Rockwell Automation, Inc.
) reported third-quarter fiscal 2014 (ended Jun 30, 2014) adjusted
earnings of $1.49 per share, down 3.2% from $1.54 earned in the
prior-year quarter. Results fell short of the Zacks Consensus
Estimate of $1.56. Adjusted earnings in the third quarter were
negatively impacted by 11 cents due to a higher tax rate, owing
primarily to the year-over-year decrease in tax benefits recognized
in the prior year over year quarter.
The company's reported earnings came in at $1.43 per share, a
decline of 1.4% from $1.45 reported in the year ago quarter.
Total revenue was $1,649.5 million in the quarter, up 1.6% year
over year. Revenues also fell short of the Zacks Consensus Estimate
of $1,685 million. Organic sales grew 2% year over year. The
company witnessed strong growth in Architecture & Software
segment while sales declined slightly at its Control Products &
Rockwell Automation, Inc - Earnings Surprise |
Cost of sales increased around 0.3% year over year to $968
million. Gross profit rose 4.4% to $681.5 million from $652.9
million in the year-ago quarter. Gross margin expanded 110 basis
points (bps) year over year to 41.3%.
Selling, general and administrative expenses went up 2.8% from
the prior-year quarter to $394.4 million. Consolidated segment
operating income was $326.1 million, up 2.6% from $317.8 million in
the third quarter of 2013. The operating margin expanded 20 bps
year over year to 19.8% on the back of higher sales.
Architecture & Software:
Net sales increased 7% year over year to $715.2 million in the
third quarter. Segment operating earnings were $204.8 million, as
against $188.6 million in the year-ago quarter. Segment operating
margin increased to 28.6% from 28.1% a year ago.
Control Products & Solutions:
Net sales declined 2% year over year to around $934.3 million.
Segment operating earnings decreased 6.5% to $121.3 million from
$129.2 million in the year-ago quarter. Segment operating margin
contracted 60 bps year over year to 13% due to lower sales.
As of Jun 30, 2014, cash and cash equivalents amounted to $1175
million versus $1024.7 million as of Jun 30, 2013. As of Jun 30,
2014, long-term debt was $905.4 million, almost flat compared
$905.1 million as of Jun 30, 2013.
Cash flow from operations was $301.1 million during
second-quarter 2014, as against $293.9 million in the year-ago
comparable period. Return on invested capital was 29.6% as of Jun
301, 2014, compared with 31% as of Jun 30, 2013.
During the reported quarter, Rockwell Automation repurchased 1
million shares for $122.4 million. As of Jun 30, 2014, the company
had $191.4 million worth of shares remaining under the $1 billion
share repurchase authorization.
Rockwell Automation trimmed its organic revenue growth rate and now
expects it to be in the range of 4% to 6% from its previous range
of 3.5%-6.5%. The company also reduced its outlook for adjusted
earnings per share which is now expected to be in the range of
$6.10 to $6.25 from its earlier expectation of $6.00 to $6.35.
However the mid point of both the ranges remain the same as before.
The company expects full-year adjusted effective tax rate for
fiscal 2014 to be about 27.5%.
Rockwell Automation will benefit from expansion in the emerging
markets and strategic acquisitions. Additionally, a strong balance
sheet position and free cash flow, along with dividends and share
repurchases are expected to generate long-term shareholder value.
Even though the European economy is gradually strengthening,
macroeconomic conditions might continue to be a headwind for
Rockwell Automation in fiscal 2014.
Milwaukee, WI-based Rockwell Automation is a leading global
provider of industrial automation equipment, application-specific
integrated software and consulting design services. It also offers
industrial automation power, control and information solutions.
Currently, Rockwell carries a Zacks Rank #2 (Buy). Other players in
the industrial products industry, which look attractive at current
levels include HollySys Automation Technologies Ltd. (
), iRobot Corporation (
), and Graco Inc. (
). While HollySys Automation holds a Zacks Rank #1 (Strong Buy),
iRobot and Graco hold the same rank as Rockwell Automation.
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