Rockwell Automation Investor Conference

Transcription

1 Rockwell Automation Investor Conference November 19, 2015

2 Safe Harbor Statement This presentation includes statements related to the expected future results of the company and are therefore forward-looking statements. Actual results may differ materially from those projections due to a wide range of risks and uncertainties, including those that are listed in our SEC filings. This presentation also contains non-gaap financial information and reconciliations to GAAP are included in the appendix. All information should be read in conjunction with our historical financial statements. 2

3 Agenda Strategic Overview Keith Nosbusch, Chairman & CEO Sustainable Market Leadership Frank Kulaszewicz, SVP A&S Blake Moret, SVP CP&S Financial Overview Ted Crandall, SVP & CFO Final Remarks Keith Nosbusch, Chairman & CEO Q & A Session 3

4 Rockwell Automation An Intellectual Capital Company $6.3B in FY15 sales; primarily an organic growth company Automation industry leader for over 110 years The largest pure-play global automation and information company Serving a broad range of end-markets Great financial returns due to technology differentiation, domain expertise and productivity A unique business model based on trusted partnerships Strong culture of ethics and integrity Differentiation Diversification Delivering Results 4

5 Value Creation Strategy VALUE CREATION Above-market organic growth Best in class operating margin & ROIC Strong cash flow Expand customer value; increase shareowner value ABOVE-MARKET GROWTH Expand served market Gain market share Acquisitions as catalysts PRODUCTIVITY Drive productivity to reinvest in the business Working capital management INTELLECTUAL CAPITAL Innovation Domain expertise Asset light 5

6 2015 Macro Trends / Disruptions Four Global Forces Breaking All Trends (McKinsey, May 2015) Disruption Trends Customer Impact Urbanization Accelerating Technological Change Urban population growing by 65 million every year Expect a 150% increase in emerging market annual consumption from 2010 to 2030 One trillion objects expected to connect to the Internet by 2025 Growing demand for consumer goods and energy Secure access to information anywhere, anytime Aging World Greater Global Flows Expect an increase in the share of older workers in the workforce from 14% in 2010 to 22% in 2030 A 5X increase in global trade and financial flows from 1990 to 2012 Skills gap and greater need for productivity to sustain GDP growth Enterprise-wide optimization 6

7 Business Drivers Customers still need: Faster Time to Market Lower Total Cost of Ownership Improved Asset Utilization Enterprise Risk Management Fundamental business drivers haven t changed 7

8 Automation Trends But with technology advancements like customers are now seeking Enterprise-wide connectivity (IT-OT convergence) Real-time actionable information Secure network infrastructure Expertise to fill the skills gap Unified communication for collaboration The Connected Enterprise 8

9 The Connected Enterprise Enabled by Integrated Control and Information Integrated Architecture Intelligent Motor Control Delivered through our core platforms Solutions & Services 9

10 Market Leadership Business model One company, unique market access, industry-leading strategic partners Leading the way with innovation through technological discontinuities Future-proofing our customers production investments Entering new markets, expanding capabilities and gaining share Eg. process, safety, connectivity and information management Right strategy plus great execution market leader 10

11 Our Leadership Continues: High Performance Architecture Delivering business value today! 11

12 Attractive Growth Opportunities $90B PAM Product Available Market (billions) $65 $90 $90B market Connected Enterprise added ~$8B 5-yr CAGR of 8% FY10 FY15 Market Share Market Growth Productivity required to remain globally competitive Installed base refresh Consumer demand in emerging markets Skills gap and aging workforce Market/Customer Share High performance architecture Process (PlantPAx and services) Midrange Powertrain Safety PAM Expansion Network infrastructure Security Information & data management Operational intelligence Bolt-on acquisitions The Connected Enterprise will fuel growth across the spectrum 12

13 Sustainable Market Leadership Delivering Customer Value Frank Kulaszewicz Senior Vice President, Architecture & Software Blake Moret Senior Vice President, Control Products & Solutions 13

14 Agenda Competitive Differentiation at Rockwell Technology Innovation Domain Expertise Delivering Value to Customers Customer Values Case Studies 14

15 Rockwell Automation Approach to Innovation Focus on customer value and productivity Delivered through our technology and services Broad automation and information portfolio Premier Integration Key tenets Scalable deployment Common platform Ease of use Backward Compatibility Future-proof 15

16 Innovation and IP US Patents Issued/Year Programmable Logic Controllers, Drives, Software Logix: Integrated Discrete, Process, Motion, Safety, Motor Control The Connected Enterprise: Integrated Control and Information Electromechanical Products Market Leadership Through Each Discontinuity 16

17 Innovation Enables The Connected Enterprise 17

18 The Resulting Products Deliver New Value Today Smart. Productive. Secure. Evolving Our Architecture With More New Products & Platforms Than Ever Before Processor and I/O Electronic Operator Interface Intelligent Sensors Network Portfolio Information Enabled Intelligent Motor Control Common Software Environment Reusable Engineering Content Safety Devices & Solutions Mobility Information Software & Solutions Tamper and Content Protection Authentication and Policy Management 18

19 Domain Expertise to Serve a Broad Range of Industries CONSUMER TRANSPORTATION LIFE SCIENCES OIL & GAS HEAVY INDUSTRY FOOD, BEVERAGE, HOME & PERSONAL CARE AUTOMOBILE, TIRE PHARMACEUTICAL, MEDICAL DEVICES UPSTREAM, MIDSTREAM DOWNSTREAM MINING, METALS, PULP & PAPER, WATER / WASTEWATER We provide the fastest line integration for packaging equipment Our partnership with Fanuc enables new value for Powertrain applications We are the market leader in Pharma Manufacturing Execution Systems Our digital oilfield solution optimizes production from existing wells PlantPAx Modern DCS integrated with Intelligent Motor Control reduces startup and downtime The expertise to apply innovation and reduce risk 19

20 The Resulting Solutions & Services Deliver New Value Today Increased Capabilities in Served Markets Process Applications featuring PlantPAx Modern DCS Serialization Powertrain MES Industrial Network Infrastructure, Security and Remote Services Safety Services Manufacturing Execution Software (MES) Expansion Reliability Services Workforce Solutions Closing the Skills Gap 20

21 Combining Innovation & Domain Expertise with a Unique Approach THE CONNECTED ENTERPRISE Understanding Consulting to Define Business Problems Unique Market Access Unmatched Partners Combined Innovation & Expertise Smart Products Designed to Operate in a System Packaged Solutions Products as a Service Simplification Multi-discipline Control and Information Data-driven Services Single Integrated Business 21

22 Agenda Competitive Differentiation at Rockwell Technology Innovation Domain Expertise Delivering Value to Customers Customer Values Case Studies 22

23 Delivering Customer Value Faster Time to Market Lower Total Cost of Ownership Improved Asset Utilization Enterprise Risk Management Flexible production Design productivity Intelligent devices Lifecycle management Operator effectiveness Technology migration Reliability and quality Analytics and diagnostics Real-time data access Regulatory compliance Brand and image protection Safe, secure operating environment 23

24 Procter & Gamble Consumer Products Global $50M PRODUCTIVITY SAVINGS 20% INCREASE in THROUGHPUT 30% REDUCTION IN SCRAP 50% EXTENSION of LIFE CYCLE Synchronization of product, people and digitized information flows along the end to end supply chain 24

25 BCP Group Oil & Gas OEM SIMPLIFIED START-UP INTEGRATED CONTROL INCREASED ENERGY SAVINGS Networked Oil Wells Provide Insight Into Field Operations with Real-time Data EXTENDED WELL LIFE IMPROVED SYSTEM RELIABILITY 25

26 Columbia Pipeline Group Oil & Gas - Midstream We re making more educated decisions based on real-time and historical operations data that we can access anywhere. We ve been able to significantly improve company profitability as a result. - Brian Sloan, Engineering Manager 99.5% AVAILABILITY Business Decisions Based On REAL-TIME & HISTORIAL DATA $2.3 M Saved in Maintenance and Downtime 26

27 Mahindra Automotive India Work Stations Master Data Sent AUTOMATICALLY Suppliers ERROR PROOFING Zero Defect Delivery Inventory Reduction on Assembly Floor REDUCED Mean-time-to-repair with Alarms & Real-time Visibility INCREASED FLEXIBILITY With In-Process Changes 27

28 Video Cue Mahindra 28

29 Beingmate Food & Beverage China Most Advanced Track & Trace System in all of China for Baby Formula. - China Food Drug Administration (CFDA) 3% Productivity Increase Reduced production prep/dispatch time Speeds up delivery, auto-fill BOM 7% Labor Costs 29

30 Gruppo Campari Food & Beverage U.S. Now 70% Distillery production DOUBLED OEE Increased 10-20% PRODUCT TRACKING Down to the Gallon Supports Government-mandated Reports Integrated Distillery, Process and Bottling Facilities Establish The Connected Enterprise The PlantPAx system has helped us get better every day Our KPIs are all trending up, and our cost per case is going down. - Wayne Knabel, Packaging Director 30

31 Video Cue Campari 31

32 Sustainable Competitive Advantage Based on Differentiation Technology Innovation & Broad Portfolio The only scalable, multidiscipline, information-enabled control platform Secure, unmodified EtherNet/IP network infrastructure Leading market position in safety Intelligent motor control products and systems Domain Expertise & Global Support Application know-how Lifecycle support for customers in all industries Trusted Partners & Unique Market Access Model Market-making channel partners, strategic alliances, technology partners Integrated Architecture Intelligent Motor Control Solutions & Services 32

33 Financial Overview Ted Crandall Senior Vice President and Chief Financial Officer

34 Fiscal 2016 Guidance Sales Midpoint Full Year Outlook ~ $6.0B Organic Growth Range (4)% to 0% Currency Translation ~ (3)% Segment Operating Margin ~ 21% Adjusted Effective Tax Rate ~ 27% Adjusted EPS $ $6.40 Free Cash Flow as a % of Adjusted Income ~ 100% Note: As of November 10,

35 Track Record of Execution Sales Return on Invested Capital Actual Results Nov. 10 th 2015 Guidance Actual Results as of Fiscal Year End Adjusted EPS Free Cash Flow Actual Results Nov. 10 th 2015 Guidance Free Cash Flow Pension Contributions 35

36 Cash Deployment Priorities Free Cash Flow Cash Returned to Shareowners Acquisitions Dividends Share Repurchase Returned $3.5 billion to shareowners in the last 5 years 36

37 Final Remarks Keith Nosbusch Chairman and Chief Executive Officer

38 In the near term we are focused on Our best growth opportunities New products and services Automotive and consumer industries Productivity projects in heavy industries Prudent cost controls Q4 restructuring actions and tight reins on discretionary spending Incremental cost productivity Maintaining R&D and customer-facing spend Continued solid cash deployment Increased the dividend 12% in November Acquisition opportunities Flexibility to make opportunistic share repurchases Ensuring the long-term success of the company 38

39 How We Measure Progress Sales and EPS growth, FCF, ROIC Share gain in all market conditions Measurable cost productivity every year Customer loyalty index improvement Connected Enterprise adoption indicators Network infrastructure and services (up >15% in FY15) Logix growth (up 4% in FY15) Holding ourselves accountable 39

40 Good Stewards of Your Investment Singular focus on industrial automation and information a great market Robust pipeline of organic growth opportunities Experienced leadership team adept at managing through cycles Sustainable, profitable business model Differentiation in technology and domain expertise support sustainable competitive advantage Best in class operating margin and ROIC, while still investing in innovation for the long term Strong cash flow and healthy balance sheet Track record of returning cash to shareowners Strong culture of ethics and integrity 40

41 Shareowner Value Creation Will Continue Business model, strategy and execution support shareowner value creation We effectively balance investment with cost management through a cycle Consistent track record of returning cash to shareowners Total shareowner return consistently above S&P

42 Appendix Reconciliation to Non-GAAP Measures

43 Reconciliation to Non-GAAP Measures Return On Invested Capital (in millions, except percentages) Twelve Months Ended September 30, (a) Return Income from continuing operations $ $ $ $ $ $ $ $ Interest expense Income tax provision Purchase accounting depreciation and amortization Special charges (4.0) 46.7 Return 1, , , , (b) Average Invested Capital Short-term debt Long-term debt 1, Shareowners' equity 2, , , , , , , ,798.5 Accumulated amortization of goodwill and intangibles Short-term investments (639.3) (485.2) (361.7) (232.5) Cash and cash equivalents (1,376.1) (1,210.6) (1,010.2) (878.8) (922.7) (763.3) (576.0) (728.0) Average invested capital 2, , , , , , , ,819.1 (c) Effective Tax Rate Income tax provision Income from continuing operations before income taxes $ 1,127.5 $ 1,134.2 $ $ $ $ $ $ Effective tax rate 26.6% 27.1% 22.9% 23.7% 19.7% 19.1% 20.4% 28.6% (a) / (b) * (1-c) Return On Invested Capital 32.6% 30.1% 31.4% 30.3% 31.6% 22.8% 10.7% 24.0% 43

44 Reconciliation to Non-GAAP Measures Adjusted EPS Fiscal 2016 Year Ended September 30, Guidance * Diluted EPS from continuing operations $ $6.03 $ 6.09 $ 5.91 $ 5.36 $ 5.13 $ 4.79 $ 3.05 $ 1.53 $ 3.89 Non-operating pension costs per diluted share, (0.14) (0.17) before tax Tax effect on non-operating pension costs per diluted share (0.21) (0.15) (0.14) (0.20) (0.09) (0.06) (0.02) Adjusted EPS $ $6.40 $ 6.40 $ 6.17 $ 5.71 $ 5.29 $ 4.89 $ 3.10 $ 1.44 $ 3.79 Free Cash Flow (in millions) Twelve Months Ended September 30, Cash provided by continuing operating activities $ 1,187.7 $ 1,033.3 $ 1,014.8 $ $ $ $ $ Capital expenditures (122.9) (141.0) (146.2) (139.6) (120.1) (99.4) (98.0) (151.0) Tax payments related to the gain on divestiture of Power Systems Excess income tax benefit from share-based compensation Free cash flow $ 1,077.2 $ $ $ $ $ $ $