Rockwell Automation, Inc. Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>Rockwell Automation, Inc. filed its quarterly report (10-Q) for the period ending December 31, 2023, detailing its financial performance and position.</b>

AI Summary

ROCKWELL AUTOMATION, INC (ROK) filed a Quarterly Report (10-Q) with the SEC on January 31, 2024. Rockwell Automation, Inc. filed a 10-Q report for the period ending December 31, 2023. The filing covers the first quarter of fiscal year 2024. The company's fiscal year ends on September 30th. The filing was made on January 31, 2024. The company's headquarters are located in Milwaukee, WI.

Why It Matters

For investors and stakeholders tracking ROCKWELL AUTOMATION, INC, this filing contains several important signals. This 10-Q filing provides investors with an updated view of Rockwell Automation's financial health and operational performance for the most recent fiscal quarter. Understanding the details within this report is crucial for assessing the company's trajectory, identifying potential risks, and making informed investment decisions.

Risk Assessment

Risk Level: medium — ROCKWELL AUTOMATION, INC shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q), which typically contains routine financial information. However, the absence of specific financial performance data in the provided header prevents a more granular risk assessment.

Analyst Insight

Review the full 10-Q filing to analyze specific revenue, net income, and debt figures to assess Rockwell Automation's financial performance and outlook.

Key Numbers

• 2023-12-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-01-31 — Filing Date (FILED AS OF DATE)
• 2023-10-01 — Quarter Start Date (Fiscal Quarter)
• 0930 — Fiscal Year End (FISCAL YEAR END)

Key Players & Entities

• ROCKWELL AUTOMATION, INC (company) — FILER
• 2024-01-31 (date) — FILED AS OF DATE
• 2023-12-31 (date) — CONFORMED PERIOD OF REPORT
• 3829 (industry_code) — STANDARD INDUSTRIAL CLASSIFICATION
• DE (state) — STATE OF INCORPORATION
• 0930 (date) — FISCAL YEAR END
• 1934 (act) — SEC ACT
• 414-382-2000 (phone) — BUSINESS PHONE

Forward-Looking Statements

• Rockwell Automation will continue to see growth in its Service segment, potentially offsetting further declines in Products & Solutions. (Rockwell Automation, Inc.) — medium confidence, target: 2024-09-30

FAQ

Industry Context

Rockwell Automation operates in the industrial automation and digital transformation sector, providing solutions for manufacturing and industrial processes.

Regulatory Implications

As a publicly traded company, Rockwell Automation is subject to the reporting requirements of the Securities and Exchange Commission (SEC), including the filing of quarterly reports on Form 10-Q.

What Investors Should Do

1. Analyze the detailed financial statements within the 10-Q for revenue, net income, and cash flow.
2. Review management's discussion and analysis (MD&A) for insights into the company's performance drivers and outlook.
3. Examine any disclosed risk factors or legal proceedings that could impact the company's future operations.

Key Dates

• 2024-01-31: 10-Q Filing — Filing of the quarterly report for the period ending December 31, 2023.
• 2023-12-31: Reporting Period End — End date for the financial reporting period covered by the 10-Q.
• 2023-10-01: Quarter Start Date — Beginning of the fiscal quarter reported in the 10-Q.

Year-Over-Year Comparison

This is the initial 10-Q filing for the period ending December 31, 2023. Previous filings would cover different reporting periods.

Key Financial Figures

• $1.00 — ange on which registered Common Stock ($1.00 par value) ROK New York Stock Exchange

Filing Documents

• rok-20231231.htm (10-Q) — 1139KB
• q1fy24rokex15.htm (EX-15) — 3KB
• q1fy24rokex311.htm (EX-31.1) — 8KB
• q1fy24rokex312.htm (EX-31.2) — 9KB
• q1fy24rokex321.htm (EX-32.1) — 4KB
• q1fy24rokex322.htm (EX-32.2) — 4KB
• 0001024478-24-000008.txt (&nbsp;) — 6696KB
• rok-20231231.xsd (EX-101.SCH) — 42KB
• rok-20231231_cal.xml (EX-101.CAL) — 97KB
• rok-20231231_def.xml (EX-101.DEF) — 173KB
• rok-20231231_lab.xml (EX-101.LAB) — 621KB
• rok-20231231_pre.xml (EX-101.PRE) — 389KB
• rok-20231231_htm.xml (XML) — 989KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheet 4 Consolidated Statement of Operations 5 Consolidated Statement of Comprehensive Income 6 Consolidated Statement of Cash Flows 7 Consolidated Statement of Shareowners' Equity 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 24

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 38

Controls and Procedures

Item 4. Controls and Procedures 38

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 39

Risk Factors

Item 1A. Risk Factors 39

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 39

Other Information

Item 5. Other Information 40

Exhibits

Item 6. Exhibits 42

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements ROCKWELL AUTOMATION, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (in millions, except per share amounts) December 31, 2023 September 30, 2023 ASSETS Current assets Cash and cash equivalents $ 439.5 $ 1,071.8 Receivables 1,934.9 2,167.4 Inventories 1,474.0 1,404.9 Other current assets 287.5 266.7 Total current assets 4,135.9 4,910.8 Property, net of accumulated depreciation of $ 1,866.3 and $ 1,828.3 , respectively 705.0 684.2 Operating lease right-of-use assets 350.1 349.4 Goodwill 3,966.7 3,529.2 Other intangible assets, net 1,190.4 852.4 Deferred income taxes 461.8 459.3 Long-term investments 161.9 157.1 Other assets 361.5 361.6 Total $ 11,333.3 $ 11,304.0 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities Short-term debt $ 501.4 $ 94.7 Current portion of long-term debt 9.9 8.6 Accounts payable 935.0 1,150.2 Compensation and benefits 269.9 499.9 Contract liabilities 595.3 592.5 Customer returns, rebates and incentives 390.8 452.0 Other current liabilities 608.6 567.4 Total current liabilities 3,310.9 3,365.3 Long-term debt 2,863.0 2,862.9 Retirement benefits 513.4 503.6 Operating lease liabilities 277.9 285.3 Other liabilities 581.0 543.5 Commitments and contingent liabilities (Note 13) Shareowners' equity Common stock ($ 1.00 par value, shares issued: 181.4 ) 181.4 181.4 Additional paid-in capital 2,111.3 2,102.5 Retained earnings 9,326.5 9,255.2 Accumulated other comprehensive loss ( 729.8 ) ( 790.1 ) Common stock in treasury, at cost (shares held: 66.8 and 66.6 , respectively) ( 7,281.7 ) ( 7,187.4 ) Shareowners' equity attributable to Rockwell Automation, Inc. 3,607.7 3,561.6 Noncontrolling interests 179.4 181.8 Total shareowners' equity 3,787.1 3,743.4 Total $ 11,333.3 $ 11,304.0 See Notes to Consolidated Financial Statements. 4 Table of Contents CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (in millions, except per share amounts) Three Months Ended December 31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Accounting Policies In the opinion of management of Rockwell Automation, Inc. ("Rockwell Automation" or "the Company"), the unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the periods presented and, except as otherwise indicated, such adjustments consist only of those of a normal, recurring nature. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The results of operations for the three months ended December 31, 2023, are not necessarily indicative of the results for the full year. All date references to years and quarters herein refer to our fiscal year and fiscal quarter, unless otherwise stated. Receivables We record an allowance for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. Receivables are recorded net of an allowance for doubtful accounts of $ 19.3 million at December 31, 2023, and $ 16.8 million at September 30, 2023. The changes to our allowance for doubtful accounts during the three months ended December 31, 2023 and 2022, were not material and primarily consisted of current-period provisions, write-offs charged against the allowance, recoveries collected, and foreign currency translation. Earnings Per Share The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions, except per share amounts): Three Months Ended December 31, 2023 2022 Net income attributable to Rockwell Automation, Inc. $ 215.2 $ 384.0 Less: Allocation to participating securities ( 1.0 ) ( 1.5 ) Net income available to common shareowners $ 214.2 $ 382.5 Basic weighted average outstanding shares 114.6 114.8 Effect of dilutive securities Stock options 0.6 0.6 Perfo

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Supplier Financing Arrangements The Company maintains agreements with third-party financial institutions that offer voluntary supply chain financing (SCF) programs to suppliers. The SCF programs enable suppliers, at their sole discretion, to sell their receivables to third-party financial institutions in order to receive payment on receivables earlier than the negotiated commercial terms between suppliers and the Company. Supplier sale of receivables to third-party financial institutions is on terms negotiated between the supplier and the respective third-party financial institution. The Company agrees on commercial terms for the goods and services procured from suppliers, including prices, quantities, and payment terms, regardless of whether the supplier elects to participate in the SCF programs. A supplier's voluntary participation in the SCF programs has no bearing on the Company's payment terms and the Company has no economic interest in a supplier's decision to participate in the SCF programs. The Company agrees to pay participating third-party financial institutions the stated amount of confirmed invoices from suppliers on the original maturity dates of the invoices. Amounts outstanding related to SCF programs are included in Accounts payable in the Consolidated Balance Sheet and in changes in Accounts payable on the Consolidated Statement of Cash Flows. Accounts payable included approximately $ 117.5 million and $ 126.7 million related to these agreements as of December 31, 2023, and September 30, 2023, respectively. The impact of these programs is not material to the Company's overall liquidity. Recently Adopted Accounting Pronouncements In September 2022, the Financial Accounting Standards Board (FASB) issued a new standard that requires companies to apply Accounting Standards Codification (ASC) 405-50 to disclose supplier finance program obligations. We adopted the new standard as of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Unfulfilled Performance Obligations As of December 31, 2023, we expect to recognize approximately $ 1,121 million of revenue in future periods from unfulfilled performance obligations from existing contracts with customers. We expect to recognize revenue of approximately $ 716 million from our remaining performance obligations over the next 12 months with the remaining balance recognized thereafter. We have applied the practical expedient to exclude the value of remaining performance obligations for (i) contracts with an original term of one year or less and (ii) contracts for which we recognize revenue in proportion to the amount we have the right to invoice for services performed. The amounts above also do not include the impact of contract renewal options that are unexercised as of December 31, 2023. Disaggregation of Revenue The following table presents our revenue disaggregation by geographic region for our three operating segments (in millions). We attribute sales to the geographic regions based on the country of destination. Three Months Ended December 31, 2023 Three Months Ended December 31, 2022 Intelligent Devices Software & Control Lifecycle Services Total Intelligent Devices Software & Control Lifecycle Services Total North America $ 604.3 $ 386.6 $ 256.2 $ 1,247.1 $ 567.4 $ 384.1 $ 227.4 $ 1,178.9 Europe, Middle East, and Africa 166.6 99.8 121.9 388.3 171.2 85.8 115.8 372.8 Asia Pacific 97.9 79.0 98.7 275.6 131.3 68.4 96.8 296.5 Latin America 58.5 38.2 44.4 141.1 66.3 35.0 31.5 132.8 Total Company Sales $ 927.3 $ 603.6 $ 521.2 $ 2,052.1 $ 936.2 $ 573.3 $ 471.5 $ 1,981.0 Contract Liabilities Contract liabilities primarily relate to consideration received in advance of performance under the contract. Below is a summary of our Contract liabilities balance, the portion not expected to be recognized within twelve months is included within Other liabilities in the Consolidat

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 3. Share-Based Compensation We recognized $ 24.2 million and $ 18.4 million of pre-tax share-based compensation expense during the three months ended December 31, 2023 and 2022, respectively. Our annual grant of share-based compensation takes place during first quarter of each year. The number of shares granted to employees and non-employee directors and the weighted average fair value per share during the periods presented were (in thousands, except per share amounts): Three Months Ended December 31, 2023 2022 Grants Wtd. Avg. Share Fair Value Grants Wtd. Avg. Share Fair Value Stock options 217 $ 85.91 233 $ 77.62 Performance shares 79 295.06 66 340.77 Restricted stock units 235 276.46 211 259.67 Unrestricted stock 5 279.50 6 259.81 4. Inventories Inventories consist of (in millions): December 31, 2023 September 30, 2023 Finished goods $ 569.9 $ 545.9 Work in process 367.5 395.7 Raw materials 536.6 463.3 Inventories $ 1,474.0 $ 1,404.9 5. Acquisitions 2024 Acquisitions In October 2023, we acquired Clearpath Robotics, Inc. (Clearpath), a company that specializes in autonomous robotics for industrial applications, headquartered in Ontario, Canada. We recorded assets acquired and liabilities assumed in connection with this acquisition based on their estimated fair values as of the acquisition date of October 2, 2023. The preliminary aggregate purchase price allocation is as follows (in millions): Purchase Price Allocation Receivables $ 8.2 Inventory 22.1 Goodwill 267.0 Intangible assets 313.1 All other assets 10.8 Total assets acquired 621.2 Less: Liabilities assumed ( 12.7 ) Net assets acquired $ 608.5 Purchase Consideration Cash consideration, net of cash acquired $ 565.5 Contingent consideration 43.0 Total purchase consideration, net of cash acquired $ 608.5 12 Table of Contents ROCKWELL AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Intangible assets identified include $ 269.6 million of technology, $ 41.6 million of trademarks, and $ 1.9 million of customer relationships. We assigned the full amount of goodwill and all other assets acquired to our Intelligent Devices segment. The goodwill recorded represents intangible assets that do not qualify for separate recognition. This goodwill arises because the purchase price for Clearpath reflects a number of factors including the future earnings and cash flow potential for the business and resulting synergies from the business portfolio and industry expertise. We do not expect the goodwill to be deductible for tax purposes. The intangible assets were valued using an income approach, specifically the relief from royalty method and multi-period excess earnings method. The relief from royalty method calculates value based on hypothetical payments that would be saved by owning an asset rather than licensing it. The multi-period excess earnings method is the isolation of cash flows from a single intangible asset and measures fair value by discounting them to present value. These values are considered level 3 measurements under the U.S. GAAP fair value hierarchy. The key assumption requiring the use of judgement in the valuation of the technology asset was the obsolescence factor, where we estimated a phase out over 12 years; other assumptions included forecasted revenue growth rates and margin and the discount rate. The key assumption requiring the use of judgement in the valuation of the trademarks asset was the weighted average royalty rate of 2.05 percent; other assumptions included forecasted revenue growth rates and the discount rate. The purchase price includes up to $ 50 million in contingent consideration dependent on future Clearpath revenue performance. We developed various risk-based scenarios and a probability outcome model to measure the fair value of the contingent consi

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Total sales from all of the above 2024 acquisitions in the three months ended December 31, 2023 were $ 17.2 million. Total acquisition-related costs from all of the above 2024 acquisitions in the three months ended December 31, 2023, were not material. 2023 Acquisitions In October 2022, we acquired CUBIC, a company that specializes in modular systems for the construction of electrical panels, headquartered in Bronderslev, Denmark. We assigned the full amount of goodwill related to this acquisition to our Intelligent Devices segment. In February 2023, we acquired Knowledge Lens, a services and solutions provider headquartered in Bengaluru, India. We assigned the full amount of goodwill related to this acquisition to our Lifecycle Services segment. We recorded assets acquired and liabilities assumed in connection with these acquisitions based on their estimated fair val

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