ROK - Earnings call transcript Q4 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

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

charts measures. and release released non-GAAP were non-GAAP measures. will of website. and release to this Our and and reconciliations have press our these results posted release earlier been the reference press charts include the include Both morning, press the and charts Both today our 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, to Aijana, couple we everyone. before joining for results. comments of make you turn today. Thank I'll fourth us a quarter and our good morning,

With focus newly that role a turn federal will the transition we're its manufacturing plays recognize U.S. the that of us, pleased optimistic economy. country election core day now to that We're our elected U.S. essential leaders. smooth policymakers to behind the the at

several in technology we helps streamlining that to manufacturers solid leveling U.S. innovation, QX, soft that providing playing and be so in by leader on our benefit had Orders will policies the clear most we approvals but continued execution competitive, the welcome is important be fronts. Rockwell project field. spurring more market

all orders conversion of to levels to are service pre-pandemic shipments Customer and businesses. back new levels across

of lines product profitable growing digital We impact in to helped are and partially inventory our mitigate the of business, channel. excess services which software

in and now Annual double our grew XX% recurring revenue. is of year revenue the digits total

comparison gains share competitors. XXXX. reports, revenue ARR market market seen years based on of to few automation For U.S. We've of our modest over businesses X% was studies the our the about share in in past comparison, product-specific closest

results in market, our best now and of revenue. were North America, Our in less year than China our home fiscal X% is 'XX

cost has into Rothe, And broadening the He Christian effort enthusiasm. savings jumped additional activities. new brings perspectives new CFO, our with our are We opportunities. on valuable

savings At we year, fiscal million the the cost we end the of about 'XX, in able to in the above $XXX our accelerate first were million to reductions realize half year target second May. discussed of of $XX

of 'XX. down our As QX over of is since end XXXX, of global October headcount of XX% fiscal the

$XXX In and from manufacturing reduce ability in the save of efficiency of 'XX lower last are Despite as combination call, our we including for to opportunities, talked still cost-down confident services to volume, purchase paid price in plants. year components to actions our our increase about all as the multiple well fiscal additional the headwind the we the of million actions. productivity activities

we but expansion position actions productivity the profitability. impact We call, on from sense pricing, and of as deliver resilience year. and our of impressed growth will actions. see urgency have and I'm cover our Later ourselves times, positive been difficult continue margin to for by teams Christian These to market-leading next pricing this

on turn Slide our now to results Let's QX X.

quarter, Our at single-digit the excess low sequentially slower distributors gated QX Similar of end user and down was builders expectations orders improvement. were lingering for of digits our single by inventory demand. to our reduction compared low machine rate last to

America growth with orders Of the in sequential North did see Asia sequential decline. largest contributing we note,

I'll last in high sales about quarter in and and talk businesses outlook digits forward, orders expect fiscal typical our our from single to be to expect sequentially. Going due our call. configure-to-order we the we 'XX. orders QX later fiscal slower And primarily be seasonality solutions QX more on flat down to 'XX QX our of

expectations. our with orders, sales in largely organic weaker-than-expected in line came Despite QX

we As orders good and of quarter. quickly product in I the execution mentioned year converted performance to capped incoming earlier, improved shipments, with off Lifecycle a Services

the XX% last growth user to year-over-year and XX% destocking for comparison, declined QX versus end product decline our prior difficult company The due year sales year. lingering the in QX effects compared of slower to demand. channel is in businesses

segment Products in year-over-year. offerings declined with year-over-year. sales Organic acquisitions our Intelligent and growing configure-to-order down XX% were Devices

infrastructure particular, growth IT center where In leading I'm needs orders pleased with in are Cubic recent gain and our with our good power our expanding for traction hyperscalers how acquisitions we we data providers. market. saw to continue

win secured and quarter, is compact switchgear-agnostic leveraging helping significant capabilities. data Rockwell footprint customer design achieve this a at center by leading NTT, modular, custom Cubic's This a strategic we colo provider. savings

& and down mix slightly Within sales our up, Control, demand by year-over-year. continuing markets. segment, is helped shipments in market this slower were were Despite Logix geographic due Software over continued In weaker in end PLC the product shipments, organic XX% our share end innovation. product-centric to volatility

process significant our introduced recently SIS, releases their new into discrete, established we're on product applications upcoming We leadership new Rockwell hybrid safety controller And across already process applications. and safety key helping building in Rockwell's Logix machine OEMs designs. design

solution software Other their quality Last Vision yield. differentiation the to our launches quarter, help customers we extend launched and of offering. AI our improve

other few first, with Plex studio in integrated design automation release boosts is software and cloud-native this which FactoryTalk automation revenue general, industry an at FactoryTalk productivity best-performing The many copilot, area these of growth our newest year as this a good application, across offerings. system features in [indiscernible] our was which products design weeks. Fiix, a In fair

QX. year. X% and our below [indiscernible] by grew for slightly sales in was Book-to-bill average historical organic versus segment this prior Services Lifecycle

a this projects business quarter. couple of our delayed Sensia customer We in saw

projects, have which include operational and shift performance. improve pipeline applications to both safety We of a continue operations a and transition autonomous to towards traditional energy healthy general reflect and

end total in business XX% our 'XX. are overall over markets Energy fiscal of

of contracts a generating recurring to number On managed growing we continue the services services side, customer revenue. through penetration increase with

across XX% XX%, double-digit Segment offerings. over Total quarter was services and company our ARR grew for $X.XX. was the adjusted in EPS software growth and margin with the

in to segment year-over-year overall top year last Turning of our with highlights line record of X our comparisons Slide QX difficult Similar being QX to shipments. by review quarter results the reflects to performance a our quarter, industry key of performance. industry

Despite by of certainty in warehouse to programs. in were and more owners our Sales and we and semi, growth automotive, auto industries in pause delays we and project hybrid win improvement consumer traditional this continued partially In and policy there's impacted suppliers in still ICE EV, e-commerce spending. activity. wait quarter continue automation. And overall across declines an business discrete brand for offset as saw by another in EV

Ford industrial partner automation be Lugo, assembly controllers, truck their programs. final facility. in by body selected in Motor Company is portfolio for additional HMI was and their next-generation supplying Kentucky full the as shops. logic There the drives, components Rockwell a content of for will Rockwell also

semiconductor. Moving to

uncertainty facilities industry oversupply automate and U.S. future we an with in here the dealing support, While semiconductor is secured manufacturing with their leader win to around important stimulus the R&D global in a

to also traction for We our material gain continue with transport. production offering logistics

sales E-commerce increased versus year. prior XX% and warehouse automation

Cubic we data and upgrades center in by investment, in business. to our continued players, retail traditional e-commerce investments the of see In warehouse benefits both particularly addition

continue in driving by and to users double-digit as improvements In declines on to Turning facilities. muted and are in focusing existing beverage delaying food were industry. end their beverage, investments our segment see sciences. food impacted and hybrid projects year-over-year life we capacity Sales operational this and across

portfolio the With Plex world. we soy the win that In future sauce important the Kikkoman scalable engineering In on we producers plant-wide working with MES food factory build an plans. of leading largest said, are had next Wisconsin. beverage Kikkoman, with the software are here we Jefferson, in greenfield their and manufacturer the their and Rockwell's partnership quarter, with firm control, delivering in helping CRB, of

aggressively companies QX Within GLP-X as contract the growth consumer sciences difficult this add over to life their last vertical, segment. industries comps our in soaring impacted support our of investment seeing demand. industry year process we're Sales manufacturing in XX% capacity pharma drugs with by and key growth was for manufacturers in

due funding Sensia pushouts grow digits similar to and improved election given impact and greenhouse profitability. in gas, North have projects. and America in of changes, oil we quarter, did continued policy saw the to double may deliver they uncertainty quarter last the on project gas-related to Within potential

of are customers sustainability in mining, investing the safety operations. their and In

their Rockwell quarter, was Seriti monitoring system to conditions This upgrade and a hazards. chosen environmental by from ensure competitive in software offering to respond potential South New of Africa Denmark environmental to monitoring effective

down tough were Slide our In sales Let's the to comparisons of lingering due organic X impact sharply general, turn to year-over-year regional QX destocking. sales. and and

year-over-year shipments up easy sharply to year down were low due fiscal Sequentially, were Orders QX 'XX. comparison with the single digits, and orders flattish. were

market, best home our performing region. our to The be Americas, continue

North America. in I were mentioned, orders sequentially up As

our While our with the presence we to we continue share world. are wallet around serve happy the users they European builders with as machine in of their strong Americas, end expand

In won process comprehensive suppliers GEA the in water efficient components machinery ensure state-of-the-art largest the the as important technologies and world's for one and system with of we quarter, usage portfolio to technology, pharmaceutical will includes India. as beverage in The GEA services. food, implement plants project an user GEA sectors. well advanced replenishment. is The and end

acquisitions of value reported growth with Let's we year for contributed from of the in our production We sales. X% move our in as to customer point fiscal X Slide cybersecurity Sales year-over-year highlights and XXXX. Verve decline and key X the spaces. expand a finished about logistics Clearpath

in the software high and our business have point line our we The significant our us recover. ARR cost free decrease cash align for over year-over-year actions margins Total performance diverse across grew margin as more with our markets earlier single-digit with took prior on without structure our to XXX sales forecast. XX% flow our the actions services in a with is conversion portfolio These was total decline worse and segment expanded this would and mix business. current now business XX% been reduction strong of XX% basis recurring position year environment. also cost

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

more macroeconomic projecting we continued end due of in Christian to typical seasonality, negative QX will to the positive After the call. number of sequential expect across of shipments in later of fiscal range the guidance in our on our primarily balance X% 'XX. this sales in growth a year decline we're growth through project sequential and delays improvement top our environment gradual calendarization X%. the a detail cover in line uncertainty the Given markets,

prior about Segment be margin expect the to versus midpoint. annual be EPS down slightly to at is is our revenue projected We XX%. $X.XX recurring year, to and adjusted grow expected

cash year return 'XX. to to free We flow conversion in expect XXX% fiscal

detail 'XX. fiscal Christian? financial for now and full year to over outlook it on and our QX more Christian to I'll provide turn performance

Christian Rothe

you all morning, this Blake, the and morning here you, look Thank to coming good with quarters be over and to excited everyone. working and forward years. I'm

I'll other of the down The roughly start information. points Slide Fourth quarter from acquisitions X, quarter organic sales negative fourth reported positive key in currency prior our offset impact impact each year. financial on price. came versus and were quarter, of growth the while X XX% of

reflects margin unfavorable compensation. was compared incentive The cost to year-over-year offset XX.X% partially and our actions year ago. a XX.X% by Segment all volume mix, sales operating and decrease reduction lower

and revenue accrual of price Clearpath items. benefit targets tied an of to achievement EPS to above an was $XX Adjusted from the million included onetime acquisition. $X.XX seller's our earn-out adjustment Those our items primarily due and expectations onetime to

for our tax the on quarter cover about XX.X%, below rate effective later fourth and Adjusted of the X expectations XX% for EPS prior was bridge a slide. year adjusted below points quarter. year-over-year I'll rate our the

sorry, cash we remaining shown to million On $XXX not lower at pretax -- $X.X our on prior $XXX September we repurchase authorizations. billion conversion flow had in cash the free a additional flow of income. slide, cost the below repurchased million. primarily year $XXX was One item -- XX, than approximately shares XXX,XXX million due the of Free under lower quarter

volume X margin the our unfavorable XX.X% to XX performance and basis operating of lower overview Devices sales X mix. provides and Slide points sales decreased segments. margin due Intelligent for year-over-year

benefit earlier, margin the Intelligent from Devices adjustment earn-out was exclude you the XX.X%. in mentioned I Clearpath If segment

execution segment as expectations XX% which cost-out organic including decline. the costs, more our adjusting conversion by below and in [indiscernible] other mid-XXs than point strong focusing Purely had cost sales was X decremental of the volume the lower currency. reflects the after a quarter, fourth decrementals about on year-over-year better-than-expected was earn-out, programs against this impact Operationally, in on for offset the

sales of lower due margin partially X,XXX shipments control were this expectations XX.X% Software volume, points to and decreased reduction cost mainly about lower no compensation. basis controllers. Logix of actions incentive due Margins offset was which in below to year-over-year by our segment

Control QX & hardware Software typically by the Software & business Software the our the was portion up cost-out shipments in sales portion software Control the historically of from Control Revenue in high XX% actions. for held high year. by prior decline somewhat nicely mitigated of The against the year-over-year. driven The decrementals of & were

margin Lifecycle points segment year-over-year year-over-year was driven higher and XX.X% project The of compensation, Lifecycle increased Services basis improvement. was expectations. and by no slightly incentive XXX margin our above margin strong Sensia in execution

this reflect the that. said, performed 'XX, and incrementals Blake business As throughout well fiscal

slide, next from walk the to product unfavorable an XXXX. a provides driving and with fiscal On XX, adjusted mix EPS Core decrease flow-through. $X.XX XX% performance fiscal segment the XXXX down QX organic was QX sales on outsized

year reflects year. year-over-year and million an a actions mentioned, last provided $X.XX $XX a were bonus versus was payout exceeding tailwind. delta compensation this This the Blake reduction cost payout in Incentive our As benefit tailwind. no expectations above-target quarter, $X.XX

benefit year-over-year Shares, The tax tailwind Clearpath a $X.XX a headwind were was whereas $X.XX. a taken from and together other acquisitions $X.XX. was were tailwind. $X.XX impact each earn-out and The of items currency interest

want QX to to the I QX. discuss to from Rockwell pause sequential performance here for briefly

not 'XX particularly progression, the we the when I discuss on guide. fiscal informative the it's think Although to discuss it's slide, later

our was to sequentially. the mix contributor decrementals largest Negative

in While more were Control, amount. $XX both & sales double reported Logix, than million, Devices that Software products and were company-wide down in declines including Intelligent

hand, profile. some our other QX in as segment and saw favorable On the in we call, the less which Lifecycle had have mentioned configure-to-order growth Services Services our Lifecycle high-margin products, impact Further, volume adjustment. both headwinds mix pension earn-out negative by and not recur were QX. decremental sequential and projects the This shipped in margins. did Sequential high drove of currency that QX margin in offset

XXXX. from were was X% to sales sales Organic billion, on, key year Moving XX%. information Currency Reported Slide financial coming provides acquisitions. the growth fiscal XX $X.X declined X point for including full down neutral. of

from unfavorable mix offset and due XX.X% partially incentive earn-out last margin toward cost reduction including the compensation decrease from that no by as items, segment actions The sales skewed XXX heavily year year. of points decreased lower Full basis to was again, the an and well as adjustment. products, benefits onetime

be down adjusted walk your was XX%. EPS year-over-year detailed A reference. appendix in for EPS the found Adjusted can

shared flow income. in decrease lower line last about was at decreased the XXXX. fiscal driven conversion flow million 'XX. by cash The Free in cash we quarter free fiscal Free XX% with flow updated expectations cash was $XXX in pretax from

the in than a XXXX XX.X% line were receivables and Inventory income. in and XXX demand. Return as end year quarter lower we source on balances lower points reduced of capital our with cash primarily driven fourth invested was by prior year for basis fiscal

For billion investments repurchases beginning the the made year share made dividends organic sorry, about $XXX for and -- Clearpath $X.X of year, of inorganic the and toward we investments at million of capital Verve. fiscal deployed and

liquidity and Our capital structure strong. remains

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

from currency negative X% impact no the range at We with expect $X.X acquisitions. positive reported or in or from a to billion X% below midpoint slightly sales

sales & Devices to be At negative down we low and Control is Software X%, digits single Services Intelligent Lifecycle the low single and which to midpoint guidance, expect of up digits both be year-over-year. our

price of to We growth for be year X cost about the contribute and point to price favorable. expect

Segment expected from just fiscal to about XX% the year is under midpoint, margin 'XX. XX points basis at be down

in $XXX our fiscal mentioned, from million projects As and expansion productivity we margin to Blake in year-over-year expect benefit continue 'XX. year

excellence with Day forward more to look journey and Anaheim. covering our on upcoming productivity our operational at in Investor We you

than benefited year that tax events be points fiscal X will some rate from not 'XX, XX%. recur. is around expect percentage adjusted We the full to which This about effective higher discrete

range with midpoint. the $X.XX is Our at $X.XX to adjusted guidance $X.XX EPS

cash free income. of expect full year adjusted conversion flow of XXX% about XXXX We fiscal

that down From the mid-teens. sales QX Blake first in we expect mentioned margins earlier our to high expect margin single be digits sequentially. we quarter low a standpoint, be to to

shape Although first quarter we additional thought give would the color guidance, it be we don't expect to we give to quarterly helpful how on some up.

Devices a and headwinds the product configure-to-order backdrop, soft have low be teens demand will tough Intelligent down of expected a to and nonrecurrence in seasonal products. are adjustment. this Devices compensation Intelligent earn-out reflecting Against low sequentially, sales volume

As margins a Intelligent be the segment in teens. low Devices expect result, to we

expected sequential be low a flat XXs expected Software sales & is seasonal on Services the sales and low Control down to low in typically to margin growth. quarter, first in has the are Lifecycle single sequentially. digits be

compensation expect drive We headwinds low Lifecycle segment teens. to and volume to impact margins the in the

our As the gradual sales of rest Blake through year. we sequential mentioned, improvement in expect the

corresponding a our segment margins. increase We also expect in

turn Let's XX full our the Slide to adjusted year. EPS for for walk

$X.XX guide. the X% is expected the for the our midpoint be sales normalized Our at on core decline with conversion year more negative to of

Importantly, spending, about X% continue sales. our of lifeblood to future the target is included R&D growth, we in which our core of at

for continue include planned fiscal investments nature tailwind performance are will IT U.S., future to Cubic investments and ongoing are the Non-R&D Rockwell to and in expansion position investments $X.XX inside India especially footprint walls. structural our center to us a be headwind. in These differentiated a Rockwell's capture facility for both new 'XX to of expected They outside growth. provide in of that data the

Continuing the on to waterfall.

Our are offsetting decrease compensation cost-out expected the EPS next which are $X.XX, to year, savings increase midpoint targeted to $X.XX productivity EPS million at and actions reflecting inflation savings. by the are by Nearly headwinds those expected of $XXX guide.

and in fiscal QX fiscal $X.XX in 'XX. QX resulted in a earn-out Clearpath the for Adjustments of 'XX headwind

expected a interest $X.XX a We items expect Shares, be are expense be and headwind. to other tax headwind. to together $X.XX taken

$X.XX in points added benefit segment adjustments way, basis the margins our down fiscal about year. for another EPS from guide earn-out the that our to XX adjusted To about break 'XX of included

under flat as well of the The flat our headwinds to X% offset just reflects of the this adjusted fiscal a -- of essentially decline as by guide cost-out segment investment segment of on expected compensation margins year-over-year. level midpoint and our guide sales headwinds are at segment at be margins XX% Our basis programs. 'XX a

comments to We're on is million few XXXX expense and expected fiscal to share million. for during assuming be of million fiscal of around for are million. $XXX Corporate expected your and guidance XXXX shares targeting models. interest A we year. XXX.X diluted $XXX additional repurchases the $XXX about Net is be expenses shares, average other outstanding

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

Blake Moret

U.S. and capacity new these with we saw Thanks, best Christian. and Despite verticals uncertainty throughout ramp We in year. the the throughout U.S. delays quarter of tied a the sequential policy year quarter. the project to a won in projects variety election, the wins across QX in being

Projects came and funnel of these increase in during of from gas, including EV diverse tire, set expect mega is orders a robust, end The and year 'XX. renewable projects markets, these we semiconductor. and fiscal energy, an oil

'XX customers the product strong our at you introductions, a year fair software. to for this hardware will including for year during Fiscal both forward Day look for new Investor show. X and weeks be in and We automation showcasing innovation particularly during

Acquisitions in acquisitions growth major 'XX. We year to point made organic anticipate not X year. new ago do about in fiscal the a of are contribute expected year

We to unmatched that portfolio with have ways an of combines new traditional sources win. value

our investors now As built we integrating what our on expanded margins for employees. for to we've for bought drive and simplification said, customers, we're focus concentrating and

year our our and I and thank partners working operations, to around with to as tune people success, customers. shoulder add Our our new I My forward look coming world heart shoulder the during employees to and portfolio team win the their them we for remain the and at dedication our innovation resilience. and leadership of

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

Aijana Zellner

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

Operator

Our Davis from from [Operator Research. Scott Melius question Instructions] first comes

Scott Davis

you election Do something a restock implied that the seems see Blake, that imminently? you some happening noise. maybe that possible? Is caused

Blake Moret

the really of on we're in anything not counting at not counting QX. really -- the Scott, particularly year, We're beginning on

at we stock talked nearing before, drain of end the As the distributors machine about and we're builders. of excess

for Some inventory to on equilibrium counting and some to just put additional them their shelf. machine builders not back that rapid distributors we're already are on But acceleration back point.

Scott Davis

build responses? last just were -- follow distributors there were up behaviors theme. particular concerns What likely the up in are they more more -- around Were they tariffs. there may was that? pre-buy Or to customer in. around we tariffs change buildup, And in of time, the The had inventory? that kind to certainly, be who come on customer and And a some

see just you kind what saw curious and may how to So time guys inform time. last that of this

Blake Moret

tell proud ensure to the to see I'll customer change didn't the tariffs. that ahead positive of I'm we that, as that get behavior as coming an that's in. price/cost of lot area were really showed things a We through with you a the that agility came tariffs

And we tariffs, in our be very to pricing should confident we'll additional able I'm customers. see reflect that so to

tariffs. a as increases there's expectation But price with will U.S. we little technology. occasionally Obviously, regular that unlike what And course, our you labor the respect of didn't a of purchases brought see spot. bit to continues forward, in increases where to happen see investment down with complement really sweet lot that of right the with that's

Operator

Our Kaplowitz from from Andy Citigroup. next comes question

Andrew Kaplowitz

you relative and is any flat, that's trying look in given kind Blake, forecast I bit a 'XX, the you, low in to bottom visibility in at respectively? closer CapEx we're down think when markets out maybe more, let's delays, of but some you call about digits single helping stability it, know and mentioned there hybrid do discrete? a just process incremental flesh talk to 'XX little any of you 'XX,

Blake Moret

Yes.

with like greenfield with projects. -- in continuing of activity So business them a of on trigger things to beverage, their we're we're associated pulling planning seeing and modernizations working And for get not investment, brownfield people services, and that and hybrid. still with footprint. expansion although start Food through on EPCs the lot let's digital the we're

little bit talked with a we've sciences. with a around think continue to that In expect coming may life of that sciences, that And we're and we the we about area. respect we be capacity engaged optimism to do life that bottom off in GLP-X

ago the biggest a component the win discrete, In about at discrete is minute of talked automotive. Ford. We

can let's picked are where but sound clear, we So up all say. a to point the still not customers it's investing,

sold SAAR XX%, we the in fiscal do a little EV at of obviously as to ago. in than pace a envisioned to expected expect go increase vehicles 'XX. percentage above slower is much the all couple a years up U.S. of We count a

then also that data is. for to year That's discrete activity e-commerce is bright looking That only there, another a center who other and operations modernize make the their where more us, continue. And and hyperscalers, element automation. expect to There's a also and this we activity lot of our among was but warehouse among spot of are the retailers not efficient.

Semiconductor, a there. little year. bit more that that We talked activity mixed. I contributor not in expecting to We're be still recover. big expect to a about the some

Andrew Kaplowitz

in then, That's the Order's is of helpful. And Blake, maybe fleshing this for low digits and just guidance, Christian. kind down single out 'XX QX.

flat rate about guess of run and the QX. Xs probably terms puts in sales. you talked You that I in in

So you of guide? maybe destocking that QX And of to in do do how to in start if midpoint just lift make much you your sort orders end? were get to up picking orders need

Blake Moret

very we're at growth triangulating We're at gradual a different really QX. the points, variety in what looking sequential from after a expecting, That's looking orders industries. of

growth invest, exposure process, continues the are also at We they Lifecycle the relevance that that its segment in contributing which with have backlog higher look to year. in to of and positive

the with and biggest that So being feel described Devices with Intelligent then I on order Control -- Software impact comfortable & the through and influence the year. we the that just biggest progression

Operator

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

Andrew Obin

where go of figure to bottom. sort things I'm trying going to to -- Just back out

funnel and becomes obviously orders, and you then shipments. your orders funnel at as look then become So

to be sort that's what year-end? this trying is converting orders? calendar understand, a And just going orders 'XX, need we're into So set for see and of just funnel to effectively at so budgeting budgets the we to is

shipment together, what think guys X because when to you you from what's once way actually just as weeks. you if that order, you X things of I this But for converting not your then you it product and start And know ship the you, get book? X right timeline could put within stuff you probably outline the just Is Is it X do that months? an thinking inflecting. If months? into order can

Blake Moret

Sure.

So that then Andrew, I let up. touch overall bit process. something, of a the missed me And describe if me to little ask

funnel project, a calendarization projects versus was at for MRO go EV tracked probably in year instance. greenfield that The of of the we big we for look products terms like the pure bit into a typical that described little last that big differently

business. we we as cases, I of our in different intensely And there shown industries. left a our across has year. this year. before some both even where CapEx work, And in track group or that's coming the We lighthouse project the course, year with are more in project have expect And really X orders said, activity the

That and with guide supports respect the Services. certainly funnel looks good Lifecycle to

on. have in and so Clearpath, We Cubic for a funnel good instance,

a to comes that project. an very those we're come year in or in depending the as those amount And funnel, be won between that some the a comes could more that to shipped, that order months the said, on products turning the or, in time to when something it us, as of out cases, of back When funnel and at you is engineering rate. high and ordered out and around

our the build plants. to That's in But building those back it, year The shelf. of converting can we a during rate. the high serviced we a we have distributor at of safety -- up period majority when within built built or very get the days up of stock rely even on that

between But weeks those time think products, literally a to for think Lifecycle the we engineered shipment, of months. the systems. months, what average period it time, or X have lead get products the in to little it for overall probably Intelligent Devices. I from fully in configure-to-order order a your Services you And time get the X is and services longer I So digital an bit you about into is certainly question, again, that varies

for. some touches that hopefully, on looking you of So were what

Andrew Obin

And absolutely. just No, you if apologize machine sort builders point. was have were -- then about sort pinch Europe and talked Yes. I in of but of you it,

out out sort X more of a view happening bit of builders one has in being that, machine there? X that pushed your to What said granular think months. come I is just Europe, little with and is competitors

Blake Moret

Well, a that builders couple our now. lot Yes. automation me in of of at and with Europe of seeing machine is in fair from start let facility them I'm subjective comment, a a weeks. see we'll a lot And

is Expo they're that and of lot those to investing These PAC big That's of Super forward. lots the close decent working in builders where sized with about want already but of Chicago a U.S. enough we're in and opportunities encouraging. their they going their a down machine show are spend, us up the lot leader. their be with names, to plans end seeing to come The grow customers to share users fact. U.S. given of are And talk

those coming declines, hearing directly the condition overstock where and them definitely of after automation that In as expect at machine that hear fiscal some the fair we more to year well. European off Americas. a builders, big 'XX machine you'll contributed decent We're builders from performing from to of year Europe be

the patterns. completely world Europe, So as Asia 'XX normal they dissipate, and those in get conditions to best-performing Americas by in followed by will be followed order the region overstock back

Operator

Research. Wolfe next Our Coe from from comes question Nigel

Nigel Coe

XQ for guidance and the Thanks additional points. the color all

for map guide the to to got we've it message We're want X% year to organic the the So year-over-year sure Christian, XQ. just of to I XQ. type X% just sort getting make -- on back full that down

EPS, more perhaps in of maybe so. [ consistent so margin, a the maybe or sort be on on pressure $X.XX Would that like your down based just seems to ] it And thinking? like bit

Christian Rothe

Yes.

the it bit, frame a we of So sequential just kind side it talk of about overall for the little when organization. to

you got QX if bridge We have from into QX, we've -- headwinds.

from We've of perspective then the of earn-out got of of recur. going adjustments course, are there's volume to reduction, go not we headwinds to going to real inflationary that, the the side. course, And contribute on decrementals QX. compensation top into Of as which all some

mentioned on be on going will not number but a EPS. get number into is, that actually you exactly what We're $X. So significantly detail real it the to below

Nigel Coe

Yes.

start getting seems the in back of on just XQ sequential be half normal then benefit and then the mean, And I helpful. a easy comps similar That's level Okay. down it the of year. through real the you "normal" from the year, year-over-year, the based in like -- would

X% what year. understand to to struggle start the just do gets the of us given I But plus

X%, order of expect to So sort just terms what maybe in what of numbers. plus and it at assumptions to see making that just be frame the in you'd you're curious

Blake Moret

Yes.

sequential So end to bit plus a development the the would a Intelligent Devices bit earlier would little in products a bit the and would -- for or X% & flip better the markets recovery little that year. Software little that Control be so more pronounced up shipments improvement, ramp positive of either

higher bit the little in given year this. a that that's see and get It's build of pickup. than expected products you be off Lifecycle see growth we dramatically. lead items, continue time The longer the to don't to will that, if markets earlier that you as Services, to the process changing votes exposure amount really in going and I again, the the sequentially backlog, the in So would the swing where be

Operator

Stanley. Morgan from Snyder Chris from comes question next Our

Christopher Snyder

talk to trends. wanted about I and market Americas order

you low said think guys just I were that those digits single sequentially. up or sequentially up So

any of the on magnitude So maybe increase. color

orders new comment flat awards. how new the and is better? America, could into more on you is environment on and competitive wins seasonality, think anything specifically continues on talk sequentially And get you of when guys doing to QX expectation broadly share around that you just the the then about And company Americas

Blake Moret

Yes. Sure.

largest the the the region share We will in said, the in As we and have we was by region. Americas. 'XX expect performing obviously in Americas best continue to far best-performing 'XX be

best the and deepest We've channel. got We've installed the the base largest relationship. got

in I share mentioned gains. that a before, as hand And So modest pretty seeing, we're case. there's good

firms And very hands differentiated support world around with well well, the releasing we're users whole the sense all urgency equation. our engineering same to new unmatched, But have we in that. as on footprint. of that and U.S. competitors recognizing the it are attacking that the all the Obviously, continuing for battle take the builders for products here to with expanding as as provide machine and interested it's to and deck

North terms the through solutions. characterized be where mention in In haven't we by year did expect region America. products sequential and Americas improvement And sequentials, to we just see QX of But the that we the best. again, we in saw by the I in orders or sequentials

we expect effects we orders will say And I that more from past in in as that overstock the channel. number the become get 'XX projects than 'XX. and a expect that to that did And mega saw we more so-called the we come more in in significant activity finally products of

Christopher Snyder

like Appreciate even equipment, which electrical maybe more and investment, bigger that. electronic things towards chips And manufacturing then much like maybe just obviously following up CapEx on tilting transformers. that components is American

different CapEx industry, for content just products, anything automation the not those you, that new United as but maybe lower for is shifts markets, Is just is the of should compete aware that and of verticals some be fact on bit verticals just like content? the end on how then And there Rockwell than those? investors So into on these are more to to beverage? positioned States, just food the the traditional a

Blake Moret

we're opportunities the where great at projects laser ready literally, the getting looking make there getting Yes, Chris, tracking, then Yes. the of funnel line have thousands top are we we're to clearest question. that The and of and on decisions. of and we're sight, focused

by historically, as you things vertical have don't much extremely much we've that to we about sciences. the we great like readiness like like life verticals in, that talked semiconductor we automotive, like we industries haven't at high that split serve have beverage, talked by look balanced and funnel, represented share penetration forever, between food evenly industries roughly about in as that the If have it's

and dollars it's roughly very for that characterized us. we and each equal, billions of opportunity and of went projects. of split So CapEx entire represents of substantial amounts of basket through side of And hundreds that

awarded. before, the said being I've those think still early as I innings in reasonably we're And of

not data now. for awards long are very you're data have orders things centers obviously our centers, items. it's And while So time the for People exposure seeing lead for projects in like some business. we bulk of placing

so in transformers, out still on. cases, years are think and X I some

biggest few over next come content is the projects And still think to from some of the we'll those amount that. But I see years.

Operator

Our next question comes from Julian Mitchell from Barclays.

Julian Mitchell

Blake, Maybe year Investor thinking just back one ago. question Day to the for a you,

running about negative So of organic sort and that high at you guide a take 'XX single-digit CAGR to you're sort entitlements. we CAGR. mid-single-digit 'XX, sales the mid- talked for When of

to because trying how the plus of mid- term, the headcount taking understand get of you up to nose heavier of in much trend near-term couple put So more for without back need growth, place you you're sort the sort mid-single-digit are and towards terms just positive to move you reinvestment? that in spending to But short do investment line. in, So high cutting I years? of to you of can sort of confident next in growth get back the top understand,

Blake Moret

Yes. the for Thanks question, Julian.

the for well of like Control, of of automation So investment, R&D lot continuing couple a even portfolio, at year as see customer-facing in care Devices, Software the in Intelligent digital terms our through product last you'll to that across preserve new areas introductions. And spending & taken as of increased tough the in weeks services. we've new a fair pace resources

we're of very market. I'm products to new proud the getting way that these

double sales is Software fact, Control, R&D in & actually digits. a of percentage In as

forward. preserve to that continue we So going

still as line talk growth line as growth after get past guide 'XX, as rates, XX% of the couple margin of we high that look both weeks, we the back and obviously, hold well last we'll also this hold, then that we a and at decline framework, very expectations. say that let I year, in about to year in still terms top reset, for to think we the top this but more growth, in the getting those me

mentioned we've continued some structural making. we're while for of in cuts the incoming that term investments business as well. to with are so orders, the cost made some long investment that and We R&D. the about talked align current And structural structure business [indiscernible] that of conditions capacity the I just

about because sharp talked been that made we to at to growth not see don't we've make the I Investor acceleration that surgical we've the last cutting year. future lifeline pretty the to So snapback about Day sure cuts a back that we're

Julian Mitchell

maybe very the second shorter-term And That's for just question helpful. a guidance. XXXX

margin the the segment it's on just XX% year. So point, for

do to to margin comment? starting point, we segment you was basis QX, sort Is of margin low so And Just XX% year? the XXX framework? for the quarter wanted a each XXX that mid-teens or margin QX the the and get right of comment points sort that up was sequentially check, margin -- assume to take to that for off you

I year? recent it years. think but to sort of that I in clarify, you And know have earnings, Christian, different maybe half, maybe first XX% say, Is is talk this quarterly context, half way, it XX% don't maybe often of first in just so or a want EPS to let's

Christian Rothe

Yes, Julian, question. thanks the for

go think in we've segment that about through as we as the So That talked to quarter. should was it continue we year, sequential margins about first that the improve.

goes -- as that, So the number yes about half, yes, I that on But side. to not in the I'm talk too do really order to year understand get second much mid-teens first And the margin that was that about that we expect XX%. there. discussed half. the low ramp you're we -- math going segment that to doing I should that do to

Operator

Wells Joe from question comes next O'Dea Fargo. from Our

Joseph O'Dea

so the XQ to trend from We've you is quarterly on just like outlining stable the on $XXX it range. we've over what destock in Devices And for of you're on market quarter. a seen much down seen a little understand of seeing larger outlook first sequentially elaborate the I [indiscernible] to than kind actually Intelligent like just regions in start wanted you're XXXX. to can that and be revenue of step course million, what a would and down looks that what XQ drivers the more? [indiscernible] pretty there,

Christian Rothe

Yes.

was in about as there you was that step sequentials happening. we were So each that through think fact going quarter, the XXXX, that some down, shipment the

the So that order time. of during incoming rate were the shipments outstripping period

And are first of on do in happening seasonal the that, quarter. top some we lows have that

is the us somewhat, off to in for headwind quarter. configure-to-order a the going business in that's So quarter. And be first well, the first

Joseph O'Dea

inventory helpful. end any of channel the it. we of effects in the just kind Got terms then markets think color XXXX over channel. management And versus when course in of about around That's

and I billion the revenue think combination Software Intelligent at down year-over-year. Control, we look when roughly & of $X Devices

trends? contributions to as destock market versus versus end it Can helpful. on we be X/X think that? been about of of channel roughly level, would end context management there have Anything any market Just could high it kind

Blake Moret

your dependent know velocity interrelated they're don't because the that on the destock relative out can I user I is the end Yes. of it of channel. split pulling quantify because demand

the end part of last actually user think. first pronounced. of user underlying just effects 'XX, overstock of positive, year we demand more market was and that were The the But to

as they're end talked demand. about And some to point last then think the it's calls, in And informative about end really weakening we of demand. those the linked. year, towards couple we're Again, user I in the spread most end a of the talk at where

goes There's in end bit user channel, demand it as a the stock of but goes. left little

really that's And the look to development at we going as so be biggest item the the year. in

on The the verticals. biggest will be product-centric of that impact

beverage. product total you going about a And where business business very and large products through machine our into builders, distributors packaging most So think and a going through beverage, done is the in cases. actually food type percentage go-to-market some of is food automotive, of that's and where those

have or higher most oil gas So for that's sciences where an where and you comes that digital from and engineered of a it solutions. percentage the to, as you services life instance, opposed see

Operator

Noah last today come from Kaye will from Oppenheimer. Our question

Noah Kaye

clarification a guide. on Just the

out sounded expansions. You of called more the investments, non-R&D nature but some facility the of those like

more bit whether a these they're OpEx us color give CapEx? versus and just So on investments

Blake Moret

of there's OpEx these, a it's mix. some CapEx. Yes, In and of a mix

manage expanding some center As said, the to portion to in be growth of really facilities, it of able business. Cubic is the you their strong data

digital We do is partners, that productivity we for that in well internal and then with got some services IT the system world a make have within us. India business providing resilience facility sure we've in class. productivity external digital as Asian region And our new as for as additional a that's infrastructure

a portion, bit investments of of OpEx as we're the So making. there's talked for them CapEx the those little the about that are well. waterfall of on but some those because We

Operator

now will for to call I over back the Zellner Ms. turn remarks. closing

Aijana Zellner

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

Operator

time, may Thank disconnect. you. you this At

Rockwell Automation (ROK) 7 Nov 242024 Q4 Earnings call transcript