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Rockwell Automation Inc. (ROK - Free Report) reported adjusted earnings per share (EPS) of $2.71 in third-quarter fiscal 2024 (ended Jun 30, 2024), which surpassed the Zacks Consensus Estimate of $2.11. The bottom line declined 10% year over year, primarily attributed to lower sales volume in the Intelligent Devices, and Software & Control segments, which was offset by the improved performance of the Lifecycle Services segment.
Including one-time items, earnings were $2.71 per share compared with $3.01 in the year-ago quarter.
Total revenues were $2.05 billion, down 8.4% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $2.02 billion. Organic sales were down 8.4%. We had projected an 11.8% decline in organic sales. The variance was mainly due to the better-than-expected performance of the Lifecycle Services segment.
Acquisitions contributed 0.6% to sales growth while currency translation had a negative impact of 0.6%. We expected acquisitions and currency translation to contribute 1.5% and 0.4%, respectively.
Rockwell Automation, Inc. Price, Consensus and EPS Surprise
The cost of sales declined 5% year over year to around $1.26 billion. The gross profit declined 13% to $795 million. Selling, general and administrative expenses were flat year over year at $501 million.
Consolidated segment operating income totaled $426.5 million, down 10% from the prior-year quarter. The total segment operating margin was 20.8% in the fiscal third quarter, lower than the prior-year period’s 21.1%. Lower sales volume, unfavorable mix, partially offset by positive price/cost, lower incentive compensation and savings from cost-cutting efforts led to the downfall in margins.
Segment Results
Intelligent Devices: Net sales amounted to $957 million, down 1% year over year. The reported figure beat our estimate of $953 million.
The segment’s operating earnings totaled $194 million compared with the year-earlier quarter’s $163 million. We predicted the segment operating earnings to be $160 million. The operating margin improved to 20.2% from the year-ago quarter’s 16.8% as positive price/cost, lower incentive compensation and the benefits from cost reduction actions were partially offset by lower sales volume.
Software & Control: Net sales slumped 32% year over year to $512 million. Reported sales surpassed our estimate of $503 million.
The segment’s operating earnings plunged 54% year over year to $121 million, lower than our expectation of $126 million. The operating margin was 23.6% compared with 34.8% in the year-earlier quarter, reflecting the impact of reduced sales volume partially offset by positive price/cost, lower incentive compensation and the gains from cost-reduction actions.
Lifecycle Services: Net sales for the segment were $581 million, up 12% year over year. We had projected the segment’s sales to be $559 million.
The segment’s operating earnings totaled $112 million compared with the year-ago quarter’s $48 million. Our estimate for operating earnings was $93 million. The variance in sales and operating profit was mainly due to higher-than-expected volumes in the quarter.
The segment’s operating margin was 19.3% compared with the year-ago quarter’s 9.3%. The improvement was driven by higher sales volume, lower incentive compensation and realized savings from cost-cutting initiatives.
Cash Position & Balance Sheet Updates
At the end of the fiscal third quarter, cash and cash equivalents were approximately $0.41 billion compared with $1.07 billion as of the end of fiscal 2023. Cash flow from operations was $431.5 million in the first nine-month period of fiscal 2024 compared with $535.1 million in the last fiscal year’s comparable period. Return on invested capital was 16% as of Jun 30, 2024. ROK’s long-term debt was $2.6 million at the end of the quarter, lower than $2.9 billion at fiscal 2023 end.
Rockwell Automation repurchased 0.6 million shares for $161 million in the fiscal third quarter. As of the end of the quarter, $0.5 billion was available under the existing share-repurchase authorization.
2024 Outlook
Rockwell Automation expects order levels in the fourth quarter to improve on a sequential basis, but at a slower-than-expected pace. It expects to report an 8.5% decline in sales in fiscal 2024. The company had earlier projected a year-over-year sales decline in the range of 4-6%. Organic sales are anticipated to decline 10%, lower than the earlier projected range of a 6-8% decline.
ROK currently expects adjusted EPS to be around $9.60, lower than the earlier stated range of $10.00 - $11.00.
Price Performance
In the past year, Rockwell Automation’s shares have lost 17.9% compared with the industry’s 20.3% decline.
IRobot (IRBT - Free Report) reported a loss of $1.96 per share in the second quarter of 2024 (ended Jun 30, 2024), which was wider than the Zacks Consensus Estimate of a loss of $1.77 per share. IRBT reported an adjusted loss of $1.42 per share in the second quarter of 2023.
IRobot’s revenues declined 30% year over year to $166.4 million. The top-line figure missed the consensus estimate of $168 million.
Emerson Electric’s (EMR - Free Report) second-quarter EPS was $1.43, which beat the Zacks Consensus Estimate of $1.42. The bottom-line figure marked an 11% improvement year over year.
Emerson Electric posted revenues of $4.38 billion for the quarter, which missed the consensus estimate of $4.45 billion. The company reported revenues of $3.95 billion in the year-ago quarter.
Honeywell International Inc. (HON - Free Report) reported second-quarter adjusted earnings of $2.49 per share, which surpassed the Zacks Consensus Estimate of $2.42. The bottom line inched up 8% year over year on an adjusted basis.
Total revenues of $9.6 billion beat the consensus estimate of $9.4 billion. The top line moved up 5% from the year-ago quarter.
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Rockwell Automation (ROK) Q3 Earnings Beat Estimates, Decline Y/Y
Rockwell Automation Inc. (ROK - Free Report) reported adjusted earnings per share (EPS) of $2.71 in third-quarter fiscal 2024 (ended Jun 30, 2024), which surpassed the Zacks Consensus Estimate of $2.11. The bottom line declined 10% year over year, primarily attributed to lower sales volume in the Intelligent Devices, and Software & Control segments, which was offset by the improved performance of the Lifecycle Services segment.
Including one-time items, earnings were $2.71 per share compared with $3.01 in the year-ago quarter.
Total revenues were $2.05 billion, down 8.4% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $2.02 billion. Organic sales were down 8.4%. We had projected an 11.8% decline in organic sales. The variance was mainly due to the better-than-expected performance of the Lifecycle Services segment.
Acquisitions contributed 0.6% to sales growth while currency translation had a negative impact of 0.6%. We expected acquisitions and currency translation to contribute 1.5% and 0.4%, respectively.
Rockwell Automation, Inc. Price, Consensus and EPS Surprise
Rockwell Automation, Inc. price-consensus-eps-surprise-chart | Rockwell Automation, Inc. Quote
Operational Update
The cost of sales declined 5% year over year to around $1.26 billion. The gross profit declined 13% to $795 million. Selling, general and administrative expenses were flat year over year at $501 million.
Consolidated segment operating income totaled $426.5 million, down 10% from the prior-year quarter. The total segment operating margin was 20.8% in the fiscal third quarter, lower than the prior-year period’s 21.1%. Lower sales volume, unfavorable mix, partially offset by positive price/cost, lower incentive compensation and savings from cost-cutting efforts led to the downfall in margins.
Segment Results
Intelligent Devices: Net sales amounted to $957 million, down 1% year over year. The reported figure beat our estimate of $953 million.
The segment’s operating earnings totaled $194 million compared with the year-earlier quarter’s $163 million. We predicted the segment operating earnings to be $160 million. The operating margin improved to 20.2% from the year-ago quarter’s 16.8% as positive price/cost, lower incentive compensation and the benefits from cost reduction actions were partially offset by lower sales volume.
Software & Control: Net sales slumped 32% year over year to $512 million. Reported sales surpassed our estimate of $503 million.
The segment’s operating earnings plunged 54% year over year to $121 million, lower than our expectation of $126 million. The operating margin was 23.6% compared with 34.8% in the year-earlier quarter, reflecting the impact of reduced sales volume partially offset by positive price/cost, lower incentive compensation and the gains from cost-reduction actions.
Lifecycle Services: Net sales for the segment were $581 million, up 12% year over year. We had projected the segment’s sales to be $559 million.
The segment’s operating earnings totaled $112 million compared with the year-ago quarter’s $48 million. Our estimate for operating earnings was $93 million. The variance in sales and operating profit was mainly due to higher-than-expected volumes in the quarter.
The segment’s operating margin was 19.3% compared with the year-ago quarter’s 9.3%. The improvement was driven by higher sales volume, lower incentive compensation and realized savings from cost-cutting initiatives.
Cash Position & Balance Sheet Updates
At the end of the fiscal third quarter, cash and cash equivalents were approximately $0.41 billion compared with $1.07 billion as of the end of fiscal 2023. Cash flow from operations was $431.5 million in the first nine-month period of fiscal 2024 compared with $535.1 million in the last fiscal year’s comparable period. Return on invested capital was 16% as of Jun 30, 2024.
ROK’s long-term debt was $2.6 million at the end of the quarter, lower than $2.9 billion at fiscal 2023 end.
Rockwell Automation repurchased 0.6 million shares for $161 million in the fiscal third quarter. As of the end of the quarter, $0.5 billion was available under the existing share-repurchase authorization.
2024 Outlook
Rockwell Automation expects order levels in the fourth quarter to improve on a sequential basis, but at a slower-than-expected pace. It expects to report an 8.5% decline in sales in fiscal 2024. The company had earlier projected a year-over-year sales decline in the range of 4-6%. Organic sales are anticipated to decline 10%, lower than the earlier projected range of a 6-8% decline.
ROK currently expects adjusted EPS to be around $9.60, lower than the earlier stated range of $10.00 - $11.00.
Price Performance
In the past year, Rockwell Automation’s shares have lost 17.9% compared with the industry’s 20.3% decline.
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Zacks Rank
Rockwell Automation currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performances
IRobot (IRBT - Free Report) reported a loss of $1.96 per share in the second quarter of 2024 (ended Jun 30, 2024), which was wider than the Zacks Consensus Estimate of a loss of $1.77 per share. IRBT reported an adjusted loss of $1.42 per share in the second quarter of 2023.
IRobot’s revenues declined 30% year over year to $166.4 million. The top-line figure missed the consensus estimate of $168 million.
Emerson Electric’s (EMR - Free Report) second-quarter EPS was $1.43, which beat the Zacks Consensus Estimate of $1.42. The bottom-line figure marked an 11% improvement year over year.
Emerson Electric posted revenues of $4.38 billion for the quarter, which missed the consensus estimate of $4.45 billion. The company reported revenues of $3.95 billion in the year-ago quarter.
Honeywell International Inc. (HON - Free Report) reported second-quarter adjusted earnings of $2.49 per share, which surpassed the Zacks Consensus Estimate of $2.42. The bottom line inched up 8% year over year on an adjusted basis.
Total revenues of $9.6 billion beat the consensus estimate of $9.4 billion. The top line moved up 5% from the year-ago quarter.