Spent the morning on a couple of conference calls relating to Rockwell Automation’s release of its financials for the second quarter of its fiscal year 2010. The bottom line: Pretty good, all things considered—and way better than 2009. Fiscal 2010 second quarter revenue was $1,164.5 million, up 10 percent compared to a year ago. Fiscal 2010 second quarter revenue was up 9 percent sequentially compared to the first quarter. Fiscal 2010 second quarter income from continuing operations was $111.9 million ($0.77 per share), compared to $40.6 million ($0.29 per share) a year ago. The rest of the numbers are
here. The numbers weren’t all good. Rockwell divides its business into two segments: Control Products & Solutions (CP&S) and Architecture & Software (A&S). A&S carried the ball for most of Rockwell’s financial gains this quarter, with a 31-percent year-over-year increase in sales and a 10-percent sequential increase. Operating earnings were up a whopping 269 percent year over year. CP&S did not fair nearly as well. Sales decreased 2 percent year over year, but increased 8 percent sequentially. Operating earnings were up 3.2 percent year over year. Nosbusch and Crandall are optimistic about growth for the remainder of fiscal 2010. They have their highest confidence in the growth of their automotive business, which is not surprising, given Rockwell’s history, but also expect solid expansion in the next months in their OEM, food, beverage and brewing, and personal care lines, as well as in oil and gas, especially in the later part of the year. In a second conference call with RA CEO, Keith Nosbusch and CFO, Ted Crandall, Nosbusch explained CP&S’s relatively poor numbers this way: “CP&S is made up of two pieces: The product business, which is less than 50%, and solutions. Taken by itself, the products portion on the business performed similarly to A&S, which is also a product business. The solutions business is where we had negative growth on a year-to-year basis. Solutions is tough because of a backlog of orders. In second half of year, we didn’t get a lot of orders. That will switch in the second half of the year, when we’re expecting growth in the mid-teens.” CFO Crandall added, “Solutions is a late-cycle business. There’s a longer lag from the time we get an order to the time of shipment and payment. What we’re experiencing in terms of products leading us out of recession is about what we expected. Our performance is pretty much what we expected.”In this second call, we also talked about Rockwell’s plans moving forward. The company plans investments across the company in three areas—integrated architecture and safety and information, both in the A&S business, and intelligent motor control in CP&S. Nosbusch said Rockwell will increase spending in core technology, such as the Logix platform, expanding its scalability, functionality and performance. He said the company will also spend on its “customer-facing” activities, that is, its sales force, application engineering and support, especially in its emerging markets. Nosbusch says that end users can look for further developments in Rockwell’s “information” sector—the software, hardware and services required to support connectivity between the plant floor, the enterprise and the external supply chain; MES; advanced process control; manufacturing decision support; manufacturing intelligence for the plant floor and regulatory compliance. He added that the strategy of developing some of the necessary expertise in these areas through acquisitions, such as those that brought Pavilion Technologies, Incuity and DataSweep into the Rockwell fold, is still in place and that more acquisitions are possible.As to the recurrent rumors that Rockwell itself might be a target for acquisition, Nosbusch said, “We think the best way to maintain shareholder value is for Rockwell to remain an independent company.”
