Rockwell Automation · statements and financial information contained in Rockwell Automation’s...

Copyright © 2012 Rockwell Automation, Inc. All rights reserved. Rev 5058-CO900C

Rockwell Automation Investor Conference

November 8, 2012

Copyright © 2012 Rockwell Automation, Inc. All rights reserved.

Safe Harbor Statement

This presentation contains statements (including certain projections and business trends) that are “forward-looking statements”

as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “project”, “plan”,

“expect”, “anticipate”, “will”, “intend” and other similar expressions may identify forward-looking statements. Actual results may

differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control,

including but not limited to: macroeconomic factors, including global and regional business conditions, the availability and cost of capital, the cyclical nature of our

customers' capital spending, sovereign debt concerns and currency exchange rates;

laws, regulations and governmental policies affecting our activities in the countries where we do business;

the successful development of advanced technologies and demand for and market acceptance of new and existing products;

the availability, effectiveness and security of our information technology systems;

competitive product and pricing pressures, and our ability to provide high quality products, services and solutions;

a disruption of our operations due to natural disasters, acts of war, strikes, terrorism, social unrest or other causes;

intellectual property infringement claims by others and the ability to protect our intellectual property;

our ability to successfully address claims by taxing authorities in the various jurisdictions where we do business;

our ability to attract and retain qualified personnel;

our ability to manage costs related to employee retirement and health care benefits;

the uncertainties of litigation, including liabilities related to the safety and security of the products, services and solutions we sell;

our ability to manage and mitigate the risks associated with our solutions business;

a disruption of our distribution channels;

the availability and price of components and materials;

the successful integration and management of acquired businesses;

the successful execution of our cost productivity and globalization initiatives; and

other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission filings.

These forward-looking statements reflect our beliefs as of the date of this presentation. We undertake no obligation to update or

revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2


Notice Regarding Financial Information

This presentation contains non-GAAP financial information.

Reconciliations from GAAP to non-GAAP measures are contained in the

appendix of this presentation.

All information should be read in conjunction with the historical financial

statements and financial information contained in Rockwell Automation’s

Annual Report on Form 10-K, periodic reports on Form 10-Q and Form

8-K, and public announcements of financial information.

Copies of these reports, as well as a financial information overview, are

available on the Investor Relations section of Rockwell Automation’s

website at http://www.rockwellautomation.com/investors/

3


Rockwell Automation Investor Conference

Keith D. Nosbusch

Chairman and CEO

Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 5

Rockwell Automation at a Glance

Fiscal 2012 Sales: $6.26B

>50% outside the U.S.

Two segments, one business

Architecture & Software

Control Products & Solutions

22,000 Employees

Serving customers for 100 + years

Technology innovation

Domain expertise

Strong culture of integrity and

corporate responsibility

Leading global provider of industrial power, control and information solutions


Growth and Performance Strategy

6

ABOVE MARKET GROWTH Expand served market

Target highest growth

markets

Acquisitions as catalysts

REINVESTMENT Drive productivity to fund

growth opportunities with

attractive ROIC

INTELLECTUAL

CAPITAL Create customer and

shareholder value through

technology innovation and

domain expertise


Long-Term Goals

7

Sales growth of 6 to 8%

Double digit EPS growth

> 20% Return on Invested Capital (ROIC)

Free cash flow 100% of net income

2017 goals

60% of sales outside of U.S.

30% of sales in Emerging Markets

Double Process sales

Maintain track record of above-market growth with stable cash flow


Automation is an Attractive Market

8

$80B market growing faster than global GDP

Productivity and cost optimization

Manufacturing flexibility

Safety and sustainability

Replace aging installed base

Developed Market Growth Drivers

Market Size by Region Market Size by Industry

Infrastructure investment

Growing middle class

Extraction of natural resources

Wage inflation

Emerging Market Growth Drivers

Heavy

Consumer

Other

Transportation


Customer Value Propositions

9

Design productivity

Intelligent devices

Flexible production to respond to customer trends

Life cycle management

Technology migration

Energy management

Operator effectiveness

Manufacturing intelligence

Reliability, quality

Diagnostics, predictive maintenance

Asset management

Global support

Safe and secure operating environment

Regulatory compliance

Sustainability

Brand and image protection


Differentiation is the Key

Customer Value

Technology Innovation

Domain Expertise

Broad Portfolio

Market Access Model

Global Support

Trusted Partners

Maximizing customers’ return on their automation investment


$0.0

$2.0

$4.0

$6.0

2008 2009 2010 2011 2012 2013

$3.79

$1.44

$3.10

$4.89$5.29

Adj

uste

d E

PS

$

Track Record of Execution

11

Stable Free Cash Flow

Above Market Sales Growth Sales Diversification

Adjusted EPS

$536

$5.75 $5.35

Actual Results Nov 5th 2012 Guidance

0%

10%

20%

30%

2005 2012

6%

15%13%

22%

Sal

es a

s P

erce

ntag

e of

RO

K

Process Initiatives Emerging MarketsActual Results Nov 5th 2012 Guidance Process Initiative Emerging Markets

Free Cash Flow Pension Contributions

$6.65

$6.35

$508 $531

$773

$458 $431

$545

$672

$0

$200

$400

$600

$800

2005 2006 2007 2008 2009 2010 2011 2012

Fre

e C

ash

flo

w (

in $

mill

ion

s)


Keys to Success

Continued enhancements of

PlantPAx

Leverage power, control and safety

portfolio

Expand application libraries and

tools

Increase penetration of mid-range

portfolio

Maintain segment focus

Expand productivity tools

Invest in customer-facing

resources

Develop channel capabilities

Domain expertise acquisitions

Continue to scale Logix , evolve

visualization

Expand intelligent motor control

platforms

Increase packaged solutions and

services

New Products

OEM Process

Emerging Markets


Process and OEM Growth Opportunities

Frank Kulaszewicz

Senior Vice President,

Architecture & Software

Blake Moret

Senior Vice President,

Control Products & Solutions


Driving customer value…

Integrated Architecture

centered on the Logix

Platform

Intelligent Motor Control

(IMC)

Solutions and Value-add

Services

… through three platforms to maximize our customers’ return on their automation investment

14


Integrated Architecture – Logix Platform

15

Multidiscipline

Integrates six control disciplines

Common development environment streamlines

design, training & maintenance

Scalable

Matched to customer requirements

Built to protect legacy investments

Information-enabled and open

Designed to integrate easily with information

systems

Based on open, accepted industry standards

Large and growing installed base


Intelligent Motor Control (IMC)

A large, fast-growing part of the automation market,

driven by:

Strong resource markets

Manufacturer’s needs for flexibility

Industrial energy management

Precision control of motors provides process

productivity and energy savings

We differentiate by providing both high-performance

motor control, and the easiest way to integrate the

devices that control these motors

Intelligent motor control is integral to the automation system

16


Technology Leverage

Life Cycle View

Globalization

Remote Services

Domain Expertise

Services and Solutions

Enterprise Risk Management

Asset Utilization and Optimization

Faster Time to Market

Lower Total Cost of Ownership

We win by leveraging our strengths to provide customer value

17


Remote Services

18

Customers are asking for remote application support and

monitoring to complement traditional product support

Remote services leverage our multi-discipline control platform A common approach can be developed for process and discrete

applications

Standard unmodified Ethernet provides a high-performance backbone

Multiple assets throughout the plant can be monitored on a single

network

Related network design and security services are increasingly

desired and leverage our relationship with Cisco

Machine builders seeking to develop their recurring support

revenue are also turning to us for technology infrastructure


Customer Validation

19

A formal partnership driving business value

for both companies

A broad range of process and discrete

applications utilizing…

Integrated Architecture Multidiscipline control including safety

High availability

Scalability… start with what was needed

and grow

Intelligent Motor Control Coordinated drive systems

Solutions and Value-add Services Local support and technical expertise


Process …continues to be our best growth opportunity

20


Solutions and Services



Process …continues to be our best growth opportunity

21


Process Market

Our process sales have grown at

22% CAGR since 2005

Largest served market expansion

Winning greenfield and brownfield

projects in both batch and

continuous process applications

22

Process PAM ~$35B


Faster Time to Market Agility

Design and commissioning productivity

Asset Utilization Monitoring and diagnosis of asset health

Manufacturing intelligence

Total Cost of Ownership Life cycle management

Open communication standards

Migration strategy

Enterprise Risk Management Domain expertise

Regulatory compliance

Safety

Process Drivers

23

Integrating information, control, power and safety for optimized operations


Process – Strategy Execution

Exp

an

de

d S

erv

ed

Ma

rket

Acquisitions

Developments

Partnerships

’05 ’06 ’07 ’08 ’09 ’10

ProcessLogix

Batch/Hybrid

Fieldbus, E&H

Integration

Asset Management Unified DCS Architecture

Virtualization

ICS Triplex Pavilion Tech. Incuity

Proscon Hengsheng Hinz Hiprom

ControlNet-based

architecture

Logix +

ViewSE

Engineering Libraries

Plant Asset Mgmt

EtherNet-based

architecture

’11 ’04 ’12

Virtualization

Innovative technology, domain expertise and partners – a winning combination

Harbin Jiuzhou

24

High Availability on

EtherNet


Customer Validation

25

Warwick Chemicals is the world’s

largest manufacturer of bleach

activators. Every major detergent

producer uses their products.

Customer requirements Open connectivity with third-party systems

Scalability

Local service and support

Advanced control strategies

Ability to develop and enhance the system

to meet process changes

Multi-phase project will replace a legacy DCS system with PlantPAx

Results

Total cost of ownership over 15 year operating life key to Rockwell selection

Multi-year project – initial phase completed (waste water treatment plant)

System engineering on time and on budget

Real-time operator information


Customer Validation

26

Located in Lawrenceburg, Tennessee

Facility expansion… greenfield plant to double

production Existing plant control used competitor’s current

technology

Long-term relationship with customer, but Rockwell

Automation was not used for distillation control

Requirements One system for multidiscipline control

Visibility/connectivity to valves, instruments and

motor control

Diagnostic and preventive maintenance tool

Remote access capability

Results Met implementation

timeline

Maintained product quality

Optimized production and increased capacity

Safer work environment

Our market access strategy includes working with partners to meet customer needs


Customer Validation

27


Metals Dubai Aluminum

Company

Pot-line control system Middle East $10M

Chemical Cynar PLC Waste plastic to fuel

conversion plant

United

Kingdom

$11M

Oil and

Gas

Daewoo Shipbuilding

& Marine

Control and safety

systems

South Korea $6M

Mining Freeport-McMoRan Extraction and

processing

USA $2M

Life

Sciences

Large biotech

company

Batch management for

active ingredients

UK $2M

Process Wins, FY2012

Market adoption in key verticals in all regions

28


OEMs …important in every vertical

29


Solutions and Services



OEMs …important in every vertical

30

Manufacturing

and Assembly

Material

Handling

Packaging

Process

Power and

Energy

Converting,

Print, Web


OEM Market is Significant

Market Dynamics

OEMs have greater influence on end-user decisions

Asia is the fastest growing market

Portfolio additions have allowed us to expand our served market

31

~$25B PAM


OEM Drivers

Faster Time to Market

Productivity and design tools

Reusable engineering

Simulation and emulation for digital design versus

physical prototypes

Integrated control, power, safety and information

Global support

Improved Asset Utilization and Optimization

Reliability, quality

Machine performance

Diagnostics and remote monitoring

32

Shorten the time to design, develop and deploy new machines


Standalone Machine Midrange Machine Complex Machine

Scalability for OEMs

33

Comprehensive solutions allowing OEMs to choose the most cost effective

solution for their machine


OEM Market – Strategy Execution

Continuing to build on our OEM success

Product

Development

• Midrange offerings

• Integrated Drive

Motor

• Multidiscipline

control

Market Access

• Technical

resources to

assist OEMs

Global Support

• Remote Support

Centers

• Field Service

Professionals

• Network and safety

consulting

OEM Programs

• Growing Machine

Builder Program

34

Expanding Served Market

Productivity Tools

• Design tools /

Mechatronics

• Libraries


Customer Validation

Design tools accelerate machine design

process

Mechatronics design software integrated with

Rockwell Automation partner Dassault Systèmes

Integrated platform for machine, motion and

safety control

Products

Results

Faster design and installation

Improved machine throughput and reliability

Improved energy efficiency

35

Design Tools

ControlLogix controller

PowerFlex Drives

Kinetix 6000 servos

PanelView HMI

Remote I/O


Customer Validation

36


Packaging North

America

Aagard All in one continuous wrap around

cartoner system

Packaging Asia

Pacific

Samwoo End of line packaging solutions

Material

Handling

North

America

Rangeland Inc. Oil and gas pipe sorter

Process EMEA SobaTech Continuous dosing, mixing and

kneading dough system

Converting,

Print, Web

EMEA MTorres Automatic unwinding splicer for tissue

industry

OEM Recent Wins

Market success… key segments… all regions of the world

37


Driving Continued Success

38

… through sustained differentiation


Rockwell Automation Financial Overview

Ted Crandall

Senior Vice President and Chief Financial Officer

November 8, 2012


Fiscal 2012 Results

40

Sales $6.26B

Sales Increase (Excluding Currency) 7%

Currency Translation (3)%

Segment Operating Margin 18.1%

Diluted EPS $5.13

Free Cash Flow* 81% of Net Income

*After a discretionary pre-tax pension contribution of $300M to the company's U.S. pension trust.


Introducing New Earnings Measures to Exclude Non-Operating Pension Costs

41

Improve transparency into core business

performance

Remove components of pension expense

tied primarily to financial market factors

Provide more relevant historical

comparisons for underlying operating

performance

Components of Pension Expense

Service Cost

Operating

Non-

Operating

Prior Service Cost

Interest Cost

Expected Return on Plan Assets

Actuarial Gains/(Losses)

Plan Curtailments &

Settlements/Transition

Obligations

Introducing new non-GAAP measures of Adjusted Income and Adjusted EPS and

redefining Segment Operating Earnings starting in fiscal 2013


Operating & Non-Operating Pension Costs

42

Year ended September 30,

2013 B/(W)

2013* 2012 2008 2012 2008

Service Cost 93$ 72$ 58$ (21)$ (35)$

Prior Service Cost (3) (2) (4) 1 (1)

Operating Pension Cost 90$ 70$ 54$ (20)$ (36)$

Interest Cost 161$ 168$ 150$ 7$ (11)$

Expected Return on Plan Assets (227) (228) (194) (1) 33

Actuarial Loss 145 95 19 (50) (126)

Non-Operating Pension Cost 79$ 35$ (25)$ (44)$ (104)$

Total Pension Expense 169$ 105$ 29$ (64)$ (140)$

($ millions)

* Forecasted FY2013 expense as of November 5, 2012


Reconciliation of Fiscal 2012 GAAP to New Earnings Measures

43

Total Segment Operating Earnings 1,131.4$ 32.5$ 1,163.9$

Purchase Accounting Depreciation and Amortization (19.8) - (19.8)

General Corporate - Net (85.6) 2.7 (82.9)

Interest Expense (60.1) - (60.1)

Income from Continuing Operations before Taxes 965.9 35.2 1,001.1

Income Tax Provision (228.9) (12.6) (241.5)

Income from Continuing Operations 737.0$ 22.6$ 759.6$

Diluted EPS from Continuing Operations 5.13$ 0.16$ 5.29$

Segment Operating Margin 18.1% 0.5 pts 18.6%

Effective Tax Rate 23.7% 0.4 pts 24.1%

Supplemental data on historical pension-adjusted results can be found on Rockwell Automation's investor relations website

http://www.rockwellautomation.com/investors/

FY 2012

FY 2012

Adjusted

(Non-GAAP)

Adjustment for

Non-Operating

Pension Cost

($ millions, except per share amounts)


Fiscal 2013 Guidance

44

Sales $6.35B to $6.65B

Organic Growth 1% to 5%

Currency Translation & Acquisitions ~1%

Segment Operating Margin ~18.7%

Adjusted EPS $5.35 to $5.75

Free Cash Flow ~100% of Adjusted Income

Note: As of November 5, 2012


Total Shareowner Return

$25

$50

$75

$100

$125

$150

$175

$200

$225

2004 2005 2006 2007 2008 2009 2010 2011 2012

Fiscal Year Ended September 30

Rockwell Automation S&P 500 Index

..

• Includes the reinvestment of all dividends in our common stock

2005-2012 annualized total return of 10.0% vs 5.4% for the S&P 500


Rockwell Automation A Great Investment

Expanding served market

Expanding product, solutions and services portfolio

Diversification – industries, applications and geographies

Expanding growth opportunities

Technology leader…focused on innovation

Domain expertise

Unique market access model

Competitive differentiation

Productivity, flexibility, safety and sustainability in developed markets

Infrastructure and growing consumer demand in emerging markets

Automation markets grow in excess of GDP

Strong balance sheet and cash flow generation

Best in class ROIC; an intellectual capital business

Financial strength; disciplined cash deployment


Appendix

Reconciliation to Non-GAAP Measures



48

Fiscal 2013 Year Ended September 30,

Guidance 2012 2011 2010 2009 2008

Diluted EPS from continuing operations $5.00 - $5.40 5.13$ 4.79$ 3.05$ 1.53$ 3.89$

Non-operating pension costs per diluted share, 0.56 0.25 0.16 0.07 (0.14) (0.17)

before tax

Tax effect on non-operating pension costs

per diulted share (0.21) (0.09) (0.06) (0.02) 0.05 0.07

Adjusted EPS $5.35 - $5.75 5.29$ 4.89$ 3.10$ 1.44$ 3.79$

Adjusted EPS



49

(in millions)

Twelve Months Ended September 30,

2012 2011 2010 2009 2008 2007 2006 2005

Cash provided by continuing operating activities 718.7$ 643.7$ 494.0$ 526.4$ 596.8$ 444.9$ 313.3$ 548.3$

Capital expenditures of continuing operations (139.6) (120.1) (99.4) (98.0) (151.0) (131.0) (122.3) (102.7)

Tax payments related to the gain on divestiture of

Power Systems - - - - 7.9 190.0 - -

Excess income tax benefit from share-based

compensation 18.5 38.1 16.1 2.4 4.6 27.1 47.4 -

Free cash flow 597.6$ 561.7$ 410.7$ 430.8$ 458.3$ 531.0$ 238.4$ 445.6$

Free Cash Flow



50

Organic Sales(in millions, except percentages)

2011

Sales

Effect of Excluding

Changes in Changes in Effect of Organic

Sales(a) Currency Currency(b) Acquisitions Sales(c) Sales(d)

Architecture & Software 2,650.4$ 73.5$ 2,723.9$ -$ 2,723.9$ 2,594.3$ 2% 5% 5%

Control Products & Solutions 3,609.0 92.4 3,701.4 (36.7) 3,664.7 3,406.1 6% 9% 8%

Total 6,259.4$ 165.9$ 6,425.3$ (36.7)$ 6,388.6$ 6,000.4$ 4% 7% 6%

Growth Ex-currency Growth

(a)/(d) (b)/(d) (c)/(d)

Twelve Months Ended September 30,

2012

Sales

Sales Growth Organic



51

Segment operating margin(in millions, except percentages) Twelve Months Ended

September 30, 2012

Sales

Architecture & Software (a) 2,650.4$

Control Products & Solutions (b) 3,609.0

Total sales (c) 6,259.4$

Segment operating earnings

Architecture & Software (d) 702.8$

Control Products & Solutions (e) 428.6

Total segment operating earnings (f) 1,131.4

Purchase accounting depreciation and amortization (19.8)

General corporate - net (85.6)

Interest expense (60.1)

Income from continuing operations before income taxes 965.9$

Segment operating margin:

Architecture & Software (d/a) 26.5%

Control Products & Solutions (e/b) 11.9%

Total segment operating margin (f/c) 18.1%

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