Rockwell Automation (ROK) 7 May 242024 Q2 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. [Operator Instructions] At this time, I would like to turn the call over to Aijana Zellner, Head of Investor Relations and Market Strategy. Ms. Zellner, please go ahead.

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

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

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

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

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

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

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

reduced am slower growth the at are full doing. Before QX happy but and we second high QX on than make is still increase I'll was second is we year-over-year the half. Consequently, larger return for X, performance At quarter machine but the level, year, to in what initial we builders expected continued levels expected. impacting Orders year. to comments. good, here's The I our are impact Slide some during a shipments to the in the results with high to guidance inventory turn for our not of ramp

line year margins aligned to more program with orders, on revised expand Investor actions outlook the accelerating November. with are to in bring our the comprehensive costs during Day introduced in We current

the a $XXX year save half in fiscal starting will taken creating point beneficial million now, from year actions 'XX. accelerated of being this for second We

actions And and alone view program from plus $XXX from a of comprehensive manufacturing detailed of provide additional on next will savings more a incremental see the next SG&A. will amount we million this our sourcing, We earnings call. larger these of year more savings targeting program

our improving that with 'XX, support growth of when about year on and for our analysis year's a information channel technology. processes the include we decision deeper exit team, reasons. better I'm are next We perspectives regardless forecasting optimistic new several position of fiscal

built an has the growing portfolio for Rockwell unmatched meet smart to world's need manufacturing.

America the North market, home is faster PAM. Our grow worldwide to than expected

new discrete, today are new major hybrid and of value our offerings We winning and across business process traditional sources industries. with both

with the excellence our shareowner value. we targets expansion through As we couple this cost focus longer-range will growth, organic achieve and November create operational in on introduced margin significant and discipline,

to quarter. Turning the

with adjusted the at offerings, Software Lifecycle incoming quarter and products, As above we sufficient the or indicate in place X, on both to balance of all current higher year. to have the orders performance EPS at at safety we than mix orders stock good much or converted a operational the we expectations. returned we and QX, convert our of Services our level In through organic level Sales second higher of sales above in fiscal and forecast. in Slide product, configured-to-order were now

pre-pandemic booking quarter to at are and received orders rates. are We conversion essentially back product in the they billing

and on highest organic quarter sequentially. total the X.X% sales based America With continued acquisition were regions, business had sequential X% across quarter. orders the Our up digits segments were in increase an of Year-over-year, in the North decline points recovery of and sales down all low X.X double growth.

meet with the our execution stock and quarter these X.X% year-over-year. to about declined our pleased sales in products. organic for build segment, Devices Intelligent commitments our shipping In I'm safety

mobile autonomous our from continue sales growth of also X.X to in see the points strong performance almost We quarter. to Clearpath robots recent contributing with ITD acquisition,

continues win was Company. chain quarter the One notable Company and and The Hershey digital Hershey ] including its with manufacturing capabilities [ advance efficiency processes. to to supply across this operations, Clearpath enhance agility

their and Hershey Motors Auto also productivity improve better has technology selected QX part was As operations. performance both in manufacturing than Clearpath to efforts, of for expected. margin fulfillment

Control were & Software organic year, down XX% we prior versus as sales expected. largely

by There high we inventory know, new at is of this you in our our and had these levels last Software offerings. QX products this year, business across share builders. XX% correction, gaining Logix segment hardware our Control. we Logix are comparables growth winning As and impacted temporary of are significantly particularly difficult In business. in in machine Despite year-over-year & software

and proud vitality launches those demonstrated using partners technology. of and They controllers. the NVIDIA our partnerships cases customer are expertise organic we by that petabytes our processes benefit use also of especially product recognize development artificial the flow use focused intelligence. data and machines Microsoft an here, on recent of that and enormous select source have manufacturing represent domain from cases, this their with data, specific for untapped I'm simulation to that largely simplification product and of will These best through know the manufacturing

Services in Lifecycle end outperform businesses. XX% good and in by segment our led Book-to-bill year-over-year growth was solutions organic order Sensia continue grew our process driven and markets. expectations by X.XX, over sales to this strong

another continues over services, orders high-value saw The saw almost QX. sales cybersecurity, including year-over-year strong quarter. the quarter XX% from XX% contribute in JV to Sensia our growth of growth segment which Our Services growth in Lifecycle of also

making quarter, business this not are We on of to working margin progress We performance the expand this we're segment. Lifecycle margin. Services done substantial saw XX% and in

was Total again up this quarter. XX% ARR

call. expectations profitable the quarter. the on will of see the would Rockwell XX%. EPS the cover software. have adjusting the from more Adjusted margin recurring detail accrual. after recorded bonus about to reversal services strong segment was $X.XX and both was of our in for This without continue in reversal the above even later Nick bonus growth high-value this we We XX% accrual been of

X pronounced prior of channel impact review our turn in high year-over-year high highlights discrete to automation Much are segment product key most discrete in sales warehouse industries inventory Sales our Automotive, QX Within The is automotive Slide teens down impacted. down XX%. weakness this in in product discrete, e-commerce of segments. our year. the levels were of all were industry hybrid performance. and driven and Let's to were our inventory sales channel. excess now other industry versus by

fiscal However, 'XX impact time as their to we're the customers also investments. on to EV timing see our starting reevaluate sales take of some

are project While we are battery or seeing of start certain EV seeing we not production cancellations, pushouts dates. any

all positioned expanded in are they is vehicles term. options strong customers, well more installed in whether increasing portfolio, interested hybrid Rockwell in with and automotive As we've mentioned, They given our investing electric efficiency. near adding base the are or

this In chips and major XX% value, Clearpath suppliers our temporary Tier sources X robots weighing pressures brand to a year-over-year Semiconductor continued traditional autonomous a sales helped wins mobile CapEx with over on declined customers' semi owners addition with oversupply us of of secure legacy dozen quarter. half investments. and geopolitical

and outlook. did Our sales sequential teens global increased in and high warehouse pipeline traditional logistics e-commerce retailers an year We and with full strong warehouse our growth automation rebuilding shipping and see a customers. We're sales were this in improvement down quarter.

innovative and and capacity down segment modernization at driven XX% by personal to are are year-over-year. sales. users fund OEMs, still and packaging projects Food beverage This care. installed The who There home hardware newer and Food sales contract the One their across slower this Results therapies expand important quarter, AMR markets, are had with India I offerings. We cybersecurity new Clearpath including wins QX user earlier China. this our projects in segment beverage end Sciences continuing through slower in by high who and Resilience, at the project was solution an in our National bring manufacturer, especially resilience working to vertical inventory. and mainly in single market. end were driven and signs mentioned weakness a of were region, was AMR mid-teens customers. Life and our to continue excess selected their like and in and emerging expansion industry comprehensive facilities. Asia, beverage the quarter some and existing the was industry provide they also delays, cell digits. by example software spend. Outside order an as of quarter, in sales of Southeast down that we to to base CapEx declined new hybrid with food gene Turning led value project activity in

to Moving Process.

hydrogen. oil projects, year-over-year, by transition storage in over supported for with here strength and in projects. applications secured capture, and carbon gas Oil decarbonization single continued were multiple up Our gas and grew energy we continued momentum sales including quarter XX% mining. and this QX, digits In sales high

this our Italy, our particularly Slide North America region about to decreased the sales organic to to quarter. Americas America continued turn X% and Let's down X sales. year year, with in consumer Germany and regional sales goods. builder X% and due high machine in growing QX be in organic Latin inventory The XX% packaged EMEA versus prior strongest

declined XX% quarter, year. the with Asia almost in down China in Pacific sales XX% prior sales versus

distributor destocking China continue conditions to a year. fiscal performance expect combination to our impact weaker of the and this We of market through slower balance

Moving for XXXX outlook. X to Slide our fiscal

once continued to we that yet the current continue last at both expect sequentially to I mentioned to seen organic increase that are trajectory, is EPS year result not equal their XXXX they orders closer and results machine some seeing distributors demand financial orders full placed I track the of expect on The and does low from acceleration QX we of investor orders the while said growth of of March, range. also in to builders its excess end the As in not translate conference amount on of would Rockwell. through if year, work our we our pace an the an trough fiscal have inventory.

order we've then, Since seen lower-than-expected activity.

at is our excess the we on distributors to amount expected ramp from information continuing work in overstock received the revision our of builders. year. the machine inventory and of have slower While downward are the builders orders reduction in underestimated resulting machine directly of through on largest of their inventory, the largely size Based based fiscal a their our builders, machine pace and

Again, share we America market, digits the we are QX. from our order return forecast are updated the our as quarter, single full an U.S. prior versus in and year. to in product our starting growth and sequential in growth is to strongest lines now expect taking do order believe for We progresses. year-over-year globally impact projects our implies We year mega to third major be and expect and we in orders increased QX low see orders still North to down customer the year

decline to date margin performance our versus prior at our specifically at expect now and lower-than-expected of accelerated organic grow in the projected about order to volume to the to down we the expected cost year, ramp, the 'XX is with his midpoint, which on and in sales by is is X.X and continue an still EPS revising detail midpoint. I expected range still and fiscal Segment will ARR XX% growth. XX%. earlier. acquisitions decline driven points slated fiscal to X% we Based actions share the guidance contribute Adjusted sales QX, to half to increase additional decrease are second higher year-over-year implies in Nick section. mentioned of XX%

will operations prior increasing plan planned only profitability. cost conversion and impact strong take our of the our The our used year, positively comprehensively foundation is This will results will expect program year guide, year. of a guide our this out original for XX%. and company-wide The fiscal drive and growth roughly and the strengthens double for detail we reduction expand flow free are future Savings margins to commitment to a cash reduced Nick repurchases in and from our more building be reinvest later. We to growth. to to cover products next share for future

than additional earnings will detail later QX We call. no provide the

intention to for consistent Our is manage segments our forecastable performance. business

months. has his And the Nick fiscal CFO will to he outlook our now we been Nick's successor. engaged to search provide be QX retirement. new underway, for fully the announce seen the on transition upcoming a 'XX. coming in and will in You've more performance and expect detail of A announcement also financial

Nick?

and Blake, everyone. morning, you, Thank good

delivering are Although is ensuring comes smooth, continued a and my this on my new and for what family to a plans CFO. transition I focus seamless about retirement, in year next our excited

information. I X, I'll start Slide financial on key quarter second

price, and sales reported points points compared last quarter about Second from down to organic points XXX compensation. reflects compared ago. by offset XX% contributed sales down This basis X.X% point operating XXX sales a increased partially basis by XXX were X.X%, to came QX sales lower growth. lower line our XX.X% were our and was of growth basis Currency acquisitions in total translation organic volume, XX decrease margin basis with projections. year year. Segment to incentive

EPS than Adjusted higher was of expectations. $X.XX

we our cash expectation on $XXX million to rate. tax due a of was I'll second XX.X% better-than-expected the outlook quarter. adjusted QX quarter year-over-year in in Given a fiscal in million our quarter Even EPS Free of cover sales. prior conversion rate prior $X.XX bonus impact, the of our year orders the into EPS expense accrual. did for lowered not prior any ahead without reversed for below bonus incoming bridge 'XX, compared effective QX, was This the adjusted later $XX the we adjusted total accrue to slide. Adjusted flow bonus in benefit resulted EPS was the and approximately year. a

free pretax our the March income quarter tax working repurchase available XXXX shown not by item 'XX capital. gain was higher the repurchased payments, to our payments flow decreases XXX,XXX a shares cost million million. On in Our relate and tax. of offset lower the in One in lower on tax our fiscal payments additional remained we by at on year-over-year driven sale PTC TCJA approximately of shares The generation our and under year authorization. partially transition cash quarter slide, in $XXX increased XX, $XXX on the

year volume and by margin ago. segments. performance to incentive compensation. from offset to mix. provides lower mix, our driven the sales compared sequential lower partially better a margin was unfavorable compensation, volume the by by partially of Intelligent incentive decrease and X XX.X% and Devices year was X Slide The sales driven XX.X% offset overview operating by prior Higher decreased lower margin

lower margin was volume, XX.X% software lower compensation, The cost driven sequential compensation, XX.X% positive lower decreased was partially incentive last incentive sales margin by Control & higher by and by by favorable sales. offset of lower by from Higher lower year. driven driven partially price Software offset margin volume. mix,

walk acquisitions partially sales lower $X.XX on down EPS from an this bonus impact payout The unfavorable above-target The better-than-expected X% organic and to was This from and margins driven ago was price/cost. sales volume Higher incentive by improvements projected a ongoing Core strength X.XX, was decline. QX decline from by dilution Slide in was to XX.X% adjusted no fiscal profitability margin was driven year Services fiscal $X.XX Lifecycle margin reflects improvement 'XX. margin continued neutral lower incentive tripled and in a year. was payout and was was Incentive margin book-to-bill performance by tailwind. compensation, compensation in and productivity. X next underlying Services year-over-year in 'XX a impact was volume, of demand. The X.X%. indicating positive Sensia. Clearpath higher year-over-year last versus Lifecycle QX year sequential mix provides the an from The offset of performance tax by The higher Verve. due compensation EPS driven tailwind. $X.XX lower

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

our lowering X% sales guidance sales We now expect in to the of range negative to are to the of reported 'XX. decline range X% We organic fiscal negative and in X%. to X% negative negative for decline

basis XX points earlier, of expect continue strengthening now dollar. Blake acquisitions we currency to as we to contribute to continued growth As points to add basis seeing XXX growth. U.S. about are We mentioned expect the to

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

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

income. free following Therefore, positive the cash this this The flow now adjusted our our benefit We is generation fiscal is expectations cash conversion impact year year. payout of because any on of EPS the does lowered incentive quarter recorded compensation the full cash fiscal see flow in not to to $XX in conversion compensation the incentive about of the annual of fiscal conversion of XX% free better We 'XX. flow that range year a year. are in adjusted of result driven cash will This first fact X for fiscal this 'XX we by guidance the expect lowering year from $XX. earnings occurs

drop 'XX. expect days days standpoint, of of calendarization QX of had year XXX a we teens 'XX to compared inventory drop sequential inventory inventory end growth on we fiscal mid-single-digit expect -- in we order growth in continue XXX From at QX. the perspective, and high fiscal the days year by an order sequential From end will by to that the hand to

We QX QX sales and be lower expect levels. margin dollars segment to than

new up we quarter, expected. cleared from Now that the ramping have generating in of most our largely than are which sales orders product backlog, we we product our slower are

QX, to segment, Intelligent margin Logix in We to benefited points that & and we in bonus in dollar lower margins a Software mix. non-repeat Services. XXX quarter QX reversal QX be of to to in perspective, than and be sequential Control Devices, basis lower the accrual due significantly highest expect slightly controller of QX about we QX margin due year. From our revenue flat down up in the lower margins be expect the expect also and By volume Lifecycle sales to the

are this As with we Blake our outlook for fiscal level year. mentioned, lower spending the adjusting

our which year our and 'XX the the a set temporary is structural right for driven year. fiscal reduction Last out $XX million be million $XX in in combination full cost X%. spend by 'XX foundation current the to year-over-year fiscal spend actions, increase will protect will to quarter, and fiscal and be margins investment second half of of million beyond. year year full by help up roughly $XXX 'XX we to or versus We our down year spending This about now expected prior expect approximately

further travel items positions, and cost for the reducing and Some year. our filling marketing reductions contractor reducing include not examples spend temporary spend open of

are of focus of to aligned restructuring are are about with These terms our and structural million In charges the excluded productivity of restructuring fiscal continued savings actions, The the year. cost charges reductions adjusted optimization count profitability second related structure longer-term in expected we $XX EPS. our head expecting and half our targets. from

few and to shares assuming expense expected million We're fiscal average XXX.X shares. diluted be A on other around of is Corporate million. additional comments $XXX 'XX outstanding guidance. now

$XXX and year. acquisitions. million fiscal to our expect near-term to versus to shareholders and million is expense million during million $XXX from $XXX of between of prior deploy repurchases prioritization Net the to million. an expected $XXX interest to share cash range returning We a reflects This is higher now 'XX $XXX increase be about for

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

Nick. Thanks,

throughout margins these to We help will all efficiencies are now funds have reinvestment. Aijana none second and more the and entire and knit focused to Q&A which customer now and will is capabilities higher organization. getting bought savings, yield on of session. The time that is drive portfolio together. we the in synergies efficiency for This us built pieces cost begin the will turn value, and

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

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

thanks all and for congrats, Nick, help. your

especially tell there, to big order And said, with you, step-up more terms Nick, builders. your you because what's start QX has Blake given your need obviously, positive give for excess you a could of difficult think, inventory trajectory as in here to of how out you in guidance? So embedded to continued machine I seen much been improvement Have now color it's $XX been pretty $XX or especially still QX, order in orders in into you guidance. us

lower visibility won't what better inventory when they to to So into ultimately, again? you their bottom doing and EPS get have may are and you with try

the in then I'll low after comments. sequential expecting QX have Andy, Nick orders. may of QX. order QX. mid-single in This analysis on We're digits And start, saw that's of sequential growth some in orders in then growth based we Sure. our and machine sequential growth inventory we additional is the double-digit that existing expect well distribution levels high And as teens as builders. on in

direct regions. by that a longer, inventory clear to with largely goes third distributors. China that the the but expect and we we're of from outlier is quarter distribution, consistent an in those the end probably those that's feedback bit little tracking most For levels

direct be particularly have we we're that we As specific Europe the inventory in largely we machine This and the and those from go at largest have going lot some to then in distribution. is cleared America, and with the imperfect OEMs, have machine better discussions a builders builders expecting out North in through QX. us, buying OEMs because that to of are

we So the evolving. better the have at the for primary we reduced the for beginning guidance and than of still did year, year. today much But that's view the that's reason

that. in completely one consistent What I'll add orders that. on just thing April Andy, we've seen with is

order expectation an growth Our of guide X% of sequential growth. of order

you And to could CapEx guys. Rock in that trying at that trajectory, back to sort that you've you and for point markets mentioned, you achieve think North then, you mentioned Can out you separate sooner into this will been X% channel to gains the X% that talk the beverage. acquisitions, core and said resume growth and would which Blake, Helpful, color versus November, you mentioned long-term you your but would market later. more weakness noise the the just end give back ex know seeing about targets growth? drive conviction share food you improved America, step organic maybe I from of in instance, can

Sure.

portfolio we've we that It's growth ranges winning that look our as based So through of the our in offering. higher the that's North that we course, home built sales confident see market. are America, in the is are we on on which, market, reasonable are, most today It's it's and based growth our of where our those cycle.

that projects projects. rate around involved impact of good those our with competitors toughest I team are are and directly win So growing that mega projects. we the world of a through see versus the the my individual with competitive,

of the talk win about gains, when areas, look controllers we one share those obviously, and I of We we world is the market those get Logix in new rates both terms important which that also key offering, when line, is space motor well, do instance, the a see as control with on in the in and by gains, us looking reports reports some the our U.S. America, at for Cubic but good. that the was for as the other centers, we when look And virtually we there's North offering and product industries, see previously. areas unserved around also

the And logistics several the mobile autonomous of from much a then you space already examples $X robots, market heard $X billion with than those faster our automation or wins production billion in the that's acquisition, market. growing general Clearpath

the And that about targets. lot about of long-term new confident so with the these these of our the above-market growth. majority that as gives as And it's again, us sources of up confidence well business, value just make not a products we're

absolutely I our you've fundamental the tone few months, expansion to on heard and forward. the going think that this is together margin plans with in putting call the last

question from from next Our comes Research. Nigel Coe Wolfe

retirement. your enjoy Nick,

maybe wondering the just a you the quarter you kind can third I'm get provided. So color color on if of bit more

I into to share quarter. an close -- $X EPS So backing the for I'm the per third mean the

there, back then pointing is into of great. number? sort more percentage trying get a just I to would make Just terms be you're sequentially, in your with quantification that order aligns to that model. rates billion order bit like a the of So $X that sure want that And mid-single-digit increase to

an this, -- QX, Yes. into how that's what complete rate Nigel, too. you're that's backing consistent from in of order we're in seeing terms with

our discrete otherwise, higher our to of on say tax other and based out rate I average. we point this. than terms average expected tax pretty one our EPS, of items on the the just estimating. and be the modeling nuance I'd In lower is will the on rate, quarterization QX are what that year tax your matching from the expect we're be rate I'd second to half say the a than nuance closely QX timing. But That's That's in the only

all want bonus then on on in helpful. million in costs of pullback. And then doesn't like just costs mainly that That's investment savings, sort or in the of reversals it? of half year, this that, That's have back year feels this $XXX the to coming about half savings. think to XXXX. sure and the cost the in, Okay. the cost spending the the additional of any that temporary make we just more right of include It it's second way cost savings Is accrual structural

me start then can anything comments, the detail some is totally half and The Let I that second with that. of some for general to mentioned incentive separate million with savings year the add from of $XXX Nick the comp.

So additional reduction that's a in savings Embedded is in approximately separate that that's that. from of totally force X%.

in the talked the additional force I that actions detail additional are is There's on next alluded structural and front of there's meaningful incremental about, So the not a provide next savings temporary and Nick we'll will that end of provide that structural reduction call. benefit those and that's that into year. also some the to, more but actions temporary

year. fiscal million. $XXX talking half 'XX Those $XXX were And additional the actions, a expect million this have about Nigel, part of to into year an tail what is we of expecting second in we we're there of the

benefit and comment -- is I'm in fiscal it So into some that about impact reference it the saying of 'XX. tailwind that carried but year your sustainable majority and to temporary, makes is of temporary,

Julian next Our question Barclays. comes from Mitchell from

Nick. best, the you for all you the Wish help. Thank

circling sort maybe back walk. of EPS on Just the

you've of about you've spend, cost got cuts. this buckets big morning, example. But fixed got reductions you've got I costs and incentive for these count helpful, got that relating XX, of sort you've think investment head Slide if talked about So X to very compensation, you've

about year-on-year investment of XXXX. spend a got then you've count $X you've XXXX, combined. XXXX? the way think savings for that from And the to got reverses cuts like other lot hand, in about looks it in are of from So EPS incentive and may $X about tailwind head it that comp Is these right a that be on EPS worth

in reverse and substantial kind of trying of the a incentive kind Just comp year understand in of investment following the that spend, does to how naturally? way

couple of points, Julian. A

First compensation reverse. year with intend certainly the the we're we're that investment of But in on why about that fiscal the benefit into talking reverse I year doing spend that not savings, noted we of that slide we And actions structural expect fiscal million majority incentive cost carryforward the do $XXX 'XX. that's that does 'XX. the all, to productivity of

be X comp answers. reverse, So absolutely but again, investment spend year not. for total And The we're will different seeing. spend dependent next investment in incentive does opportunities on does the

But benefits what set year? of create into is. confident tailwind are $XXX that next doing number what here, haven't we the We million benefit will this that we're

Yes.

a we're offset high 'XX. that I their comp at actions next this taking level, that than beginning the investment program the year the benefit benefit you when expect on that then structural we and to headwinds as year, with add mentioned, that comprehensive now to actions incremental we Just more the that more go year and from incentive into so a more fiscal returned we're

then and follow-up to be sort on to and your inventories of trying your revenues inventory. That's really back And circle point would helpful. that just my your customer

third your a up that's on sure when are so Nick, us How number this sounds inventories own inventories stable? happening sort finished very mentioned. down you'd think, like that been quarter it in the for of sheet customers' have your if help Maybe are stuck at are dip, same now. sequentially the understand your that the have own now. we're are sequentially, dollar QX orders second And year coming you and your you I balance why sales So in quarter

Yes.

supply with is normal. quarter, through We've good we've as chain, brought back the Julian, backlog our and to normal. second So end back backlog of success of to our working the product essentially had our

pandemic, revenue the second benefiting year. we our we So a And orders be particular sales what going In the like digits operating high backlog to of And drawing up than were be why our why are we quarter. were very our of our our will quarter, second sequentially. we a expect we backlog. -- expect orders second second into particular quarter higher in from sales going forward, single quarter. expect sequentially, in We that's down still some in that be though were down down phenomenon orders. even to in like pre our what quarter to where in are that's much end That brought the half

Kaye comes question Noah Oppenheimer. next from Our from

some about to where color. you're the investments the around making would in business. of reduce talk I Maybe choices love any

a Maybe you made that. can the You not protocol? or lot by segment acquisitions. to of it sure talk possible it's on if if about related level I'm

looking at headquarter affecting some in additional SG&A Sure. and does Nick comments, marketing ones. functions. and that No, Most reduction have of make I'll sales is we're and may and include that the force some

and I best as think is a principles, acquisitions Rockwell through generating standpoint existing look and the directing with to cost for spend portfolio we activities areas. returns also the synergies guiding we're product look those taking a geographically there. resources at that's integrating at what from both We're value highest the and recent the in going looking

back efficiencies look efficiencies we as and our we've Others out manufacturing expecting to I right? our as well. match output. reduce then activities to operations. capacity SG&A. growing performance safety very sales, lines stock, tune it of some the And as operations, in continue. in term those near full as variances is we're well our some back-office actions taking built of bought, that in we're There to there's for including as opportunities, said, what year-over-year, So we're And reductions that's see can our And the technology. and tuning see they're of what are acquisitions. with to to that. And that of the cost always, together getting get some at leveraging in terms by and product-specific, in development Some we we've as we're expected we in knit of ways good consistent are gotten We

of that's So current we're that actions the doing. list

there's like also opportunities SKUs with the opportunity other at range additional we spend be the and focusing sourcing on then at big direct us of offer. As wide for material efficiencies we items. and we portfolio manufacturing comprehensive is more our that we'll program, a look as And the look areas for of

Nick?

piece support our I'd of segments. one organizations are reporting The functions costs these to multiple or that Yes. add Many that. of in

doing. Devices we're these will way & costs we Intelligent these and see Control segments, across Given actions impact Software that allocate greatest from the the

does And step big commentary cost imply. on margin for see XQ, XQ. pretty Makes you've how up? orders the Right. I'm and apart getting sequentially that and talk around walk sense. just reductions we're that to Maybe fly, to for something in the year help you the here on margins what, step-up like X points here. then to announced, helpful very your would Again, margin seem from a doing around the sequentially on exiting the math math

Yes.

our cost benefiting by you margin few be going correct, So We is we're that the favorable half we to impacting there's then the X by That's we And margin that in quarters. mix expect the having biggest to be, and we be Control. that year. as progression the of highest third our & go savings far, positively volume the is of second Software the contributor things through And of be will -- a is quarter margin, margins. to and QX impacting structural that doing. particularly temporary more will followed the revenue a are

it's margin and QX. sequential volume all cost savings improvement the the contributing in by and is mix, that So then in followed to largest the then

Our from next comes Steve Tusa JPMorgan. from question

investments, a relative basis? year what's absolute When trend this on you as talk about on sales year last of the or these an to R&D percentage

be at pretty a percent consistent to going revenue. Yes. is revenue Steve, as of of X% R&D

percent last not a really of from changing year. revenue, it's As

about time, around altering a longer intellectual and over would that core, basically kind business bit just philosophically, of guys technology accruals more that? what managing Okay. property just kind I are story, be juxtaposed certainly being from, where have I boat term. confidence bonus of I And investments business. comes the whipping I a about -- that the business of thinking that story at of How we guess not rocking based of an do And have you're then How higher the on lot I seems IP-type struggle little the with sales. a your concern guess, near-term part that know you level an you just with is least. my with more talked guys biggest

this Blake. Steve, is Yes.

expense our development Nick at X%. remains said, As

last We is continue new which in we're delivering invest of product well to increasing both in to market, software new as robustly few terms as as years like the products introduction, the what over well. of in areas, terms actually the hardware

up last I growth efficiencies shortages out We're the of about to as years forward think that for had it. with gone going taking volatility we're cost few supply would And over of it and incorrect to piece for making that sure whiplashing be looking so that are that. built we've tuned pandemic chain from talk that

had This growth is expectations, in that The EPS. philosophy well we changed it's that payouts and We better not we're and we've way and in as a year performed and going really back, is a to pay-for-performance come teens paying the been bonus, for year I've last hasn't incentive as below business. with the that's but operated long comp a operate we there because even top high great culture. line

of activity no value to the way provide. manage sort it in So long-term to of implies expense the we at continue that some short-term results

last as I Is half quarter. the how are you obviously kind we're the actually to to one on similar been seeing the of comments to on sales XQ, of from made being to we we've that just the the year XQ. from mean, last then XQ know X-ish it the one going X this -- dependent from second the there? dependent same XQ there. XQ was sales I seeing in dynamic -- being And on

to EPS to dynamic QX. from the is Steve, the sales single QX biggest in increase the contributor

the to X/X second total be about impacting expect the we of year, that followed we're QX QX. of -- actions to about of cost and a on to be impacting that second The Second half by that smaller actions. X/X scale cost projecting in

-- of reliance there fourth number still revenue is the on that it, but So quarter. a smaller in to part growth it's compared occurring

Our Baird. Rob next Mason comes from from question

if in that the color in fourth high that I more you expecting channel is normalizing little you as a the of wanted positive up see growth? around I inventories -- well? you're some Or you're know expecting expecting -- sequential to more mentioned orders that in could entirety the in in the that orders provide shift quarter? are teens distributor point. demand you at step-up But shift

builder the There's a what first packaging a Rob. inventory. machine elements informs guidance, of significant is that in few But reduction

actually that feedback the directly So outside we're into been to quarter. that, them OEM regions the inventory clear within inventory, by packaging the reduces through as conversations China The receiving quarter of go is affected has the from machinery and before third we significantly particularly the that. And expected in with fourth distributor indicates that. again

important of those factors so And are X an part it.

the would always normal in shipments line that a do higher that of a and beginning also next kind shipments. of ordering We Sensia and the We're with that now. our we some include year drumbeat of in see year again Think come year. have through in as of those that that shipment at Services And of mega the to there, amount increases some are the then to and into sight of projects. expected seeing projects fourth seasonality we impact There's and quarter. growing engineered-to-order Lifecycle see well. And the the of a end as

order engineered-to-order, as Should the point the absent we now, solid normal we there? quarter into think a seasonality fourth off jumping level about as go XXXX

in a I to orders next volatility that up year. have Yes. been in base mean X years, I foundation last this going operating in, so we've what do the setting I'm the an think that But we're attractive cost of view. we regardless reserve

Goldman Joe Ritchie comes from Sachs. next from Our question

just like maybe that forth. we're so can back last project retirement think mega spending of Nick, like pushouts. the some about trying maybe pickup specifically. semi-fab I be I plants. for biggest where start would project And EV/battery on on then -- seeing square CapEx? the the you kind wish mega comment best comments and I and on earlier expectation just if the also Yes, to then in in And and EVs around we're I'm probably

the on green And shoots see you're some out good project where me square the of starting to some kind kind of and mega so Help side. just on actually pushing comments EV

Yes.

doesn't than X/X we're that push but -- automotive we all business. mean away. a So gone I our of is in total mentioned still seeing out EV about And some cancellations EV, projects. on not bit those that it are seeing more little X/X they've

got now. business been announced So over and around there winning major at the that areas Asia of world, getting a great a there's lot currently that's for are other still in the those control are of the management and some EV fabs projects that for for we of a role business but systems a we're good have capabilities facilities the the some fabs. of and or look If We've and playing been projects, decade. projects in us in semiconductor -- construction U.S., under mega

So it's application not a new for us.

investment is in a solar. Renewables we're playing good that another seeing area

extent how resources. result on them come the and over automation we've couple with There overall is give those some in are our are And of that of more seeing the months projects and business combined and in well seeing tracking is, labor to an to few talked with Cubic we've playing I another as area greater area technology acquisition. Rockwell has resulted in and the major have had, you We that that to the And scarce we're the aggressively next a adding particularly we call. But wind, had last their as building wins technology of of as I'll moving to a complement it multimillion we're and clear the about fixed in we've And mobile that with production made that's automation of customers and go want discussions an logistics. always off again, are those have space have for with they talked that impressive then out. years. to their funnel a example wins, complement people of bottomed, about of the meaningful solar really dollar back there, warehouse to to robots, that with some AMRs, the we unique have somewhat some capabilities couple think,

come And of those kinds are are in. examples the to that starting mega of so projects

savings. that the year helpful, of maybe just Blake. squared That's sure And super for then next -- on if can I it I've buckets got totally make cost and

So for the then year. you something on And side. going more to this mentioned incentive million comp get structural year. to X $XXX We're goes next

year, normal normal would $XXX roughly a $XXX a million in about basically be so that year. in like And million, headwind

that it? baselining just the Is about way is that So it? right to think

for except our in it Joe, bonus million expenses you million all the last normal got $XXX one, right, range. to $XXX the

question. take more one we'll Julianne,

Certainly.

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

what when set Blake, QX packaging, you order talk about for to want on to -- the sizes level of delivering to overall just business. from better activity how QX, that kind

talking you're about thinking so care, And and and should beverage up? personal pick be revenue and XX% household food that and we would seeing of that be

about packaged the overall machine business think XX% covered by and our consumer builders. in the OEMs, there, the -- about of the verticals Actually those you if those X is about of goods size so that's verticals verticals Yes. mainly

we're can that the that's business the of that and of levels, of calculus higher the inventory you been to way suppressed has coming be do quarters. how dissipating over kind by So expecting much the

structural about sort you underway? and a absent temporary prior guide if than sort do that side, better XX% headwinds flip are of cost $X.XX on about some sort of to the EPS in is it. sort guide like think the revised that's a that it these looks to traditionally the a be actions the core like about translating of the core, bridge something XX% what think case, of reversal through Got would to And of then and we the piece of incrementals you And think on could cycle, impact decremental.

talk incrementals normally incentive some They're in parts strip you like But stripped of Yes. those incrementals moving part you XX% or X our decrementals of of many things parts certainly and we are range would out our and normally of the underlying in degree about what decrementals, are investment normal. of more that portfolio things investment from compensation though. where those spend there spend there. compensation and to because details detail there that offset give by terms incentive showing we out be like When we're what but in

Yes.

I biggest high think that that is based that have comes you're And Logix, there's from think on, Logix put We've with lot to seen and correction we've getting and and grow. help growth that I directionally, with last the does around right no but high it continues incrementals very which huge in a But really revenue profitable. -- decrementals. back the recurring so in, the does tough as annual hardware comps year. around us on

and incrementals high decrementals have there. We high

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

disconnect. Thank At you this time, now you. may