Rockwell Automation, Inc. · NYSE:ROK
Rockwell Automation — Q3 2020 Earnings Presentation
29 slides from Rockwell Automation's earnings presentation, Jul 28, 2020
Slide 1: Third Quarter Fiscal Year 2020 Conference Call
Third Quarter Fiscal Year 2020 Conference Call July 28, 2020 PUBLIC 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement THIS PRESENTATION INCLUDES GUIDANCE AND OTHER STATEMENTS RELATED TO THE EXPECTED FUTURE RESULTS OF THE COMPANY AND ARE THEREFORE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTIONS DUE TO A WIDE RANGE OF RISKS AND UNCERTAINTIES, MANY OF WHICH
Slide 3: Q3 FY20 Results Highlights
Q3 FY20 Results Highlights ▪ Reported sales down (16.3)% YOY; inorganic investments contributed 3% ▪ Organic sales down (17.6)% YOY, but better than expectations – Logix down (16)% – Information Solutions & Connected Services (IS/CS) sales down low single digits YOY – Orders grew double digits YOY ▪
Slide 4: Organic Industry Segment Performance
Organic Industry Segment Performance % of Q3 FY20 Q3 FY20 Sales vs. Q3 FY19 Q3 FY20 vs. Q3 FY19 Discrete Automotive down ~25% ~ 22% Down ~20% Semiconductor up mid single digits Hybrid Food & Beverage down ~10% ~ 44% Down ~10% Life Sciences down ~10% Tire down double digits O&G down ~30%
Slide 5: Q3 FY20 Organic Sales Growth by Region
Q3 FY20 Organic Sales Growth North America EMEA (20.0)% (13.0)% Highlights * • North America results driven by weak process industries, partly offset by resiliency in discrete and hybrid • EMEA outperformed expectations and benefited from increased PPE production and double digit Asia Pacific growth
Slide 6: FY20 Full Year Outlook Highlights
FY20 Full Year Outlook Highlights At guidance midpoint: Organic sales growth unchanged, increasing Adjusted EPS ▪ Assumes a gradual recovery continues, with no increases in pandemic-related facility closures or disruptions to the supply chain ▪ Organic sales growth unchanged; down ~(8)% YOY ▪ Inorga
Slide 7: Organic Industry Segment Outlook
Organic Industry Segment Outlook B/(W) vs. April FY20 vs FY19 FY20 Assumptions at Guidance Midpoint Guidance Discrete Automotive down mid single digits Down mid single digits Semiconductor up high single digits + Hybrid Food & Beverage down mid single digits Down mid single digits Life Scien
Slide 8: Q3 FY20 Key Financial Information
Q3 FY20 Key Financial Information ($ in millions, except per share amounts) Q3 FY20 Q3 FY19 YOY B/(W) Organic Growth (17.6)% Inorganic Growth +3.2% SALES $1,394 $1,665 Currency Translation (1.9)% Reported Growth (16.3)% SEGMENT OPERATING MARGIN 16.5% 23.8% (730) bps GENERAL CORPORATE - NET $26 $24 $
Slide 9: Q3 FY20 Segment Results
Q3 FY20 Segment Results SALES SEGMENT OPERATING HIGHLIGHTS ($ in millions) MARGIN $621.4 23.8% ▪ Logix, motion, and network & security ARCHITECTURE infrastructure better than expected Organic (15.9)% (600) bps & SOFTWARE Inorganic +0.8% ▪ Lower Segment Operating Margin primarily due Currency (1.8)%
Slide 10: Q3 FY19 to Q3 FY20 Adjusted EPS Walk
Q3 FY19 to Q3 FY20 Adjusted EPS Walk ~$(1.05) $2.40 ~$(0.10) ~$0.10 ~$(0.10) ~$0.05 ~$(0.05) $1.27 FY19 Q3 Core Restructuring Asset Sale FX Tax Rate Acquisitions 1 FY20 Q3 1 (excl. Interest) 1 Sensia within acquisitions consists of the incremental operating earnings, intangible amortization, transac
Slide 11: Q2-Q3 FY20 Global Daily Average Product Order Trends
Q2-Q3 FY20 Global Daily Average Product Order Trends $ January February March April May June July MTD thru 7/24 PUBLIC| Copyright ©2020 Rockwell Automation, Inc. | 11
Slide 12: COVID-19 Response Update
COVID-19 Response Update ▪ Prioritizing employee and customer safety ▪ Services and solutions businesses – Revenue dependent on ability to access customer sites (physically or with remote technology) – Experiencing some project delays but no significant cancellations ▪ Operations and supply chain –
Slide 13: Updated FY20 Guidance
Updated FY20 Guidance July Guidance April Guidance Sales Midpoint ~ $6.3B ~ $6.35B Organic Growth Range ~ (8)% (9.5)% - (6.5)% Inorganic Growth ~ 4% 4.0% - 4.5% Currency Translation ~ (1.5)% ~ (1)% Segment Operating Margin ~ 19.5% 18.5% - 19.5% Adjusted Effective Tax Rate1 ~ 12.5% ~ 13% Adjusted EPS
Slide 14: New Operating Segments Align with Customer Needs
New Operating Segments Align with Customer Needs Industrial electrical, automation, and information market Software ERP Cloud PLM CAD, ECAD Partners systems platforms software Consulting Simulation, Augmented Professional MES / MOM Security Analytics digital twin reality services Software & Control
Slide 15: New Operating Segments Composition
Former A&S business New Operating Segments Composition Former CP&S business Intelligent Devices Software & Control Lifecycle Services ▪ Drives ▪ Control software & hardware ▪ Consulting ▪ Motion ▪ Visualization software & hardware ▪ Professional services Solutions ▪ Safety ▪ Digital twin & simulat
Slide 16: New Operating Segments to Simplify and Accelerate Profitable Growth
New Operating Segments to Simplify and Accelerate Profitable Growth 2019 Total Fiscal Year Sales and Product Available Market (PAM) $3.0B ARCHITECTURE $25B PAM & SOFTWARE SERVICES LIFECYCLE (11%) SERVICES ~$1.6B SOLUTIONS (22%) INTELLIGENT DEVICES PRODUCTS SOFTWARE & ~$3.3B (67%) CONTROL ~$1.8B $35B
Slide 17: New Value Through the Lifecycle in the New Normal
New Value Through the Lifecycle in the New Normal Nobody is better positioned to help customers drive productivity and build resiliency + + + Design Operate Maintain Agility Flexibility Safety & Security • Design lines to run multiple products and • Optimize production workflows to allow • Reduce on
Slide 18: Appendix
Appendix Supplemental Financial Information and Reconcilations to Non-GAAP Measures 18
Slide 19: Q3 FY20 Results: Summary
Q3 FY20 Results: Summary ($ in millions, except per share amounts) Q3 2020 Q3 2019 Total Sales $ 1,394 $ 1,665.1 Total Segment Operating Earnings $ 229.4 $ 395.9 Purchase Accounting Depreciation and Amortization (10.6) (4.1) General Corporate - Net (26.4) (23.8) Non-operating pension and postretirem
Slide 20: Free Cash Flow
Free Cash Flow ($ in millions) Q3 2020 Q3 2019 Net Income $ 314 $ 261 Depreciation/Amortization 44 37 Retirement Benefits Expense 32 17 Receivables/Inventory/Payables 34 (10) Compensation and Benefits 47 17 Pension Contributions (7) (7) Income Taxes (3) — Change in fair value of investments1 (176) 2
Slide 21: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity ▪ Total debt of $2.4B at June 30 Debt Structure – $423M of short-term debt, primarily term loan borrowings – $2.0B of long-term debt (next maturity is 2025) Current ▪ Cash on balance sheet of $910M at June 30 Liquidity ▪ We have access to the commercial paper marke
Slide 22: Industry Segmentation
Industry Segmentation % of FY19 Sales Discrete Hybrid Process ~10% Automotive ~20% Food & Beverage ~10% Oil & Gas ~5% Semiconductor ~5% Life Sciences ~5% Mining, Aggregates & ~5% Household & Personal Care Cement ~5% General Industries ~5% Tire ~5% Metals • Warehousing & Logistics • Printing & Publis
Slide 23: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Organic Sales ($ in millions) Three Months Ended June 30, 2020 2019 Reported Acquisition Currency Organic Effect of Sales Growth Growth Growth Growth Effect of Changes in Organic (Decline) (Decline) (Decline) (Decline) Sales(a) Acquisitions(e)1 Currency(d) Sales(b
Slide 24: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Segment Operating Margin ($ in millions) Three Months Ended June 30, 2020 June 30, 2019 Sales Architecture & Software (a) $ 621.4 $ 747.9 Control Products & Solutions (b) 772.6 917.2 Total sales (c) $ 1,394.0 $ 1,665.1 Segment operating earnings Architecture & Sof
Slide 25: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate ($ in millions, except per share amounts) Three Months Ended June 30, 2020 June 30, 2019 Net Income attributable to Rockwell Automation $ 317.8 $ 261.4 Non-operating pension and postretirement benefit
Slide 26: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Return On Invested Capital ($ in millions) Twelve Months Ended June 30, 2020 2019 (a) Return Net income $ 767.6 $ 1,033.6 Interest expense 104.3 90.4 Income tax provision 125.3 292.7 Purchase accounting depreciation and amortization 34.2 16.7 Return 1,031.4 1,433.
Slide 27: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Logix Sales Growth Three Months Ended June 30, 2020 Logix Logix reported growth (18) % Effect of currency translation 2 % Logix organic growth (16) % Control Products & Solutions Sales Growth Three Months Ended June 30, 2020 Control Products Control Products repor
Slide 28: Reconciliation to Non-GAAP Measures
Reconciliation to Non-GAAP Measures Fiscal 2020 Guidance ($ in billions, except per share amounts) Organic Sales Fiscal 2020 Guidance Organic sales growth ~ (8)% Inorganic sales growth ~ 4% Foreign currency impact ~ (1.5)% Reported sales growth ~ (5.5)% Segment Operating Margin Total sales (a) $ ~ 6
Slide 29: Thank you
Thank you www.rockwellautomation.com 29