Rockwell Automation Slashes FY24 Outlook As Q3 Sales Disappoint, CEO Cites Project Delays And Economic Uncertainty

Rockwell Automation, Inc. ROK shares are trading lower after its third-quarter results.

Sales fell 8.4% (on a reported and organic basis) to $2.05 billion, missing the consensus of $2.06 billion.

Segment Details: Intelligent Devices sales declined 1.1% Y/Y to $957 million, Software & Control fell 31.8% Y/Y to $512 million, and Lifecycle Services increased 11.8% Y/Y to $581 million.

Total ARR grew 17%, and organic ARR rose 14% in the quarter. Adjusted EPS was $2.71, beating the analyst consensus of $2.08.

Total segment operating earnings were $427 million in the third quarter of fiscal 2024, down 9.8% Y/Y. Total segment operating margin was 20.8% compared to 21.1% a year ago. The decrease in segment operating margin was mainly due to lower sales volume and an unfavorable mix.

The company held $406.7 million in cash and equivalents as of June-end. In the third quarter, the company bought back around 0.6 million shares for $161.2 million. As of June-end, the company had $0.5 billion worth of shares remaining available under the existing share repurchase authorization.

FY24 Outlook: Rockwell cut the guidance for adjusted EPS from $10.00-$11.00 to ~$9.60 (vs. $10.11 estimate), with reported sales growth guidance to ~(8.5)% from prior (6.0)% – (4.0)% and organic sales growth to ~ (10.0)% from (8.0)% – (6.0)% prior.

Blake Moret, Chairman and CEO, said, “On the demand side, we did see additional project delays this quarter, with customers citing weaker consumer demand, high interest rates, and policy uncertainty around tax, tariffs, and stimulus incentives as the main drivers for deferring their investment plans.”

“Therefore, while we saw progress on inventory de-stocking at our distributors and machine builders in Q3, our low-single-digit sequential growth in orders was lower than we expected.”

“We expect continued sequential order growth in the fourth quarter and into our next fiscal year, but at a more gradual pace than we originally expected. We are reducing our fiscal 2024 guidance to reflect this pace. Margins will continue to show the positive impact of productivity actions and pricing.”

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Investors can gain exposure to the stock via Gabelli Automation ETF GAST and ProShares S&P Kensho Smart Factories ETF MAKX.

Price Action: ROK shares are down 1.91% at $245.99 premarket at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.