Rockwell Automation (ROK) 26 Jan 232023 Q1 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 lines for questions. [Operator Instructions]

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

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

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

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

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

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

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

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

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

delivered quarter. turn quarter and our and faced we better environment, Let's headwinds were helped chain QX. on supply our we continued team's strong quarter year-over-year Slide offset of agility, exceptional we investments of a into both this the to and improving gradually focus along results Rockwell's more expected profitability. as execution Organic than in pleased with resiliency and heading many I'm growth and X. first sales up with earnings another than

through quarter to low cancellation up rates Orders the quarter. flat January. the digits in remain were Order and backlog single and prior sequentially in were

business contributed a up supply translation demand regions. strength end growth year-over-year, and user dynamic acquisitions segments by sales were this better reduced quarter. almost sales our point prior year. chain the about of by grew a XX% environment. continued despite very sales across encouraged versus X% are X% and than expectations We of Organic Total our all Currency

industry lines. a Consistent Intelligent material regions all deals by composition quarter with to I'll independent handling in sales about another electronic semiconductor. product of with and technology of and organic specific Devices was impacted the by year the segment, multi-year region many backlog. prior order the few We business, of and had segment, versus industries in these business assumptions, our minutes. our increased remarkable access driven sales EV, including across cover wins In cart and large in prior X% strategic split some growth of growth our by business components

XX% redesign Control driven than versus requalify key and organic components sales supply ability Software grew almost prior and to team's was our support to products quickly secure suppliers. additional Logix Better expected with the certain year. from by growth

electronic another double-digit sales improvement a services and healthy component a sales solutions, year-over-year Services Solutions in continue up had Sensia Connected this year-over-year. businesses. also in Book-to-bill to were X.XX Lifecycle and was Information across and see organic quarter Services We XX% gradual supply. growth. segment of was consistent

both deals, a significant in services. here We large multiyear software and in are seeing uptick and multisite

their lines. years. production with as company potato costs helped capabilities digital and One enterprise of five focus customer next over global We're a leading our quarter be they throughput processing our reduce energy the of this across partner revenue important this increase multiple where and analytics digital doubling Information was combination Solutions to to consulting an Kalypso wins a the proud company, on

cloud-native management where sales to and across customers. logos in automotive to our various Our include recent and offering wins metals, software new land the are asset wins amplify with network numerous distribution us industries in These Plex leveraging and Asia, continue food and local regions. we acquisitions Fiix's beverage enterprise

with customers and and resiliency wins continue we enterprise consumer beverage, goods, side, their sciences Services and life Connected operations. the across build their packaged investments On food of cybersecurity with to prioritizing momentum

with of world's quarter Claroty key software their This over was year-over-year our globally. margin our differentiated to this of and capabilities one deal annual of EPS XX% will expected. to in our also and with sites contribute Rockwell's grew security basis the ARR Adjusted wins Segment hundreds of of the largest of services than global recurring grew points companies, cyber better XX% along double-digit revenue. manage QX portfolio year-over-year. was multiyear partner One at hardware, up was growth OT who consumer chose XX%. goods XXX

performance. In expectations, highlights our consistent market in and sales discrete, Let's All XX% now were continued of with discrete three key low turn review prior saw to year. QX segments electronic year-over-year our gradual availability. sales Within the industries, component automotive teens. Slide industry up end growth strong up versus were above to X were improvement

system both to with brand EV battery and orders continue We new follow-on win integrators. ecosystem, the and the and OEMs owners including vehicle and supporting

quarter of in our win battery this supplier. A position leading is strong a good Rockwell's EV example with

are XX% Our in Tennessee. cart we year. at including vertical to greenfield the partnership and independent offerings Ford's with the another our versus Day to we we and are together. Investor We assembly where last for selected are and plants Kentucky independent carbide Logix-based to BlueOval our process sales about battery progress talked transport This technology cart support making prior Ford excited cell about was wafer November, Semiconductor for strategic able wafer and expand formation manufacturing. automation applications, our silicon over for new grew is

In warehouse automation, year. down our prior versus sales eCommerce and low were teens

their continued investment in next-gen sortation to facilities, process including existing this fiscal Some greenfield year. we upgrading investments of course systems our of over the largest of are expect the eCommerce brownfield, and from customers shifting in

multiyear our smart leader machine and scale. eCommerce wins will its solutions in software, quarter on-demand packaging produce help was One Rockwell's of large hardware for a which CMC, portfolio our smart with sustainable of includes full innovative architecture, at CMC packaging. this in

cold This with our create design quarter the support Phononic, to chain unique and team with a applications. for was customer technology cooling on working in solutions focused the infrastructure cloud win important and to necessary warehouse is company Phononic's Kalypso and IoT Another systems. disruptive heating

in Moving to beverage. led over year. and segment. Hybrid by prior and teens food this were our XX% strong segment year-over-year, versus beverage grew up industry growth Food sales low in Sales

earlier, As number saw we this mid-single in cybersecurity Life and I of quarter. security operations. Sciences their the large focus mentioned resiliency a customers' digits on wins underscoring sales grew in in vertical,

mid-single to wins addition In this this coming quarter a several end high Europe. up we in cybersecurity the from important number saw of quarter. also with in Tire digits was market wins software,

process growth prior gas. Rockwell's production. We chose to Cornish and with pioneering Process. talk and win for exploration by Lithium, year, demo to but plant and control refined development This its oil company, lithium for grew about in segment turn system metals mineral an digits convert Let's mid-single used metals concentrate battery had vertical, into rarely sustainability our important a who versus PlantPAx lithium led we high-grade

excited to are We journey. this partner transition with on Lithium energy Cornish

Asia X sales QX North X% up of Turning Similar XX%. sales is was now performance year, sales. demand. were our fiscal than EMEA increased grew Latin last availability underlying organic to regional Slide to America customer X%, and organic our Pacific the rather America reflection electronic sales over in here XX% year-over-year, by component up a

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

improving chain line bottom Given top our supply we line outlook are our and fiscal increasing QX performance, a and XXXX. our for gradually record backlog

electronic by are continue the component approach still we to operations. our encouraged macroeconomic the dynamic take very conservative While landscape, and is improving environment a we in

are midpoint Organic the growth assumes continued Our of improvement. growth of in XX% already chain guidance projects at XXXX of XX%. XXXX shipments fiscal sales total The backlog. majority reported fiscal sales supply our

expect margin more ARR expected of and prior points still We on Adjusted of Segment this Nick later. XX%. to profitable expected target is grow increase to expected continue year be a and over to touch contribute conversion. to headwind to acquisitions continue versus XXX XX% point by a currency to free we will flow is points. grow X about is growth EPS cash year-over-year. basis XX% to

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

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

reported operating of our Segment majority driven by growth. to the margin came improvement points X.X% redesign XX margin were electronic points. The X.X% expanded XX.X% earlier. significantly our higher quarter sales our X of by up and sales expectations. QX our contributed up than organic total activity improved decreased versus Blake acquisitions from component was points basis revenue year, price. organic discussed higher expectations from growth availability that and were was the translation First X over sales Currency About to last and

on our with year-over-year and higher was cash adjusted million our the was a Adjusted bridge and estimate pre-tax adjusted higher higher versus year-over-year of later XXX was by The last price ahead investment grew with $XX an volume, of XX% by This year, cost driven XX% quarter line margin effective year. our and the slide. tax Corporate sales in and full expectations positive income. expense effective driven flow rate compared basis of with EPS adjusted cover rate. other I'll in The partially prior of EPS was offset expectations our million, was XX.X%. line by to year in was first point higher spend. aligned $X.XX tax for Free $XX increase $XX expectations. million

continued to recent As quarters, capital working in grow sequentially.

increases capital more one quarter expect this We working year. of

the second shares the the capital our billion gradually half working item approximately quarter expect remained We on improves. to in slide, year million. $XXX our XXst, of of chain slightly additional a in the supply at shown authorization. available $X.X repurchased cost under not December On we repurchase decline balances as One XXX,XXX

our with Slide Organic year-over-year. and double Devices growing and margin segments. and digits X grew provides Control overview Lifecycle Software in of sales X% Services, operating performance sales the Intelligent three

orders demand our continued with As in activity earlier, grew customers. a QX saw Blake as strong we driven mentioned healthy project sequentially by

for consistent see longer lead customer we portions our to continue of We portfolio. times ordering have with patterns the

lead normalization and expect as times further We ordering products patterns different of improve.

to impact increased flat margin on offset higher the fiscal margin higher margin was year year-over-year XXX we for Turning last by Devices impact Segment currency the Intelligent to basis spend QX points year-over-year compared Lifecycle of year. from price through to to positive higher positive to partially an of points and the unfavorable expect cost, impact, favorable basis and XXX balance cost. and declined resiliency Similar margin XXXX, price control software due margins. year-over-year. Lifecycle sales. Services year roughly expand by Plex Services

adjusted XXXX. $X.XX reduction provides The of was fiscal XX the currency EPS Slide organic earnings X.X% and in impact fiscal expectations. a $X.XX more $X.XX walk to and per XXXX a for original share. our This year. QX was up earnings increase. than next from better by Core sales impact was compensation Incentive our a performance QX The dollar. increased to was slightly growth plan headwind, U.S. The year-over-year our stronger expectations due was slightly a than the driven on

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

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

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

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

We is view based on to X takes X expect of our we volume availability on at rate be guidance growth QX component deliver of into backlog. account our and This can current be electronic price and points growth. of our and to the which points outperformance

expected single organic highest to year is up be rates to the high each growth and in teens By expect mid QX organically quarter, with QX to QX year-over-year, the the revenue digits. while in grow of we

is While to resiliency reflects we headwind merit QX guidance. of which We the on be U.S. points points, sequentially now our margins of levels outlook sequential expect annual XXX be the increase. QX, year currency to strengthening expect the in better spend updated the to expect similar new euro development, higher due our a dollar. XX primarily than and timing to we sales product of up full basis previous basis against This

to expect We prior segment guidance margin full XX%, from year of about be operating XX.X%. up about

to coming with price in full fiscal from we of the expect year, most favorability the positive actions continue the price/cost XXXX. for We took

price/cost year-over-year in benefit half year. expected, year the is the coming of the As this our of majority first

full now of conversion updated core assumes year guidance XX%. Our around earnings

We continue effective year adjusted rate to XX%. to full be tax expect the around

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

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

an fiscal XX XXX.X XXXX of million diluted on on EPS previous be be adjusted million. now is guidance guidance included outstanding at A few expense comments expected also midpoint for our additional fiscal We're other your $XXX interest Corporate shares. to the Net $XXX and about reference. shares assuming around We've for XXXX to guidance. walk average expense Slide our expected still million. is to from current

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

dynamic this made agile the environment, biggest our been a important more in positioning and challenges. the ourselves In Automation solving relationships. future. Nick. customers sustainable large investments are and in strongest the for we these A more have Thanks being decades-long percentage never and of market customers' where are share, our we has channel U.S., global best resilient,

with Shoring most the Act, for continued, early strong order is our benefits important we investments, real see of our rates. the Inflation many along of and reflected verticals, Reduction these in

where our at Chicago, partners demonstration all successful our Rockwell product the and accelerating welcomed of value by friends. and employees our These are We an provided introductions customers, XX,XXX pace fair platforms across the of automation to key our recent acquisitions. we in showcased including new and over were very product innovation, amazing

meet new sustainability CUBIC's ago, largest I was also few CUBIC with am in segment. an expand team and presence portfolio Denmark to I increased customer able new to our opportunities our a about in renewables, the weeks excited

we Importantly, both customer recent our culture how together I'm to by embraced enriched come. deliver our the additions. And in to excited new with and years how and I'm value strong is growth happy see

begin the now will Session. Aijana Q&A

Julienne, Thanks, first take Blake. you. [Operator Thank question. Instructions] let's our

Our from Please question ahead, Scott Certainly. Research. Melius your first from [Operator Instructions] comes is Davis open. line go

and Hey Nick good morning Aijana. Blake, and

Scott. Hey

morning. Good

context Maybe product factor. bit the categories quarter particularly compares little that prior color kind more being perhaps quarters last couple a mentioned that how just just on still gating or in guys times some context availability geographies a a the around still also acute? electronics as You and of even of where the and maybe it's

Thanks, Scott. Sure.

And for the the of as I and software our characterize lot quarter's improving. We that's use results last. lines. chips our was notable we think still case. So issue when to the across concerned And I affecting were we control product talked generally mitigate specific the general landscape ability a think most that about we

were We general, landscape, with But that helped mitigate broad chips to relationships good to the across supplier going seeing quick move we it's risk. but happen that we're us able in involved improve overnight. had not a

them optimistic, chip are products chips But as Services from both of keep is And so of all some segments, in And some we uses the product from ship and with business suppliers remaining to it a are work devices. there's those secondary of one some then, those and to effects Lifecycle there being well. the to course, continue it. software but and view constrained to control, improve those takes of because in is intelligent able

all yet. it's clear not so And

an to that is because any never Blake, issue able couldn't so hold is on a because begin little fear patterns mean to to not and times of there? holding with? kind inventory still inventory to much were that Or product that they order impacting that still? customer extra I lead get too are is on long are there here potentially folks they

to Yes, uneven product lines. it's be by different going

much our So, have do pre-shortage, that lead than to, times. big return The of lead would levels times. of there. still terms elevated needs We have machine our to times more portfolio we product product more still OEMs months of returned offering to orders in they coverage in at lines like their for is than majority we pre-pandemic when pretty placing they for see will normal lead

improve still expect it's a and through it factor, we year. improving, the but to So it's

of best this you. luck year, and congrats Okay, Thank guys.

you. thank Yes,

is go next ahead, line your Citigroup. Andy from Please comes open. from Our question Kaplowitz

everyone. good Hey, morning

Hey Andy.

Andy. morning, Good

noticed in your any you CapEx in you change forward? any moving their continues of markets as then XXXX, conversations around your plans started customer thinking you? And Blake, Obviously, unusually about high. be you're to concerns how end that it you about calendar backlog have talk

high with backlog demand strong it up current the still XXXX? pretty Given you this likely a relatively at end does FYXXXX you that environment, point that for sets seem

traditional sequential clear. higher That's demand head one high me with backlog going we We're levels. the with backlog of we're to And QX be Andy. saw Yes, let to that We expect we the XXXX that backlog from fiscal have then than start fiscal continue as QX. end in first, into to year growth to at seeing, far XXXX.

customers' isn't announced of the across industries CapEx continuing. a investment quarter-over-quarter share behavior, even increasing Semiconductor to are see we're let's terms highlighted in important announcements a that their seeing battery. of that at we've but levels the as we generation in continue fabs. CapEx growth same and new high as up that needing verticals of we've of to high ramp talked Now in make, on changes to track once level And those the in moderates. quite in do EV of very that's And and we wallet as us, about, investments say, capacity, it's

good that's So news.

some we Food the are adding. both a talked going are us. gas of they and about to OpEx value for be CapEx of in, energy a be oil new area double-digit particularly where looking investing And we're we the positive to growth and the of information of and for they and that beverage, full that is year, solutions continues split probably expect cybersecurity areas, some at when

you then helpful, Very Blake. Nick, price more maybe ask color could how for And I versus cost. are about you on just thinking

price X% You mentioned QX. the in

said stickiness positive are at tailwind quarter; chain-related expanded supply about as I to pricing would the how be on, the of think your last headwinds subside? that points basis Has cost begin for price you year. XXX thinking you

of, price basis vast year-over-year see almost XXX the the exactly in guidance fact, said more points through we the that ago – it I we then. last margin of first gave about what of The the the months It's majority way see majority less through expansion holds. Yes, happening the that of we cost, in year. change improvement we expect year, or three progressing that half

We a cost margin approximately expected little in half and down year-over-year we of the cost XX as continue about or year, moving going goes the from on of fiscal price points in the XXXX. that's statement year. not the first points half expect and expansion of expansion a on, a under against in second of basis XXX to basis that the year we're deterioration That's price comps of more it to

beyond Going ready that. and cost, giving to guidance not beyond seeing getting now just price of terms how be cost that, any in we're XXXX, I'm into price on we're

Appreciate it Nick.

Our from next question comes your ahead, Please Vertical Jeff Research. Sprague go is from open. line

Hey thank you. Good morning everybody.

Good Jeff. morning,

morning. good Hey,

Just for a me. couple

supply the the First, of just kind permanent the redesign kind to is a kind redesign corrected advantage, thing on that improves makeshift of actually dynamic, needs chain or supply when more? this Blake. negative the create actually Does some chain further of whole and cost road down be work

Yes, redundancy, resilient, to that constrained better make flow additional and design future. material this long that overall is components with benefit the additional term, to the basically more to a chain. less our going suppliers the is be stronger going bills new of with The to to ensure net us supply qualification work for components, that's

that like time. terms benefits. currently, continue term, we're efforts, towards some customers, contribute resiliency. be cost There also seeing that of costs that overhead But and to those is are over that's being as to strength and I of long some their think directed does all already in the real will additional that will additional mid the to wane resiliency our we, looking we're increase But seeing. And a

just another maybe a of two-parter me. kind for And then

surprised benefits you was rule and First up some gummed areas like seeing of a know on promulgation. things to wind kind you're there. I are some I waiting other on hear IRA, little in say

on you wonder could there. you're I if what actually So seeing comment

how maybe terms percentage your many then on changing in your material the is is newer think in think, I handling I share it, of you been handling And strength with the cart version a potential respects. But you size offerings? wallet has could could And secondly, frame house. or independent semi, in side material semi your historical on of however better of would

Sure.

you there. including we that the helped about for what One, with thoughts work that. we're we've of which with asked IRA doing greenfields, IRA couple First renewable the Jeff, are some specifically Solar, to were So showcased funding they've of and energy. seeing A their along stated come by mind

not And many their years had so we've many the we're as the Solar. IRA digital would with in doing projects of greenfield funding. controls We're relationship introduced twins the have proud and First without for now facilities. They

which an And where are us they partner. so them, good that's because helped example helps a it

we're strong some U.S. of on builds is provisions because position there the probability the automobile is get second large U.S., in manufacturer manufacturing. content When The higher that a the plant of IRA in to a here. an our going

so as to and unmatched And it reasons the it's comes brand in the also the owners. And by that's us increased the an well about that position. when U.S. have you're well. the investment again, I But what's talked aware helping then of we earlier U.S., for

part of systems. there? For second core question, semiconductor doing been and facilities time, So and are our has long in strength a management control of areas what we for the your

process And So hardware the in good a are long being and U.S., And also with again, clean as It's And that's management cleanliness long temperature, as room combination fabs enjoyed Asia. our a more of and built that that here. of of well done clean capability for engineer-to-order some room that's environment. tooling relationship the in we've the expertise. a wallet share for time suppliers, we're time. a project as controlling the of tools. very in humidity, the We've extending the

these the to them harden big, talked here and a technology cart is lot And cybersecurity largest really in times, about we've multimillion new recently, starting talk that of couple has And as well. wafer the companies a to world. cyber-attacks. in EV we're the industries, win dollars valuable facilities several make independent been dollar More transport resilient that in that we against semiconductor other millions as factor more we're projects of has and of of business added a about helping

some I a We're use a automation rather have final in We're industry time. the of one a they characterized a that for standard that's seeing long technology. silicon was PC-based architecture And systems to a than it carbide custom exciting then lot that are because logic-based the and products. own mentioned starting that scale there, control becomes using our

So gets heart hopefully, questions, that at the Jeff. those of

does, It thank you.

Yes.

Our Please from next question Morgan your from Josh Stanley. line open. comes go ahead Pokrzywinski is

guys. Hi, good morning

Hi, Josh.

Hi, Josh.

Blake, just Fed more to versus you're of but to automation are balance employment trying some it and flag of the seeing seeing really trying out productivity up that, be doesn't in think out we're seem deliberately, there what what in orders. you to some here the would a for macro, I is that and sort guess showing foil create

I some things the and the just of beverage not markets science prepared and as and like EV, remarks And and food mentioned you demand maybe where there's variability and making know how the life in kind there. imperatives with that are demand secular are anyway? these And investments of slow customers see down you versus kind of But balance? cyclical expectation this these will much do

Yes, there of a is I think, things on. going blend

of fleets vehicles a competitors of their can't and of turn and out based on of they macroeconomic their their in be We’ve terms to of got them is just First going out the have idea of technologies pause take missing out year, that a that the concerns all, in there all ahead of like industry, let thousands real fear the players ability in new wait. hundreds EV, on. a investment they're far build the the to

through so build dynamic environment. would it's have they course, to having a And capacity. and semiconductor EV well, that's they And power economic where are say I of this also battery. to still as

automation them be broader greater more their seeing enable to help to of we're that productivity going and verticals idea spectrum workforce. general, resilient is a going In the across is from

that that direct of So trend And about of labor, it's verticals, on. I that's for and the productive. not making so we're seeing it's think beverage, our labor other a and so more automation food across pharma, substitution much general

not that It's approach, going the on year backlog building fuel that. effect concerns to needed tone-deaf And fiscal as an of the but not that's of have, current a operations, new into the of We're we in prudently well growth, have talk very macro. just terms us adding about economy. We're a XXXX that. seeing to we're going own huge aware in watching and much about backlog because to as to go resources and conservative when we're the taking our I we're So beyond. of we're

Got you. on That's some announcements these And then out helpful. maybe follow-up see just we context. a in of there putting

that that of for the these the the bigger X% XX% the [ph] automation of mentioned, some White we some verticals $XXX What's spend? numbers put [ph] different exposure recently, sort announcements? you trying kind of talking $XXX ones it about of I think within that dimensionalize something across out Is like fairly bigger the versus see? next years. of of of spend? or billion the House Just billion several to over kind worth projects maybe

And a But Yes. Josh, of equation us unfortunately, and brownfield-type that and are brownfield course, give by huge between I amount wish give our to variability with carry I it the could of vertical so a lot going on, industries. would greenfield, guide higher different us. an you the of construct percentages investments a percentage. between there's the for

So some the things offer and of those related to information of services. automation are and terms that the in we management dedicated

in on the in the a and both complex, work EV traditional maximize in for as really our those fab to we're software share major doing of be cart wallet, going EV hard job a spend side total. of but as wins is value, it's and like doing to we're percentage semi to our add a independent or doing The new of really areas like with small And we're so percentage the new in on. EV

it's that value, low, that hope growing each the high it's I of it's year. while fairly CapEx remains profitable and So percentage total

Very helpful Thank as you. always.

Thanks Josh. Yes.

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

Your line is open.

morning. quarter. in wanted of area I the that circle I main just the margins, back as Good the surprise, to Hi. guess to was

us segment services seeing XX% also, of it on in about and biggest high So sort I three Software rate How kind margin about Control the ramp? second the the life Is about help on half. exceptionally I & think the a of talked any sort thinking cycle leverage? give a ahead? quarters, Nick, think XX% that should operating performance. could we of in And then that's about XX% that first last run you that half in you so think half-on-half averaged

Yes. the Julian for thanks question there.

lifecycle half services expecting expansion the the the from the year all half we XX% up that going of of step bigger first services year, up total of margin year. margin year-over-year for of the expansion little in the second expecting. fiscal lifecycle of in And terms just margin segments roughly we're to year over contributors one our that as yes, in a is XX% moving In average lifecycle XXXX. the margin services see But in through bit we're to

So that's seeing it. how we're

Software expenses ago the Plex. look the if Control, the was calling you're just of to I leverage base, of like we're of getting, some some out, that terms Julian, as point of was that & looking In what you of related year out to our want incremental a just at one things at I including

came that had the year-over-year Plex Control, experiencing we're basis onetime of those example, in in an as basis in as points & that, we're quarter by first about that in over expenses in a we points XXX expansion in change from some driven year-over-year of margin XXX of little XXXX. our Software largely what So the there's

it grow growth Software going that as our margin. that we that more attracting & level more we – the often me everything. and to will overall to continue well that. conversion. of XX% about But investments that hear Control, in the a our you've We that. In – Software really is we that we & put we incremental is we enhancement. leverage Control, expect investment That's give at of expect things to inclusive one that's business enhance that down our talk don't segment create That's also of XX% in expect conversion of to like a more core terms margin It as as

part balance. you I'd just that's the mind on Julian, keep to that. of like So in

on industry then Thanks the maybe just sort Blake, That's of Nick. helpful. one And very vertical. process for

vertical So Process I and the of year on? backlog quarter, kind the year think there first in the the you of of sort saw just as mid-single-digit the in a particular steam pickup goes on. Is over Industries goes you'll function talked balance first you what up quarter? in that any sort faster of pick year growth Is of as within will there you drive that about recognition process versus think the that

where we is ramp mid-single Julian, and a particularly Yes. expect to double-digit. from gas strong digit oil

see the strong some oil backlog that in We also supply for full gas that a our little the strong chain continue, see really Orders pressure shortages spot. mentioned industries, of comfortable a and sweet that and fine growth I related as But little verticals continued with chemical bit put They quarter. confident and process. the bit applications with and we'll double-digit of year. see to the really on particularly in continued chemical the orders for before are that in we're the the other shipments

Great. Thank you.

Process I – high were should at mention you if just saw availability mention, process since should new IO. we're I about talking the Automation Fair, you

just in traditional new some introduction. not that's our we're that in the over that recent it's PlantPAx So as major our our release acquisitions high system. we but change strength months the of the availability coming of providing, product a step IO, and value And capabilities

of a that with So the turned had IO happy a the customers. very by process and for endorsement we're and has time, period the been that's something out that way gap

That's Blake. Thanks good remainder. a

Yes.

Tusa question ahead. comes Steve from go next from Morgan. Please JP Our

Your open. line is

Hi. Good morning.

Steve. Hi

Good morning, Steve.

the execution the on quarter. on Congrats

you. Thank

more like mean orders maybe services lifecycle I bit the little sequentially. up looks it a on orders, the color. Just were just

area? said that mean give should of landed? Maybe You growth? we total modest total us a little I kind Maybe sequential kind up orders color in of Was just sequentially. kind any were X.X orders magnitude? of I frame color on assume that rough bit type of the high-level it where book-to-bill. around on more just of mean

strong. were orders the Yes,

even give And at the overall, excess the which talked in sequentially being to backlog that we meaning, book-to-bill the of lifecycle as we across continued services, the orders at shipments was quarter, company, backlog for see and go see obviously, orders about the continue for shipments it's were will up, We increased specifically of regions as levels strong it's see the guide, demand. across we XXXX and as the with and high for segments we backlog the very X.XX. the And we'll continued strong end into XXXX.

range? in up Like something that Okay. for total low-singles order,

Yes.

healthy going talked remaining we sequential rates, sequential the important are low-single-digits, We we and the to which it flat say than because think talked cancellation other factors orders being about the in about those it’s information most we also think haven't forward. and

booking up And mean X% quarter up year, that you in the get to orders, said comps think today? I at the to similar to it on pretty future Right. it this when price you prices obviously embedded in in And the the orders Is those this from to I price like – price looks get stage? in the mean, tougher. I X% decelerating. price the revenues much comes are increases somewhat you're booked price

as the put we what that as to showing what now, or the have experience we playing price pricing is that going seeing orders we're just be that the baked sequential is how that. from in backlog based Steve, all our and all of And right will of the the on improvement backlog already pricing virtually out. Yes, based fiscal into it on balance we're that pricing, year XXXX for far

no the we're not an first for giving In of we I'm price pricing fiscal aspect to the had price in that of recognition half then of and representing seeing half terms in XXXX. of the down in year XXXX, year significant of had virtually full we half. growth more the the fiscal – year price growth It's just a guide starting the level from second is first come

all change not comp, kind that of – any the from based there. deceleration on on it's So

price of from expectations in more of yes, And say of increases recognition this I year agile changing an December, just just in last year. terms And with fiscal prices so that, in be more could proceeding by channel. able over customers add being price we've our with apart price that's additional increases, in have increase I if And we to terms talked did the agile announcements the specific of and the to getting are our introduced. as being with the the future would of and smoothly methodology

you around it one change? January feedback cancellation from how behavior Investor quick the on mentioned – more Sorry, because at the guys policy Day, any this channel the on one,

Yes.

more a impact cancellation type order about issue. significant patterns. I that's exactly of experience affect of hygiene new and got in, part talked orders, that it we think did we a didn't We expect on is order it's the processes. on that's of it patterns, healthy have our and policy As it a to But not our

All it. right. Appreciate Thanks guys. Yes.

Steve. Thanks Yes.

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

open. Your line is

Thanks Good for my all. question. morning taking

Hey Brendan.

current So how question, thinking through cycle expanded the your as look about you on are recurring revenues for this base? CapEx, of back you installed

Yes.

be gives adding And It relatively of a that it able total with expand to still it's revenue. business, we've a formally PO. position and reason having double-digits, with while are whole sold complement So couple with each being for growing we're constantly a here We you about understood last being motion source a terms value. our and the basis, like a one-time in ongoing recurring it much customers on our year physical land more our talked like that intimate that, years. to a had big I is small of starting well goods ARR. perpetual still good the part the focus of that of on shipping We've and in being

where additional we expect as add time, our annual to well streams revenue hardware that software over services But as and to recurring makes sense.

year fast, as in business total growth, because but amount, not is a second the phenomenon more we're the our the One than growing pace. so increasing huge is a ARR of overall our double-digit percentage is it of of as is keeping

mix we're so able software happy and on. with with restack for channel content processes to it. easier take services our it We're so subscriptions easier those be the And to in and to and to customers a able and business and orders retooling to hardware, be make internal expand of

progress the with we're happy So there.

you. Thank

question. Julienne, we'll more take one

you. Thank

Our last question Kaye from come from Please go will Noah Oppenheimer. ahead.

open. is line Your

much. so Thanks

just a quick that So to patterns. after clarify it implementing cancellation Number of want questions. really I to didn't order you impact one, the policy, appear couple mentioned

any trending you've healthy still so just here pull seen clarify, You've not So forward? far seen to orders in XQ?

from the to contributed sequential even We would But have in see that was orders increase. pull that, was that we price some forward that without QX factor a growth. more had strong

been of but do then. with have So any cancellation introduced been QX increase would would had much pull we the in some to factor that have price have policy, forward not forward the would pull a there that

multiyear I in and We multi-site are also project as QX, seeing, that significant was with mentioned and strong activity in deals, QX.

decisions customer what of is guidance lot that of Right. for around make And IRA long-term orders? treasury and opening these impacts; on of its that, do the positively waiting sense that in some of credits to mean still sense like of forthcoming terms a some the any then talk and around guidance base some investment? get sort you could of Any up

still a are Like clarified. of there that's be waiting I Yes, very case think fair a customers but it's more our that of as think see fair to clearly activity I own is. a clarity and to of is think increased And assumption some what assumption. doing to some we provisions waiting we know, means what to portions the think activity us. we're I evaluation seen that of to know result, some our have I in what some waiting

are assume our it's to customers doing think the same I fair thing. So

Yes.

much. All So so very helpful. right, thanks

Noah. Thanks

call would call. out for to back like out over questions I the are Zellner time of to Ms. to today. close We the turn

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

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