Rockwell Automation Reports Third Quarter 2014 Results

• Sales up 2 percent year over year

• Adjusted EPS of $1.49; diluted EPS of $1.43

• Company narrows Adjusted EPS guidance to $6.10 - $6.25

MILWAUKEE--(BUSINESS WIRE)--Jul. 30, 2014-- Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2014 third quarter sales of $1,649.5 million, up 2 percent from $1,624.2 million in the third quarter of fiscal 2013. Organic sales also grew 2 percent.

Fiscal 2014 third quarter Adjusted EPS was $1.49 compared to $1.54 in the third quarter of fiscal 2013. The decrease in Adjusted EPS was due to a higher Adjusted Effective Tax Rate in the third quarter of fiscal 2014 compared to the same quarter in the prior year. The higher Adjusted Effective Tax Rate, which reduced Adjusted EPS by 11 cents, was primarily due to a discrete tax benefit recognized in the third quarter of fiscal 2013. Total segment operating earnings were $326.1 million in the third quarter of fiscal 2014, up 3 percent from $317.8 million in the same period of fiscal 2013. Total segment operating margin expanded to 19.8 percent from 19.6 percent a year ago, primarily due to higher sales and favorable mix, partially offset by increased spending.

On a GAAP basis, fiscal 2014 third quarter net income was $199.7 million or $1.43 per share, compared to $203.7 million or $1.45 per share in the third quarter of fiscal 2013. Pre-tax margin increased to 16.6 percent in the third quarter of fiscal 2014 from 15.8 percent in the same period last year.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, "Sales and earnings came in as expected this quarter. We experienced strong year-over-year growth in Architecture & Software, while sales in Control Products & Solutions declined modestly, primarily due to very strong sales in our solutions and services businesses last year. I was pleased to see solid sequential sales growth in both segments and across most regions. Free cash flow continued to be strong. Organic sales grew 5 percent for the first nine months of the fiscal year and total segment operating margin expanded by 70 basis points. These results reflect the ongoing execution of our growth and performance strategy."

Outlook
Commenting on the outlook, Nosbusch added, "Given our year-to-date performance and with one quarter remaining in the fiscal year, we are narrowing the fiscal 2014 guidance for organic sales growth to 4 to 6 percent and for Adjusted EPS to $6.10 to $6.25. The midpoints of both ranges remain the same."

Following is a discussion of third quarter results for both segments.

Architecture & Software
Architecture & Software fiscal 2014 third quarter sales were $715.2 million, an increase of 7 percent from $671.0 million in the same period last year. Organic sales also increased 7 percent. Segment operating earnings were $204.8 million in the third quarter of fiscal 2014 compared to $188.6 million in the third quarter of fiscal 2013. Segment operating margin increased to 28.6 percent in the third quarter of fiscal 2014 from 28.1 percent a year ago, primarily due to higher sales, partially offset by increased spending. Through the nine months ended June 30, 2014, Architecture & Software sales increased 7 percent and segment operating margin expanded 140 basis points.

Control Products & Solutions
Control Products & Solutions fiscal 2014 third quarter sales were $934.3 million, a decrease of 2 percent compared to $953.2 million in the same period last year. Organic sales also decreased 2 percent. Segment operating earnings were $121.3 million in the third quarter of fiscal 2014 compared to $129.2 million in the third quarter of fiscal 2013. Segment operating margin was 13.0 percent in the third quarter of fiscal 2014, down from 13.6 percent a year ago, primarily due to lower sales. Through the nine months ended June 30, 2014, Control Products & Solutions sales increased 3 percent and segment operating margin expanded 10 basis points.