Rockwell Automation (ROK) 2 Nov 232023 Q4 Earnings call transcript

Ladies and gentlemen, 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.

If you have a question.

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

Blake Good Automation's thank Year Fourth Conference CFO. today Earnings Abbie. and and us Genset, Nick Fiscal for for Release our is me With Rock Quarter Call. our morning, you, Chairman you CEO; and joining XXXX Moret, Thank and Full

Our reference and our press the website. and results press this non-GAAP our have charts recent the released and earlier include [ Both ] cold-tole been measures. were charts morning release posted to

of reconciliations on include non-GAAP charts replay and release press call available the webcast A be for days. this our these of XX Both measures. for the will next website

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

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

differ Our in Blake. with wide and hand to of risks a actual our earnings it that, results and to are our may projections filings. due over And range our in SEC release that materially uncertainties I'll from described all detailed

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

adjusted this results with turn double-digit our strong X. both XX% growth by growing Let's We to sales delivered Slide on over quarter fourth and year-over-year. earnings quarter

segments. and solid Our business across execution QX in exceed regions our all expectations, helped resulting and us improving supply chain growth double-digit sales

growth. almost demonstrates growth products and were with Devices our to billion than our and This each contributed region scale XX% year-over-year. times of Business by our up year. $X.X was were Rockwell's shipment Consistent sales. continued versus sales organic the grew faster increased across product growth backlog. to sales improving composition split across X.X sustained about in customers And to prior With year, largely ability record Organic all Intelligent capacity XX% quarters, deliver our versus XX.X% significantly of this we to total translation sales business for by the lead quarter of lines, expected regions. organization's segment, Total strong quarter. in sales over industry driven prior the contributing and investments reflects our prior points with Currency segment, acquisitions able

car segment, year finishing XX% offering technology continues quarter, handling and this offering. in independent be part advanced another fiscal sales. this growth with of material had strong to over an logistics integral production Within our This

ClearPath call. are our We excited addition of Robotics, I with to about cover strategic this will differentiated of our the this on later latest portfolio highlights some acquisition and deal

year-over-year. Control sales XX% Software and grew organic

of and mosaics. software innovate continue both the talk new process IO, our availability, to We hardware factory significant FactoryTalk and offerings in data optics as portions architecture such with high

inorganic We gains. continued are with in this value business organic investments how pleased customer share new and our delivering are and

segment positioning this were up Within organic fiscal prior was this XX% QX. year profitability year. in Services the strategic double-digit our Life XX% sales Information for lift grew automation improved systems, X.XX Cycle year-over-year. segment, had this growth venture and historical strong year-over-year the over finish was above a the order to XX% over with joint Book-to-bill for Solutions average Services business Connected process artificial driven in versus in by in and growth control continued 'XX. quarter. and and growth sales wins This Sensia year

using management quality making value for to operations. their in our global a number global was wins standardize leader already of a global This it the entire from of also customers sites. our One Tire, plex cloud-native differentiation system Italy. of and recently easier has demonstrates win the our at on-prem not offerings, portfolio stand-alone their but only processes the of modular was manufacturing our Prometeon customer highlights solutions tire integration to digitize the largest This information with MES headquartered in selected ever software manufacturing

Connected our we continue grow year-over-year. Services, XX% sales practice Within QX with cybersecurity growing to

cybersecurity expertise, the revenue. grow fiscal times our meaningful front helping QX future with is grew backlog ARR reduction security with overperformance business contributor year of a EPS IT year-over-year. being in is quarterly contributed shipment cybersecurity earnings a record improving to of significant us growth and services quarter. a annual expectations. to million $X.XX, over in are almost margin year-over-year. framework. portion this Segment with grew Significantly Our was company partnerships software which of Adjusted our for number, a Total recurring on and recurring differentiated line good in our lead our this rapid the well revenue along $XXX That's industrial into a XX% XX.X% XX% of

are the still is coverage remains highest billion superior over A levels. which of annual with customer backlog, year $X.X well sales, service XX% our in to We ending pre-pandemic priority. return above over

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

grew of our over sales year-over-year, battery. were and vehicle both XX% versus discrete, continued reflecting strength discrete in Our offerings Within automotive XX% up prior electric year. sales

Our our double business EV total growing sequentially. revenue both and in quarter, to the close of automotive was year-over-year XX% digits

with startup strategic chosen digits. technologies. One with as grew high exclusive their build Rockwell wins and new innovative a has battery was Nanotech Nanotech partner automation battery of sales single Energy, Semiconductor storage new Gigafactories. our to energy

to semiconductor system take in across major control applications globe. at companies continue share We the management, facilities

build technology transport out to wafer existing advanced portfolio, our funnel greenfield our leveraging customers' a projects. continue across brownfield win solutions and of independent strong addition and In to we car

artificial participating rapid centers to build-out computing are support of and data in cloud We the intelligence. also

several recent extends portion in Our the centers. us cancellations automation single-digit vertical, used portion for mid-single versus in U.S. of seen of e-commerce see In in especially our the and control customer some with year-over-year strategic investments, to distribution delays in growth data into North positioning year to America, starting and After reach fiscal to Asia this warehouse e-commerce more and quarter and quarters acquisition environment low and the 'XX. power vertical, optimize declined digits the prior systems We've and in in wins systems control of are our safety year. our facilities come. we're sales the new in these Cubic

good sales Beverage, our Strong versus were segment growth vertical. this paced and and by Turning hybrid Food beverage prior in digits double Food to year. industries. low largest customer in grew sales our

addition this several wins they use vertical, infrastructure we to modernization incorporating customers In formulations cybersecurity new as in in recipes. digital products, AI is business had continued assistance our services QX wins our develop and where CPG generative real-time and AI functionality helping

grew of sales software, in a are of and mid-single This quarter. combination hardware a great value vertical we the Life through Sciences expanded capabilities. digital customer how is example digits delivering services

plant Tire BeiGene, developing company innovative their for Prometeon a large quarter, cancer at software Tyre affordable by global including site a our PAX in This high the I on process mentioned selected control monitoring deal was earlier up biotechnology teens the in environmental call. and quarter, was wins Jersey. globe, the at with system multiple across New greenfield solutions medicines the and

Moving wins This in and strong well the including and was several to oilfield carbon as mining year-over-year, gas in in solutions, led of Oil capture gas, and America. North segment oil XX% by over and control and process. Sales in EMEA digital grew quarter. this sales metals. growth industry in a XX% up combination over were as driven Asia lift process new safety growth by

footprint multitech combination Sensia global a had continue onshore gas engineers at and of and capabilities. notable Rockwell We India, we This gas We this oil grow projects. was a the an company Middle in competitive and and explorer of producers working to as with footprint and quarter India with their our win on DCS government-owned are oil one offshore in partner EPC Rockwell a filtration multitech to and for process win industry headquartered with and the East. increase U.S. largest they excited

sales. again, than QX our and reflect of our backlog sales X QX the organic the underlying composition Slide to demand. by year for in Once fiscal customer our now the rather year regional Turning and full 'XX region

Our the of outperformed Americas the full year in world. the orders rest

North America America up XX% sales and the over were quarter, year-over-year. and XX%. sales Latin grew over Pacific up EMEA Asia over in was organic XX% Both

order continue to and in see in high year While saw China fiscal in strong sales cancellations 'XX, we growth deferrals we China.

year billion. this sales of to and our anticipated Both sales we Services Slide Investor new move in fiscal introduced were year our a accelerated XX% This framework key achieved XXXX. X, demonstrating well this original in the expectations. reaching we organic with customers' of milestone sales was ahead frame of reported $X earnings total million, when year, our XXXX. and XXXX. adoption for grew figure accelerated growth record of Solutions had our offerings. is Xx what digital Day over year-over-year, time Let's $XXX at exceeding We above We up highlights this Connected and profitable Information almost X%

a recurring as grew both XX% strong offerings. Service in with Software ARR our growth services Total and

In and Verb, will key growth. provide of more generated value segment working XX% and prior free capital. invest least, top X the Our acquisitions: of our driven cash was cash Nick operating And flow year. further of in record points The year. Adjusted XXX flow strong in we remarks. cash ClearPath his XX%. in for free to growth. accelerate in versus conversion conversion basis represents made and not by resulted few was free of We improved the $X.X last this flow the areas continue primarily expansion a EPS This year, billion we expand detail to last months, but better performance much $XX.XX margin quarter up line

impact talk While and to about X we longer-term the a both about we both turn our Day, more are few to let's Slide near and share upcoming have why at take our Investor on minutes excited we'll ClearPath investments growth.

brand the robots many been goods serving with shared AMRs differentiated consumer top subassemblies on auto to companies, you safety. right autonomous move place move lines we've where shipping As customers have and identified traditionally the of and suppliers customers in to a portfolio their increased docks raw mobile These as Their is warehouses. finished production ClearPath have relied for space logistics segments. and opportunity quarter, industry focused AMRs, to across leader many automotive labor materials to also earlier is semiconductor goods and the packaged manual efficiency on workflows or fabs by production on and in

X the operations, applications next one industrial mobile Path. believe Clear growth years, Given skills robots for for along autonomous the than to is the this workforce over overall and grow no gap, factory on to with market better shortage XX% Rockwell we to capitalize more move the is expected and and and positioned floor

space. will of you we including more with design Together, our expect this can at operations and of platform. cloud-native This end-to-end We'll and and configure logic Fair Automation and October of acquisition autonomous this contribute Rockwell, see environment is important Day management in process software the and technology industrial an about this our FactoryTalk AMRs X our fiscal growth production closed the with these optimize to provider operations a next and together milestone with integrate point capabilities, all for Investor simulate in fix embedded our Plex do and line bring operations to only top performance to like production in are 'XX. the for capabilities what We week. it year AI early

As trough you Slide with full shared XXXX last in review $X.X X, to Orders fiscal were year our fourth believe we call, Consistent the we our for let's we reaching quarter. be move outlook. through what continued a fiscal billion. earnings on to to XXXX, decrease our our orders with what

the expected to China. increase is year single to Order Asia be orders orders year-over-year Americas fiscal low are due down to 'XX to expect digits We in expected growth highest be year-over-year.

remainder relatively returned our largely have China on the SKUs helps times to prepandemic The our global reduce low our the our of on to levels However, lead impact with products exposure distributors. to normal clearing shipping times constraints of at fiscal getting our final golden inventory QX. addresses This due the lead committed backlog back around screw our past the end to and results.

fiscal and including analysis our and on time increased and requiring QX we with been a forward distributor new that projects of projects during Customers to additional brownfield demand Act. cybersecurity builders expected are lead line, QX. to plans expect to legislation, digitization. both and in build the funnel investments for move of we've in 'XX won machine by IRA largest and end reduction resilience year In inventory by at capacity product orders second of and on Based begin This specifically the with with greenfield the continue also in users, half adding commercial and recover underlying our incented business projects chips 'XX. strong U.S., fiscal by and resources team recent focused authorized infrastructure, stimulus close Science year to

sales Organic sales of assumes fiscal the projected at are the at Our billion total about reported guidance $X.X midpoint. to 'XX midpoint. X% grow

are point expected Currency is to X.X% growth. to by about acquisitions contribute sales of X slated and increase

higher Segment to prior year We grow expected detail At this cover in double-digit year-over-year EPS midpoint. of another have Nick are projecting more growth. slated versus is to to will at we Adjusted ARR the slightly and expected is about on 'XX in slightly level, reducing a year. X% backlog increase fiscal of and revenue conversion margin high by is later. to strong pulled reduce $X.XX organic year-over-year fiscal Good expect ClearPath earnings. year sales. amount. during 'XX of $XXX million a similar of forward adjusted earnings QX performance

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

and points. margin spend year. growth last key XX.X%, organic investment XXX came basis organic The morning, decrease more from to information. operating compared price to restructuring translation a by and start higher Blake, higher contributed Fourth the you, financial offset than sales points and sales basis quarter were everyone. and incentive was good sales Segment compensation, actions. year reflects year-over-year growth. Thank Currency up fourth of X, up acquisitions Slide points being increased X over quarter reported higher volume were XXX ago. by of I'll QX XX.X% sales XX.X% XX.X% price. our About impact on

was of investment sales, our to higher primarily partially incentive $X.XX offset organic higher above by EPS spend Adjusted due and compensation. expectations,

flow slide. a in, later year-over-year quarter adjusted $XXX million a was than fourth grew annualized of adjusted effective cash $XX the of The adjusted which of restructuring below over for the XX%, slightly All XX% year. took on is million just also EPS EPS on million cover in tax prior the a We bridge versus charge an rate. than to rate quarter $XXX yield basis. benefit prior was I'll prior expected more year higher year. $XX million, Free

cash capital. in the flow free by and income quarter driven generation strong Our higher was in working reductions

our we due capital down. couple have last supply to see over we of volatility, starting bring pleased balances to actions chain know, are capital you the As seen years. working and grow to working

One performance. in repurchased the shown under X of discussed of on a operating the at I'll we available XX, and top on $XX segments. not XX approximately million Slide September million. line shares additional repurchase slide, in focus provides our cost On quarter item margin Like our our so our XXX,XXX margin $XXX the the sales authorization. overview remained performance performance quarter,

basis pay-for-performance culture headwind of our all IO. segments. segments points margin devices, because Intelligent was and and bonus and investing expense this strong QX, our higher basis of points portfolio business represented Given higher volume. between results, intelligent for year-over-year of saw are XXX drives next-generation in XXX Within this year. each the In points decreased our by up year-over-year sequentially margin of Devices of basis and XXX XXX we

points Software year-over-year. XXX control basis decreased XX.X% of and margin

share with our rate is was Our software incremental to and XX% was the we margin strong we cloud-native invest highest the cycle performance in line of Life segment and QX year-over-year by driven This margin growth. as top logic continue under services next-generation was portfolio. anticipated. XX% X.X% the exit investments

addition most we to a restructuring this by the for was as In margin charges items, in impacted in came bonus, the X the planned. this segment quarter. higher segment Absent taken those the

joint Sensia the joint venture. walk, for this expectations and Before our about supply I'd underperformed XXXX. pandemic chain global constraint, talk XXXX Challenged moving to EPS our through to adjusted initial like the by venture

fiscal quarter. in Blake us. as largely outlook, items 'XX and growth chain-related goodwill this quarters resulted supply double-digit orders strong top Sensia impairment lower recent a in line onetime updated Our growth, base, the has in mentioned. in fourth delivered behind includes are Sensia's inefficiencies which partial

tax 'XX. profitable bonus This from versus Going reflects year-over-year double-digit forward, Sensia. compensation XX from a payout year. increase. year up fiscal fiscal 'XX Slide Core to we the this expect increase The organic performance $X.XX The a below-target over EPS on count key higher XX% to year-over-year grew QX $X.XX headwind. were growth acquisitions. the coming fiscal XX provides to $X.XX a a from EPS headwind, tailwind change sales walk Slide was impact year XX.X% billion, Incentive last XXXX. was Reported the the year-over-year including next interest for X each full this Share and provides sales from was currency from financial payout a quarter. $X.X $X.XX adjusted rate expense. in by information point QX offset immaterial

XX%. higher partially last sales $XXX investment growth year-over-year approximately to sales impacted basis points increase be The above the detailed expectations by Adjusted Full Organic points. negatively offset was The were EPS fiscal or in our year higher reference. EPS margin accelerated We for million segment sales appendix higher over Currency due outperformed. up our a of increased by year. 'XX original XX%, revenue XX.X% X.X for walk spend as up and incentive can found your compensation. investments was XXX adjusted

earlier, 'XX. was driven cash discussed cash income. capital XX% net fiscal increase Working free in $XXX flow from 'XX in expectations, flow Free of by free to flow prior As million than XX% ahead with capital and flow higher fiscal cash 'XX. by XX.X% the XX% peaked free QX higher Return conversion and of sales in our XXX cash in conversion down The year, driven QX. primarily on was pretax increased for came better points income. basis fiscal invested was of at

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

about also down debt by $XXX We paid million.

debt. Our strength us of fund strong. new what without year capital first quarter structure to our is the in fiscal acquisitions long-term allowed remains liquidity This any and 'XX

expected QX decreased to work continue we In forward. current rapidly we lead distributors guidance, through machine 'XX builders QX, thinking and our as as want in quicker to orders our fiscal our you to inventory look and response to orders turn times. improving on we we than Before update

QX said, the support Blake As view. believe trough October we in orders that was and

grow single what year to similar digits we fiscal orders profile with expect low 'XX We to discussed in an order QX.

fiscal in on the time, for differentiation innovation on move resilience, In extend secular customer-facing projects growth. for most in same resources top line a At now capitalize we the growing to and XX, in low own continued strong our of Guidance 'XX, are fiscal focusing slide, even invest on demand to 'XX. Let's to next to our continue our we'll year automation. in earnings year important

our X.X%. X.X% to reported growth to expect range sales from We

the and growth XXX organic acquisitions basis to We in expect X% basis range of expect points. year in addition sales negative to full to growth positive of add a XXX currency tailwind X% points we to

exceptionally 'XX, a backlog From expect that fiscal in year segment given software strong the execution lowest see this top control growth in in and growth XX% to segment fiscal our in year perspective, line resulted 'XX. we

segments. services expect positive both life our Intelligent and We sales growth cycle organic Devices in

We year basis will XX.X%, growth be expenses. year around margin coming is R&D fiscal EPS expect an for slightly ClearPath basis. flat in VERB's will adjusted from be by Segment positive commercialization a and well to price from 'XX. relatively integration of to continued 'XX. point headwind unlevered the impact will fiscal includes the This ClearPath per year a Verb. XX reflects in $X.XX up impact acquisitions as reduce contributor investments year. on earnings and as This share fiscal 'XX

'XX. fiscal become to the acquisition year in to accretive earnings We expect ClearPath

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

$XX.XX. EPS guidance is $XX to range adjusted Our

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

to year hand 'XX had end XXX our of of approximately fiscal to expectation we the by days days at days inventory reflects 'XX. drop inventory on XXX end compared fiscal This of year the that will

due stake realized Cuts Tax sale for to higher payments payments gains tax Jobs tax the under and tax PTC a on outlook tax Our for capital our in higher payment a of higher and Act. required cash is and the

QX, our volume half year-over-year expect digits expect below free followed timing the grow tied tax We through growth compensation income in sequential calendarization in as payout by progress year. cash to the the and payments. to low XXX%, conversion well we incentive of to flow perspective, first single in organic From we a sales mostly the sales in be

QX As strong result from down volumes of performance, a our will backlog to be QX QX.

Given margin to sequential throughout dynamic, the with improvement projected our lowest QX quarter be is this year.

to walk. full the Slide our for XX EPS let's For year, adjusted turn

will fiscal productivity target Our to on is impact core to due increase expected $X.XX. our expected to by 'XX. increased fiscal to above $X.XX positive earnings modest earnings QX was compensation Structural Incentive 'XX 'XX fiscal year strong year by and actions earnings investments a reduce about have performance. of year for from while from is $X.XX growth

tailwind be represents will for this 'XX. by of a $X.XX diluted So $X.XX. Acquisitions fiscal

fiscal the and add Our guidance. sales few will will net XXX 'XX around shares other average of basis shares. expense interest diluted about points 'XX is expense $X.XX additional a about outstanding $XXX interest, Corporate million. and to tax is $X.XX. of be shares for from comments currency be and assuming expected $XXX growth million contribute A fiscal on Net million. expected to We're of XXX.X

during to over expect some share to repurchases year. Blake we that, Q&A. turn remarks for I'll $XXX the $XXX back million it before million between deploy to and start With closing We

Nick. Thanks,

and are organization As exceeding I record investments earnings clear XXXX, in off. a of reflect through talent year tight technology of navigated helped a our knit expectations. dynamic environment has us paying our how and deliver and it's proud sales I'm continued on

we year continues that Looking of of ahead aware us, situation every at the and to geopolitical backdrop the change the macroeconomic are day.

further about can and heard productivity for in of optimizing us key that so focusing today You investing our growth. workforce areas continue talk we

enable workforce. on to of will Our Investor lot to their a seeing to in look security at you week our where and bring provide be forward help augment market life-saving next leading customers We Boston technology our to use we drugs globe new to and and energy differentiation rely to the continued across and critical Day infrastructure innovation

Schlumberger we with the time, entity so Gap] [Audio at few the months launched pandemic. the a before

us we've -- and impairment. the We've assumptions along orders, seen original great subsequent refinement of and at the out supply the that the from the lower COVID XXXX Sensia management shortages, that shutdowns changed to team of have with of caused quarters in of mix profitability. So chain and base was improvement the some couple we improving last encouraging take good backlog resulted

we so be life cycle large Sensia the that contributor improved expect the quite will services. few years And a in over actually to next profitability

would Thank to Okay. pass assume I'll Yes. -- it Appreciate you. on. that Good I it.

And take next question we with will Citi. our Kaplowitz Andy from

obviously, just you And Maybe likely what guidance and Like, orders low in order confidence trough gives in we And in are in in give that on October Could seeing. many of your to more are on color QX are the confidence? that see your single-digit lumpy view. Do growth in us elaborate come most orders 'XX. focusing you you your being mentioned that then 'XX? of regarding projects orders centered mega been around there cycle. FY verticals your a supporting projects have in more conversations from? you mega terms of they're where what could You

Andy. Thanks, Sure.

our throughout ramp all, the orders of orders of and then from terms the that and up first So in we QX of development, sequentially supportive October orders QX up was that trough. view saw saw we

to We throughout QX. building continue in QX expect orders recovering and

machine based builders as our and users business. our direct So that's well the what described the largest with on development, and orders terms to view what I seeing, we're of end the that in have contribution just that's as discussions

and what views, OpEx our the personal our supportive expectations, feedback have coupled with. with with the that, own their recovery distributor So analysis a their are we expectations, this that went we all order curve. projects of of shape and And CapEx did opportunities detailed of

much projects, mega know the that's lumpiness. don't the I of going terms contribute In to that so to

'XX business amount builds incented to that by of of released literally The have recent additional we're of decision that some and projects are the going of or beyond. made projects the a positive fiscal projects tracking the a it's equipment. year those think tracking, have I automation not stimulus majority majority not the be of throughout that we're hundreds and

would things earlier project that, automation certain probably like which the those that. look So after switchgear, would when you led equipment to at be include follow cycle projects, in with

early the that processes projects think encouraging. our to early innings and very those mega and in we So respect we're with our are tracking still wins

just Nick, going for more little And maybe 'XX. in segments your Blake. helpful, the over Very expectation margin a

we has perturbation what's level in particularly had, in answered Do segment already see a And on let's normal that supply But call from devices. chain. lifecycle and question services. Scott's you Obviously, your in some improvements see that 'XX do intelligent step You Sensia. segment? environment 'XX it, in confidence up more a that then and

Yes.

to your 'XX, In cycle taken business of terms expectations that margin and outlook the year-on-year on do the that we the be expect based actions for based life segment most will we expander. services fiscal that significant 'XX by have highly year in on we And answer have in question, are confident we for that in 'XX.

slightly. we're we business driven backlog, to we expect had we but expect in translate control, to the year, intelligent alone, to XXX in fiscal definitely our that and and will And that's be -- we've flat devices. to of flat is our perspective, ClearPath the our growth, ClearPath will us QX We're the a on in putting our strong basis in that headwind saw up one And an around we'll that with intelligent there. with the products. the as be up the 'XX devices where be by into is execution side, From and year impacting the then organic year-on-year that and margin throughout in be that leading the to growth software and software what's doing and opposite On that outstanding the lowest be in also year-on-year lower in that where point for one devices expect productivity the margins investments. impact segment of business, about slightly. actions impact primarily incremental it seeing to majority margins happens lower intelligent be investments control that's been -- growth we and to our segment

will from question Research. Vertical Jeff next Sprague with We our take

$XXX by confused to of comment backlog. of come just But ramped backlog back there's what bridge maybe the to other of on ending $X.X just guiding the orders in I just you that? it forward I kind forward. cancellations were I How pulled to versus you $X.X was normalization, at regular during I'm way to a us order million orders million. Right. QX. billion, than do know if much sales, million of happened and sales right? kind pull wanted way just mean that kind that $X

Sure.

add then me of a to as may Let and Nick couple have something make Jeff, comments, well.

of look the with quarter QX at beginning in we sequentially of the of So a orders October. at that saw from exit we the then orders beginning rate if end, increasing uptick saw to a good and at higher you than

So QX ramp why that the and we the believe that was trough for talking was orders. about we were

bringing rightsize on we us. levels the times. down as Yes. of our seeing to that, to little the continue orders we're in right and And one their they dynamics working in inventory being lead is resulting doing reductions partners, inventory actions deeper we're lower our go expect of in as and well through are seeing channel seeing, their distributors in are good Jeff, QX as They're that's a placed just QX, our we to seeing

all that the QX they we be think And of through at where to our we we is expect. the in level expect distributors where start reaching and that normal as and change QX, with that will distributors, discussed as levels -- we to inventory will our continue QX

see taking say, normalized. correct we're level levels orders I'd inventory reaction don't We're just to is seeing now their the partly, seeing really to them actions of they're to the this bring So that, say down. we

add could to And if that. I

on distributors are incoming levels. orders to that level our high seeing due in turn So us their placing higher they inventory a are of

orders visibility would So from we they're have, very on as end in from order good higher incoming our imagine, distributors' activity customers into users machine placing and you the us. the what and than turn their builders, that is

orders comes So as will additional that gives ramp confidence up their us down. inventory situation that

negative I thought right, in have with said on happen, and positive I this a were would you obviously, normalization. to just maybe then you guide happen actually heard that range. guide. have the And growth order think would If QX in QX it negative organic expecting you're in if your I

what talk growth the of versus So QX. being thought in process the to positive you your year kind organic negative maybe just of about gets for

Sure.

the a At in of you before. our and you at of upper at the see did would end, the distributors at would So a macro. see inventory end range, than inventories they levels distributors the reduction deterioration higher their negative slower stabilizing

new that back impact think being spurred well. of the equilibrium end, high I at the also some getting integrators underlying high some as on there demand terms and the that and and that builders, projects specifically the I sales would of talk machine reflective to performance from users the of as of from see the are more total big placing orders some you and we stimulus, U.S. by acquisitions, the add should in if well opportunity in end, about there's So

looking Yes, we would at on if why Jeff, QX, sense low the were why orders, make negative. that will the single-digit to only growth. think question one follow question about up not And would be your that we why

we a year continue backlog have we're However, with. entering billion $X.X also the that to

seeing is QX. what that backlog, expecting our revenue the of combination lower of of we're QX we're orders in a some continued so And in coupled with sales

I if through of year. Yes. We just ramp piece. in shipments expect to And sequentially one do additional could add the volume terms

of on strong shipments enters the at as of You get end comparables based having the growth math into that well. the into the such tail year of year-over-year the a math of little bit

America. Bank Obin with take Andrew We will our from question Andrew. next of

Yes.

it. framework. do Does end minus of your just a to for more But about a describe kind fully it of see Could batteries. itself. your what manifest Day been this the bit we a view low appreciate I you'll unpack lot EV CapEx minus to the maybe X%, macro X% you us Just environment just between maybe pushouts Historically, of and macro growth tell of imply growth little sure strong to the need the Analyst at of the minus sort and rate, there's I'm rate X% further. forecast. connection behind the this

Yes.

contribute XX% over energy, push-outs rolled aren't that I have contemplate quite of if the minus a of to reduction cancellations, or I build increase projects projects, need those or out But hydrocarbon not don't significant downside people going turn just frankly, the impact a we U.S. our to "No, process, if some project would those and of part cancellations by EV, about think the is that semiconductor if both in is a months, to that the in industry. that whereas business kidding larger of to forms think couple those year. which big said, into of range. looking a renewable we into energy of that If amount saw people projects it's would pushed the deferrals a

rates. Got which of follow-up, you. ARR an decent exit software XX%, pretty company, And nice industrial just for a is

your So embedded forecast? in growth assumptions ARR what are is of what 'XX kind of software kind

Yes. year do like to ARR We're through X% well, above both but offerings Rockwell. year. increase not number that our software ARR, well we XX% the combination the the in of high-value of Flex and as it's very of a and we're in the and go our as traditional based because on services. fix, just newer lower to We overall It's recurring growth broad-based. total it's looking ARR the the expect as acquisitions proud at some It's as on-prem of software the sales

sales. results to We our made and going to to offerings some that that each X overall have, resiliency not with the like have is area. And that, to the the starting at gives growth. our we us some ARR respect with of organizational by it developments contribution we that that software make And about changes optimistic along obviously, new very year supercharge

from Mitchell Barclays. next take with will We our Julian question

up comments to Nick, wanted first just follow the I off first Maybe on quarter. your on

you of in similar so sort the single-digit given the assumption for low year-on-year guided right the that And year just organic of is flattish margins is to kind acquisition said. QX the Are QX, growth So for forth. assuming and headwind are then as total we company.

margins then? year-on-year a of up little little bit sort have bit and a earnings flat you sales So up

question. for that QX be thanks asking Julien, will low organic digits. growth year-on-year, single think we

question, XX%. last we year, a the of had On margin of QX margin

to and be the And it that contributing We expect year-on-year impact ClearPath are lower X that fiscal have. mainly there's in to our 'XX. to acquisition will One being lower. be year going that is things

quarter mix margin The in less be be selling. going things a we we mix the adjusting we'll be And think there's think first of we in these combination that the as are production to having lower orders. see we to second as is will lower And those we're factories products year-on-year. resulting lower our favorable that X our in utilization in

That's the very wanted then to to outlook. I helpful. And just back come revenue

question globally. we year. one digits I lowest or up there 'XX, something in So the maybe growth maybe America, implies this look the guide region America was North are North mid-single think at sales And

years so that assume orders embedded And I of that about these sort -- the -- is on assuming the tariffs that X the or years year, will and color? book-to-bill so the from U.S.-China often correct? times. just the And looks of wanted for pace X Is what's we're people to stimulus perhaps onshore from be $X.X than just like you check that in slower are sales it billion IIA is on hope much projects it

follow with on little discussion, up and start the a with Nick can me then the Americas book-to-bill. bit Let

the our the to region based there. some second the of backlog expect And Americas that business than we're continue case, actually region to fairly to last factor quarters talked of for by year. We to in we're of with projects on the do underlying of really in forward. -- half in respect you're the by the tracking. correct world So that highest the Americas about But still demand. segment innings that rest industry aged stimulus, With and The ramping that we've backlog, going the respect there expect development growth is 'XX we be in few from come shipping distribution there's and now outpaced the year to just impact the more based we more fiscal orders, some of saw current winning we're the on is that growth far, good business by up. a backlog a early

full XX% year question the the Julian, half math that the that Julian. yes, approximately of of half and in above book-to-bill for on the Thanks, year. year a in the below your And first second the is book-to-bill, right, the

We will Nigel our from Coe next Research. take Wolfe with question

X,XXX more. So I we've had questions on have X of back about

by to do inventories half once level cutting first billion for start rebuild. I'm distributors be end wondering, full the going it of we're year, the go the So low book-to-bill down below that seems sort X.Xx then that stop to of -- and the the kind we the suggest $X for

backlog the Just see stabilizing? you wondering where

given Yes. And at of normal as We to XX% will earnings think call backlog last is the businesses XX% well revenue, mix see quarter I our on is I that the revenue level backlog have. be stabilizing. the that normalized we what said of annualized at think the this we

would $X indicate an above fiscal that of So billion. year at exit the

Correct.

in you've is billion just said on well. as the talking And Nick, then of that the about X.X -- with And consistent orders Okay. sort we're and fourth what quarter fiscal.

[ X for assuming helpful. I getting can of things. tailwind math is bridge, FX, that the -- couple X.X on of that, more be you minus ] would 'XX And can a the year. FY verify like probably full If kind just then of you're a we're the points

we're it on in quarter? wondering on life what visibility the wrong So the improving fourth margin there just there. based the And sense just makes downside is expansion think do is we services where history on drove in. have then What lifecycle margins I wondering

in Yes. I'll try to do reverse order. those

expense cycle the facing. The down that an as main services actions as of things terms well outsized margin had the restructuring fourth the things the quarter. In impact on X were increased were our that we bonus the drawing life in

Now actions be expense the a life benefit we will will margin also margin into from 'XX, be -- took 'XX. of we cycle flip that expansion services cycle businesses from into will will those propellant in a life tailwind think XXXX, also but bonus and as the all services that. we to

what in the we rate given euro, side, and our currencies some is of particular businesses and the our use mix for On banks will in current of a the projecting, the the we're such a as spot using occurrences what they're group current is of currency forward currency going year. many -- expecting what just coming we're what

second then year-on-year we orders roughly our in the it quarter. year. we it's of therefore, $X.X and half of year, full are the in did had were in currencies terms XX% fiscal in they expectations orders, giving of 'XX. say coming We were $X.X haven't we're is -- so the at for year billion the benefit then, X.X for And the And midpoint from been year. At million the the by said

The that third Fourth above average. of average quarter was The quarter was above below level. that. slightly was X.X% that

in go haven't to QX, but giving we what our further, it quarter been it orders by are. down we QX saw So

next Morgan. from our will We Steve question take Tusa JP with

of just bridge. tailwind Just second Can sense. maybe you help makes -- big how and is that on tailwind It what the you a this breaks you year. quarter us with was out maybe expect Can a incentive there? just the in type first comp here, the headwind

Yes.

if $XXX total of 'XX, And million, expectation -- exactly spread year $XXX X in in just million. I'll QX, year, equally that our -- First, $XX and Steve, out, expense In for that for $XXX actual $XX QX, in actual 'XX the QX. XX%. full million plans it's dropping million say across -- give $XX how helps. was numbers, that $XXX approximately 'XX, that's in million of fiscal I million in in can $XX million million. And quarters QX of is bonus actually year our fiscal broke to was you the the numbers that

Wow, great detail.

I how was. number the cancellations headwind I'm earlier, actual cancellation sure that was not the -- On the actual or of orders, what much actual caught

main were distributors. inventory The contributor about, the which major they is cancellations range orders decrease. decrease not to contributor to high were orders the The talking similar to by say far been to Yes. the a at what we've the levels is in the

At be the of a or smaller small relatively a down orders overall it. complete were the material to golden point, to those to in and clearing this piece constrained bills is to of contributor also cancellations component So distributors final components QX. shift able fourth wheel screw allow

is of One acquisition bridge. The last the $X.XX headwind on one, pretty just big.

is kind much that's the So For is $X.XX the the relatively are revenue a number, to all big keep what's ClearPath making business, or small how that's given investments losing? that? it's Or money number. incremental you driving of business like a pretty

based said, be apparent an first it think on in to fiscal ClearPath strategic their we will dilution expect ramping week. is about year be as of Nick next a X and all, demonstrate accretive move fiscal is contribution as I talk Rockwell important year for we This The the combination capabilities. Yes, Steve, in 'XX. that and of it them

also fully of a that able think us the it as to resources mode, but quickly to integrate somewhat start-up for of with into making that it be we Rockwell to So sure as as right possible surround it customers. provide value

out those but cost help their So drive resources, of out infrastructure it's operations cost the them the commercial only and unit the to it's AMRs. resources that's drive technical not of

it we investment is really thoroughly sure because a milestone us. this so major integrate part is Rockwell's And for some additional this to that from make

We take questions. will final

question come Noah Oppenheimer. will with Kaye final Our from

And for what rollover Okay. inflation? disgust price for contribution you X 'XX? the XXXX? what Or cost is then contribution of to housekeeping for is growth organic assuming total price the are What item.

Yes.

basis little very growth accretive price that to We in cost over slightly a costs, price over neutral to will margin. input of of terms be And that year-over-year, are we're points causing assuming be expecting X% to year-over-year. be the XXX net

question-and-answer will Ms. session ladies to Ajana turn for the gentlemen, remarks. today. call back Zelmer And concludes that now closing I and our

you, today. That us Thank everyone, concludes joining call. our for

you may participation. your disconnect. this for at gentlemen, Thank you time, and Ladies