Rockwell Automation, Inc. (ROK) reported an increase in profit to $183.3 million or $1.27 per share in the first quarter of fiscal 2012 from $150.1 million or $1.04 per share in the same quarter of prior fiscal year. The profits exceeded the Zacks Consensus Estimate by 6 cents per share.
Sales in the quarter grew 8% to $1.47 billion, which is lower than the Zacks Consensus Estimate of $1.52 billion. Acquisitions contributed 1 percentage point to the increase in sales while currency translation reduced sales by 1 percentage point.
Operating earnings went up to $283.8 million in the quarter from $222.0 million in the same period of 2011. Operating margin increased to 19.3% from 16.3% a year ago driven by volume leverage.
Segment Results
Architecture & Software: Sales in the quarter rose 6% to $650.5 million. Currency translation reduced sales by 1 percentage point. Operating earnings were $186.3 million compared with $153.1 million in the comparable quarter of fiscal 2011. Operating margin was 28.6% compared with 24.9% a year ago.
Control Products & Solutions: Sales increased 10% to $823.4 million in the quarter. Acquisitions contributed 2 percentage points to the increase in sales while currency translation reduced sales by 1 percentage point. Operating earnings improved to $97.5 million from $68.9 million in 2011. Operating margin was 11.8% compared with 9.2% a year ago.
Tax Rate and Share Repurchase
The effective tax rate in the quarter was 24.5%. The company expects the effective tax rate to be 24% for fiscal 2012.
During the quarter, Rockwell repurchased 0.1 million shares of its common stock for $8.0 million. The company had $194.0 million worth of shares available under the $1.0 billion share repurchase authorization as of December 31, 2011.
Financials
Rockwell had cash and cash equivalents of $884 million as of December 31, 2011, compared with $988.9 million as of September 30, 2011. Total debt was $1.26 billion as of December 31, 2011 compared with $905 million as of September 30, 2011.
In the quarter, the company had a cash outflow of $189.0 million from operating activities compared with an inflow of $12.6 million in the first quarter of fiscal 2011. Capital expenditures during the quarter increased to $31.6 million from $20.3 million a year ago.
Guidance
Based on projected sales of $6.2 billion to $6.5 billion in fiscal 2012, Rockwell reiterated its earnings per share guidance of $5.05 to $5.45 for fiscal 2012.
Our Take
Based in Milwaukee, Wisconsin, Rockwell Automation is an original equipment manufacturer of industrial automation equipment, application specific integrated software and consulting design services. The company is a leading global provider of industrial automation power, control, and information solutions.
Rockwell competes with ABB Ltd (ABB), Emerson Electric Company (EMR) and Siemens AG (SI). Currently, it retains a Zacks #3 Rank on its stock, which translates to a short-term (1 to 3 months) rating of “Hold”.
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