Rockwell Automation (ROK) Tops In Q3, Curbs Sales Outlook
Zacks Investment Research | Jul 27, 2016 03:23AM ET
Rockwell Automation, Inc. (NYSE:ROK) reported adjusted earnings per share of $1.55 in third-quarter fiscal 2016, down 3% from $1.59 earned in the prior-year quarter. Earnings, however, outpaced the Zacks Consensus Estimate of $1.46 and recorded a positive earnings surprise of 6%.
Including one-time items, the company’s earnings came in at $1.46 per share, down 4% from the year-ago quarter figure of $1.52.
Total revenue was $1,474 million in the quarter, declining 6.4% year over year and also missed the Zacks Consensus Estimate of $1,487 million. Organic sales fell 4.8%, while unfavorable foreign currency translations had an impact of 1.8%.
Operational Update
Cost of sales dropped 4.4% year over year to $857 million. Gross profit tanked 9% to $616.8 million from $678.2 million in the year-ago quarter. Gross margin contracted 130 basis points (bps) to 41.8%.
Selling, general and administrative expenses decreased 7.9% to $346.7 million. Consolidated segment operating income was $311 million, down 10% from $343.7 million in the prior-year quarter. Operating margin contracted 70 bps to 21.1% primarily due to lower sales.
Segment Results
Architecture & Software: Net sales went down 2.5% year over year to $666.4 million. Organic sales decreased 1.3%, while currency translations hurt sales by 1.6%. Segment operating earnings were $184.2 million, compared with $200 million a year ago. Operating margin contracted 160 bps to 27.6% from 29.2% a year ago, primarily due to lower sales and unfavorable mix and currency effects.
Control Products & Solutions: Net sales fell 9.4% to $807.6 million. Organic sales declined 7.5%, while currency translations dented sales by 1.9%. Segment operating earnings dropped 11.8% to $126.8 million from $143.8 million in the year-ago quarter. Operating margin decreased 40 bps to 15.7%.
Financials
As of Jun 30, 2016, cash and cash equivalents were $1,509.3 million, up from $1,427.3 million as of Sep 30, 2015. As of Jun 30, 2016, long-term debt was $1,521.8 million, up from $1,500.9 million as of Sep 30, 2015.
Cash flow from operations came in at $675.3 million for the nine-month period ended Jun 30, 2016 compared with $839.7 million in the comparable year-ago period. Return on invested capital was 32.6% as of Jun 30, 2016, decreased from 33.1% in the year-ago quarter.
During the reported quarter, Rockwell Automation repurchased 1.1million of its shares for $121.7 million. As of Jun 30, 2016, $1,075.2 million was available under the existing share repurchase authorization.
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