Rockwell Automation, Inc. (Rockwell Automation) has reported total sales of $1.19 billion for the first quarter of fiscal 2009, compared with the total sales of $1.33 billion in the year-ago quarter. It has also reported a net income of $118.4 million, or $0.83 per share, for the first quarter of fiscal 2009, compared with the net income of $156.6 million, $1.04 per share, in the year-ago quarter.
First quarter 2009 free cash flow from continuing operations was $21.8 million versus $78.1 million in the first quarter of 2008. Return on invested capital was 22.3%.
Free cash flow, organic sales 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, “After a very solid October, we experienced a severe decline in customer demand during the second half of the quarter. Deteriorating economic, financial and credit market conditions affected all regions and most industries, aggravated by an unusual number of customer plant shutdowns. As a result, our performance in the first quarter was below our previous expectations. In the face of this challenging environment, we nevertheless are encouraged by the continued success of our process business and 10%organic growth in Latin America.”
Commenting on the outlook, Nosbusch added, “We expect the market environment in 2009 to be extremely difficult. The global recession has grown deeper and wider than we originally anticipated. Key economic indicators and projections continue to weaken and we are seeing a significant deceleration in customer demand. Given the abrupt fall off in sales volume and increasing uncertainty, we are preparing for a revenue decline between 12 and 17%in fiscal 2009, excluding the effects of currency. Based on this outlook and the savings related to cost reduction actions, we are revising our fiscal 2009 earnings guidance downward to a range of $1.55 to $2.25 per share.”
“We are executing the previously announced restructuring actions and are realizing the planned benefits. Given the current environment, we will continue to reduce costs, balancing short-term financial performance with prospects for long-term growth. We are aggressively attacking working capital to improve cash flow conversion. Our balance sheet, revenue diversification strategy and experienced leadership team provide strength in difficult times like these. We remain committed to executing our growth and performance strategy and will preserve investments in core technologies and the globalization of our business.”
Nosbusch added, “Our employees are doing an outstanding job navigating through these global market challenges and are committed to improving our customers’ experience and increasing our share. In these times, manufacturers need more than ever the competitive benefits of our technology, domain expertise and solutions. As we help our customers solve their business needs and better equip them to deal with these difficult market conditions, we are confident that we will emerge from this downturn more competitive than before.”
Following is a discussion of first quarter results for each of the segments.
Architecture & Software
Architecture & Software first quarter sales were $506.4 million, a decrease of 12%from $577.9 million in the first quarter of 2008. Currency translation contributed 6% points to the decline. Segment operating earnings were $109.6 million in the first quarter of 2009 compared to $148.5 million in the first quarter of 2008. Architecture & Software segment operating margin was 21.6%in the first quarter of 2009 compared to 25.7%in the same period of 2008.
Control Products & Solutions
Control Products & Solutions first quarter sales were $682.8 million, a decrease of 9%from $754.0 million in the first quarter of 2008. Currency translation contributed 6% points to the decline. Segment operating earnings were $68.0 million in the first quarter of 2009 compared to $109.0 million in the first quarter of 2008. Control Products & Solutions segment operating margin was 10.0%in the first quarter of 2009 compared to 14.5%in the same period of 2008.
General Corporate – Net
First quarter general corporate net expense was $18.1 million compared to $14.2 million in the first quarter of 2008. General corporate net expense in the first quarter of 2008 benefited from a $6 million gain related to the divestiture of power systems.
The effective tax rate for the first quarter of 2009 was 17.1%, as the company benefited from resolution of a contractual tax obligation and the retroactive extension of the US federal research tax credit. The effective tax rate for the first quarter of 2008 was 28.5%. For 2009, the company now expects the full year tax rate to be in the range of 22 to 26%, subject to quarterly variability.
During the first quarter of 2009, the company repurchased 1.7 million shares at a cost of $50.0 million. The company had $621.2 million available at December 31, 2008 under its $1.0 billion share repurchase authorization.