ROK - Earnings call transcript Q2 2019 | 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 up the line for questions. [Operator Instructions] 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

Steve Etzel

and thank fiscal joining call. XXXX Blake and today and CFO. Automation's With for second 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 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 Moret

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

all results in reflect Enterprise. Connected growth reflecting Information and the led by performance. quarter saw profitable in Solutions growth process accelerating the of for Connected adoption Services We strong Our industry regions

strong. this organic was expected January. late in sales we Our product in year-over-year. In a orders were This Heavy and mining. double-digits. in already Tire saw pulp Globally, was sales particularly growth automotive impacted a with X.X%. and mentioned product February in by growth up and but region, were grew weaker Transportation, From down picking tempered America. March. grew by than North our which led strong led sales and about paper, XX% weak very the nicely up up quarter, Life by was Automotive, grew I Consumer oil vertical Heavy gas, once again double-digits. was perspective, which gas Consumer, was mid-single-digits. grew growth which Sciences within high-single-digits Industries' In Oil and Industries growth

Commenting process performance the Our the weakness combination X% us North organically. U.S. grew automotive quarter. for on the Canada, and regional grew sales XX% for The in logics. in is which the of drove KPI in decline X% organically. America,

significantly While Bay pulp growth Consumer was rate a up paper, Packaging. a significant we was wide growth industries. across broad-based Tire. this in the of led for region, Automotive range by EMEA weakness quarter and control this power quarter the process overall Green with impacted In over X% won order and and

X% our X% Industries operating up comments points EPS financial grew QX expanded and Automotive. I'll Asia year-over-year. led sales make remarks. Industries. for grew Heavy were a Heavy XX% led and few quarter Services by up our basis by X.XX elaborate results. was on China about Book-to-bill second Latin Solutions in additional margin was XX Adjusted America X.X%. our his Patrick and high. will segment QX. performance in performance remains Backlog businesses about

full Let's fiscal move guidance now to on XXXX. for year

continue call production Forecast for growth. to industrial

broad-based see strong growth performance. to continue We financial with

are However, of range organic and the for growth end the Automotive, EPS. guidance our in sales we adjusted weakness given reducing high

to expected about sales $X EPS our currency, adjusted impact year-over-year of XXXX is at growth of previous $X.XX Currency guidance. guidance organic is to fiscal be to XXXX fiscal in up now guidance revised of now updated billion. percentage range our two expect We sales guidance. the Including by of the compared Mid-point X.X% points. reduce mid-oint $X.X is

a discuss venture. guidance include few in Sensia Patrick does impacts As will not the of this the joint minutes,

recent update strategic an slide increase on value our two four. I'll investments provide for long-term to owners. customers and onto Moving share

our and down, focus additional rollouts. some new to engagements FactoryTalk to profitable to Automotive is Even locations. expand excited overall Ford offering industries geographies with InnovationSuite. well. partnership new progressing strategic business Recently, multisite where and in about are PTC this spending is all Our our winning of decided We're across customers expanding are

customer, an & production Auto manufacturing Decker management Manufactory life the to Connected their Group, to Geely bring Rockwell and division. FactoryTalk Black improve chose quality. partnering InnovationSuite Enterprise the affiliate Automation of is to Stanley ECARX, X.X with through Another In digital Consumer,

shown by Activities of slide, industry's and automation that be the on creating in announced venture venture has The digital the well we February, solutions As announcement joint fully we oilfield. the are will to the well the side right form integrated for target oil forming Schlumberger, customers. joint been provider Sensia received gas this with underway. first

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

Patrick Goris

year, higher up compared to The year-over-year last adjusted compared an in increase EPS year. I due to Thank $X flat million year. $X.XX margin sales up was you, the expected, primarily Adjusted quarter, operating Segment about offset lower spending cash by the of quarter driven year-over-year, sales mostly to partially conversion benefit morning and normal quarter. share elements offset higher five, than $X.XX translation second $XXX was million A growth was that from increase by tailwind compared weaker strong growth us for Organic the higher spend. higher contributed of of net organic the points in XX with of X.X%. EPS basis information investment $XX lower Reported currency North second in of is automotive financial expense. last weaker and offset was are remained expense key investment this. last flow by good in was and than General and slide America. net were interest growth about X.X% quarter There count, was in several margin to everyone. Blake by partially we will XX% to X%. XX.X% million on corporate start organic QX. sales up at Free and of

Overall, QX, this including $XXX million in payments the year we about Tax QX to overweight about about QX. were expect are compared quarter, tax the million repatriation as specifically is higher in installment on that owed first for the the $XX tax result of and year. half the payments tax a last of our Reform. paid half to First, pay We in first year full what to

Working Second, we the We transaction, the gets amortized time which hedges. the the in issued our of and the we particularly payment debt debt over in Even inventory. to chain, out In this paying expense rate at U.S. to about hedges. quarter. We've $X reduced supply related we was and entered another an cash length as cash of distribution our quarter. in about issued some of outflow, this activities re-foot free us including the relocation printing advance this gets million to reported the though the operating term, settle resulted center. flow long-term capital closed into factor hedges in relates in past manufacturing debt the talked financing debt Europe this interest interest to which the of amount $XX billion

facilitate when these built the not free have A to to about full discuss I few this stock safety expect and activities reduce fiscal additional will cash by year We on slide. shown inventory items we cover guidance. flow I year-end. talk to

were to shares million for quarter translation slightly had repurchases million. decreased of sales declined ahead in March or year. shares share repurchased down provides For a X.X last this at our to year in XXst, Organic get $XXX $X adjusted currency and X million pace the X.X% overview in segment. segment. Through X.X to of and margin year-over-year. added about were XXst, of full EPS, authorization. we the point million, cost by billion XXX sales We quarter At under a from March Architecture & Slide target. Acquisitions diluted $XXX X.X% amount up are million one-tenth Software remaining a about X.X%. the sales $XXX outstanding average repurchase sales performance million the Year-over-year X.X%

contracted For points very the year-over-year, strong XX.X%. yet margin XX remains quarter, at segment basis

for to The by were on we by Solutions. at so sales Growth Operating this provides slide X Control year. last Blake up I'll spending. sales compared X.X%, segment, sales just a performance segment slide in on sales good about in broad-based were was Also, reduced Services in points mentioned growth X.X% growth & to segment our saw slide currency and XXX up Moving region. emerging of an that Product overview which translation his this markets, X.X%. the QX remarks, organic were in geographies. for organic the of in us across growth to was due Reported guidance. offset businesses our The over sales businesses by compared slide last investment largely was year, digits Products Solutions X, most was strong This to to this X high-single covered primarily margin higher basis higher basis. next up X%. X% an segment up takes

this approvals make pending. will we I activities on Schlumberger JV Before JV year. and I about in announced slide, are what cover Sensia is comments underway are February the and regulatory that the formation some

As Blake the is mentioned, not our have our and estimated therefore Sensia on included impact XXXX financial we dependent on of fiscal timing the guidance. of impact statement in close,

project Automotive. a billion With reduced our fiscal of move XX, end now of XXXX. range headwind the close for in sales of $X.X EPS growth by to fiscal the expected We September end organic reflect about our We to to continue a year year XXXX. $X.XX weakness Assuming we continued fiscal full guidance. estimate me that, for high let

expected the X.X%. Our about be to Currency at point to organic midpoint is with sales headwind. growth X.X% range translation is now now X.X% of two

to We segment continue operating expect XX%. of about margin

to for about Our is now our also fiscal January We're guidance compared tax our of upper XX.X% end adjusted range. XX% guidance. EPS effective XXXX lowering adjusted rate the in

is mix prior rate. the reduced benefit range the offset to tax lower and Our $X.XX Compared are $X.XX. and guidance, by spending, partially new from to volume headwinds

respect supply as are with price for XXXX. products. to costs vendors, remain as changes neutralize assuming diluted targeted shares increases we chain on to fiscal million well the tariffs, incremental affected outstanding through average With track on and XXX.X We negotiations

project XXX% income. of to projected to to continue $XXX adjusted of about free now General million conversion is be $XX cash about million. corporate-net flow We

income. million, year corporate-net to In XXXX of short, As expected to guidance. Net is strong now financial performance. consistent our $XX with amount for expect interest reminder, general a January expense fiscal another interest we excludes about

operating at point. sales year-over-year increase With I'll updated growth XX% X.X EPS it on about Our the to hand projects adjusted organic of over that, midpoint margin and growth back guidance in Steve. X.X% the

Steve Etzel

you. Thank

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

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

Operator

Davis Thank ahead. question first Scott from Melius And here go Please your Research. you. comes from

Your line is open.

Scott Davis

Hey good morning guys.

Blake Moret

morning. Good

Patrick Goris

morning. Good

Scott Davis

I visibility a but of double lumpy, But projects that slower. you else at that that where quarter And really little so out CapEx digit, business in your us help look isn't -- I help bit was the and everything is things. can't the know to process sometimes seeing understand the was remember OpEx you're a sizes. way type on there various see best of maybe versus quarter-to-quarter

Blake Moret

Heavy the So theme talked about application. be quarters, Industries continuing Heavy the and in past that to strong continues Industries are biased we've towards process few

well ongoing as my Solutions quarter Connected and there that mention was growth we continues accelerating small in we strong projects process projects a about a and and well So in Information seeing entered talked the those, of that remarks, part And was industries. had gas. servicing as backlog fair as Services part within I strong a of both we're really prepared due I've that high base. and the installed mix with. capital Mining to in oil in year

Pharma ever MES new Company our because for order these at So received Lonza process European applications. and in encouraging the it's that largest value instance, is we

Scott Davis

visibility maybe relatively launches spend that's to CapEx that are sales helpful. Auto two coming picky little of a back? kick there -- on weak, next mean be mean but may to cadence auto, but this again, help is EV and the know we of No just I is understand And I any bit there auto is I crap know really start us years coming in? ton the in seem a when in

Blake Moret

overall our Yes. continued but just increased we'll we -- CapEx still of it's 'XX. of a spend in EV. is increases part EV for set expect to seeing this what do the into be in for us. the some of this to in already end fiscal very see It's that and total balance small front year that do then double year Auto, We're of see we It's

owners the within market, the spending model spending the in capacity have EV given with think brand I vehicles. autonomous the changes contend the auto and CapEx to general investment for at for and

it. they're CapEx size of contenders So for new spend that regardless the of

Scott Davis

Okay. That’s helpful luck. Blake. Thank Good you.

Blake Moret

Scott. Thanks

Operator

JPMorgan. from next Your question go ahead. comes Tusa Steve with Please

is line open. Your

Steve Tusa

morning. Good guys. Hey

Blake Moret

Steve. morning Good

Steve Tusa

of kind in bit what's of some that or end going robot, seeing of directly of kind like, kind in So you reconcile how do China? of are robotics capacity you definitely anything read suppliers you're but we being guys are some guys do with your know over the business? that customers? seeing slowing happening And Japanese don't and a there to added, What what from but in market. for guys how of on of seeing we maybe in know I kind the link what's there's I what versus the do those you

Blake Moret

we did the serve And So growth percentage market. is reasons we've in in a probably other one quarter talked EV have about, portion a of as think of in of of reasonably the auto in China in the That investment to I the really is ahead growth. a for X.X% automotive. little markets. we strong have a And readiness bit EV China, with good that included the some

think the prompt was it. in and well. also We've of China us in industries projects for both stimulus part some that water those metro heard as I are good growth has spending of that So helped and

Steve Tusa

that your same up in how much How at all would how all? for break time? much the And then like was robots Auto EV if timing much and And So they then stuff? -- you you all do then come also China was order think how you much order from the first at of up? EV guys? it does Or perspective, order can

Blake Moret

terms of spend split traditional EV in in a versus be parts combustion a robot say that I strict placed products. internal when the sequence I orders higher of than up when lot orders mid-single do was other would then towards projects but don't the the then than when Auto don't when and in in to the for of for going tooling know suppliers EV cycle of world. know China orders to us. us, are are So the our are and it weighting decide digits robotics, our released the the to other to enter it has to for there's a they placed be to orders And

Steve Tusa

appreciate color. Okay. a Thanks I lot. the

Blake Moret

Steve. Thanks,

Operator

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

Your open. line is

John Inch

Thank you. Good morning everybody.

Blake Moret

Good morning, John.

John Inch

guys. morning, Good

are think the to so in XX% year? improve in that things there for down that or -- that is the cadence embedded the run half So Auto, the Patrick next guidance new you your like rate year? moderate And towards back it into or speak

Blake Moret

John comments make a of Patrick a bit. Yeah. and then I'll add little couple will

XX% So we have XX%. that mentioned year Auto make full expecting started projects purchases. some that down we about do already be were of down for in the and to We to quarter have sight in around the we're line

that will with expect in up comment. some show of Patrick that some maybe year. We And the additional

Patrick Goris

in to was the Blake little low any some we We to don't that we to to. in quarter QX Automotive, that a expect slightly and projects expect referring of bit larger know in flight QX single-digit. up are QX John. and QX growth or up just Flat that year-over-year refers Sequentially pick

John Inch

to helpful. the don't going That's but How us? you you success are to share I what guys Sensia. with is saw with could anything And just Okay. actually Schlumberger, this would there targets JV in think financial Switching I gauge establish business? you

Blake Moret

market a markets, digits. Yeah. itself at billion, profitable the we double already oilfield believe look is over the double-digit digital growth. $X which you It's growing When is

market. we, So expect to the grow obviously, above

is oil one. And business. target a a about view, in of so the we it talked growth point upstream John financial profitable gas From and very simply

criteria financial free We five. three flow XX% to cash expect to year’s achieve acquisition through in so our yield

assuming not we in is completely given approvals, control fiscal this regulatory at for $X.XX headwind. year, a end the close is the fiscal The EPS our which of XXXX, expect other thing

we fiscal above it For fees intangible including amortization be XX, expect to and neutral $X.XX of EPS about

John Inch

it the Patrick the investment you that is nature profit And dilution. or to spending? because you're what's not but giving to nitpicky capture get back up Is that JV, of don't

Patrick Goris

costs wouldn't and fiscal some of fees deal and close end if And we fees that comes this the year, any the costs with of the fiscal see see setup by we setup JV. with revenue that associated are but the There of it XXXX. would transaction in

John Inch

Busy morning. leave at it. Thank that. it you. I’ll Got

Blake Moret

Thanks, John.

Patrick Goris

Thanks, John.

Operator

Jeff Please Your with Research. Sprague next go question comes ahead. Vertical from

Your line is open.

Jeff Sprague

Good you. Thank morning.

Patrick Goris

Good morning, Jeff.

Jeff Sprague

things two me. Just from quick

I on expecting here? investment on investment Patrick, Or said in investment just kind first lower some that you you're spending. you bringing spending. down with think guide? in Just the taking posture change you're revenue Are is there concert of spending the other

Patrick Goris

Jeff. No

right. You're

quarter, is million out and mentioned talked quarter about important our million. about And year. the $XX-or-so full Last be the about during increased During we year. $XX for million going full We're -- of our in protecting, talked This our about second that thinking starting push increase increase seen $XX the year. we spend. of spending expect most February. now to Blake we on the talking two-thirds discretionary of first year of in We're decided for investments we saw, lower We as some of -- last the weakness that to course. would still we focused half have $XX million less, we're

seen the it we've spend. up So most and of ramp call

Jeff Sprague

what to would bit be of Blake, terms there you're in color upstream you're in seeing happen? activity, downstream? provide helpful. your on any you all pause Just just a versus upstream prepping other Is at little process any for And Sensia color could as more there

Blake Moret

Yeah.

little oil the heavier We And as activity midstream. a growth We bit on and double-digit had strong. quarter. the continue continues know, you see, to exposed we're gas in and upstream

significant $XX paper million be and time the a Packaging. that'll worth for equipment remarks Green machine Besides, us. ancillary oil over gas all about to Sensia. project and That with a mentioned I we prepared in my process, So it's think Bay was good

parts of market. in process we are different seeing So the CapEx spend

Jeff Sprague

you. Thank

Blake Moret

Thanks, Jeff.

Operator

with Please ahead. comes Mitchell Barclays. from next Julian go Your question

Your line is open.

Julian Mitchell

morning. there with Hi. there's sort starting Good business, America the some of slowdown talked just but QX, better a the in sharp organic you Maybe or North rates? off So in growth that versus about for, North expect you QX. growth pickup? any just should what there that specific And verticals did in second in have half, what wondered we America the seen were exit

Patrick Goris

Yeah.

we've for North So the rates quarter growth actually half somewhat Julian similar the we in of as for second year, America. second the expect seen

with general we about some QX, seen Solutions more about, expected Services we is industries than rates heavy so and are in the our our continued of in above-average but similar And -- quarter. growth we've second growth of business which product business most we're that course talking what expect QX exposed in the in

Julian Mitchell

you some Thank for much my of OEMs that of Or then And any second in very much. around, experienced particular of products distribution? seasonality? would obviously, have or question, if you felt your particularly be with or inventory adjustments line been any adjustments at whether inventory normal clusters you'd kind

Patrick Goris

moves inventory nothing seen is there way significant impact other that that Julian quarterly results. our on that of one were we've or indicates the

Julian Mitchell

Great, thank very you much.

Patrick Goris

Julian. Thanks,

Blake Moret

Julian. Thanks,

Operator

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

Your line is open.

Nigel Coe

Good morning. Yeah.

Patrick Goris

Good morning.

Nigel Coe

problems the mute some having here button. with I'm

question. quick a So

I'm you I'm just the wondering, describe ex-auto health of Seimens semis obviously Your have Schneider in and on But quite markets. called you industry? would then, your The general in about that's a ABB cautious And particular Street down other initially. as commentary two-point three health well. thinking drag peers guidance and your to market XX%, And How manufacturing. been out general the how about automotive was

Blake Moret

clusters look say we let's Consumer. the So at when than discrete more of other, industries

other pharma, us. a mentioned There and growth ago growth big mix the of there. there's well. for discrete be minutes Life to Sciences of as I good the a project is growth process year And Consumer a continue through few parts there. very about to continues But in vertical just applications strong We in see

worldwide a Tire spot that for was has quarter. offering, process is a well. mentioned fit our as great Tire And this also in as the Tire because discrete. well in elements is of it We bright as strong picture

Nigel Coe

And great. Okay, semi.

single-digits. about expected? Is way were that out playing you the that you up being think mid I talking

Patrick Goris

quarter the was for single-digit. Semi about mid Nigel down

Blake Moret

strong growth of double-digit After a of years has semiconductor couple moderated.

projects, continue but lot around a in a of software-based moderation participate we projects environmental have seen in semi. to largely We the control

Nigel Coe

know that I a of lot in queue. people the surprise. No there's Okay.

So I'll leave guys. it there. Thanks

Blake Moret

you. Thank

Operator

with from Your comes next question ahead. Richard Please Eastman go Baird.

Your is line open.

Richard Eastman

be Yes. Connected just the to Good out any Solutions I morning. just mentioned Can wins Are business? up if and Is may sift dollars you contribution rate can Blake, growth Services that define pushed seeing speak there early the think you the PTC PTC rate was and we pushing some actually and double-digits. that? -- Information of there growth maybe plus could in better you you bit? up. how have the maybe a there

Blake Moret

seeing all conversations to in showing given the It as that. and it's subscription really while with have And up multiple geographies. of our us revenue, are across target of terms still these. richer customers early We allows nature industries in of

the are decision-makers not carrying that just CFOs. we're customers business I and our would offerings offering, the whether we're augmented ThingWorx internally Vuforia analytics so to it bring industry-leading add what on even in who've are proof picking it's if outcomes. portfolio. really discussions. to people CFOs what working some is say, And a have had the because CIOs or on on traditional to Customers these PTC's focus these customers to allows we are of outcomes all In and competitors new IoT Kepware leading discussions, and customers. to the is cases, reality And our to is traditional talking our And seeing addition the so our or happy those buying. portfolio that the us, focus And it's these of because competitors, the programs, actually report day. exposure the our on our the in to we're those best the competitors, been to. us offering have

Richard Eastman

is growth the general, Heavy a X.XX assess a I When in businesses, Industries of tail the markets, How the around mix look end whether you have we're the at when given And business typically The end them. business you which -- be it's to that? question at softer where -- in second what you're it's bit and is bit at Rockwell's in strength a the book-to-bill log, the follow-up showing kind of do longer cycle your process growth cycle any look but later seeing in X, it just here markets. standpoint my or in to little seeing you're the just your on feels thoughts log than business? from to about of run front -- And better historically a seems where quarter. front relative than length where

Blake Moret

Sure.

So first second the we and and for at all additional industries book-to-bill quarter of quarter as to does of that Services thought life And was exposure looked more that increasing in we cycle. point X.XX so Solutions success that the the and which traditionally would help quarter. our to some for are believe

in gas Information short oil So we the We even see adding strength Solutions the Connected and about cycle in traditionally value Services. businesses new more talk mining. some and the of through in and

they because subscription-based each very ways of recurring increase together more there's really recurring to Taken are and areas component revenue these and a part deliberate in win service of software of to our to find high revenue. attempt

Richard Eastman

Okay. Thank you much.

Blake Moret

Thanks.

Operator

line comes open. question with your Deepa next Your is ahead, Wells Raghavan Please go Securities. Fargo from

Deepa Raghavan

Good guys. morning

Blake Moret

morning. Good

Deepa Raghavan

XXXX -- suggest commentary perhaps is the -- just were to organic regards Outside probably bigger what growth to expecting to slashed growth higher question expectations you what the at guide other that line could to gets high that of of Automotive. X%, get headwind. industries there, up you my much of But pretty there seems kind currency you've time? exception your at Your you obviously Automotive in end are guide? things with was end a with that I but organic you were of what this organic, with mean

Blake Moret

Yes.

that strong it year the meeting through in Industries continued end Industries, takes about the expectations then Heavy Automotive and earlier. talked us that the that to be would we in Heavy So, growth high

Deepa Raghavan

Okay.

not-- back So, and you're year-over-year bounce not I not -- better necessarily assuming it's Obviously, some expecting assuming mean it but stuff, comps to positive but XX%, there's gets necessarily it basis. from a it seeing down you're Automotive's on you're -- get you're to

Blake Moret

Automotive approach were realistic We the as think the we've to year. in taken factored for a guidance

Deepa Raghavan

Got it. it. Got

So, region outlooks us your you're Europe your growth? right-size guide year is I slow and that that now the what you OE But on down. like in within builders. pretty that especially organic looks machine contemplate strong probably are you. weakening full Thank with expectations regional can mean

Patrick Goris

We think be that year. about and EMEA, average strengthened in company we it Yes we organic So, the the in in growth. for Consumer. for of think Tire will terms full

Deepa Raghavan

about the too? regions other How

Blake Moret

mean the--? You for

Deepa Raghavan

et No, China, Americas, cetera?

Patrick Goris

Sure.

expect For at for America year above the the average average above company be Asia EMEA strongest the average, midpoint, a for at America bit now expect be for year. we be we region, North average, the company same full expect full little our the China, to at Latin growth, double-digit to to below the we company China above company and

Deepa Raghavan

much. Great. very you Thank

Patrick Goris

you. Thank

Operator

question line from Please McCarthy next Your comes Robert Stephens. with go ahead, your is open.

Robert McCarthy

Good morning.

mix about the can of operating in what year-over-year of just you sense If of you the and the terms in kind there your kind you of for A&S decline give on there headwind? any a and talk dollar Auto a color profit get saw could of -- CP&S Is anything performance review your just we us so context basis? bridging

Patrick Goris

the would is that & Software Yes, question that Rob our versus Control overweight Products be I would Solutions. & Automotive business answer Architecture way in

So, be the & largest Control impact segment. on logics Solutions the Products would of & Automotive compared Architecture including to Software

Robert McCarthy

around Boston about you for any talk for And of right. confab further terms that in All enhancements that. or kind there is Thank ThingWorx? June in launches the expect we could particular relationship of then in then should PTC, product And how in going? you

Blake Moret

Sure.

all the with voting add products is So, We've really with agree announced seeing energized in solution. more the that. our wallets in customers solution. the is probably are on satisfaction IoT night we organization proof salesforce this And and Rob you last industries heard trying best and this X,XXX in -- We're than with a and geographies have satisfaction had they growth they the great PTC the when relationship people may talked how PTC their bookings to about good in good and all success. overall that with that

it's value from element well. subscriptions think million financial we revenue future to $XXX and more business to and that's Connected of our from a we standpoint. It services. Services Information In had high of additional than contributes the growth going we the and can speaks profitable recurrent that This So, that provide ability the Solutions double to XXXX, last with year. well

So, of progress relationship. the we're the very happy with

Rob McCarthy

Thanks for time. your

Blake Moret

Thanks, Rob.

Operator

Kaplowitz next Please Your with ahead. go from Andy question comes Citi.

open. line Your is

Vladimir Bystricky

Good on for This Bystricky Vlad morning, guys. Andy. is

Blake Moret

Morning.

Vladimir Bystricky

out given Europe. the shifting a the So just is regions strength back seen quarter EMEA's bit. some surprising a little of to of in we've headlines the

what when talk you talking about EMEA that versus XQ, the was of single can remainder the you're down about year? the mid and seeing for digit to changed growth growth now So XXXX

Blake Moret

I'll make some as then and of couple comments well. a might have Patrick

was As strong. the especially tire in consumer. And we led EMEA, was by mentioned, growth

before As are significant some there for is I purchases a and contributed us results. builders Europe lot was tire a good that of the industry mentioned tire in to those and

Patrick Goris

say what we growth the the quarter seeing and year a Yeah. second in said we I balance organic of bit last we the backlog higher little would quarter. started our which that the were some also is that expected looks good in

balance the expect the growth EMEA year of well. some for we as So, modest in

Vladimir Bystricky

in just the the level year guidance was can know and driving year. the I drag the free incremental But outlook. weakening you on of about, acceleration confidence any And -- cash of unchanged FXQ. then auto that That's the cash free some Okay. of in headwinds helpful. back on just whether talk impacted the given and that mentioned in your half then flow the you one, in

Patrick Goris

Yeah.

than, been So, we of free on impact sales that a on don't drag significant cash flow a we've auto has other that seeing. believe course,

confidence. to be to free flow why have unchanged remains cash of our year. we quarter. is terms for the guidance half And obviously, we guidance the one going That's high deliver to our XXX% confidence, We're provided In second obviously able that last weighted. compared

Vladimir Bystricky

you. Thank Great.

Patrick Goris

Thank you.

Operator

go comes next with Credit Suisse. question Your John from Walsh Please ahead.

open. is line Your

John Walsh

Hi. Good morning.

Patrick Goris

morning, Good John.

John Walsh

Hi.

at of Solutions about around Services. of the you of mean to double-digit. then Can comment lot a prepare Connected a on things of I covered, Is What's guess can lot follow-up as things. XG over quicker in Information acceleration order to your That go picked you're So some a kind of acceleration Is back to you think? acceleration we the driving anything that I people magnitude for are but periods there something kind grow the payback of your investments. mind? that is paybacks? wanted talk that And on seeing? one ground and as shortening of else actually Hannover these it Continues of the up to

Blake Moret

acceleration is its Sure. growth which developed the Well, by are seeing the we double-digit our relationship in PTC complementing strong helped offerings. own internally and quarter

the growth towards really the think outcomes. biggest ability positive our business I deliver of market is of business factor and the whole to the

talk. So, ability you is for just else Everything have to providing customers. really that start with quantify savings you're to the what

And customers can OE increase operational productivity, those the so the maintenance, helping our target able on and in areas market with being that those focusing the we to predictive by to help get specific faster understand industries. ways we

first rollouts. the pilot, as putting invest moves so competitors, of multisite company been that then of variety And services also mention in has success year on the value. Other that, the it's payback of would our part top top on results new be and that than wide systems. In our and some systems. some a in quantifies, and come control the added times, space of a cases, where should I on to realistic less periods of we'd software logic

us So to area it's an exciting for be.

John Walsh

And maybe that. one on Great. then quick follow-up just

if of – So work the it's integration how not project you when logics, you come Rockwell? look mean, for and put on side does Because do when in do that the on top your the – obviously of mix some going you I about impact see going there's look that just but the talk mix to not differently, multiple you all and they're be maybe projects – in of think can to projects? would I those

Blake Moret

Sure. In average. general, going it's around be the Rockwell to

average the and higher degree the with revenue profitability a software and to Information the the there's is more so so and Rockwell the little regardless profitable. like average. Connected And below of delivery Services But it labor-intensive that's be drives recurring Solutions than has the that's services, software a providing bit whether average. about we're and logics along just the When bucket our on going and the very the Rockwell has of

John Walsh

you. that. Got Thank you. Appreciate it

Blake Moret

Thanks, John.

Operator

Scott Graham BMO with question ahead. comes Your next Capital Markets. Please from go

line open. Your is

Scott Graham

morning. Good Hi.

Blake Moret

Good morning, Scott.

Scott Graham

that, fully know you still I tariffs, offset the on question for commented a year. you of them Kind that to expect

plan price I in buckets? kind that year could to dimmer coming half C, changes likelihood million? $XX was A, number of I any of supply up as you into if of the guess, just $XX B, the B, chain, think to something like The half does to is the where was much moving I was I the tell the the there time the with of at million. And seemingly quarter. sort now remember And back XX% I change of us, believe. kind landed is sort wondering pricing

Patrick Goris

Yes, Scott.

pricing it not XX% the in to quarter the we're So for expect impact in on changes our impact have have which overall closer XX, versus targeting three nine a tariffs, and does what price be to still X.X to we wouldn't on neutral was the it our or because to is The full about with this through what respect annual XX price impact the be if full XX. consistent vendors, realization cost year. an with of will overall again the go financials with for project we our to respect impact our But fiscal neutral on negotiations realized then financials. year With year. headwinds to the we

Scott Graham

So you –

Patrick Goris

short playing in it in – – is say would I out

Scott Graham

Sorry.

Patrick Goris

Scott?

Scott Graham

that your was balance asking you on off? I Well would Please. pull chain initiatives then back supply to just

Patrick Goris

you another $XX need with be be million implement The a think go does could not this us way for tariffs. won't No. price there is to to $XX about increase the associated if million

Scott Graham

Fine.

go to back a better beat Okay. maybe Great. you. guess. to that Auto I Thank horse and want little I

second down saying And quarter year it's think just a on comps kind us of into it the facing XX you're you've the actually I full and know hoping of you're I'm things some it little situation, XX minus on you minus like could also year? first of half So and I minus there projecting further we outlined was bit a quarter Yet, in this looks deteriorated said, kind this the Auto the XX side quarter. the On you how XX. down get in XX. second more give half. you're But

Blake Moret

Scott. Yes,

about year-over-year, this think it can QX was to you about way whereas down much our XX% was compared the first pretty flat So quarter.

QX And flight. QX so slightly for the balance Automotive in to related of and the are expect year, that to of we low-single-digits the up know be larger projects some in we

From slightly the of a we balance point And XX% as the up for to still in not and expect Auto year-over-year much it, of so, year-over-year call down, view, QX year. be flattish to just QX. as

Scott Graham

half, up So slightly to year-over-year? but the from of Auto first flat rest year, down

Patrick Goris

Correct.

Scott Graham

of more now kind from away doing be know I by the kind know given question Got and PTC when where I going are what just the But sneak thing. your maybe end of more it's color, of your us bit sales, customers year. working here, certainly there. customers' do from to CapEx could it. customers saying the little you're the If appreciate in last hoping I that. the one was sort about great of the And out to which standpoint whole a of agreement, of I they're is and But portion you've

give if areas, of saying how in So some in specifically in maybe in the orders you possible businesses us Auto I about wondering if the are maybe was customers Heavy those saying, the We've can are what flakes of talked and are. sort Industries. customers loop just maybe what consumer

Blake Moret

Right.

U.S. they are CapEx Sciences, addition in the mentioned it's was a Automotive, packaging a Bay in reflected Green we're continue some project, about. the here in bit vehicle, Auto. capacity released, some vehicle of that before has previously the we some autonomous CapEx releasing moves we of the the see little CapEx has Life of major in I resulted Lonza that that So, delays model that that which process, in of talked playing with for Today about projects We in in CapEx in the being and and we're that role to changes, talked to and contenders mentioned Pfizer. projects the in In we've electric talking development of Europe. $X.X billion uses

in to continue consumer beverage. and Life particularly builders report I mentioned healthy their backlogs food Sciences. machinery Our in business, and

in so outlier remains broad base there a North of automotive And particularly growth general, and spending America. bit across there industries, of being in remains the the

Scott Graham

guys. helpful. Thanks a really That’s lot,

Blake Moret

you. Thank welcome. You’re

Steve Etzel

Operator, we’ll one last take question.

Operator

Justin question Thank comes go Great. from you. from here G. Please And your Bergner last ahead. Research.

open. is line Your

Justin Bergner

Good morning and thank you for taking question.

guides sort organic there any... XX year points, bringing your down are by Auto basis addition of In full guide about the to

Patrick Goris

Hello? Justin, out. you've cut

Operator

Bergner, X you re-queue. Justin And can press again if to star

Justin Bergner

Auto markets year I worse materially again. organic looked outside a your versus there quarter XX live of I'm full that about Hopefully, by they with how end Are asking down Hi. or guide in year full better was your look points. any implicit ago? outlook bringing basis

Patrick Goris

all some Justin, verticals. little I would but that puts Auto mover takes say always that move no. bit, was of a and the our big There's it's really

Justin Bergner

terms such segment comment of good sort margin Control delivered mix the margin that on margin absorbing Products a a absorb headwind strong Any improvement there Products to the in & seem while headwind? how of performance on Solutions growth. And in you in mix Solutions increase Okay. the growth versus

Patrick Goris

Yeah.

main of between there mix Products the organic margin segment. was So the spending. sales segment year-over-year big strong the & was modest were Solutions. headwind that partially Control Those by higher driver really offset growth, of movers expansion The within

Justin Bergner

Thank Okay. you.

Patrick Goris

Justin. you, Thank

Steve Etzel

I'll Blake turn to final you. few it Thank for a over comments.

Blake Moret

growth So key investments, adjusted are growth summarize, Automotive. X% line than just PTC in regions Sensia progressing and of driven all by we our to Two well. verticals and delivered other larger EPS top in strategic

owners. of for and see partners new our the value our I'm execution to employees and very customers accelerating are embrace strategy. win, share ways to encouraged We expanding

Steve Etzel

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

Operator

this disconnect. that today's you. call. And time, you concludes may conference At Thank

Rockwell Automation (ROK) 25 Apr 192019 Q2 Earnings call transcript