ROK - Earnings call transcript Q4 2017 | Rockwell Automation, Inc.

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Operator

Thank you for holding, and welcome to Rockwell Automation Quarterly Conference Call. I need to remind everyone that today's conference call is being recorded. Later in the call, we will open the lines up for questions. At this time, I would like to turn the call over to Mr. Steve Etzel, Vice President of Investor Relations and Treasurer. Mr. ahead. go please Etzel,

Steven W. Etzel

and thank fiscal joining call. XXXX Blake and today and CFO. Automation's With for fourth is CEO; President our quarter earnings Moret, Goris, you morning, our us for Rockwell me Patrick Good release conference

website this released of available our and to to and the Both non-GAAP replay include this reconciliations the be press for measures. Our charts earlier press that next been webcast have call the results will XX at morning, were charts A posted website. release for release and days.

need get started, expected remind we company comments statements. Before our of will results statements I and the to to you forward-looking therefore, related that are our include future

and may our in a Our described due detailed actual our earnings from materially release differ all filings. results that SEC uncertainties of and our are of projections risks in to wide range

that, So I'll call Blake. the with over hand to

Blake D. Moret

and metals. in industries also again, semiconductor, continued was were this in food to including quarter, see that, you today. good points to X%, and once Transportation I'm industries broad-based and us across do quarter, quarter, in slightly Steve, us. everyone. was joining Heavy up to page another deck. had on and again automotive, beverage growth the key was growth Organic expectations. some for for XX%. good which above with which X consumer, about chemicals In slide call pleased both Thank by This regions. the for please our start well. turn was led good another the morning, good quarter growth so was Thanks, about the up I'll

for in quarter. strong the in to finish regional meaningful saw quarter up in was up automotive We X% EMEA to X% the we in gas year year. finish including verticals, oil were quarter, had overall a our company. a in a perspective, Importantly, performance which semiconductor, almost the digits From fourth the high-single We grew the market, the and saw to nice strong U.S., growth and orders, organically. growth the largest metals. return all almost in

OEM We continue progress to make machine builders. with

by a industries. grew comments X%. X%, additional of up Asia quarter. about grew make points to heavy I'll Logix led compared added the growth China year. sales led was few last by Latin profitable up X.X was in semiconductor. X%, growth. X% America Acquisitions

improved, up organically. year-over-year business was Including process process Our acquisition, X% our and was up almost MAVERICK XX%.

specific not two We had items previous that our guidance. also quarter in the were in

Solutions of a First, Products we & part business Control was sold segment. small that our product distribution

we restructuring reductions well Connected of to competitiveness manufacturing plans to Enterprise services highest to efforts on Enterprise spend as the and sharpen Connected the These our further focus related Second, enhance ongoing strategy initiated accelerate products, and re-footprinting, as to actions cost solutions. priorities. our our our general redirect

will continue full-year elaborate balance will with on commitment remarks. our to his and profitable our Patrick quarter performance We in investments growth. financial to fourth delivering

year full the fiscal year, was for good to us. a very Moving XXXX overall,

XXXX the contribution Connected automotive were was from good to down years returned a to Consumer years saw from Continuing We and digits the Here another After a are activity. of led and year, XX% food powertrain gas improved year some the of including saw few the initiative in oil semiconductor good in verticals our industries, points. over low-single-digit grew performance value in revenue and and strong year. growth. Logix growth, mid-single fiscal several new by also Enterprise. and process very of streams vehicle strong electrical We in growth XXXX course related heavy beverage. growth. key had up

We'll in next at Thursday our expanding and talk well progressing are Investor more Day. this pilots all Our industries. about

successfully year companies of good of Connected Enterprise, our how conversion. will to the to is and free compete by in With financial investments information services. team performance including productive. customers examples offerings, had continue year, specific provide this make cash Connected more we another management flow becoming core Our helping solutions the We respect connected Enterprise and

return $XXX million continued over during to share We fiscal cash owners, to XXXX.

we increase flow reflects dividend. the Just announced in last a cycle. week, annual sustained in XX% free confidence the our cash This through

recent domain contributed points market X.X Our growth technology, and and our acquisitions of increased profitable expertise access.

recently a large strong both and engagement have community. pipeline opportunities of we the increased We and acquisition small start-up with have

and resources opportunities. more acquisition the to focus During year, investment added we on

continue acquisitions of or growth to each point expect to more generate We year. a

technologies research investments emerging also We and development technology to own continue make targeted access our activities. partnerships, gain and to to complement strategic leverage

differentiate employees, Our their to to thank efforts every would like I and for day. partners us, and suppliers continue them

the now with growth conditions rates XXXX and market for on PMI economic macroeconomic indicators. conditions Current start production forecasts I'll GDP and to move call are global Let's fiscal solid. are outlook. and improved levels. at high Global industrial measures

us into year transportation XXXX. as oil this enter gas. XXXX well all including Our fiscal fiscal growth we and continued good the in consumer strong positions quarter a in and contribution meaningfully expect higher industries, account, in we heavy Taking growth performance with orders and another of fourth from

expected to of X.X will of we of our guidance XXXX year-over-year reduce growth Patrick little add guidance. and Including sold a around more EPS detail in percentage to earnings percentage $X.XX adjusted point, of The fiscal up our to sales impact X sales currency, absence expect midpoint is the currency organic did We fiscal XXXX sales billion X% to sales by QX while at more remarks. provide $X.X be of $X.XX. than the in his growth. and points about business will guidance

seeing a it annual Patrick, Before our add of you week comments. next to at I to few many let Day. over me look Investor turn forward I

customers. Day our our be for in to As usual, how the year. at see Enterprise bringing to we a is hold Houston, customer great This we Investor will which event, will Texas main Fair, Connected are life this Automation opportunity

differentiated innovations, demonstrated value verticals Automation and and the We'll our history the already this Enterprise is as we floor, are because installed Rockwell high have long Connected of brings powerful across every information value world. partners with the The become opportunities to pulling is Enterprise during believe of how life. plant more control us successful and to into latest their information our our our the showcase integrating value in will thousands the on acquisitions profitably competitive. we being more continue customers, The invest in technology grow share, Connected customers a have Thursday base are this plans we for provide Day. their combination enterprise solutions large demand ever, and expertise, I we a for highlighting and partnerships. and we and day domain We to value of expertise deliver Investor are next to connect to expand domain of greater to to and positioned around of technology and the customers, all best are worldwide than

to Finally, from address proposals. last Electric's announcement I want briefly Emerson our week regarding unsolicited

we saw, October a unsolicited Rockwell release rejected that you confirming press previously two Automation on XX proposals had As issued Emerson. from

noted for plan. were on Rockwell in largest and single value the the is across each well-positioned applications of board and interest release, environment, of we execute evaluated unanimously uniquely company software attractive our dedicated industries financial create consultation shareowners. directors not information. all legal substantial reviewed its process and in company carefully the our a and the determined distribution by and continuing and advisors, and our world's of As Automation automation proposals proposals that to hybrid its to Rockwell We platform industrial strategic additional the is and with to the one customers in positioned the very channel. is our best We deliver the both to believe and discrete which company on shareowners as

execute talked deliver are week, on equally have we and in with the ability confident shareowners company, upside who our this our past plan. additional to team, many Over the and analysts and

and Our is guidance. XXXX our call and demonstrate the to fiscal The our of and reinforce purpose results focused. attention is guidance fiscal and strength results our business our strategy discuss confidence of year's today next is where XXXX in the that for

Patrick the our Patrick? deeper call me dive a Now, let for turn to results. on

Patrick Goris

Thank information good key and on everyone. you, X, quarter. I'll start Blake, slide morning, financial fourth

performance had dollars translation than growth contributed better a was sales bit X.X million a As Currency expected. growth, in to points better up we expected. Blake few reported than X.X%. with X.X%, quarter Organic we sales also the mentioned, good sales

Our two growth. acquisitions points of X.X last September from contributed

of more the Switzerland. to operations. manufacturing of Before and in provide business take About half I relates of cover our which as execute in closure sale $XX of referred let manufacturing the as of restructuring which other booked large We is charges elements quarter, on to detail included well all incremental our on Blake this to finalized. comments, announced This in years charges re-footprinting July segment impacted quarter, attractive the to re-footprinting of This were includes will the on and our facility Aarau, guidance. earnings expected margin. million the neither in his once in of charges a yield page, me these the earnings several the

similar We the past. projects have in successfully executed

$XX pre-tax areas, spending highest order SG&A to cost our in other through The half redirect reductions relates million of particularly Enterprise-related priority in Connected the charges investments. general to

segment. be to different fiscal was net savings be of products re-footprinting, In channel $XX with finalized. annualized for implementation $XX and a business on a the with to further $XX into and gain The over million Solutions sold no core booked once sale. We of for is million. top the account product We brands. After The $XX sold Rockwell re-footprinting we distribution associated the the Products expect respect million has the $XX about is gross we business the property expected under Control million potential & our charges fiscal approximately million. of XXXX the business benefit the With quarter, in run $XX should be costs sold taking associated intellectual to million about our to outside business manufacturing that. includes sale, pre-tax XXXX a benefit the with net rate earn-out

we points one the more quarter. pension potential make by of our prior than for EPS Adjusting and projections, tax spending. compensation mentioned higher represented in the slight contribution part in lower item not decided increase million the an make the to to The from We strong adjusted A EPS than was the our to increased contribution works, last $X.XX year. reform reflected was I most due little points in to U.S. compared last the With tailwind and due for U.S. charges, $XXX restructuring the a bit last charges, that incentive financially of our least the relates current XXX five not was U.S. we a expect both the With quarter page. X Let on and and other the me guidance quarter headwinds net includes fourth made expense let's the is XX%. of a to Based mandatory of sale pre-tax pension investment reduction divestiture. primarily to guidance, related compared translation segment Adjusted decided to charges PBGC contributions U.S. margin on down and to in year to to of not a tax year-over-year. was of pension at our to offset XX.X% million adjusted fourth increase now. year-over-year and up attractive. cover flat this were during on operating was this to remaining made adjusted currency. taxes EPS effective expectations. corporate-net yielded in margin do premiums gain was basis gain that, higher margin combined move July than our expected year, to The the higher sales, contribution we but plan. the to plan was benefit. higher margin restructuring a compared growth offset $XX Currency XX% EPS on to expected $X.XX sales, restructuring higher as was spending. The investment compared about General on of rate $X.XX and by other incentive elements up organic A tailwind compensation years. Segment which voluntary

trailing $XXX return the Excluding contribution, pre-tax flow was XX%. invested free the in in line capital quarter million was with expectations. XX-months pension on cash our

of Average the were Let at last outstanding We few year. me shares million, add in cost to slide. $XX.X $XXX.X shown XXX,XXX items shares the a about the repurchased on in not quarter million. flat quarter a additional diluted

authorization. remaining year, at X.X under the of existing bit repurchase our cost we a million For our million September XX, we share million. of target. $XXX.X repurchased is million short $XXX $XXX This At shares have a

X, with and slide higher on a talked all adjusted to key a EPS of We on XXXX. incentive X% higher year fiscal short, In financial EPS. XX% information year Moving adjusted being had sales. growth for headwind year margin full good compensation we to about

was compensation segment the higher significant margin and about year-over-year represented headwind impact to than For more restructuring The incentive full earnings year, $X.XX. incentive million and year-over-year EPS on charges compensation conversion. a Adjusted a had $XXX headwind. was X-point

Excluding adjusted effective expected. than income. up sale. Free tax to the we EPS restructuring flow XX.X% we cash the charges, full-year the QX adjusted slightly due primarily was XX% the on last XXX% and $X.XX better quarter, on adjusted rate gain sale higher rate net is a business bit gain than ended The provided of you of of

to in XXX%-plus compares the items QX you free contribution, July. and shared which the cash Excluding conversion XXX%, we guidance with flow pension the was

of margin up to sales quarter Moving growth. contributed Organic good & sales and by with on and X% X.X%, X, increased This year-over-year. Currency Architecture had slide were sales performance another Software acquisitions the segment. translation sales segment X.X% X.X%.

provides in & For organic sales spending solutions associated of reported in a Control sales good compensation Book-to-bill growth were quarter, charges. and QX growth with charges, incentive R&D. organic and expected, restructuring mostly acquisitions second X.XX primarily year-over-year, and We X.XX by to services segment. businesses usual as of a performance up sales contributed margin the basis Slide another sales sales were was charges associated performance higher pickup performance solutions for than compared higher leverage growth. up contributed to points offsetting with X.X%. segment Products The X.X%, The translation had leverage X an product and majority is more segment X.X%, Operating this was and ago. over consecutive the by and year, driven restructuring decreased basis. This margin this and currency growth offset margin incentive higher was for this to the QX. businesses last year with Solutions the segment for increased We year-over-year. sales segment XXX compared X%. on affected in stronger QX in about our restructuring this this up basis quarter Operating incentive up saw compensation contracted services segment a overview X% And compensation XXX X.X%. segment. up due Organic in in bit than points the

sales of overall orders in up mentioned, covered digits by next were provides company details remarks. region. an QX. most The Blake X As high-single in slide overview performance these his of Blake our

slide from So to be out guidance. of X-point QX sales This X.X% fiscal quarter an both growth a I a expected and rate million will in us months, tailwind X.X full point and to is more the than increase be compared about translation was of just a fiscal sale geographies the across XXXX. business XX sales $X.X currency for broad-based X.X%. currency next that Organic of X, expect project Consistent about takes year $XXX the billion, we range We about XXXX. for expected is growth the to points, little of headwind. a projections within to with of to

expect operating margin segment bit be We XX.X%. to below a

expected adjusted full-year the tax The excess from believe about XXXX $X.XX the implies the is potential the from fiscal increase, this the and in flow of include that does a estimated from benefited about corporate-net million. sale X-point repurchases will EPS be tax couple reflects full-year this outstanding tax an adjusted in to the headwinds increase XX%. Free average and We we share a X% and bridge. about restructuring a shows rate reform. $XX XX.X% midpoint, XXX%. sales resulting conversion is U.S. guidance effective EPS about to the business compensation. rate. Excluding higher equity-based income charges, corporate the XX.X%, Included of conversion earnings fiscal At be million fully-diluted potential not from Page discrete about fiscal impact items the higher a impact will cash mainly XXXX. million despite of an right. of benefits the to range left $XXX XXXX expected rate adjusted impact we XX.X% to be items. tax targeting comments is to $X.XX. rate about tax is I'll X% XX from other significant add compared any be our of be in tax from General expect to tax the are $XXX.X for the My shares on Note

QX restructuring. $X.XX XXXX benefit reported I adjusted the gain of a EPS net $X.XX and fiscal on earlier, As from mentioned sale includes

Excluding compared prior fiscal contribution a XXXX, we of organic represents distribution about EPS and is see midpoint at about guidance tailwind as of of on our sales segment is $X.XX. of a we And XXXX a the business tax sale of to growth $X.XX. rate. instead as a compensation represents at that, mentioned of $X.XX higher expected $X.XX. not benefit X% expected, incentive the significant product we On calls, in of a and came The adjusted in to $X.XX. expect the yield about in $X.XX, Currency earnings guidance we of from headwind headwind effective CP&S a loss midpoint

lower benefit the share our in significant number expense, share lower there count. we a repurchases, a smaller-than-typical impacts couple benefit shares repurchase. pennies, a of from modest increase price, Finally, the is We pension of share and given from EPS which project

and headwind. rate good while that in XXXX, low XXXX QX, the we quarter. me to over expect growth first compensation Steve. We growth will lower not do incentive tailwind, year unusual spending had EPS we it fiscal another modest it an year-over-year in tax EPS overall the a while is add that, year-over-year expect and Let I'll XXXX, for fiscal of first be fiscal turn a in With quarter and for of sales

Steven W. Etzel

like say to Before the as Q&A, many of want you possible. that would to get we start we to I just as

one limit question. please and first to So a our Operator, question quick take Thank yourself you. let's follow-up.

Operator

Certainly.

from question Jeff go first Our from ahead. Please comes Research. Vertical Sprague

Jeffrey Todd Sprague

you. it morning. Good keep of Thank Boy, I try bunch things. to tight. a I'll guess

First, then growth half the of not the sounds to get Emerson with Patrick there, helpful I'll other on segments directional rate even understand but that first the XXXX the maybe high some segments. a that the me. showing how set thinking the in avoid helpful. would it us in better than and to about through color importantly, question, spending would gave there restructuring's to in that quarter, be investment should be the FX peculiar And you quantify played just how comment but something to more the tax regard? Is be we

Patrick Goris

and Jeff, the XX% to charges of about about had the that's so of being respect a respect the the EPS with you charges for respect XX% charges, a question split, think a headwind & the over the XXXX, to segment, you segment little to going in fiscal of XX/XX not charges Okay. Architecture the X-point to X-point and can a no with the margin growth year-over-year the Software, Software Architecture half segment first & impacting CP&S the the was so CP&S the in With quarter. to year. of comments QX, restructuring quarter about my headwind

the is expect not for of the because mentioned, items year-over-year half. for items but EPS for that first it's down be adjusted QX – the that we So to only I

margin X.X for CP&S. to that first little half, about it the for was and respect the a that below year, With for to than a more bit was currency a do compared A&S to we bit the EPS and prior segment expect currency hit point company For little growth.

Jeffrey Todd Sprague

investment next the in view the kind a expect maybe and the are maybe on follow-on, just you, business But, week. Blake, XXXX? to anything a And a there just saying And of little really more hit little execute company we're what Emerson your position as do of just lot Great. unusual your your spend and on going spending to to a about and company just strategic to Is then higher hear much direction sure and I'm – your push-back customers you about that? a what level proposition. more plan more in of importantly your of forward, fact, going

Blake D. Moret

Sure.

efficiencies are get lots that a help we're and benefit life bringing why a and voting having biggest me And with the productive, telling is business, The a a remains is us wallets would and huge that's Enterprise integrated But the Customers with Let compelling regions over software it's strategy They and with as brings of well applications a company over, We're to very types their them industrial the their start broad-based what enterprise automation in that. because something to enterprise control them. to Having that that's can I devoted different gaining them solve platform industries. and add that have them customers focused platform to integrated people us. that and world we within of to it's their it in across be single us, exclusively products the is on the business right environment different a our such tightly and to Connected integrate last. brings do. we benefit. that information. share single We're to from customers means are lot companies. to strategy. a of it information tell and as common across single customers to different industrial and productivity more

Jeffrey Todd Sprague

you. Thank

Operator

question from Please next go from Deutsche Your John Inch ahead. comes Bank.

John G. Inch

morning, you. everyone. Good Thank

to did had have to business amongst what's Let intended what fared? understand, spending, ultimately gain pull just normalized this to – your sort of and me had Like unusual forward charges these has ultimately of how the I'm trying you run of kind you of would sort if we haven't Like in gain? you I'm versus have other been spent normally of or what kind – a decipher would words, $X.XX start by this Patrick, asking, through charges. the trying anyway? $X.XX so

Patrick Goris

Yeah.

have, being quarter be of for You company million now and do. called out $XX can normal every just charges. some million we of normalized The in about we year, top the have we charges that per $XX-ish on charges our we restructuring think would

so, a been there. played supply our here. looking a who items we had large for couple and and sale chain obviously, gain while re-footprinting Obviously, at potential And the the role we've a now

So that we through these we're long to restructuring mentioned to as item pull can spending the redirecting term is the both. Enterprise, some related we And looking Connected our term, One trigger. decided we comments, to higher-priority and in do our other a at our is areas re-footprinting; the where constantly other redirect charges enable one shorter us spend. is of

Blake D. Moret

Yeah.

Let dramatically back me that expect no. unusually to Jeff Do development spending question is And going as also to asked add and well. forward? we higher that the this the higher, goes answer

development keep increase, able continue business. strategy, our modestly revenue, a acquisitions we're percentage as organic the at complement of partners to to with as spend by well to best continue our levels. By to We spending as working total in the managed making

John G. Inch

Okay.

the to going million had intimidated fair bleed into say et there cetera, Because of had ring-fence I these initiatives still was you Swiss that like So, be more thought facility, it that is sort to of $XX XXXX. for this? the does

incremental there be or XXXX and $XX but to to that's spending is occurring gain? said spending without it, back offsetting maybe clear the you a still just So, normal is million

Patrick Goris

million, $XX normal John. The

John G. Inch

Okay.

the So $XX is XXXX normal million.

Okay.

Patrick Goris

Yes.

John G. Inch

described a industrial I broad-based. obviously, probably primary because, of wasn't – for organic overall was the X% Why driver core mid-single et mean right, slow quarter, bit better you seems It was actually which your put this did up China a It as to strong that growth, Parker-Hannifin growth cetera. digit?

on be doing you What's to world. slower. around situation, fiscal was in So, your in strong industrial comes quarter it do and But there what China going expect the XXXX?

Patrick Goris

I some XX%, see more always in say little We're in Yeah. year. we quarterly fiscal China the emerging the China close some larger of that to about our a growth of did projects. there's (XX:XX) markets growth we And year, pleased rates, where this would some be expect bit China for variability especially below. with XX% to next XXXX. in of our growth in

at So would in one particular I wouldn't look growth as expect forward some going variability rates those I continued quarter. well. just

Blake D. Moret

Yeah. I also add. would

get the lumped to variability. going natural you're projects that that of some heavy some As see into of come industries back,

remains color, So metals China, in QX strong, high Transportation for some at and mining. semiconductor in continues very additional levels.

So a you're that lot have to variability going business and of there. some is project-based

Patrick Goris

is as China Blake John, industries that good mentioned, many different are it's that in growth. supporting The news,

so some only of the as but are contributing consumer, And industries it's heavy well. now not growth

John G. Inch

Okay.

So basically, or No. or sort some a share loss lumpiness. that. not This of is That's some like trend sort fine. something event of

Blake D. Moret

we've think we in think �� John, we've John, share think – taken China. we We taken

John G. Inch

especially think a Well, Yeah. in I consumer, sense. that makes lot of

three Let Yesterday with really presented a singular way laid it, one afternoon the Emerson's increasingly the of last these I and provider were disciplines, would for the out, and And sort I your than solution solution rationale like process me a buy say that customers (XX:XX), they Emerson customers across is one want how if and talking big discrete of in pretty sort ask provider. to business singular strategic more they concur you. like you wondering discrete, here. between hybrid across different. mean you to plug market lack I'm this why would read I isn't subset and I Basically, of full offering. was commented by the if differences looking between kind all discrete curious But true terms big want that question sets statement true skill picture. mean, so, that they of answered process guess I'm once customer of a hybrid their about Jeff's you automation process. really it are just obviously that in for if and of

interested you be higher So on turn billion up I'm process prompts and doing least historical versus wondering trend. to you'd or record even to I $X as kind in saying penetration. this stepping Blake, in if up think you're time at deals try strategically drive Rockwell's over M&A of

Blake D. Moret

Yeah.

got again solutions priorities about ones pipeline a And talked services connected up the being plus that smaller big $X So, appetite we've billion and for acquisitions. level. for get ones that to with We've some information some and starting John, with acquisitions.

that. making So acquisitions. We we return at we're looking for financial those look the at and the strategic with fit start first then

one In terms platform able for, of customers lot people. mix that a applications their have enterprise can operations that attractive batch/hybrid of and able on for a an platform of Logix the type and that's what of integration the that discrete And them. is to logic and they from across standpoint, they market all single so looking learning different attraction and standpoint to process our customers of and and parts be only being looking very a their platform a build to train solve a deploy to on to continuous from are have

even while that sometimes for pieces platform. That's specific a matters customers bring why functionality looking is the are are to looking customers, based we're a caught customer what a what overall add single market used, process be that in software to and lot the to environment that's we a automation at. the on of telling continuous our path Logix, and at common of get looking that can us continuing investments So on to right customer specific up what is outcomes you

John G. Inch

Okay.

either balance process what feel don't in kind of think need I the So incrementally more you're in gain saying. events events or kind the that's the step discrete of the your based of versus penetration on to up Emerson to offering? you market a other

Blake D. Moret

behind We a because of process of as MAVERICK combine we great continue growth in of control We that have process has the the with what acquisition. that's our successful a part rationale equation, expertise was terms opportunity. what domain been an very part important to see

in a past the drives fluids, about any the good talking control. is variable talked in important that speed and control and there significant the taking as we When an intelligent then you're and that lot as something as about portfolio motor share handling part well. business And we power we're of a the have is

is see control combining of improved capabilities So QX reported process. kind with that's to our in something we that the process in growth us allowing

John G. Inch

you Thanks. next Got See it. week.

Patrick Goris

John. Thanks,

Blake D. Moret

John. Thanks,

Operator

ahead. from question Rich Fargo next Your comes from Please Kwas Securities. Wells go

Rich M. Kwas

expected good so year Blake, morning. Good Hi. auto. another for

in that's diesel across applications on from OEs, opportunity growth rate of and as do the combustion, electric a for re-footprinting to that hybrid structural to you potential over think years, we powertrain coming growth enhanced in out going playing the within see with Just step-up global the Rockwell, that shifting terms vertical? curious away that how of company's should and more particularly internal side

Blake D. Moret

Rich, powertrain positive. add it the very as as of automotive we to about and of we same-tier each $XX year additional that the few you electric years vehicles, see the talking suppliers of powertrain for activity we've million business on been you segment. from going combine When EV at the revenue be many million in in business with those contribution and XXXX, $XXX our worth expect last

those and around be and in at those rates. enjoyed to we assembly to that's to automotive. see a continue big world the time winning enough it's customers. internal So combustion And we've that meaningful a high providing boost competing We're long growth business the definitely for traditional

Rich M. Kwas

say get, a what powertrain... top you from of was going nothing on on normally And really would that's incremental

Blake D. Moret

I ago, zero. Absolutely. was four three years or that mean, a

Rich M. Kwas

Yeah.

All Thank you. Okay. right.

Patrick Goris

Rich, – Blake EVs our strong automotive in powertrain mentioned. as continued guidance so and growth for

to Our below expect the company grow overall average fiscal business, we auto XXXX. in

Rich M. Kwas

Okay.

Patrick Goris

single-digits. Low

Rich M. Kwas

as that Does consumer to apply well?

Patrick Goris

No. a above. industry Consumer little will be about the would company and heavy average be at

Rich M. Kwas

Okay. as about an imply industry faster basis, more think growing of would mix and revenues. that the as And back we then, and just sales on about organic heavy solutions-oriented think we coming

maybe part year the about where year, guidance the of think there second early that incrementals we should as there? the and we is we of impact the bit? on and go through moderates year, half As about Any a be the incrementals stronger the something mix thinking

Patrick Goris

Yeah.

faster like guidance assumes say And solutions businesses. services when within product faster, a I or of a so our our grow our than Rich, little our it's that point just businesses. and will So product

terms In half would the expect reasons impacting the conversion year-over-year I of QX. half, first in of conversion, related the second with some to stronger the I mentioned be or in earlier to for comparisons than earnings

year-over-year. earnings second first conversion stronger So than half in half

Rich M. Kwas

issue and really a issue big a not it's comp is half? first in mix So the

Blake D. Moret

yes. and Correct

Rich M. Kwas

Okay. Got I'll you. pass you. it Thank on.

Patrick Goris

Thanks, Rich.

Operator

Melius. Please Davis question go from Scott next Your comes from ahead.

Scott Davis

guys. morning, Good Hi.

Blake D. Moret

Good morning.

Scott Davis

strong a you you to spending of had got that QX it you take you the and of was get up us just felt why ahead you sense said and like saw order Give in was planned, book – to what this and was kind trying marketing models? wasn't add sales get this in I'm most Or sense investments. of our planned of because other to clearly wasn't and what of or just it a investment

Patrick Goris

in we a sales within came million spending overall our where we adjust the our dollars. be. Scott, few basically came Actually, If expected it to first in all, – of

about in the the was than came where we segment our being. but of where in little charge of for midpoint was of was with which thought in was not our segment margin would end guidance. line And better we EPS $XX headwind is a adjusted margin that guidance, it expected, $X.XX currency Our up we million basically restructuring net –

no what was QX. up the – this there we let's there to was assumed put quarter for spending and no just it beyond decision way, during ramp So above

Scott Davis

mean this be that. structure, have you clearer you – little right and versus we wrong. Emerson Okay. little the at a the to a different our to is or it and there models, or decided mean back kind price And to new done beat a partner just had price getting on at dead back trying be any of I just a guys a want I Yeah. just is Just Emerson, move not different on then (XX:XX) with I this this maybe process was get – just to here. light if of some came horse – don't just closure is would want forward?

Blake D. Moret

my today strategic as confident company's the our we're I in in guidance. in direction and and mentioned levels discuss and is prepared results Scott, very to our XXXX here to that's demonstrated attention ability Yeah, continue where that's creation, our in our and results We're of confidence remarks, fiscal today of the strategy delivering our strength superior our growth in and value and focused. being

Scott Davis

be horse dead was figure just is and move if a something Okay. kind talking of going trying this we're through is if that's just Yeah. this something about to XXXX or to I all. on. That's

Blake D. Moret

we're to do. anybody Electric going what Emerson else on not Yeah, Scott, might or speculate

Scott Davis

Okay. Fair enough.

you on. Okay. I'll Thank pass guys. see it next week, you. We'll

Patrick Goris

you. Thank

Blake D. Moret

Thank See then. you you.

Operator

Andrew question ahead. Kaplowitz Please Your Citi. next comes from go from

Andrew Kaplowitz

guys. morning, Good Hey.

Patrick Goris

Andy. morning, Good

Blake D. Moret

morning. Good

Andrew Kaplowitz

that clearly Blake, pretty to grow oil including mining, heavy gas. quarter. changed? it think gas higher Was What you do mentioned materially company chemical? mentioned and semicon Is back, and the improved larger projects XXXX. markets the come the you in than average oil industries you now so mentioned I can started and in board you and know across that

Blake D. Moret

We and the now already pieces of we're do as semiconductor. small seeing performance gas this a We And Yeah. in heavy activity about some and an natural general, returning and a MRO, while of mix oil as Chile strong get it's we gas and Pulp And be recovery in prices in saw mining as vertical, renewed larger to instance, seeing in in year. that above we part we that mines saw $X. broad-based well Obviously, some continues America, growth. of metals. industries, paper, segment. on – In for Latin the copper see interesting so a projects. talked we're and see saw it's up significant

we that. a So do industries, very of think broad-based see heavy we recovery advantage positioned well as to and we're take really that across

Andrew Kaplowitz

faster When Okay. mentioned products though, I year. And Patrick, then, tough you CP&S grow actually obviously you than year mentioned so was a I momentum solutions pretty but be you But, And maybe to little given into at Blake. both, have that the order The two in I late have that been solutions X.XX you than seem about A&S does cycle. might lower book-to-bill a as there talk you than obviously, you in that. solutions look go that XXXX. in is throughout to segments faster and think going there, going the thought. strong think in That's compares grow helpful, your momentum

Patrick Goris

Yeah.

at expect we to fiscal – we segments So, rates grow in about actually, XXXX. expect both similar would

and grow And within than faster a Solutions Products question, the that Andy? segment. part part of bit the Control other & was within products what little will services Solutions your then,

Andrew Kaplowitz

X.XX Did you was bit... say little and a book-to-bill

Patrick Goris

Yeah.

Andrew Kaplowitz

seasonality. than ...weaker normal

Patrick Goris

Actually... No.

Andrew Kaplowitz

there? color Any

Patrick Goris

Yeah. QX. It stronger was bit little X.XX. a than That is typical actually for

Andrew Kaplowitz

Felt stronger typical. than

Okay.

Blake D. Moret

is. It Yeah.

Andrew Kaplowitz

the Led and by gas and businesses? heavy oil

Patrick Goris

good And intake. order generally Blake Yeah. QX we as had mentioned, a speaking,

Our overall the company up fourth the high-single orders were digits for in quarter.

Andrew Kaplowitz

Thanks, Great. guys.

Patrick Goris

Thanks, Andy.

Blake D. Moret

Andy. Thanks,

Operator

ahead. go Cowen. Joe from Your Giordano next from Please question comes

Joseph Giordano

taking Hey, my guys. Thanks Good for morning. questions.

Patrick Goris

Good morning.

Joseph Giordano

the start we're the grew think of and might next I it your quarter. wanted you to question I But some last have said into with A&S if in trajectory in year, I growth Patrick. Just in we going look, when getting start, first pretty quarter guide, XX% look this at second to framing like, the think kind could X% guys tough, – you there, into then

guidance? pace So year kind to kind total we does out how of look of A&S relative as your the through

Patrick Goris

Yeah.

I in organic as with growth. company the A&S to Andy, terms be So we overall mentioned line expect to of in about

A&S. more about that's X%. right, comps the what you're So will project difficult, And but get we for that's

exposure We expect said consumer. in A&S to we Don't heavy continued has growth as industries. forget also

industries sold Our in process and Logix platform is other industries. heavy

expect so good that. continued associated we And growth with

Joseph Giordano

what is XXXX? $XXX a Okay. powertrain million that Blake, EV $XXX And incremental that or you the and million – year. in next was $XXX from off you mentioned mentioned it Like, contribution an million Is what then of?

Patrick Goris

was about way close years it about number is three can ago think zero. The probably that you to

XXXX be $XXX an fiscal XXXX XXXX, is it we it fiscal end and in years we have not years plus is we that's last million the incremental combined powertrain that three ago. that two, have but EV a basically, business seen versus over that of so three the XXXX, growth and And think that expect didn't and will business the by

Blake D. Moret

And detail maybe bit with more on a little that.

we about a year of from explicitly reentered $XX started talking talked when business around powertrain. as million So powertrain that about we we market, incremental

is same that it's participate million figure. our a boost over of has very last As few that now, we $XXX the years. growing basically additional didn't and at an again, in the customers, business and that many that's share fast it's market EV to, grown And

Joseph Giordano

for rate guidance just estimate or And does before next couldn't stock that you. Patrick On the for tax impact clarification. some like hear option year, or Thank Okay. your of exercise? include one I quick exclude,

Patrick Goris

It's inclusive.

Joseph Giordano

guys. Thanks Great. Okay.

Patrick Goris

Thank you.

Operator

Bergner Justin Company. next question Your go from from & Gabelli comes ahead. Please

Justin Laurence Bergner

and quarter guidance Good fourth explain morning, currency. to headwind your you you question it my My relates a the Could the margins in thank in for just how questions. first why will XXXX? was effective currency affect taking and to

Patrick Goris

Yes.

and into we sheet currency of impact time every the balance quarter doing. why is And swings, see currency currency remeasurements, significant small where QX, a to was modest of of which currency in a may whereas actually impact performance OE The of So was impact tailwind. are from a headwind. line we margin top that's sales a earnings point compared get the what the in we view,

projections currency. we contribution contribution sales fiscal rate XX% on used based projections, on we currency the we're a conversion the expect – and months see For for X.X% as on projecting from sales currency based we XX about XXXX, a and currency earnings out, those

And that the why bridge. and currency tailwind with the that's we you show get on EPS associated to EPS so

Justin Laurence Bergner

just within you. Thank And to Great. automation alternative my to are an be assets of second Rockwell? are question could relating And interest, Emerson's I transaction structure there versus I was if portfolio that attractive mean, proposed? the Emerson one may.

Blake D. Moret

Yeah.

for outlook focus going on on the Justin, comment going results to to QX to not continue and We're we're that. the XXXX.

Justin Laurence Bergner

questions. for Okay. taking my Thank you

Patrick Goris

Yeah. Thank you.

Steven W. Etzel

going one to Operator, question. take more we're

Operator

Okay.

Your ahead. next question comes Please from from Noah go Kaye Oppenheimer.

Noah Kaye

you're you Connected about thinking words, going of week next can a much investments, an Emerson other need at Thanks. to investments, give to lot promise. question. just on growth investment this Enterprise structuring this on R&D a question, get bit But you It's I between, accomplish to you detail what growing footprint? Fair. help of kind just how kind much and the Enterprise taking us sales Thank I really Automation of understand In we're target about, so talking my do those not Connected say, your understand little for split (XX:XX)?

Blake D. Moret

productive. it Sure. bringing producing that them me and focused on let customers Connected life Well, outcomes more them to the for make saying is for by Enterprise our Noah, start

level expertise, is in which It starts parts the additional by working with so so products, that's and Connected putting to them domain productivity. of combination data overall as the foundation on an fundamental their and that's a the approach add to are the And that of technology go smart Enterprise. where born, Logix, the they the that's place of journey

to And has with Enterprise, also Enterprise. and a the to continue PowerFlex Connected to the more of and more Logix, Connected parts are that's where logic-solving our deliver new fundamental our analytics that so value to platform. continue to to of predictive drives, we that are about more those visualization add performance it's investments the But All lot add go. from spending integrate things will the tightly

integrate born so these we data smart helps productive. become control that customers And products that enterprise, information on more as into can advantage. we've the field across and is The got information our turned home useful be

own our as strategy software, is fast. partner support. applications, And and as domain it's other the technology well our where own us. technology, for information that's software too about I the so valuable. in a under all area And their has focus the the investments just also roof the acquisitions also It's that's expertise it's for mentioned, not the it's So moves nobody as to with necessary, ability because integrate because and about

week, the pilots those the engaged Enterprise you'll and engineering there's of we're technology. of of all that All that four to that hear complement dozen Connected next over tracking, about those we're involve in,

the are for things all of are in the maximized, sure customer so that And management, investments consulting our those important value in investments that project services, and the right goes is parts make project to the that well. so as

responding as that life. is So to of we approach all that the together, so are bring what favorably overall customers Enterprise to Connected

Noah Kaye

very much color. Thank Great. you for the

Blake D. Moret

you. Yeah. Thank

Operator

Etzel remarks. for back call the turn now closing we'll time, this at And to Mr.

Steven W. Etzel

That all us. Okay. Thank today's concludes for joining call. you

Operator

you time, you much. Thank now may At very this disconnect.

Rockwell Automation (ROK) 8 Nov 172017 Q4 Earnings call transcript