ROK - Earnings call transcript Q1 2022 | 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’ll 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

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

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

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

about news handle using feed company our relations be R-O-K. can the investor Rockwell’s found and information Additional on twitter @InvestorsROK, @Investors that’s also

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

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

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

Blake Moret

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

these the situation, global supply It’s electronic remains automation on Let’s demand very quarter. grew expectations, XX% a reflecting strong high by and results to digital shortages. to turn Organic navigate our despite persistent challenges. manufacturing billion continues sales our supply orders constrained than very solutions. levels billion, first portfolio grew transformation supply chain of once again $X.X demand extremely core significant challenges Slide grew over better dynamic to of Total organization X. our and year, in quarter versus of chain Total more chain XX%. and prior our due $X.X component than revenue to The XX% across

technology, variety chain and additional a support increase actions, investing in including and of to semiconductor our supply qualifying capacity resiliency are We taking growth. our

sales broad-based lines, performance. Sensors line year, with Network, business supply chain. Turning now the was Motion, automation significant our increased our versus top product Core sales In Safety. prior organic XX% orders Devices and even momentum Intelligent and to segment, including headwinds Control, Power, from Visualization, across

Software was expectations. & our impacted chain also sales of supply but X% Control organic above by growth was constraints,

double double-digit had was companies in the ago. Kalypso’s natural also segment. in win note, America. orders We strong of in digital strategic were our cybersecurity XX% a QX growth year, leading ASEM, orders acquisition, Lifecycle quarter at increasing increased almost North Sensia by included book-to-bill Connected versus by year and demonstrated Solutions from portfolio Demand and business. services. well both strong growth revenue. digits orders PC and were grew and Services, X.XX industrial segment. the orders recent as & Of particularly Solutions Services and prior world’s segment, the sales for Information the Industrial consulting growth one a led in doubled sequential Information very strong gas Solutions our organic at double-digit the particularly as strongly across In demand a sales this with pipeline strong the in as is entire

win. create our us key manufacturers a how win We business to demonstrating also cyber EMEA, for of industrial new had with ways Beverage largest to one in the continues

showing good Our are very traction. the also in cloud investments

leader delivery is a trends. with Another The global Shyft formerly the in notable Spartan a The as vehicle last was quarter known industry win and and commercial the of mile Group Shyft EV big Group, Motors. beneficiary in

over on-prem we positive their we practices just also In its and presence XX reduce see had has win one all making portfolio differentiation way selected I’d manage while how the the ARR deployments. top readiness world. processes, contributions double across very digits. are with a to are XX% to the our Rockwell Motors, Fiix facilitate supporting the line was last growing capabilities ARR XX% Platform to material production This FactoryTalk PTC, and quarter, seeing software partnership. and to subscription resource including become Here, costs, software continued Rockwell’s to recent the over of great synergies Plex’s Fiix, our PTC grew and and over to great portfolios, contributing in enable happy they customers. the recurring traction months. is with I’m added within ARR by revenue quarter, XXX had of with high-speed overall our business. of example In Manufacturing significant EV our Lucid grew are versatility these The customers across organic the the quarter, already new expanded base, Fiix from ensure Lucid we the to already quality our effectiveness. summary, chosen companies digital up-and-coming best in total automate the solution In to At operations, contributed is cloud their has a growing another and our and our offerings like and organically highlight software, great skilled contributions developed luxury acquisitions. base combined software and Smart with

included with Significant is leading grew of increase our XX% fastest-growing sales strong growth double-digit sales a Within series grew total. to segment, in well-known market to growth. our and our versus eCommerce including over strong organic sales are vertical, Automotive said, XX% a mid-teens, fulfillment QX orders Semiconductor where about semiconductor-focused the led at segment, are Advance in lead highlights XX% year. builders. machine turn up provider. capital In as XX% this Motion, EV And grew material our orders a showed around gains demand. world greenfield vertical. the growing underlying for our reflective double-digit, in for automate technology, technology. made throughout all and activity share believe sales provide EV new differentiation segments by in strong led few I’ll with the products cart wins industry Slide needed eCommerce year-over-year strong activity orders approximately growth over now prior independent a prior that XX% Each our we’ve America in Let’s handling North not engineering firms longer was eCommerce services and project in quarter, driving advanced industry to approximately Discrete by industry performance. battery, our strong the of regions. dollar We project of multi-million strong, fast-growing our immediately the of year. this are end-market support X centers growth time of

fiscal quarter. our deep one steady over of believe Food and project the technology Beverage quarter Turning verticals with record of our for QX, The our now greater grew industry last grew opportunities, the a automation, broad vertical. important automation. had expansion, greater need manufacturing remains of off to levels extremely Hybrid and this Sciences in strong machine with relationships greenfield strong also sales trends and in differentiation end-of-line pipeline XX% XXXX. growth segment in Life key SKU XX% builders, brownfield the QX, fastest-growing flexibility driving requiring and demand verticals an our in year are this and are segment. across regions. again, in over We Once terrific of

over last well-positioned significantly years broader we believe our We to this share of invested offerings have through and gain in the few and deeper business expertise. area more are and

is quarter. grew Our This XX% Tire, was fastest another vertical heavily great is investing segment which the growing in about in Hybrid in the that this vertical quarter innovation.

approximately grew in XX%, trends to upstream and industry Gas. led Turning this by midstream segment Oil and Process, improving

existing Our Sensia’s venture digitalization to and process quarter, the the the solutions safety in desire to control industry’s to infrastructure, and as as impact. use the life well solutions. useful productivity joint by had orders strength and environmental are and well to reduce Sensia in lift modern energy desire strong sales extend improve improve automation technology led suited of

increasingly for XXXX. in As believe well-positioned double-digit is we open Sensia capital budgets operating growth up, fiscal and

XX% organic and and sales Tire EMEA QX Metals. the strong grew by by strength across performance. year, Turning and prior now driven X regional increased sales organic Food double-digit our segments. to industry three North and XX%, Slide versus all Beverage sales America in growth with

fastest QX, and Beverage. our driven growth and by in strength with Food led and by Chemical, China, Mass XX%, region was Food Semiconductor broad-based growing Tire, double-digit Beverage, growth Asia-Pacific and growing saw in In Transit. we

billion, Let’s and really expect to highlights few We taking now review for new above just the exceed turn is whole a Slide what year our which to the to we outlook. business X ago $X orders to level. months year a full for now expected

the prior expect total XX.X% reported organic including sales to growth continue of year. versus We XX.X%, growth

line product detailed by Our remain of before, review we’ve very of as over course year, constraints constraints a and but the supply said supplier the chain these projections dynamic. reflect

Information well Services. growth of to expect contribute continue We as and points to profitable off Solutions as in and Core double-digit growth. Connected to top Acquisitions good both expected start a two are line Automation

the results is segments. $XX.XX compared margin of outlook on the me on We found year, range now year. the about who will are growth, X. year more including QX another our ARR our which totals slide, continue to details you over revenue won’t our for Nick? Plex million fiscal see, but XXXX. annual to and market that, detailed into this adds target which at maintaining growth adjusted elaborate XXXX. outlook the of three industry midpoint can approximately for to should the no view fiscal and $XXX there we A recurring into on our that financial outlook EPS for represents Nick, Slide our add expectation let it in by recent as go prior With I double-digit XX% to end expect to our change is turn I of the acquisition,

Nick Gangestad

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

X.X sales and We the were total resulted reported anticipated. operating quarter to is from under by indicated sales better November. saw than was quarter quarter and better X margin in translation first up timing acquisitions sales of were we a year. point. XX.X%, improved points component that QX. from Currency last stronger growth. decreased than the over expected expected slightly improvements we our in sequentially This electronic suppliers QX Segment for First in and up organic XX% shipments than some contributed XX%

in impact in-line These declined planned margins expectations. margins $XX sales. Versus by Corporate higher improved the expense negative were price/cost, the basis stronger performance our last spend Our other million. offset both XX to and higher was our partially year, points of quarter. due with sales both and

quarter included the a was in non-recurring $X.XX. fiscal QX legal $X.XX. favorable settlement EPS of adjusted of year Our XXXX

our first the cash adjusted bridge on basis a not the the and of Total One quarter XXXX reported higher of Compared of XXX the year-over-year shown flow The On an legal million later million rate cover year sales Devices I’ll and Intelligent year, cost grew to prior points prior sales sales at negative settlement, the all repurchased due a to our compared under last additional available quarter the three our capital demand, serve effective December across to $XX down in the segments. was the price/cost on line XX%. grew margins XX.X% bonus, Free shares overview double we strong increase tax EPS year Excluding sales XXX,XXX was Intelligent slide. Devices fiscal in organic prior year. performance by repurchase X with XX.X%, adjusted prior versus working million. provides operating a by in remained item and year. authorization. slide, despite for quarter a EPS Slide expanded the payout favorable XX% the headwind. XX, payments. $XX and digits three on to our adjusted higher our tax segments. $XXX planned to margin grew of in

was for grow by Segment XX%. project unfavorable were segment XXX and price/cost spend, balance XXX margin impact through This sales driven offset planned Services the higher saw Software margins the sales compared to X.X% provides left. investment XX, basis of walk a backlog. segment margin and pay higher impact that to unfavorable the up our the strong with is reversed. declined Margin of to the organic fiscal have Slide and quarter. grew sales increase. been growth & declined negative this was basis by year sales. by sales. next higher acquisition Acquisitions a higher Lifecycle about points year of result headwind. input related Currency actions costs, by and that were from was investment as and costs, year year, mostly Segment benefiting this by spend, sales QX we organic to temporary the $X.XX, partially fiscal quarter XXXX organic points organic a expected was $X.XX EPS have $X.XX. to of as prior partially comparables Control Core is in up higher Starting on in prior last higher performance XX.X% adjusted had offset negative since Approximately the The also planned integration last X%. mix, $X.XX on about XXXX. This a Plex. a related QX the slightly

We will year up year XXXX expect be impact from that EPS the continue of to $X.XX expense Plex, and including fiscal breakeven XXXX. in fiscal interest

total gain of This As included $X.XX. a legal EPS EPS us of reminder, non-recurring a our prior settlement to year $X.XX. our brings

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

XX.X% the about sales in of $X.X guidance midpoint fiscal up at XXXX, our reaffirming We are billion range. the of

growth in on of half component of This guidance see the to a range the quarter, of availability. range. with XX.X% to organic mid-single to sequentially second By at electronic We current view sales digits midpoint XX% continued is based improving year. expect in low be improvement the we and our sales of XX%, our QX

our in Our availability. little our with our and due to electronic projections line initial component second expected timing first quarter to little a a is first of half in being lower quarter be coming with stronger

are ability environment team’s our We navigate and our on the pleased keep focus supply serving with through to dynamic customers. this chain

XX.X%. year to full segment margin expect be We operating about

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

second margins by XXX dilutive approximately to first accretive the be the from margin that and by basis impact be on points. half the basis in points, of price/cost price/cost XXX half expect over will impact We

offset expect price/cost, the to first second Given in the being impact similar to costs. positive QX of we impact sales input sequential with quarter year half higher of higher from the the negative margins, margins by be

significantly increases with sales price We the higher expect our the margins of phasing year. along the half of in will benefit second

the and year on view margins full those on Our remains price/cost unchanged. margins impact of

We full between XX% expect earnings and of continue to conversion year core XX%.

R&D growth-related sustained as grow and our XXXX We investments to position beyond. track These and are we digits. well will drive double on growth other investments in us by

adjusted do tax fiscal rate to We We full be to expect discrete effective the any continue tax anticipate year XXXX. in impact items to not around material XX%.

$XX.XX. range, We represents At are also midpoint reaffirming of $XX.XX EPS the our XX% the of adjusted adjusted EPS to growth. this guidance

cash about expenditures This one XXXX reflects full growth. flow of significantly income. capital XX% performance, million $XXX projecting support $XXX of year funding are working we Finally, payout capital adjusted of fiscal XXXX in sales bonus a free higher levels conversion made higher and of fiscal quarter for million to the

million about remains is total outstanding to Our million, fiscal on XX% shares. amount Net assuming million. $XXX target diluted about sales. capital working A shares Corporate fiscal interest average for aligned XXX.X our about comments expense and to and of historical additional be of of guidance. expense $XXX XXXX is we’re other XXXX around few expected

to on fiscal strategy priorities. XXXX our capital Finally, or deployment, no change

Our we our focus year we to that, deployment for then activities. back Q&A. continue focus before on to XXXX. capital returns dividend, focus repurchases, closing we I’ll shareholders, Blake over it some capital on is share start first that, Then delevering through turn inorganic organic and and we on After fiscal in growth. remarks to With priority

Blake Moret

for outlook fiscal record Thanks, top backlog robust XXXX. and a Nick. line trends Strong underpin order

and making As future to we we our our growth. capacity, are said last people investments technology, quarter, in support

by made and new investing FactoryTalk we’ve resiliency supply applied offerings, expanded increasing million per expand the manufacturing to significant chains. operations in platform Plex quarter the of AI the our smart FiiX’s capabilities. quarter, progress including to are at same capabilities, while SaaS We We release our capacity in $XXX time

the We also is next operating twins EmulateXD next functionality our release further A capabilities in of systems. of significant production creating to and released version scheduled Logix quarter. digital of for new

earlier the In Importantly, great have capitalizing design especially automation been want time to work take anticipated. results went the year. management to today, We’ve see I people new last at us recognize during these investments to cloud-based summary, functionality and in on originally QX the our while challenging a accelerated of times. that allowed start access year’s data information tremendous a for the busy and to was opportunities the building organic organization future. same the remote very we moment into release secure than

We significant and are making new investments to existing technologies talent the in with and them and resources are successful. empowering be

look they encourage customer’s been more I at value ways increase transformation our to today. continue We the top are organization have through and than across ideas from and the in confident feel that of eyes. never mind fresh automation investments digital to

devoted think from ecosystem our multi-year of leader products pure-play of we cycle. expertise, significant benefit areas, agility, a best company and to portfolio domain be a positioned us and to exclusively significant, As best-in-class should make partners, what differentiated services, the these our our our growth

Let me begin now session. to pass to Jessica back the the baton Q&A

Jessica Kourakos

Thanks, Blake.

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

Operator

[Operator first Scott Melius question from line with Instructions] Research. Your the comes Davis of

now line open. is Your

Scott Davis

morning, Hey, good everybody.

Blake Moret

Hey, Scott.

Nick Gangestad

Good Scott. morning,

Scott Davis

of about tip that do the new Blake, But becoming of the of everybody. kind digital standard before still to that of stuff? of I you becoming that break stuff. the Is the is Or Is the morning, Good wanted factory ask this – ground? twin simulation a EmulateXD, full kind norm? iceberg digitally kind to kind

Blake Moret

shoulder And line. being everybody through the aware promise think Scott, to material pandemic – simulate couldn’t systems wanted adoption of of line. new everybody be is to But get would I one to to production a because of actually you that climbing before a traditionally starting think line think have the still you those on-site, we’re run I I commissioning shoulder this the on areas curve is the able accelerated, that there.

to ability people able And it, together tune of further the what having to and to and be product in without have to traditional actually path the so go get able the digitize should your system much line to takes to good way. you through down picture happen to be a running a

we of companies into concept. well most see proofs the So advanced

some with that by holistically complement involved people the have area followed helped then that that acquisition Logix We’re higher the organization heavily of describe of at recent And the of technology I that. to really we is to who new add, that required the should that an capabilities off them Kalypso with has have has can and acquisition are more sort for EmulateXD this the the really AVATA to initiative us. and been helpful levels the on sign on

Scott Davis

then, in cycle, up is where unfavorable going to given helpful. That’s historically, the is can Okay. have Or into and unfavorable supply the of mix, projects are. those got bit that just be harder and be bids is projects harder many projects there And works? always less Blake, price some demand there it scenario aggressively an to different but project imbalances little Is a this and mix that has here, there that these supplying have impact? and not how this you more a how you cycle just

Blake Moret

No.

couple a I of think things.

this that little be First do bit is of all, going think to a unusual. I cycle

where because where capacity to is Now the a that for longer-term partners of still new little capital differences going have amount think wide next. around cycle an investment maybe local elongated, big always one I these from there’s fabs. of with to while, not in semiconductor, build to some on verticals ecosystem come they But a bit this one the

bit that little than past. maybe see think I longer could the we mean cycle lasts that a a in actually

right the to In demand able now, terms chips. and the of this, supply bottleneck is into being

changing. haven’t the is but that the new completion evidence out that, and through constraints. getting down, them of we plans their competitors of I with working than capacity don’t slowing think I seen I moving – offerings, because forward and see We’re people that pandemic come is terms that going I the supply still these of out projects. are chain there any are They’re and positioned material trying expansion of to but not their see in better to can’t everybody

Scott Davis

Okay. Good luck, Blake. Thank you.

Operator

Your of of Andrew next the with Bank question America. comes Obin line from

is now Your open. line

Andrew Obin

Hi, morning. guys. Good

Blake Moret

Andrew. Hey,

Nick Gangestad

Andrew. Hey,

Andrew Obin

cited and question first weaker. for to fourth sort first that quarter constraints. think second and price/cost the I question, of a better lot said Just pinch to supply we’re than that expected a you the the managed and in bit hearing than was was better actually expected quarter quarter. big is quarter guess be companies point seems And guys fourth guys you little a of I you do

why Thank So I’m of how out trying out the you. what your quarter. figure the get stuff specifically, worse in is to in it were fiscal And first just able second to you door it get quarter? would

Blake Moret

broad Obviously, So Andrew, just broad suppliers They intelligent. Devices beyond suppliers. But have of of a category, within managing all because semiconductor we have of the our that even we’re Intelligent goes semiconductor base base are based it well technology. a suppliers. virtually

I and We are think chain were bit supply that. the through about backlog quarter situation, to are contact key we’re incoming of is but basically, had a guess, organization chips more that our to the we first but with in our team. on suppliers senior we little my top coming the should get dynamic we originally the quarter in include me and orders than that It’s a And fundamental, forecast, second you in expecting the new be that enormous few conversations framework lighter. able daily a have with

add the we expect So time to don’t that? come. for anything some quite to constraint, the be to demand not is to and Nick, it

Nick Gangestad

Yes.

our as what the just significant is were from half for hasn’t going Our the to deal changed. getting be of that first component most year for chips we

quarter. them in able and to the we ship little first out in were of a earlier, came Some things

view not Andrew. first did to were get what of going just half The we change,

Andrew Obin

follow-up a that And maybe sense. No, on makes Software question & Control.

were spending on the just And you versus expectation the Software Thank your out just You – of how the for much. was you spend. money planned your highlighted discretionary was on? this investment in what figure investment quarter? so quarter? much margin & you how I versus spend where wanted Can planned? were to high of And much it Control expectation, And

Nick Gangestad

Andrew, bit is little what Control million. – were in where, in – with $XXX right total ago, three margins line the by investment we said better The that that it’s Yes, internal spending for a be the Software our had actually we total planning. upping than we’d & investment just company, approximately our spend months

exactly roughly were first quarter on we continued Our the margin million that quarter, spend in the $XX that plan. year executed each our impacted spending costs. It’s is We last acquisition a as quarter increasing. integration the – we’re on first And by of also over in that quarter planned.

We the integration. expect diminish the the as will that impact we work coming quarters in on margin through

as know Andrew, of didn’t Intelligent to we it’s way, going flat points, expansion our but Lifecycle to be largely quite Control. most going think basis think full continue margin our don’t to total the and for expansion of year, margins last it largely & We you XXX & from the Control the I Services. grow coming ask of think Device are in So this company and compared we to Software of margin year Software

software we were we spending what & on in development, were development specifically, Now Software product spending Control. on,

in of some Control Software customer-facing piece are Software resources we specialization & & the we spending more on sell selling and Control as of in We one that our also building how is products. are more

will of a things increased little Blake more are detail on. a add on that our spending we’ve those So that. couple

Blake Moret

terms that in that during Investor development Andrew, within as new Yes. around tools, visualization and a then Software about, the under in system. talked There’s and we’ve little the Day. software hardware things & we explored new bit just of control are hardware Control, also within software multiple development cloud-native Logix FactoryTalk the products Hub specifically functionality

going all areas have to in in XX next months. new of major three the product releases We’re those

Andrew Obin

useful. And as compliment it was is a Thank last on fun growth lot. you. Thanks well. your to software This you night Jim hear super

Blake Moret

is you. going Thank PTC well. relationship Yes. The

Operator

comes Sprague question the Research. of Jeff next from Vertical Your line with

Your is line open.

Jeff Sprague

Good you. Thank everyone. morning,

Blake Moret

Jeff. Hey,

Nick Gangestad

Hey, Jeff.

Jeff Sprague

price/cost a we is prior good And everybody. little the catch Hey, on touched to with sequentials? margins on questions. sequentially in a availability, so it just like is And kind – on you there something higher I sequential into revenue revenues more is create incentives But actually can that the that up addressed we also? leverage delve being in on something or of on know flat would Or sequentially, just or bit lack that second worse investment else but thinking the about of quarter growth? going bit spend

Nick Gangestad

price/cost. point we better terms on we first impacting three us it at margin. fourth the Yes, year Price of Then from planned They third bringing basis that what even there. of how roughly that shared largely had substantially months getting when negatively the you’re in were exactly be first right you’re impact the there, on in beginning Jeff, that’s starts in costs quarter and theorizing the to And quarter, negatively ascend in the price/cost, quarter. the in what price/cost, will and out ago. that second impact this XXX will us half negative more to impact

that’s as dynamic seeing happening the the in our planned throughout three think is months go costs first and been well. we actions price are seeing we’re – only I go higher, higher

So both ago. net three tandem of keep price/cost those moving said we in to what exactly our months

Jeff Sprague

function continued in in baking and back anniversarying? half? the half expected you could of the is you cost discuss. relief kind so second relief price mounting actually the Maybe And a Are of in

Nick Gangestad

happen, would cost not we’re that that to will for think great Jeff, course, planning of mean, I be relief. but No.

We second the the continued half pricing will our phasing It in in are in. cost for the of that be of and going positively will planning inflation impacting be the part price us year.

Jeff Sprague

just billion address the XX% my then orders? about nature is And $X long time separately lead think stuff. of And could how question also orders, the you of to

orders But think that term, reaction orders, I’m about a maybe that frame guide want function of how than way bit sales? the more your because but in sure conversion up dealing different complicated or to changing would revenue over of chain stuff. a Is little with. That’s little kind between a XX% of that’s is sales Or it that that. to the and kind other sort here shorter-cycle disruptions you short-cycle a let’s it’s So plus little where to call billion the maybe maybe convert orders just imply of minus on use and the bit. supply to deliverable we’re $X and just orders

Blake Moret

Yes. Jeff, equation the main of there. entering component, that very other large say, is backlog have we the I’d the

on the time And lead comes these orders part fiscal orders will little a year. that – in shift a will shift longer orders, So backlog. that top historic and I’ll bit, even growth the continued or large of those describe of likely levels of

So down XXXX. say end To up large beyond necessarily of lead be orders sure, longer mean pushed fiscal what But time, example let to going the those backlog of for fiscal have the when in doesn’t XXXX. end at of scenario any setting that give very an me we advanced we’re fiscal be. would it’s XXXX

orders shop has six three would lead built, that machines and so in months’ they times, and drives us. on. an to own of components and say, think you So OEM typically that buy, months of big Rockwell, be they’re backlog worth they extend of may their let’s component servo that out placing Because longer the of on and amplifiers to of controllers from

as that So customer carefully the that’s the that at just as they patterns. they have where we increased well And their advanced It’s look respect. speculative demand distributor both not orders order example in demand.

gives of right that with is representative to underlying say demand and goes the confidence to this us that closely that working the user. end We’re them,

Jeff Sprague

I’ll Great. pass the baton. Thanks for the color.

Blake Moret

Thanks, Yes. Jeff.

Operator

Morgan line the next with Your from of question Pokrzywinski comes Stanley. Josh

is line open. Your now

Josh Pokrzywinski

Hey, good guys. morning,

Blake Moret

Josh. Hey,

Nick Gangestad

Josh. Hey,

Josh Pokrzywinski

some there know ground preposition quarter. high. that inventory the because we’ve that yes, That were was it there. of I industrial tell you margins maybe wave, it or you like is advantage, initial anything has – that margin as So just kind for Is when first. this the in so supply think the across the Intelligent covered inflation? that can away? chips But second quarter? kind worse able us, to about goes waiting the of Nick, price extra just of just of you something this common Devices gave universe getting I get is with Or really anything else Like here sort in goose been price/cost on first kind

Nick Gangestad

low there mid-single for the we’re sequentially digits by driving see second little for well what not Device that expectations the that’s And bit second the had higher will margin The single higher worse But margin it expansion drove as even I’m of – planning the first getting company revenue I about, biggest why from because offset that benefit the we that Intelligent expansion talked price/cost quarter. largely expecting. in quarter. higher as total the was that we margin a quarter what high and guiding Intelligence thing be were in in Device to the than what in in sales is a we

generate in be even describe in there we using and we’re benefit Now overall a cost way what around offset after I input that to but would in to trying three input now, pricing That’s to substantial cost price. the And price at to largely way we’re is ago share slightly be as We it just pricing seeing. between gaining here earnings our seeking terms months a we input but a more we our to pricing we basically how difference offset inflation a philosophy that can not of for not are to profit the why substantial still world. to it. are see per offset opportunities see costs. share And our

Blake Moret

the idea in that nothing this accelerating seeing profitable expands line the that committed Yes. we’ve or and with top out to like margins of about growth, line play growth. remain It’s IDN we talked

we’re a the investment think the good and And balance create profitability near-term brighter future. even an we striking that to between so

Josh Pokrzywinski

the then line. it. question stuff and ordering secure Got stat just in sort follow-up helpful. that of part time a lead is aren’t on try And That’s big on longer of earlier suggests the the that equation really on Jeff’s a it Interesting, their orders. spot customers to

and near-term? end converging kind on process, that’s that’s be a thing, but the business, customer’s delaying that is the should a some there of from sales us of chain? good Or the shorter labor kind on cycle like of or just what other in I So of delay is of only prevents something kind convergence sort supply thing orders guess

Blake Moret

things. Josh, got of a basic supply We’ve enormous I this think, it’s chain result, constraints. three demand that’s

across secular and seeing a and transformation higher on all, of placing automation degree before. that out you’re trends digital it’s the First play importance geography, of industries than ever

it’s It’s cyclical. also So secular.

all position are three of still this And We demand. be a early then of are those think driving in multi-year finally, in things the economic I believe what it’s expansion. to And market. we going our period is

Nick Gangestad

our as we’ve see thing do one is capacity add I’ll Josh, that that in Hey own not constraint. internal a we invested

So it’s to and that, up. we’re and that getting as and availability ramps said, that go Blake as component’s for equipped that ready

Blake Moret

higher sales just for just final were point summarize, chain supply not And to it be Yes. XXXX the fiscal would constraints. a

we’re acquiring things, on making world, our talent, wages, around Nick competitive that capacity, talent, said, we’re paying hand keeping as So very to labor ahead keeping our all based practices hand those managing, it. sure we’re dynamic the of

Josh Pokrzywinski

color. the guys. Appreciate of Best Great. luck

Blake Moret

Josh. Thanks, Yes.

Operator

Barclays. line Your with of next the question Julian Mitchell comes from

line now Your is open.

Julian Mitchell

morning. Hi, good

Just back the wanted comps supply is down it’s the way this you’ve maybe on of order well. easier orders but get in decent billion-plus and half assumption again, in balance as then of into that conditions a but the to tougher have over backing the of circle year? orders $X for as chain double-digit about got think Is right sort the so to that probably year-on-year outlook you sort year-on-year growth the QX back number the year

Nick Gangestad

math growth what half own seeing – quarter you what second Hey And do we’re and expecting, think are year-on-year of growth. order we’re – Julian, then can second in going of our see of to calculating we mean would what based that what do we the order year, the on up at far, growth of that year-on-year going we point. line that, seeing billion. too to think little, it’s think we’re a what a means we if that’s be second with whether Like fine it’s quarter But in in we’re $X or and so down that’s I think a we little year-on-year.

Blake Moret

Yes.

I point for this now. to just we’ve into quarters the continued And order is other January. would are The momentum trends extending see add multiple

industries, salespeople it, well to on and multiple from point greenfields these have our large reflective the specific been we see of in we directly own on involved that the can in as people underlying are distributors, as who demand based announced So investments the individual as ground from again, projects.

So we feel very good about demand. the overall

Julian Mitchell

second then my the helpful. That’s And Thank aspect. cost you. question just on price

sales some increases, you organic in – So the mentioned aggregate extra some left but price you’ve unchanged. guide price

still of of labor pricing whole cost from X% not as different talk does that? aspect just year the logistics you and from about is solely and sort for freight that maybe tailwind type you’d to So components and when that is a price mean And separate that is kind before? that mentioned then clarify, that cost,

Nick Gangestad

see offset incentive we is largely and I’m about we is going more first, all what Julian. of than of second cost, that to and we’ve price improve productivity what logistics efficiency often as you’re the for we’re there exactly part as something productivity are inputs of the question it take and inflation what the Labor what our to saying, managed doing When around we’re there. to well costs. wage talk operations think the paying

we costs its price when the in and talk input costs, – input cost deflation, cost logistics. we’re So

guide, we chosen to – I’m we going for price growth a the terms go the situation on price of year. mean guide were roughly dynamic I it full to new a think We same overall not we going I when that that have cost, and number yes, because Now growth in indicated planning our up. number and but keep as organic ago, – put with we X% pricing it’s see a months up. our three to X% that’s going

the and are. balance that the of parts keeping more net, We’re on equation focusing two those net what in

the same. So we the guide kept

I from FX, be that of like it’s now into price, things in one quarter likely all like with the guidance. we’ll things think incorporating

Julian Mitchell

Great. Thank you.

Blake Moret

Thanks, Julian.

Operator

next Bernstein. Brendan the Your from line question of comes Luecke with

is now open. line Your

Brendan Luecke

Thanks Good all. morning, taking for my question.

Blake Moret

Brendan. Hey

Brendan Luecke

footprints CapEx to shifting chain the growth story back is crisis? gain early projections? you this Or look As you sort a the of indications extended and when recovery more customers, on seeing supply your of of you manufacturing any at really talk of are share

Blake Moret

shifting is probably not would a look larger investment. new I think a I it its at as manufacturing, of it than think traditionally. has in been although North global investment percentage I America company’s manufacturing

brownfields strongest majority being beneficiary. upgrades greenfields I capacity, outsized capacity. or America, So see, as solutions closing Asia, I or planning bringing I as as for what’s instance, the North the see do see But in our of and existing driving don’t that them adding it’s people and people to back an plants is obviously demand. market, are new digitization whether

lot So said And high are it’s automation, position our are the from cycle, in Then areas increasing. in still growth, this in in before, is and a general, investment what as driving I technology early. positive both of secular outlook. high a geography of standpoint

Brendan Luecke

you. Excellent. Thank

Blake Moret

Brendan. Thanks,

Operator

Your the from with J.P. next comes question line Tusa Steve of Morgan.

is line open. Your now

Steve Tusa

guys, good morning. Hey

Blake Moret

Hey, Steve.

Nick Gangestad

Steve. morning, Good

Steve Tusa

execution of good on above kind here, Congrats seasonal.

comments guys you at clear of that that make on a least. to through the I wanted you shoot like just looks backlog bit just little it So made.

You’re guiding Forex at zero.

you’ll think I a have headwind.

headwind headwind be today, the would would that I a snap assume the you that what’s on Forex, that, for line If year.

Nick Gangestad

I the updating because – impact. be – a and chose between week, didn’t We I this to X% it for snapped component Steve. have for I one enough X% We if chose updating and line volatile Yes, be to we not and just earlier would it’s be want not volatility. all. updating negative

a initial if top line worse So we now, that’s the have FX snap bit guide. our I than right little

ago We where said than aggregate EPS in, we growth think an initial we think most and that better that than our sense. guidance, the we top is growth that have higher All leads we that to our initial make have three our and still are months costs line price input guide.

Steve Tusa

right. right, Right,

is were And of what not guy. how revenue Got Okay. then have sort like the some software booking in – Plex quarter. there for I’m orders there? I a much dynamic – of million it. revenues then And side Plex deferred $XX for kind

a I and our like software orders bunch deal, just So you flow there’s do talk Can at feel companies in a first through like of time quarter. to the orders Plex? revenues every that

Nick Gangestad

Yes.

substantially is were were. higher My revenue, looking Orders exactly Plex in they what it of numbers about revenue Your terms where ballpark higher. was. our at XX% that’s just on are than

Steve Tusa

not kind in for orders like anything huge there it’s of you It’s didn’t Okay. them. number thought rebook

Blake Moret

There No. is – no

Nick Gangestad

no, no. No, Yes.

Steve Tusa

fourth year, of mind to and for back half of talk last then or one anything as third Okay. just And far on dynamics? keep and as quarter the third just one – in kind fourth the about

Nick Gangestad

progress biggest our things, are we terms I and into about, two electronic what the we we sequential see estimating talked as mean second Yes. improved already revenue, components access continued in as to of I’ve improvement Steve, or half.

from is second In to driving the in profitability, the on going half. is costs terms of positive to And flip the margin that’s price also leverage there. second second with half added There be big the the on thing – margin going be then benefiting biggest negative having. we’d dynamic improved up is biggest in and the single the on a the the sales half. that isn’t dynamics That’s going another

Blake Moret

just Yes. very And say strong continued I would backlog.

and remains and shipped booked So what just of we we simple a grows. math the what indicates backlog even

remains that healthy. So

Steve Tusa

Appreciate the all it. for Thanks Awesome. details.

Blake Moret

you. Thank Yes.

Operator

next comes the Andy Your from question line with of Citigroup. Kaplowitz

now is open. line Your

Andy Kaplowitz

Hey, good morning, guys.

Blake Moret

Andy. Hey,

Nick Gangestad

Hey.

Andy Kaplowitz

you actually have region. comparisons investments the you’ve the think in global and been your still in go easy to Blake, I but in you changing double I way Asia-Pacific you’re about market Asia-Pacific, growth. and led digits talking China there you the know QX strong mentioned making

– QX And some macro efforts? there be the those obviously, risk region. to is results QX is result seems in then a So of

give a more little you’re what seeing us into there? you color could So

Blake Moret

Sure.

had Food single China area an Food in our great there’s China, where on look the in worldwide traction double-digit strong we’ve EV biggest that And tire some is and and there that vertical, contributed of China, beneficiary within a Beverage we’re on Chemical and that. if lot of going be continues verticals recent Just activity of Mass a specifically in a great to was complementing which, Beverage, we Transit. at then a growth, is and and the activity to Tire, vertical. course, that general,

as it’s are industries lots generally room about they investments China. run. complementing our make say think local But share We also things leadership lower products been China. have doing market, by it’s are So these us distribution. when to ways to empowerment combination to traditional our that our talk in might Food correctly, new in Information their there’s the a seen new calling ways relatively & installed are as be for engaging I base and climbing fast. win, into new we’ve core customers to a it’s Solutions value productivity to Connected really of good our getting of more appropriate with product, And the when all with for they’re card to And basic interested And get way that high really pretty Beverage given competitive well Services. level as across those them. and we And bring in decision makers Life those even curve as companies a that and EV, intensely Sciences

a we as China independent independent in endorsement disruptive to we China which card, particularly card, like assembly. which as very in large where strong some in software, of our that’s see EV battery contributor based technology new continue on orders and so particular is well win And

Andy Kaplowitz

like raised Nick, look, mean, little Thanks sciences, you’ve e-commerce, that, you forecast. then, I end growth you the overall a life the it and markets, oil at looks I if your of chemicals. pieces didn’t And I bit for Blake. change know though, gas, sales lowered

suggest you end recorded given you quarter more even confident Does about even might us the in all in supply end. the still told you of have that you relatively So you just sort of these here implicit I made at – that quarter, with this you that last orders markets if QX? sort put that even range think confidence, together, changes issues, high you that felt chain the your especially

Nick Gangestad

exactly we – think guidance see we ability not we we things will where guiding be, We those think on of less going to talking we’re and our far of it demand guiding what confident has that changed, and but is remain to our able that like and deliver to small the about, those this that view procuring are where Andy, components a view we’re exactly we to be be year. what is we’re far continue more that by fringe more based you’re think of

Andy Kaplowitz

Thanks, guys.

Blake Moret

Andy. Thanks,

Operator

the to back question-and-answer Ms. session. turn concludes Kourakos, That I you. today’s call

Jessica Kourakos

Thanks, call. and support We you your soon. Emma. day. everyone. a to forward Thanks, to That talking look Have today’s appreciate concludes great

Operator

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

Rockwell Automation (ROK) 27 Jan 222022 Q1 Earnings call transcript