Business News

Rockwell Automation Reports Third Quarter Results

Tuesday 22. July 2008 - -- Revenue growth of 15 percent - Diluted EPS of $1.03 - Company expects fiscal 2008 diluted EPS of $4.00 - $4.10

Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2008 third quarter revenue of $1,475.0 million, up 15 percent compared to $1,280.6 million in 2007. Foreign currency translation contributed 5 percentage points and acquisitions contributed 4 percentage points to the growth rate. Fiscal 2008 third quarter income from continuing operations was $152.6 million ($1.03 per share) compared to $167.5 million ($1.07 per share) in 2007. Segment operating earnings were $258.3 million, down 2 percent compared to $262.3 million in 2007. Third quarter 2008 free cash flow from continuing operations was $151.2 million. Return on invested capital expanded 0.8 percentage points to 24.5 percent.

Free cash flow, organic growth and return on invested capital are non-GAAP measures that are defined in the attachments to this release under “Other Supplemental Information”.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, “We delivered solid top line results despite slower than expected growth in Europe and the U.S. Revenue growth was particularly strong in Asia-Pacific, Latin America and our solutions businesses, demonstrating strength in the on-going diversification of our revenue base. Operating margins and EPS grew sequentially but came in lower than 2007, largely driven by continued slower growth in our higher margin product businesses. Given the current environment, we are proactively implementing the appropriate actions to control costs.”

Outlook

Commenting on the outlook, Nosbusch added, “For the remainder of the fiscal year we expect to see continued strength in Asia-Pacific and Latin America as well as in resource-based industries. However, macro-economic conditions in Europe and the U.S. are weakening. We have begun to see a change in buying behavior by some of our customers in consumer related industries, including project delays and curtailed capital spending. In the current environment, we expect fiscal 2008 EPS to be $4.00 – $4.10.

“We continue to monitor market conditions with a view toward rebalancing spending, as well as positioning ourselves to address a potential contraction, should it materialize. We remain committed to executing our growth and performance strategy, including continued investment in core technologies and the globalization of our business.”

Following is a discussion of third quarter results for each of the segments.

Architecture & Software

Architecture & Software third quarter sales were $625.7 million, an increase of 7 percent compared to $582.5 million in the third quarter of 2007. Acquisitions added 1 percentage point and foreign currency translation added 5 percentage points to the growth rate. Segment operating earnings were $154.7 million compared to $164.7 million in the third quarter of 2007. Architecture & Software segment operating margin was 24.7 percent in the third quarter of 2008 compared to 28.3 percent in 2007.

Control Products & Solutions

Control Products & Solutions third quarter sales were $849.3 million, an increase of 22 percent compared to sales of $698.1 million in the third quarter of 2007. Acquisitions added 6 percentage points and foreign currency translation added 5 percentage points to the growth rate. Segment operating earnings were $103.6 million compared to $97.6 million in the third quarter of 2007. Control Products & Solutions segment operating margin was 12.2 percent in the third quarter of 2008 compared to 14.0 percent in 2007.

General Corporate – Net

Third quarter general corporate net expense was $21.9 million compared to $17.6 million in the third quarter of 2007. The third quarter of 2007 benefited from $5.0 million of interest income earned on proceeds of the Power Systems sale.

Income Taxes

The effective tax rate for the third quarter of 2008 was 28.5 percent compared to 26.2 percent in 2007. The tax rate in the third quarter of 2007 was lower due primarily to the resolution of certain federal and state income tax matters. For 2008, the Company expects the full year tax rate to be in a range of 28 to 29 percent.

Share Repurchase

During the quarter, the Company repurchased 1.2 million shares at a cost of $57.4 million. The Company had $774.6 million available at June 30, 2008 under its existing $1.0 billion share repurchase authorization.