ROK - Earnings call transcript Q4 2018 | Rockwell Automation, Inc.

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Operator

Thank you for holding, and welcome to Rockwell Automation's 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 for questions. At this time, I would like to turn the call over to 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; Chairman 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 reply 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 Moret

you today. our points us quarter, in Steve, the everyone. joining to page with deck. on and the key quarter. some for for with X slide call Thank I'm the for please start turn pleased morning, good results so Thanks, the I'll

and industries. we a across a and sciences. quarter. Consumer of with by and organic vertical led growth food growth above As broad well, beverage range life perspective, average was X% very both performed in the expected, above heavy consumer growing company industries From the growth was

was Process saw was despite transportation, automotive. In automotive. in grew about grew and the consumer performance flat U.S. quarter and across heavy growth EMEA continuing XX% by by the range almost in tire While quarter, weakness verticals We X% growth softness organically, with Within continued initiative. digits. grew good high and the automotive key wide industries. up offset in in a single Commenting in this of our on Logix regional demonstrating the in very the X% down led quarter, industries growth progress than was was in XX%, semiconductor. quarter, weaker organically expected mining

over Asia about most I'll grew in double-digits. up very region up flow up Adjusted the our XX% with China cash comments sales were few free strong. growth. results. and QX with about was countries EPS additional to XX% XX% sales was make a Latin America contributing

we with healthy Importantly, year the finished backlog.

full-year. that was and important Automation, set continued Moving to the as an operating well for marked actions success. for Rockwell stage XXXX performance, Fiscal year the strong as financial by our

First, some highlights our of financial performance.

diverse X.X% down larger Our of exposure even our organic was industry though deliver verticals to enabled one us growth, XX%.

food market, we XXXX, automotive driver to Following growth gain continue in the almost was but all saw share electric metals. year-over-year, was particularly Heavy in and beverage traditional XX% of by sciences. with the year, this company verticals about and and growth contributing. average, mining fiscal performance led at down largest life in over grew vehicles. and Consumer this We strong both industries in verticals semiconductor,

XXXX and executing the well on grew double-digits. and grew $XXX X% Revenues Connected Process year, which from are profitably grew new reaching million. Information in We represent from double-digits Enterprise, initiatives. value Services, The Connected for our Logix key Solutions

the XX%. dividend billion significantly We we increase in deliver equity U.S. made with this his Our segment fourth our good the PTC, increased we elaborate we and year. In fiscal wake XX% we In billion shares, $X.X and $X Each was adjusted accelerate of accomplishments financial operating year quarter PTC. key And to twice will value. reform, including up capital future full-year growth. cash year, increased will on our fiscal conversion. worth tax margin several was which EPS performance investment year-over-year. expanded, deployment Patrick We flow shareowner had free in of had other repurchased another remarks. long-term the of our during partnership XXXX, our

invest to the employees. of continue company, success for and customers our long-term our We

move for outlook full-year now XXXX. fiscal and to our environment Let's on macro the

an indicators are on tariffs demand mitigate not above trade continued PMI are U.S., have uncertainty, favorable across growth actions impact on we expected Economic of production metrics our productivity. customer Internally, we taking While as remain impact operations. most with in is the create Macroeconomic market industrial to and geographies, the that industrial tensions largest to global our seen growth. focus XX companies on strong. continue

verticals range are our balanced our into account, the industry to from growth be industries, expect know the we have broad macro and and a our backlog we across consumer environment, outlook, heavy industries what hearing what strongest of drivers. exposure we to Taking We and continue about customers.

year another in growth financial good XXXX. We are and fiscal performance expecting of

at We fiscal revenue XXXX. sales Currency to reduce is rate guidance and year-over-year, midpoint sales to our expected and growth $X standard expected to recognition is new percentage of Including XX headwind basis XXXX growth our the be one of of the currency recognition fiscal by expect adoption the includes point. organic our impact adjusted guidance. new of in This fiscal a from X.X% billion EPS standard, of revenue up $X.XX point about $X.XX. XXXX about

to turn around provide XXXX more detail over I'll our and Patrick our and guidance. sales full-year results earnings to Now QX it and

Patrick Goris

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

X.X%. points up was in expected. X.X X.X we reduced points, last about good XXX was to Currency operating sales mentioned, The Segment by X.X% reduced sales sales XXXX reported fourth translation we organic points our fiscal fiscal basis was X.X points. divestiture growth QX than compared worse XXXX. by with best year. margin with of our quarter up line organic growth of expectations a had Strong As quarter Blake and XX.X%,

corporate from settlement million of Adjusted compared increase QX about is XXX organic A was down margin periods. lower charges up $X.XX and in XXXX sales and of legal of lower partially expanded share in basis benefit the very shown adjusted last strong the to X.X last year. $XXX Excluding adjusted $XXX EPS benefit charges, shares a slide. the of General last growth in of cost a expense margin investment compared cash million spending. on by in net $XX longstanding XXX.X and the benefits points. million of the settlement fiscal the year's gain We case result to a in tailwind during of down was future tax see Average million million favorable last margin of of about (XX:XX). settlement the quarter restructuring quarter outstanding we'll good performance had $XX flow diluted operating and was XX% quarter performance The were EPS operating X.X million higher income. restructuring shares from segment at was legal $XX A a than higher year. about We year repurchased year-over-year expected. or additional quarter strong The rate quarter, we disposal last this and year's mainly fourth up cash count. Free XXX% not are million, performance items on again that offset million. net few and at the

to in finally, XX, full-year quarter investments the just billion our For Act. our last under that fiscal $X.X and had authorization. September to the fourth repurchase amounted share remaining billion. PTC as quarter, include Tax related will our And note you we XXXX, GAAP results adjustments $X.X about repurchases At

non-recurring excluding XXX Organic conversion, for good conversion expanded fiscal points was stronger as fiscal on XXXX. full-year adjusted year-over-year XX% The We restructuring XXX%. a XXX a as basis. was beginning charges. stronger Core had free effect we Moving growth to was a a tailwind of financial a key was currency XXXX. flow QX adjusted was EPS items earnings segment excluding information than points immaterial slide or of tax at the margins a and divestiture of operating sales basis up the the XX% was mainly fiscal from over well of of X.X%, increase the net restructuring X, The in and on little XXXX's Adjusted share rate in year. count. basis performance and lower impact cash effective expected EPS result the

U.S. not adjusted X.X% tax of but our tax course, cash. was, reported helped access expense event sales. XXXX. our and For also XXXX, only grew X% about effective to research an and reform rate, increased non-U.S. fiscal fiscal us development corporate provided It during reduce to important of

XXXX, $X.X about of fiscal repatriated billion we cash. non-U.S. During

redeployed to $X.X we repurchases to XXXX our Slide the provides mentioned, Architecture billion. this Blake cash in As investment sales share fiscal our and PTC segment. & a increasing overview X of and Software performance margin

tailwind. margin X% had restructuring the year-over-year little sales quarter, was offset growth. sales For than X% expanded charges higher Segment currency headwind points main basis basis expansion. less points contributor a of margin to growth X.X% translation. the XXX by was margin sales to from segment this XX.X%, of XXX Organic Lower contributed about year-over-year

billion For segment up points, time. $X sales. X% point costs to the margin for contributed reported primarily sales full-year, Lower basis organic higher growth little XXX for the over a X.X margins segment expansion. restructuring Segment was this due first and to about expanded by reached

Moving increased and currency margin for on represented this X.X%. segment X% by the segment Solutions was segment. XXX margin to Reported were growth restructuring for investment was to pretty about to X.XX, due sales points businesses Control fourth expansion. about XXX translation Organic typical X, restructuring reduced headwind charges a primarily Lower compared in and & divestiture slide up X.X% sales offset charges, year, contributed Operating Solutions. Services for last sales basis and Products X.X%, performance higher sales quarter. this to the a spending. points higher our by QX lower for basis XXXX Book-to-bill

sales margins growth the of X.X% region. margin sales the in charges slide the expansion. primary half XX.X%. less provides remarks. For his organic and expansion. our full overview Higher XXX points year, covered an by drove was The most next of X basis restructuring Lower expanded than this Blake driver were margin to performance of

move So, on. I will

an comments Before April you actions. shared of and Section XXX have company. to impact I with our in on about you mitigating provide I'll I a the few immaterial get that impact tariffs, with tariffs guidance,

that fiscal and Section a impacted line XXX with July Since shared year, The During earnings little in in less July, call, we with in by you back XXXX results to QX the adjusted net our mentioned we List X. July was $X.XX EPS. QX are of earnings all this X of and expected what X call I than of majority production. We actions this Section as gross additional purchase to we tariffs China to $XX enacted from annual be than the and by and partners impact Lists internal been The well products million. have vendors to-date rather implemented. relates XXX own components about our estimate retaliatory as impact

XXXX of the on comprehensive be to mitigating expect as impact fiscal actions. neutral results net a We result

implementing actions to remaining price to The gross with adjustments gross of about include effective We vendors. the supply expect offset impact offset chain selected through half products. and the negotiations on alternatives impact

we expect fiscal XXXX first unfavorable increases, price Given impact. the selected the quarter timing a net of these to have of

mentioned fiscal earlier, of expect be neutral. impact to we I As the full-year XXXX earnings

This mitigating continue will monitor and appropriate. slide take situation to guidance. the actions additional takes X, to us We closely as

we're headwinds XX basis most Blake fiscal organic estimate ASC XXX, $X XXXX. recognition As XXXX. expecting of quarter creates We're the This revenue a which new will adopting of mentioned, of sales fiscal billion about standard, first fiscal in XXXX. we effective the sales, impact point on

range For a X.X% projections the in expect the the XX months, full-year, we currency for rate with X X.X%. currency point. expect from next organic headwinds of to Consistent about growth we be to of

will income. share We expect rate repurchases net over the billion average interest expand to for primarily about tax believe is of shares adjusted $XX diluted XXXX. full-year fiscal We outstanding fiscal general assume in XX.X%, XXXX be million. to expected effective to about by increase and million. corporate driven of $X The dialing be We're $XXX.X similar XX%, lower segment operating margins is

on more Day capital structure you will details our deployment plans our week. share We at with Investor and next

adjustments From related flow reform. of is timing adjusted capital higher cash expenditures. of the adjusted a $X.XX viewpoint, during EPS the represents EPS EPS as X% deemed and we conversion growth million of calendarization will we of result repatriation our fiscal impact full-year adjusted at of tax in growth investment the of Note liability guidance about payment, midpoint, income. do finally, And quarter, sales. result to year-over-year million, related $X.XX, This on first make pricing tariffs, the $XXX first XXX. about expect spending, a Our range the free XX% that about this of XXXX, includes we $XX ASC a tax to not as expect to higher XXX% XXXX reported

Next adjusted from slide provides XXXX fiscal XXXX. an fiscal This slide to XX. walk EPS

headwind sales. tailwind from enter Going XXXX Currency due performance from is to the right, performance, to compensation of organic to will this EPS $X.XX. that a so as left for fiscal above in us strong main be represents expected you about a growth see our higher contribution for fiscal XXXX. on poor was target Incentive comes we

cash net expense a expect We deployment. interest higher of our as result

income mentioned interest I As earlier, will be lower.

will expense the expected $X.XX be the fiscal finally, tax expect we adoption million to lower standard, higher interest the large the about addition, XXXX. be count. impact $XX in a we of The revenue adjusted share rate recognition In to midpoint. at Including And EPS the get from new related to tailwind about same. adjusted the EPS of is

So, it with that, back you, I'll Blake. turn to over

Blake Moret

Thanks, Patrick.

want Before remarks. we Q&A, move additional to make I some on to

key my comments. was of quarter a great year. I a strong accomplishments our in several This finish to mentioned earlier

ahead Looking of us. exciting to fiscal another XXXX, we year have

ways more to will to Enterprise, with provide Connected win. us gives continue new value We The which

companies and people be a entire industrial productive. focus their As our more helping on is pure-play,

priorities. no have competing We

capital balance with continue to strategic will capital Our inorganic investment allocation return. consistent

cash sheet continue balance the us in active. perform made flexibility continue free flow strong and this tremendous on well generation path. to give recent and Our pipeline Acquisitions to years remains

of key are Our regional areas information process expertise Connected share and Services, software, expansion. focus

can predicted $X on certainty, annual $XXX the are target be payout with our increased week, timing never from growth more will acquisitions. repurchases. of which million. bring billion a again of annual In Last amount to or continue point we we spend dividend, share XXXX, over to While our planning to size, and deals we

billion. cash So, is of our shareowners return total, about in targeted to $X.X

opportunities. flows direct I value forward Day. next cash Investor strategy week at many to Our the sustainable we seeing to creating generates you continue look our Annual of will strong that

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

will powerful for for of the We thousands Automation Process around latest Rockwell PTC world, create innovations, new customers important combination our in year, other high customers eventful our from Solutions, Information will the partners. see and powerful with Among software combined additional Solutions and releases particularly and our showcase an investments of processor a Information highlighting drive technology to Logix applications. performance innovations

productivity information opportunities that and around industrial verticals offerings drive vision Enterprise control converging our The is analytics control to the real business of by All these across Connected all are increased than integrating ever, the time and positive increase being productivity and for with and of greater world. customer our information outcomes. power demonstrated of

large their history of to More and positioned deliver competitive. customers value best their day differentiated Investor our as high provide to are base, are this customers the to expertise, have we connect Day. plant successful in because technology long we partnerships. are on us We to and already every floor The into Thursday demand value installed domain a we with have is enterprise, more next plans pulling during become we a

our Rockwell and Finally, partners to our and to like Q&A. employees over within of Enterprise add I'll life, turn it the start each thank to Steve? for to Connected With The customers. Steve bring efforts I'd to their that,

Steven W. Etzel

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

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

Operator

Certainly.

Our first Winoker UBS. Steven go question from Please ahead. comes from

Peter Lennox-King

Good morning, on Lennox-King gentlemen. This Steve. is Peter for

driven that is for I'd size, a to by on that really if first what parse is there like nice me? you vertical, comp Or the are clearly drivers even. the distributed project? The by focus Process which more business, picking and could by are Is they up out main thing, on type large

Blake Moret

Process mid-single us millions project digit And project business balance we remember distributed for flow very of do so a truly of is really is what more projects. a well little of the of is big a good mega So, the in dollars, as Peter, business. balance nice as across It's industries.

during result talked are growth NioCorp good the someone other So, in that we Products in had that and as especially projects be where also head while But significant America in we past in and both the by might in we've Control saw integrated a will in applications. growth as that business, into U.S., Latin of well shipments oil XXXX. about else it's gas orders well like really in year mining, and fiscal providing balance Codelco flow we

Peter Lennox-King

that you or that overhaul? in is a then by retrofit obviously And the large great. it, since of more And America within That's How mix? growth or versus driven project greenfield was very maybe growth is mentioned versus was And of verticals? business mainly a project much process other Process the Latin strong. again mining-related that an areas, other

Blake Moret

with happy America. the really we're in growth Latin So,

complementing story actually pretty growth. the we I mining, consumer saw was regions strong the think a Latin as and been It consistent America saw in transportation well. one that for in some growth us of a in also it's growth we

to vertical, that most Within mines. mining is the existing of upgrades

operations. mine Codelco, a So, control sure an supervisory existing brand-new central it of data was system and that with to that data a to upgrade the from make this these the that deal transfer of but aren't acquisition In room control services good mine the at. was securely, a was case performed was being done providing

Peter Lennox-King

it I'll That's very much. Thanks helpful. pass on.

Operator

Melius comes Davis Our Please go from ahead. question from next Scott Research.

Scott Reed Davis

guys. morning, Good Hi.

Patrick Goris

Morning.

Blake Moret

Morning.

Scott Reed Davis

long OpEx, was the take? for over see it Sounds how at all. was guys the and of put a waiting just cadence just Is you facilities SAAR? and isn't asking mean, market up, think getting back imply function what what not obviously like picking between break auto is, these might some quarters function and soft, several of you really that with dying, you to better or that's as to guys going But as but EV you a CapEx really cadence it CapEx as of it's next I'm that what noted, the what's it be I I surprise of of of the is, part guess weaker a built? it how down Is you up?

Blake Moret

Hey.

to helpful it's having general look as automotive our at business think I components. few a

the business expected quarter. of from obviously, part that. installed a ongoing that MRO important see the softer We than Americas, in base, result an the So, an in last is particularly did from

And The traditional engines. remains is million programs for activity, new project power combustion $XXX EV IC is for activity. for going vigorous other which transmission business, are lot third around in us. the engines in that to these And the the internal at piece beyond. and programs as most those see to continues but we're be XXXX as well and expectation there there's EV, then cases, of a still In delays,

Scott Reed Davis

Are maybe they this? – I'll can maybe and gone guys but PTC. yours, are offline, how you both real to I'm it's to – of synergies well, this you you and know fault. not some maybe still my examples or benefiting ask struggle how again, market fault, the tangible it's together sometimes, see where But I you're with tangible And my from doing have what us and give you're guys,

Blake Moret

couple subscription-based operations. think recognizing for into with, and I'll PTC. that control repetitive of those and new insights to that that processes turning taking the have But it physical that a basic a that byproduct Scott, allow recent labor To without the whole orders comes in our of of long Sure. Information don't talk Solutions, have with our of additional from we productivity. the automation customers relationship a we begin in level remove orders, productivity about there's by data as are those a been processes successes has growth the maximized would driven resulted time we

floor example, plant host have customers. and of their So, applications the It's company, to it design going a to also into provide that game of automotive, the in they traceability floor the real-time to PTC already big visualization things software, that to improve move savings looking software, from some operations. good efficient, cost together software the great some well But on a was combine were our able a have in knowledge for beat and twin making together ThingWorx first the PTC, to because and we mining And to pilot expect customer. we the quality, they Analytics provide with portfolio we're example, with next position company, a mining the we're we When which with over is has that the the there's that with like that tools over. in large at control major whole And tools. plant we a has we that PTC, going workflows came to our create providing our being said our more the win world. for nicely most to In in a that powerful in were FactoryTalk PTC again, rollout and looking good simple. digital fit a combination competitors and year. hardware that project, second of

Scott Reed Davis

encouraging. That's you. Thank guys. Good luck,

Blake Moret

Thanks.

Patrick Goris

Scott. Thanks,

Operator

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

Deepa B. N. Raghavan

you is think look the Rich growth Good help that most? your it in for EMEA, morning. in expectations automotive for comment on of a This presentation Kwas. the as organic at Blake, the about I growth a was Deepa forecast Raghavan which weak. midpoint for a embedded What's the was question little should said think you guidance? there And we how XXXX. regions

Blake Moret

Sure.

in as equal. expecting all growth and the contributors being at other consumer, midpoint a So, any to life of continued as beverage vertical, automotive that. in we're so upside, would flat sciences And we're are food heavy be industries for by looking consumer. automotive and of midpoint, growth well things the driven largest be the At guidance,

Operator

from from question go comes Haskett. Please next Our ahead. John Inch Gordon

John G. Inch

Yeah. Thank everyone. you. Good morning,

Patrick Goris

Morning.

Blake Moret

John. Hey,

John G. Inch

Morning, guys.

talk John there's a a I like guess, talk been how There quite I be recently, quite you to to going you kind of So, retiring. forward? can was things to of these the positioning mean, these changes few actions, going I there've of where they sort late. changes just – Can management you been of McDermott's guess, the maybe take to few – with or dovetail tend and how left. Ted's obviously company

Blake Moret

to. Happy

we've in counsel that, continue sales for our a organization, not all But Connected Let and thanks are couple Ted's saying wise his beginning changes me that by about, life. start The we from marketing had and leadership yet, talked we because bring they then gone most recently in asking so to to and benefit Ted's and of ability June involvement. our Enterprise to about accelerating that

growing to So, of and Solutions, deploy when we our Control the be moved know Products component which and combining was a and to importance expertise, of the as technology Frank are ensure the critical to customer as solutions, we outcomes it positive & recognize CP&S to high services has going you technology.

We also changes, strategic as created areas. a of a enterprise additional define focus staff largest which investment, Asia. the my running Connected most the And and PTC also we Enterprise growing marketing when continuing our member recently, is, dedicating Europe growing recognized, consulting who function of led in to operations, we by to have help unmatched Most them our credibility of previously brings provided by share well to and those course, in as accounts worldwide problems. to importance their Bob talking been customers in Murphy, sales better a business

sales we world. who get in well has And so think begin our so, the perspective as team, as around globalize marketing my regional that for based remain responsibility Brussels. of functions me to I going that selling And needs from important leader to the it's the is to customers for the

John G. Inch

maybe to drive material actually on types can bit synergies PTC, it and more of you Rockwell other you. revenue this going just to Thank I make what and partnership? Is is but appreciate you about could kind dollar investments that. talk operationally, what from you're to do? a to to the side, have going mentioned Like perhaps, less, just of have we

Blake Moret

taking in in that we've subscriptions I sure and we focus right to That's to selling making well that of the it's place, about, we IT higher than have that time. that's back in in office the infrastructure, That's necessary the have we're a that Solutions the I the talked FactoryTalk so ready of to susceptibility fit really when those customer early MES that our any Scott's to information our our go. technology a other It's make have to they alternatives simpler people they within software Analytics mentioned software ensure over portal And involved the for of in and a creating converged also experienced applying than question. business, needs deeper Well, at have our together customers roadmap the going sure quite delivery fact, are, that to engagements, in obviously are organization, past. swings some the made addition care also the to so resources help sure economic well rate that for to the our business might and decrease important deploy subscription ThingWorx that and we offerings, in have. to take we

John G. Inch

investments. So, organizational like are fair changes a versus dollar these sort it sounds that of hard statement? Is

Blake Moret

allows make us with similar continue we mean, software, continues and on. FactoryTalk to in already the It's to so John. that I really amount both, a at has investment, area. benefit of then PTC a the investing were This significant with MES, the but in investments rate the getting information prior of Analytics and this, considerable IoT to

both. it's So,

John G. Inch

startup that just should your it little talk traditional just EV out there's Yeah curious, lot customers, partnered other your mean, with I know understand. mean, some of the of to EVs I'm I are those go business, of things. awful initiatives, I EV going growth an is Chinese players customers – just with lastly, I'm just are you're I the So, a traditional footprint startups year I or – we mean, your a color of is how likely more of kind be and it with your right? bit or more helpful. little bit would new about more could established you and

Blake Moret

cars we're as a also it's vehicles But XXX nice the owners there's startups make are I to space. mean and that the all somewhere the close established to involvement brand we Well, combination. in going Sure. them other said, then you doing, are trucks it. not heavy with And and and it's are there of suppliers. engaging for what And there. have

we've again. than we were we when suppliers not they process powertrain working serve with EV in space, to established that there the manufacturing to these became about them And of the So, is, do powertrain past. companies, are as we readiness talked an powertrain and mix a but higher may re-entered the familiar have basic we be many And are we traditional the much the IT a side. for as companies in

So, for nice of some as traditional players quite it's a us those with well. opportunity

John G. Inch

much. very Got it. Thanks Appreciate it.

Operator

Our ahead. from comes question go Tusa JPMorgan. from next Steve Please

Charles Stephen Tusa

good guys Hey, morning.

Blake Moret

Steve. Morning,

Charles Stephen Tusa

merger that. cover, on stuff like are are just and How we And seeing side, you XXXX the anything you? some you're beverage on that's at seeing concerning food beverage JBT, Company guys globally? activity, What talked food all? delays, and into some about

Blake Moret

world, as need, quick for to machinery in to flexible of still key wider maximize different more some well space. are choice as entering, are for looking changeover People builders as are the the shelf and the Those as packaging well. a users they packaging people styles, still middle-class focus around people the the what areas

bit in technology, almost as if of big case, right Independent their we in But couple important the to and of and quickly as that quickly and of multinational that. different middle most launched you space the the the One that for they're growth last of a Technology looking have major styles that companies over issues, of that is packaging little either say, every productively recently, addressed would go possible. a to years, now the focus innovations EXPO more as doing the supplier the and becomes of see Interpack, we're showcasing change that you'll expansion lot also that I some for them. and in relates food ability cost Cart to PACK

beverage integrating some the information to whole of of and companies are there adopters concept of of get next this particularly, earliest And so, level food control right consumer, we're that and and Connected with productivity. Enterprise the them,

Charles Stephen Tusa

Got curious, it. just sure, there's the I And next about but and thinking not math I parts. mentioned, if moving what the margin do you're decent a mean, year? Patrick, if of a is incremental I I'm guy. can calc, not this, for I'm amount caught you

incremental looking So, of core you're what's the for? kind

Patrick Goris

reported will about the Steve, So, full-year. incremental be the for XX% margin

Charles Stephen Tusa

like seems parts, about. you of it's all as relatively them clean, the talked includes Okay. lot a it And lot there's mean, that a stuff of but I offset. moving

Patrick Goris

XX% you of but not that, can about this we way then get tariffs, X gives but of conversion about is The core us XX%. points, us think earnings talked back the necessarily And little we earnings. tailwind Bonus conversion. a reported gets to a about revenue, Yeah. the about

Charles Stephen Tusa

Okay. Great. the for color. Thanks a lot

Steven W. Etzel

Thanks, Steve.

Operator

Our next question Research. go comes Wolfe from ahead. Coe Nigel from Please

Nigel Coe

morning. good Thanks, Yeah.

Blake Moret

Morning.

Nigel Coe

– wanted quarter. didn't to Logix And we to quarter. Logix the see just above and this in for hey, tend to this plus X% dig into average grow According

layer? it more my this was understand maybe really that. down mean, I then spending maybe some connected I'm wondering, auto gist if to weak And tool, So, as machine are from just just tool we've that address of the year. to was was down dollar but I'm we question And curious, globally. the is a IS well? XX%, see And the moving Logix I is, going heard machine factor

Blake Moret

very of also think you offering good industries, end we sales – see CompactLogix. processor range, within the Logix, a Fair, I interesting find And with you'll the see continue Logix before, to as particularly at to our well. showing I have the encouraging So, we Automation mentioned as you a in mid-range ControlLogix platform, we well. which see contemporary heavy But continue of think new I growth been invest in as really at upper

Patrick Goris

A&S also which expect the XXXX, average. X%, And was of about a couple little A&S for bit up average be Logix above for a above XXXX, as the to well. is points, we Logix full-year Nigel,

Nigel Coe

(XX:XX) with nothing so Okay,

Blake Moret

Nigel, really going basic feed the provide replace come Solutions other, processes from those Information fit Solutions those the data the additional One is I'm value Logix. the Connected doesn't the control Information thing aggregates one the Logix that that creates well the and for Services data and just to and higher services. with add, opportunity

So, of both value Connected and parts Enterprise they're they they well really proposition. fit The – together fundamental

Nigel Coe

times the increase, what you going going by you Okay. tax Great. remind you've think from year. about X.X here leverage, end of Even leverage. X.X is $X and us, ratios dividend just net And of leverage now this reform? Can that EBITDA. billion then with Gross forward times types the just the maybe to I on the imagine be got your to

Patrick Goris

XXXX XXXX of by about can way about fiscal with of end We net more that fiscal a but the think talk we'll about this we the $X.X bit week, that about end think will is, $X.X next Nigel, it Yes. billion be you billion. debt.

there way by so, the we increase million at our balance, $XXX about time, investment cash and $X.X target about year debt reduce billion $X.X what total is, get billion. same the will that's we'll at to expect close And we'll now. which was end, to And to

Nigel Coe

XXX tariffs, want then is And want would like impacted guys. Thanks, but sounds just, it quarterly, mean, I to but helpful. But, don't just to on know you little of a be going ASC know by to about maybe that? and color Great. guide so XQ just say, be I bit Okay. XQ

Patrick Goris

I QX will year What released investment investments but in some two was the the XXXX, the actually as of be in the mentioned last from of be quarter, main EPS you quarter growth margin. the our perspective. largest spending, year year-over-year don't will first expect elements, particularly of is like, increase the of a we first had really fiscal the we Yeah. And XXXX Nigel mentioned timing segment in high spend (XX:XX) our the we element spending. and that

the there really quarter. tailwind organic So, share quarter, There say, I'd of we some from the first count, first three for some growth. the are a course, – main, in lower expect there is tailwinds headwinds but

timing about, tariffs. on then second the pricing ASC lastly, will one. the the first just which of the the XXX, is we largest the the that one first of talked quarter. be will mostly one be impact The the Then And impacting investments

first think we we the net in of quarter. means see And so, EPS that won't that the growth

Nigel Coe

That's Thank Okay. helpful. you.

Steven W. Etzel

Nigel. Thanks,

Operator

from go comes Julian Barclays. question next Our from Mitchell ahead. Please

Julian Mitchell

morning. good Hi,

Blake Moret

Good morning.

Julian Mitchell

Patrick, on Maybe investment just comments up following question first your on the for spend.

I think million $XX of you increase. had of placeholder $XX last a year million for to

that you fiscal the for where what magnitude And of in anticipate of end. wondered do XXXX overall? increase came Just sort in,

Patrick Goris

in The what you. little shared have XX%. of with spending – embeds increase rate at we growth. than was spend about That bit we our of earnings in conversion basically XXXX line a growth the what So, a lower organic fiscal XXXX, mentioned I

quarter. spending the first quarter. that And be to fiscal more XXXX. And will will in in the so, increase about It again, in the than first X% growth that be think X.X% biggest significantly

Julian Mitchell

you. just around... Thank would my then be Understood. quick And follow-up

Patrick Goris

to other one maybe do other XXXX. maybe related again expect Julian, – spending. than our We in one spend just thing, R&D to faster increase fiscal

our saw up you percent sales of R&D so, XXXX. in And pick fiscal as

will are current again increase XXXX. fiscal in projections Our that

that R&D commercial referring including, Blake of also our some then and was to related PTC. spend, priorities the So, to investments for

Julian Mitchell

you a China? Very to helpful. you'd end China fiscal again, differences double-digits. Thank by the your if China, major more you. any and bit demand on what switching prepared XXXX little And then think side maybe for said expectations grew just detail Wonder the could give the in I market are remarks in within

Patrick Goris

Yes.

So, above was fiscal fiscal were we a for year double-digits XXX, in good up us the will actually for year. the in impact XXXX China. ASC the But XXXX, excluding We of China. think average be

the and to mid high The ASC than XXX single-digits. more regions. Asia So, rec other impacts China change revenue

pretty of a but think chemicals, we're related rev the broad includes did transportation and think we be be from a for – it's XXXX, basis, next upside sciences rec of reported a couple we we food life basis, based, mid-single of China oil in in about a on points, change. this fiscal China. terms below in that as organic the year. up that we and think that year; estimate next we what to little might expect perspective, average see will growth digits company in and year headwind beverage, a and So, we vertical an gas We on Again

Julian Mitchell

you Thank very much. Great.

Steven W. Etzel

Julian. Thanks,

Operator

Morgan Our go next comes from Josh ahead. question Pokrzywinski from Please Stanley.

Joshua Charles Pokrzywinski

guys. Hi. Good morning,

Blake Moret

Josh. Morning,

Joshua Charles Pokrzywinski

to lot. that XX% of think expect need an of follow-up all that to I conversion, XQ to ramp XQ? up more a the next jump earnings on the I three EPS, over it or see just headwinds? Just to on of getting quarters of those the full-year kind abrupt make sure XQ it margin for we to change into wasn't some a wanted or normalize XQ want XQ comment. is Because Should implies

Patrick Goris

view. It point EPS growth largest of in year-over-year QX will QX be a an the ramp from with benefits and

Joshua Charles Pokrzywinski

Got it.

thinking book-to-bill probably at Okay. about That's just the gives last X.XX, average, quantitative something And be to just seems that outside kind that year, years helpful. on heavy lines was industry I of of I the that, as but but of, guess, outlier. with not then, as given bigger orders big that you up Because there typical, is solutions of projects, otherwise, it some kind few the project last think it accelerating? an seems that not or pretty seeing confidence? orders good and you're

Blake Moret

Yeah.

I'd with backlog. think start I

in have some so we growth. start what And backlog QX a double-digits orders with strong up So, nice previous is Solutions that. QX and have that's the Services to built book-to-bill seen and

Joshua Charles Pokrzywinski

Got it. leave helpful. I'll there. That's it

Steven W. Etzel

Thanks, Josh.

Operator

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

Andrew Kaplowitz

guys. Hey. Good morning,

Blake Moret

Andy. Hey,

Andrew Kaplowitz

that business, out you helping evidence and/or sort in of investment all can have in the higher of XXXX, Blake sense talk simply about continued you it growth mid every you're Basically, XXXX the and did in seen you your seen there? just about rate or U.S. Patrick, how to to so quarter for QX. lately given in sustain can that, more the high single-digit the thinking in FY protectionism U.S. onshore that U.S. you've growth accelerate that increased

Blake Moret

opportunities continue the I that we're continue we industry and from as to and see the before as course customers, the U.S. mentioned What Yeah, be of the to well. beverage important we're from continue that continuing gas of strong. consumer hearing is world. are mining and year even basic coming think life in that as sciences in outlook industries talked the heavy earlier we the food as that's strongest look in oil growth good U.S., to around metrics We expansion taking and about share. well we signs led future. by And for so the the that and activity

the Good we continuing. in good We products, market great U.S. access have that is position and march a that, think

Andrew Kaplowitz

that over Europe point? alternatively, auto pull heavy And seeing then few and in Okay. come lethargic little that could down to is know in does assume any That's I industries helpful. weak relatively look relatively are that some the up quarters. a Europe in XXXX would back Europe are that dragging bit. continues I at Europe be FY starting XXXX, you to signs last

Patrick Goris

year it the with region will be low us. next We be think We digits think that for Europe single will growth. lowest the

in do next consumers. some industries, verticals we in we year don't growth in expect growth do of some but we terms year, heavy expect as expect in Europe, any we In the next transportation, do

low-single So, in digit a still rather tailwind growth. that region. is a than Automotive headwind clearly

Blake Moret

area Connected vertical strong I I pharmaceuticals to mentioned the us, life that some us with we would there in use, from for that's very where an while Cart and also sciences Independent add well a as strong so Technology help MES the smaller Europe, a it's continues new that, be The the of value single Enterprise. and system, as position have before for

Andrew Kaplowitz

Okay.

Patrick Goris

verticals So, Europe, Andy strongest XXXX. the fiscal you think in growth where expect two of life mining being we do in the and sciences

Andrew Kaplowitz

Thanks, That's guys. helpful.

Blake Moret

Thanks Andy.

Steven W. Etzel

we'll take one more question. Operator,

Operator

final go today from for ahead. Our Ritchie Goldman Sachs. – Please comes question from Joe from

Joe Ritchie

in. Thanks. Good morning, guys. And you appreciate fitting me I

Blake Moret

Joe. Morning,

Joe Ritchie

color that specifically so, supply the more at question, select also being chain. million offset we around you're year tariff could are little doing sure you provide maybe that first my $XX you progress your So mentioned know to a bit And and actions should throughout I what guideposts headwinds? the But looking be made? is the there along make actions pricing to certain in

Patrick Goris

Yes.

the on into So, maybe detail – being $XX more a little million. bit

of a little perspective; one I'd although into the that a come with add we effect why and increase I to that has in the the are manufacturing. offset price is will half own the from we the say into – on half on whether for branded the vendors. of get products or impacted chain will are The other they October impact by whether the of Then couple QX is gross Of neutral. to there's selective – with the weeks, planning now, also related that's that, expect expect that of we're phase. is be that only increases vendors, is timing effect of As the execution tariffs. is maybe price addressed full-year, effect gone two-thirds into saying gross XX the balance buy from some second tariffs, tariffs by to our impact said, they it's XX% The that what I'd on are components in a say, products. top negotiations the one-third phase alternatives that and I'd supply in, with the we

Joe Ritchie

I my helpful, lot it. follow-up, the guys one guidance; the a be know And love half, you giving Got clearly some benefits headwinds Patrick. of don't XQ, That's seem coming to second so in in quarterly through XX% as these but you on guys benefits typically of XQ, more to your normal be come XQ, through? expect a well do about is roughly should as we earnings that lighter XQ, seasonally in or going

Patrick Goris

growth earlier I'll will the that will of in of my be and EPS the to second XQ most stick comment be half the year, around.

Joe Ritchie

Okay. guys. Wonderful. Thanks,

Blake Moret

Thank you.

Blake Moret

So for we're this several just we strategic forward to performance, and year, operating us. We strong XXXX. good year financial summarize, another fiscal areas delivered growth key accomplishments with in XXXX and was looking in important had very year good to a

Steven W. Etzel

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

Operator

At today's does call. disconnect. Thank time, may conclude this you you. conference This

Rockwell Automation (ROK) 7 Nov 182018 Q4 Earnings call transcript