Rockwell Automation Inc. executives said Jan. 31—after reporting quarterly results that severely dented the company’s stock price—that they are hopeful that orders for their equipment, software, and services will continue to rebound this spring from their late-2023 trough.
Milwaukee-based Rockwell produced net profits of $213 million on sales of $2.05 billion in the three months ended Dec. 31 (the first quarter of its fiscal 2024), which missed analysts' expectations. A year earlier, those numbers were $384 million and $1.98 billion, respectively, and Chairman and CEO Blake Moret said the lower margins show Rockwell is still adjusting to a post-pandemic operating environment.
“Organic sales (growth of 1%) did come in below our expectations, largely due to the timing of our recovery to a more normal product book-and-bill process,” Moret said on a conference call with analysts. “As […] our demand shifts from older backlog to new orders that need to be shipped as soon as they are received, we are working through some lingering shortages and line constraints.”
Shares of Rockwell (Ticker: ROK) tumbled on the earnings news and closed the day on Jan. 31 down 18% at about $253 per share. The fall sliced more than $5 billion from the company’s market capitalization, which now stands at about $29 billion.
Rockwell also is still dealing with some of its customers working down their own inventories, but Moret and CFO Nick Gangestad said they are sticking to their full-year revenue and adjusted earnings forecasts in part because they are seeing customers ramp up their activities. Moret noted that sectors, such as automotive and food/beverage, that dipped in the company’s most recent quarter are rebounding.
“We’re seeing an inflection up in the orders from the Q4 trough,” Gangestad said. “And we’re expecting that to continue into the second quarter.”
Still, for its fiscal 2024, the Rockwell team is expecting organic sales to come in anywhere between a drop of 2% and growth of 4%. Total sales are forecast to grow 0.5% to 6.5% from last year’s roughly $9 billion.
A bright spot on the growth front is Clearpath Robotics, which Rockwell bought last year to build out its lineup of mobile robots. The venture, which Moret called “a standout addition,” has in recent months snagged big contracts with auto and food clients and is now expected to add more to growth this year and hurt profitability than Rockwell’s leaders had projected.