Rockwell Automation (ROK) Q1 Earnings & Sales Beat Estimates

Live

Watch: Special coverage of Nvidia CEO Jensen Huang's keynote at GTC 2025

Zacks Equity Research

Thu, Jan 27, 2022, 9:23 AM 5 min read

Rockwell Automation Inc. ROK reported adjusted earnings of $2.14 in first-quarter fiscal 2022 (ended Dec 31, 2021), beating the Zacks Consensus Estimate of $2.00. Compared with earnings of $2.38 reported in the year-ago quarter, the bottom line declined 10% year over year as gains from higher sales were partially offset by negative price/cost mix.

The prior-year quarter’s earnings per share figure of $2.38 included a non-recurring legal settlement gain of 45 cents. Excluding this impact, the company delivered an 11% year-over-year improvement in earnings.

Including other one-time items, the company’s earnings was $2.05 per share in the first quarter of fiscal 2022 compared with the year-ago quarter’s $5.06.

Total revenues were $1,857 million, up 18.7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $1,806 million. Organic sales in the quarter were up 16.8%. Acquisitions contributed 2.6% to sales growth, while currency translation had a negative impact of 0.7%. The company reported record quarterly orders of $2.5 billion, which surged 40% year over year.

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

Rockwell Automation, Inc. price-consensus-eps-surprise-chart | Rockwell Automation, Inc. Quote

Operational Update

Cost of sales increased 21% year over year to around $1,108 million. Gross profit climbed 16% year over year to $749 million. Selling, general and administrative expenses flared up 19.5% year over year to $447 million.

Consolidated segment operating income totaled $355 million, up 15% from the prior-year quarter. Total segment operating margin was 19.1% in the fiscal first quarter, lower than the prior-year period’s 19.8%. Higher planned spending and negative price/cost, partially offset by higher sales, led to the contraction in margins.

Segment Results

Intelligent Devices: Net sales amounted to $900 million during the fiscal first quarter, reflecting year-over-year growth of 25%. Segment operating earnings totaled $213 million compared with the year-earlier quarter’s $140 million. Segment operating margin expanded to 23.7% in the quarter compared with the year-ago quarter’s 19.4%.

Software & Control: Net sales climbed 16.5% year over year to $514 million in the reported quarter. Segment operating earnings declined 12% year over year to $117.6 million. Segment operating margin was 22.9% compared with 30.2% in the year-earlier quarter.

Lifecycle Services: Net sales for the segment were $443 million in the reported quarter, reflecting year-over-year growth of 10%. Segment operating earnings totaled $24.5 million, indicating a decline of 32% from the prior-year quarter. Segment operating margin was 5.5% in the reported quarter compared with the year-earlier quarter’s 8.9%.

Financials

As of the end of first quarter of fiscal 2022, cash and cash equivalents were around $540 million compared with $662 million as of the end of fiscal 2021. As of Dec 30, 2021, total debt was around $4.07 billion compared with $3.97 billion as of Sep 30, 2021.

Cash flow from operations during the first quarter of fiscal 2022 was an outflow of $12 million against the prior-year’s inflow of $310 million. Return on invested capital was 20.6% as of Dec 31, 2021.

During the quarter under review, Rockwell Automation repurchased 0.2 million shares for $49.4 million. As of the end of the quarter, $503 million was available under the existing share-repurchase authorization.

Fiscal 2022 Guidance

Reflecting strong demand and record backlog, Rockwell Automation expects reported sales growth at 16-19% for fiscal 2022. Organic sales growth is projected at 14-17%. Adjusted earnings per share guidance for fiscal 2022 is expected to be $10.50-$11.10.

Share Price Performance

Image Source: Zacks Investment Research

Over the past year, Rockwell Automation’s shares have appreciated 23.6% compared with the industry’s rally of 12.8%.

Zacks Rank & Stocks to Consider

Rockwell Automation currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are MRC Global MRC, Titan International TWI and Sealed Air Corporation SEE. While MRC and TWI flaunt a Zacks Rank #1 (Strong Buy), SEE carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MRC Global has an estimated earnings growth rate of around 212% for fiscal 2022. In the past 90 days, the Zacks Consensus Estimate for fiscal 2022 earnings has been revised 11% upward.

In a year, MRC Global’s shares have gained 17%. MRC has a trailing four-quarter earnings surprise of 61.7%, on average.

Titan International has an expected earnings growth rate of 163% for 2022. The Zacks Consensus Estimate for current-year earnings has moved north by 19% in the past 60 days.

Titan International’s shares have surged 51% in the past year. TWI has a trailing four-quarter earnings surprise of 32.1%, on average.

Sealed Air has a projected earnings growth rate of 16.8% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 4% in the past 90 days.

SEE’s shares have appreciated 53% in a year. Sealed Air has a trailing four-quarter earnings surprise of 6.5%, on average.