• Revenue growth of 8 percent in the quarter
• Diluted EPS from continuing operations of $1.08, excluding special charges
• Return on invested capital of 24 percent
Rockwell Automation, Inc. reports fiscal 2008 fourth quarter revenue of $1,484.3 million, up 8 percent compared to $1,370.5 million in 2007. Foreign currency translation contributed 2 percentage points and acquisitions contributed 1 percentage point to the growth rate.
Fiscal 2008 fourth quarter income from continuing operations was $125.6 million or $0.87 per share. Income from continuing operations for the fourth quarter, excluding special charges of $46.7 million ($30.4 million after tax, or $0.21 per share), was $156.0 million or $1.08 per share. Earnings per share from continuing operations for the fourth quarter of 2007 were $1.07. Segment operating earnings were $269.1 million, down 2 percent compared to $275.2 million in 2007.
Fourth quarter 2008 free cash flow from continuing operations was $197.2 million. Return on invested capital for 2008 was 24.0 percent.
Full Year 2008
Sales for the full year were $5,697.8 million, up 14 percent compared to $5,003.9 million in fiscal 2007. Foreign currency translation contributed 5 percentage points and acquisitions contributed 3 percentage points to the growth rate. Full year 2008 income from continuing operations was $577.6 million or $3.90 per share. Income from continuing operations for the year, excluding special charges of $46.7 million ($30.4 million after tax, or $0.21 per share), was $608.0 million or $4.11 per share. Earnings per share from continuing operations excluding special charges for 2007 were $3.70. Segment operating earnings for fiscal 2008 were $1,025.2 million, up 4 percent compared to $984.7 million in 2007. Full year 2008 free cash flow from continuing operations was $458.3 million.
Free cash flow, income from continuing operations excluding special charges, 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, “Our strong performance in the quarter again demonstrated our ability to execute on our growth and performance strategy and capped another very good year. In 2008, we delivered 9% revenue growth excluding currency, increased EPS from continuing operations excluding special charges by 11% and maintained ROIC at 24% in a challenging environment. Our business in emerging markets accelerated and we reached our goal of generating 50% of revenues outside the U.S. We achieved greater penetration in process industries and strong growth in our solutions businesses, demonstrating the on-going diversification of our revenue base. These results are a credit to the focus and hard work of our employees and partners around the world.”
Following is a discussion of fourth quarter results for each of the segments.
Architecture & Software
Architecture & Software fourth quarter sales were $617.1 million, an increase of 8 percent compared to $569.5 million in the fourth quarter of 2007. Foreign currency translation and acquisitions each contributed 2 percentage points to the growth rate. Segment operating earnings were $141.6 million compared to $145.3 million in the fourth quarter of 2007. Architecture & Software segment operating margin was 22.9 percent in the fourth quarter of 2008 compared to 25.5 percent in 2007.
Control Products & Solutions
Control Products & Solutions fourth quarter sales were $867.2 million, an increase of 8 percent compared to sales of $801.0 million in the fourth quarter of 2007. Foreign currency translation contributed 2 percentage points to the growth rate. Segment operating earnings were $127.5 million compared to $129.9 million in the fourth quarter of 2007. Control Products & Solutions segment operating margin was 14.7 percent in the fourth quarter of 2008 compared to 16.2 percent in 2007.
General Corporate – Net
Fourth quarter general corporate net expense was $24.5 million compared to $22.2 million in the fourth quarter of 2007. General corporate net expense for the full year was $77.2 million compared to $72.8 million in 2007.
The effective tax rate for the fourth quarter of 2008 was 28.9 percent (30.2 percent excluding the impact of special charges) compared to 29.2 percent in 2007. The effective tax rate for the full year was 28.6 percent (28.9 percent excluding the impact of special charges) compared to 27.8 percent in 2007.
During the quarter, the Company repurchased 2.5 million shares at a cost of $103.5 million. The Company had $671.2 million available at September 30, 2008 under its existing $1.0 billion share repurchase authorization.
Fiscal 2009 Outlook
A conference call to discuss our fiscal 2008 financial results and outlook for fiscal 2009 will take place at 8:30 A.M. Eastern Time on November 11. The call and related financial charts will be webcast and accessible via the Rockwell Automation website (www.rockwellautomation.com).
This news release contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “expect”, “project”, “plan”, “anticipate”, “will”, “intend” and other similar expressions may identify forward- looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:
• economic and political changes in global markets where we compete, such as currency exchange rates, inflation rates, interest rates, recession, policies of foreign governments and other external factors we cannot control, and U.S. and local laws affecting our activities abroad and compliance therewith;
• successful development of advanced technologies and demand for and market acceptance of new and existing products;
• general global and regional economic, business or industry conditions, including levels of capital spending in industrial markets;
• the availability, effectiveness and security of our information technology systems;
• competitive product and pricing pressures;
• disruption of our operations due to natural disasters, acts of war, strikes, terrorism, or other causes;
• intellectual property infringement claims by others and the ability to protect our intellectual property;
• our ability to successfully address claims by taxing authorities in the various jurisdictions where we do business;
• our ability to attract and retain qualified personnel;
• the uncertainties of litigation;
• disruption of our North American distribution channel;
• the availability and price of components and materials;
• successful execution of our cost productivity, restructuring and globalization initiatives;
• our ability to execute strategic actions, including acquisitions and integration of acquired businesses; and
• other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission filings.
These forward-looking statements reflect our beliefs as of the date of filing this release. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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