ROCKWELL AUTOMATION, INC Q1 FY2025 earnings call

• Blake Moret highlighted early benefits of operational excellence and cost discipline, with $250 million productivity benefits plan intact despite currency headwinds. - Confidence in mitigating tariff impacts by leveraging US manufacturing position. - Strong order performance with mid-single digit sequential growth, strong orders for Logix controllers and IO. - Segment-specific highlights: Intelligent Devices had double-digit organic sales decline but CUBIC and ClearPath acquisitions saw growth; Software and Control saw Logix orders and sales at double digits; Lifecycle Services organic sales up 5% with book to bill 1.05. - Industry segment performance: Discrete sales down mid-single digits with e-commerce/warehouse automation growth; Hybrid sales slightly above expectations with food/beverage and life sciences wins; Process industries sales down high single digits with mixed energy customer reactions. - Regional sales: Americas outperformed, EMEA down 14%, APAC down 9% led by China decline.

Intelligent Devices: Organic sales down 12% year over year. Margin of 14.9% decreased by 130 basis points. Software and Control: Organic sales declined about 12% but were above expectations. Margin of 25.1% flat with prior year. Lifecycle Services: Organic sales up 5% year over year. Margin of 12.5% decreased 190 basis points. Overall, the segments showed varied performance with Intelligent Devices facing organic sales decline and margin compression, while Software and Control maintained margin and Lifecycle Services saw growth but margin decrease.

• Organic sales expected in range of negative 4% to positive 2%. - Reported sales guidance adjusted to midpoint negative 2.5% due to currency headwinds. - Adjusted EPS range unchanged at $8.60 to $9.80, midpoint $9.20. - Expect sequential sales improvement through the year, with Intelligent Devices sales down mid-single digits and Software/Control and Lifecycle Services flat; ITD margin down, Software/Control margins to expand, Lifecycle Services margin flat to slightly down.

• Currency fluctuations impacting earnings. - Tariffs and their potential impact on profitability and supply chain. - Macroeconomic and policy uncertainty affecting customers' capital expenditure plans. - Supply chain disruptions and volatility from global events.

Q: Scott Davis asked about SKU rationalization and its impact on 2025.

A: Christian Rothe said SKU rationalization was starting with low-hanging fruits, with no significant near-term impact.

Q: Andy Kaplowitz inquired about orders up mid-single digits sequentially.

A: Blake Moret said orders reflected underlying market improvement, with destock done in most areas, strong in e-commerce/warehouse automation and some life sciences areas.

Q: Chris Snyder asked about book to bill and regional inventory.

A: Blake Moret said orders better than expected, with North America distribution normalized, Europe machine builders' inventory normalizing, and China having a small drag.

Q: Joe O'Dea asked about cost out and channel inventories.

A: Christian Rothe said cost out momentum building, with manufacturing efficiency and sourcing contributing, and channel inventories mostly sorted out with North America and Europe normalized, China having a small drag.

Q: Noah Kaye asked about margin drivers.

A: Christian Rothe said mix, temporary cost measures, and better cost reduction/margin expansion activities contributed to margin outperformance.

Q: Jeff Sprague asked about corporate expense and Asia Pacific.

A: Christian Rothe said corporate expense increased due to execution costs on margin activities, and Asia Pacific expected to be weakest with EMEA stabilizing and China having structural challenges.

Q: Robert Mason asked about pricing and repricing backlog.

A: Blake Moret said tariffs were handled immediately, with quick price changes and communication to customers about repricing backlog.