Earnings call transcript Q2 2023

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Operator

Thank you for holding, and welcome to Rockwell Automation 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 your questions. [Operator Instructions]

At this time, I would like to turn the call over to Aijana Zellner, Head of Investor Relations and Market Strategy. Ms. ahead. go please Zellner,

Aijana Zellner

Chairman Good Automation's thank earnings second me Moret, call. Julian. our Nick us CFO. release for for With our Blake is Rockwell quarter today CEO; morning, you, and you Gangestad, and joining conference and Thank fiscal XXXX

released morning, today charts and results have our press call charts reference and include release non-GAAP release were Our posted the to press the and will measures. been our earlier this website. Both and

of press these available measures. our the release of and call the website for reconciliations this include Both webcast non-GAAP charts replay days. A will on next be XX for

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

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

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

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

Blake Moret

Aijana. you us Thank for good And today. morning joining Thanks everyone.

second to in earnings. quarter both and on We had Slide our an strong outstanding sales turn Let's growth X. quarter of results

were total estimated our we environment. in economic billion, once and price-related orders our and uncertain Through electronic evenly this as margin even to Our double-digit $X.X continue QX. forward year, be between of the demand fiscal pull offerings half business to availability. strong well execution strong the X for in continue sales fiscal The Rockwell's spread first for adjust focus as reflect component overall growth in resiliency on quarters the improvement our differentiated this

in rates cancellation the through single order April. low our expected, digits remain As

reduced XX% growth versus X sales by prior of sales over point expectations. grew year-over-year about this translation year. Currency sales over quarter. Organic Total and were contributed X% above and acquisitions our up over were XX%

access driven industry, and to backlog. region As sales of by segment, of business our largely in the was the prior composition quarters, by and electronic the split components

prior In business broad-based the Devices growth across Intelligent segment, versus businesses. sales all grew year with XX% organic

We food is independent life semiconductor and our of for continue of application fabs. new transport technology across and semiconductor, applications sciences. in to see in One the wider way new example adoption beverage cart

significant see We material offering large space our These U.S with to and increasing expanding leading technology demand continue important handling and customer and and capacity win systems existing its this helps this including in for more fab company modernizing to savings. independent utilizes a efficiently wafer investing output increase cart quarter. increased

over and by in the prior Software our overall Strong Control we organic of resiliency continue was versus an increased XX%. year growth led supply chain. improvement see sales and logic, investments where benefits to

XX% Lifecycle Information our intake Book-to-bill grew of and Services in business. Services services organic sales strong had quarter year-over-year. Connected competitive sales Sensia were across was another by wins in prior software cybersecurity this order and portfolio. XX% led about our versus multiyear X.XX, up We segment Solutions year.

to Information customers expand with new SaaS, Smart industries of we as Solutions, am the breadth platform I geographies. continue increasing to Plex Manufacturing our Within our and pleased new

One into product of grain world's food sustainable ingredients. and with supply quarter nutritious business wins largest start-up was the company upcycling focused our its this on by EverGrain, AB-InBev, of Plex brewing

to cloud-native future. Flix the providing and Our today for EverGrain management functionality modular the mission-critical while scale software capabilities in helping quickly business deploy is quality the

in to for saw of a customer quarter we recurring demand industries are their as operations. safety customers our and continuing of another invest Connected infrastructure offerings security and across many Services, as In service cybersecurity

and food animal-based One of products. repurposing waste by was company these processing focused food reducing wins a Ingredients, with collecting Darling on

EPS of QX. grew in than points basis year-over-year year-over-year. XXX better year-over-year XX% XX.X% grew revenue was Adjusted and was over recurring annual Segment expected. Our margin over up XX%

Knowledge which of to acquisition adds the Kalypso significant services quarter, this our business. We scale also digital Lens completed

Let's segments Consistent year. on X my digits performance. QX end strong review key market chain versus to of environment, our grew to comments Slide all earlier double the X industry gradually prior with highlights now turn improving supply

Our competitors. quarter. where Within versus over in We strong U.S. strategic about the partner discrete, of edge sales quarter automation our a of this wins EV XX% helped XX% combination our and up automotive were in ecosystem out and grew in battery discrete and number saw year. sales core biggest the prior China, both a

costs invest While building they in operating term, continue still production some out goals. in the near capacity meet their customers are to new optimizing to

one already semiconductor were mentioned year-over-year. sales up win. Semiconductor mid-teens I

our with our is Another example expanding is Rockwell how footprint now applications with project win analog multiyear existing semi of wafer transport devices.

handling technology Our delivering lots implementing across applications material fabs. least moving will several to at improve By by productivity chosen by manually cart global away their was fab. technology, at ADI's our operator automate from XX% ADI of independent the

year. In QX digits mid-single e-commerce automation, down and warehouse prior sales our versus were

traditional see players, warehouses. and many packaged to in to their greenfield pause continue modernizing retailers companies in announcements, continue we invest While a e-commerce goods consumer

by sales Turning year-over-year, XX% food to up increased strong segment were Sales led this our and almost beverage. prior year. versus in hybrid growth Food in XX% industries. and beverage

in agriculture We Demand and strong. also their remains saw this number processing a in dairy quarter facilities this business vertical resilient. especially making to orders efficient brownfield and continuing of invest our customers with large in more

XX% grew year-over-year. sales sciences Life

One was the digital plant to software worker multiple leading and potential quarter eliminate Kalypso and increase model important wins bottlenecks used EmulateXD company, services health a European simulation layouts up XX% to was with care test safety. of Tire our this in our quarter. the where over

subsidiary, prior over up in process, we was and win. Within led dioxide the growth metals. X.X segment and atmosphere. providing year, is sustainability had for air help once an Through remove from Occidental Rockwell important This systems that Petroleum's process. XX% capture gas oil again by carbon units versus control to Moving direct

be carbon Occi’s strategy management low-carbon of proud solutions deliver zero are to net We accelerate a economy. to that part large-scale

electronic QX what's America EMEA and backlog our increased and XX%, North demand. in grew sales sales. customer X was region growth regional grew Similar organic component to reflects availability our Slide our the quarters, up to underlying and rather XX% Asia-Pacific and Latin XX% now organic year-over-year. XX%. prior Turning the sales America than by

move XXXX now Let's Slide outlook. to X, fiscal

said have the previously to ship fiscal backlog. is ability based sales 'XX our primarily performance that on We

half, 'XX. in increasing improving supply performance resiliency and the benefits our earnings are Given the sales and first our fiscal we ship of outlook our for actions,

Our fiscal growth 'XX sales XX.X%. guidance projects of total reported

XX% the sales organic expect of We at growth midpoint.

of to touch X.X more expect growth over to X acquisitions later. Nick this of a point will currency points. be We headwind and contribute on

is year-over-year. grow cash we expected prior Organic is to Segment ARR XX%. XXX Adjusted by XX% increase and versus expected to grow flow conversion. target margin EPS to XX% expected continue over year, to basis is points free

thoughts turn backlog our with it more customers, on me setup we year and I continued share better orders 'XX. With our end levels. believe of full the year some visibility let Nick, half Before our for discussions we into than us of have through this fiscal over to and behind fiscal year

of the customer about our slight of We lead expectations availability This billion, times. half expect be our orders year. subsequent consistent a implies orders in 'XX moderation which $X is reduction with component fiscal to in second and improving of the this

the an we us expect our impressive for With growth, focus given year our largest current positioning backlog year of to and well with fiscal Also, unique around differentiation. $X we record earnings we 'XX. exiting the that pure billion, outlook, anticipate have levels continue of market as orders play, and

Let to detail and our performance outlook more 'XX. me on to it over for turn Nick QX provide fiscal financial

Nick?

Nick Gangestad

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

XX.X% points up XX.X%, were sales over QX sales XXX reported total quarter basis to growth. organic were up Second last contributed acquisitions year. and

higher sales than majority of growth this Currency sales our margin expectations. costs, margin and driven The X.X% our of the decreased by outperformance translation The compensation driven price. X basis partially was offset year-over-year incentive higher about XXX operating by higher price points increase and point Segment volume came higher by spend. was XX.X% higher and to revenue. by expanded organic investment from was in positive

XX% other cover million, expense versus line of a and in expectations. year-over-year our of EPS I'll later grew year. prior $X.XX $XX bridge was a on EPS with was expectations ahead slide. our adjusted Corporate and Adjusted

flow for million quarter income, $XXX by Free pretax by working offset sales last higher The The QX driven given increase driven accounts year, higher the receivable was adjusted higher was cash partially million $XXX by to tax rate compared capital. effective second primarily in our capital of higher XX.X%. was working outperformance.

balance improved we cost repurchased reductions billion continue by on we approximately We inventory On available X at year. not days for days the authorization. quarter the on remained One to $X.X XXX,XXX of repurchase in days our additional of March under and shares hand slide, million. the in in a the our $XX QX, shown in XX, inventory expect item

of overview performance margin and segments. sales X the provides X Slide our operating

segments. double each Organic of in sales our grew digits operating year-over-year

by partially offset price Turning to incentive XXX volume, basis to year-over-year by investment spend cost increased margins. and Intelligent higher due points Devices sales and compensation. margin higher positive

Segment investment higher incentive higher for compared spend control increased and positive offset year by volume XXX and margin on to sales points last costs basis price software partially compensation. and

basis margin to and future the by was onetime compensation higher as higher year-over-year services items incentive Lifecycle profitability. XXX decreased points of sales expand more by offset benefit than

expand to sequentially margin XX% services lifecycle expect QX. exceed We and in

currency The was headwind the to sales $X.XX fiscal XX.X% on The 'XX compensation $X.XX Incentive $X.XX a reflects stronger in was from EPS up The Core next last year-over-year a XX, adjusted walk increase. QX fiscal provides versus 'XX. year. Slide, a a performance QX QX headwind. organic of EPS. reduction of was dollar impact

expectations increase our and our earnings and QX year. reflects for This higher year last growth this fiscal in year-over-year of lower bonus

$X.XX impact. Higher interest a was expense

adjusted $X.XX tax about outstanding $X.XX. reduction adjusted added effective Our higher and rate a in our shares our -- was headwind

XX, 'XX. Let's move to fiscal Slide for guidance on

or We our billion fiscal growth to sales in the 'XX approximately $X.X are midpoint. guidance at reported increasing XX.X%

XX% be sales of at We organic XX% to in growth the XX% to or range a midpoint. expect

fiscal supply our of and through X volume add expect view growth half first on the takes price into chain points based is of improvement. of add to to guidance our account We This year performance the and ongoing current of growth. XX points

second availability previous centers. This in from calendarization better This full primarily organic a each reflects U.S. X provider currency expect the the in third-party in our our now outlook expect X dollar. which strengthening terms guidance. the of single-digit basis updated In half, QX of includes basis Euro the XX against points, is points logistics high mid-teens of we to and than next and growth our at one of distribution XXX quarters the We year chip of view transition growth our QX of another headwind QX.

full from prior guidance, year prior costs point operating guidance and split driven higher evenly XX.X%, our over year-over-year This of XXX for positive to to from margin benefit basis year. volume improvement point and be segment about We versus an by price expect higher XX%, full up XXX about We a margin cost. from represents now our price basis between expect cost. increase price the

XX%. rate updated full year forecast close full the now expect in to effective that of guidance be our around year assumes earnings items QX. XX.X%, realized to core of down prior due discrete We Our now from XX% adjusted to were tax conversion

adjusted are growth range, at of $XX.XX EPS midpoint. the to from We growth, At EPS represents of adjusted up increasing our guidance this midpoint XX% $XX.XX. prior the guidance XX% the to approximately

year expect $XXX comments 'XX around expense fiscal 'XX on expense income. to XXX.X around outstanding million. other about expected adjusted is average still shares. of conversion fiscal and full assuming free we're of guidance. A million fiscal to be Net interest shares 'XX cash And is additional XX% still flow diluted be $XXX million. expected for We Corporate few of

guidance, Slide for to our EPS Versus $X.XX. we XX. Turning midpoint the are increasing prior by

in higher sales an by driven our Our price/cost. guidance our of core increase outlook and improved organic $X.XX reflects in

sales additional digital adding as new in is $X.XX. deployed future and as revenue will Currency and that product also infrastructure We growth investments well profitability. generate development

finally, Given compensation drop adjusted our will by tax our effective incentive rate increased basis point the add is $X.XX. in our And stronger $X.XX. outlook, XX

closing With that, for I before to remarks over will back we it Blake turn Q&A. some start

Blake?

Blake Moret

Nick. Thanks,

new accelerate environment investments rest laser-focused fiscal said, are we of development With continuing in execution through and are on the this operating year. still dynamic in product are We and cloud-native technologies. a to that

both becoming Revenue meaningful is organic share inorganic to growth new and gains. more offerings, contributor and from our a

and process We automation hybrid strong differentiated partnerships strategic offerings we acquisitions. largest adding scale are and and market-leading discrete, the company pure-play with through to industries are across solutions our

working is Lens Knowledge resources solutions AI This cutting-edge digital key existing of customers business. science, plans. employees team want Knowledge with and cloud next-generation their acquisition XXX expanded our recent I services already to is our adding to Our to all Rockwell. welcome data with Lens on

growth us give our our momentum talent Our profitability close and the best-in-class for relationships continued with ecosystem end beyond. confidence this and in and customers, year

the Aijana will session. Q&A now begin

Aijana Zellner

Thank limit and to as possible, yourself a please Thanks, to Blake. question We would you quick of follow-up. so X many like as get you.

Operator

Our Citigroup. [Operator question first comes go Andy from Kaplowitz Instructions] Please ahead. from

open. Your line is

Andy Kaplowitz

focusing you're and think durability capacity say, solution, $X to terms you're having? backlog your in know order be that with. suggested investors just the about automation but 'XX so I I the for grow coming billion? who how the of you your the about the $X $X of based setup close set some cycle on beyond can about will how to of know orders think And the the there you hitting that Blake, you're the half. will comments context talk year of look it, on and you you of in call have you end second $X the in you're year to deceleration billion-plus this do earnings [Indiscernible] the conversations point cycle we about do billion up billion But as thinking the growth, 'XX.

Blake Moret

me Sure. We're that let add capacity. Well, take first, continuing to Andy.

supply and ready facilities, our to at continuing integrated our So handle our redundancy same to chip supply is time operations the We're our continued chain make that growth. improving. is sure labor across that

So me let start there.

the demand, terms in of like Now thought we would. out is this playing it

and some times said expect shipments that did orders for converge have lead time as We improve. we now to

we've but the renewables vertical spending historic bigger and part in a continuing important as We're look as view, to at let's additional vehicle and And electric so about the levels our are the And like of well. verticals strong become battery as of expenditures things take of the kind seeing orders fossil what fuel that's a that both us, pace. in decarbonized semiconductor. business energy, talked a you're and vertical generational that, exactly certain are to by seeing, at providers

so on increased complement But we're we that to the and workforce an technologies of people with software focus to also due the seeing scarcity large trained and automation, across services trends, provide. and like all durable verticals that's things the and need the

I So setup is think conditions, pay we look attention automation for multiyear information to growth there. we and as across continue to the in that close macroeconomic while

Andy Kaplowitz

more not sort do Nick, to supply you kind can color margins or your software give If segments. lifecycle, that Blake maybe control, a of like lagging business, then when And and chain look little behind on headwinds still seems I in you at us bit. a mid-XXs are impacting and low the obviously, can it of little

second a software So lifecycle that do of you get up is firing now an starting margin And it's the assessment of business. it's all cylinders, XX% and when above the half of on fair in control year? sort

Nick Gangestad

Yes, Andy, that. me take let

the what and margin overall and control we're that business. that XX% over business the far software As with a as for see of and the we selling sustainable seeing market we're what mix in do there, strength as in

we getting the this had quarter. In in double up. And fourth terms digits. services, We happening be to that's earlier -- talked to see going lifecycle sequentially that that see of going we about

good And 'XX trajectory to we see as beyond expect going a think to we're that's well. happen

segments. where that's margins So seeing in two we're those

Operator

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

Your line is open.

Josh Pokrzywinski

on just Blake, I the some little kind square the want about, commentary, comp of the to I comp circle bit. order sequentially. of Talking here guess, So you a

increase. forward the the had pull probably around price that happened You

coming bit. down are times lead said, you As a little

still sort order. have, presumably, call accordingly, it, of So altering but sequential customers plans you flattish

and in anything, EV quarter-over-quarter come terms the get or and a of aware I gotten there. markets But like seem build few guess, momentum over that we and something over should April others mentioned Sciences have March exit that It that So and in did rates like be seems to better. and of? it's anything Life battery again, same

Blake Moret

some things and a Josh, business our than in We -- talking but And that Yes, while American would expect I'd major had to there. addition say also we couple the good. quite now, in gas we've I of were within orders Sensia orders a and great fairly stronger to things. some were and rest Asia, the continue it say that backlog the the competitive year. wins broad, was suspects, of Europe about been orders usual the for relatively that built for oil North

Josh Pokrzywinski

quarter? guess spending the a more the this on how to I in we expected. And a Nick I around kind for spending there about gets of And think little think bit, question obligatory there's when since rest than then pulled things investment year? should reallocation are investment better that of Nick, was especially of get the little any

Nick Gangestad

more in up this few for spend for QX. dollars than plan came second a quarter, had for initial particular what investment The million Yes. we our it

upping we were the All view what invest previously if in year improve, what in our full holding would total ready investment spend are are we we quarter. in, half the would with, and I do that the things call, investment spend of third million. in, releasing and our fourth what we on up year. were conservative that for estimated We to in versus going spend, second and the we things We pocket be year of back pretty to a the started had we that roughly by see some $XX up

now said I be over $XXX million. in It's up up guidance $XXX last million. previously the year million, it up year would it's $XXX

Operator

America. Our next comes Obin from ahead. Please from question go Andrew Bank of

line Your open. is

Andrew Obin

times. getting are Just on we questions lead

-- Or dynamic Is fiscal showed math. I it a just you about a above you slightly sort us simple So Is round then framework? $X right, this number sort of how throughout there versus where big the $X that basically where were billion, is sort think of of to and should were the $X of help fiscal to 'XX just to you about nice this think billion matches, billion comp year? number? placeholder update is $X just the very billion a end

is an quarter? the manages company every that sort Or inside update somebody a of number to

Blake Moret

Andrew, rates. you still think of slight but the up current at order $X.X should strong by reduction held Yes, about which backlog, as about that billion, sits a continuing

improve, intended the to strength lead that stays be and precise, orders. that high to trends quite the clear the not backlog, it's hand, reflect that on due able So the but other we're times number seeing as is but overall continuing does past it to of due we're

Andrew Obin

manage guys at can you just But impressive. because does sort Plex demo about historical to sort evolution and just the focus And at experience XX% on a is said, a, Plex try how question you of we has focus clearly, Rockwell is a on feel just had large show. just show. pretty enterprise the is and Plex IRR great of a SMB Can what I And end talk Hanover of Hanover been, as product big because market, doing?

Blake Moret

playing sure, expand existing tier beverage that with we EV like had Europe mining. we've Sure. knew functionality the opportunity to but continues is Plex they ERP bought Asia acquisition. where with we their and our knew medium-sized would just to capability, hoped seen that and that addition has with automotives, chain exciting like has record food even we When we Plex to market out into Azure we're that supply made a our Well, already and in great it's manufacturing Plex, also customer and offering, smart but be nice businesses. and management, and really we be wins wins track we had to some there. that for And doing a and MES diversify Plex and it quality it when to certain putting geographically also could in we platform small- verticals in on base access,

lots room playing So it's is there and that. with out, of that's to that run synergy

within the that I've selling cloud-native well. to working we've take given it's one mentioned Rockwell. enterprise-wide So of seasoned roles before, software done and is the things SaaS of veterans them

are Marketing from number and So Plex. coming our Chief other leadership, software functions sales of a Officer

the that sure we're the and just in organization. making -- expertise don't it's the the business So vary it's technology not we also that

Andrew Obin

worse, with sort for of And Is XX%. of if it commensurate you're X% growth just line the [Indiscernible]. rates rest if you the could benchmark sort in business, of better was that

Blake Moret

Sure. are Plex overall and growth our Flix the business. supportive to very of software

Operator

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

open. is line Your

Julian Mitchell

little detail, bit drill broadly where little a by more just doesn't sort understand, to being at look orders half if and for that hybrid just versus process Maybe but into that. book-to-bill being back try you sort for It year-on-year a of maybe we you'd well sound anything wanted element more most in on book-to-bill that see versus that of it to pressure the perturbed bit severe. trying question one. Blake. like around below maybe a out just markets, And or more call discrete you're

flush revenue component had You've right this driving surge this huge now.

of the the environment at demand recent sort all a months? flush that there post or Is changed view in on world

Blake Moret

Yes.

Julian, backlog the past way additional me wouldn't we and in is service that a in let start. the It's improving adding I out due orders we're characterize levels in backlog is pressured. that in and So it playing business. reduction hope clearing would customer

you able been So products ship to the quarter get that in Rockwell historically pretty same be fortunate we order. out that know the much to has

as time, continuing in intend a good our the cycle Lifecycle to for backlog, this is same just the demand So X.XX gives there. have about longer as reduce much us we to and book-to-bill At confidence Services lead times continue possible. projects to and unusual products business product

demand I good environment. but going obviously is So this is We the that as about a on forward, very working. additional as feel way healthy this we well are creating execution feel focused

to supply they chain on we changed chips. any second resilient, our of go resiliency products as constraints new sure are have component as unless will vendor. products designs levels forward anything terms sure that be being the in dependencies effort new to that make one able well mean I reduce to existing pre reevaluating have in To than in both and robust making always and we on going of designs to get we're did your question of terms to about, a able component supply larger world, has

with to the of stay. capital about, year. that believe, cash good the here some and increases to talked go working We that's as supports inventory do the down, Nick for So flow

things to So forward to resolve in do aren't continue the more the say, but as constraints prepandemic, a change themselves. to so on back capital going to, expect go and certain those all as normal chip way let's levels of we we return working

Julian Mitchell

when could And you sort sort a do at of good we having two a sort quarters thinking, being you're of that of look period for be Rockwell's backlog one? same below of in conversion quite of moves prolonged sort components because then the one-to-one it a for get of and pipeline coming plus book-to-bill back at accelerated classic into model. of business no, strong adjustments into revenue demand of the a projects you up, like seeing time, think customer Or chain, and some of supply couple we

Blake Moret

Yes.

of constraints, to a that, going intention were with the we above they And the given. order prepandemic. positive general and in that's product and further a guess kind what already closer the unusual level that I'm Beyond read but far levels they rate verticals that before our as automation about incoming closer believe is times going setup forward. demand is of an to setup but not I've well as disclosure specific do something lead 'XX about about reduce were to we've for talked for what these

Operator

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

open. is line Your

Steve Tusa

of guys the sequential this or did the -- Congrats on change execution you on sorry, -- XQ But about talk missed call. backlog. a to I in the in from part backlog XQ? XQ the that

Nick Gangestad

was year That's talked $X.X we year. million about what now at the the us of stands that of beginning the billion. is $X.X backlog Steve, versus for the it the that at middle at

So million for the of up $XXX X months year. first the

Steve Tusa

the just just like how color business Maybe that all was And and then you on from from the that break products-related much how at the is of much at in a much little came much down did the drivers? on the there? more price/cost margin How that how bit year-over-year F&C, margins came products software of spread?

Nick Gangestad

far we're mix. of and biggest I that the that by margin haven't factor terms experiencing growth versus But software provided product the getting the causing on the are things the volume we're expansion. that. The leverage the in is

biggest to increase. is where that to a some second down versus offsetting is XXX last basis to And year. the then price/cost bring thing year-on-year improving quarter that were extent, favorable margin we point in The second it that,

investment also have and for are margin and in we are We on spend compensation. QX year-over-year the noticeably the negative Control. year-over-year in higher Software things software increased incentive control, and facing X the Those

Steve Tusa

then that year finish that expect do do you expect margin Where where to for end? to And you the margin annual just the F&C margin?

Nick Gangestad

year. see we're think in have second the to our in similar We we margin up past and quarter. of At seeing it to the It's that will what be that's fairly over -- being I the that XX%. Yes. levels from what said able sustain into second half

XX% be year, above XX%. a full to points could few So going we're percentage above be

Operator

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

Your line is open.

Nigel Coe

sort where converting conversion And this so But customer if just will X timing? normal see labor? I it are apologize is we're kind about supply backlog, we constraint chains, of the lead I backlog be versus means of project question it asked times? lead times. some the of asking terms the be of call, So like, of acceptance, to it about in I wondering we've times? just going more Is the Is

could of the second faster year? What backlog the cause half the convert in even to

Blake Moret

that's in as older primary the backlog is that chip easing the factor supply good Yes. limiting development Nigel, there. a is as clearing we're really this

it's to there. continuing we've down And around from year, also the held go the the said, services $X we've lifecycle got expecting intake with As order book-to-bill. strong by about its to but $X.X good we're billion backlog, of and billion end of up worth by contribution that

So chip supply. it's primarily the

world. add in continue as the operation. very around We feel now, not time to We've equipment. capital-intensive we're our our additional adding really been good a for some to ability labor about facilities But you know,

because of not a having add to an we're company. like primarily it's heavy So lot we're capital equipment if intellectual

lead operations. shorter relatively heavier times were has need we we that equipment than the type so in And manufacturing if

Nigel Coe

of first would And causing so X.X% then what's systems, shifting cetera. the billion kind backlog obviously the you half. I And then through that we but the mix very so coming we -- the of half, particularly first $X.X another larger just be down? are to is those seeing the the plants, seeing billion in in a of mean, second et -- stab some about ED $X mean, systems part Are $X.X to it, orders just backlog. billion with backlog? the What's still of at that orders, the $X.X the some of larger I point of billion question another in level, drop half, no projects,

project timing? times rate orders? Is that have visibility What of do the it for kind of to it declining just same not to Again, you are of in customers that you pointing kind deceleration orders. half second level are Is orders. lead placing very channels healthy

Blake Moret

Yes.

So orders. composition think first change any all, backlog, of the we're of the type in terms the of of fundamental in I don't seeing

Now the as through the richer year. a has backlog pricing obviously, move work through as we we

going big in or don't just or cycles in terms change of So card a semiconductor, a are of systems facilities these number I MRO, big management lot think that's you're continuing a areas investment of good the read. or because to But see independent multiyear. EV those projects

the it in positive these for We're with areas. some of long haul

machine most of coverage orders, improve, specific a the across their moderation to a many Now months are as size area is backlog. little our of from the of to not having see you'll same bit contribution as as probably the you provide times of lines, where orders of of product lot they builders the lead in might have terms in see

flow and they reduce orders about concerned booked. size then shorter can of months their the because their machines need they look lead many times, they're as cash they the already at can coverage So that don't for they've as

So I the of to some orders specific think that's moderation. probably contribution most the

Operator

ahead. question Mason Baird. next Our Rob comes Please from go from

Your open. line is

Rob Mason

Sensia gas. oil I called and times out around several and in

as through we interest, go the But at are pulling to looks over things like profitability operating it positioned the next forward on shift any on thoughts might based sounds it So we're -- maybe like months still minority how further Sensia. just an loss XX just X, there. accelerate

Blake Moret

Yes.

growth it. strong in I strong business. we're had good and there's We there. particularly the seeing very a mean, orders, some said You a backlog

an as across quarters, terms lifecycle growth so and the Sensia to then we in have coming contribution And the expect first profitability positive and impact through of we more services broadly on both move of Rockwell.

Nick Gangestad

And that. to took on quarter build profitability. that Rob, to about the my second just costs I we some expand talked onetime prepared In remarks, in

more -- some is it business that of in more it think the we where the profitability for for Sensia investments will Some Sensia that future. to in build area even infrastructure made focused simplify we make

seeing And quarter in part our second of Sensia. so that's we're what results for

Rob Mason

Excellent.

out what Just recovery seeing as a playing is that hear to, follow-up the I on to how ground any commentary didn't exactly any just you're in business? China China, your specific thoughts, in and

Blake Moret

Yes.

a couple So of things.

sciences and like First EV and past of And of contributors the all, general, we've in on. growth same in areas the lot is a across it's life so with strong in China the business. the that seen

there is posed So we business our growth. for think continued that

Operator

question Noah comes Kaye from ahead. go Our Oppenheimer. Please next from

open. Your line is

Unidentified Analyst

for This is Andre Noah. on

Asia defined for near give and color how market a as you've you access ISGS Europe Material active and focus priorities. today? what's Handling any in On Could looks M&A and Advanced pipeline on that and the most term you as pipeline, previously us

Blake Moret

That's a a within production and information the that, But it's fairly Andre, broad. world. priorities. the there's pipeline, said Yes. it. lot in software you are management of good Those

additional technology, advanced some things as has the control, some So and there's talk added we independent applications things very think interesting and capabilities material there. some robotics both We successful through organically decent all acquisitions, some of us Cybersecurity line control been our targets about for we've we're extremely robot as there. time lines get doing and going blurred cart on about there's the between programmable in the handling.

had of with happy, PCs you exciting for there's new that of and and industrial Italian and new also And most to Asia, then we're value that's instance, we're very New Obviously, some manufacturer some with has of basis great the AI -- these for for forming York in what awesome, dimensions some doing customers. introduction. software areas, the our autonomy for

So would good of fronts. the across all I that say is pipeline those

Unidentified Analyst

and transition needs any with on just battery the and the Thank customers now? update pipeline production right opportunity domestic lithium vehicle IRA in impact in an you in and focused also the starting most get vertical upstream of and customer EV where that

Blake Moret

get investments. their that focused building up giant capacity can return so fleet all on these Well, on they're a they

start door You today, look through finish at vehicle and on this them, of you see per those process you more through don't facilities all look and still of the don't listen the you output. to trends, production a making electric the for assembly. the be needed basic jobs get that the on electric ton that is the you multiyear unless on from and the But to hour road and are a if you put and expand they're lines working all goals to vehicles materials batteries, so able to if battery their the

where on out us get All combustion anywhere you the internal a come to has electric of be seeing to able that build to to near vehicles vehicles start point approaching road.

on supply years whole the So focused manufacturers all years in these is of this debottlenecking to going is chain, multiple which for and that be come. news to are

instance. think question. other We've We First other it about with I Solar, one does helps for the the obviously, Oxy's mean talked well as X.X there talked before providers. IRA, as I about initiative. renewable that

of we're come online it's their and verticals are So people for business and more it seeing our models. more because these doing across important

to years. not And again, thing. femoral going a over multiple That's be that's

Operator

from from ahead. Phil Buller Berenberg. comes question next Please go Our

Your open. line is

Phil Buller

process of, more pipeline the speaking, generally I expand you funnel than excited or rather so on in the at the discrete than topic this funnel could the markets, was I'm about if more point. I or backlog. you're guess, hoping wondering hybrid order

in customer those trying get such. You've on big examples aggregates discrete thought it helpfully handle those like into I'm EVs a very just how and different buckets. to about process versus

So fuller, funnel getting will? is which you if

you there's be margin if between structural differential remind those any that great. us And would can perhaps

Blake Moret

with And and is with applications I process our Sensia, good balanced single talk is talk we well. we and activity sciences, mean, then hybrid but order EV Sure. process, about discrete happy in about them. see we're some big battery business in Yes, and in continue as beverage that beverage and mean, highlighted it's I strong we I to with as broad-based. the very between way discrete, opportunities in all of food hybrid. in activity also and food vertical metals biggest and life particularly our

So it's all of across them.

in Now heavily more to complement little the engineered opportunities on in systems margin, the bit are one would for side. same looking customers the are Those the there's say to coming more engineering hardware process a of next that the I often each the provider. one. concentrated terms high-margin content from

probably that, see you'd of people to intensivity industry near So and in but for midterm all funnel across the a margin the of good the due lower segments. orders little opportunities bit there

Phil Buller

just topic margins margin. Software here. different The terms I know in one of the quite on different And the the depending is different, and touched at. Control you've drop through businesses looking which three on you're between

a know around of I moment. lot at And that there's been bouncing the things

of think I HX each HX. you evolution Is bearing was the margin businesses mind about you out please? anything to and beyond relative to Software should be get trying point on how the Control, in there I that could guess just we So that a for handle three

Nick Gangestad

at and about margin been devices, XX% Control, still, intelligent this which Beyond covered year. I've half in already little first XX%, that's of look when I the over Software a

the that, and Intelligent to the year Devices. XX% to think full I be maybe close between XX% for full year, for margin for it's going

we in is see price Some good of comp for we'll I investment the resiliency that places full spend we've of of as focusing about also the been talked see This growth, there, to happening things where volume, continuing. higher and but spend. continue be we'll investment year, one earlier, seeing our the higher good some incentive and

XX% Devices. and XX% for between Intelligent So

improvement. services. me, talked double-digit crossing until -- soft I've threshold then see sequential us I the quarter. about fourth the And lifecycle into don't excuse margin

see the being first from to going little not I that margin. where the half to direction we quarter. XX% and stepping where in up, way it So fourth all over or a move then be the X% the We'll over QX but XX% in we're in were in

Aijana Zellner

will take question. we Julian, one more

Operator

ahead. question will last our Nathan Please from Jairam go Certainly, from come Daiwa.

is Your open. line

Jairam Nathan

automotive. a little spend wanted just to time on the I So

of We spot are as do seeing, understand or I to not any have process steps content EVs, casting giga welding, we auto companies implications things on down. like welding does the transition seeing coming the lot see And of as towards from are and a you EVs Rockwell probably but number go that?

Blake Moret

Yes.

actually up go a couple EVs, internal that's Rockwell we as for engines for and reasons. So the net from combustion to of goes opportunity

and process, First which cylinders, control, the a finishing a things not with that's surfaces manufacturing technology of that's operations. traditional computer And all, more That's that's subtractive that. metal that has. Rockwell numerical boring done like drivetrain directly largely is

We partnerships, provide have something but good it's we not that directly.

to battery some that the batch more by great are And the operation. end vehicles, of Rockwell serve. operations with electric type at processes. aspects replaced that formation of in that's assembly. when has all and so And readiness front and That's most the applications packing those assembly of And notably, there's an

Then it's press Rockwell when operations, control it, systems. press you great look of more joining has mentioned at part complex what specifically and in the you

drive those expanded well our as of applications our more again, good complex, control So the becomes with as program control. formation for are metal really Rockwell as

and added And So that's more then software we opportunities. applications. we of have automation It's there. about manufacturing those pervasive good feel the solutions basic process, those to battery and really a vehicle the part electric good

Jairam Nathan

if more, one may. And I

actually all I So -- outlook, be I to X the the your mean which given decline area chemicals. seems think

think you I single digits. a from double from -- went high low double a digit

can So you that bit? explain a

Blake Moret

chemical bulk on a say our specialty chemical, opposed than the where is to don't I focus as other to have fine chemicals. answer is chemical for moderating specific in more chemical No.

Operator

like to Ms. We have questions. to for turn call no further Zellner over the I'd remarks. back closing

Aijana Zellner

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

Operator

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

Rockwell Automation (ROK) 27 Apr 232023 Q2 Earnings call transcript