ROK - Earnings call transcript Q3 2021 | 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 now like to turn the call over to Jessica Kourakos, Head of Investor Relations. Ms. ahead. go please Kourakos,

Jessica Kourakos

and morning Third you Release Quarter today our With Good CFO. Gangestad, for Conference joining Rockwell me Chairman Moret, Blake Automation's Fiscal is and and Rene. Nick for our thank us Call. CEO Thanks XXXX Earnings

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

the a prepared in Supplemental of our call. our convenience, new be information remarks related your to available Relations segments Investor transcript corporate found of website also conclusion website. can be our today's also For of at section business the will on our

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

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

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

Blake Moret

Thanks morning us Jessica joining everyone. and good today. Thank for you

Before Bucks. first an our congratulate let incredible I me begin season, Milwaukee Bucks Go such for

talk a of couple about to key the moment a take quarter. in now me Let highlights

drive global a to and the brings Rockwell of this as after and core Cyril more customers. at services customers. wealth and even outcomes automation, our provide role about to who for pleased to help software, Perducat value First Chief additional and with very later welcome experience helping I'm automation Sujeet perspective November. the legacy new from in positive more and of talk impactful experience will for transformation combination a and great He His year of Chand Cyril his Technology all, our a is mindset managed I'll retiring long career Officer. passion digital offerings succeeds

of Plex be will QX We a agreement service this it the we a cloud-native scale the our at acquire and definitive close Fair during operating its to offering. software capabilities in of is year. expect leading Plex look platform Day also signing Automation into production smart to our Investor FactoryTalk and of announced part manufacturing which Houston. big as system a Systems in showcasing We integration a complete unique at November to forward

another across turn XX% billion quarterly prior grew versus $X.X year let's to levels recent Organic including a new are from saw our significant Now Kalypso, supply The Fiix. exceptional of revenue to Total dynamic chain Slide of orders and including a record and $X sales persistent XX% a monitoring challenges. and ASEM, despite that we a component constrained situation shortages. manufacturing due surpassed increased hit electronic It's We our demand product demand continues demand closely. supply to portfolio. very over X. chain acquisitions quarter Total remain contribution of reflecting results on pipeline. one-point strong grew billion

OEM business these From to strategies growth organization broad now and strong short resiliency. motion on I strong increase automation Our strong partner to offering by our order our was navigate technology in chain investing continues and Devices including will wins chain segment. orders intake order Interlocks, global world. leveraging top throughput. perspective based challenges cart commerce XX% e- the Interlocks measures of both whose automation segment. for XXX% increase taking growth our supply of is and important XX% was growth Independent cart variety orders consecutive quarter organic quarter. by a in technology this again is the independent Intelligent saw based long-term largest increased included broad American in the realize performance line are warehouse a material orders our handling to over supply cart Once sortation an a some is driven in and was the products. which process the in of demand sales our record North in independent able their and applications in this third of led high by comment supporting machines bottleneck area e-commerce

Logix organic for services, year-over-year. strong demand was control the and and sequentially. grew continued prior XX% showing grew of XX% grew product versus drive fourth family. business sales X.XX strongest control over the and Software segment is segment. Book-to-bill sales Orders year-over-year software for sales XX% and XX% lifecycle sequential prior this through X% backlog to segment XX% this improvement over versus across sales year organic in quarter. by segment momentum. over increased expected year our led company In grew this the by Total increased the major strong

that strong future. favorable segment basis resiliency in of as profitability, set increased by points our margin Turning the our increase contributed continued we above all $X.XX profit us XX% a Adjusted higher versus to make and grew was up due mix business technology and quarter strong expectations. performance people and to for and to EPS investments our XXX primarily year prior sales of operating the sales. XX% to Stronger

with of Turning infrastructure-as-a-service important newest across strong Sciences which contributions Food represent to of the grew double also digits, Beverage most manufacturers. revenue orders Recent great end sales some Rockwell’s Connected Organic had and and & many a variety of Life of software orders Information number Services, with streams, and include another a Solutions markets. world’s and quarter. wins digital we meaningful

manufacturers to SINOVAC, PharmaSuite recently help largest chose example, bolster vaccines. of of in one For production their our MES China, pharmaceutical the

to annual this in great costs is power Renewable on operational, power develop reducing while a Once had by also to project of $XXX We plant a win XX% GE country’s major the energy generation Energy demand, plant provide a Africa. hydro greenfield expected with million.

helped Connected Services our cybersecurity greater systems offerings, of last products, integrator industrial important our continues greenfield even share our portfolio. In received within to very core us Kalypso Year a to the addition this play addition synergies PTC’s role project. Year win also using the the capabilities to in as see of PTC-Rockwell is in Rockwell award. across and This we receiving good PTC’s of Award, continue overall week Partner Partner automation to

underway Slide X. of organic the our areas: FactoryTalk software. three to our Design we Turning about XXXX Operations in we FactoryTalk Day, talked Studio to FactoryTalk software offerings well complements offering Design best-in-class our Hub and bringing year's our with key Hub, development Hub. At last FactoryTalk SaaS Investor The Hub, are cloud Maintenance FactoryTalk and how is

platform, MES than have Plex, trace Plex's cloud-native at acquisition offering cloud-based cloud-native our With customers a available over traceability Capabilities as of world-class, track their The more of great and the revenue we comes smart like will to last a leading cloud-native platform with Kezzler, of most Maintenance FactoryTalk with first and provider inventory management accelerated a we of the Hub year's Fiix, million includes an scale the supply Fiix, have both sold our quality addition maintenance including cloud-native each. full XXX% annual complement critical FactoryTalk offerings. software with will $X on-premise, supply AI-enabled two optimization, ever, management, advanced well addition partnership a management cloud-native Operations the and manufacturing chain of we on that will is and chain are from solutions. solutions. as be offerings subscription our Hub. of a Since foundation and contributions and of Last week, unmatched supply chain also one basis. acquisition, that of growth recurring we've seen announced on-prem

product revenue they’ve XX logos applications joined Fiix by added are Rockwell. grew month since complementary, many and quality, utilization. further asset manufacturing XX% improve for quarter, sequentially, both they’ve year-over-year customers Fiix This and and average, on highly per with over to over opportunities new and Plex productivity,

Fiix’s velocity, we synergies addition, model years in provide the go-to-market that will additional revenue In ahead. high believe

because leap pace on new data. rock-solid ahead are highly moving deal, we up in that to As are easy build from real-time the solutions the with information and have innovation; world heritage, on Plex born the value picking and we mentioned we to call well-integrated manufacturers to opportunity use, of the fast, announce of scalable, the our

segment, Slide segment, are with industry X projects our related I’ll sales we sales. increase QX Within capital where this performance. a an led sales capital industry organic taking estimate provide our highlights automotive projects winning the XX% are in two-thirds to of Figures grew few turn Discrete for about EV We performance by at roughly end-market XX%, are now We to Let’s growth. activity. project had flight. of great in

line technology capital where automotive growth. In broadening increasing for will spend, another wallet at customers the For America’s automotive driving grew are win North We battery core pack of EV strong we assembly believe example, in had of brand our about used tailwinds, an with share secular automation be all supplier we XX%. our one owners. Semiconductor, and largest Wipro-PARI, Indian

our We Semiconductor to raising high the growth once year. teens outlook for are again

retailers, year. warehouses with in secular are players, growing our traditional tailwinds has within through that performance their vertical Discrete as e-commerce, was sales transforming as versus XX% highlight with This Another approximately automation. well prior ecommerce pure significant play

fast-growing we expectations, verticals with had Brazil. them & our are in included through help Covid-XX Life are to in dividends Turning Food greenfield the into industry as significant behind outperformance vaccine over that that wins a production the share our should grew now and another XX% great and Sciences to maximize differentiate to a offerings and competitive carry taking investing and believe also prioritize was large our Sciences continue Life taking most over technologies that quarter, Butantan These in was industry this in in this had largest strength fourth in our growth. we technical XX% for not we to Key Automotive, far fiscal segment. project win Hybrid share believe a and We QX and their commercial in is quarter. Beverage the reaping XXXX. terrific fast-track grew customers performer quarter. highly relative market vertical. their their

will System, and that MES PharmaSuite Here paperless fully equipment and will Factory our the PlantPAX on floor. other with Control best-in-class integrate Batch, system control a enable batch factory Talk

Our standard fastest up as Rockwell the the Key the quarter. XX% Tire, in for in their Group where Toyo was Serbia. automation growing Tire chosen was segment included was in about plant vertical in Japan, which wins Hybrid

Our prior core strong the markets Rockwell the return verticals has which for to were major always production innovation industry IoT-ready a and were key factors and strong we high positive technologies industry our in customers’ technology, Process were capacity. Tire all MES sequentially. are saw automation supporting low expected. process investments all single including in architecture, digits our grew securing critical and win. this up increasing than versus been our capability our vertical & quarter first where and was growth, and year, Gas, better approximately This XX% Oil grew digits single of actively

our organic XX%, driven strength now in organic double-digit growth strong in segments. driven Turning performance. QX with sales Food increased grew Tire. Sales and double-digit Asia region by EMEA and grew and three with Life sales Semiconductor, growth XX% China, Sciences prior regional North all by Sciences, Pacific X, sales by year, & America broad-based strength the Life Beverage versus saw Tire. to in across the industry growth In Tire, by led EV. XX%, and Slide we

was will expect XX% longer led businesses cycle Beverage the as and in kick Food China exceed in. & continue our average to year, growth the by Latin growth America company for of Automotive. We

now Let’s balance are XXXX. and strong to expected into to momentum X fiscal to outlook. growth highlights backlog Orders the sales and for drive the full-year of review year in the Slide turn

industry improvements Process higher in our by Hybrid line Our and top segments. is guidance driven

Our prior new growth X% up versus reported outlook year. for total growth XX%, the including is sales organic

Acquisitions seeing a We over as in Information of growth. point automation Services. and are Connected profitable as Core are both growth well Solutions contributing strong

our are increasing margin to We expectation XX%.

adjusted from to on A the new go see, fiscal our by continue more we market into as in EPS won’t growth to I to details year. at can our is but expect target view Nick should pending related slide, Slide I to growth on on end outlook organic compared double-digit detailed into next you acquisition midpoint expect X. $X.XX transaction our This acquisition Our range includes let Nick? XX% year. the sales the to this $XXX growth of broad-based who over of updated now performance million fiscal $X.XX Recurring Plex. that, ARR that quarter With financial Plex of with over for fees me this prior outlook and it fiscal also represents our found elaborate Annual will XXXX. expected the XXXX, totals to year. add we add the Revenue turn third

Nick Gangestad

I’ll everyone. quarter good Thank and information. you, Blake, key start financial X, Slide third on morning

sales These rate our effective planned reductions, than driven related compared XX.X% to to incentive year. tax Plex expansion. higher slightly pay pending Other increased up costs. and point our costs Higher adjusted Segment price investment reported the was over points to five Third the was margin compared and compensation, last one offset The year. more quarter million, last growth, sales XX.X% mix, Acquisitions higher by a expense QX basis contributed quarter XX% were to than year. of expansion were third and points. factors input by mainly higher an $XX was contributed XX.X%, spend, Corporate last Organic sales all XX%. volume, year, up operating favorable sales of currency translation and of last XXX last margin for year’s acquisition.

was higher for Strong slide. item sales. Third cover free capital. quarter XXX,XXX year-over-year was $XX related quarter million bridge of working shares repurchased primarily QX later $XXX was additional dollars driven a in adjusted free expectations, conversion quarter XXX% versus the slide, a to was management flow the we our not and by XXX% in EPS last on or year. Year-to-date, Free EPS up a cash $X.XX, was XX% cash flow of at the conversion quarter. conversion cash I’ll on the in our shown cost of Adjusted million. continued flow above One

of to however operating sales. million, in basis segment XX% segments. of million We approximately demand. offset organic anticipation costs price. our had At America For authorization. XXX mainly from see XX.X%, repurchase Plex the available by strong Intelligent transaction. June remained higher did again of once in was This input Slide led grew the repurchase performance million Devices $XXX year-over-year and sales The year, target we $XXX sequentially, overview EMEA orders margin these last Segment XXth, our the higher Devices upcoming costs Intelligent were our than both under sales growth have largely due provides $XXX our XX higher the in year, quarter. lowered and segment three points full margin North to and performance orders by quarter. XX% had

points XX.X%, offset drive to benefit grew fiscal in last by beyond. was spend. XXX and year. contributed Software additional growth. sales Control in sales organic basis year & segment higher Segment XX% margin was XXXX higher the above margin from resources Acquisitions quarter. relate revenue partially These investment which to three primarily points growth development was The investments to software sales and

offset to X.X% sales incentive compared compensation. partially the Food was Control by basis increase double in about for strong higher Logix, double regions. segment was led and margin primarily segment Organic of points led digits of which Life contributed Semiconductor. due Services year-over-year, grew sales growth. the XX XX% by & also of this digits orders grew by to Operating Beverage, year. all XX.X%, increase grew Sciences, This last & Software to Lifecycle an Acquisitions reinstatement

for we reversal performance Third had QX walk of $X.XX, compared performance Slide to was quarter The a X.XX. year the Control have These offsetting Core to price mostly in fiscal announced Starting fiscal this costs did Approximately, our accelerated was that input to investments ago, Software non-recurring $X.XX, actions see XXXX. this which the Incentive which of are positive and throughout to $X.XX pay ADJUSTED was XX, year-over-year a temporary earlier next Currency targeted QX provides year. due segment temporary Services compensation, headwind of favorable increases a reductions, and with $X.XX impact book-to-bill mix. sales EPS on the XXXX approximately higher & segment. pay and contributed investments the the higher we year. quarter related We bonus left. from of primarily was the approximately $X.XX. been Lifecycle about $X.XX.

fiscal $X.XX XXXX. expense about bonus expected. QX was dilutive in were as As there a no of we reminder, Acquisitions

backlog Not Slide to are takes areas Slide about order here slide Logix shown in for over QX segment, slide this billion, company overall all-time are performance trends double grew trends. as an Moving were this total particularly quarter. quarter over XX, strong XX, order daily our orders our again year-over-year. growing our digits improved and in and sales. updated and portfolio. the on for The included our year-over-year. guidance. levels sequentially product Lifecycle year-on-year The in Order account average includes us $X which Services overall product strong Motion. were software resulted This This quarterly the order high; as at intake products, of up for of XX% two-thirds which well both shows sequentially order trends to

are mid-point organic growth We sales to from our one-point the increasing previous is a X%. increase of which outlook X%,

translation We we contribute XX%. about total, to points now and are X.X or $X.X contribute up to to about acquisitions expect sales X.X%. billion be currency we to growth, about reported forecasting In still expect

primarily the XX-basis adjusted $X.XX. We of new EPS the next includes acquisition. XX%. the represents new expected $X.XX of of prior mid-point related This is also partially to $X.XX approximately new from the updated fees Plex expense. operating about guidance prior offset by to $X.XX point to guidance bonus transaction slide. of a be to reflects now pending a from margin I’ll the the increase now bridge review additional higher Segment $X.XX have range range This guidance to and sales mid-point on

full expect We year. price/costs the positive continue for to

realize XX%. in rate XX%, be normalized This same related tax is Our effective as expect guidance. QX. adjusted which discrete around XXX-basis our to benefit We annual adjusted effective believe tax rate point prior is to to still includes the a expected we about items

we primarily flow now million are Plex. free the incremental million, expected $XXX to new for $X Corporate be generation about anticipated through additional XXX% related to acquisition $XX from free quarters, about of of the fees million the expense expected and million and XXXX first of Expense debt be $XX the to guidance. Net be transaction-related now interest of pending about interest million is adjusted conversion the projecting few for on strong and is pending now acquisition to and reflects fiscal flow cash includes income. A for our above three comments Plex. fiscal XXXX cash Given expected $XXX Other of about expenses to now

assuming the Slide This from be core XX. million outstanding operating April sales contribution to bridges organic higher average mid-point our from margin. slide guidance. to to This compared shares mid-point guidance shares. takes of the prior we’re left, EPS of diluted new a to $X.XX our on us to adjusted there and XXX.X in guidance. Finally, the the of is is range primarily higher now increase higher performance, contribution expected due The currency Starting

is there Next, a the bonus million. in bonus guidance, be given about is expected now impact expense $X.XX higher increase expense. to from $XXX Full-year approximately

our than approximately initial year projected the higher Given of XXXX year is about fiscal performance million. $XXX bonus target full this

year For fiscal comparison, for XXXX. was zero this

$X.XX we the coming from the have of This pending new to brings we about impact QX. close $X.XX. now the Finally, guidance anticipate a in range Plex, will acquisition of which midpoint

Plex Plex, page & our portfolio will turning Finally, few Solutions Control offerings. now Connected & comments of reported of Services more and Information a our XX. be part in Software be a segment on to

for after operations integration expense. About $XXX year the generate of offset from adjustment that forecasting EPS revenue, will earnings revenue We ARR, the interest to XXXX, impact incremental fully expenses, deferred and to of fiscal million forecasted adjustment, share. incremental a neutral per of deferred and is in $XXX $X.XX are million revenue it

XXXX. a year be fiscal in with EPS contribution fiscal revenues expect above year $XXX XXXX to meaningful to We million

fiscal further XXXX impact the in that, the and it We additional details comments. year have Blake on appendix of included financial XXXX. for With to some hand I’ll in Plex back

Blake Moret

end our backlog Nick. top Thanks, confidence The and for of in Services supply order ability Hybrid, creates combination our the we to continue Once underpin unique with and to Discrete, navigate chain Devices, value customers Lifecycle markets. we line again, future. our robust team’s across in strong record Intelligent trends challenges. And software our and outlook, controllers, invest have Process and a portfolio

who now Our thank particularly possible job employees. our of mitigating be like momentum I’d not Chain the Integrated at managing pandemic would the and everyone our challenges to sourcing organization, Supply people great have done our without constraints. in Rockwell, a tremendous and efforts

expertise own be customers sustainable. leveraging to agile, more manufacturing We’re help resilient, and our

now pass baton and to me the Let session. begin the Q&A we’ll back Jessica

Jessica Kourakos

Thanks Blake.

to get quick want let's a we follow-up. Before possible, would we start question. question Thank many as take to so as limit just Rene, to like you please one you. the of say yourself and Q&A, I that our first to

Operator

Thank you. [Operator Instructions].

Julian Your Mitchell from first comes from question Barclays.

open. is line Your

Julian Mitchell

let's all, good constraints realizing morning. manage to the over supply first probably well I Hi, a months, quarter thinking should current sort to is XX incentive to of understand, and operating wanted next the chain of heavy say just XX about and there compensation, headwind how component costs. trying be we the as from from leverage headwinds some

fade as how quickly items think the and should at those we wondered think beyond about please? this leverage, current of should mix, quarter you fiscal of business look Just operating how sort move you we when sorts

Blake Moret

just being see at right XX% full in about often XX% that to as core we around conversion to talk conversion, and of year we Hey core leverage, we the first, often our about. XXXX the Rockwell XXXX as operating talk out far range Julian,

that one far we'll drives think margin way about future, margins course, our as there's line to our detail more November. think XX% and more going Day like implies the But thinking our As several November XX% to things, about our expand we say like Day. still Investor of will to we I'm And in would of a about core about helpful nothing conversion, course, give at growth, is, about Investor top that -- But to at given way it that our in operating year. it. we next to that think expect that's give

Julian Mitchell

thing think looking there end just, XX% just market us auto auto the delivered sustainability your then growth and year-on-year, Discrete, in backlog, sort very automotive within related you you of strong the Perfect, wondered as portion you third CAPEX rebounds? thinking such is EV, of I into as quarter what that we're XXXX, very, think how in of about update a of you're very to if perhaps could is if about much. the thanks And

Blake Moret

Sure. probably directly either EV established market. are And accelerating we Well, passing engines have into see thirds as as owners two like we're about in are, that Wipro train a the quickly currently that automotive within think internal business products power content. as for that capital the automotive. Julian, as the those our of the continuing we're brand power new combustion course, projects suppliers, tier mix and the we EV to that train trend entrants the mentioned market, seeing And well earlier. little owners, sales the EV then their seeing is a brand bit Power all and to we bringing of part of of And startups

And So around strengths, think providing quite that portfolio. to their very the tier tier because we one automotive that's with suppliers, smart positive, frankly, suppliers. we're Plex help their world, on of bullish very our to platform manufacturing going is

next see we continuing. year fiscal going strength expecting trend we're into order. in So And this the

Julian Mitchell

Great, you. thank

Blake Moret

Thanks, Julian.

Operator

question from Melius Scott Research. next Your Davis from comes

Your line is open.

Scott Davis

guys morning, and good Hey, Jessica.

Jessica Kourakos

Morning.

Scott Davis

any any mean, competition, more there different dynamics, I they versus less the on compare like Julian's helpful, how mean, suppliers, just if EV I'm do more just I to competition, think? question additional are I scope? color complexity, like follow-up intrigued projects, kind And, suppliers, ice be less and you give can there. of these and

Blake Moret

Sure.

there's Rockwell, a combustion upside EV traditional internal project versus an For actually engine. to

and a wins starting the what had if us. train our the smaller a on in have you internal for been for traditionally or losing Rockwell stream may precision for control be It's will, where So side, some for battery who a the not a engines, with actually of independent have have of technology drive you, drive cart so positive That that transition. motion EV lot train, the in for other business revenue suppliers we're combustion don't traditional but we true CNC and net not content. has

software scheduling necessary the software manufacturers system. production the On from a the are adopting as of EV right MES start their side, element

so will. ago the requirement but whereas facilities the And all have, nice you XX years as seen vehicle a that then a with pieces you And bill necessary part online necessarily these other was new as a combine same. of not seen so, of to material, of coming remained MES or putting is a if together, it the

So still end and the those paint And good components, you them at you line, stamp Rockwell applications to offerings that metal, all have so are and has the assemble you on. of the test for.

of terms In of the terms and usual the in manufacturing as are of suspects vehicle the there competitive landscape, assembly. you expect, part would traditional the

the in battery train, and vehicle Asian the Korea. On electric heavy drive Japan, very content; China,

together and in span countries. And projects new elements. across those so multiple I'd tracking for And pursuing that say some Asia put towards teams it's we've good even more international bias with of a these

Scott Davis

And is the full Amazon how even kind actually and does a could warehouse scale on call increasingly mean, of last helpful. do out, year. here that style size? independent really cart, this -- independent that to cart, scale like I become kind you've for you almost of That's every there it more bullish, Are possible, does

Blake Moret

say, Amazon cart. of of multiple lots pieces independent There's our center more be are within applications can by facility those accomplished their provided Today, customers. typically being overall an fulfillment that through

So you single them, don't so providing of sortation, and all conveyance one to see the supplier and on. sub necessarily

bringing recognize. you host Amazon with and also there's machinery ones, the ecosystem. of we're though, whose whole is a of their big into working so a would builders names that with course, of integrators And But some good idea,

add, the I this working also And of we're so with a would big smaller And just e-commerce lot suppliers. giants. these for isn't

for manufacturers tremendous additional the in of area to try right almost independent independent in limitless Packaging, outside cart. could see see U.S. where talked And we a see they're applications, we at e-commerce in But handling, adoption we for talked before. in Life one of other of the Food amounts solutions efficiently retailers the these are box big let's we've the their it then scalability in never to material their as And automate some, that also applications at the about locations, of Now, ago. few given it this are have Navy flexibility Walmarts material wins the looking just e-commerce. individual quarters who like we Sciences, get bringing We and more to and more opportunity Beverage we place see cart looking the ever see with about, say, and unusual also world is before. than

Scott Davis

guys. luck, Good you. Thank Excellent.

Blake Moret

Scott. Thanks

Operator

Morgan Pokrzywinski question Josh from comes next Stanley. from Your

line open. Your is

Joshua Pokrzywinski

Hi, good morning to you.

Blake Moret

Josh. Hey

Joshua Pokrzywinski

follow-up make that would of here would on obviously, what sort I backlog that time be over than say you anything or complexion have and healthy backlog guess, guys that how short guys usual, more for reputation and being is that shippable view are about that pretty of you that of what seeing of shippable evolving sort cycle, have that a a a timeframe over longer you with and might but reference on Blake period X number? is lot you of backlog. quarter a Greenfield another Brownfield the several questions over year-over-year, intake, this a up cycle order Just you orders billion

Blake Moret

or typically part on bit being industries longest that's orders actually not slower at are would the business based and to get a I that the Yeah, backlog I this projects. of solutions, recover. would getting backlog The longer-term look we as shippable the little that's in of mix

the few over increases would that case seen or really indicate the been that But you. it's Hybrid. content are and great process to due has due about quarter to It's individual verticals in we seen have nothing And it's it just in And that higher some, with from. the dramatic and that surge constraints. there. chain to given project backlog across there's the you So in coupled color with now, orders, Discrete have what markets these are last a to mix balance special sustained bit supply a that, respect starting coming that we've the kick

Joshua Pokrzywinski

a pieces then it's cost follow-up just some you the helpful. moving it, Nick. Got for the on on side And of

comp to XXXX of investments that's there kind talk a think bit to last XXXX. maybe maybe bit for add the the start some off basis normalized tailwind something kind leveled some where quarters or get had year whether to earlier more still that or plus and there out that some the I If is of of column? is of next the back up quarter a a investments on we catch up was incentive of in a the you being a fees, frontloaded on or

Nick Gangestad

the compared Josh, year to And X% expect investments we more really $XX up year. XXXX, I million $XXX back and terms expected to year-on-year full between go investments full that's half of to the Yeah, for last go of about in end said that total quarter, for up investments loaded. the million, our XXXX. we our second

year-on-year the best go is million half. second now to estimate up $XX it's for Our going

I spread seasonality call our be of And it So big loaded think up I'd over I don't of investment investments. end then don't impacting investment more see evenly any next year year. back end again than in next to early, reason the front fairly it not in year, Josh, terms would see spend. loaded our any spending it's that but

Joshua Pokrzywinski

Thanks.

Operator

question next Kaplowitz from Citigroup. Andy Your from comes

is Your line open.

Andy Kaplowitz

guys. morning good Hey,

Blake Moret

Andy. Hey

Andy Kaplowitz

of least much to too don't trending kind and you keep what this your are given up, times or point Blake, at I'm want in your you us organic XXXX at this higher but close target? FYI that to on be or industrial they two above in much give point, could confidence orders delivering at production at trends growth sure order XXXX, so give XXXX do

Blake Moret

we on very levels projects positive in the saying competitive verticals. across and we're to of orders ability about across too through to win that as our the to momentum, and get closer without The compete balance we much normal world, shift expect year, the we the Well, backlog until are. November, largely the XXXX where

great a well and performance I it think it's and year next for beyond. And setup. going into the should bode growth our

Andy Kaplowitz

improvement That's yet oil as forward? cycle helpful of markets, to giving typical in you're just improved you monthly starting especially process your and significant on but and later process and a you're what's for chemicals, see more of confidence gas, focusing seeing raise sort recovery forecasts obviously and more your maybe in level some you XXXX growth, go

Blake Moret

Discrete do sequentially Yeah, always we cycle oil it and optimism But to and we year-over-year seems in grew gas the businesses. lagging see as earlier continue oil and gas. for to

of technology gas a gas oil the are be in infections on business the projects who oilfield COVID months. while providing some expect of a and these people another And some the think impact world are drilling generally growth to nine as of by comments lot us. are continuing and oil well and services, the quarter quarter. continuing the operators, good around in six of spot uncertainty, still from We a to fourth say as We we're with there's gas and watch those or earlier those our oil and concern for lead and in the cycle we're

saw signs that oil And to are persist and are this of pick optimistic going in so quarter some up. we gas early and the that we

Andy Kaplowitz

Appreciate it Blake.

Blake Moret

you. thank Yeah,

Operator

question next from comes from Your Nigel Wolfe Research. Coe

open. is line Your

Unidentified Analyst

and Co. the I'm again, investment million XX looking Hi, XX be good stores question around on at My question XXXX? million still was for morning. will for I at tailwind Nigel looking for the the incentive

Blake Moret

our XXXX, not I in much seen terms to approximately for we like we're XXXX. of year spend -- investment our in guidance very up for the mean, what tailwind where is on this what spend investment X%, position expect In we're total prior we've a sharing be years. going But yet

last million our year, that second with we growth these in earlier of necessarily headwinds down normal it of then as quarter. is anticipated. $XX investments Julian's anticipating $XX of question, with repeat exactly all during That's about I I I $XX But our call. not bonus we what said those year not to zone $XX in it's example. of million repeat. be temporary as the As didn't the or tailwind, expanding going that a is, more as instance, one of That's the investments about this far go the accelerated on will investments won't And point is did Those into in say we I and catch necessarily more half in earlier million, for accelerate fiscal talked But, XXXX. that is the expectation an in The be quarter likely quite have investments, that. back third our we will XXXX that exception XXXX. and would fourth million we're will in margins spent

Unidentified Analyst

of in as the conversion orders will into Got that mentioned, you. long idea not it's another cycle. And sales? one Do momentum, the terms was you you any when happen have

Blake Moret

good market be XXXX for levels. of shifting raise the bit, led organic more seeing towards, the year. Backlog expected up be we saw growth of we'll we're not And as will us but backlog that that And above were through closer sales obviously, as to that we the QX. QX. midpoint the expectations Well, in us balance expect increase backlog a getting normal this little guidance QX at our in rates in

Unidentified Analyst

it. Appreciate you. Thank

Blake Moret

you. Thank

Operator

next J.P. Your question Morgan. from comes Steve from Tusa

is line open. Your

Stephen Tusa

Hi, morning. good

Blake Moret

Steve. morning, Good

Stephen Tusa

usual Thanks as all for details. the

Just wanted missed to what year? I comment is what think the have comp, performing on is -- mechanically, incentive normal, just maybe you're level might to incentive relative of the that you do this comp, normal at kind

Blake Moret

of we compensation, the our started would normal what consider million. planned we year with $XXX which is our Steve amounts Yeah,

$XXX we're Given currently approximately this expense our million. expecting year exceeding be to total bonus performance, of expectation that

Stephen Tusa

tailwind year $XX assume mechanically, Okay, so that? get million a you'd we from should that next just

Blake Moret

a I pretty assumption. think that's fair

Stephen Tusa

for forward, investments, about that think so up profile next million, the I at just then kind investments And of of for X the year? the investments then XX then remove mean, we and Okay. going and should for is least, kind so

Blake Moret

million should terms working repeat. is that of here. yeah, You know, XX planning haven't things done of what how that that's investments, to and We're the year, the of we've taking invest you to saying with lot something that I But way given we still not XXXX. we we our that the of guidance agree approach. your yes, we've think XX of a out million to, this through want in we're in assumption on want been But of what

Stephen Tusa

much costs? something the on goes the XX kind our then XX million to up and so it's the like those account and core kind like we up Okay, of how of investment million profile make that's of minds for plus, have kind

Blake Moret

when for best to I is this. way to look we're the more detail November be think able provide to to going

Stephen Tusa

that. for you ask but question won't you be I one date orders. more of That this the for follow Okay, on the would just up

Sorry, big a revenue of with kind a front their again. for ERP there dramatic deal. something that's on much the detached details on the from like, of has kind XX% actually the is in seems XXXX, company pretty to thanks past? be the their pure this around where revenues is been acceleration as pretty growth because number that in Plex deferred then do And how And accounting MES core? really to That's of to

Blake Moret

of comments. a things. Yeah, so and couple additional may Nick have just some start I'll

that First XXXX the of deferred all, is in the after adjusted revenue XXXX, in figure the revenue, for adjustments and impact XXXX.

the deferred So you XXXX. adjustment see don't revenue in

revenue carrying for we're the And line year. be So terms we offering. will deferred then But growth looking in top into seeing XX% the that Plex’s mix not of in of adjustments XXXX. not

it chain. supply has has ERP, manufacturing a smart has they So and has platform, offer modular it it management, MES, quality it

don't and of talking resources so big, now to that to disparate sized medium small take manufacturers, knit when hope they you're engineering And they have and applications, together. bunch a particularly centralized software

large of forced and integrated a offers last but to over MES buy customer work Plex of have the so mentioned, applications done those portion of suite they so a I those want. an couple ERP isn't modularize offerings, what don't some is they other they've years it, their that And to modules. good

and continue offering food them. the as to other like of already had of the Plex exposure going haven't as introduction industries, expand the to they outside U.S., will well We these support for all as applications the bought to And in that they and to much customers pharmaceuticals, beverage we're the as be helping past. who've

Stephen Tusa

Got it.

Nick Gangestad

in out anticipating. a for can that the seeing XXXX, we've or provided the the it and actually that provide how revenue just context Plex additional underlying we're put shows you growth that on so Hey deferred to adjustment we're that appendix, and showing. that you're in make That range that of breaking then it about to think sure we Steve, detailed some revenue

Stephen Tusa

helpful. super That's Right.

lot. Okay, a thanks

Operator

Oppenheimer. Kaye Noah last have We from from question one

open. is line Your

Noah Kaye

thanks to some been following that, for And to for on customers. manufacturing questions. from getting you've these both versus the customer about responses questions guess on-prem of base Plex morning, the I and the love announcement, taking the I up migration there some would that hear lot of just have Good think internally. a been cloud

are in coming also you to moving arrow offerings, another broad got of and quiver of the portfolio own legacy, your prime, You've have of but and of are, which which the course, cloud. some some

customers you going you little can think quarters what figure coming about just are help you be out responses think to years? them you how and the to can the over and So and talk a trying

Blake Moret

lot cases, with And an who question. to employees buying Look, They long introduce who thrilled software. really the it trying that to migration customers as sell made software. they to to larger, it, thanks orders us going they on see excited, developed want transformation we got they sense and from a we a they meets those in. customers were said, runway who feedback customers want made great for offer have both native great But And MES on-premise there, based were about And and over we've for can is have about for on an these years. those path. what that have relationships felt the their to and start on-premise MES we well. ready the announced there And are and that have continue on journey. day decided to is. to going what decision for that it something start talked see applications investments we working where to we for a decide get center working that We're customers a approach customer time, bringing of they're what from at in of their grow Noah, continue unsolicited for of customers like we they're to base some cloud build it a and automation our to still I this, lots and where who I've lot made been that Sure, opportunity compliment software added ready that digital with years they've they're this core and look have, they're With have customers or the Plex’s to with orders the production solution. partner

way as as core of them we've all automation give to core talked it going their theme pieces be automation is that about back before, the down supplier expect us we into so open we're And in the to on well. of that currently approach, approach providing be on software this to value where one not a a for a the of components to the that And at working competitive we software lot we're strongholds fully going automation. forcing We'd where coming can where and the Rockwell we're philosophy we're are meet then comes from And they customer's data throat. them, but not an having telling journey. like

it's So gives ways to about win Plex us. be approach the bold and thrilled that going new we're a to

Noah Kaye

Okay, thanks, Blake.

quarters? supply both see of planner, I can can me demand, constraints, ask if the for from one this drinking it and is is chain imagine if like still the But really like and much I looks supply I we I a a some on don't around impact prepared day. still or think call, on couple was touch pressures press just this addressed is of mean, firehose you got in was you more more the ops reramp this question. Let also, manifesting having bit I the color production chain remarks, every over in to wondering but mentioned Rockwell the too it think what what internally, where maybe for you on get release any that and coming then little

the of customers ramping? by CAPEX And back extent your to seeing wondering kind challenges so what you're being just the demand or of just held somewhat plans

Blake Moret

Sure.

the continue be lessening year. not crimp to And believe to this small still and seen foreseeable customers, quarter, may to It organizations in chain this, our our job mentioned think, So part that amount affecting that going supply automotive our the a constraints of chain or little supply going thinking navigating We're operations, doing going next but I've would these we and at organization, going saw we to electronic And fact, of industries. a not I not The to about other the bit chain be it's from MRO. supply is to capital automotive, for it's with something an supply short on chain supply on a term the in supply term we're say is to are also and we impact that. see are did that a future, converting piece on foreseeable projects with specifically respect these have over I quarter. we of was terrific own probably in we're of looking a that the it's earlier with be dealing terms And future forward. the are we the basis, backlog. for going how in continue on chain constraints components but basis. And do in longer a in working that deal what while

Again, a organization. across development hard, as supply think right Because we're our in I the our with a it's extremely also there's in destination Some this sharp the But great make that see then we very great you now. our labor it's simply job very and labor is, in doing orders. the on labor, so we've demand continue and plants, in that just market chain to and by for we in organization, seen, that a recovery know, we're on to have that. teams brought a active sure of

parts we're come as are so a organization destination, We that all good people Rockwell we when the sure across top. considering have pulling together collaboration of really to make that on out that

terms two constraints. it's a really seeing areas, but I significant our would again, say, chain of not supply customers the by those dampening on of we're demand, in brought So demand

Noah Kaye

helpful. extremely much. Thanks That's so

Blake Moret

Noah. Thanks, Yeah.

Operator

Ms. call I Thank to would now like back Kourakos. you. to over the turn

Jessica Kourakos

we Thanks know for and you will all, and but soon. we Rene. very, us Well, we'll see thanks earnings, busy see interest joining I support very today. a everyone you for appreciate day your it's

Operator

conference you At may today's call. disconnect. this concludes That time, now

Rockwell Automation (ROK) 27 Jul 212021 Q3 Earnings call transcript