Rockwell Automation Inc. (NYSE:ROK) Q1 2018 Earnings Conference Call - Final Transcript

Jan 24, 2018 • 08:30 am ET


Rockwell Automation Inc. (NYSE:ROK) Q1 2018 Earnings Conference Call - Final Transcript


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Blake Moret

for global GDP and industrial production. Obviously, US tax reform is an important event, but we are optimistic that the impact of US tax reform on our customers' investment decisions could provide an additional tailwind to our future performance. It is too early to quantify the benefits.

An immediate benefit of tax reform for us is a lower effective tax rate in Q1 and going forward. The lower tax rate will drive improved profitability, thus giving us the ability to make additional investments. Another benefit of tax reform to Rockwell is that we will have much more flexibility to deploy capital.

That said, I want to emphasize that our investment and capital deployment priorities remain the same, as summarized on Slide 4. Our first priority is investing in our business to drive organic growth. A new guidance for fiscal 2018 includes incremental investments to accelerate profitable growth and other long-term objectives. Examples include accelerated software development, investments to help our employees be even more engaged and productive and, importantly, spending to enable customer innovation and complement our existing workforce development initiatives.

Our next priority is strategic acquisitions. We are actively engaged in the evaluation of inorganic opportunities to accelerate our connected enterprise strategy. We will then return remaining excess cash to share owners through dividends and repurchases.

Turning to guidance, we still expect our fiscal 2018 organic sales to be up 5% year-over-year at the midpoint of guidance and expect full year reported sales to be about $6.7 billion, including the impact of currency. Compared to our expectations back in November, we now see slightly better growth in heavy industries and a weaker transportation vertical. We continue to expect Consumer to grow at about the company average.

We are adjusting our EPS guidance to include the expected impact of US tax reform on our full year results. Our new adjusted EPS guidance range is $7.60 to $7.90. Patrick will provide more detail around sales and earnings guidance in his remarks, including more specifics on the impacts of tax reform on our Q1 financial results and fiscal 2018 guidance.

Before I turn it over to Patrick, let me add a few closing comments. At Automation Fair in November, we showcased how we are bringing The Connected Enterprise to life for our customers. We continue to make progress executing this strategy, and the new value from The Connected Enterprise continues to grow at a double-digit rate.

You've heard before from us how we practice what we preach, and I'm glad to say that we are being recognized for our efforts. Our Twinsburg, Ohio plant recently received the 2017 Plant Engineering magazine top plant award for its innovative use of technology to enhance work or productivity. We've deployed our own manufacturing execution software and analytic tools to optimize productivity, improve quality and increase sustainability. Congratulations to the team.

Finally, I would like to thank our employees, partners and suppliers for their contributions to another successful quarter.

With that, I'll turn it over to