ROK - Earnings call 3 2023 | 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. [Operator Instructions] At this time, I would like to turn the call over to Aijana Zellner, Head of Investor Relations and Market Strategy. Ms. Zellner, please go ahead.

Aijana Zellner

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

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

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 detailed 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

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

Blake Moret

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

to recovered shipments QX, we in 'XX turn earnings by of Shipments capacity a calendar lines, sales third center. end our Let's for times Lead beyond. May fiscal year. distribution quarter American X. products new the on to at to We recovery and across supplier also now with this in planned pre-pandemic of of continue and component this ease. in logistics both North a from June higher did week as shortages a and year changeover place expected to center third-party all almost double-digit because for good have continued longer-than-expected to quarter We miss in saw product distribution the times Slide reduce our growth results our lead

than X decreased year by versus and the prior less of point quarters, and this our point to each of netting contributed over industry split organic our Currency Both out. translation XX% business total over by largely backlog. acquisitions the grew sales of with X other region and was prior currency driven growth sales Similar segment, by roughly acquisitions quarter. and composition sales

were business changeover year. prior Devices in had segment, our center Intelligent versus segment quarter. organic impact the on sales the up distribution X% In The in the this biggest

be Within Devices technology, and to the strategic Cart had this handling continues we U.S. several a Intelligent Technology in wins Independent segment, material the more quarter. disruptive

of ArmorKinetix to products recent our innovative On-Machine control motion adds portfolio. handling our The launch material

important our of win desalination with economical the and customer drinking companies, one sustainable deliver regions. are services helping leading We Europe developing also in SIDEM, millions of this an people and in to world's where had PowerFlex water drives expertise

reflecting our XX% chain resiliency we've quarter, & Software year. were XX% year-over-year. the the grew sales control last organic Control almost the Logix investments and benefits made strong continued this differentiation platform of sales over from supply over

and View standardizes the & global ThinManager platform. a of example competitor America success the our our software within win well-known facilities recent to its unseated company, at visualization a combination many Rockwell ASEM industrial as of where Control Software North parcel on customer Another is a delivery ways PCs long-standing

and had by Asia. X% X.XX, increased across in this another was deals versus Sensia large EMEA with services year. strong Book-to-bill our segment prior business. quarter sales sales and and good organic Services in led Sensia orders multiple Lifecycle orders of

in delivered Services higher also quarter. this We sequential Lifecycle margins

across Information QX, software. wins Services grew Information our We versus XX% our in multiple Solutions portfolio year. including & both Solutions cloud-native had entire on-prem Connected sales prior and

new to selected Rockwell's located MES manufacturers, FactoryTalk production the quarter, develop its of one in This world's global Pacific, center tire platform. top Asia

Microsoft cloud-native need Asia to win Another Plex SaaS hardware, at without contributing Azure HVAC, of our and in start execution leader one continue our global quickly system extensive customer the plants. market chose for manufacturing deployed where to solution a on The Japanese machine our wins logos. in in greenfield up their on-premise management being with ramp was IS platform strong important software access quarter and saw quality as new to is a up the SaaS Plex support. synergy is We

off monetize to we In stepping PTC's with and of XXXX. shares combination business now we total less agreement with revenue ThingWorx saw regarding our software PTC, outstanding, visualization We their of I Services the X% continue recurring through our the in quarter, of platform. own the the Digital Board. and accordance terms a partnership than of made benefits our Also numerous wins investment of in am we with PTC,

remains Our June. was and relationship strong in extended commercial

comply important an Oil Abu had with system we and Services, partner, infrastructure from Connected leveraging Dhabi win of cybersecurity the network and security with with network is Company. regulations. help secure services along our ADNOC, This its to In cybergovernance our customer an detection expertise intrusion Dragos, National

strong despite shipment to Backlog grew of to very Segment year-over-year recurring XX% as lead EPS with annual over the grew flat and improve. expectations total a margin our Adjusted is year reduce quarter. was times line Our revenue beginning in shortfall. XX.X% last this year-over-year. XX%

Let's key our performance. X to review of Slide now QX turn end highlights to market

automotive about year-over-year. up prior mid-teens versus Our discrete year. grew discrete, sales sales were XX% Within

for thermal offerings, customer this working quarter battery automation an One tooling Korean X Tier provide was core brand battery for on using European with including is supplier notable motion control, customer here the our to owner. of a management. project EV wins a This

Another with U.K. the X electrified this was in EV their was win quarter Land shops body the JLR for Rover, Jaguar support where of Rockwell automotive selected architecture to

transport last see manufacturers. by broader quarters, high this the of solutions adoption our on world's strength quarter. Building we over Semiconductor leading wafer few continue sales semiconductor the teens to grew

important win Saudi This its Arabia, in implements quarter, site manufacturing at smart we our platform also SOC the Riyadh. had an in as Plex customer semiconductor at

and some In cancellations at delays down continued sales prior were e-commerce and warehouse customers. by teens year, our versus automation, e-commerce high driven

XX% growth in strong versus by hybrid segment beverage year-over-year. food in our and led mid-teens Moving and were sales beverage Food to and industries segment. this tire. prior grew Sales up year.

of investments wins a brownfield this food company PlantPAx leading global competitive both on this A expertise. control its our global see to platform. is sites a domain processing customer's standardizing XX win our on one multiyear program. process with to in in vertical, and fleet applications This focused over quarter modernization important in continue control is DCS technology of progress greenfield most and testament our both We

medicinal mid-single continues Cart Group speed the to workflows where win a and BICO Life America, newer of with and development. selected technologies cell member see new Biosero, combined of North grew strategic This We had a a for versus in our both year. and CapEx our lab across regions in therapy investments prior pharmaceuticals therapy Independent all increase Biosero in Sciences accuracy to gene sales projects strong and program. traditional OpEx automate Technology digits industry products. advanced the drug

up was over Tire the quarter. in XX%

growth and Turning to and Process Industries, Process mining. led sales in were year-over-year, oil up gas by XX%

Slide now sales. to X regional QX and organic our Turning

see year-over-year underlying year said I the and against our growth of quarter organic sales about Latin As X% year than full our grew rather America earlier, backlog composition by demand. higher comps. fiscal North of customer the orders up China this for Americas reflects We 'XX the Pacific region the X%. an outpacing EMEA America was in in was are QX, Asia this our order XX%. rest Through the uptick did over cancellations world. XX% sales the up in quarter. and grew

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

were that July distribution shipments the line in are center in forecast the will shortfall confident our quarter caused by We fourth change. in full for Shipments the the recover in year. QX with

now the reported Nick and total to sales at to XX% guidance We currency from XX%, acquisitions to Our cover sales expect growth midpoint. a offset of fiscal XX% organic range each we 'XX impact later. other. continue more this detail and assumes in of will growth the expect

normalization of strong, products component we and of them will do Their order and products said and need cash seeing have lead as on what times no improving patterns builders right improving orders. and ordering orders unusually machine With times all lead placing improve, improve lead along constrained and frontlog many are incoming times, We are remain large months not flow. as that we further that's advance now. their longer expect help

distributor pick items will inventory as that up them committed receive they orders. last clear We constrained to the also orders their allow restock and expect complete customer

now full fiscal Our our be remain year to We low. billion expect billion 'XX orders to order in range. $X cancellation rates year the $X.X

the in backlog, Given this with year XX% updated $X.X of shippable to in with order expect we billion fiscal about $X about that to now billion backlog 'XX. outlook, finish year

organic ARR points year-over-year. is expect basis by to Segment XXX expected margin XX%. increase grow We to

now higher we expect now EPS grow We year. to capital. conversion by to are And midpoint prior our flow XX% and increasing adjusted XX% due guidance the adjusted EPS free cash versus of $X.XX working expect

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

Nicholas Gangestad

Thank and morning, you, good everyone. Blake,

I'll X, quarter start information. on key Slide financial third

by over points to growth points Currency QX sales total XX.X% decreased quarter growth. up reported from Third basis points. came year. organic basis acquisitions sales X price. XXX were organic and last About XX contributed were up translation of XX.X% sales our

expanded higher our XX offset positive The increase cost, to in spend. higher partially point sales XX.X% margin improved was and investment basis driven expectations productivity was volume in with line by and sales. offset Segment margin lower-than-expected operating year-over-year price as by

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

tax line was higher increases capital driven than increase inventory. driven $XXX partially by cash year, million offset effective $XX year. quarter income prior pretax lower The million of The income. rate third the primarily in and capital the by in was XX.X% higher Free flow working prior working in adjusted and was receivable accounts by for payments, and tax with

in in X result days, QX. as a Inventory grew shift planned finished the goods from primarily shipments to QX of by

XXX,XXX XX, at the our a repurchase slide, $XX additional we under item shown quarter $X remained June billion on million. One cost of not available shares in repurchased authorization. approximately the On

sales margin Slide led and performance Organic X XX% X sales provides year-over-year. segments. & growth was of overview our operating which Software Control, grew the by

Segment compensation, and increased margin margin price/cost. higher to unfavorable price offset to investment last due points positive investment year-over-year Devices higher compared mix offset year spend. decreased Intelligent volume by points basis margins. & XXX to by on incentive XXX higher for Turning partially Control costs, and Software basis sales positive by higher partially spend,

accelerate to top-line Plex, from in and ASEM. continue We growth including the years, Fiix acquisitions past few profitability and

planned. last Lifecycle Services as margin year was through similar sequentially and the improving to year

now yielding benefits focus into productivity Our on coming and quarters. is the

expand Services to in to expect sequentially Lifecycle exceed margin continue XX% and We QX.

versus 'XX. Core excluding fiscal adjusted bonus This headwind. year-over-year was $X.XX count Slide, this year a increase. XX, payout the the year-over-year a The spend organic reflects tax, of quarter. interest on to expected $X.XX EPS fiscal year. up payout increase share expense, investment normal QX next immaterial last and a below $X.XX 'XX performance XX.X% impacts currency each higher was EPS QX provides from from The compensation walk to were sales Incentive increased this

Before Slide years to on couple trends fiscal and think progression spend we talking forward. be of 'XX orders will a let's guidance, last few orders turn to the color on it our XX. provide minutes our more We helpful going about over our

saw fiscal that the First, reduced on XXXX, by created. we and customers' uncertainty constraints orders pandemic operations caused the in

three orders address three, automation of and year driven resiliency; of shortages increasing fiscal in workforce certain well high Then 'XX that increased semi verticals and to on component many projects the by fiscal EV as fiscal during and extended saw catch-up large times in first, more our like business levels of caused need combination deferred and advance an as we by shortages. due orders for investment 'XX; things: customers second, 'XX, historically to lead

for fiscal continuing 'XX, underlying long-anticipated improving in to are orders but the lead see now we demand, year products. In driven times moderation we seeing our are strong by

to our by end of to stated to levels year of X continue the times the lead 'XX. earlier, expect we back times in we next pre-pandemic at be expect and virtually we calendar quarters product normalize all lead As

the Once back are strong with align our at customer expect lead levels, underlying normal we orders demand. times to closely

ups plus time it's fiscal we at XXXX tripled that than a frame. think rate have will annual revenue downs over 'XX backlog worth noting grown cycle, and encompassing to has that year that the I during of time the X% the growth of compound order fiscal period, year more a

to Let's the guidance now next move fiscal XX, Slide for 'XX.

XX%. XX.X% the increasing sales of are reported We to midpoint guidance our from

we and guidance. the growth sales weeks. organic in reflects dollar range XX% expect to points, We previous XX expect points a the XXX than U.S. currency weakening XX%, our basis This updated now of year better of of headwind recent outlook the full in basis

of points to We continue prior expect year to points still XX of guidance. segment volume and full price to And unchanged expect margin from growth. XX.X%, to operating growth add we add be X about

updated conversion XX%. Our earnings core of guidance assumes close still full year to

We rate XX.X%, expect year from full continue adjusted unchanged to tax the guide. to prior around be effective our

our the year. up $XX.XX The is midpoint $XX.XX. are guidance range currency. EPS to driven increases to $X.XX XX% adjusted guidance narrowing EPS prior $XX.XX, up last We from of to increase $X.XX by from our This and guidance

do the projection year at hand to guidance days We inventory our likely drop of the of on cash inventory days fiscal than new will free We now the be of XXX of expect lower year XXX reflects to end 'XX, revenue of income. will reduce end but of had our our updated about we year originally flow to expected. expect approximately by conversion of on the This the we days XXX full days This not fiscal 'XX days. calendarization hand. XX% updated inventory adjusted and the

tax Our tied assuming 'XX of million. also is expense our to diluted Corporate we're $XXX as payments $XXX additional shares comments still gains cash outlook payments is shares. increased capital shares. tax interest expected fiscal to XXX.X sales guidance. free fiscal for expense million. gains Income in on few these our outstanding million reflected we expected and are Net realized cash for results. A flow average of other to on And about around be still be 'XX still PTC

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

Blake Moret

Thanks, Nick.

continue few to and a key we As users, themes to close builders emerge. stay distributors, end machine

in by builders of strong. First, demand investment and Chinese e-commerce economy, verticals. across end parts the regions and served mentioned users softness We've the of in and but machinery continues remains majority

chain take years, over supply especially few operations. is up inefficiencies the This to Second, seen machine months it the flush global our in at builders, and some last own built distributors will improving, that have inventory. but the is

about for have American business our fast never manufacturing Rockwell. for Third, positive journey. scarcity, annual meet role to hearing success We're new strategic higher. Automation automation a hard to these the reads Investor premium Day capacity in placed and months of needs away, It's agility on customers' with and the X capabilities. should next been moving and Fair and believe, to of forward play but you only shoring all being are our exciting opportunities the Workforce are our look to more about leg

have difference I to our us this collectively want unmatched and to worked also point so customers. and all our distributors, the who bring make to our employees at thank who hard

Aijana will session. now begin the Q&A

Aijana Zellner

Instructions] [Operator take Julianne, our question. let's first

Operator

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

Andrew Kaplowitz

XX? The 'XX. maybe of saw you're And could a [ like timing, it you inflection us give bookings? Slide think say? construct attempting And what again significant in like allowed most see Nick, expect in even half reach levels uptick that to that orders more looks the an then Is first what also markets that peak you likely ] relatively can color About you orders you would you you 'XX. the order it looks or the higher, have in Blake of you visibility into to

Blake Moret

that for there's Andy, that a Yes, to factors outlook few contribute orders.

We at and a verticals areas renewables, beverage, high energy, in as life continued many some focus on we First track our of other are we EV verticals investment and like investments semiconductor, and so sciences, the for while general like new automation on. food in in CapEx see continued announcements important levels us. see

give conversations demand also a that We with of remains customers consistent and strong. distributors had have number that a us view

what placing directly I terms my America described end advance to and our year-over-year machine North in conversations in we've not we're the large our direct remarks builders actually a say, based of unusually of all users, with builders with their members orders and As some in my also demand talked plans proceeding order they seeing the are distributors year are increases. products. We ago. have team and largest on consistent that had seeing machine they're of distributors, who for And did,

picture we consistently that demand view you of again, showed recovering, XX on that orders strong complementing strong informs the So backlog. that Slide remaining

Andrew Kaplowitz

XX% to then like And then sales you was change how can we can impacting thinking conversely, to the about specifically, in go made over impact Devices. distribution then you to go for guide? software margin think Nick, should quantify margins your But be moving in mid-XX% the which about segments? in It And prior talked continues QX? that that how you change you sustain looks much And you XX% moving on Intelligent U.S. forward -- segment? for segment, margin earnings your forward, and up, had could

Nicholas Gangestad

the when and to far as extending disruption. be had that expected close ballpark total anticipating quarter some originally several it million what $XX would as All of revenue in the were the for fourth to QX range $XXX We of QX, third a days from think, third causing Yes, what on had between shift and the a we're ago. loss we of X something we the were there what between disruption in by of million That terms to we had expectations I impact, is, expected of growth capacity guided ended quarter. seeing sales think in, a of of planned, months us. good revenue we this up about more our we of impact and during week planning

continue the year. for fourth margins quarter be for Andy, that will expand. rest will progression, margin to highest of margins year, terms think the of our margin expect in we then We And this

Software for margins quarters, our Control to the couple in sequential of see to of business, expect Services. couple similar last in expect quarters. what Lifecycle we been we've continue seeing in as said, to We And something & the last I've improvement margin strong

We shifted there as up from QX quarter. of were in the expect Devices, be that some margin in to we And we will be recapture where we from think that QX. over that then Intelligent third will bringing that revenue revenue QX, XX% added

will for XX%, less expect was well margin under All in the a in, will for with Devices be to Software we Lifecycle a below but and -- Services XX% and little Intelligent Control there. over ITD's to full year, nicely 'XX, still it fiscal & the be in, be we're little than it focus year, similar on what the XX% to productivity full all progressing having be

Operator

from Our Stanley. comes next question Morgan Josh Pokrzywinski from

Joshua Pokrzywinski

Blake, same and of or of some that's adapting a get to out one-time even that times. of versus need that end order and the on pull of sizing the trying that customers, kind sort I lead what to just bit maybe back that those distinguish length be. a supply go the including that might outlook? of of is, squeeze shorter maybe half phenomenon of don't accordion sort between OEMs, the impact in. normalization of to what Just what implied might that Any folks as rate chain the sense on second be orders time order run

Blake Moret

more normal in the demand, placing bit year for might orders during that that were when in only were plays demand. Yes. a months where their let's at, X products the on lead times, I mean X how constrained or they of little normal this for equipment, of their component that more put a say, be equipment or out, some shortages times period OEMs saw of we most giving color

of but cases larger orders. across not board, those that's Now did see the we

expected expect inventory improve, a quarter to that's on little As their said, or have last faster and WIP don't bit strong. my block long consistent place a last we remains of OEMs and machine orders. we And to operations, need message, as machine their over times focus, months, such just It's frontlog some large continue and flushing I the than have to see has a the we them then as longer builders lead importantly, as of no they I the orders. couple builders such their to that visited as actually they over so in needing recovered remains strong. that they of demand staff visited And place the

our Now put in want are I to OEMs perspective. the business. in of this neighborhood of X/X

will a large don't those patterns ship So similar items already relieve last get impacted next months same for at with builders. able specific inventory. are their been of frame is but in effect inventory That's see their users, that's we constrained an couple that's committed our they and distributors, And over inventories little projects. a need or that the as of to those committed machine to end-user our the time orders bit

Joshua Pokrzywinski

before want follow-up, that sort bev bev and consumer see take helpful. business that. win, I about of I want looking maybe energy put if shift now backlog the in perhaps that can't nearshoring, are process That's lot know or the that piece packaged called of you elements context after this anything business orders you on know bigger in mean breakout. of food of helpful. you where seeing terms it. see of but the a a but fundamental how step Got if out and it's obvious you and of maybe strong about a food don't investment. We a else we're talk just notice And quite just have then XX% back. or business transition, can has that and for But where near-shoring secular help is there to be some as goods, talked a a I lot would or seen there, to I --

Blake Moret

Sure.

personal is efficiency increased industry home and and and resilience. hybrid end-market and food on seeing in focus is right. segment, segment the we're largest So part you're what care an of demand, our of that, mean single I and our as beverage

say, see in with and are we don't So electric their we of those resilience. beverage big though investing food that vehicles batteries, even same do, companies the amount investment or greenfield

some cybersecurity, and is measure which heavily businesses very OT fastest-growing redundancy, They're also shortages. So dealing of one our investing of orders. meaningful workforce they're with in adding multimillion-dollar they're

aware think So positive lines. general, very that's remains it with these problems low. a but in unemployment we're that in for staffing read us, creates continuing all manufacturers And I those

they're technology offering seeing more scarce. that in we're are with important our augmenting win. as wins. looking to so providing for We've the And added ways And result trained workers highly some we're workers competitive those more

just So our technology, our we access services, talked it's it's several up cybersecurity we wins Plex wins not as ramp synergy there core as and the market machine. with about turn on that

So driving growth this of good seeing those are and some beverage the personal that and we're and the food things are home that care year.

Operator

next comes question Julian Barclays. Our from Mitchell from

Julian Mitchell

taking trends that you Slide order chart think a got look to Trying backlog-to-sales think not and normalizes. XX, you've back. where If about we there. the Maybe coverage at line step

said, you you've been As well Recently, will were sales. XX%-odd but you that pre-COVID over to XX%, backlog come down.

and huge perhaps look wondered of slump they're longer talking localized year. just shorter times chains it and ones. we about like at peers one I also settles the case seen your guess I some orders guess, Because And customer supply I out. order inventory through lead as that next on more FANUC, well, if your where patterns, can not they've make views this And sort mean best could of depletion all

that on orders 'XX. and calendar conviction of sort your that testing around early improve wondered the from perspectives just why So

Blake Moret

detail. additional Sure. I'll make may comments, and a some few have Nick Julian, then

with and the finish in billion of 'XX. expect think fiscal year to we high, we is a that about XX% year $X for fiscal the backlog starting remaining business, of composition a the couple billion, is and point, $X.X between that in As shippable our of you said months

and think is that I does what okay, question that? how is, develop your beyond

backlog products at backlog. getting We for 'XX. as shelves weeks fiscal in product back its we that our it off products as days And looked end traditionally either normal as directly at Think or ships gets about low back to return in times year year build factories. the times very calendar of levels quickly I normal the this of think having lead of that our lead or distributor to

configured Devices We a a we're have business to in of There's gaining measured are portion product to share has sometimes couple strong in typically think months. within us lead that here And of Intelligent continues that considerable that is been for times really recently. that weeks, there. That business order.

And within area. be 'XX somewhat component a the so Devices that's meaningful of backlog going to Intelligent even after

continues in backlog And becomes somewhere a have grow, of Services. neighborhood of the seen to we for typically then as bigger, then year Lifecycle Lifecycle half Services

So backlog we have new year it smaller recurring and there's larger also talked XX% growing a ARR revenue considerably becomes $X.X this Because We company about bigger as 'XX, of that fiscal the grow we that I pre-pandemic. than so leave software from or continues and quarter. remains remember billion you we're but these components, some would nicely. to say

And so Nick? that's a part of the equation as well.

Nicholas Gangestad

our year or revenue XX%, question, than But Yes. closer it down to backlog Blake on of around based -- the low recently this And I where and I was higher something Julian, to don't the to or where XX%. will frame in XX% go think things don't XX%s. more back describing, just asked the it up a little XX% you in the XX% pre-pandemic we're way

think think us, Julian, in a I now right for of more normal our state. where a reasonable where to estimation is that's backlog

Julian Mitchell

mostly That's very Maybe most appreciate I markets the helpful. discrete the call. to think Is have it? pressure China, I to markets? discrete across way there's it's the think very or seeing global And about expecting peers talked a assume we of obviously normalization, you're globally? it it's that your is severe various but some or orders difficult on sort phenomenon do that markets areas about, orders where

Blake Moret

Yes.

machine not exclusively in which think discrete. builders, described we it's is phenomenon that I with the

but well, machine We as process skid good weighted engineered less have solutions. It's a builders business OEMs, with buying they're product. towards

anymore. and need that's they So sometimes more don't a they year that were orders to you've think where or that phenomenon, placing their coverage, of do I machine for seen as

more they're the needs at because looking forward the on improve flow, existing us products deliver their to depend get with machine they constrained opportunities smaller And out their fill then orders cash [ so to can times. and equipment as from lead the ]

Operator

Our Research. next from Jeff from comes question Vertical Sprague

Jeffrey Sprague

a Sorry in if up talk backlog was of But actually quarter? was quarter, the but complexion few just missed could the of and late, where minutes in the it. future on ended the a about price/volume I on square actual us backlog. I lot also kind what you

Nicholas Gangestad

take second fiscal Of increases your of was like our we starting volume the that where organic quarter very our of much price X% question year was against we it I'll second growth, are of 'XX. Jeff, was expected. the and part ourselves lap that This And that significant first. XX% the was more as half the price. of we to in realizing were XX%

we terms haven't to In down specific to we backlog, some that further the out a in Jeff. put come and did $X.X it on expect It come in it, QX down QX, number billion weaning where to updates partly haven't on we billion that, range. going. off but $X number put on giving that's specific ourselves a you of all of frequent a of But that, trend like of

Jeffrey Sprague

all about time right? or that Okay. how of to in change to can is So actually it. are -- I you'll there outlook between in the we future future, Yes, Great. to but anchor it's if just get we we're relate going talk have the level then helpful [indiscernible] conversations, And in investment quarters? just on a just the on spending investment spending, the year

Nicholas Gangestad

very It's our Jeff, where investment plan. exactly the for almost staying No, year spend and by expecting, very, following both been quarter much is actually. we've

Operator

Bank America. of comes from Obin Our Andrew next from question

Andrew Obin

as think structurally think guys are -- just if on multiyear that you think -- you seems going we how should Do you embark How a spurt. growth cash do and we've back had? conversion conversion about about levers need your Just to get sort this forward? to capital accept that about you of growth? it permanently XX% level to not, in what just invest you And cash can and we to need pull working to lower it

Nicholas Gangestad

some Yes, for substantially flow we that to creates couple Andrew, where an The 'XX, over a that a fiscal us tailwinds growth it flow in in where free time, stand generating from should for conversion. we closer more be that, pre-pandemic. us -- higher say, and to still we year plan world, thanks estimating capital, our XXX% in we expectation years that with where for question. that cash conversion can free think longer-term standpoint,, And I'll working in averaging we're even conversion exit with XXX% than the are be or operational our the of we period at now cash we have, is growing even something, cash next

you're There making of, are a Andrew. cash are tax substantial want tax the make are we the of just more TCJA. of was point aware that sure couple headwinds at payments is transition now I'll where on part One we to

out also between And X that it X% a flow conversion. We work cash points, percentage free conversion expense. there. adjust is R&D having impact capitalize, being that requirement that's to to free and flow tax purposes, our free companies percentage And years, becomes of recent their that XX% through we flow way that conversion. after the few cash between years. we're something in X keep in and we cash having next but X point, our base, It's the don't. XX impact or for part impacted our of We the Some that several by just

reporting call of and a And XXX% as in versus ability your be taxes I'll of business has PTC noise how it then model think, quarters gain, And just could part generating the denominator out -- But that underlying our to this the those been flow I'm numerator conversion. nuance on I'll cash flow liquidating I the of in pointing our question, free impacted that coming equation. free us we've our impact that our cash us more the year equation, last of nuances is is not gain as part realizing the note the but it's is, is, that in cash shares, well.

Andrew Obin

your a about Great. sense doing healthy. hood about, And a ARR, driving what's to talk is the think better? then us of portions the I under Fiix, talk Whatever what Could on of just is Which look guys it about of sort software you give us your MES, Maybe business components talk but XX%, growth. very are? you Plex. just the give you want

Blake Moret

Sure.

wins logos terms mentioned customers And there. well good existing new the where the us in I gave to as market as of opportunities few both has expansion a us, be performer So for Plex of continued with Rockwell's a quarter. access Plex in

a us These are with mentioned competitive to was substantially applications as performer the some Plex major wins some subscription strong wins, for I are quite quarter, well So that SaaS the the that two in us doing for quarter. ARR. asset and Fiix in well management. are victories with contributed Those XX% those PTC. and were

been high-value our about cybersecurity have component businesses, a and talked services. cyber. that, right the recurring the services that's we revenue And And side, of top at then fast-growing of I've on

list top things really of you're at those contributing to in quarter. the ARR what, the right, was So good the probably were and

Operator

question Our JPMorgan. Steve from next Tusa comes from

C. Stephen Tusa

you can never talk relatively I Like Is right? before your about book-to-bill we were had around then, orders was really COVID. mean -- Can you back generally remind we like discussion us, just right? this just that guys -- X

Nicholas Gangestad

The nuances X:X exception only to quarter. Yes, much component, quarter that our Steve, from correct. we that a Services business were book-to-bill. some Lifecycle is could pretty generally, is have But

C. Stephen Tusa

Right.

the into you So this eating like quarter backlog mentioned.

your above obviously, they were a like bit -- that? So were what or . something little orders X like, like

Blake Moret

Yes.

haven't specific year the of $X for to the of billion expectation billion orders. we gave QX, full We given but $X.X value order

C. Stephen Tusa

this at right? kind like when And that, quarterly think. or like Okay. seasonality equate I scaled mean volume, kind look for of the like order I would or adjusted numbers, anything of daily like that not to would order That's we

Nicholas Gangestad

We're correct. not is seasonality any here. That for adjusting

C. Stephen Tusa

Yes.

I just were not At guys you Okay. just And one giving this like really thinking the point guys last that. about question, from then orders think That's maybe year. not them philosophically, to disclosing you fair. even went

Are level of going color Now you're go quarters? you're them like couple I disclosing we of this through to forecasting to as just of -- and next continue kind now the like guess. get we maybe them, Like some it straightforward like any be. because philosophically, just could there's maybe seems as not as this forms, provided maybe particularly it it but different view like it's of disclosure, seems just it's like and more on in normalizing

Blake Moret

from So last as as we is think different times. said, the Steve, And a orders more we're to become few investors. continuing decoupled shipments to provide over years, have you important important the at have that most they component information

we felt it information. so to that provide And additional important was

and at where to remain going material we're forward, continue that orders decisions to information. of look going to at we to As provide kind look investor

I running to and And to because the into we at going on, are value making continue going about And some time we're business the look forms horizon that. the take of you why goes some different important. as that's how of decisions forward insight it think, and that, providing it's

macro quarter forward of made to going this give bit put view big you XX, that that investors can Slide the so So on we decision orders the perspective. that forward little and and a a going events between showing and into relationship

C. Stephen Tusa

it helpful. And Yes. is

all you the thank for here So regardless. disclosure extra

thanks it. appreciate for that. So Really Aijana

Operator

question Noah next Our from comes from Kaye Oppenheimer.

Noah Kaye

go continuing I just want Lifecycle Several quarters to Services. a positive to book-to-bill.

margins year. S&C, ends right? You out in of think commented revenue about incremental do richer of comes lot help but this this know we start up going margins especially on think as get to forward, of incremental a going what forward. us associated for How about sort you this with margins just mix, I

Nicholas Gangestad

Yes.

years, contributor outsized the will years. our that Services business couple about we're Lifecycle where to an coming next expansion I Lifecycle think expect going I we the our in Services of in in with be -- As margin margins

margin So going would That Lifecycle to to imply is that range. our about expansion one way we that think to through number. core conversion is XX% helpful XX% our be of the Services

be believe of will look So I expansion highest business couple over margin segment the the segments. as X I Lifecycle Services years, our next of

Blake Moret

Lifecycle, And there, expect say which contribution, is I the Yes. improvement see in continued would improvement. we seen have and that Sensia to we

So that's major component. a

Noah Kaye

of past industry a have some we at investment, And press and and quarters, from the these all dynamics, that lot think broader step the demand trade chain kind the of is order shoring, we are the supply guess, I sorts quarter all States? do in just back like question And here trends. United long and this about of and maybe you of and folks IIJA, just look the you and wave a where talked step when you I about ask of in want runway to and manufacturing environment. IRA, see In normalizing, back, this a when specifically understand

Blake Moret

Yes.

is I are it and build a think more out I vertical-by-vertical measure, any into, objective say, battery, this looking because building electric continued components. people objective approach like the capacity down there I'd it strong at investment by breaks more EV to vehicles. of as

needed the are electric number been demand, the city any announcements to there's U.S., projections at If new that's near much to remains the you nowhere already made. with serve all greenfields look of have that increase, going and capacity even in of as vehicles low, that

that see So as we trend. a multiyear

we that security reasons fabs, it's national that semiconductors multiyear all needed as importantly, the supporting to be a as world to the and that's that reduce infrastructure able for stick risk make make Semiconductor, impacting well. to not it's geopolitical trend. just go, our see And the

core automation redundancy resiliency life services, talk but about multiyear some just of industries, not offerings, are the I think these and food trends. and and with the in other the We sciences, the beverage, additional software

the highly living as preserve we it that possible the just the a Workforce, is, a low it's workforce. engaged are of as going not a without things X broad to need technology serve. Those things industries unemployment augmenting again, across of required with be build swath that to to standard we

think about talked that automation to strong. think, automation very of the a I over remains dynamics good the is and current of outlook outlook period. We're this for the call, multiyear So lot on impact the some ability I fundamental seeing ordering but Rockwell's a outperform, we've for

Aijana Zellner

will one question. we more take Julianne,

Operator

come from Coe will Wolfe Research. from question Nigel last Our

Nigel Coe

X% seeing we we North sure inventory some pushout organic, quite in North but lot to $XXX projects some impact just So here, we've covered larger are America? any I'm was -- headwinds America from factor million there's so a the if there. weak. in $XX still seemed of in DC, the the even ground But it million of

Blake Moret

that in seen have 'XX. not in projects The world we been anecdotes prevalent as fact, the growth pushed, see North rates in America main we composition to they've have look North cancellation America, continue the but low really backlog. our trend, a year of in we outpaced the within backlog. rest at contributor is the of orders certainly the that to are fiscal and year-to-date the of as There And

Nigel Coe

suggest backlog a but obviously should it of what on burn higher And clear. to to very and been we Nick, then, fair? maybe That's it's your backlog the close is, Is what billion. maybe to $X expecting normal seems in Okay. that past, that comments be sort towards down than

Nicholas Gangestad

revenue best XX% see But Blake to used for revenue, and to what Yes. multiply reasons just getting our now. our but XX% It's that our by is. it that the don't that in estimate in yes, XX% that's and we back range, something be, on those through mix, that it dependent went to

quarters, we'll keep I where ask more learning for you are. right think we but the in now, best coming our about that's that, estimate

Aijana Zellner

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

Operator

Thank you. At this disconnect. may you time,

Rockwell Automation (ROK) 1 Aug 232023 Q3 Earnings call transcript