ROK - Earnings call 1 2024 | 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

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

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

A call the our XX this webcast for days. website on of available be will replay next for

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

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

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

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

Blake Moret

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

Let's our first X. to on results Slide quarter turn

growth This QX orders, we year. of sequential trough and in from double-digit saw segments last with all in regions up quarter, business the

see channel, of machine the continuing inventory in excess the are we and end-users While the to from demand strong. underlying impact builders remain

up X over X.X single drag by on largest acquisitions were grew X% Currency North the was increased of in and Organic sales points sales X.X% Total sales contributed by our year-over-year. China the quarter, growth. America. led point, translation almost shipments.

process. a come of the more did product our to book-and-bill timing Our largely recovery in expectations, below organic to due normal our sales

some are older received, to that soon shipped As as and they through a constraints. be from we backlog new to orders of lingering line need source demand our as are working shortages shifts

to expected transition impact the little on team QX this full supply chain year. in with is complete Our

organic business Devices Intelligent segment, X.X% sales year. prior down our were In versus

we supply the and recent were of some from the performance constraints that in acquisitions. able While strong chain impact businesses experienced quarter, offset product this configure-to-order segment with in biggest shipments to our from

Our our Clearpath and tremendous are talked value Cubic on both Last customers top verticals new build-outs, with quarter, to important line, a offerings had the wins quarter, bringing acquisitions providers this I fuel and and datacenter on presence of line about to across showcasing applications. bottom cloud and our some end-market. later in service the momentum growth touch these large Cubic's the our strong on continues call. I'll in Clearpath

unique expectations. marketplace, made this sales software X% years. and to continues organic demonstrate in Control few Logix with & increased value and year-over-year the last over the our investments Software in we've segment in were line major some

our the seeing are offerings. demonstrated this and on-prem sales software growth cloud-native innovation, We by double-digit value from in information

expected. was orders Lifecycle year-over-year. better Sensia venture. we Services over in over year, Book-to-bill grew were X.XX, than solutions, progress, prior I'm versus order in how strong XX% the sales and with this segment profitable growth making Sensia and with team activity our joint our sales is pleased across quarter. with QX up X% organic services

the with metering one region the this helping technology of and was oil modernize Melita quarter Sensia solutions. metering this venture, [ key and of customer wins Sensia major strategic the turnkey the their all gas measurement one and is players largest in of companies joint of advanced Sensia's One liquid for as establishes ] Libya, gas oil skids in

financial in contracts Plex our and Total low increasing, SaaS growth and growth across of revenue growth. relatively the is continued performance in impact a services, including business. The our also with offerings Another with on product annual up highlight quarter of our recurring especially year-over-year, fixed XX% was was recurring these growing strong our year ARR. cybersecurity

on [ [ for QMS Rockwell out on Automation grid [ EOS Plex ] selected ] first that Plex, is our platform utility quarter, has information platform. [ Energy, built Systems, start-up in and to companies. currently selected ] by ] Acro with focused scale partnership Automation SaaS battery EOS Energy, batteries. complement [ storage energy software provide MES line was Acro This ] the next-gen to EOS manufacturing state-of-the-art [ manufacturing Acro's building ZX will control Rockwell's ] manufacture Energy's an solution

this and was down both $X.XX Segment The below margin Nick EPS our will adjusted were a of about minutes. expectations, few adjusted prior year. discuss XX% of further versus in and EPS

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

the Before shipments we the by were the to product-intensive that get into year. and more industries individual mind QX in planned in moving impacted keep most verticals, the later

discrete year-over-year. digits. down were were single XX% discrete, down Within sales high sales Our automotive

on focused in EV profitability EV are continue new to demand, CapEx slowdown programs. temporary they customers auto While near-term battery and and fund

in limitations. In infrastructure addition investments, as diversify seeing platforms response are demand consumer plug-in hybrid and increased brand suppliers activity ICE these and our exposure to looking to we and are to across traditional tier their owners

Rockwell with positioned As substantial installed these share well of application. capture market customers the is automotive you and know, established regardless base has additional a to

This plants platform their volume selected in producer plans and America Europe Seneca, innovative supplier, Carolina to tier plants BorgWarner, manufacturing This production developing globally. and customer production Logix AKASOL automotive our more battery South to by was for in processes North and quarter, battery increase and Darmstadt, scale a their global Germany.

autonomous Another Robotics, be came in their applications. exciting quarter a subassembly XXX auto, from our owner U.S. over Clearpath using where large brand mobile win this robots of will automotive

digits sales also down prior high year. single Semiconductor were versus

workforce continue greenfield with along for While is still risk, orders new legacy solutions. transport see capacity we myriad navigating in announcements and our geopolitical wafer fab including in momentum through upgrades, projects the industry of continued a to and memory challenges, excess shortages,

sales mid-teens needs. industry, and match expectations. verticals the existing our current our their were operations in Within across modernize market's warehouse declined e-commerce with to continue automation line and many Customers to

fiscal for funnel to later fulfillment In customers year in plans addition transformation e-commerce in year strong CapEx builds starting 'XX. these center our of to a fiscal renewed we're warehouse projects, and 'XX see from

this beverage high down Industries. Hybrid in growth tire single Within beverage. prior in digits sciences our industry versus offset were segment, were declines and by sales life Food year. to food and Moving and

Given in by this capacity and quarters, call. serving internal impacted mentioned previous continue capabilities footprint. our vertical see customer on large cyber QX segment, Similar the constraints to mix to performance this investing across digital we the our products earlier was global of their their end-users most

beverage workforce we quarter, AMRs augmenting is AGV our operations. world, productivity many to sizable customer and system This across to in material had throughput autonomous enhancing at It to auto our the replace industries the the their food their customers innovative solutions further through and and win and chose sustainability security. existing clear increase in flexibility another of while one Clearpath largest safety where drive manufacturers movement focused are on their existing

sales versus quarter. Note grew in Life products. Sciences to XX% that Sciences and our services more Life revenue the is software weighted

MES Tire In investments and continuing single GLP-X as services we momentum, up was medicinal digits. see addition are products high-growth and our in obesity and such areas to to cybersecurity diabetes high drugs. increased advanced therapy

continue worldwide. mentioned gas led Moving follow-on process. oil XX% orders our see metals decarbonization this gas, over XX% we this from I Sensia, to already our and strong Oil again in quarter. mining. over Sales and and customers' industry were to performance in by up and sales and grew digitization year-over-year, projects in growth segment once

year-over-year. America and sales organic in to American Slide to continuing were QX X this market X% manufacturers North regional to strongest expect year. this be organic sales. turn North over region our our we up Let's are invest, performing

in over high were about declined And Similar X%. prior and relative Latin versus America last China teens were Asia Chinese the down the with Pacific sales pushouts sales we see Sales down rest economy, was of world. challenges down high X%. to EMEA few the manufacturing quarters, X.X the to point. to in cancellations continue year.

X XXXX our Slide outlook. for to Moving fiscal

growth prior of continue to We the continuous through strong full customer projected fiscal are projects, sales our year. inventory guidance expect at strong range of through grow our of reaffirming levels single with fiscal X% organic midpoint. performance analysis versus we this digits with to our 'XX Factoring year the our low sales distributor balance and to January, pipeline year, grow sequential orders

Currency to is contribute growth. acquisitions sales also increase expect we of to now slated XX%. points ARR And to about is by expected grow still X%. X.X

expected taken section. in being is half versus discipline increases slightly from year, Nick spending prior productivity significant Services. product of increase second increased with share margin initiatives volume, in benefit Lifecycle coming additional his to and detail Segment will the growing calendarization

And EPS Adjusted the of weighted slated free year-over-year cash expect midpoint, XXX%. at still to is we back to again, flow of the year. conversion the grow half X%

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

Nicholas Gangestad

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

were points sales our sales reported points XXX increased year. growth. over to sales acquisitions quarter up XXX and in translation our X.X% of growth organic were basis contributed price, total points. basis up X%, QX About line from X expectations. with came Currency last by organic First

utilization. margin products operating and between year and spend, supply to solutions, higher point a was compared Segment This XXX investment mix ago. XX.X% XX.X%, decrease reflects lower basis chain

spend sequentially, last low difficult a QX While down comparison year. year-over-year our was of abnormally in spend QX had investment due we an to

investments progression year-over-year investment Key commercial in when full comment on I expected cover digital later spend resources. increases outlook. infrastructure our I'll of include new our spending areas products, of and the year

The order expected of growth expect through inflected of slope orders over upward with couple orders we is Blake year. quarters. the strong remainder what mentioned, As have we the last the sequentially, discussed consistent of sequential and

year, primarily of a lower-than-expected year-over-year additional I'll XX% slide. devaluation Adjusted EPS lower $X.XX, headwind QX. a EPS compared in down adjusted of cover and expectations, EPS Argentine peso below on sales due bridge adjusted margin. our to was to an segment The later operating $X.XX the was last

in for negative rate year. a prior rate. positive XX%, million, The the flow Free effective $XX above quarter the prior year $XX cash the was adjusted first million was compared tax slightly to

tied higher Our in the cash quarter was during to incentive driven compensation by quarter, the lower was payout fiscal year-over-year flow performance. which 'XX free our generation

by repurchased $XXX additional remained payable. quarter item receivable, million. at on decreased capital the available in under lower million QX, $XXX On December One XX, approximately shares XXX,XXX We offset the not cost lower shown Working repurchase in by accounts accounts authorization. of a driven partially our slide.

of Blake discussed our margin the performance. top Slide margin and operating our overview segments. X on focus performance performance line provides I'll so quarter, X our sales in the

than year. investment incremental the difficult spend our a was Intelligent comparison This started in and in Software the Control. most in & QX mentioned of As resulted fiscal both 'XX lower year-ago as investments earlier, year-over-year quarter for margin normal I in QX of Devices last

to investment partially the decrease the impact and timing acquisitions, margin price/cost. from of compared XX.X%, by spend, of prior to year sales year XX.X% was lower year driven positive Devices a decreased by ago. Intelligent volume, The prior offset

and well investments performing and making and accelerate Clearpath are commercial are Our acquisitions, Intelligent both profitable and part of making here technical are commercial Cubic to -- Devices, we growth.

and from driven Software & margin XX% year. last by year decreased spend chain supply price/cost. timing of Control utilization, prior offset the was partially investment lower lower by of XX.X% margin The

year-ago book-to-bill was performance was higher margin Strong Sensia. doubled X.XX. XX.X% driven Services in compensation lower by Lifecycle Services from margin margins incentive of and X.X%. margin sales, Lifecycle of the higher

We in are coming are productivity actions realizing year, Lifecycle benefits we restructuring Services took from benefits as last expected. and those

sales slide, reflects was $X.XX $X.XX X, by this fiscal X% tailwind. positive lower on walk a year. provides and compensation price/cost versus was product last negative QX QX organic fiscal above-target offset EPS lower than next spend This investment more projected performance 'XX a a increase was Incentive bonus Higher the Core down supply 'XX. payout an year The utilization. payout EPS from mix was improvement chain $X.XX year-over-year to adjusted headwind. a as

currencies. -- with the expectations. from from impact Argentine a offset our offsetting aligned from positive currency headwind, the $X.XX currency tailwind more the expense. headwind net a than by $X.XX revaluation with $X.XX acquisitions the $X.XX impact from headwind year-over-year impact other interest was The headwind from was The a and peso was $X.XX $X.XX The

Share count EPS immaterial to quarter. and tax rate this in the change year-over-year were each

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

X.X%, to our We positive reported guidance X.X% X%. X% in to growth of are growth fiscal 'XX organic negative sales the sales and of range reaffirming for of

guidance, As Blake growth. from as expect acquisitions XXX to mentioned earlier, of to to basis pipeline from add we higher our growing is prior XXX the leading projects points Clearpath points expected growth, up now basis in

to is Clearpath Given expectation versus this improvement, $X.XX prior our dilute expected $X.XX. of EPS adjusted by now

basis the points expect now XXX the the slightly for year prior a full euro guide because XXX points, tailwind dollar of currency basis Canadian and our have We from weakened down year. projections in for

year. for We contributor to continue a to expect the price positive to be growth

And XX%. year full the adjusted tax to expect be to We $XX.XX. are reaffirming of EPS around we adjusted range rate guidance effective our $XX

XXX% reflects cash 'XX, 'XX to of 'XX. of our the the year of by expectation adjusted XXX We year at inventory that fiscal approximately This we about on expect had days end continued inventory to fiscal flow hand drop days income. fiscal days XXX will end conversion of full year compared of free

Jobs We made first and performance, our well continue our tax the 'XX well as the year in expect half on in realized our to to tax payment free to flow the fiscal the transition Tax mostly below tied income cash conversion to sale payment. Act related stake compensation higher PTC, XXX%, higher Cuts relative incentive capital to of payments and gain QX as be in

products expected constrained the dollars would to to From times a and similar we normal QX our previously the levels. by to return on expect segment sales margin last We end lead be is calendarization This means perspective, more revenue the will half. middle our between the weighted being second QX. towards half This to back year. split and of of be pushed second that first now QX the half even

Our balanced in upward our to supply spend fiscal trajectory the chain in of plan and 'XX, year quarters for as be of grew. year was recovery 'XX, fiscal X pace compared confidence across to spend continues

prior first Given noticeably the and means noticeably the be lower half, to sales margins between and will higher. split of year first half margins compared half second that second

virtually anticipate expansion they We the quarters of by then all similar QX. to flat 'XX. to virtually revenue in with relatively and end expect QX levels in in spend remain to be -- returning margin consistent in driven We investment margins QX all to QX the to and demand. is what That mid-XXs across year fiscal increase were X

increases QX investment will decrease year-on-year in then QX. $XX in million year-over-year each a perspective, From be QX a spend and and approximately

guidance. million. assuming fiscal is Corporate A million 'XX $XXX $XXX to other be And we're is Net expense expected about expense shares million. diluted on XXX.X interest fiscal of outstanding few expected be additional comments around for 'XX and to shares. average

during We million repurchases $XXX and expect to the between deploy year. share $XXX to million

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

Blake Moret

healthy our Despite fairly machine end-users point Nick. geopolitical builders to discussions market distributors, and our Thanks, detailed volatility, conditions. with

based Our on distributors new excessive outlook is for fiscal year of an as product reduce inventory. acceleration machine and 'XX builders orders

can prepandemic shipments good or Our lead convert operations team new is orders ensure are into working times these to around that the we times. as at than lead clock better

platforms, We gain especially here share North continue to in America. key our across

productivity seeing be stimulus, are by from customer early We way orders facilitated projects maximize important an economic and available workers. automation the to to of continues

well beginning. are and Robotics including is wins Rockwell's the even diverse addition automotive, cost, logistics. acquisitions recent We've Our portfolio. and and both revenue multimillion beverage, performing and this to end-markets, on across just dollar a being standout And with seen warehousing Clearpath food

We bought business. have in best a and of high-value unique the that we've partner ecosystem portfolio assets built with the

by and growing Our efficiency now focus flow cash a driving profitability is as these integrate can, pure-play synergy. only to elements share, and

now session. begin Q&A we'll the Aijana,

Aijana Zellner

as Blake. Julian, a many like first X our so to you would to let's quick yourself please of possible, question and follow-up. We take to limit Thanks, as get question.

Operator

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

Andrew Kaplowitz

FY you up your us Nick, for you QX? that order your digits you mentioned low double Could backlog was where And orders reiterate growth sequentially. tell regardless, 'XX. did were single-digit ending

fiscal in distributors so, QX a are if say out are would orders inventory more end-markets most? bottom levels? their And in inflecting as So turn see here the beginning to you substantial you your what

Nicholas Gangestad

down and we digits in during all year backlog -- in, with quarter. $X.X first single Andy, Yes, a it of went last high the ended billion

you're the trough. of QX into expecting continue up second we're in to right, exactly the with an quarter terms that into from orders, seeing we're And the growth In orders double-digit inflection seeing of second we're what quarter. the

to where we're terms seeing over -- I'll that In where that, of that turn Blake.

Blake Moret

Yes.

me that Andy, is just additionally, distributor down. Let mention coming inventory

are down model, about So our our going into channel have on talked as that we distributor and good as we've before, we based expected. we inventory visibility seeing

beverage, seeing high-value seeing and auto good revenue, a and other services software like lower annual quarter the portfolio, we're were orders, a in the it talked from of some also standpoint of aspects it's food shipments as we mix first and pressured industries, As across very a Services. the the strong industries Lifecycle across recurring by entire about and the we're that including

process expect we that including broad-based that But such oil gas. industries, to discrete key good do the is and be and complement order hybrid, continuing in recovery performance going across our in to as

Andrew Kaplowitz

And that then modest suggested supply catch you up with change know, EPS But somewhat chain talked didn't QX. you And loaded. I in level should book-and-bill margin the not that slow a trying adjusted does that are jump your talk growth $XX.XX environment the you mention in Or growth maybe suggests lower year, QX, did for that guys. EPS for Very in you confidence getting type expect Blake, starting team more the modest about you helpful, for FY expect to could single that's Nick, about QX. but guidance start you jump in and you range? more EPS to your back-end that? $XX margin meaning you year EPS 'XX, a relatively for EPS in

Blake Moret

is EPS that second The Well, the November. significant in based half we on introduced we're the reaffirming increase in the volume. No. in increased guide the year of

the of drive expecting similar recall of billion around quarter You'll $X from of the year talking that 'XX, the of were exit something causal $X ramp EPS. see we QX billion. the getting year. to at it's $X.X higher supply. $X.X shipments billion we year, year, This to that of first year fiscal And what's roughly the year, 'XX end roughly on we're orders. in based for That's of ramp fiscal shipments chip around last and of year, this to was went in going margins an from about in billion the the Last to

Operator

comes from Jeff Vertical Sprague Our question from Research. next

Jeffrey Sprague

we the Can about prior X quarters. the X They supply seem Revenues are comments? just in chain door lot quarters, drill revenues lower we quarter you're the prior this into back think it. right? a more inconsistent, out right, the when So getting than

a a please they Just supply So what Are if with? of happened kind for Rockwell on could. What chain? us, more supplier Are they exactly level? just dealing little bottlenecks you're can in up elaborate at factory level? the you you at clear that bit

Blake Moret

Jeff. Sure,

we're is large shift dynamic timing the a going shipments on recovery what in from more reducing based been the to of a seeing So a book-and-bill of to process. normal product entirely that's backlog, amounts

big that shipments that based a saw was visible concentrated backlog the mass were SKUs relatively for of last with on us. year of we in over set coming past-due a chips very the So really in

what it soon we variable whether control visibility good the had So to speed we IO. drives chips. ship needed was We Logix got into motion or or very as as

QX, orders. little safety in the QX to tail being clear be the shift build We're stock quarter. to things should taking we vast some moving well on past-due new normal those the that in The seeing coming shift of and distribution then incoming around the majority turned to shipments to talked be which QX book-and-bill, than having backlog able items to us based of as that of able a orders a continuing quarter to the were in that QX, handle as lingering complete those out, more is, bit challenges, component longer about our that the of hampered get in in in

That progress QX. continues in

versus that be year that's in out what of substantially difference We we the shipping expect with complete we're quarter. the to what shipping now. were last out But

talked we've billion. the mention, over in capacity remains being And $XX also our should true. past about that I

and in capacity Our of labor $XX be is grow. plant that's ship we And over billion. to continue going as to to physical terms important

Jeffrey Sprague

And more then if for we again, could Nick. bit little it's talk just maybe a detail,

expecting for on mix and does of bit some sequential like QX. a pretty the that. Maybe you're I give just in QX. you're kind us sort of sound little mean lift revenue the what's of think margins color I on though driving explicit it

to similar QX? roughly be margins would why So

Nicholas Gangestad

Yes. be dollar margin. current we it bring QX, QX out The to in be quarter mix more as selling a in we're We're in similar of we to be coming shifting current shifting our coming that QX of very in revenue QX, from expecting quarter what more it will orders to backlog to was QX, very similar book-and-bill. -- to and mix and continue out In what of that of less QX, backlog that down. had will

almost first will The investment On in to the going front, many was we sequential similar saw the that it the year-on-year QX what similar to spend down, -- that things very in identical. but of be to we're margin quarter, change keeping in of QX. very what will the come be

as was then sales And segment our a growth not into Services, was more coming us in our in a as highest probably in expect And where from to in from QX, we're within will Devices mix expect negative negative we mix business. growth QX. of mix drain configure-to-order to where a be a segments -- continue Intelligent -- but -- our Lifecycle we also seeing higher both

Operator

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

Andrew Obin

I any and nicely. is over deliver Day, then changes your there XX ensure next a a ramp-up? revenue Can the chains that, accelerate which make processes supply of how going up, volumes? we next is this guess, to it's year, very that that expand, to to transition you sort to follow means back you're you structural the your plan to the Analyst message do actually Are year, growth I can Jeff's sure making question. go just think and to on If mean-reverts Rockwell smooth internal months, Just

Blake Moret

is. there Yes, Andrew,

terms billion from we have year, last worth shipments step-up us is of the make in which year, of get a first over feel was where, been healthy allowed today, for capacity billion like to in worth And $X that going the place. have on the we've sure fairly We've $XX.X to before, the that assets over assets. working which to of we to mentioned prior. we fixed I As a kept

in asset-light fixtures, mount so organic growth, that we're And not recall, the a It's acquisitions growth. seeing such also only surface assembly, process. be strong As to and we're that on. it's to with you'll making fairly where the our investments but sure, making manufacturing machines fuel it's business, able test we're we're

other area. is the Labor

adequate We place product in currently. labor have

to We seeing in place ramp order growth to on cases, business are that through year through ramp up based as labor some labor continuing our holding share we the in engineered-to-order the it's And in we're there the that there, that. in continue we're the gains and the make sure year. that see

standpoint, From drive we through scale a throughout efficiency, working the to structural ways are to get organization.

is needing the of redundant of But it's in dependence sources single about we've suppliers to able also redundancy of plants, reduce across the single of some things supply adding the Some in cases, standard multiple on learned terms world. that be this in lean resilience to concepts. parts

engineers. all plays those as operations So well with the as we're in working of

to your growth expect year that encouraging, supports through fiscal we volume to margins Nick about, with well continued be and as comment, do this go back exiting as beyond. going we very talked as first 'XX, are as 'XX transition, in Andrew, that

Andrew Obin

in Just just concerned folks CapEx. packaging getting about a We've calls, incoming question. some been follow-up slowdown

around comment can I concern, process. the bit little I Also think of these world? headlines. specific markets, seeing But mining, about area a specific there were and of are X you just sort more maybe granularity what another discrete you know

Blake Moret

Sure.

Life in goods. machine being in I we to packaged well, course. of our should us, there's as we packaging machinery of industries medicine consumer through builders, are Sciences, typically And their beverage, in Life similar vertical is So food distributors of of and our Sciences incorporated builders seeing work, part And in those inventory for seeing areas, as those packaging the mention, system. are

similar distributors, of the we that from customers, direct underlying strong see what few in demand. It's months, kind in with with we builders what a off expect profile seeing that exposes we're to continue with over to and machine those those works conversations coming our

in seeing relative that mining, strength on. we areas the to are respect focus mining With actually we in

Some is the see of in low do growth to But by mining in that we for general, in materials driven year. single-digit batteries. expect

Operator

Wolfe comes Our Coe Research. from Nigel from next question

Nigel Coe

I'm called the you Nick, running I where sorry, call point. Did you acceleration? out you through order were degree I of the missed double-digit call, part the of growth out sequentially. know guidance a

you wondering order if exiting quantified and quarter. the backlog Just the

Nicholas Gangestad

call did some I out. Yes, that of Yes.

in in the and QX, and sequentially driven ramp order saw the QX we're orders. And then inventory QX. coming growth by we expect QX double-digit First, we with progress sequentially growth in into And for out. double-digit further channel seeing order being that's excess

of the that we $X.X of the year ended first backlog with 'XX fiscal a backlog, down terms and In we saw billion, single-digit come quarter. high percent in

Nigel Coe

real stabilizes Are $X looking at start we order as this billion in the still we that point where see where to inflection and rates?

Blake Moret

$X the sorry, I'm billion?

Nigel Coe

Yes, $X billion of backlog.

] level. I you think that's normal [ what called out of as sort

Nicholas Gangestad

the a last backlog our on range XX% more of What the revenue. call is expect XX% Yes. normal we in that I of to said

as projections XX% that closer that the now 'XX. fiscal still to think good the high year for that see say to of we our range I'd end, see us current a at end I point. high XX%

Nigel Coe

impacts. follow-on my are terms And of Nick, that understand unpack for just gross But us maybe is Okay. M&A mix impacts from the in year-over-year, the growing, versus Control question, great. XXX Lifecycle the services of margin ID. and mix I then That's basis compression that points Software maybe

that because fairly was big that X delta. given price/cost Just curious that's positive, pricing a -- points,

Nicholas Gangestad

Yes.

is from About [ that So year-on-year. profit that I about investment X/X XXX part if that gross growth is talked release, you have that's prospect of press coming points our ]. the because year-on-year, spend of down that spend look we basis at R&D our

margin So the decline X/X that's about there. of in that

are Verve, chain then supply the be small quarter. and of our rest Clearpath from it and coming acquisitions, the underutilization Our in a -- first part of points And of XX our mix basis of that. underutilization would are

Operator

Steve from JPMorgan. Tusa from comes question next Our

C. Stephen Tusa

like a are have So I to stability a the smoothly looks choppy product be there the kind types from like that's outcome maybe the driving segments market anything certain guess flowing on on perspective there of not past? are what that a or just deliveries. it delivery? very as Is they this of as end-market Is that or particular in

Blake Moret

the really product and centered mean, in it's it's -- Devices. Steve, Intelligent it No. I is

you have between what these where earlier, I were we backlog, where that areas significant motion bringing a that moving now So mentioned the are book-and-bill of down you're greatest more the environment. And diversity drives, we're normal shift past-due variable and amount towards SKUs control. a seeing is where of speed

resolved and we that really shipments challenges more of vast QX within we majority from the unsurmountable segment. into backlog centered past-due as a no there's Intelligent move be saw that don't in shift to expect the Devices It having is our little that book-and-bill, QX, the moving to But bit QX. was

C. Stephen Tusa

Okay. you just as just, be to just we is earnings first low, XQ how of about perspective, half from much linear I a the relatively step-up think here? an seasonality think X going do is Nick, also, guess and for

Nicholas Gangestad

worked us are as Yes. this is to the then under-reflecting I'd normal. first It getting inventory be QX for year and bringing our end-demand will being X where back QX through. products more say, excess And really quarters that of are, a

consistent from that of half given it weighted growth, what revenue the of makes in what into QX. uptick So earnings the we'll But year. and doing yes, very spending, our type we with more back the QX of is be that plans of to heavily expect kind with

C. Stephen Tusa

X-point, in kind don't right? range. I on to just getting about of lastly, the Is we're know, just And orders, X.X, that the Okay. X.X something

Blake Moret

Yes.

to in talked We continuing double-digit QX number, to really through specific continuing sequential year. QX, from growth from trough about sequential We growth the Steve. expected double-digit QX, with given the haven't QX and the

Operator

question Snyder from UBS. Chris next Our from . comes

Christopher Snyder

step-up in margins quarter the about ask sharper incremental about the teens from mid-XXs are than in sequentially, fiscal the but I normalized say of third company. much the level volumes in to would wanted guided for fiscal to sequential much, high is second getting I the we that quarter. kind better is what implied understand

about uplift of just back other talk of just the you margin can volume? So beyond sequential into drivers half sort that

Nicholas Gangestad

in increase from is spending Chris. coming XX% vast There's majority, X investment point across volume that that, I'll holding on the out Yes. I'll margin expansion, things of The year. flat just say the

of expect third coming that as The second utilization from is we And from we to that. then the chain to third continue, to result part Lifecycle is also and our be that -- and on that's we'll pieces margin, saw see of continued margin half the expansion One equal. and of supply half. factories pretty services and our a our second we'll improved progress our are going the good first that the

Christopher Snyder

don't supply magnitude out caught appreciate then on some of could it, It that chain how sort you that quarter. sales much on any the called I the I weighed And first on provide like constraints And of the year. in then shipments back you that's does like seem of think but are were guys in that. right? Is that? it they impacted into the quarter. by the half of seems second back coming I not deferred kind

Nicholas Gangestad

in the at Yes. quarter. -- first put originally we We the single-digit came expected low I growth X. would we had that in guided

million that the it's $XX So portion, talking $XX is range is there. of but about there -- probably That into is second And in of there's the of yes, much a going the year. half what we're . million correct. to

Operator

question Mitchell comes next from Barclays. from Our Julian

Julian Mitchell

and of just with square and wanted comments utilization sort to the on capacity try constraints supply inventories. the I

wait like sequentially mid-teens they're lot the Q rose they've sort think it of running those last I end-December at the of running sales a are stable they sort rose. but as the X%, sounds months even maybe. versus share -- X% And of we'll a for been And for pre-COVID. XX sales balance,

need You you plant? inventories to understand So sounds sort But underproduce a medium do year. a for of are sell-through -- get somewhat though you some share to even stay based will that out much now of the than inventory days, normal? Or do the inventories of much fall higher the back sales, as sort of inventory want -- term lead the faster down? on sales balance pre-COVID to is reason, I some in that sort need times think like should to of it just of

Nicholas Gangestad

Julian, change a that will there's there. things Yes, few

you move all, projection days been That's XXX. that's and down that going XXX from of inventory our First we're unchanged. there know to of to

we're increased see there we're that shift more some this we action that, of the finished more booking current of is and to Now stock as quarter goods. billing, looking coming needs at part plans for orders of revenue from our mix and safety of those our

this we we progress. we're by our lead offset as some that well for work So driven reductions components by than be components times the go seeing up. go balance those But there of will the finished goods have year, through our improved places where the more will as as that in in be

seeing we're The XXX So as to days we be under through inventory. still will our levels of above where XXX shift. of well typically kind we days were just progress pre-pandemic expecting, that be 'XX,

Julian Mitchell

But it. I get guess see. I I --

sort of sort saying need need are projects satisfy would backlog. Sort now have you people high of inventories. of a the said there. go in ago, inventory very kind sort of and you higher ship of because understand years backlogs I and towards inventory you changed and you're thinking But as X normal to book that requires higher of more back to business, sort also want just what's

Nicholas Gangestad

our to In distributors want products working sufficient customers been our inventories on order and ship. products getting be can have to to to it, to quickly where very recovery we've they able our Yes. back we when ship

feel of should on couple goods next getting progress performing for plan. part we're where expectations. they make finished customers' we're to -- making sure That's that part of our our in we stocks all Now to the quarters executing to in of order and is our safety be the of our

of in decline, coming finished expect the and so And progress. -- in materials in be we decline all our our but not to will work raw goods

Julian Mitchell

your on you they follow-up their would levels how just managing that those seeing the That's about of are inventory be, And helpful. them and are feeling product? please? sort how today, kind look when And distributors, your you customers at inventories of of

Blake Moret

Yes.

service customer couple distributors get customer amount it has thinking carrying that a over with had the capital. specific the they're how We level than the expect of industry prepandemic. little with discussions that's and that be very was last a about that balance them distributors working about challenges to equilibrium given higher higher service our to be the of inventory to little of And years, expect we

difference at work some builders seeing we continuing but to with the to working machine coming do know of their with system, complete inventory are little own at level expect also would our as in higher we We're down and mentioned I machine inventory before, are that, them expect I over still months. in builders don't be the of that But they traditionally. of normalize our carrying any capital. than a distributors, them looking levels way have to

Operator

from from Our next Noah Kaye question Oppenheimer. comes

Noah Kaye

a down lines? backlog? Just environment? focus it dynamics of operational of different going better, want more a require Thanks been to you bit very help there some different Can us on understand one Is a reconfigure on kind final are you've you I just products production one understand versus as configure-to-order of is Does for actual business the help the about different working book-and-ship much. personnel? the little constraints. that you us ask normal through the what type

Blake Moret

Sure.

the of on in in Let the was servicing quarter. shift to backlog move me saw from products shipping just book-and-bill clarify products out that. challenges come in where the orders that's the that first quarter of we going The

on. challenge customization Those We processes. representing control the configure-to-order to drives, varying businesses Those are motor in to customer. business, independent of continue a amount our our technology isn't come us. to configure-to-order a specific big degrees have cart our of centers, biggest with That certain different very and so

that dynamic talking somewhat backlog been we of have coming the more X list quarter, building not big because largest received is up that in the of in of to the we prior. couldn't a shipments backlog -- that about X QX the book-and-bill SKUs that or diverse concentrated built see a portion our But move we've from get X orders as moving from quarters chips, set or of SKUs we

main So we're through. that's that dynamic working the

have You coming less much in visibility that book-and-bill profile. from to what's

of convert the a book, those the up process previous question that shipments what quarter. ebb we in normal talking one And able deal we're stock is the the that and in so of order and was being that's orders safety building can quarter the in the of flow areas Nick around to in turn So changes. those to with in about

processes we'll those -- a to living to we've somewhat the the operate or we're are world transitioning So time. continue are and hope, different last year the been what so, what in, in for from that we for to long

Noah Kaye

follow-up. one just ask could I If Blake. Thanks,

demand own your major any Is year. the not shift segments reiterated any I orders any or is. driven really the subsegments? end-customers? the organic channel segment for change can where in most essentially and industry the seem of like you've inventory in of there among see or of does your and shift there you timing seen full -- It outlook is production timing But here by think the considerations you cadence you're for is

Blake Moret

Yes.

it out to to the being those think said able is equilibrium. getting you largest right. distributors the I shipments see on door, return based The impact

specialty gas, We oil are continue chemical, talked activity applications. These areas and strong. relatively We in about to process that see good mining. all are

projects hybrid manufacturing, And combustion remarks, internal of about in seen traditional a those those We're and continuing in but some as certain those in engines slowdown in readiness prepared good continuing. to new the my with talked experience. in Certainly, areas business are of to lot projects, in areas. very we've have serve win as EV we I well,

So in ebbs low the end-market in flows in we're factor year. needs any the a year changes seeing through growth, big any predominant being of vertical not the and

Aijana Zellner

[ Julienne take we'll one ], more question.

Operator

Joe will Fargo. from question last come Our from Wells O'Dea

Joseph O'Dea

headwind. of wanted would 'XX of narrower 'XX is seem out transition a of of a bit that products year does concentration mix kind just you in I half shipping from like backlog the book-and-shipping it margin a back have compared about quarter to the a had First, a And band maybe of profile. to in ask higher of more

the broaden we what headwind when up, up, being out and of book half you trying it expand 'XX, Software as can Just a Devices half that down 'XX could little is still better back mix year-over-year And of you is think Lifecycle a margins so about bit? back on bit ship. is a maybe & Control be year-over-year? Is to than contemplate

Blake Moret

Yes.

To grew over a sure, you're greater with as percentage are one be some lines. the the product seeing standpoint last XX% based orders year I most on as is headwind the the profitable positive those seeing through think products where increase our what year. of from Logix year of comparables we

puts beginning point recognizing is in and take in last out takes the year, other that, year. did this the of the cost we But QX

most and exit And functions, 'XX so in were. -- higher of able help across us in those the at our than margins to business to noticeably being Services. gives they that push Lifecycle That's

Joseph O'Dea

maybe for patterns longer demand correct? market Great. observations in anticipated And of it to inventories and half end or than appreciated inventory year channel taking get inventory why your channel is sounds bit where first the out little of more versus of you year the we observations, then why like terms the levels, of of targeted are to what it previously of sort that would little a bit a more than would middle just be on have channel there seen inventory kind

Blake Moret

second about quarter. that into good see of middle year We the a orders talking a much really sequential area be talking weeks too variability double-digit could in did QX. in or We're read wouldn't in month. I increase the of versus

again based QX. represents far expect sequential we've increase a January QX. on what in We seen that so from

distributors our as so coming we we pretty at inventory And continue expected. that see to down much

Nicholas Gangestad

Yes. dialogue them -- that during and a percentage Joe, us point close be sometime are affirming just high of done our with I they that distributors, they're at there. add. of and to excess in they're obviously with equilibrium we're to mean, reducing an I'll inventory QX all expect

Aijana Zellner

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

Operator

you. this Thank you disconnect. may At time,

Rockwell Automation (ROK) 31 Jan 242024 Q1 Earnings call transcript