ROK - Earnings call transcript Q4 2020 | 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 lines for questions. [Operator Instructions] At this time, I would like to turn the call over to Jessica Kourakos, Head of Investor Relations. Ms. ahead. go please Kourakos,

Jessica Kourakos

and morning fourth you release quarter today CFO our With Good and our for Etzel, Steve conference joining Rockwell me our Chairman Moret, Blake Automation’s fiscal is Patrick and Amy. Goris, for CFO; thank elect. us call. CEO; Thanks, XXXX earnings

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

remarks website on be For your will convenience, also at call. conclusion a our of today’s prepared available transcript the our of

addition, an In segments on posted our new supplemental adjusted related have earnings information and business to definition. our and filed website X-K we’ve

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

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

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

Blake Moret

and call Jessica, joining today. morning, for good the Thanks, everyone. on us you Thank

and been be has well of leaving treasury, who us, us returns, he legacy I its consider and pandemic. be next Board remarks. strength XX protect returns. for XX are during very years few Before his including want also we will years has customers and pay for Patrick full FP&A. begin financial temporary strong his you in Many and deepest and and under in Steve making to an CFO smooth and framework the financial cuts successor. discussing we years future thanks working to a run over and to employees delivering financial announcement while discipline external to on my will will May, been as in our investments Steve his company actions the jobs investor know continued we of us has I’d he pursuit. our new our permanent difficult ensuring have confidence these candidates like drive I corporate want chapter basis. to have first opening These in that company’s In interim who to The Steve shareowner and a transition, allowed superior targeted to internal to over commitment Patrick’s continued growth. very wish shareowner us our with results the the of and make conditions, reinforce a help us start outlook, with long enabled our to career. and address to we send continue implemented him cost serve a recent preserve thousands to I important Rockwell Etzel, stepping superior relations,

the reverse temporary reductions than of one earlier business November, pay month gradually will conditions the with we by Now, improving, end expected.

the never This guidance is our for I at we In of and testament have employees’ to type Because couldn’t Rockwell hard our bonus funded positioned culture addition, plan. we dedication, next lies ahead. a a and what of year assumes prouder. fully for have work so be return another been to well

to our X. Turning Slide now on results QX

Independent Organic pleased steady led Product year, in In prior motion was long are U.S. by history. the a by expectations for business as Automation’s record project Drives based a and control year We Motion ago, the remain our down we difficult Independent better-than-expected but dependable about sales this seeing. a need sales us declined from the traditional supplier. we’re on won provides X% with QX, Technology, While versus improvement largest where reported multi-year to year. conditions total Rockwell new U.S. value way responsive the we by grew relative our Navy in received and drive sequentially. prior Motion. order for were not results driven single performance Cart precise, track XX% Cart outperformed and sales systems, a on to with and Rockwell’s versus available XX% were add highly growth.

our and Investor it, on at Day be XX. other innovative You’ll hearing November upcoming about more technologies,

the our Solutions acquisitions. and and Kalypso both the relationship. Solutions our grew this point as and in sales PTC evident well and their orders over sold very double from recent Total the to enter prior further PTC, orders grew grew of Turning organic and Services, and inorganic we up customer doing differentiate. business IS/CS basis. Demand and Connected Total for is $XXX our on us increasing a acquisition organic synergies in Kalypso had rapidly helping year fiscal an versus added they the In wins, year we is high-single digits led the year. in large competitive contributing sizes is recent venture, in services. our quarter that is combined our Connected investments, sales basis Services. contribution positive particularly reached and Information new all deal history. as recent continue offering are versus to Organic to expansion XXXX new and inorganic to connected excess million some best three a of extension were sales by XXXX, the an just digits Together with on also Information grow. customers. Kalypso over already our joint in include software of The including backlog with Sensia investments. quarter approximately software ASEM partnership along in very XXX when of fiscal software year, prior we’re result prior digits happy in double well with were of low-single IS/CS digits and logos the fiscal

Services Independent received not large Navy. Cart Solutions X. QX Services Our the full-year we U.S. and and book-to-bill X.XX the and book-to-bill over include order Solutions was was book-to-bill This does from

Turning to margin last and in flow business strong over on sales, also cash position. with strong, year our reinforcing liquidity quarter XX% resilience. profitability, lower Free very of operating solid increasing sheet was performance flat was underscoring segment balance our the

now a end-market turn Let’s provide X, QX our to I will highlights organic Slide where few performance. of

expected, German the companies. we declined car XX%, electric cybersecurity in momentum with Europe significant driven notable win segment automotive than projects market OT projects brand approximately owners. stronger saw was in industry discrete in manufacturers Among by battery with performing the a vehicles, Our sales. quarter in And better and MRO the we with major continue one and of more the

vertical things, from secular faster the devices with announcements and centers versus new and focus production This year. smart tailwinds grew along internet from the as adoption and rise of resulting recent digits are We another of need on benefiting a excited is for very established new high-single EV the wireless compelling strong of XG variety had they we both automakers the the such semiconductor, quarter offerings. as by technology. In prior of data of and

material another foundation for In management, as software. well been with to to suppliers a secular will at that win e-commerce, in support largest most our one Cloostermans, the industry important our its handling This we and significant had industrial expansion ecommerce global the long-term industry. automation tailwinds we software invest tremendous future of and growth. us, technology to is opportunity facilities for addition In to has as strong a an see which continue

outperform to discrete Turning software because that like and quarter, now delivered software fiscal in In XXXX. the digits software. and by connecting trace for little was manufacturing continues in down growth Eco-industrial to the gas Packaging segment FactoryTalk They in double global capabilities and OEMs benefit paper. were to project our our and offering ecosystem important these won of to continues important Tire, connect track industries and demonstrate differentiated our our all Once Cooper weaker pulp a partners, another portfolio, outperformed than hybrid strategic and quarter most in mining beverage industry with which Cooper growth differentiation. market and their markets and long-term that with our we strengthen digits competitive offset expected, power, and growth diverse quarter, than process the outperformed control, process the up we but to Food this well MES in Tire was and segments. XX%. strong key markets year. had reasons analytics better-than-expected less industrial and continue little Tire. both chose rubber again, its plans. support had approximately where capabilities, by strong in Rockwell Rockwell at and of quarter including to from and non-Rockwell the sciences expectations. down and performed other a to quarter declined fairly life other line differentiated strong competitive was Oil company’s performance and integrates believe we We segment. but Process This ability markets partially environments expertise our prior a accounts, control wins platforms. best-of-breed both were Sensia held our water, and during the versus the very year. each the and double-digit declined X% for low-single will driven

sales performance products, improved quarter. Slide by in to prior particularly significantly now Turning conditions XX% and regional through North organic the declined organic the our where orders sales exceeded Business quarter, expectations. year. the our X America versus in

also sales entering Independent the largely in than creating These that large partially strong EMEA, were offset Cart While year, orders new to by declined year. growth saw fiscal strong the doubled within our water. was software part Solutions we momentum that XX% of In prior due great result, win Information delays. versus CapEx more

grew builder the the Pacific mass growth declined, year-over-year largely quarter. declines Latin in transit. America oil in growth in gas. mining and life sciences mining mid-single business were user partially in Double-digit X% but sales machine automotive and due within business. and those offset We digits by PPE-related also and declined and Sales end orders declines. led region declines China to saw in sciences life Asia

all at an Chicago respond Slide for turned out say I’m now but soon of very ability us year. to while than water, during to food, the XXXX our protective at plans shadow together incredible top created taking of forward producing our through important. what am the for great top going. an to that deployed year. XXXX, proud has discussed dividends enabled our gear, this best very to The actions we line tremendously the Investor took and strong investments toward kept million the and performing the to manage of $XXX Fair what’s resulting can execution turn highlights by of strategic customers, over almost accomplished the drive deployed Day X Let’s provide big last about our of many pandemic and excited we thoughtful fiscal our us in pandemic while dedicated free of to see big service And steps million of XXXX We orders The cash $XXX keep to that unique understatement same fiscal the pandemic vision. $XXX and I business continued repurchases the areas in on truly It’s of focused employees in to Automation our at some which November. We enter review software safety the costs four fiscal a challenges, list are as projects. inorganic I’m We different our this whom and full strategic in our internal and proud performance reached sales contributed investments those in in in development including points was time over million one investments, you fiscal the we and momentum the protect both cash over business, of that we’ve revenue flow. our medicine of XXXX. growth;

now Turning X. Slide to our outlook on

is exiting second sequential production projected our grow As year. of I saw earlier, strong year. momentum in Industrial the said the fiscal to half we

quarters of XXXX. fiscal in to couple growth QX us So trough year-over-year climb it back from the may a to for take sales

We our expect during double-digit quarters. year-over-year third and growth fourth

not Of closely operations. all assuming shutdown are we customer of course, monitoring manufacturing to related we infection a global levels this widespread are pandemic, but

date. of including guidance We our organic sales fiscal X% XXXX at the grow to of X.X% and midpoint expect point of the a fiscal over and range, to reported from XXXX growth growth about acquisitions

grow showing results. after company resilient growth ARR is fiscal last are in we to important as addition, an the at up model. further Adjusted ability have the In a X% adopting $X.XX revenue more expected this year. performance to expected XXXX XXXX, which fiscal and midpoint, over recurring added fiscal is to in our an business in for XXXX. compensation annual framework ARR double of evidence reach digits EPS as our is incentive build from beginning is metric This year’s XX% metric even

discuss end that, it who XXXX and our over more on We fiscal next performance. Steve let sales can are financial and our into in market you with we expect elaborate on end outlook fiscal year to this oil year key markets will XXXX exception of With slide, XXX%. his of targeting Patrick me We’ll I detailed our turn outlook won’t the conversion free fourth now Patrick? view Slide have on gas. then remarks. positive by quarter into A the all details cash flow see, X. go organic is our as but growth of in found

Patrick Goris

will X% Thank progressed year-over-year to Key Financial than sales as flow was The up of of products Overall Fourth were were structural quarter, sales start Sales, sales lower Independent same the to and QX. X.X in over offset combination was margin, quarter perspective, the Segment the smaller expected $XX year. short-cycle million versus for and organic and last good in and was large growth the free net better XXXX. QX decreased realized organic corporate to and in than by result were a year-over-year $XX $XX improved the down by acquisitions expected double digits temporary annualized about very line headwind million, contributed Cart sales earlier. EPS company I’ll what morning restructuring XX% margin actions. order translation Slide additional even sequential year, was Blake Quarter expense XX% segment in included expected million negative cost was Backlog increased from we a of Currency sequentially referred backlog savings and expected. results a excluding partially cost as total sales and quarter. Compared be points. operating which as quarter over savings, impact Blake, in our charges most fiscal to growth. up structural and just you, a of XX.X%, Organic all everyone. last are Fourth productivity. fourth Information. of Adjusted yield these X, on much cash better pretty General mainly with

slide. on cash the EPS quarter a result of provides to $XXX over contribution our segments contribution sales cost income. performance made U.S. reflected the of the last on due to though cost than impact lower of was to As fiscal later a expected, a up adjusted with tax a Architecture year, sales, for over points most as strong. compared year, productivity, up of compared generated I a adjusted adjusted year-over-year cash organic segments pre-tax organic to a compared of walk on bit quarter. prior organic EPS including free including efficiencies. QX, The of to geographic compared effective voluntary & The compared quarter organic performance next sales our a despite from reduction sales were of of as in over basis lower adjusted Segment & overview a result in Organic fiscal better margins XX, about plan. We XX%, mentioned earlier, than income. provides QX operating different $XX for adjusted basis slightly improved million margin margin tax conversion flow also mix Control cost QX improving of fourth XXX% a last flow remained Note pension of not EPS compensation. better QX, cost XX this lower XXXX and $X.XX to last and increased were we the of and mainly bridge mainly quarter, the voluntary to Slide operating XXX basis segments basis slightly XX% includes lower rate. points, impact an XX I’ll Segment sales. sales, XXX result a that guidance. sales, million expected, XXXX. actions year. remained Slide actions both mainly segment Solutions actions, to to pre-tax Free higher well margins declined result was Compared as our generally of lower Software organic our but to our of incentive full significantly due the the benefit Both both rate lower control was offsetting segments. the This Products points last cover pension

is currency good XXXX. full declines second a As of about and below half from year, by organic is experienced contribution A acquisitions This that the of X% a result start which for outlook sales for see, year than is, with impacts. down was bit Organic information a key conversion, core we of XX% decline. July. acquisitions financial fiscal in effects a offset earnings year-over-year on year. the shared adjusted to a Slide sales XX you After implies fiscal COVID-XX the positive provides as can core little XX%, better performance the in unfavorable $X.XX declined EPS sales the fiscal the pandemic. excluding currency I you significant

XX%. about sales helped increased and selectively of increased Our to percent XXXX. target cost down sales. contribution strong, in partially was Free was last R&D at flat R&D performance EPS year margin finally, investments on Full to a conversion $XX compared as XXXX, Free million reduction actions capital areas. Adjusted flow lower cash XXXX, key X.X% highest and year, segment last our of priority was margins to remained of protected compared fiscal excluding was And the over sales year. fiscal well impact some mitigate segment about XXX% cash further to in pension flat over adjusted in income. XX%. and XX% invested return record of our of remained fiscal voluntary and to investments the We flow XX% compared expense of remained above

to turn XXXX. share Steve, dividends, billion over in acquisitions, we it $X.X I towards Before I mention to want and of repurchases fiscal capital that deployed about

liquidity million, Our the cash $XXX over remain September XX, total At capital billion. year about our and was on structure end, strong. balance was $X sheet debt our fiscal and very

$XXX we XX the X.X. September at off paid that that, year, our we and Steve. quarter, the was debt-to-EBITDA fourth the million earlier ratio net loan term in During With executed

Steve Etzel

Thank you, Patrick.

XX order Slide daily our trends, to this for of products, Moving shows product which account our two-thirds order overall shorter-cycle businesses. slide for trends sales and about our our represent

products As to we for the continued improve quarter. expected, order during intake

Our continued performance on trend basis, to October continue. down year-over-year order XXXX fiscal for guidance will assumes a through digits. this product low-single Daily improve

Solutions product than orders are slower orders. recovering

move to Let’s guidance the XXXX. on next XX, fiscal Slide for

fiscal we the up As expecting Blake $X.X XXXX, midpoint of in X.X% are mentioned, range. of billion about about the sales at

in to to sales be organic and up range sales about of a range. From fiscal sales We our X.X% organic second expect stronger calendarization organic expect to growth be of down mid-to-high viewpoint, X% XXXX, mid-point half compared first by X.X% at the we with the teens. a to half followed

organic double-digit about reminder, half. As fiscal sales first easier the declines half in second comps flat, therefore QX of starting XXXX. followed fiscal We a expect in by XXXX were

that excludes which At and at our be guidance the impacts XX%. the higher between XX.X% assumes earnings We of XX% the XX% conversion, expect currency and end midpoint, and of acquisitions margin core full range. probably segment between year operating of to

productivity. funding cost As incentive to a our actions $XXX XXXX year-over-year fiscal we reversing temporary to we additional million headwind and mentioned with related compensation fully reduction last offset expect quarter,

to expect fiscal XX%. We point rate items the will about related full-year expect realize effective adjusted includes which XXX-basis discrete we This year. to in benefit the tax late a be

underlying Our effective be expected is rate XX%. to tax adjusted XX% to

X-K and excluding an in in as new from effect are new accounting our for well Under segments basis. historical the historical earnings that definition EPS by previously. fiscal note of purchase depreciation beginning the we morning a As EPS, reflecting filed of definition the on $X.XX that approximately our announced expense modifying has adjusted we amortization as this are our information disclosed EPS. adjusted release, full increasing provides This operating year adjusted definition, now adjusted of EPS Please new information we that also recast we XXXX.

growth Our new guidance adjusted fiscal is XXXX This midpoint at higher On adjusted the X% on XX% EPS range, basis of to EPS an sales. the organic to of new the this apples-to-apples about EPS on on the $X.XX range $X.XX basis. represents $X.XX. basis, compares adjusted

as We and to than and primarily of the expect improve adjusted sequential be temporary XXXX to quarter expense $X.XX XXXX increased as quarter the result fourth of our November. reversal performance, year fiscal fiscal headwind of of compensation EPS to adjusted end anticipate EPS incentive lower throughout first related a a cost our the actions

flow expected to other we expected to expense, lower Finally, $XX full-year of income. corporate a referred and assumes XXXX guidance, XXXX. $XX expenditures million expense, on cash fiscal $XX and contribution. XXXX $XXX of corporate general be is additional adjusted little previously free we pension and $XXX comments expect Net for million. expense XXX% of about interest U.S. a XXXX between million fiscal few million, is conversion This capital around which than A fiscal be voluntary million pre-tax net to as

shares. average fiscal to XXX EPS adjusted million fiscal assuming diluted XXXX next guidance about we’re shares the XXXX of outstanding XX The the walk midpoint. Finally, provides from Slide

adjusted Moving fiscal from $X.XX was the right, on EPS left to XXXX definition. old

EPS. impact the you adjusted new Next the $X.XX see definition of of

temporary on our the the about XXXX of performance about headwind a actions, well as reversal $X.XX. the basis EPS benefit will fiscal higher benefit cost bonus adjusted So, new was $X.XX. of of be to includes of cost actions. sales, $X.XX. organic Core the together, expected Reinstatement the reduction contribute of is and This as

fiscal productivity, to expected be which The fiscal about tax a expect to weaker during dollar $X.XX October to are to EPS. headwind. the and of far is as compared $X.XX. contribute now As Sensia in that we in is made year, core, offset Currency be about one-year rate this quarter, formation Note Acquisitions last X forecasts core. XXXX, the add of to expected in which is venture. mentioned anniversary U.S. these higher XXXX, project was about headwinds a by the $X.XX should so joint

our adjusted is $X.XX. As mentioned, of range, guidance at EPS midpoint the

capital next Moving framework. on I’ll few Slide make to deployment our the XX, a on comments

recognize from our Investor this last You Day. slide may

priorities Our remain capital the same. deployment

first Our priority our organic focus we repurchases. inorganic capital growth. and is focus that, we capital Then on to through After activities. on dividend returns shareowners, then deployment

plans deployment dividends capital of $XXX about million. XXXX include for Our fiscal

continued As headwind guidance our compensation the about strong are track of and we of investments cash temporary cost announced significant Consistent to in sales expected a expect EPS In offset improvement the with beginning summary, share reinstating conversion. reminder, deployment reversing assumes resumed our October capital our continued a actions past of repurchases a Cost performance. repurchases. free actions and organic we a X% dividend fiscal flow to incentive adjusted increase remaining include sequential and year. XX% last growth on our balance expect X, and we week. record, inorganic share We

Turning to XXXX. about comment Slide, segment structure a with XX, which effective new our for fiscal is I’ll finish

our will fiscal I’ll the as quarter over shown for before results reported XXXX As it back we Q&A. three-segment to start that, some turn a here. new, closing remarks reminder, in format With first Blake be

Blake Moret

Steve. Thanks,

companies plans announcing expand resilience, steps includes American points build increase single with or agility, to list see our customers of to their and reduce investments a We Resilience to operations. take continue of growing sustainability. North to failure,

increase natural of make Mexico, a all the and these beneficiary share Other strong which Our measures strengths. include and increased in Canada resilience us Rockwell market are plans. automation, traceability, monitoring, to remote U.S.,

Investor making showcase investments in we’ll We’re during our week’s operations, next own which Day.

prompted quantities therapeutic without be life our and quality agility dynamic and and at Quite simply, safety, of vaccines. The new drugs, with very scale, by sciences the hopefully increasingly results demonstrated cannot the to automation. in great these soon, packaging SKU’s manage software the pandemic testing contribution beverage has of manufactured growth and doses is our equipment of formats, our to Our consumer along necessary by food packaging and kits, operations customers. offered

the for you more fiscal high XXXX This telling looking In paced segment. in growth. to forward coming are includes also we years. help Jessica future, is so begin customers, and Eco gives about We’re industry. a processes team. baton our This at the plans the proud reduce many pass With by industrial our is EPS of our me of that, next electric to week, with energy the need for products the great playing optimism session. one the vehicles important our help growth, of water of single-digit the along talented the and is in the and increase increasing. the is world partners, very as expanded double-digit Rockwell consumption guiding value companies to only Roche, let we ways with leadership role Industrial The focus that to Q&A back innovation to our us reasons recover. everyday Pfizer, every guidance sustainability highest-margin Clean reported drinking I’m other results

Jessica Kourakos

Thanks, Blake.

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

and you. question So Amy. a please limit yourself to follow-up. one quick Thank

Let’s first take question. our

Operator

Research. of comes from with open. Davis is first Scott, Melius your Scott line Your line question the

Scott Davis

Hey, morning guys. good

Blake Moret

morning. Good

Scott Davis

Patrick. luck. congrats, And Good

You’ll I’m be sure. missed,

Patrick Goris

haven’t Navy a contract This you with doing I Scott. with you, Independent heard Thank the while. mean, Cart technology? is the talk about interesting. in U.S. What I the is Navy

Blake Moret

of Cart the tell traditional Independent precise talk of can’t servo we general you and methods other in technology. for particular control types the of that than allows can Scott, motion some application, but amps I in specifics more about

operate profiles these The applications, for you has needed and was talk business, trusted that these U.S. some don’t natural as that, supplier kind were of the also the for long we a a high-performance with while some It environments. of applications as time, and is can point Independent now vital acceleration Rockwell’s a about deceleration government and imagine, of so been high performance to Cart really very are government So a to solution. difficult much premium differentiated fit. our

Scott Davis

any sense. a might you theme could of general markets, I in, that varied, – type that bring logos. new able to Blake, And geographies, type What then to? you particular but add PTC XXX point makes be little know helping customers Okay, any what end new it mentioned thing around that you you’re customer bit of

Blake Moret

the things we’ve penetrate that been the diversity of really and able with proud that partnership of we’ve combined our with one offering. of geographies Scott, is customers been PTC good

to and industries, industries other and well overall we’re and ways So, about business top of these, of across as the these they as going control most of source just of many that of the food it’s It things competitive of excited applications talk systems. mining as about Rockwell’s systems, gives It on lot beverage some about the are that are consumer-facing Rockwell we control goes are of automotive us talked large applications. before that are in top half and a not win time. about the we’ve while new all on for the that

various So it’s be geographies. a to those customers’ really new meaningful value across and add digital way and the in industries transformations. across to It’s the

We have wins in every geography we serve.

Scott Davis

helpful. Very and good guys. Okay. Thanks, luck,

Blake Moret

Scott. Thanks,

Operator

Your is John, your the with John open. line next Haskett. comes Gordon of from line question Inch

John Inch

Thank Good and you morning, much. very everybody, Patrick. congratulations,

Patrick Goris

Thank you. Good morning, John.

John Inch

itself guide? just the over XXXX sustain the or and do part fiscal sequential digit to I to talk core realized be Do core expect that cadence about throughout sequential to sort even guys year? sustained of of as not accelerate of that but sales me the the aware of in of expect you if your cadence, balance you mid-single Welcome. the XX% your year-over-year, perhaps

Steve Etzel

this is Steve. John, Hi,

first throughout half that decline said And mid- gradual we year-over-year, in expect implies We year-over-year the a call, rate half including the on a high-teens. as first a second quarter. and then year, growth into the sequential to recovery

Blake Moret

improvement. would I terms What add good in also did October in we is of orders that see Yes. John

So, that we entered an the the on particularly sign encouraging as year. products, was

behind and but have are leading lagging is to really order the those that solutions services that say We recovery indicator look orders, product products at. we

John Inch

think that more then quarter, Right. this your Right. how year-over-year. December of back sequential that about improvement? and sequential in understand does the slow translate the that March you in XX% on you that trend. Just terms and up? like, does I little a did quarters do expectations color we pick translate terms Like expect bit But to in into, how of

Steve Etzel

fiscal digit think a John, of Yes. it to I as sequential quarter-to-quarter in mid-single it’s think XXXX. growth best

John Inch

then just no that’s want to walk, So EPS would I remember, you’re Okay, redundant to the are Like about some fall? actions headwind. does there I Page pandemic, terms of and that sales in that response of last Patrick, good. going you’ve structural that where out been have this the facilities, offsetting structural your it. the temporary on XX What No, $XX sort I of to actions did you in confirm sort Is you impact to I maybe core, your helpful. carryover as like think a there’s follow-up the just some in And a on right? And map said against talked in the return, quarter, see offices takeout of… quantify structural that this maybe EPS? stuff. take way is structural split

Steve Etzel

yes, it will relates full see the sorry, temporary the some bonus the about reinstatement in I’m a cost Sure. of obviously bonus $XX and biggest see rehearsal, you second, and it’s the in the have to will year. for on we’ll $XXX the That way reversal. I’m I the the as sorry, bonus; headwind is but that John, the is headwind each quarter, out quarter is point headwind. itself million year-over-year full year the a on bonus bonus there second by headwinds. The walk

some in of of on savings structural that core. terms and so bridge, that’s In on, all the

actions taken on so of through cost increases. about if and which the improvement, over some as savings, And we’ve $XX volume last in our increased efficiencies quarters, relate have that including then you We million QX. several there’s reduction through cost will, plants structural other a restructurings to in

John Inch

very that’s Thanks quite it. helpful. Appreciate much everyone. Great. No,

Blake Moret

John. you, Thank

Steve Etzel

Thanks.

Operator

Julian Your comes is line the Mitchell Barclays. line next of with from question Julian, your open.

Julian Mitchell

good and line. I look wanted and in understand forward to products, focus on think you perhaps to thanks backlog morning. called just for Perhaps, around but cycle out the service good you the piece. business trends I top good short Hi, process that and first I all that that solutions orders And and the the working with question again, help. Steve. Patrick And Again,

should return a down I we in think healthy, that ahead. quickly get think looks or that how help QX for bit XXXX. so were when I to growth you fiscal Maybe in this digit so book-to-bill us in year-on-year, see And to the process the book-to-bill growth low-single the understand start sales And was in XX% down year to guiding solutions? QX.

Blake Moret

is Typically gas for to being little is That subdued and solutions some we up the vigorous. right, services we and areas first and That’s in and expecting book-to-bill of activity down other amount are the pick as like pulp see said, about the in normal orders more shipments Julian. seasonality in Oil most we as mining QX, the the increased of talked paper, a half year. bit quarter. probably the is in the

I businesses, gas OpEx like We’ve services if and We come going of seen products the performance on would almost multiple of the repeated a in at typical various are years look say to as expenditures also Sensia. lead cycles. this, to continue solutions and out downturn and orders. we many over always oil through the our focus we that

this. the of up. by have business for out surprised you that’s win not day, to we’re But So and There’s compete at end still order each there. the

are And to focused what with business traditional that winning our we have the comes but on but on, side resources, that’s increase, is activity the that We we’re going of up. new with to not as confident that some only be acquisitions.

as tech and help going as look when there those those fast in mentioned projects heroes projects, to MES we with more the software-based delivery in So when that quote ability recover acquisitions us look but some we all at for And of are just frequency. cybersecurity other in I the the possible really to even unsung we’ve increase competitively got and a Orlo, helping Avnet are of space. OT Kalypso, at as

Julian Mitchell

more why weeks and you. SaaS. alliance But Day. to then did the substantive talked you the PLM at all? strategic your how background as ago. some PTC on PLM at give if it of of Blake, us Maybe as one couple perspectives if maybe with own have about just a a co-offering that of Investor we’ll the about that may relationship seem shifted, maybe broadening now And benefits quite includes this Thank more strategic And was and perhaps the hear

Blake Moret

be is with MES analytics foundation. couple know our wins point catalyzing the well, increased directly offering. for that a we’re Sure. our own that The size on aspects of just what instance, we before wins; of PTC, FactoryTalk the then expanded starting Julian, pace not picking of have it but side as of is mentioned relationship. competitive I of I so software all seems up. a and great doing the The to

Another evolving focused way that specific the recurring is revenue now. that example of we’re is the partnership on annual

of about focused value just new So the the And value base. including both also of it’s of the but side not renewals. contract us same be that’s to for of absolutely essential the recurring it’s annual about that total business, increasing wins, as the on table, we’re on course, the

customer an Specifically and base. respect Onshape very Kalypso, that at pull digital ability have offerings, of And acquisition offering with installed with their thread opportunity be a these thread. open some in we looking in with PTC approach is recent respect to the digital to preserve PLM to and the the some of proving valuable. But the digital thread to and formidable having we is ability help capabilities when the customers’ see respect of we include to PTC, through opportunities,

that PTC continue our brought with on the side, the control but that meaningful So layer. own at that our this we disposal. really and have for to ways importantly And we is also not is on software just another to offering, pulled data way look from up technology to information the tool just integrate

Julian Mitchell

you. Thank Great.

Blake Moret

You’re welcome.

Operator

from Your of open. Jeff next Vertical the is your Jeff, comes question with line Sprague line Research.

Jeff Sprague

everyone. Good Thank morning, you.

Blake Moret

Jeff. morning, Good

Jeff Sprague

Good morning. Two for me.

and view speak of as talk control over in the just your could software if interesting, basically So it in the pandemic, kind to for What business kind what ARR, set we’re restates. baseline of the if us to First that is we XXXX? fiscal of kind on performed thanks worst just is right, And time? Kind for of kind of level software and quarters timely devices. side, of of that, with can of on in line part the the two here. control of intelligent the you year you going resiliency are

Blake Moret

or talked Yes. inputs the control logics the Jeff, in hardware outputs. a part add performance our see a compact control to function, changing of of well essential control a remain then make to a or and the end, that We that. about software mean, we systems persistent comments. of of The processing I’ll of system. and and includes quarters. And really whether on control we of couple Steve all it’s the of states last going heart couple combination in I quite software performed is the in Patrick great may evidence industries of that the based of control that’s the as serve. relative to some rest the during And the packaging two

customer functionality very perform to that depending execution and point there. of we regardless preferences, software where continue well to the from an hardware or back, and think we So can on that’s moves pure firmware we’re essential confident that

on company the selling do talk do over investments is it to on. infrastructure we’ll and we more bit specific few those deck to It bring as talked as sales goal week, orders we that On It it next also sales is software side, who that had think the the and within on we’re great a processing are make starts we’re little software takes happen. ourselves about next capabilities last a again we’re recent significant I decreasing also that that we currently. we Investor focus software a our years, of with in the either XX% and about pure of so the focus the great churn job X% sure ARR. our should Day, increasing a on rates and to make we’re part to of that. add the increasing It’s or all adding software, side, on to good includes and path hands buying. developing and And

So company it’s full to and integrated that. really grow board effort an on the

Jeff Sprague

disconnect happen it we’ve just seen would be Most of it clear a I there decision not to was investor What Thank philosophical right, a we relative so pipeline of there. mean, it’s was at us, was alone. got I the of placements earnings. decision the M&A guess certainly at color greatly coming this And we’ve much of then should gleaned high if here. but read anything X% kind there because would other of GAAP – ex-amort, separately, the happened for EPS. And companies, interested to just there go the in be from that active you’re any quite push making my on you. appreciated. kind more a kind amortization adjustment,

Steve Etzel

obviously it said, We did did as path benchmarking, of you investor a this. we is of lot input doing as have to our Steve. We This relates lot in been history. get a acquisitions a Sure. more than perhaps on

of more and goal have We to line have point thought line substance. acquisitions companies make in than doing compare And come from with the that the year top time a we growing more change more. now lot and we per of been our right we a a is other

Jeff Sprague

Thank you.

Operator

Your is Steve next comes open. your Tusa with line question JPMorgan. Steve, line of from the

Steve Tusa

good morning. Hi,

Blake Moret

Steve. Good morning

Steve Tusa

far the bit sequential performance, better, a guess you little that of XQ got as you side, a we models? our quarter the the guys at about by sequential almost in down maybe everybody there project all should want lot. thinking because the of as kind or of last on year highlight outperformed in year-over-year second take guys just And the kind you of kind anything John So I comps to

Blake Moret

think a and and period variable by going end general in end where are to markets OEM we’re Steve, highly I split. time be in of by by user, things geographies

as of said, have In are of you’re results. gradually And the of growth a business line year relative we outpaced we industrial and much competitors. to like going conditions big time, strong on grow our performance have during impact of kind expect the position to our it parts I looks in as returns easier from this theme the there, in return think we in QX QX all as we last and towards recovering and general, production QX, top pretty think out the is I as we’re recovery. trough, of a amount And year-over-year and So correct course world, different to pull comps.

but The was were surprise, industries mentioned regarding other were bit automotive, Automotive, wasn’t XXXX, point the but would that positive QX there broad-based. a I just I of think of it quarter. fiscal positive a it a you that number in make was

Steve Tusa

ahead. Okay. And then just – go yes,

Sorry.

Patrick Goris

the little in headwind to full is million I of I going you am like bit bonus earlier year, of to since $XX elaborate QX. million play and $XXX out to $XX $XX a QX going for headwinds mentioned and on up just what QX. our million in quarter QX, But million QX in all the approaching by quarter something $XX headwind million per brought

Steve Tusa

given I and segment PLCs, of pretty I the great. Okay, kind sales I Thanks in Software color. the margins and that at you majority guys? hardware the are I logics those high for the that segment Can the the for And & margin segment, XX% just Control is majority these sale think side, is for of of breakouts, that peak vast hardware. think new on then were assume XXXX mean, lastly on those that the

Blake Moret

logics that us. margin question good hardware is for no yes, Well,

all If you billion on do segment, and look we’ve of the what at you & software by and segment. math the $X.X Control about provided this breakout in fiscal Software in XXXX is

attractive this the pure segment And is in million that fiscal that we of is said I also currently then, software. our over the So $XXX that, in it majority was XXXX the mention, investment. should of

percentage as have So it’s of the in or investment. whether it’s the in highest development would segment sales this a software logics

Steve Tusa

through then And sales said through there, come you’ve incremental I of at flow margin. your normal will related think PTC Right. that kind

basically similar margins booking PTC sales, those you’re will? you on So, if

Steve Etzel

with we our about of one own in-line probably the of margins company PTC offerings XX% Steve, you it, than software. overall there, our way incremental course it controllers if to or can and lower XX% and be would package customers average, own we think between our achieve so

Steve Tusa

the lot a I appreciate thanks Yes. Great, color. it. for

Steve Etzel

Steve. you, Thank

Operator

Andy, line next Kaplowitz line your comes You’re Citigroup. Andy the with of from question is open.

Andy Kaplowitz

looking again. Patrick, working Good you congrats. forward to morning Steve, with guys.

Steve Etzel

Thank you, Andy.

Andy Kaplowitz

seeing are as to significant bit related these your either about color it or you outside more in past, I avoid in life in of increasing to you of investing this you’ve the Blake. you would about a investment the increase We investment? think little amount this you’re can you these of And failure? in of of a actually sciences, your what but spoke know reassuring characterize remarks, sectors? talked give you’ve sectors to type order continuing seen, points or customers, into us the semiconductors, seeing orders know terms uptake about prepared single you when

Blake Moret

Yes.

the the announced we longest As life do science things have talked U.S. to area have Andy, customers the before about where in probably list we’ve plans is of that

these of what Some have they’re public been about doing.

with. for doing or let’s is are considering consumer started really so the customers have are tools, doing some It’s our customers and are – working steady electronics, seen with that that also of doing others high and and with, if I’d these we cadence out and they them. there part And you will publicly to attempts Sanofi our take some You that Becton, who sorts in other about, but what disclosed so say with that overall we’re it’s work past a say of we respect get kids, the Semi Taiwan profile industries, familiar work a things resilience. in and salespeople Dickinson consumer we’ve other there we’re haven’t announcements about the We’ve on, that. that yet semiconductor talked

avalanche the it’s not we’re steady, dollars that It’s certainly it, we’re in reassuring. the meaningful. of an seeing seeing that’s there. that We see out but of business So coming that of millions

Andy Kaplowitz

Blake. know You was mentioned globally. down materially that the give declined than and you what for QX, builds it seeing in in was markets? into you us Thanks did QX, automotive And XX% better as color it improve you but modestly than then more expected, only can better auto you’re

should that seems I you’re you being FY that EV on back accelerating maybe think as a us automotive XXXX, kind transition build in held was of of go help XXXX. versus and be you XX% up seeing So the into we’re in guiding you, we bit to know there anything update QX sort

Blake Moret

sequential. industries, did almost strong, good all a as was automotive. with see we so sequential double-digit our increase so Yes, It in

rates line sight fiscal So up and around a get XX% we And vehicle growth the the MRO as We as about, have automotive. good we we the to EV there, think like obviously XXXX gives than portfolio across us for substantiate that higher into are areas see year in XX% us optimism. projects electric on that. particularly of within think automotive. improving we in for talk win Then general

Andy Kaplowitz

Thanks for Blake. that.

Blake Moret

Thanks Andy, welcome.

Operator

your Your next is line of Obin line question America. comes Andrew with from open. the Andrew, Bank of

Andrew Obin

Hi, guys. morning. Good

Blake Moret

Hey, good morning, Andrew.

Andrew Obin

congratulations. Patrick has everybody about you Patrick, look And working Mexican won’t as you mentioned. effects, forward that. Maybe do a with again to Steve, ask I question I’ll So

thing it but is bit They’re time, of more, just more Just partnership, a what addition trying partnership of anything doing little SaaS, more with to there? announced couple there a to you clearly expansion have in Microsoft. was a guys talk just for are also you Can on with you PTC, wondering, in cloud. PTC on because yet they’re also announced questions, long vertical. you your do is own been is focused new focused aligned their I aligned with so because the you And industrial more Microsoft but Microsoft, first,

So that’s my question. first

Patrick Goris

The primary new work this is expansion targeted Microsoft and cloud. focus of Azure of infrastructure the Sure. with at

with as already information for approach well as working well SaaS capabilities design and some of be areas demonstrating capabilities. using Microsoft our new in along we’re we’ll the so that And of a are new in

significant complement of the so. that or forerunner and the year new a are So in over capabilities existing see will these functionality, and on-prem of next really our kind customers cloud of amount a both

talked forces So functionality, it’s to only our provide to to we’re with together about and expertise we it’s And and Microsoft OT this bring, new excited customers of join in about which to with that’s expertise value. year. the foreshadowing functionality a pace to been the specific From we their less to it’s come. I’m tools the were now new combining very it. a to meeting design but for on that’s first things Azure that going not it’s really, forces, excited, create than with using focused the teams about able great really come assemble

Andrew Obin

sales Do Azure more you to to SaaS sort your to force sales? reconfigure do of of need out-sale the

Blake Moret

motions IT the within but and We’re microcosm talent it’s really of and learning convergence to certainly going be of force, overall adding OT. new sales our additional a

is Our And what with operational on the or and and home is who make money selling the floor middle and understand in of software perspectives field downtime. they right the technologies of advantage how what customers now. understanding people of the avoid complimenting happens these plant we’re motion that

We’re making significant that bringing the new enablement and sales the training investments talent, for force so new. it’s existing in our up talent overall plus together,

Andrew Obin

in question, from and conversations you election on the focused their new have about Thank strategy maybe and globally, contingency you. U.S. will the plans of And just with a capacity away. a lot are tariffs the light follow-up go your administration longer-term customers, of of reassuring, that new hearing again frankly on results. had mean administration, with kind less in What sort we of because investors

Blake Moret

importance and manufacturing. the We’re of Biden in U.S. has talked that, about administration the Biden campaign encouraged the

as important recognize most economy. American of us. that And manufacturing that single vital they issue plays of for the is we’re optimistic the country that a this part in so core And importance the the

to with development is the to the ways looking U.S. us a organizations well. on, working to for we’re so issue with forward increase them of and professional crucial attendant the as along which find through workforce manufacturing in And so issue

Andrew Obin

Very much.

Operator

with Your is open. next Research. Nigel, your line of Nigel comes Wolfe line from question the Coe

Nigel Coe

me fitting Good morning, for in Thanks everyone. here. Thanks.

XQ you you So that just if what Did sales. want on go I’m was to not sequential sure back John’s and say question up X% to indicated.

right. Just got sure so below is make normally I want XQ, I just that XQ to

Patrick Goris

Yes.

momentum to seeing it’s in some solutions side, QX typical described the I are be we for just down. as So, product for but

a headwind general bonus sequentially, slower to in little down well being comment done reinstated. part digit temporary actions EPS sequential than that QX It from QX. sequential we’ve from roughly was then could QX reversed that the mid-single being why be my as that’s be expected reason of mentioned So as and could growth. And the be sequentially the

Nigel Coe

the products point there’s that But enough take Right. offset the down that inflations? momentum in is seasonal

Patrick Goris

directionally that’s think case. I Yes, probably the

Nigel Coe

the wondering, expansion competitors with a amongst on of that, within I PLC PLM, offer change of those in then required helpful. of still And integration relationship view That’s bit you there think of a one PTC, great. view And be spending layers? done about that. And integration. a has has your more Rockwell your around very all to integrated just skeptical there investment I’m Okay, strong then big has taken been solution the the that? sort of have or investment been is some with historically the done PTC to

Blake Moret

Yes.

vary view by applications have version multiple the create their of to that, customer to thread different digital Our industries. going going our and is is that’s to

looking So in looking thread what in for oil in is to you’re automotive than typically. going of for you’re gas terms digital the and be what different

the between of Let’s portfolio. PTC selectively looking interesting are parts at say, integration we

past and our was this Heppelmann Onshape that One of areas highlighted Jim simulation the capabilities. during specific LiveWorx summer EmulateXD

value. area we that’s one and differentiated that’s so And very interesting, have

We’re doesn’t instance facilities every areas. in using it’s But that have we helped in-house. that to other in it and mean our us that capability competitively have own in win

So vendors, approach and approach software our of is to in in open tenant has application made that an investment important terms different respecting the the and market. of customer have already installation, industry training an

an to everything, and particularly like add deeper just use that’s own and we we integration mentioned the to between tools where we necessarily pick that And additional interesting EmulateXD, will one need where provide go we cases value. Onshape so will I example don’t but

Nigel Coe

Thanks, And thanks Steve. Right. good Blake. Patrick, luck. Well,

Steve Etzel

Nigel. you, Thank

Operator

call the closing back Jessica now I answer-session. to This turn our concludes remarks. question-and Kourakos will for over

Jessica Kourakos

back Amy. Thank final turn for to the comments. few it Thank I’ll you, Blake you.

Blake Moret

profitable and of results role Nobody in played for better the happy all is partners Rockwell and Patrick wish success, you health we remain to taken to want same we our gradual are than the time, and We continue industrial bring thoughtfully a Thanks, employees, of positioned well-being the to technology to our together. At manage and operational on focused see recovery. Jessica. information We technology through and will the good I Patrick, and you support. you’ve big be steps your best. to a growth. wish our you interest positive accelerate being also all missed. thank

Operator

Thank conference today’s disconnect. time, call. you just concludes this This you. At may

Rockwell Automation (ROK) 10 Nov 202020 Q4 Earnings call transcript