Rockwell Automation (ROK) 2 Nov 222022 Q4 Earnings call transcript

Thank you for holding and welcome to Rockwell Automation’s Quarterly Conference Call. I need to remind everyone that today’s conference call is being recorded. Later in the call, we will open up the line for questions. [Operator Instructions] At this time, I’d like to turn the call over to Aijana Zellner, Head of Investor Relations. Ms. ahead. go please Zellner,

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

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

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

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

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

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

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

volatility, fiscal to inflation strong how great on had results Let’s finish navigated significant headwinds. fourth this delivered teams operating our continued and Slide We chain to and with X. our turn performance. supply quarter I’m of the year very a proud year challenging currency

sales expectations sequentially. organic in our Our quarter. Orders expected with as and both QX in the growing results in were year-over-year came with earnings, double-digits and line

with the reduced year by almost about by driven sales in over billion Acquisitions translation across Total underlying Organic year-over-year. growth of of low continued X%, many U.S. was demand customers up order our our grew Our cancellation $X.X record contributed XX.X% XX.X% of continued rates sales solid very this regions. quarter. backlog, industries revenue dollar. and the along Currency versus expectations. prior points strengthening from two with reflect line

segment gradual a in business access chain. specific stabilization quarter, growth driven of see to last to prior XX% segment, with split all continue we region Devices the over electronic Similar regions. the sales business grew year organic supply by of expected, Intelligent As and global was by versus In shipments components. to QX

growth from for once availability, our our from actions. by mitigate technology to we the segment see in for benefits While disproportionately the PowerFlex these We this our to impacted was able issues solutions. again need motion drives quarter intelligent continued were devices with safety component our market supply to best-in-class resiliency

year-over-year. with growing technology orders had cart both sales independent a over business and year record Our XX%

Software & was for Control X.XX, good in Strong by our both organic and redesign organic and segment sales investments. Book-to-bill growth quarter. Logix year up expectations. driven had was growth Connected of in prior Solutions component of sales. this year-over-year. supply were View and over was our very improving XX% and sales Lifecycle Services an fourth growth double-digit versus Services orders in quarter Information another XX% double-digit above

areas. value the wins our releases acquisitions recent a new couple in these ISCS are of and continued in highlight Here to of

our Toyota management quality this ERP, Plex of production wins Futaba member was business and a America, with the monitoring. of for MES, Plex One selected quarter North platform Manufacturing has Smart network. Futaba

planning inventory and manufacturing into provides state-of-the-art Our solution real-time complex operations. customer’s management full this visibility

is are quarter. offerings Another to our this new with new how adding customers our Heinz example of Kraft value win our traditional

design helping implementation its platform, Kalypso’s and services quality Kraft along yield digital and Plex goals. with meet productivity, Our are

quarter In the reduce in easily also customers revenue. XX% points modular solution will could total this strong steel another stockholder and ARR we our broader with electrical with for growth including of to the maintenance devices with grew cybersecurity in systems largest year-over-year. renewable execution. Adjusted panels. strong energy Segment of bringing to access ARR worldwide was were our will digital up of customer in leader double-digit sales that unplanned expand Services basis quarter, completed quarter services. Earlier Danish We the grew cloud-native EPS REIT Fiix XX%, be X% sites. Connected bring UK’s Steel, XX system. downtime a data intelligent the to CUBIC, acquisition projects and the scaled margin our across broaden Fiix, over of In their XX% XXX management reflecting week, chosen the year-over-year, and for a market This global help the in over by our also acquisition partners, a new quarter, help was centers. base and continue Barrett company, independent

of to year. continuing Let’s global our or discrete quarter had segments industries, our customers wins highlights a We our three Within up in this of securing invest quarter infrastructure, end factory, whether to up QX starting network driven industry discrete, availability continued X prior gradual In turn All electronic versus performance. existing Slide their were cloud-native facilities double-digits improvement key in grew by with to were review almost components. numerous with the XX%. it’s sales this up new market now automotive upgrading their operations, XX% software. sales

was global controls in as quarter One Motors body, has paint site their press, EV quarter. and for year-over-year grew assembly. our greenfield County, partner of Hyundai wins key Hyundai several U.S. this Bryan wins with general Semiconductor XX% Motors with mega their Georgia. sales Rockwell selected this for

as flexible handling turnkey proven securing a an this the wafer of our system. Asia we system, sizable in In had important addition to transfers automated to in with monitoring win material here part facilities project customer’s U.S. provide

to the Cart new being were investment, In goals. to sales adopt for and Technology solutions and e-commerce greater automation, this warehouse in throughput. in scale retailers the center our Even our is customer’s efficiency capacity e-commerce support continue high-single fulfillment leveraged at labor up digits Independent warehouse with Our slowdown productivity quarter. and

mix customers. over XX% user we Food versus investments beverage and an were sales grew year, Tire intelligent in to segment versus last the XX%, food over regions. with beverage In This increase good all and quarter, end XX% continue by modular our consulting Life pipeline growth our in the devices, several see up a we software cybersecurity to deals quarter where grew led growth software, our and largest beverage, Similar and process at prior are control. was in prior of sciences won healthy and sales projects another hybrid and customer customers. some Moving is vertical in greenfield food at this XX% quarter, by and up eco-industrial. led a digital companies the Sales implementation year. we and greenfield with key with in brownfield of of services. continued industry life Sciences segment. to multi-site in projects seeing

This grew to versus with prior year, oil process. industry Turning gas. mid-teens chemicals growth in segment metals, and and

the wins this product Lyondell Group. Basell Bora to with at advanced help analytics production venture chose Petrochemical, joint in chemicals production and One was Basell polymer quality their Bora and Enterprise increase improve China. solution Lyondell in capacity quarter the of between The customer our plant new

and up up America sales was Turning by our North America organic were year. XX%, XX%, Latin also sales organic EMEA regional the almost over QX prior grew now XX%. Asia-Pacific Slide grew in versus to sales sales X XX% performance.

fiscal Slide low-single historical stay year. within Order performance to to continue an our our move cancellations Let’s orders update X, to digit range. and this backlog

record in over billion the backlog billion for of of growth strong Our and orders $XX of this over year XXXX. $X another stage set year year sales fiscal

of with and growth over record We year. As double and $XXX digits. orders grew another growing the contribute million EPS fiscal to Reported was to XX%, of up to total in orders growing now X, is total of Adjusted billion, sales X% prior $XX organic our prior challenges accounts XXXX. Slide we year revenue. an our had XX% double for Connected turn performance digits year. let’s with ARR growing light of in highlights impressive Information continue of than versus Solutions over more the and year. also review all meaningfully Services of sales, X% versus

of Excluding position our higher and we’ve for was us growth beyond. was one-time more strengthened fiscal in this and the flow XXXX last working items, year model EPS cover have Nick by this driven capital. of conversion XX% investments in The later. sustained detail Free year up will XX%. business made adjusted resiliency year’s cash

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

XXXX With the size predicated on our fiscal availability of the is of our components. for outlook record backlog,

Given continued we chain appropriate. think volatility, supply a approach conservative is

chain total with from stabilization guidance sales Our at volume. supply points fiscal projects mid-point X price Organic coming of XX% coming X.X%. and of the reported from sales growth continued assumes XXXX points X growth of growth

to be of acquisitions have currency We a contribute expect year and growth point another is points. headwind of profitable growth. double-digit ARR a expected to of about X.X to

XX cash by next we year-over-year. expand over is prior of And to generation XX%. target XX% grow projecting We a EPS flow margin with to are to segment versus billion $X.X points Adjusted conversion of free more return normalized of a basis year. year expected

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

tax the sales acquisitions and income. and our The quarter Currency impact XX% sequentially QX in reported were increase Segment expectations. over and and of key by Fourth over year. cover $XXX with translation XX.X% line prior contributed point the later basis up and driven and the morning, million on was operating by adjusted fourth The higher EPS XX% XX% in recognized year. Free offset onetime Adjusted Thank was prior line by currency-neutral $X.XX pretax our the quarter grew financial was organic prior items effective last growth. points. plans by currency. up million sales $XX increase expanded X.X you, line related good positive X, slide. our a with other was negative a and XX.X% with impact Blake, to total bridge on points XX.X%. costs, start I’ll I’ll Corporate from quarter year-over-year flow for everyone. expense year. cash in sales for year-over-year a to XX.X% X.X EPS adjusted partially the decline. and basis on year, to versus information. sales Slide the up prior price year. XXX higher margin The driven the Working was was decreased $XXX were was million capital versus grew cumulative fourth in of several discrete a rate guidance was

Our to build components. waiting in reductions environment. are critical in did taking place not continued The chain work in in materialize of the quarter to to current put actions due implement and raw inventory supply we planned the material rightsize inventory on process the longer

at days end item additional a One cost repurchased average not pre-pandemic inventory days quarter XXX approximately Our hand We of shares on million. were on year XXX $XX of shown at the close slide. days. of to current in a versus the to XXX,XXX XX the the

For sequentially margins a was XX.X% sales performance currency provides higher partially next from positive on authorization. benefiting in the in offset The software quarter. higher XX% currency from Slide $X.XX was accelerated the sales year-over-year. segment the Services EPS our segments compensation July repurchases segments. fiscal positive to line were Segment to three XX share segments XXXX sales X.XX. sales. software a the points Compared Book-to-bill XXX and XXXX. impacts. Backlog by over a year, with impact made double XX.X% organic our the The from prior XX, $X.XX mostly On all reduction for organic in million, for the XX% was the Slide offset segment strengthening last versus Core $X.XX percentage was XX $XXX our by $X.X was and our adjusted investments increase. on were impact up continued that grew control Intelligent overview the with across sales price/cost, guidance. and and to available driven XX over higher and margin billion full control remained digits year-over-year. partially grew margins to totaled repurchase and growing year, and Devices our price/costs, Total by three sales the in negative These basis all up negative benefit. and currency. up of points expanded QX non-recurring quarter three operating were Approximately Software fiscal September margin over the Incentive worse which year, performance walk QX than EPS, Lifecycle provides dollar throughout increased $X.XX reflecting related was prior U.S. expectations, of in of investments our $X.XX about & year. were segment. Control was under XX.X%

Plex primarily headwind added As prior adjusted deal $X.XX, previously including tax our fees. rate related noted, year a interest of prior comps. higher effective the was impact due the $X.XX year to Acquisitions, to

the rate. adjusted good delivered over Organic grew fiscal line by sales Our operating reduction bounced X.X or Currency to in the also outstanding our XX% and mostly this the plant were Margins than acquisition down key associated Other a business than profits full the million in actual X slightly all at year-over-year in and XX reference. sales be new the midpoint volumes was offset caused year. and labor EPS. related July execution our with year results. worse quarter offset lower growth supply compensation Slide for capabilities, over XX%. a $X.XX guidance constraints. primarily adjusted costs, benefit XX.X% Strong in in Corporate information including guidance. across played we Full lower EPS in costs focus tax by The points million, XXXX. by sales detailed were launches, was growth sales negative $XX in on the incentive product over other first price was increased X%. QX year key on currency, year margin the with coming prior and financial provides Plex a our provides our in expansion. acquisitions. for to currency investments our by fully segments. impacted growth big and more $XXX by out higher sales negatively double plants from acquisition $X.X of and increased from A digits was a negatively Reported expected force about Currency inefficiencies from by impact and on about investments points. and adjusted impacted projects impact $XX half up with $X.XX. regions a wages on shares and found remained about our We sales million EPS XX added our worse appendix EPS from compensation The incentive was to walk year. billion, sales segment in approximately margin Adjusted QX Slide EPS quarter. favorable walk and with organic in can chain up the your XX% higher capacity digital

our XX%. Excluding rate onetime the EPS the favorable tax settlement was adjusted which legal items, year accelerated included the impact of up a and prior onetime investments, and

of our driven fiscal the than with GAAP adjustments our capital As PTC below mark-to-market to working to in cash as and made performance by compared fiscal cash for capital of related free investment no flow percent primarily cash was million Return XX%. year XXXX. a decrease points in pretax Working and discussed years. in free a fiscal XX.X% of XXXX on was XX% payment by capital $XXX bonus year earlier, The basis higher a was prior lower driven There flow was year, was well XXXX. year in free a expectations XX% our on invested sales year increase the both fiscal income invested earlier. as currency-neutral bonus flow worse XXXX XX the year made payments conversion in XX% capital on as

For the towards year, and deployed share million about we inorganic dividends, in of fiscal capital XXXX. $XXX investments repurchases

We about also $XXX by paid down million. debt

capital remains liquidity structure and strong. Our

Pre-pandemic, XX% over and Page growth XXXX, Before year month & had the I Software or turn year’s we Intelligent in backlog to each of backlog our following guidance, in grew Devices. cover one year-over-year, XXXX year In fiscal double-digit strong by for revenue less XX. fiscal Control the let’s about including segment.

now our backlog outlook. to revenue segments. of our of unprecedented This XXXX represents coverage both guide in XX% over year fiscal sales confidence backlog these adds Our our for

price includes were benefits that backlog XXXX. implemented year of Our throughout increases fiscal also the

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

We the in are at XXXX, of expecting fiscal X.X% billion sales up of about midpoint $X.X range. the

backlog assumptions includes stabilization We supply levels, growth as be to our continued well range XX% expect growth and outlook at momentum. range. on current of in as X% latest XX% chain midpoint This organic our price to the our sales of a

assumes segment slide. of full earnings few about core be year on midpoint, I’ll operating on cover our this the a more margins XX.X%. expect At the guidance details and full We year XX% next XX%. between conversion to

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

guidance I EPS year-over-year a will $XX.XX fiscal a adjusted walk $X.XX. EPS on adjusted This is Our to growth. compares EPS $XX. to adjusted this At of XXXX of the XX% EPS midpoint adjusted slide. range, later cover represents the

We cash million This income. expect expenditures. capital XX% adjusted about flow $XXX conversion fiscal full year reflects of of of XXXX free

our planning working days for a in days on focus are a hand. inventory capital on reduction We with

is still capital be the to of above our slow. as working supplier times to sales, lead targeted around is of about pre-pandemic amount XX% Our XX% return historic

around additional longer tax that be U.S. other A expected around finally, the include for is interest to fiscal in projections around And additional average shares guidance. expensing million XXXX expense Corporate the our shares. no fiscal to million. XXXX payments Finally, comments Net R&D. $XXX related of $XXX income of assuming and diluted outstanding we’re is immediate allows to $XXX on change million. few XXX.X of tax for be million expected expense law

to turn XX. Let’s Slide

coming effect from in rates low in resiliency and due our to headwinds done that supply This X% XXXX. price we supported to in XXXX. XX% pieces, our tied from is XXXX line growth, fiscal our backlog. benefits guidance. about fiscal wanted many included year mostly and slide From that general our is the out X% went that fiscal are includes price higher moving from lays a redesign sales perspective, Given top into provide continuing by coming efforts tailwinds to volatility continued organic in a actions volumes chain XXXX and higher stabilization, chain and About growth supply cancellation the fiscal

factored also growth completed about recently of inorganic acquisition We CUBIC. have in our X% for

stabilization While with be there the volatility unfavorable the a along supply in to dynamic of continues chain impact shows some QX, environment of currency. including signs macroeconomic

All increased impact expect about volume and On of have and sales we is positive growth. range. adjusted guidance price/cost EPS, basis points. XXX margins The these our from informed margin on of expansion favorable price factors net

higher will a benefit repurchases. share see impacting favorably from a also and pension our about will We rate $X.XX from benefit expense discount

these payout to our Combined back investments well make a to continue key XXX-basis as headwind We around attracting retaining point as and XXX%. items our margins. talent bonus to are in restoring two

expect While components. are for in price/cost electronic inflation, we the in we positive year, a factoring continued do also primarily

We expect and our of unfavorable two points. these currency. items around a XXX negative margins mix by to be basis negatively impacted impact will Combined be

expecting our expect and which previous rate viewpoint, or the slide. The about teens Slide up From to third quarters calendarization an I effective provides fiscal year to on XX% fiscal We we for midpoint and sales have to adjusted second adjusted growth for are EPS from rates of $X.XX XXXX mid-to-high tax spoke your the XX a guidance the highest headwind. each a the XXXX reference at next walk the year-over-year. with

single-digit and the QX range. be to QX expect growth We in

the sales Following improve first quarter, year. we balance expect the sequential the over to of

in currency, margins XX.X%. our and to factored We In are segment partially offset we which EPS decrease expect mix, see a from adjusted projecting of segment by QX. the spend, decline for mid-teens into margins positive in QX price/cost. and view year margin unfavorable increases year-over-year We QX, full in year-over-year is

and by driven We continued positive price/cost. margins following volumes sequentially higher improved are seeing QX

on the a capital framework. make our next on few to Slide deployment XX. comments Moving I’ll

remain long-term deployment priorities the capital same. Our

deployment and inorganic dividend, capital we focus organic shareowners, share on After is we our to priority repurchases. first then Then that, on Our returns activities. focus capital growth. through

inorganic and repurchases that, With for about addition a million for XXXX plans remarks In closing turn $XXX back $XXX Blake fiscal include focus dividends share and capital deployment organic investments, $XXX of between on our million, de-levering, we before to it and of our start I’ll over Q&A. to some million.

Nick. Thanks,

we confident to XXXX, execute in are our strategy. to ability look our we As

model the Our set record earnings sales a backlog, double-digit for of and resilient growth. underlying a year customer operating demand, stage and more

retaining invest our to key to customers for today, on immediate heard thank in talent. their would investment including our innovation solving to for relentless the future. our and are continuing investing continued while future, I we focusing you attracting As needs the like commitment for and of people

month. with We are some Automation of Chicago at Day during later to innovations our these excited in you share Fair this Investor

make new We a programming an motor industry-first, be historic Logix, a a interface for journey. of new industries, package, introducing process in moment the will cloud-native Aijana session. Q&A control, on-machine host that begin time now differentiated this other for application Rockwell’s I/O will and operator offerings

of yourself let’s limit as to would up. as a first Thank possible, follow one many like you so to Julianne, our question. We you. to question get take and please quick

Our Instructions] Melius go Research. from [Operator you. Davis Thank first Scott comes question from ahead. Please

open. is line Your

Blake, morning, Nick, guys, good Hey, Aijana.

morning. good Hey,

Good morning.

for give meaningfully Thanks better guide? inflection of or expecting end markets, detail. worse to a that the you points you’re meaningfully things us XXXX and sense get But can perhaps in your

Hyundai both consumer going otherwise demand brand So talk owners because startups they’re industry the I force wind, as as the to about investment working to the and they’re ready for the there. have and the segments, wind segment capacity Scott, just be greenfield, in we their mentioned lose EV the EV to growing meet well increase share to continued in great not to, discrete we with and fleets see continue going within through industry battery. they different established

that see we So continuing.

and going to trends continue consumer try forward. participate that are on. to in be semiconductor in there’s decrease and and in demand see produce so and continue in that the markets, product in to the to make semiconductor, We in to remain a with people certainly And automotive that a even markets every industrial the smarter going moving we growth they consumer

see business in but warehouse most that by continuing. e-commerce, handling specifically back little food activity is that production immediate going wanting in their more see a So a Industry warehouses, beverage for see in and about we’re we plays store green fields actually handling there an that participating of don’t talked within Hybrid from XXXX. fiscal automation efficient we In and good and own material to on segment, lot about into a an bit, talked in continued apart few for continue we the that playing as productivity see the we’re forward way reacceleration role of resilience there. to wind We in referenced existing I call. that expanded And be retailers investment we semiconductor of the continues facilities.

to energy joint Sensia personalized along them So this trends venture. interest and to cyber one there’s a a growth for fuels in the U.S. as our fossil segment, as and providing domestic that our provide with their and industrial the needs for with traditional then renewables, renewables offerings. remediating to in of role lot and and we’ve with well talked consumer potentially ability solar the plans. that. Renewables The facilities best all is packaged these them as course the of continuing for playing our process of oil export of Pharmaceuticals, areas those build more gas, in monitoring security these we’re beverage and in plans. for capabilities treatment strong about transition double-digit both assessing lot have their Obviously, out management in and expanding secular see to that services energy continue continues goods water that of strong is to we and ahead customers companies. towards food And see the and good I helping particularly continue with well, a on think medicine energy and tailwinds. and to we’re Industry continuing be within Hybrid like are before we And eco attractive own

what even headwinds. at some see we we to when macroeconomic look are continue So strength the certainly face in of verticals, these

or be is When a – good When money some and ice thorough COVID detail suppose Blake, the needs there or negative such still spend some be offset higher would EV demand? answer, part pent-up just and answer. of I certain auto. in there get of the spent, in from there some in into [ph] think batteries, the color Good to world helpful. about you where you that is Thanks. spend lockdowns the there

to profit got the right? Yes, new these are owners makers, ventures. brand focus own their are Scott, of profit sources I on funding going think They’ve that continue to their

think those probably be bigger And and very working things an judicious a good model areas keeping comes running so it the vehicles, providing luxury strong that we for terms to that’s through going you keep with that, those up the to be and they’re trucks changeovers They’re have. base outsized percentage the of going are when but and this. the profit, to of the to that in when like us plants installed all of read vehicles

Okay. I’ll of you luck. on. pass Thank and it best

Scott. Thanks, Yes.

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

is line Your open.

hear Can Hi. me? you

We can.

Andrew. Yes,

Excellent.

specific Other about than cost, market getting any talk seasonality, was leading the just to Thank quarter? you quarter, in can not forecast that QX? that you’re to on any conservative particularly Just, of you. mix the ship that in ship time one normal maybe first geography strong items but revenue and price sort in or you that got to a third a quarter very

is our we’re Software in Yes, see Andrew to segment. & Control the swing biggest going

quarter, good we’re components the saw fourth that our benefiting availability we Our fourth of results quarter. in

right our first the first about be our This there, guiding part that quarter. promises the going and even part impacting year, And in with specific see really there’s we with an of what quarter. customers. suppliers couple is to our components during shorter we work that’s making from first of components statements us decline we quarter make will as supply. will partway Control that this, making – as could causing work increase we seeing throughout what are we’re our engaged in we’re our – we As Software sure be it first are that through that the tighter a coming – to we that component Andrew, – there’s the a be And plans with the in suppliers in specific quarter become you are our can imagine, to & right even

with Andrew, we the we’re that portion ratio. component constraint high expected control that, in on to and terms suppliers, that a Working disproportionately out working these And will We bearing supply the to the and supply. just add of we suppliers, understand to granularity for affect of suppliers identify Nick, our I The say/do as it. we of that continues of They in improve. had did characterized have in should add have with a QX coming a think key our a analysis offering Yes. QX. issue. chip QX

QX We’re working closely the with in guide. embedded implied them. But that’s

understand backlog And just this point a and so underwritten terms of revenue as to And much. what Got compare backlog? sort existing at you to end? does how XXXX, your by of it the percent Thanks look year normal in of is into you. your

Yes.

So, shelf Typically, to will ship this. year XX% distributor. Most the some one the additional are very delivered in about or But a drop our through backlog. of our or have month. Nick products full about we of we add from either factories details distributor off of have a of quickly

the posted of segments. across year in well absolutely half over having that the of the development see is slide guidance our you kind of all three And unprecedented. to our shipments that business show so backlog of we And in the

Right.

Yes? Nick. Sorry,

Control that’s less a focused I slightly than Andrew, that backlog, backlog. amounts more segments It’s of really to on a our normal. half Software call more and month that’s two extended & have the greater that, but add would Yes, about and elevated the that have our a comments really normal I those to Devices. anything than Services don’t a type other Lifecycle Intelligent backlog. year, It’s

real gating ability So as to the it’s factor. a just ship

correct. is That

Thank you.

Our Vertical Research. Please Sprague next from ahead. Jeff go question comes from

open. is Your line

everyone. morning, thank Good Hey, you.

Hey, Jeff.

just kind try I’m think In million, could. $XXX price sorry, thinking there. talked right, right. guess cost, more And deconstruct bit if a basis particular, over of wanted XXX the I X% I’m Hey, is I little grid about I the – here we bridge the a tailwind just doing is price Nick, that point math about to to you like

that’s a share. $X So like

price that So price/cost cost is. $X call we’d of roughly be being talking down get to half it, to, about what about

some frame price/cost what’s precisely. but and maybe and agree that on little points. or to how I bit XXX like on more gets to more math, I with me basis color know just So price/cost really up love just benefit million don’t number that that in going if mix $XXX on a you

with make it. of thinking Most aligns about and math Yes. how sense we’re your

are REIT input about that inflation reflected. XXXX, cost in that’s of Jeff. to continue price, We you’re half accurate that’s and expecting what we’re And at seeing again, making,

will up, and As of or projecting we’re virtually to to far year been all go – Things that seen in we’re recently that costs like expecting to continue logistics, while closer some logistics that XXXX. fiscal inflation we’ve continue some electronic we’re we’ve seeing we’re that rate to all next fuel extra up in expecting, where year we’re because as more components, that that seeing some where decreases, on but side. that largely go flat for offset also benefits it we’re the calling anticipating the

out equation. is point the affects only think that the as affects the in on not also I’d So of only it, the that well. denominator price thing It numerator in terms I math

benefit That’s margin. revenue. impact basis also both it on I the has impact your what XXX the to adjusting I where – point So but on – get income that’s the

a And availability it’s Great. of then answer a maybe Andrew’s that. to just like pretty little give heavier cadence be little the then can QX, in bit question figuring bit bit think tapers of out always about on more but give color to that’s a parlor QX year. about Thanks you how investment progressing year us how a little clear sounds a and game that. over the every It more us off, the color It spending. on on to seems but on supply for just

No.

coming and top over investment year to you our now we’re a spend that. about this we plans increased off now realize, increase Jeff, spend is got investment Our – in little a on by planning XX% a of or where X% this our year And that.

fiscal significant a big level. spend to stay year So about the a that the see will any consistent of very QX I really When Sequentially pretty cadence. statement throughout cadence in I at I the change that the QX brings changing will of to our year. last much. spend, XXXX on see that’s QX be QX, don’t movement from That don’t of up. more year to going was talking us investment

Great, thanks. it I’ll on. pass

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

open. is line Your

Hi, good morning.

Josh. Hi,

on I guess, first question backlog conversion.

end that sort whether planning guys rates know kind into in you’re touched growth? not part the little order kind the the any situation. on but on – of you the an we’re on backlog that not throughout as on view unusual is time. progress stay sort of rates of that You in of dipping kind of flattish you or code year I kind it, or but and of that guidance ZIP of working item, kind down up a on at normal something point bit of expectation backlog of like order explicit will Or it’s be volume how is any view

Yes, for sure.

shipments by start still converging bit in we with built just QX. orders me Let backlog QX, even and saying in a

expect year significant backlog so as fiscal we to XXXX. And continue we exit

through to those information pre-pandemic now it’s But We going our areas levels saying as continue and we’ll start times we’re certain well are an shipments as important year. order think they lead increasing, those customer down service We’re Nick? we’ve become of been coming to rates. – seeing the provide see converge, orders above in and remained and but as orders point.

half as I think, in by healthy. the reduction driven the second think there. some don’t to see I the I lead in Blake to see Yes. We if what of would to reductions particularly started we have add we said year, backlog in much our that times, –

then And the That’s it. incremental just helpful. on margins. Got

changed term XQ those specific higher channel that last anchor little of are exactly of the further seeing what as longer accelerate noise cost investment you Or environment expect guys kind to reference targeting of to there what that what sort some should point Do is you I something a to we bit on a slightly accelerate? number? supply here? guess, and of market higher the and maybe or I think year. But guess, shortfall? little a or sort Like I input chain. side, a around the driver of the

about talking I I’m X% right question. answering we’re the to in make just increase XXXX, sure fiscal want that The

guess that your things from control? Yes. broadly, driving what’s the I beyond the more apart of Or are incrementals kind

I – been of it’s the put typical that first, that’s very on growth perspective. in. range normal the for Well, we’ve investing investment us in would that spend, a from historic And things a

We’re investing in development. product

digitization. in investing our our enterprise We’re some of capabilities, SaaS

plant and as doing been see sales investment to We well expansion we our and force that continuing continue some in we’ve in to invest capacity as go.

increase We’re own in also providing that for X% our and compensation XXXX. all the that That’s investing the of talent roughly talent. in we are part

XX% things the big the core to we a said earlier of one – out. we that in framework our laid that’s financial conversion with line in I have XX% have that Now that range, we’ve

be in we One core items normalize a in of our if we’re of is to moving XXXX. bonus go noticeably XXX% our fiscal were planning for would bigger that just that, In we conversion our at restoration that back year to the that for had that to less-than-planned And bonus guide, XX%. the level. this

Yes.

are talking Fair. process the control kinetics or semiannual and with faster A for, motion systems. a at of And and while in coming to a matter. to went major that a package of the innovate start we’re new that to controller customers add for continue value more. the came and bound programmable innovation is value Automation went This operator in our the be specifically line. at this add for control a from for many, began annual that we’re PowerFlex, source for whole At be on-prem going to Fair, general about a years. new these that Automation pace that bringing whole ASEM. been have of going to on-prem some extra really big do step new items be to for so really offerings the brand-new Logix is days things with we’ve software, process we’ll software, With revenue is streams native now a these a an industries, on creating to ago. industry That’s and years interface with important cloud-native new acquisition It’s are beginning It to of our little bit a been an customers new the we’re GA IO, machine while programming market. it ASEM, offering, a line streams. of for areas to hardware going you’re Logic. for benefit continuing investors at new one addition availability, releases. of introducing On be that these have major that process of for A functionality we level out customers asking I going new first Just And now In introductions many things get product package our And that out with new was with touched is us most value areas a like strong to to few us. come. cloud to continued deal. it releases cloud-native you and of by for to the often for these

is to sure And with increases, be. so we’re spending getting the with that in we’re and of to we customers out, some word that the along make embedded need of investment front those the go-to-market

helpful. Got it. That’s Thanks, guys.

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

is open. Your line

Good And Hi, comments wanted just first circle to I maybe back the some quarter. on the morning. of fiscal just

XX% I sequentially you think segment And I So mix you QX. talked margins times. mentioned in guess, down couple from, of about XX% a

down it’s EPS. odd in anything sort like clarify happening EPS of firm-wide fiscal that? and then And that heavily X-point bit So thinking that point Software Control the are or average. is Just to mix line nothing QX? a of the of below $X.XX, $X.XX on wanted versus There’s around margins are the very that right kind we the there & in little

rest I’m the It us of the with Yes, exactly be of our to noticeable Julian. thing XX%-plus referenced headwind help biggest mix is it company first what QX when quarter Software Control. below to you & the to was will in talking I about a The expect it become growing and we the growth there, average. because a talk us about in

will part happening. what’s that of So there swing be

anything of year. the the in terms In I other see other, of with QX norm disproportionately way things things, or other us with impacting versus rate, full tax out one corporate, like the don’t

it. Got

of isn’t starting year sort a bad ago sort the $X.XX, $X.XX of of that $X.XX a EPS. down So you’re if from point,

QX. start for to guidance. EPS tend We for me color asking give you’re full we I a guide year much to as EPS. to pegged trying exact Julian, I’m EPS quarterly what range I expect but can, for to haven’t guide for the as

Understood. just – And then thank you, Nick.

follow-up my be intake. Just quick would the order around

as you and made kind had of of normalization overall because a some maybe their place ABB comments are orders to about I for Blake, very customers kind think automation orders customers of of chains macro. discrete easing slightly by guess supply the talked around the positive I environment. extended times the

So little kind I orders order intake a seen wondered of had bit. all. weighing on if drivers the Rockwell two those maybe affecting either just different points at of

Yes.

coverage certain complete as we’re the equipment. to need your our and of – with you with first, products a less if I don’t as you’re come lead product times machine months many think that particularly you lines, in bit, builder, the a in coverage, of seeing need of

to And that the coming size to where of you back to that a bit frequency the the orders. charts on of is think maybe showed. of And expected those reduce I be. positive trend so we customer graphically, see And because is some means and a that’s that going we it service

frequently customers second it need want not no, with we much with of that tell calls that saying, terms they are In I having the seeing stuff. that. your point, I’m now, customers customers their don’t of you really can

it getting at weeks you not seeing I not That I’m few ordered of a all much we’re so saying, when stuff the those worry. ship way ago. calls. can. in customers Don’t And

characterization what So seeing. we’re of that would be my

Great. Thank you.

Yes. Thanks, Julian.

Our from go Bernstein. Brendan next from question comes Luecke ahead. Please

line Your open. is

questions. my taking for Thanks all. morning, Good

morning. Good

click of They’ve Or trends. And are is little in point the two, cancellation One, X%, a that I just the The just then an on wanted X%, questions there I cause? So to noise last root is couple numbers? up this clarification. double a cancellation two bit here. over Or rates? these of is X%, quarterly a quarters. ticked the rate? just annualized guess

rates of put seen the them I’d mean, quarterly noise we’ve I digits well what single are these that in low and range the historically. those they’re are rates are Yes, category. more within and

Thank Excellent. you. Okay.

Yes.

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

Your line is open.

morning. guys. Good Hey,

morning, Good Steve.

extent, they can a the on markets, growth down? of color all the orders you you of were the On growth. Maybe Or bit us know, bit to end a just strong of markets actually little very end a give orders sales color bit were less us are around little up there on that give any orders?

Yes.

But these my good medicines getting and wins on during have pharmaceutical to above Scott’s and or areas or for on it in we got the it’s win the it’s working So we that by plants to they’re information still the EV in of through with to for robust. Hyundai whether moderated mean, well projects, like where the with new that specific activity, don’t line talked remains tour have a orders pre-pandemic oil market that sight of line question. gas order I I rates on bit, customers industry. incoming based pretty in new sight answer we again, incoming provide them we’re verticals that in while levels Sensia. about see specifically We’ve

there of more influence like seasonality around based XQ consider little may around a recognition all the a just if we software it’s constraints moving on the revenue to Got it. Is why rev kind wouldn’t from that’s intelligent these these on business And lumpy anything supply this – businesses the that at on more have And others. it’s heard that S&C the the here in margins were also, forward just impact then devices business? kind to XQ, rec, this of they that of just what an we’ve going than on for margin, have more like for bit products?

Sure.

Control strategic have We we’re to industrial that rec, the the more really rev additional of nothing Plex, as weeks. is but call, talk we the well Nick well. then in value, performance that may on and of around the story reduced the in there it with Investor talk with with with start & perform Plex, There’s as Software software me logic about very The as will didn’t about few much Day financial a during Let volume. comment. development and Plex continues happy

that about components & a about So specific Control, And for nothing up. there supply a I that’s used there’s bit back portion affected. little that a there’s volume. causing is be that It’s issue are of margins picks to the talked reduced in Software QX disproportionately with more a the

really, of quarter about positively what’s our reduction growth of But growth. Control, all that a impacted, Software with that’s bit Software year. in And causing the and with often, there. with year-over-year little & And over by and very talked are QX We we’re the saw highly increasing in – the manifested the we’re more in products rate so there giving moderate after sequential seeing that’s fourth QX that through insight as we’ve balance an Control. & from then XX% growth

term. very incidences pointing have short macro not trend. we’re What Software Yes, some It’s seeing, that is with something standpoint, visibility during this at general what’s I’m isolated a a quarter, Steve, current where a wanted highlight chain and perspective. supply particular stabilization one coming we way, of we still from out what just to and us occurring to seeing from very the we & are you. specific Control It’s general

software related Yes. not rec? Right. But not to rev software,

Okay.

Okay. Thank you.

question next from Citi. from Our go Andy Please comes Kaplowitz ahead.

open. is line Your

morning, Good everyone.

Andy. Hey,

but much cyclical and the CapEx as are call at think plans? may? is Blake, what Can your regarding economy, about concern slower have your you reshowing But cycle, you their do you orders, outperforming you there autos. markets semis about customers your remained strong. point? We’ve And and a into telling it helping you’ve you give about some out there’s global of think we reshoring obviously end talked talked do the this color let’s you more more how already where if are

I being an China CapEx new outsized of see a about would say about current just and than U.S. local-for-local Asia really and of as capacity, really got new other and economic rather with Yes. of cause I out bringing reshoring the in shoring providing, manufacturers business, more because opposed little of a strategy, lines it of U.S. more back anything to shuttering it’s the parts to lot don’t headwinds beneficiary people that a It’s like are the plants to talking filling new about kidding.

and to add redundant of Let’s manufacturing rely get anything, chains. as trying parts supply go are continuing not their pushing other to world XX,XXX-mile be people to chase lower they’re the trying to rates. back so as are having I closer that lines to a the to consumers people labor if see, on beneficiary U.S. to

Rockwell gains our We’re going And as look is to things manufacturer. the at share forward going CapEx at I What investment things continue. the plans feel sustain that in and is do to of for look our And for we one near-term year-over-year up talked we is need in which own to that continued a doing? office the we Nick like the about, U.S.

very we Asia do continue support consumer our We manufacturing biggest have continue manufacturing it’s here important a Europe to to just U.S. we’re because America. going we that the and close market. to as in in in And and Latin in

automation still chemicals-related little You’re more difficult forecasting And you give chemical-related Very process a seems lately. time uptick in XXXX? helpful, you’re then related despite companies in color us seeing for more forecasting like double-digit growth markets? bit of It an can having growth what you’re Blake. a to mining

later So given in other tick the Lifecycle expect versus what nature the then we solutions, business a that in are your margin customers of XXXX telling bigger segments? you up there? And should cycle

So where from XXXX. apart even And recent fiscal backlog activity, this the is dynamics recent good process, in is things meaningful. an year area we’re the expecting very

take higher when instance, on. that’s and commission even and and percentage the so Rockwell plan stage it’s terms for of fiscal revenue And because in longer that the an engineered average. we that’s at in company strong. to And backlog very typical it’s XXXX of in design, so solutions look than number for backlog, Sensia, It’s

Space and enhancement and of better we’ve There’s chemicals, in with had of in activity as products of the addressing in talk So call where for LyondellBasell, and that a for a to Logix decent our and wouldn’t is is metals about market got that us going chemical wins. talked a chemical, with good market. in as introducing some automation the mining going to there. I major And continued be we but we be Bora years drives, at offerings, some mining, especially control high-performance pretty about to is going read much don’t we’ve big some still systems There’s as the and to an good. oil step capabilities help Metal new we’ve we’re that had pace with metals, release fair new well. offerings see win IO be capacity, forest better continues for torrid activity a back automation we than the our gas.

in strong actually quarter. of because standpoint, not much a on So in software and services. you sciences macro as the the fourth going healthier life to live really is that, affected to that help a based way talked want by personalized in. longer, things objective, on how sciences there. We’ve high-value that mentioned people is something some is strong as medicine life in business so and and particularly of our we’re that’s those growth are science, life then component lives And the And shortages about from

Appreciate the color.

will more take we question. Julianne, one

you. Thank

will Buller question ahead. Berenberg. last come Our Phil go Please from from

line Your is open.

buffer There the I’m morning. guess for level to an backlog, the bit appreciate you’ve surprised this already in guide for overshoot Thanks year. Hi. this hear there’s see year. of the the an the what that XX% XX% keen safety macro. but to I year a midpoint of baked given last into I of growth was time questions. organic I’m Good

or in margin can buffer for right great safety So you might confidence assumptions line which would it’s levels be for in and the perhaps the terms overall more anything be or on of confidence that the that share side, earnings reside give year. the top you where levels the collectively

very saying by entry is low have start primary the driver continued strong And overarching me with order billion we and backlog let in what that’s over the with Well, unprecedented. in that rates, is $X backlog, continued cancellation story. Sure.

that of approach remarks. deliberate prepared in my terms in a mention the conservative is was that appropriate. the I’m quantify a dimension remarks did like prepared Now we that, tone, that but I going feel during comment not to or

or just this Schneider, Aviva. peers. at Emerson, the in We’ve as looking the adjacency rest of bit slight And that who who of I’m it. large the now be for lot have of a a a really to company’s a more Thanks. got is Got appetite going are point, follow-up are or acquire of context firepower. to thinking M&A small,

thinking higher M&A evolved a Rockwell’s move dynamics terms competitive of the So strongly in Thanks. has need more need on in from standpoint? agenda to to M&A? does your Or participate

this as over last And add at new more helped investors. happy Investor priorities for as in that strategic few detail the talked first, into go about a demonstrated that importantly, couple we’ve the the of very a we’ll at more at well-defined and financial we’re some customers looking and it’s in way then But little M&A the Day. Well, well the fit weeks increased we’ve years framework. value participation in with that

us with discrete all the We’re second and new funnel our from segments as way the the CUBIC into immediately most to hybrid is in market that of and It’s very access of completed, we that to with M&A one happy a have process provide continue we none. already to automation strengths, and industry of value provider. pure-play and strengthen we’ve recently our that the have the will that M&A acquisition

we’re that positioned with the M&A. I’m way So happy with

to going We’re doing keep it.

got value. strong We record into these and we’ve of a acquisitions real track balance great have sheet, turning a

Thanks. Great.

today. are of time We closing for like for over turn out to I’d call questions Zellner to remarks. back the Ms.

for Thank call. concludes us. today’s Thank you joining you. That

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