions and services • Upgrade of existing package handling systems at the Tennessee superhub with the latest RA control platforms and information technology. • RA will provi
Slide 22: Expanding Services Portfolio
Expanding Services Portfolio Transactional Services Contract Services Repair & Renewal Parts Lifecycle Parts Management • Remanufacturing • Complete Life Cycle Parts Services • Exchange Services (e.g. Storeroom Management) • Legacy Product Support Maintenance Services Training Assess & Consult • Rel
Slide 23: Sustainable Production
Sustainable Production • Environment – Recovery and recycling – Raw material reduction and process optimization – Emissions monitoring and optimization – Responsible product and package design • Safety – Worker and machine safety – Community and process safety – Product and supplier quality • Energy
Slide 24: Pavilion Improves Manufacturing Processes
Pavilion Improves Manufacturing Processes Enhance Profitability • Increase Production – Unlock capacity – Maximize throughput • Reduce Manufacturing Costs – Use less energy per unit of output – Use less raw materials in production • Improve Product Quality – Minimize variability – Reduce deviation f
Slide 25: Sustainability Success Story
Sustainability Success Story Coca-Cola retains Rockwell Automation for Project esKO Energy Monitoring System • Objective is to reduce energy consumption and CO2 emissions. • Project focuses on establishing a baseline energy monitoring solution pilot to determine/quantify energy reduction opportuniti
Slide 26: Safety
Safety Market Opportunity Revenue • $3.2B available market; approx. 12% CAGR $500 • Machinery: $1.8B market • Process: $1.4B market 51% CAGR ($ Millions) • Customer emphasis on social responsibility and sustainability • Globalization of safety standards 2004 2005 2006 2007 2008 Strategy 2008 Highlig
Slide 27: Globalization – Responding to Market Shifts
Globalization – Responding to Market Shifts 2004 Incl. Power Systems 2008 U.S. Canada LA AP EMEA 18% 23% 9% 50% 4% 61% 13% 8% 7% 7% Original Goal: 50% of Revenue Outside of U.S. by 2009 – Achieved in 2008 Shanghai, China (3rd Factory) • Manufacturing, Application Engineering and Research Center Sing
Slide 28: Globalization – Latin America
Globalization – Latin America Market Overview Revenue • Growth rates moderating but above global $450 averages 26% CAGR • Resource-based industries strong; emerging ($ Millions) consumer market • Political and economic stability across vast majority of region • Higher rates of inflation becoming a c
Slide 29: Globalization – Asia Pacific
Globalization – Asia Pacific Market Overview Revenue • China and India continue to lead growth $800 15% CAGR • Significant FDI continues to flow into the region ($ Millions) 2004 2005 2006 2007 2008 China,India,SE Asia Other Asia 2008 Results 2009 Outlook • $717M in sales; 16% growth ex-currency • E
Slide 30: Globalization – China
Globalization – China Market Overview Revenue • ~$7B available market; 15% CAGR $250 • Second largest market for Logix 24% CAGR • Continued investment in infrastructure and ($ Millions) power centric industries • Emerging growth in consumer industries • Strong demand for energy efficient solutions 2
Slide 31: Acquisitions as a Catalyst
Acquisitions as a Catalyst nneewweesstt Life Science Advanced Process Enterprise Process Safety Safety Light Chinese Heavy Application / Control & Manufacturing Solutions Curtains Industry Integrator Delivery Expertise Optimization Intelligence (EMI) • Largest • Leading position • Outstanding IP • H
Slide 32: Why Rockwell?
Why Rockwell? • Long-term sustainable growth – Automation markets have grown in excess of GDP growth – Expanding addressable market…Process, Safety, Information and Services – Emerging markets today…and as they transition to consumer economies • Diversification – Expanding product, solutions and ser
Slide 33: Investor Conference
Investor Conference Ted Crandall, SVP and CFO November 19, 2008 Copyright © 2008 Rockwell Automation, Inc. All rights reserved.
Slide 34: Full Year 2008 Results: Summary
Full Year 2008 Results: Summary 2008 Q4 Full Year Revenue Growth (Excluding Currency Translation) 6% 9% Segment Operating Margin(1) 18% 18% Diluted EPS(1) $1.08 $4.11 Free Cash Flow $197.2M $458.3M ROIC 24.0% 24.0% Stock Repurchased 2.5M shares 6.7M shares (1) Excluding the impact of special charges
Slide 35: 2008 Growth by Region
2008 Growth by Region Reported Increase vs. 2007 Region Sales As Reported Adj. for Currency U.S. $ 2,850.8 6% 6% Canada 396.4 16% 6% EMEA 1,319.0 25% 13% Asia Pacific 717.2 22% 16% Latin America 414.4 25% 14% TOTAL $ 5,697.8 14% 9% Copyright © 2008 Rockwell Automation, Inc. All rights reserved. 35
Slide 36: Capital Structure
Capital Structure Debt / Capital ($ millions) Maturities At 9/30/08 At 9/30/08 $250 $250 $250 37% $200 Total Debt 63% Shareowners’ 5.65% 6.70% 6.25% 5.20% Equity $100 CP 2017 2028 2037 2098 • Debt/Capital 37% • First long term maturity is in 2017 • Net Debt/Capital 20% • A-1, P-1 commercial paper ra
Slide 37: Global Environment
Global Environment Real GDP Industrial Production Y/Y Change (%) Y/Y Change (%) Source: IMF World Economic Outlook (October 2008). Note: Regional aggregates compiled by Rockwell Automation based on Global Insight data. Source: Global Insight World Industry Service (October 2008). Nominal Cap Ex - Mf
Slide 38: 2009 Headwinds/Tailwinds
2009 Headwinds/Tailwinds Headwinds Tailwinds Revenue • Credit market environment • Emerging market growth • Global economic slowdown • Currency • Business mix • Productivity Earnings • Currency • Q4 restructuring • Inflation • Share count Copyright © 2008 Rockwell Automation, Inc. All rights reserve
Slide 39: 2009 Guidance
2009 Guidance 2008 Results 2009 Outlook Revenue Growth Excluding Currency Translation 9% - 1% to - 5% Currency Translation 5% - 5% Segment Operating Margin(1) 18% 15.0% to 16.5% Diluted EPS(1) $4.11 $3.10 to $3.60 Free Cash Flow(2) $458.3M ~90% of Net Income (1) 2008 results exclude the impact of sp
Slide 40: Appendix
Appendix Reconciliation to Non- GAAP Measures Copyright © 2008 Rockwell Automation, Inc. All rights reserved.
Slide 41: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Revenue Growth Excluding Currency Three Months Ended September 30, ($ in millions) 2008 2007 Sales Effect of Excluding Changes in Changes in Revenue Growth Revenue Growth Sales(a) Currency Currency(b) Sales(c) (a)/(c) x-currency(b)/(c) United States $ 730.7 $ (0.2
Slide 42: Reconciliation to Non-GAAP Measures cont’d
Reconciliation to Non-GAAP Measures cont’d Earnings Per Share from Continuing Operations Excluding Special Charges ($ in millions except per share amounts) Quarter Ended September 30, Twelve Months Ended September 30, 2008 2008 2007 2006 2005 2004 Income from continuing operations $ 125.6 $ 577.6 $
Slide 43: Reconciliation to Non-GAAP Measures cont’d
Reconciliation to Non-GAAP Measures cont’d Return On Invested Capital ($ in millions) Twelve Months Ended September 30, 2008 2007 2006 2005 2004 (a) Return Income from continuing operations before accounting change $ 577.6 $ 569.3 $ 529.3 $ 447.7 $ 316.1 Income from Power Systems discontinued operat
Slide 44: Reconciliation to Non-GAAP Measures cont’d
Reconciliation to Non-GAAP Measures cont’d Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) ($ in millions) Twelve Months Ended September 30, 2008 Income from continuing operations $ 577.6 Interest expense 68.2 Provision for income taxes 231.3 Depreciation and amortization 136