Bringing The Connected Enterprise to Life with Strong ... · 3/7/2019 · Artificial Lift – optimization and life extension of oil wells Integrated process automation . SENSIA

PUBLIC | Copyright ©2019 Rockwell Automation, Inc. 1

Bringing The Connected Enterprise to Life with Strong Performance and New PartnershipsJ.P. Morgan Aviation, Transportation, and Industrial Conference | March 7, 2019


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.

Safe Harbor Statement


80+COUNTRIES

23,000$6.7BFISCAL 2018 SALES

Rockwell Automation

EMPLOYEES

OUR STRATEGY IS TO BRING THE CONNECTED ENTERPRISE TO LIFEWe integrate control and information across the enterprise to help industrial

companies and their people be more productive.

at A GLANCE

VALUE CREATIONABOVE-MARKET GROWTH | PRODUCTIVITY | INTELLECTUAL CAPITAL

TOTAL SHAREOWNERRETURN HISTORY S&P 500 Index

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


Q1 SummaryStrong year-over-year growth

Logix growth of 7%

Process growth of 5%

Double-digit growth in Information Solutions and Connected Services

Growth led by consumer and heavy industries; transportation down

A good start to the fiscal year

Adjusted EPS of $2.21 13%

Segment operating margin of 22.8% 40bps

Organic sales 5.7%


Fiscal 2019 GuidanceAs of January 29, 2019

2019 GUIDANCE

Sales Midpoint ~ $6.9BOrganic Growth Range 3.7% to 6.7%Currency Translation ~ (1.5)%

Segment Operating Margin ~ 22%

Adjusted Effective Tax Rate ~ 19.5%

Adjusted EPS $8.85 - $9.25

Free Cash Flow as a % of Adjusted Income ~ 100%


What we did

PTC Strategic Partnership

Winning with and without an installed base

ROK and PTC formed a strategic alliance to sell IoT software under common brand

Exclusive relationship

ROK invested $1B

PTC Board of Directors seat

Providing more value to our customers

Created the most comprehensive and innovative software portfolio in the industry

Profitable growth from incremental software and services revenue

We are becoming more important to our customers, which gives us more ways to win

Customer wins across a broad range of industries and geographies

Growing funnel of opportunities

Converging technology roadmaps

Significant progress in cross-training our commercial and technical resources

Accelerating Information Solutions and Connected Services growth

Why we did it Where we are now


FactoryTalk InnovationSuite - Early WinsDiversity of wins across geographies and industries


First fully integrated Digital Oilfield Automation solutions provider

The transaction is expected to close in the summer of 2019, subject to regulatory approvals and other customary conditions

Announcing …


The Oilfield TodayCustomers’ biggest challenges

Well Head, Monitoring

& Artificial Lift

Gathering, Separation & Surface Processing and Process Automation

Terminals & Storage

Custody Transfer

Pipelines

Down Hole Sensing & Measurement

ON AND OFF SHORE

Sub Sea Operations

Offshore Production

Floating Production & Storage

Enterprise

Rockwell Automationassets embedded

throughout the Oilfield Drives Controllers HMII/O …

Many disparate assets

Remote assets are not connected

Many manual processes

Scarcity of technical experts

Increased focus on cost reduction

Project and risk management

Safety and security

Limited resources

C H A L L E N G E S


Solving Customer ChallengesCreating first fully integrated Digital Oilfield Automation solutions provider

Volatility

Pressure on profit margins

Market consolidation

Optimize / expand capacity while minimizing capital investment

INDUSTRY TRENDS

Faster time to market

Operational productivity

Asset management and reliability

Enterprise risk management

CUSTOMER NEEDS

Measurement and data connectivity for insight & analytics

Artificial Lift – optimization and life extension of oil wells

Integrated process automation

SENSIA CUSTOMER OUTCOMES

Complete lifecycle and process automation solutions from well to terminal

~$5B Upstream PAM for Digital Oilfields

Currently no single end-to-end solution provider or unified technology platform

Market projected to growdouble digits

OPPORTUNITIES FOR GROWTH


Sensia – creating the industry leader in Digital Oilfield and Automation

Complementary Expertise

Production Optimization Analytics

Complementary Technologies

Well & Reservoir Analysis

Measurement & Instrumentation

Enterprise-Wide Visualization & Analytics

Production ManagementSoftware

Digital Oilfield Domain Expertise

Real-Time Control, Data & Asset Connectivity

Oil & Gas Process Automation

Production Optimization Implementation

Packaged Artificial Lift

Leveraging both companies’ technology and expertise


Joint Venture Structure

~1,000 employees~$400M initial revenue

HQ Location: Houston, TX>80 countries served

People

Domain Expertise

Technology & Businesses

~$250M PAYMENT AT CLOSING

53% 47%

~500 employees

Oil & Gas

Control & IoT CapabilitiesOil & Gas Solutions & Services Software & AnalyticsArtificial Lift

People

Domain Expertise

Technology & Businesses

~500 employees

Oil & Gas

MeasurementInstrumentation

Software & AnalyticsArtificial Lift

Estimated closing and operations begin in summer 2019

Focused on Solutions


Sensia’s Differentiated OfferingWill provide an integrated offering vs project-based partnerships

Secure, scalable solutions integrated into one technology platform (cloud or on premise) Integrated process control, safety & information

solutions Single point of responsibility for contract management Committed & fully integrated technology roadmap Deep domain expertise and global footprint

End-to-end solutions – from measurement to production optimization to process automation

MEASUREMENTARTIFICIAL

LIFTPROCESS

AUTOMATIONDATA

MANAGEMENT APPLICATIONS

Maturity Key High Medium Low

Industry’s first Digital Oilfield Automation solutions provider

ROK

SLB


So How Does it All Work?

Customer Outcomes

Improved visibility to disconnected data Elimination of manual process to drive

production efficiencies Asset optimization and automation Safety and security

(both personnel and assets)

Real-Time Control & Process Automation

Wells & Artificial Lift

Operational Assets &

Equipment

Well Pad

Data Connectivity & Orchestration

Production Optimization

Example of Upstream Oil & Gas Application

Field DevicesAssets


Sensia’s Estimated Initial Revenue Mix

By StreamBy Region

80%

Upstream

15%

Midstream

5%

Downstream

EMEA

North America

Asia Pacific

41%

27%

19%

13%

LatinAmerica


Sensia’s Estimated Financial Impact on ROK

Free cash flow yield > 10% in FY22

FY19 estimated EPS impact of ~$(0.05) Includes start-up costs, deal fees, tax benefit Assumes June 30, 2019 close

FY20 incremental sales >$200M

FY20 Sensia EBITDA % at ~ ROK average

FY20 EPS impact expected to be neutral (includes ~$0.10 of intangible amortization and set-up costs)

Financial Return to Rockwell

JV consolidated in ROK’s financial results effective at closing

SLB’s 47% share will be shown as a minority interest

Reported in CP&S Segment

Accelerating profitable sales growth

Accounting


Acquisitions and Inorganic InvestmentsSensia addresses key areas of focus

INFORMATION SOLUTIONSCONNECTED SERVICES

PROCESS EXPERTISE

EUROPE / ASIA


Capital StructureMaintaining strong financial flexibility

Maintain “A” credit rating ~$500M cash Targeting ~2.0X Adjusted

Debt / EBITDA Flexibility to temporarily

increase leverage to ~3.5X Adj. Debt/EBITDA for strategic acquisitions

FRAMEWORK

* Cash and cash equivalents, short-term investments, and long-term investments (fixed income securities).** EBITDA = Net Income + Interest Expense + Provision for Income Taxes + Depreciation & Amortization (trailing 12 months). FY19 based on mid-point of guidance as of January 29, 2019.*** Estimate based on Moody’s Investors Service methodology, which treats pension underfunding and leases as debt.

9/30/2017 9/30/2018 9/30/2019E

$2.8B

$1.8B

$(1.0)B

1.4X

2.2X

$1.1B

$1.8B

$0.7B

1.1X

1.9X

~$0.5B

~$2.2B

~$1.7B

~1.4X

~2.0X

Cash & Investments*

Total Debt

Net Debt

Total Debt / EBITDA**

Adj. Debt / EBITDA***

Targeting $1B of Share Repurchases in FY19


Summary

Good start to the fiscal year

FactoryTalk InnovationSuite – early customer wins

Sensia – creating first fully integrated Digital Oilfield Automation solutions provider

Focus on continued successful execution, including our PTC partnership and Sensia JV


AppendixReconciliation to Non-GAAP Measures


21

Fiscal 2019 Guidance(in billions, except percentages and per share amounts)

Organic Sales Fiscal 2019 Guidance

Organic sales growth 3.7% to 6.7%Foreign currency impact ~ (1.5)%Reported sales growth 2.2% - 5.2%

Segment Operating Margin

Total sales (a) $ ~ 6.9

Total segment operating earnings (b) $ ~ 1.5

Costs not allocated to segments ~ 0.2

Income before income taxes (c) $ ~ 1.3

Total segment operating margin (b/a) ~ 22%Pretax margin (c/a) ~ 20%

Reconciliation to Non-GAAP Measures

Adjusted Effective Tax Rate

Effective tax rate ~ 21.0%

Tax effect of non-operating pension and postretirement credit ~ 0%

Tax effect of change in fair value of investments (1.5)%

Adjusted Effective Tax Rate ~ 19.5%

Adjusted EPSDiluted EPS from continuing operations $7.33 - $7.73

Non-operating pension and postretirement credit, net of tax (0.08)

Change in fair value of investments, net of tax 1.60

Adjusted EPS $8.85 - $9.25


Organic Sales(in millions, except percentages)

Three Months Ended December 31,2018 2017

Sales(a)

Effect ofChanges inCurrency

SalesExcluding

Changes inCurrency

Effect ofAcquisitions

OrganicSales(b) Sales(c)

Effect of Divestitures

Sales Excluding

Divestitures

Sales Growth (a)/(c)

Organic Growth (b)/(c)

North America $ 998.8 $ 3.8 $ 1,002.6 $ — $ 1,002.6 $ 943.9 $ — $ 943.9 5.8% 6.2%EMEA 294.4 10.8 305.2 — 305.2 307.4 — 307.4 (4.2)% (0.7)%Asia Pacific 214.4 9.3 223.7 — 223.7 214.5 — 214.5 —% 4.3%Latin America 134.7 10.1 144.8 — 144.8 120.8 — 120.8 11.5% 19.9%

Total $ 1,642.3 $ 34.0 $ 1,676.3 $ — $ 1,676.3 $ 1,586.6 $ — $ 1,586.6 3.5% 5.7%

Three Months Ended December 31,2018 2017

Sales(a)

Effect ofChanges inCurrency

SalesExcluding

Changes inCurrency

Effect ofAcquisitions

OrganicSales(b) Sales(c)

Effect of Divestitures

Sales Excluding

Divestitures

Sales Growth (a)/(c)

Organic Growth (b)/(c)

Architecture & Software $ 753.1 $ 16.4 $ 769.5 $ — $ 769.5 $ 735.6 $ — $ 735.6 2.4% 4.6%Control Products & Solutions 889.2 17.6 906.8 — 906.8 851.0 — 851 4.5% 6.6%

Total $ 1,642.3 $ 34.0 $ 1,676.3 $ — $ 1,676.3 $ 1,586.6 $ — $ 1,586.6 3.5% 5.7%



Segment Operating Margin(in millions, except percentages) Three Months Ended Three Months Ended

December 31, 2018 December 31, 2017Sales

Architecture & Software (a) $ 753.1 $ 735.6Control Products & Solutions (b) 889.2 851.0

Total sales (c) $ 1,642.3 $ 1,586.6

Segment operating earningsArchitecture & Software (d) $ 237.0 $ 224.2Control Products & Solutions (e) 137.9 131.2

Total segment operating earnings (f) 374.9 $ 355.4

Purchase accounting depreciation and amortization (4.1) (4.4)General corporate - net (21.9) (24.0)Non-operating pension and postretirement benefit (credit) costs 2.6 (5.8)Costs related to unsolicited Emerson proposals — (11.2)Loss on investments (246.4) —Valuation adjustments related to the registration of PTC securities 33.7 —Interest (expense) income, net (18.0) (12.2)Income before income taxes (g) $ 120.8 $ 297.8

Segment operating margin:Architecture & Software (d/a) 31.5 % 30.5 %Control Products & Solutions (e/b) 15.5 % 15.4 %Total segment operating margin (f/c) 22.8 % 22.4 %

Pretax margin (g/c) 7.4 % 18.8 %



Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate(in millions, except per share amounts) Three Months Ended

December 31, 2018 December 31, 2017Net Income $ 80.3 $ (236.4)

Non-operating pension and postretirement benefit (credit) cost (2.6) 5.8Tax effect of non-operating pension and postretirement benefit (credit) cost 0.3 (1.8)Costs related to unsolicited Emerson proposals — 11.2Tax effect of costs related to unsolicited Emerson proposals — (3.1)Change in fair value of investments 212.7 —Tax effect of the change in fair value of investments (21.7) —Effects of the Tax Act — 479.7

Adjusted Income $ 269.0 $ 255.4

Diluted EPS $ 0.66 $ (1.84)Non-operating pension and postretirement benefit (credit) cost (0.02) 0.06Tax effect of non-operating pension and postretirement benefit (credit) cost — (0.01)Costs related to unsolicited Emerson proposals — 0.09Tax effect of costs related to unsolicited Emerson proposals — (0.02)Change in fair value of investments 1.75 —Tax effect of the change in fair value of investments (0.18) —Effects of the Tax Act — 3.68

Adjusted EPS $ 2.21 $ 1.96

Effective tax rate 33.5 % 179.4 %Tax effect of non-operating pension and postretirement benefit (credit) cost — % 0.3 %Tax effect of costs related to unsolicited Emerson proposals — % 0.3 %Tax effect of the change in fair value of investments (14.8) % — %Effects of the Tax Act — % (161.1) %

Adjusted Effective Tax Rate 18.7 % 18.9 %

Non-operating pension and postretirement benefit costs(in millions) Three Months Ended

December 31, 2018 December 31, 2017Interest cost $ 40.2 $ 39.4Expected return on plan assets (61.2) (61.2)Amortization of prior service credit (1.1) (1.1)Amortization of net actuarial loss 19.7 28.7Settlements (0.2) —Non-operating pension and postretirement benefit (credit) costs $ (2.6) $ 5.8



Logix and Process Sales Growth

Three Months EndedDecember 31, 2018

LogixLogix reported growth 4%

Effect of currency translation 3%Logix organic growth 7%

ProcessProcess reported growth 2%

Effect of currency translation 3%Process organic growth 5%


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Bringing The Connected Enterprise to Life with Strong ... · 3/7/2019 · Artificial Lift – optimization and life extension of oil wells Integrated process automation . SENSIA