Rockwell Automation Q3 Results Miss Estimates, Narrows 2014 Earnings Outlook

(RTTNews) - Industrial automation solutions provider Rockwell Automation, Inc. (ROK) reported Wednesday a profit for the third quarter that declined from last year, despite sales growth, hurt by higher adjusted effective tax rate. Both adjusted earning per share and quarterly sales missed analysts' expectations. The company also narrowed its earnings guidance range for the full-year 2014.

"Sales and earnings came in as expected this quarter. We experienced strong year-over-year growth in Architecture & Software, while sales in Control Products & Solutions declined modestly, primarily due to very strong sales in our solutions and services businesses last year. I was pleased to see solid sequential sales growth in both segments and across most region," Chairman and CEO Keith Nosbusch said in a statement.

The Milwaukee, Wisconsin-based company reported net income of $199.7 million or $1.43 per share for the third quarter, lower than $203.7 million or $1.45 per share in the prior-year quarter.

Excluded certain items, adjusted earnings for the quarter was $208.7 million or $1.49 per share, compared to $216.1 million or $1.54 per share in the year-ago quarter, reflecting the adverse impact of a higher adjusted effective tax rate.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $1.56 per share for the quarter. Analysts' estimates typically exclude special items.

Total sales for the quarter grew 2 percent to $1.65 billion from $1.62 billion in the same quarter last year, but missed eighteen Wall Street analysts' consensus estimate of $1.68 billion. Organic sales increased 2 percent.

Segment-wise, architecture & software sales grew 7 percent from last year to $715.2 million, while sales declined 2 percent in control products & solutions to $934.3 million from a year ago.

In the quarter, total segment operating earnings increased 3 percent to $326.1 million from prior year's $317.8 million, and operating margin improved 20 basis points to 19.8 percent from last year.

The effective tax rate in the quarter was 27.1 percent, compared to 20.9 percent in the year-ago quarter, primarily due to a discrete tax benefit recognized in the prior year. Income tax provision for the quarter was $74.3 million, compared to $53.7 million last year.

Looking ahead to fiscal 2014, the company narrowed adjusted earnings to a range of $6.10 to $6.25 per share from the prior forecast range of $6.00 to $6.35 per share, on projected annual organic sales growth of 4 to 6 percent, compared to the previous forecast of about $6.6 billion.

Street is currently looking for full-year 2014 earnings of $6.20 per share on annual revenue growth of 4.9 percent to $6.67 billion.

In Wednesday's regular trading session, ROK is currently trading at $112.17, down $7.95 or 6.63% on a volume of 0.68 million shares.