Q4 2023 Rockwell Automation Inc Earnings Call

Ladies and gentlemen, thank you for holding and welcome to Rockwell automation quarterly conference call.

Speaker 1: Ladies and gentlemen, thank you for holding and welcome to Rockwell Automations Quarterly Conference call.

Speaker 1: I need to remind everyone that today's conference call is being recorded.

I need to remind everyone that today's conference call is being recorded.

Speaker 1: Later in the call, we will open up the lines for questions. If you have a question at that time, please press star one.

Later in the call we will open up the lines for questions. If you have a question at that time. Please press star one.

Speaker 1: At this time, I would like to turn the call over to Ijana Zeller, head of investor relations and market strategy. Ms. Zeller, please go ahead.

At this time I would like to turn the call over to <unk>, Elmer head of Investor Relations and market strategy Ms. Elmer. Please go ahead.

Speaker 2: Thank you, Abby. Good morning, and thank you for joining us for our automation, fourth quarter, and full year fiscal 2023 during the release conference call.

Thank you have a good.

Morning, and thank you for joining us Barack automation fourth quarter and full year physical 20th 23 earnings release Conference calls.

Speaker 2: With me today is Blake Moret, our Chairman and CEO , and Nick Gangstad, our CFO .

With me today is blakemore at our chairman and C E O.

Against that R. C S O.

Speaker 2: A result for release earlier this morning and the press recent charts have been posted to our website.

A result, or at least earlier this morning, and the press that we've been charged had been posted to our web site.

Both depressed we've been charged to include in a cold table reference non-GAAP measures.

Speaker 2: Both the press loosen charts include, and our call today will reference, non- GAAP measures .

Speaker 2: Both the press release and charts include reconciliations of these non-GAAP measures.

Both the press release insurance includes reconciliation of these non-GAAP measures.

Speaker 2: A webcast of this call will available on our website for replay for the next 30 days.

A web cast of this call available on our web site for replay for the next 30 days.

Speaker 2: For your convenience, a transcript of our prepared remarks will also be available on our website at the conclusion of today's call.

Well your convenience a transcript of our prepared remarks will also be available on our website at the conclusion of today's calls.

Speaker 2: Before we get started, I need to remind you that our comments will include statements related to the expected future result of our company and are therefore forward looking.

Before we get started I need to remind you that all comments will include statements related to the expected future results of our company and are therefore forward looking statements.

Speaker 2: Our actual results made different materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all our SEC.

Actual results may differ materially from my projections due to a wide range of risks and uncertainty that are described in our earnings release and detailed and all our SEC filings.

Speaker 3: So with that, I'll hand over to Blake. Thanks, Ijana, and good morning, everyone. Thank you for joining us today. Let's turn to our fourth quarter results on slide three.

So with that Robert Blake. Thanks.

Thanks, Diana and good morning, everyone.

Thank you for joining us today.

Let's turn to our fourth quarter results on slide three.

Speaker 3: We delivered strong double-digit growth this quarter, with both sales and adjusted earnings growing by over 20% year-over-year. Our solid execution and improving supply chain helped us exceed our Q4 expectations, resulting in double-digit sales growth across all regions and business segments.

We delivered strong double digit growth this quarter with both sales and adjusted earnings growing by over 20% year over year.

Are solid execution and improving supply chain helped us exceed our queue for expectations, resulting in double digit sales growth across all regions and business segments.

Speaker 3: With lead times significantly improving across our product lines, we were able to deliver products to customers faster than expected this quarter, contributing to over $2.5 billion in total sales. This record shipment reflects Rockwell's continued capacity investments and demonstrates our organization's ability to scale for sustained growth.

With lead time significantly improving across our product lines, we were able to deliver products to customers faster than expected this quarter contributing to over $2.5 billion in total sales. This.

This record shipment reflects rockwell's continued capacity investments and demonstrates our organization's ability to scale for sustained growth.

Speaker 3: Total sales were up 20.5% versus prior year. Organic sales grew almost 18% year over year. Currency translation and acquisitions each contributed about a point and a half of growth in the quarter.

Total sales were up 25% versus prior year organic sales grew almost 18% year over year.

Currency translation and acquisitions, each contributed about a point and a half of growth in the quarter.

Speaker 3: Consistent with prior quarters, the split of our sales by business segment, region, and industry was largely driven by the composition of our backlog.

Consistent with prior quarters that split of our sales by business segment region, and industry, which largely driven by the composition of our backlog.

Speaker 3: In our intelligent devices business segment, organic sales increased 18% versus prior year with strong growth across all regions.

And are intelligent devices business segment organic sales increased 18% versus prior year with strong growth across all regions within this segment independent car technology.

Speaker 3: Within this segment, independent car technology had another strong quarter, finishing this fiscal year with over 50% growth in sales. This offering continues to be an integral part of our advanced material handling and production logistics offering.

Another strong quarter, finishing this fiscal year with over 50% growth in sales. This offering continues to be an integral part of our advanced material handling and production logistics offering.

Speaker 3: We are excited about our latest addition to this differentiated portfolio with our acquisition of ClearPath Robotics, and I will cover some strategic highlights of this deal later on the call.

We are excited about our latest addition to this differentiated portfolio with our acquisition of clear path robotics, and I will cover some strategic highlights of this deal later on the call.

Speaker 3: Software and Control Organic Sales Group 23% year over year. We continue to innovate in both the software and hardware portions of our architecture, with significant new offerings such as high availability, process IO, factory talk optics, and factory talk data mosaics. We are pleased with how our organic and inorganic investments in this business are delivering new customer value and continued share gain.

Software and control organic sales grew 23% year over year, we continue to innovate in both the software and hardware portions of our architecture, which significant new offerings, such as high availability process Io factory talk optics and factory talk data mosaics were.

Pleased with how our organic and inorganic investments in this business are delivering new customer value and continued share gains.

Speaker 3: Life cycle services organic sales were up over 10% year over year. Book-to-bill in this segment was 0.97 and above the historical average for Q4. Within this segment, our Sensia joint venture had a strong finish to the year.

Lifecycle services organic sales were up over 10% year over year book to Bill in this segment was 0.97 and above the historical average for Q4 within this segment R. M. C. A joint venture had a strong finish to the year with over 50% year over year.

Speaker 3: with over 50% year-over-year order growth in the quarter. This growth was driven by strategic wins in process automation and artificial lift control systems, positioning this business for continued double-digit growth and improved profitability in fiscal year 24.

Order growth in the quarter. This growth was driven by strategic wins and process automation and artificial lift control systems positioning this business for continued double digit growth and improve profitability in fiscal year 2004.

Speaker 3: Information solutions and connected services sales grew 10% versus prior year. One of the largest information solutions wins ever was with Prometean tire.

Information solutions and connected services sales grew 10% versus prior year, one of the largest information solutions wins ever was with Prometea arm tire.

Speaker 3: a global leader in tire manufacturing, headquartered in Italy. This customer was already using our cloud-native Plex quality management system and has recently selected our on-prem MES software to digitize the manufacturing processes at a number of their global sites.

Global leader entire manufacturing headquartered in Italy. This customer was already using our cloud native Plex quality management system and has recently selected are on <unk> Mes software to digitize the manufacturing processes at a number of their global sites this with <unk>.

Speaker 3: This win not only demonstrates the standalone differentiation of our modular offerings, but also highlights the value from integration of our entire portfolio, making it easier for customers to standardize their global operation.

Not only demonstrates the stand alone differentiation of our modular offerings, but also highlights the value from integration of our entire portfolio, making it easier for customers to standardize their global operations.

Speaker 3: Within connected services, we continue to grow our cybersecurity practice with Q4 sales growing 30% year over year. Our industrial cybersecurity software and expertise, along with differentiated partnerships on the IT security front, are helping us grow our cybersecurity services into a business of well over $100 million this fiscal year with the significant portion of this being recurring revenue.

Within connected services, we continued to grow our cyber security practice with Q for sales growing 30% year over year or industrial cyber security software and expertise along with differentiated partnerships on the security front are helping us grow our cyber security services into abuse.

Must have well over $100 million this fiscal year with a significant portion of this being recurring revenue.

Speaker 3: Total annual recurring revenue grew 16% year over year. That's a good number. And ARR is a meaningful contributor to our future growth framework.

Total annual recurring revenue grew 16% year over year, that's a good number and <unk> is a.

Meaningful contributor to our future growth framework.

Speaker 3: Segment margin of 22.3% was in line with our expectations.

Segment margin of 22.3% was in line with our expectations.

Speaker 3: adjusted EPS of $3.64, which is a company record for quarterly earnings grew almost 20% year over year.

Adjusted EPS of $3.64, which is a company record for quarterly earnings grew almost 20% year over year.

Speaker 3: Significantly improving lead times in our Q4 shipment over performance contributed to rapid backlog reduction in the quarter. We are ending the year with over $4.1 billion in backlog over 40% coverage of annual sales, which is still well above pre-pandemic levels.

Significantly improving lead times in our queue for shipment Overperformance contributed to rapid backlog reduction in the quarter, we are ending the year with over four $1 billion in backlog over 40% coverage of annual sales, which is still well above pre pandemic levels.

Speaker 3: A return to superior customer service remains our highest priority.

A return to superior customer service remains our highest priority let's.

Speaker 3: Let's now turn to slide four to review key highlights of our Q4 end market performance.

Let's now turn to slide four to review key highlights of our queue for and market performance.

Speaker 3: Our discrete sales grew over 15% versus prior year. Within discrete, automotive sales were up 30% year over year, reflecting continued strength of our offerings in both electric vehicle and battery. Our EV business was close to 40% of our total automotive revenue in the quarter, growing double digits both year over year and sequentially.

Are discreet sales grew over 15% versus prior year.

Within discrete automotive sales were up 30% year over year, reflecting continued strength of our offerings and both electric vehicle and battery are <unk> business was close to 40% of our total automotive revenue in the quarter growing double digits, both euro per year and sequentially.

Speaker 3: One of our strategic battery wins was with Nanotech Energy, a startup with new and innovative energy storage technologies. Nanotech has chosen Rockwell as their exclusive automation partner to build new battery gigafactory.

One of our strategic battery wins was with Nano-tech energy, a startup with new and innovative energy storage technologies Nano-tech has chosen brockwell as their exclusive automation partner to build new battery Giga factories.

Speaker 3: Semiconductor sales grew high single digits. We continue to take share in facilities management control system applications at major semiconductor companies across the globe. In addition to our existing portfolio, we continue to win and build down a strong funnel of advanced wafer transport solutions, leveraging our independent cart technology across customers' Greenfield and Brownfield projects.

Semiconductor sales grew high single digits, we continued to take share and facilities management control system applications at major semiconductor companies across the globe. In addition to our existing portfolio, we continue to win and build down a strong funnel of advanced wafer transport.

Oceans, leveraging our independent car technology across customers Greenfield and brownfield projects were.

Speaker 3: We're also participating in the rapid build down of data centers to support cloud computing and artificial intelligence. Our control systems are used to control and optimize the environment and safety systems in these facilities. And our recent cubic acquisition extends our reach into the power distribution portion of data centers. We've seen some strategic winds in Asia and in the US in the quarter with more to come.

We're also participating in the rapid build down a data centers to support cloud computing and artificial intelligence or control systems are used to controlling optimize the environment and safety systems in these facilities and our reach our recent cubic acquisition extending our reach into the power distribution.

Portion of data centers, we are seeing some strategic wins in Asia and in the U S and the quarter with more to come.

Speaker 3: In our e-commerce and warehouse automation vertical, sales declined mid-single digits versus prior year. After several quarters of customer delays and cancellations in the e-commerce portion of this vertical, we're starting to see new investments, especially in North America, positioning us for low single-digit year-over-year growth in fiscal year 24.

And R E Commerce and warehouse automation vertical sales declined mid single digits versus prior year after several quarters of customer delays and cancellations and the E. Commerce portion of this vertical we're starting to see new investments, especially in North America positioning us for low single.

[noise] digit year over year growth in fiscal year 2004.

Speaker 3: Turning to our hybrid industries, strong sales in this segment were paced by good growth and food and beverage are our largest customer verticals.

Turning to our hybrid industries strong sales in this segment, where paced by good growth in food and beverage our largest customer vertical food.

Speaker 3: Food and beverage sales grew low double digits versus prior year. In addition to continued cybersecurity and infrastructure modernization wins in this vertical, we had several wins in Q4 incorporating generative AI functionality, where our digital services business is helping our CPG customers use real-time AI assistance as they develop new products, formulations, and recipes.

Food and beverage sales grew low double digits versus prior year. In addition to continued cyber security and infrastructure modernization wins in this vertical we have several wins in queue for incorporating generative AI functionality, where our digital services business is helping our CPG customers.

Use real time, AI assistance as they develop new products formulations and recipes.

Speaker 3: Life Sciences sales grew mid-single digits in the quarter. This vertical is a great example of how we are delivering expanded customer value through a combination of software, hardware, and digital services capabilities.

Life Sciences sales grew mid single digits in the quarter. This vertical is a great example of how we are delivering expanded customer value through a combination of software hardware and digital services capabilities.

Speaker 3: This quarter, our Plant PAX system was selected by Beijing, a global biotechnology company developing innovative and affordable cancer medicines for their process control and environmental monitoring solutions at a Greenfield site in New Jersey.

This quarter or plant Pix's system was selected by Beijing, a global biotechnology company, developing innovative and affordable cancer medicines for their process control and environmental monitoring solutions at a greenfield site in New Jersey.

Speaker 3: Tire was up high teens in the quarter with multiple wins across the globe, including the large software deal at Prometean Tire I mentioned earlier on the call.

Tire was up high teams in the quarter with multiple wins across the globe, including the large software deal at Prometea entire I mentioned earlier on the call.

Speaker 3: Moving to process, sales in this industry segment grew over 25% year over year, led by strong growth in oil and gas, mining and metals. Oil and gas sales were up over 30% in the quarter. This growth was driven by a combination of digital oil-filled solutions, including process safety and lift control in Amia and Asia, as well as several new carbon-capture winds in North America.

Moving to process sales in this industry segment grew over 25% year over year led by strong growth in oil and gas mining and metals.

Orland gas sales were up over 30% in the quarter. This growth was driven by a combination of digital oilfield solutions, including process safety and lift control and EMEA in Asia as well as several new carbon capture wins in North America with.

Speaker 3: We continue to grow our process industry footprint with a combination of Sensium and Rockwell oil and gas capability.

We continue to grow our process industry footprint with a combination of <unk> and Rockwell oil and gas capabilities. We had a notable when this quarter at multitask filtration engineers and India headquartered global EPC company working on onshore and offshore projects. This was a compare.

Speaker 3: We had a notable win this quarter at Multitext Filtration Engineers, an India Headquartered Global EPC company working on onshore and offshore projects. This was a competitive DCS win for Rockwell with one of the largest government-owned oil and gas explorer and producers in India. And we are excited to partner with Multitext as they increase their footprint in the US and Middle East.

Additive Dcs wind for Rockwell with one of the largest government owned oil and gas explore and producers and India and we're excited to partner with multi tax as they increase their footprint in the U S and middle East.

Speaker 3: Turning now to slide five in our Q4 organic regional sales. Once again, our sales by region in Q4 and for the full year, fiscal year 23, reflect the composition of our backlog rather than the underlying customer demand.

Turning now to slide five in our queue for organic regional sales once again, our sales by region in queue for and for the full year fiscal year 23 reflect the composition of our backlog rather than the underlying customer demand a full year orders in the Americas outperformed the rest of the world.

Speaker 3: A four-year orders in the Americas outperform the rest of the world.

Speaker 3: North America organic sales were up over 12% year over year.

North America organic sales were up over 12% year over year.

Speaker 3: Both Latin America and Amia sales grew over 20% in the quarter, and Asia Pacific was up over 31%.

Both Latin America, and EMEA sales grew over 20% in the quarter and Asia Pacific was up over 31%, while we saw strong sales growth in China in fiscal year 23, we continued to see high order deferrals in cancellations in China.

Speaker 3: While we saw strong sales growth in China and fiscal year 23, we continued to see high-order deferrals and cancellations in China.

Speaker 3: Let's move to slide six key highlights of fiscal year 2023. We had a record year of sales and earnings with our total sales exceeding $9 billion.

Let's move to slide six key highlights of fiscal year 2023.

We had a record year of sales and earnings with our total sales exceeding $9 billion.

Speaker 3: We achieved this milestone ahead of the timeframe. We anticipated when we introduced our framework for accelerated profitable growth at investor day in 2019.

We achieve this milestone ahead of the time frame, we anticipated when we introduced our framework for accelerated profitable growth at Investor day in 2019.

Speaker 3: Both reported and organic sales grew 17% this year, well above our original expectations. Information solutions and connected services were up 9% year over year, reaching over $870 million.

Both reporting an organic sales grew 17% this year well above our original expectations information solutions and connected services were up 9% year over year, reaching over $870 million.

Speaker 3: demonstrating our customers' accelerated adoption of new digital offerings. This is almost three times what this figure was in 2018.

Demonstrating our customers accelerated adoption of new digital offerings. This is almost three times with this figure was in 2018.

Speaker 3: Total ARR grew 16% with strong growth in both our software as a service and recurring services offering.

Total AOR grew 16% with strong growth in both our software as a service and recurring services offerings.

Speaker 3: A strong operating performance resulted in 140 basis points of segment margin expansion versus prior year. Adjusted EPS of $12.12 was up 28%.

A strong operating performance resulted in 140 basis points of segment margin expansion versus prior year ajar.

Adjusted EPS of $12.12 was up 28%.

Speaker 3: We generated a record $1.2 billion of free cash flow this year. The much better free cash flow conversion in the quarter was primarily driven by improved working capital. This represents 86% free cash flow conversion for the year, and Nick will provide more detail in his remarks. And last but not least, we continue to invest in key areas of growth. In the last few months, we made two acquisitions.

We generated a record $1.2 billion of free cash flow this year.

Much better free cash flow conversion in the quarter was primarily driven by improved working capital. This represents 86% free cash flow conversion for the year and Nick will provide more detail in his remarks and last but not least we continued to invest in key areas of growth in the last few months we.

May two acquisitions.

Speaker 3: ClearPath and Verve to further expand our value and accelerate top-line growth.

Clear path and Verve to further expand our value and accelerate top line growth.

Speaker 3: While we'll talk more about both investments at our upcoming investor day, let's turn to slide seven and take a few minutes to share why we're excited about the impact ClearPath will have on both our near and longer-term growth.

While we're talking more about both investments that are in upcoming Investor day.

Let's turn to slide seven and take a few minutes to share why we are excited about the impact clear path will have on both are near and longer term growth.

Speaker 3: As we've shared with you earlier in the quarter, Clear Path is a leader in autonomous mobile robots, or AMRs serving customers across many industry segments.

As we've shared with you earlier in the quarter clear path as a leader and autonomous mobile robots or amr's, serving customers across many industry segments diff.

Speaker 3: Their differentiated portfolio of auto brand AMRs is focused on the production logistic space, where customers traditionally have relied on manual labor to move raw materials and sub-assemblies to the right place on production lines, and also to move finished goods to shipping docks and warehouses.

Differentiated portfolio of auto brand Amr's is focused on the production logistics space, where customers traditionally have relied on manual labor to move raw materials and sub assemblies to the right place on production lines and also to move finished goods to shipping docks and warehouse.

Speaker 3: These workflows have been identified by many automotive companies, semiconductor fabs, and consumer packaged goods suppliers as their top opportunity for efficiency and increased safety.

These workflows had been identified by many automotive companies semiconductor fabs and consumer package goods suppliers as their top opportunity for efficiency and increased safety.

Speaker 3: Given the workforce shortage in skills gap, along with the overall move to more autonomous operations, the market for industrial mobile robots in factory floor applications is expected to grow over 30% for the next five years. And we believe no one is better positioned to capitalize on this growth than Rockwell and ClearPath.

Given the workforce shortage in skills gap, along with the overall move to more autonomous operations the market for industrial mobile robots and factory floor applications is expected to grow over 30% for the next five years and we believe no one is better positioned to capitalize on this growth.

Rockwell and clear path.

Speaker 3: Together, we are the only end-to-end provider of autonomous operations in this space.

Together, we are the only end to end provider of autonomous operations in this space.

Speaker 3: We're bringing together our factory-talk design capabilities to configure and simulate the production environment, including these AMRs, integrate with our cloud-native operations management software like Plex and FIX, and optimize the production process with our logics and embedded AI capabilities, all with one technology platform.

We're bringing together our factory taught design capabilities to configure and stimulate the production environment, including these amr's.

Integrate with our cloud native operations management software like collection fix and optimize the production process with our logics and embedded AI capabilities, all with one technology platform vicious.

Speaker 3: This is an important milestone for Rockwell, and you will see more of what this can do for industrial operations at AutomationFair and Investor Day next week.

This is an important milestone for Rockwell and you will see more of what this can do for industrial operations at automation fare and Investor Day next week.

Speaker 3: We close this acquisition in early October and expect it to contribute about a point of growth to our top-line performance in fiscal year 24.

We close this acquisition in early October and expected to contribute about a point of growth to our top line performance in fiscal year 2004.

Speaker 3: As we move to slide eight, let's review our Fiscal 2024 Outlook. Consistent with what we shared with you on our last earnings call, our orders continue to decrease through Fiscal 2023, reaching what we believe to be a trough in our fourth quarter.

As we move to slide eight let's review our fiscal 2024 outlook.

Consistent with what we shared with you on our last earnings call or.

Our orders continued to decrease through fiscal 2023, reaching what we believe to be a trough and our fourth quarter.

Speaker 3: Orders for the full year were $8.2 billion, which specifical year 24 orders to increase low single digits year over year.

Orders for the full year, where eight $2 billion, we expect fiscal year 2004 orders to increase low single digits year over year.

Speaker 3: Order growth is expected to be highest in the Americas.

Ordered growth is expected to be highest in the Americas.

Speaker 3: Agile orders are expected to be down year over year due to China. However, a relatively low exposure to China helps reduce the impact on our global results.

Asia orders are expected to be down year over year due to China.

However, a relatively low exposure to China helps to reduce the impact on our global results.

Speaker 3: The lead times on our products have largely returned to pre-pandemic levels, with the remainder of our SKUs getting back to normal lead times around the end of our fiscal Q1. This addresses the final golden screw constraints to shipping past due backlog and clearing committed inventory at our distributors.

The lead times on our products have largely returned to pre pandemic levels with the remainder of our skews getting back to normal lead times around the end of our fiscal Q1. This addresses the final golden screw constraints to shifting past due backlog and clearing committed inventory.

At our distributors.

Speaker 3: Based on our analysis of lead time reduction by product line, distributor inventory, and underlying demand at our largest machine builders and end users, we expect orders to begin to recover in Q1 and build in Q2.

Based on our analysis of lead time reduction byproduct line distributor inventory and underlying demand at our largest machine builders and end users. We expect orders to begin to recover in Q1 and build in Q2.

Speaker 3: Customers continue to move forward with plans for both Greenfield and Brownfield capacity investments and also with resilience projects requiring increased cybersecurity and digitization.

Customers continue to move forward with plans for both Greenfield and brownfield capacity investments and also with resilience projects, requiring increased cyber security and Digitization.

Speaker 3: In the U.S., we've been adding commercial resources specifically focused on projects that are incented by recent stimulus authorized by legislation, including infrastructure, IRA, and the Chips and Science Act.

In the U S. We've been adding commercial resources, specifically focused on projects that are incentive by recent stimulus authorized by legislation, including infrastructure Iras and the chips in Science Act.

Speaker 3: This team won new business during the second half of fiscal year 23 with a strong funnel of additional projects expected to close in fiscal year 24.

His team won new business during the second half of fiscal year 2003, with a strong funnel of additional projects expected to close in fiscal year 2004.

Speaker 3: Our fiscal 24 guidance assumes total reported sales of about $9.4 billion at the midpoint.

Our fiscal twenty-four guidance assumes total reported sales of about $9.4 billion at the midpoint.

Speaker 3: Organic sales are projected to grow 1% at the midpoint.

Organic sales are projected to grow 1% at the midpoint.

Speaker 3: Currency is expected to increase sales by 1.5%. And acquisitions are slated to contribute about a point of growth.

Currency is expected to increase sales by 1.5% and acquisitions are slated to contribute about a point of growth.

Speaker 3: We are projecting ARR to have another year of double digit growth.

We are projecting to have another year of double digit growth.

Speaker 3: Segment margin is expected to increase slightly versus prior year. Nick will cover this in more detail later.

Segment margin is expected to increase slightly versus prior year Nick.

Nick will cover this in more detail later.

Speaker 3: Adjusted EPS is slated to grow 5% year over year at the midpoint.

Adjusted EPS is slated to grow 5% year over year at the midpoint.

Speaker 3: At a high level, we expect strong conversion on slightly higher Euro for your organic sale.

At a high level, we expect strong conversion on slightly higher year over year organic sales.

Speaker 3: Good performance in reducing backlog during Q4 of fiscal 23 pulled forward about $100 million of revenue and $0.25 of earnings.

Foreman's and reducing backlog during Q for a fiscal 2003 pull forward about $100 million of revenue and 25 cents of earnings.

Speaker 3: Clear path is expected to reduce fiscal year 24 adjusted earnings by a similar amount.

Clear path is expected to reduce fiscal year 24 are adjusted earnings by a similar amount.

Let me turn it over to Nick to provide more detail on our queue for performance and financial outlook for fiscal 2000 for Nick.

Speaker 3: Let me turn it over to Nick to provide more detail on our Q4 performance and financial outlook for fiscal 24. Nick?

Speaker 4: Thank you Blake and good morning everyone. I'll start on slide nine, fourth quarter key financial information.

Thank you Blake and good morning, everyone.

I'll start on slide nine fourth quarter key financial information.

Speaker 4: Fourth quarter reported sales were up 20.5% over last year.

Fourth quarter reported sales were up 25% over last year.

Speaker 4: Q4 organic sales were up 17.7%, and acquisitions contributed 140 basis points to growth. Currency translation increased sales by 140 basis.

Q for organic sales were up 17.7%.

And acquisitions contributed 140 basis points to growth currency translation increased sales by 140 basis points about.

Speaker 4: about six points of our organic growth came from price.

About six point of our organic growth came from price.

Speaker 4: Segment operating margin was 22.3% compared to 23.3% a year ago.

Segment operating margin was 22.3% compared to 23.3% a year ago.

Speaker 4: The year-over-year decrease reflects the impact of higher sales volume and higher price being more than offset by higher incentive compensation, investment spend, and restructuring action.

The year over year decreased reflects the impact of higher sales volume and higher price.

More than offset by higher incentive compensation investment spend and restructuring actions.

Speaker 4: Adjusted EPS of $3.64 was above our expectations, primarily due to higher organic sales, partially offset by higher investment spend and incentive compensation.

Adjusted EPS of $3.64 was above our expectations, primarily due to higher organic sales, partially offset by higher investment spend an incentive compensation.

Speaker 4: We also took a restructuring charge in the quarter of just over $20 million, which is expected to yield more than $40 million of benefits on an annualized base.

We also took a restructuring charge in the quarter of just over $20 million, which is expected to yield more than $40 million of benefits on an annualized basis.

Speaker 4: All-in, adjusted EPS group 20% versus prior year.

All in adjusted EPS grew 20% versus prior year.

Speaker 4: I'll cover a year over year adjusted EPS bridge on a later slide.

I'll cover a year over year adjusted EPS Bridge on a later slide.

He adjusted effective tax rate for the fourth quarter was 17% slightly below the prior year right.

Speaker 4: Freakash Flow of $776 million was $417 million higher than prior year.

Free cash flow of $776 million was $417 million higher than prior year.

Are strong free cash flow generation in the quarter was driven by higher income and reductions in working capital.

Speaker 4: As you know, due to supply chain volatility, we have seen working capital balances grow over the last couple of years, and we are pleased to see our actions starting to bring working capital down.

As you know due to supply chain volatility, we have seen working capital balances grow over the last couple of years and we are pleased to see our actions starting to bring working capital down.

Speaker 4: When additional items not shown on the slide, we repurchase approximately 200,000 shares in the quarter at a cost of $55 million.

One additional items not shown on the slide we repurchased approximately 200000 shares in the quarter at a cost of $55 million.

Speaker 4: On September 30th, $900 million remained available under our repurchase authorization.

On September 30th $900 million remained available under our repurchase authorization.

Speaker 4: So I'd 10 provides the sales and margin performance overview of our three operating segments.

Slide 10 provides the sales and margin performance overview of our three operating segments.

Speaker 4: Blake discussed our top-line performance in the quarter, so I'll focus on our margin performance.

Lake discuss our top line performance in the quarters to allow focused on our margin performance.

Speaker 4: Given our pay-for-performance culture and strong results,

Given our pay for performance culture and strong results.

Speaker 4: All of our business segments saw higher bonus expense this year. In Q4, this represented between 200 and 300 basis points of year over year margin headwind for each of the segments.

All of our business segments higher bonus expense this year in queue for this represented between 200 300 basis points of year over year margin headwinds for each of the segments.

Intelligent devices margin decreased by 100 basis points year over year and was up 450 basis points sequentially because of higher volume.

Speaker 4: Intelligence devices margin decreased by 100 basis points year over year and was up 450 basis points sequentially because of higher volume.

Speaker 4: Within intelligent devices we are investing in our next generation portfolio of drives in I.O.

Within intelligent devices, we are investing in our next generation portfolio of drives in Idaho.

Speaker 4: Software and control margin of 33.5% decreased 100 basis points year over year.

Software and control margin of 33.5% decreased 100 basis points year over year.

Speaker 4: Our strong Q4 margin was driven by 25% year over year top line growth.

Are strong Q4 margin was driven by 25% year over year top line growth.

Speaker 4: This is the segment with the highest share of incremental investments as we continue to invest in next-generation logics performance and our cloud-native software portfolio.

This is the segment with the highest share of incremental investments as we continue to invest in next generation logics performance and our cloud native software portfolio.

Speaker 4: Life cycle services margin was 8.4% and was under the 10% exit rate we anticipated.

Lifecycle services margin was eight.

4% and was under the 10% exit right we anticipated.

Speaker 4: In addition to a higher bonus, this segment was the most impacted by the restructuring charges taken in the quarter. Absent those two items, the margin for this segment came in as we planned.

In addition to a higher bonus this segment was the most impacted by the restructuring charges taken in the quarter apps.

Absent those two items.

Margin for this segment came in as we planned.

Before moving to the adjusted EPS walk I'd like to talk about our <unk> joint venture.

Speaker 4: Before moving to the adjusted EPS walk, I'd like to talk about our Sensia Joint Venture.

Speaker 4: Challenged by the pandemic and global supply chain constraints, this joint venture underperformed our initial expectations for 2020 through 2023. Our updated outlook, which includes this lower base, resulted in a partial goodwill impairment in the fourth quarter.

Challenged by the pandemic and global supply chain constraint. This joint venture underperformed. Our initial expectations for 2022 2023 are updated outlook, which includes this lower base resulted in a partial goodwill impairment in the fourth quarter.

Speaker 4: Since he has one-time items and supply chain related to any efficiencies in recent quarters are largely behind us.

Since he has one time items and supply chain related inefficiencies in recent quarters are largely behind us.

Speaker 4: since he has delivered double-digit, top-line growth in fiscal 23 and has strong orders growth, as Blake mentioned.

Cynthia delivered double digit top line growth in fiscal twenty-three and has strong orders growth as Blake mentioned.

Speaker 4: Going forward, we expect profitable double-digit growth from Stencia.

Going forward, we expect profitable double digit growth from <unk>.

Speaker 4: The next slide, 11, provides the adjusted EPS walk from Q4 fiscal 22 to Q4 fiscal 23.

The next slide 11 provides the adjusted EPS walk from Q for fiscal 2000 to two Q for physical twenty-three.

Speaker 4: Core performance was up $1.5 on a 17.7% organic sales increase.

Core performance was up a dollar and five cents on a 17.7% organic sales increase.

Incentive compensation was a 45 headwind.

Speaker 4: Incessive compensation was a 45 cent headwind. This year-over-year increase reflects the higher bonus payout this year versus a below target payout last-

This year over year increase reflects the higher bonus payout this year versus a below target pay out last year.

Speaker 4: The year-over-year impact from currency was a 5-cent headwind, offset by a 10-cent tailwind from interest expense.

The year over year impact from currency was Ah five headwind.

Offset by a 10 cent tailwind from interest expense.

Speaker 4: Chair Count and Tax Rate were each immaterial to the year-over-year change in EPS this quarter.

Sure count and tax rate, where each immaterial to the year over year changing ETS this quarter.

Slide 12 provides key financial information for the full fiscal year 2023.

Speaker 4: Slide 12 provides key financial information for the full fiscal year 2023.

Speaker 4: reported sales grew 17% to $9.1 billion, including over one point coming from acquisition.

Reported sales grew 17% to nine $1 billion, including over one coming from acquisitions.

Speaker 4: Currents significantly impacted sales by approximately $100 million or 1.4 points. Organic sales were up.

Currency negatively impacted sales by approximately $100 million or one four points.

Organic sales were up 17%.

Speaker 4: Full year segment margin of 21.3% increased 140 basis points over last year.

Full year segment margin of 21.3% increased 140 basis points over last year the.

Speaker 4: The increase was due to higher sales, partially offset by higher investment spend and higher incentive compensation.

The increase was due to higher sales, partially offset by higher investment spend and higher incentive compensation.

Speaker 4: We accelerated growth investments for fiscal 23 above our original expectations as our revenue outperform.

We accelerated growth investments for fiscal twenty-three above our original expectations as our revenue outperformed.

Speaker 4: Adjusted EPS was up 28%. A detailed year over year adjusted EPS walk can be found in the appendix for your rep.

Adjusted EPS was up 28%.

Detailed year over year adjusted EPS work can be found in the appendix for your reference.

Speaker 4: As discussed earlier, free cash flow conversion was ahead of our expectation.

As discussed earlier free cash flow conversion was ahead of our expectations with free cash flow conversion of 86% in fiscal twenty-three.

Speaker 4: with free cash flow conversion of 86% in fiscal 23.

Speaker 4: 3 cash flow increased $532 million from fiscal 22.

Free cash flow increased $532 million from fiscal 2000 to.

Speaker 4: The increase in free cash flow was driven by higher free tax income.

The increase in free cash flow was driven by higher pretax income.

Speaker 4: Working capitals peaked in Q3 at 24% of sales and came down to 20% in Q4.

Working capital P Q3 at 24% of sales and came down to 20% in Q4.

Speaker 4: Return on invested capital was 20.9% for fiscal 23 and 570 basis points better than the prior year. Primarily driven by higher net income.

Return on invested capital with 29% for fiscal 2003, and 570 basis points better than the prior year, primarily driven by higher net income.

Speaker 4: For the year, we deployed about $850 million of capital towards dividends and share repurchases and made inorganic investments of $170 million.

For the year redeployed about $850 million of capital towards dividends and share repurchases and made inorganic investments of $170 million.

Speaker 4: We also paid down debt by about 870 million dollars.

We also pay down debt by about $870 million or.

Speaker 4: Our capital structure and liquidity remains strong. This strength is what allowed us to fund our acquisitions in the first quarter of fiscal year 24 without any new long-term debt.

Capital structure and liquidity remains strong this strength is what allowed us to fund our acquisitions in the first quarter of fiscal year 2004, without any new long term debt.

Speaker 4: Before we turn to our fiscal 24 guidance, we want to update you on Q4 orders and our current thinking as we look forward.

Before return to our fiscal 2000 for guidance, we want to update you on Q4 orders and our current thinking as we look forward.

In Q4 orders decreased quicker than we expected as machine builders and distributors continued to work through inventory in response to a rapidly improving lead times.

Speaker 4: In Q4, orders decreased quicker than we expected as machine builders and distributors continued to work through inventory in response to our rapidly improving lead time.

Speaker 4: As Blake said, we believe Q4 was the trough in orders in October , support that view. We expect fiscal year 24 orders to grow low single digits with an order profile similar to what we discussed in Q3.

As Blake said, we believe Q4 was the trough and orders in October support that view.

We expect fiscal year 2004 orders to grow low single digits with an order profile similar to what we discussed in Q3.

Speaker 4: Let's now move on to the next slide, 13, guidance for fiscal 24.

Let's now move on to the next slide 13 guidance for fiscal 2004.

Speaker 4: In fiscal year 24, we are focusing on growing earnings even in a year of low top line growth.

In fiscal year 2004, we are focusing on growing earnings even in a year of low top line growth.

Speaker 4: At the same time, we'll continue to invest in our own resilience in our most important innovation projects to extend our differentiation and then customer-facing resources to capitalize on continuing strong secular demand for automation.

At the same time, we will continue to invest in our own resilience in our most important innovation projects to extend our differentiation and in customer facing resources to capitalize on continuing strong secular demand for auto nation.

Speaker 4: We expect our reported sales growth to range from 0.5% to 6.5%.

We expect our reported sales growth to range from 5% to 6.5%, we expect organic sales growth in the range of negative 2% to positive, 4% and we expect acquisitions to add 100 basis points to growth.

Speaker 4: We expect organic sales growth in the range of negative 2% to positive 4%

Speaker 4: We expect acquisitions to add 100 basis points to growth in addition to a full year currency tailwind of 150 basis.

In addition to a full year currency tailwind of 150 basis points.

Speaker 4: From a segment perspective, given our exceptionally strong backlog execution in software and control.

From a segment perspective, given are exceptionally strong backlog execution in software and control that.

Speaker 4: that resulted in 25% top-line growth in fiscal year 23. We expect this segment to see the lowest growth in fiscal year 24.

That resulted in twenty-five percent top line growth in fiscal year 2003, we expect this segment to see the lowest growth in fiscal year 2004.

Speaker 4: We expect positive, organic sales growth in both our intelligent devices and life cycle services.

We expect positive organic sales growth in both are intelligent devices and lifecycle services segments.

Speaker 4: We expect price will be a positive contributor to growth for the year.

We expect price will be a positive contributor to growth for the year.

Speaker 4: Segment margin will be around 21.5% up slightly from fiscal year 23. This includes a 60 basis point headwind coming from the acquisitions of Clear Path and Burr.

Segment margin will be around 21.5% up slightly from fiscal year 2003.

This includes a 60 basis points headwind coming from the acquisitions, a clear path and for.

Speaker 4: VERB's impact to adjusted EPS is relatively flat in fiscal year 24. ClearPath will reduce earnings per share in fiscal year 24 by 25 cents on an unlevered basis.

Birds impact too adjusted EPS is relatively flat in fiscal year 2004.

Clear path will reduced earnings per share in fiscal year 24 by 25 cents, an an unlevered basis.

Speaker 4: This impact reflects continued R&D and commercialization investments as well as integration expenses.

This impact reflects continued R&D and commercialization investments as well as integration expenses.

Speaker 4: We expect the ClearPath acquisition to become accretive to earnings in fiscal year 26.

We expect a cleared path acquisition to become accretive to earnings in fiscal year 2006.

Speaker 4: We expect the full year adjusted effective tax rate to be around 17 percent.

We expect the full year adjusted effective tax rate to be around 17%.

Are adjusted EPS guidance range is $12 to $13.50.

Speaker 4: We expect full year fiscal 24 free cash flow conversion of about 100% of adjusted income.

We expect full year fiscal 2000 for free cash flow conversion of about 100% of adjusted income.

Speaker 4: This reflects our expectation that inventory days on hand will drop to 125 days by the end of fiscal year 24 compared to approximately 140 days of inventory we had at the end of fiscal year 23.

This reflects our expectation that inventory data on hand will drop to 125 days by the end of fiscal year 2004, compared to approximately 140 days of inventory we had at the end of fiscal year 2003.

Speaker 4: Our outlook for cash tax payments is higher due to a tax payment for realized capital gains on the sale of our stake in PTC.

R R.

Outlook for cash tax payment is higher due to a tax payment for realized capital gains on the sale of our stake in PTC.

Speaker 4: and the higher tax and higher tax payments required under the tax cuts and jobs at.

And a higher tax and higher tax payments required under the tax cuts in jobs Act.

Speaker 4: We expect free cash flow conversion in the first half to be well below 100% mostly tied to the timing of our incentive compensation payout and income tax payment.

We expect free cash flow conversion in the first half to the well below 100%, mostly tied to the timing of our incentive compensation payout and income tax payments.

From a calendar is nation perspective, we expect year over year organic sales to grow in the low single digits in Q1, followed.

Speaker 4: From a calendarization perspective, we expect year over year organic sales to grow in the low single digits in Q1, followed by sequential growth in sales volume as we progress through the year.

Followed by sequential growth in sales volume as we progress through the year.

Speaker 4: As a result of our strong Q4 backlog performance, volumes will be down from Q4 to Q1.

As a result of our strong Q4 backlog performance volumes will be down from Q4 to Q1.

Speaker 4: Given this dynamic, Q1 is projected to be our lowest margin quarter. We see quential improvement.

Given this dynamic Q1 is projected to be our lowest margin quarter.

With sequential improvement throughout the year.

Speaker 4: For the full year, let's turn to slide 14 for our adjusted EPS.

For the full year, let's turn to slide 14 for our adjusted EPS walk.

Speaker 4: Our core is expected to have a modest positive impact on earnings of about 5 cents from fiscal year 23 to fiscal year 24.

Our core is expected to have a modest.

Positive impact on earnings of about five from fiscal year 2003 to fiscal year 2004.

Speaker 4: Structural productivity from our Q4 actions is expected to increase earnings by $0.25.

Structural productivity from our queue for actions is expected to increase earnings by 25.

Speaker 4: while increased growth investments will reduce earnings by 55%.

While increased growth investments will reduce earnings by 55 cents.

Incentive compensation for fiscal year 2003 with.

Speaker 4: In Census compensation for fiscal year 23, was above target due to strong performance. So this represents a tail land of 85 cents for fiscal 24. Acquisitions will be diluted.

Was above target due to strong performance. So this represents a tailwind of 85 cents for fiscal 2004.

Acquisitions will be diluted by 25 cents.

Our 150 basis points of sales growth from currency will add 25.

Speaker 4: Our 150 basis points of sales growth from currency will add $25,000.

Speaker 4: and the net of interest, tax, and shares will contribute about 5 cents.

And the net of interest tax and shares will contribute about five.

A few additional comments on fiscal 2000 for guidance.

Speaker 4: Corporate another expense is expected to be around $120 million.

Corporate and other expense is expected to be around $120 million.

Speaker 4: Net interest expense for fiscal 24 is expected to be about $115 million.

Net interest expense for fiscal 24 is expected to be about $115 million. We're assuming average diluted shares outstanding of 115.3 million shares we expect to deploy between 300 and $500 million to share repurchases during the year with that.

Speaker 4: We're assuming average diluted shares outstanding of 115.3 million shares. We expected to deploy between 300 and 500 million dollars to share reproaches during the year. With that, I'll turn it back over to Blake for some closing remarks before we start Q&A.

I will turn it back over to Blake for some closing remarks before we start Q&A.

Speaker 3: Thanks, Nick. As I reflect on 2023, it's clear our continued investments in talent and technology are paying off. I'm proud of how our tight-knit organization has navigated through a dynamic environment and helped us deliver a record year of sales and earnings exceeding expectations.

Thanks, Nick as I reflect on 2023, it's clear our continued investments and talent and technology are paying off I'm proud of how our tight knit organization is navigated through a dynamic environment and helped us deliver a record year of sales and earnings exceeding expectations.

Speaker 3: Looking at the year ahead of us, we are aware of the macroeconomic backdrop and the geopolitical situation that continues to change every day.

Looking at the year ahead of US we are aware of the macro economic backdrop and the geopolitical situation that continues to change every day.

Speaker 3: You heard us talk today about focusing and optimizing our workforce for further productivity so that we can continue investing in key areas of growth.

Heard his talk today about focusing and optimizing our workforce.

Productivity. So that we can continue investing in key areas of growth.

Speaker 3: Our customers rely on our continued innovation and differentiation to provide energy and critical infrastructure security across the globe, to help bring new life-saving drugs to market and to use leading technology to augment and enable their workforce.

Our customers rely on our continued innovation and differentiation to provide energy and critical infrastructure security across the globe shall bring new life saving drugs to market and to use leading technology to augment and enabled their workforce.

Speaker 3: We look forward to seeing a lot of you at our Investor Day in Boston next week, where we will be sharing our long-term business strategy and some of the most exciting developments across our key markets and applications. Aijana will now begin the Q&A session.

Look forward to seeing a lot of you at our Investor Day in Boston next week, where we.

We will be sharing our long term business strategy and some of the most exciting developments across our key markets and applications are John It will now begin the Q&A session.

Speaker 2: We'd like to get to as many of you as possible, so please lean yourself to one question and a quick follow up. Abby, let's take our first question.

I would like to get as many of you as possible. So please limit yourself to one question quick follow up.

Let's take our first question.

Speaker 1: Thank you. And as a reminder, if you would like to ask a question, press star one on your telephone keypad. If you would like to remove your line from the queue, press star one a second time.

Thank you and as a reminder, if you would like to ask a question star one on your telephone keypad. If you would like to remove your line from the queue Press Star one a second time.

Speaker 5: and we will take our first question from Scott Davis with Melius Research. Your line is open. Hey, good morning, guys. And I just...

And we will take our first question from Scott Davis with Mileas Research. Your line is open.

Good morning, guys.

Hey, Scott Scott.

Speaker 5: A lot here and I'm glad you're doing the analyst the investor digs

A lot here and and I'm glad you're doing the analysts the investor Dixon that gives us a lot to dig in here, but.

Speaker 5: until we get there, can you give us a little bit more color on the China comments just around delays and cancellations?

Until we get there can you give us a little bit more color on on on the China comments, just around delays and cancellations.

It's not a shock given what we're reading, but maybe a little bit more granularity.

On I want you to see in there.

Speaker 3: Sure. So just for context, China is about 6% of our worldwide sales. So big manufacturing economy, but relatively low exposure for Rockwell there. And we saw very strong sales in China for the year, but in China, the orders...

Sure.

Just for context, China is about 6% of our worldwide sales so big manufacturing economy.

But relatively low exposure.

For for Rockwell there.

And we saw a very strong.

Sales in China for the year, but in China the orders.

Speaker 3: were lower and that is the source of the cancellations.

We're lower and that is the source of the cancellations.

Speaker 3: that we did see while our worldwide cancellations are roughly in line with what we've been seeing, China is the highest component of that. And I would say it's broad-based. It's not one particular industry. We still see winds and investments.

That we did say, while our worldwide cancellations of roughly in line with what we've been saying China has the highest component of that and I would say, it's it's broad based it's not it's not one particular industry, we still see wins and investments.

Speaker 3: in areas like EV, but the distributors that most of our products go to market through in China still have relatively high inventories and they're working that off.

In areas like like E V, but the distributors that most of our products go to market through in China still have relatively high inventories and they're working that all.

Okay, that's helpful and.

Speaker 5: It's helpful and you mentioned the good well impairment on

The goodwill impairment on on <unk>.

Speaker 5: It's like the next few years, the outlook there is pretty darn good. How do you kind of pair that up? And it's kind of, you know, way...

But it looks like the next few years outlook, there is pretty darn good what how do you kind of pair that often.

I'm just kind of.

I would imagine I would take it too lightly when you take a goodwill impairment.

So.

I'll just stop.

Hello.

Speaker 3: Sure, Scott. So, we launched the entity with, at the time, Schlumberger a few months before the pandemic. So, that was in 2019. And the lower base that resulted from COVID shutdowns and the subsequent supply chain shortages, along with a refinement of some of the original mix assumptions, caused us to take the impairment.

Scott So we we launched the entity with at the time Schlumberger a few months before the pandemic. So that was in 2019 and the lower base that resulted from Covid shutdowns and the subsequent supply chain shortages along.

Long with a refinement of some of the original mix assumptions caused us to take the impairment we've changed out the management team at <unk> and we've seen the last couple of quarters of encouraging improvement, we have great orders, good backlog and improving profitability and so we expect.

Speaker 3: We've changed out the management team at Sencia, and we've seen the last couple of quarters of encouraging improvement.

Speaker 3: We have great orders, good backlog, and improving profitability. And so we expect over the next few years that Sensio will actually be quite a large contributor to the improved profitability in lifecycle services.

Over the next few years that sent to you will actually be quite a large contributor to the improve profitability in life cycle services.

Yeah, I would assume that too okay I'll pass it on thank you appreciate it good luck with your next week. Thanks.

Speaker 5: I would assume that too. Okay, I'll pass it on. Thank you. Appreciate it. Good luck.

Thanks Scott.

Speaker 1: And we will take our next question from Andy Kaplowitz with Citi. Your line is open. Good morning, everyone.

And we will take our next question from Andy Capital, which which city. Your line is open.

Good morning, everyone.

Speaker 6: Andy Andy Blake, just focusing on your guidance of low single digit order growth in FY 24 on your confidence of a trough in orders in Q4 23. Could you give us more color in terms of what gives you that confidence? You mentioned orders in October are supporting your view. Maybe you could elaborate on what you're seeing. And then obviously there have been many conversations regarding mega projects and where we are in that cycle. Do you see your orders being more lumpy centered around mega projects in FY 24 and what are the verticals that they're most likely to be?

Andy Andy play.

Just focusing on your guidance of low single digit order girl to not fly 24 on your confidence of a trough and orders in queue for twenty-three could you give us more color and turns it will give you the confidence that you mentioned orders in October are supporting your view, maybe you could elaborate on what you're seeing and then obviously there have been many conversations regarding mega projects and where we are in that cycle do you.

See your order is being more lumpy centered around mega projects in FY 24, and what are the vertical that they're most likely to come from.

Speaker 3: Sure, thanks Andy. So first of all, in terms of the orders development, we saw orders ramp up throughout Q4, and then we saw October orders up sequentially from that and supportive of our view that Q4 was the trough.

Sure. Thanks, Andy So first of all in terms of the orders development. We saw orders ramp up throughout Q4, and then we saw October orders up sequentially from that and supportive of our view that Q4 was the trough we.

Speaker 3: We expect orders to continue recovering throughout Q1 and building in Q2.

We expect orders to continue recovering throughout Q1 and building in Q2.

Speaker 3: So that's the view in terms of the orders development, and that's based on what we're seeing, what I just described, as well as direct discussions with our end users and machine builders that have the largest contribution to our business. So we went and did a detailed analysis of...

So that's good that's the view in terms of the orders development and that's based on what we're saying what I just described as well as direct discussions with our end users and machine builders that have the largest contribution to our business. So we went and did a detailed analysis of their tap.

Speaker 3: their CAPEX expectations, their OPEX expectations, with projects that we have the opportunities with, and that coupled with our own personal views, and with our distributor feedback, are all supportive of this shape of the order recovery curve. In terms of the mega price,

X expectations, there opex expectations, what projects that we have the opportunities with and that coupled with our own personal views and with our distributor feedback are all supportive of this shape of the order recovery curve in terms of the Mega projects I don't.

Speaker 3: I don't know that that's going to contribute so much to the lumpiness. I think it's going to be a positive, you know, additional amount of business that builds throughout fiscal year 24 and

No that that's going to contribute so much to the Lumpiness I think it's going to be a positive you know additional amount of business that builds throughout fiscal year 2004, and beyond the majority of the projects that were tracking and we're tracking literally hundreds of projects veterans.

Speaker 3: The majority of the projects that we're tracking, and we're tracking literally hundreds of projects that are incented by some of the recent stimulus, the majority of those projects have not made a decision or have not released the automation equipment.

Headed by some of the recent stimulus the majority of those projects has not made a decision or have not released the automation equipment. So.

Speaker 3: When you look at those projects, certain equipment, which would probably include switch gear, things like that, would be let earlier in the project cycle with automation to follow after that. So we think that we're still in the early innings with respect to those mega projects, and our tracking processes and our early wins are very encouraged.

When you look at those projects certain equipment, which would probably include switch gear things like that would be led earlier in the projects cycle with automation to follow after that so we think that we're still in the early innings with respect to those mega projects and are are tracking processes and our earth.

Really wins are very encouraging.

Speaker 6: Very helpful, Blake. And Nick, maybe just going over your margin expectations a little more for the segments in 24, you already answered Scott's question on Sensia, you know, but what's your confidence level that we do see a step up in 24 in lifecycle services, and then particularly in intelligent devices? Obviously, that segment has had, let's call it some perturbations from supply chain. Do you see, you know, more normal environment and improvements in 24 in that segment?

Very helpful Blake and neck, maybe just going over your margin expectations are more for the segments. In 24, you already answered Scott's question on <unk> you know.

But what's your confidence level that we do see a step up in 24 and life cycle services, and then, particularly an intelligent devices. Obviously that segment has had let's call. It some perturbations from supply chain do you see you know more normal environment and improvements in 24 in that segment.

Speaker 4: Yeah, in terms of expectations by segment for fiscal year 24, we do expect that lifecycle services will be the most significant year-on-year margin expander, and to answer your question, we are highly confident in that based on the actions that we have taken in 23 and based on the outlook we have for that business in 24.

Yeah in terms of expectations by segment for our fiscal year 24.

We do expect that lifecycle services will be.

The most significant year on year margin.

Expander and to answer your question, we are highly confident in that in that based on the actions that we have taken in 2003 and based on the the outlook we have for that business in in 2004.

Speaker 4: On the opposite side, software and control, we saw outstanding growth in fiscal year 23 as we had strong execution on our backlog, and we expect that business to be the one with the lowest

On the opposite side software and control.

We start outstanding growth in fiscal year 2003, as we had strong execution on our backlog and we expect that business to be the one with the lowest.

Speaker 4: organic growth and then that will translate into lower year on year margin in our software and control business. Primarily driven by that lower growth and it happens to also be the segment where we're putting the majority of our incremental investments. From an intelligence deb-

Organic growth and then that will translate into lower year on year margin in our software and control business, primarily driven by that lower growth.

And it happens to also be the segment, where we're putting the majority of our incremental investments.

From an intelligent devices perspective.

Speaker 4: That's one where we expect the margins year on year to be flat to up slightly. And that is with the impact of clear path in there. Clear path is for the segment alone about a hundred basis point headwind.

One where we expect the margins year on year to be flat to up slightly.

And that is with the impact of clear path in there clear path is for the segment alone about 100 basis point headwind.

Speaker 4: And that will be impacting throughout the year, but we'll definitely be seeing that impacting Q1 in intelligent devices. And the actions that we've been doing in intelligent devices.

And that will be impacting throughout the year, but we'll definitely be seeing that impacting Q1 and intelligent devices and.

The actions that we've been doing in intelligent devices around our productivity and our investments and products.

Speaker 4: around our productivity and our investments in product.

Speaker 4: That's what's leading us to expect margins to be flat to up slightly.

Uhm, that's what's leading us to expect margins to be flat up slightly.

Appreciate that kind of guys.

Thanks Sandwich.

Speaker 1: We will take our next question from Jeff Sprague with Vertical Research. Your line is open.

Yeah, We will take our next question from Jeff Frank with vertical research. Your line is open.

Good morning, all my job.

Speaker 7: Hey Jeff, hey, just, hey, good morning. Hey, I just want to come back to kind of orders and backlog. I just got confused by the comment that orders ramp during Q4.

Hi, Good morning, Hey, I, just want to come back to kind of orders and backlog.

This kind of confused by the comment that orders ramp during Q4 right.

Speaker 7: Right. I mean, the ending backlog at $4.1 billion, you were guiding $4.5 billion to $5 billion. I know you pulled forward $100 million in sales, right? But maybe just bridge us on what happened other than that sales pull forward. How much of it was cancellations versus just kind of regular way order normalization, if there's a way to do that?

Right I mean, the ending backlog at 4.1 billion you regarding four and a half to five.

$4 million to $100 million in sales right, but.

Maybe just bridges on what happened other than that sales pull forward how much of it was cancellations versus just kind of regular way order normalization or if there's a way to do that.

Speaker 3: Sure. Let me make a couple of comments, Jeff, and then Nick may have some to add as well. So we saw orders increasing. If you look at beginning of the quarter of Q4 to the end, we saw orders exit at a higher rate than at the beginning of Q4, and then with a good uptick from that sequentially in October . So that was the ramp we were talking about and why we believe that Q4 was the trough for orders.

Sure Let me make a couple of comments, Jeff and then Nick May have some to add as well. So we saw orders increasing if you look at the beginning of the quarter of Q4 to the end we saw orders exit at a higher rate than at the beginning of Q4, and then with the good uptick from that.

Sequentially in October so that was the ramp we were talking about and why we believe.

That Q4 was the trough four orders.

Speaker 4: Yeah, and Jeff, just to go a little deeper in that, what...

Yeah, and just to just to go a little deeper than that like what we're seeing what are the dynamics, we're seeing in in queue for and we expect to continue through Q1 as well is R.

Speaker 4: What we're seeing, one of the dynamics we're seeing in Q4, and we expect to continue through Q1 as well, is our channel partners, our distributors, working to right size their inventory, as we are seeing.

Channel partners are distributors working to right size their inventory as we are seen as.

Speaker 4: as they are seeing good reductions in our lead times. They're doing the right actions of bringing their inventory levels down, and that's resulting in lower orders being placed on us. And we expect that to continue to queue through queue one, and we think queue two, and as we discuss with all of our distributors, queue two is where that will start to change, where the inventory levels at our distributors will be reaching

As they are seen good reductions in our lead times, they're doing the right actions of bringing their inventory levels down and that's resulting in lower orders being placed on us and we expect that to continue to acute through Q1, and we think Q too as we and as we discussed with all of our distributors.

Q2 is where that will start to change where the inventory levels at our distributors will be reaching the the normal level that they expect so finally, I'd say that just to say, we don't really see this level of orders. We're seeing now is normalized we're seeing them the correct reaction to the to the <unk>.

Speaker 4: the normal level that they expect. So partly I say that just to say, we don't really see this level of orders we're seeing now as normalized. We're seeing them the correct reaction to the.

Speaker 3: actions they're taking to bring their inventory levels down. And if I can add to that, so our distributors are seeing a higher level of incoming orders than they in turn are placing on us due to their high inventory levels. So we have, as you would imagine, very good visibility into our distributors incoming orders from their customers.

<unk>, they're taking to bring their inventory levels down and if I can add to that.

So our distributors are seeing a higher level of incoming orders then they in turn are placing on us due to their high inventory levels. So we have as you would imagine very good visibility into our distributors incoming orders from their customers from the end users and the machine builders.

Speaker 3: from the end users and the machine builders, and that order activity is higher than what they're, in turn, placing on us. So that gives us additional confidence that orders will ramp up as their inventory situation comes down.

And that order activity is higher than what they are in turn placing on us. So that gives us additional confidence that orders will ramp up as their inventory situation comes down.

Speaker 7: And then maybe just on the, on the guide.

And then maybe just on the on the guide.

Speaker 7: If I heard right, I think you said you're expecting positive organic growth in Q1. Obviously, you have a negative in your guide range. I would have thought if that negative were to happen, you know, it would actually happen in Q1 with disorder normalization. So maybe just kind of talk about, you know, your thought process of what gets you to the negative organic growth for the year versus being positive in Q1.

If I heard right I think you said, you're expecting positive organic growth in Q1.

Obviously, you have a negative and your guide range.

I would've thought it that negative were to happen it would actually happen in Q1 with this order normalization. So maybe just kind of talk about.

Your thought process of what gets you to the negative organic growth for the year versus versus being positive in Q1.

Speaker 3: Sure, so at the negative end you would see a slower reduction of inventories at our distributors and a deterioration in the background.

Sure so at the negative and.

You would see a slower redux.

Reduction of inventories at our distributors and a deterioration in the background.

Speaker 3: At the upper end of the range, you would see distributors stabilizing their inventory at higher levels than they did before, so getting back to that equilibrium and placing orders.

The upper end of the range he would see distributors stabilizing their inventory at higher levels than they did before so getting back to that equilibrium and placing orders that are more reflective of the underlying demand from users and integrators and machine builders and you would also.

Speaker 3: that are more reflected of the underlying demand from users and integrators and machine builders. And you would also see at the high end, some of the impact from the big projects being spurred by stimulus, specifically in the US. I should add as well that on the high end, if we talk about total sales.

See you at the high end some of the impact of from the big projects being spurred by stimulus specifically in the U S. I should add as well that on the high end, if we talk about total sales.

Speaker 3: Some of the performance in terms of new acquisitions, I think there's some opportunity there as well.

Some of the performance in terms of new acquisitions, I think there's some opportunity there's some opportunity there as well.

Speaker 4: And, and Jeff, to follow up on the one question about why, why Q1, why, why we think that'll be a low single

And just to follow up on the one question about why why Q1, why why we think that'll be a low single digit growth. Yes. If we were only looking at the orders your question would that.

Speaker 4: Yes, if we were only looking at the orders, your question would, that would make sense why not negative. However, we also continue to have a $4.1 billion backlog that we're entering the year with. And so what we're seeing in our Q1 revenue is a combination of

That would make sense why would why not negative. However, we also continue to have a.

Four 1 billion backlog that we're entering the year with and so what we're seeing in our queue. One revenue is a combination of continued.

Speaker 5: Continued sales of some of that fat blood coupled with the lower orders. We're expecting in Q1 Yeah, if I could just add one additional piece, you know, we do expect shipments to ramp sequentially in terms of volume through the year to get into a little bit of the math of Compleables based on having such strong shipments at the tail end of the year that enters into the math of the year of year growth as well.

Continued sales with some of that backlog coupled with the lower orders were expecting in Q1, if I could just add one additional piece, we do expect shipments to ramp sequentially in terms of volume through the year, you get into a little bit of the mass of comparable based on having such strong shipments.

At the tail end of the year that enters into the map of the year over year growth as well.

Alright, thank you for the color.

Thanks, Jeff.

Speaker 1: And we will take our next question from Andrew Oben with Bank of America. Your line is open. Hi, I guess. Good morning.

And we will take our next question from Andrew Open with Bank of America. Your line is open.

I guess good morning.

Speaker 8: Morning, Andrew. Yeah, just maybe just to maybe unpack this minus 2% growth rate a little bit for the, you know, historically there's been a strong connection between cat bags.

Mourning mourning Andrew.

Yeah, just maybe just to maybe unpack us minus 2% growth rate illiterate for the you know historically there has been a strong connection between capex.

Speaker 8: And you know, you sort of view of the growth rate. I'm sure you'll tell us a lot more about it. The analyst a new framework. I fully appreciate it But what kind of macro do we need to see For minus 2% to manifest itself, you know, does this imply push outs of Evie batteries could you just describe the macro environment Behind the minus 2% the low end of the forecast. Thank you

And you know you just want a view of the growth right I'm sure you'll tell us a lot more about it the analysts say a new framework I fully appreciate it but what kind of macro do we need to see four minus 2% to manifest itself.

Comply push out so.

The batteries could you just describe the macro environment behind the minus 2% along the forecast. Thank you.

Speaker 3: Yeah, I think, I think that would contemplate.

Yeah, I think I think that would.

Contemplate.

Speaker 3: pushouts that turn into cancellations quite frankly. Whereas, you know, if a project is pushed by a couple of months, it's not going to have a big impact in the year, but if some of those projects or a larger amount of those projects rolled over into deferrals and cancellations.

Pushouts that turn into cancellations quite frankly, whereas.

It's a project is pushed by a couple of months, it's not going to have a big impact in the year, but if some of those some of those projects or a larger amount of those projects rolled over into deferrals of cancellations that people said Nab you know just kidding about E V.

Speaker 3: The people said, now, just kidding about EV, we don't need to build out the semiconductor industry.

We don't need to.

To build out the semiconductor industry process, which is 35% of our business. If people are looking to increase.

Speaker 3: process, which is 35% of our business. If people aren't looking to increase

Speaker 3: you know energy of both hydrocarbon and renewable energy forms in the US. If we saw a significant reduction of those projects, I think that would contribute to that minus, you know, that downside part of the race.

Energy, both hydrocarbons and renewable energy forms and the U S. If we saw a significant reduction of those projects I think that would contribute to that minus.

That downside part of the range.

Speaker 8: And just to follow up, you know, ARR of 16%, which is a pretty decent for an industrial software company, nice exit rate. So what kind of software growth is embedded? What kind of ARR assumptions are in your 24 forecast? Thank you.

Alright gotcha.

To follow up you know are are of 16 purse had wishes pretty decent for an industrial software company.

Exit right. So what kind of software growth is embedded what kind of are our assumptions are and your 24 forecast. Thank you.

Speaker 3: Yeah, we're looking at 15% ARR and we're very proud of that ARR number because it's broad-based.

Yeah, we're looking at 15%.

And.

We're very proud of that.

Number because it's broad based.

Speaker 3: You know, it's not just the newer acquisitions like Plex and Fix, but it's our traditional offerings as well, some of the on-prem software, and, you know, as we go through the year, based on the lower growth in overall Rockwell, we do expect ARR to increase to above 9%.

It's not just the new newer acquisitions like flex and fixed but it's our traditional offerings as well some of the on Prem software.

And.

We go through the year based on the lower.

Growth in overall Rockwell, we do expect <unk> to increased to above 9% of our total sales in the year. It's a combination both of the software as well as the high value recurring services.

Speaker 3: of our total sales in the year. It's a combination both of the software as well as the high value recurring services.

Speaker 3: We made some organizational changes to supercharges that area and that along with some of the new developments and offerings that we have, make us very optimistic about the contribution that ARR is gonna have to our overall growth. And obviously we like the resiliency that it gives our results by not starting each year at zero with respect to software.

We made some organizational changes too.

Super charge that area and that along with some of the new developments in offerings that we have like is very optimistic about the contribution that is going to have to our overall growth and obviously, we liked the resilient to see that it gives our results by not starting.

Each year.

At zero with respect to with respect to software sales.

Speaker 9: Thanks so much. Thanks, Andrew.

Thanks, so much.

Thanks, Andrew.

Speaker 1: We will take our next question from Julian Mitchell with Barclays. Your line is.

Alright, we'll take our next question from Julie and Mitchell with Barclays. Your line is open.

Speaker 10: Thanks very much. Maybe I just wanted to follow up first off on Nick, your comments on the first quarter. So is the right assumption sort of low-stingled digit.

Hello, Thanks very much.

Maybe I just wanted to follow up first off on Nick Gill comments on the first quarter. So is the right assumptions sort of low single digit.

Speaker 10: you know, organic growth, Q1 as you said, and then margins for the year-a-guided, flatish for the total company, we assuming kind of Q1 is similar to that year on year, just given the acquisition headwind and so forth. So you have sort of sales up a little bit, margins flat and earnings up a little bit year on year.

Organic growth Q1, as you said and then margins for the year of guided flattish. So the total company and we assuming kind of Q1 is similar to that year on year, just given the the acquisition headwinds and so forth. So you have sort of sales up a little bit March.

Flat and earnings up a little bit year on year then.

Speaker 4: Julian, thanks for asking that question. Q1, organic growth year on year, we think will be low single digits. On the margin question, Q1 of last year, we had a margin of 20%. We expect that to be lower.

Julian Thanks for asking that question.

<unk> one.

Organic growth year on year, we think will be low single digits on the margin question Q1 of last year, we had a margin of 20.

20%, we expect that to be lower.

Speaker 4: year on year and fiscal year 24. And there's three things that are going to be mainly contributing it to it being lower. One is our clear path acquisition and the impact that will have the second.

Year on year in fiscal year, 2004, and there's three things that are gonna be mainly contributing to it being lower one is our clear path acquisition and the impact that will have.

The second is mix that we see a less favorable mix in the first quarter.

Speaker 4: that we see a less favorable mix in the first quarter of the products that we will be selling. And we think we'll be having lower utilization in our factories as there's...

Of the products that we will be selling and we think will be having lower utilization in our in our factories as theirs.

As we're adjusting our production to these lower orders and we think those three things in combination you're going to be resulting in lower margin year on year.

Speaker 4: we're adjusting our production to these lower orders. And we think those three things in combination are going to be resulting in lower margin.

Speaker 10: That's very helpful. Thank you. And then I just wanted to come back to the revenue.

That's very helpful.

Thank you and then I just I wanted to come back to the the revenue outlook.

Speaker 10: Outlook. One question maybe.

Outlook one question maybe.

Speaker 10: You know, we look at North America, I think the the guide implies maybe sales are up.

We look at North America.

I think the glide implies maybe sales are up <unk>.

Speaker 10: you know, mid single digits there or something this year. And in 23 North America was the lowest growth region.

Mid single digits, there was something this year.

And in twenty-three North America was the lowest gross region.

Speaker 10: globally and so we're sort of you know seven years on from US China tariffs two years on from the iija Is it just that the pace of these on shawry and stimulus projects is so much slower than perhaps people often hope or assume

<unk> and so is sort of you know seven years on from U S. China terrorists.

Two years from the I R. A J a is it just the pace of these on the show and stimulus projects is so much slower than perhaps people often hope or assume.

Speaker 10: I just wanted to check that for the year, are you assuming it looks like that the book to bill will be about 0.9 times? Is that correct and what's embedded in the orders and fails color? Thanks.

Just wanted to check that for the year are you assuming it looks like the bill will be about now.

Nine times is that correct and what's embedded in the orders and sales color. Thank you.

Speaker 3: Let me start with the America's discussion, and then Nick can follow up with a little bit on the book to Bill. So the Americas actually outpaste the rest of the world with respect to orders.

Let me, let me start with the.

America's.

Discussion and then Nick and follow up with a little bit on the book to Bill So the Americas actually outpace the rest of the world with respect to orders and we expect that to continue in fiscal year 2004, we've talked about for a few quarters now based on.

Speaker 3: and we expect that to continue in fiscal year 24. We've talked about for a few quarters now based on shipping from backlog in some case, fairly age backlogs that our distribution of growth by region and by industry segment is more a factor of the backlog than the current underlying demand. And you're correct that we do expect

Shipping from backlog in some case fairly H backlog that our distribution of growth by region and by industry segment is more a factor of the backlog than the current underlying demand and you are correct that we do expect.

Speaker 3: the highest growth region to be the America's going forward. With respect to the impact of stimulus, we're still in the early endings there. The business that we're winning there is really just ramping up. We saw some good development in the second half of last year, but by far, there's more business to come based on the projects that we're attracting.

The highest growth region to be the America's going forward with respect to the impact of stimulus. We're still in the early innings. There you know the business that we are winning there is really just ramping up we saw some good development in the second half of last year, but.

By far there's more business to come based on the projects that were tracking.

Speaker 4: And Julie, the question on the book to Bill, you got your math is right approximately 90% book to bill for the full year below that in the first half of the year and above that in the second half of the year.

And.

The question on that book to Bill you got your Masters right approximately nine.

90% to bill for the full year.

Below that in the first half of the year and above that in the second half of the year.

Great. Thank you.

Thanks Julian.

Speaker 1: And we will take our next question from Nigel Coe with Wolf Research. Your line is open.

And we will take our next question from <unk> with Wolf Research. Your line is open.

Speaker 11: Thanks, good morning everyone.

Thanks, Good morning, everyone.

So.

Speaker 11: So we've had about a thousand questions on backlogs. Why not have one more? So the point nine times, I've talked to Bill for the full year, seems as just that we're going to be down to the lowest $3 billion for the end of the 24. I'm wondering, do we go below that level, you know, first half, you know, once it's, you know, trivast up.

So we've had a thousand questions backlog, so why not have one more so the 0.9 times spoke to bill for the full year. It seems to suggest that we're gonna be down so the lowest $3 billion for the for the <unk>.

The end of 24.

Wondering do we go below that level, you know first off once it should have stopped kind of stopped cutting inventories and then then rebuilds. Just wondering you know where you see tobacco stabilising.

Speaker 11: kind of stopped cutting inventories and then then rebuilds. Just wondering where you see the back looks they've like.

Speaker 4: Yeah, we see the backlog stabilizing. I think I said this on the last quarter or any call as well, that at 30 to 35% of revenue, annualized revenue is what we think is the normal, normalized backlog level will be at given the midst of our...

Yes, we see the backlog stabilizing I think I said this on the last quarter earnings call as well.

At 30% to 35% of revenue annualized revenue is what we think is the normal normalized backlog level will be active in the midst of our business businesses that we have so that so that would indicate an exit of the fiscal year at above $3 billion.

Speaker 3: So that would indicate, you know, when exit of the fiscal year at above $3 billion.

Right.

Speaker 11: Okay. And that is consistent with what you've said as well. And then just on sort of the... Nick, we're talking about $1.4 billion borders in the fourth quarter fiscal. If you can just verify that, that'd be helpful. And then on the FY24 bridge, a couple of things. FX, you're assuming one and a half points of tailwind.

Okay.

That is consistent with what you've set as well.

And then just on sort of the <unk>, we're talking about one point <unk> is in the fourth quarter physical or if you can just you know kind of kind.

Verify that that'd be that'd be helpful. And then on the FY Twinkle Bridge, a couple of things F X <unk> excuse me one half points of a tailwind.

Speaker 11: The math we're getting is probably more like a minus one for the for the full year. So just wondering where we're wrong there and then on the life.

The math, we're getting is probably more like a minus one for the for the full year. So just wondering why we broke the and then on the life.

Speaker 11: life cycle services, you know, marching expansion. I think it makes sense, it's based on his tree, it's just wondering, you know, what could have the downsides in the fourth quarter? And, you know, what visibility do we have on improving margins there in 2020?

Scientists lifecycle services launching expansion I think it makes sense. It's based on history. This just wondering you know what throw the downsides in the fourth quarter.

You know what was going to do what do we have on improving margins the 24th.

Speaker 4: Yeah, I'll try to do those in reverse order.

Yeah, I'll I'll try to do those in reverse order.

Speaker 4: In terms of the things drawing down the margin in the fourth

In terms of the things drawing down the margin in the fourth.

Speaker 4: quarter, the two main things were our restructuring actions that had an outside impact on the life cycle services as well as the increased bonus expense that we were facing. Now as we flip into 24, the bonus expense will be a pale wing to all businesses and life cycle services will margin will benefit from that, but also from the actions that we took in 2023.

Quarter, the two main things where are.

Restructuring actions that had an outsized impact on the lifecycle services as well as the increased bonus expense that we were facing now as we flipped into 24, the bonus expense will be a tailwind to all businesses and and lifecycle services will will <unk>.

Margin will benefit from that but also from the actions that we took in 2023 we.

Speaker 4: We think those will also be a propellant of lifecycle services margin expansion into 24.

We think those will also be a propellant of of lifecycle services margin expansion into 2004.

Speaker 4: On the currency side, given our mix of businesses and what we're projecting, many of the currencies were just using our current spot rate is going forward. In some currencies, such as the year or what we will use as a group of banks and what they're expecting for a particular currency in the coming year. And so our roughly 1.5% year on your benefit.

On the currency side.

Given the mix of businesses and what we are projecting many many of the currencies were just using our current what the current spot rate is going forward and some currency such as the euro what we will use as a group of banks and what they're expecting for a particular currency in the coming year and.

And so are roughly 1.5% year on year benefit.

Speaker 4: is coming from our expectations for currencies in fiscal year 24. And then in terms of the orders, we haven't been giving it by quarter. We did say its orders were 8.2 billion in the-

It's coming it's coming from our expectations four.

Four currencies in fiscal year 2004.

And then in terms of the orders, we haven't been giving it by quarter. We did say it's orders were eight 2 billion in the.

Speaker 12: for the full year. At the midpoint of the year, we had said there were 4.8, and therefore we're at 3.4 in the second half of the year. The third quarter was above that average. The average of 1.7 was above that. Fourth quarter was slightly below that level. So we saw from Q3 to Q4, it go down further, but we haven't been giving it by quarter what our orders are. Okay.

For the full year at the midpoint of the year. We had said they were four eight and then therefore, we're at three four in the second half of the year. The third quarter was above that average. The average of 107 was was above that fourth quarter was slightly below that level. So we saw Q3 percent.

Q for it go down further.

We haven't been giving it by quarter, what our orders are.

Okay. Thanks, Max Apple.

Yeah.

Speaker 1: We will take our next question from Steve Tuso with JPMorgan. Your line is open.

And we will take our next question from Steve to start with J P. Morgan Your line is open.

Hi, good morning.

Speaker 13: mornin uh... just on the bridge can you just maybe uh... the the incentive comp is uh... a big tailwind makes sense it was you know ahead when this year uh... can you just maybe help us uh... with how that breaks out in the you know first and second quarter here uh... what type of uh... what type of tailwind you expect there

Hey morning, I see.

Just on the bridge can you just maybe the incentive cop is a big tailwind makes sense. It was you know a headwind. This year can you just maybe help us with how that breaks out in the first and second quarter here, what type of what type of <unk>. When you expect there.

Speaker 12: Yeah, first for the full year, I'll just actually say actual numbers. Our total bonus expense in fiscal year 23 is approximately $240 million, and in our plans for fiscal year 24, it's dropping to $120 million.

Yeah first for the full year I'll, just actually say excellent.

Actual numbers.

Our total bonus expense and fiscal year 23.

Is approximately $240 million and in our plans for fiscal year 2004, it's dropping to $120 million.

Speaker 12: And that expectation of $120 million, that spread exactly equally across the four quarters of 24. In 23, that $240 million was, I can...

And that that expectation of of of $120 million, that's right exactly equally across the four quarters of 2004.

In 23.

That that $240 million was.

Alright, I can give you the actual numbers.

Speaker 12: numbers of how that broke out Steve if that helps. There's $46 million in Q1, $58 million in Q2, $56 million in Q3, and $80 million in Q4.

Numbers of how that broke out Steve that helps.

Eight Q1 $58 million in Q2 $56 million in Q3 and $80 million in Q4.

Speaker 13: well great detail uh... thanks for that uh... on the on the orders how much of the headwind was actual or actual cancellations i'm not sure i'd i caught that earlier you know what what the actual cancellation number was

Wow great detail. Thanks.

Thanks for that on the on the orders how how much of the headwind was actual where actual cancellations.

Sure I caught that earlier, what what the actual cancellation number was.

Speaker 3: Yeah, the cancellations were in a similar range to what we've been talking about, which is to say they were not the major contributor to the order's disappearance.

Yeah. The cancellations were in a similar range to what we've been talking about which is to say they were not the major contributor to the orders.

Right.

Speaker 3: The main contributor by far to the order's decrease is the high inventory levels at the distributors.

Decrease the main contributor by far to the orders decreases the high inventory levels that the distributors.

Speaker 3: So cancellations were a relatively small piece of it.

Cancellations were relatively small piece of it.

Speaker 3: At this point, clearing those final golden screw or, you know, fourth wheel constrained components to be able to allow distributors to shift.

At this point clearing those final Goldman screw or fourth wheel constrained components to be able to allow distributors to shift.

Speaker 3: Complete bills and material is also a smaller component of the overall contributor to the orders down.

Complete bills of material.

Is also a smaller component of the overall contributor to to the orders down in Q Q4.

Speaker 13: okay one last one just on the bridge the twenty five cent of acquisition headwind is pretty big um... i i i you know for for the clear path business given you know to relatively small revenue number uh... that's all kind of incremental investment you are making or that's how much you know money the businesses losing or like what what driving that so to he the twenty five cents is a pretty big number

Yeah, one one last one that's on the bridge to twenty-five cents of acquisition headwind is pretty big.

Yeah.

But a clear path business, given it's a relatively small revenue number.

That's all kind of incremental investment to you are making her that's how much money.

Money that business is losing her like like what what's driving that such a heated the 25 cents is a pretty big number.

Speaker 3: Yes, Steve, first of all, as Nick said, we expect the clear path contribution to be accreted in fiscal year 26. This is an important strategic move for Rockwell and one that I think will be apparent as we talk about it and demonstrate it next week.

Yeah, Steve and first of all as as Nick said, we expect that clear path contribution to be accretive in fiscal year 2006. This is an important strategic move for Rockwell and one that I think will be apparent as we talk about it and demonstrated next week the.

Speaker 3: the dilution in fiscal year 24 is based on a combination of them ramping their capability. So think of it as somewhat of a startup mode, but also us making sure that we surround it with the right resources to fully integrate it as quickly as possible into Rockwell to be able to provide that value for customers. So that's not only the technical resources, but it's the commercial resources, it's the infrastructure to help them drive costs out of their operations and drive unit costs out of those AMRs. And so it is some additional investment from Rockwell's part to make sure that we integrate this really thoroughly, because this is a major milestone for us.

Dilution in fiscal year 24 is based on a combination of them ramping their capabilities. So think of it as somewhat of a startup mode, but also us making sure that we surrounded with the right resources to fully integrated as quickly as possible into.

Rockwell to be able to provide that value for customers. So that's not only the technical resources, but it's the commercial resources. It's the infrastructure to help them drive cost out of their operations and drive unit cost out of those bars.

Bars and.

So it is some additional investment from rockwell's part to make sure that we integrate this really thoroughly because this is a major milestone for us great.

Speaker 13: Thanks for the call, our guys. Really appreciate the details.

Great. Thanks for the collar guys really appreciate the details.

And we will take one more question.

Speaker 14: Thank you. Our final question will come from Noah Kay with Oppenheimer. Your line is open. Okay. Thanks for all the details and the guide. Just one housekeeping item. What is the price rollover contribution for 2024, or what is the total contribution of price to organic growth for 2024, and then what are you assuming for cost implications?

Thank you our final question will come from Nella K with Oppenheimer. Your line is open.

Okay. Thanks for all the details and the Guy just one housekeeping item what what is the price rollover contribution for 2024 or what is the total contribution of priced organic growth for 24, and then what are you assuming for cost inflation.

Speaker 12: Yeah, we are assuming that price growth will be slightly over 1% year over year, and in terms of input costs, we're expecting that to be very neutral year over year, causing the net of price cost to be a little over 100 basis points accreted to margin.

Yeah, where we are.

Assuming that.

Price price growth will be slightly over 1% a year over year and in terms of input costs were expecting that to be very neutral year over year, causing the net of price cost.

To the <unk>.

Little over 100 basis points accretive to margin.

Alright perfect.

That's.

Speaker 2: And ladies and gentlemen, that concludes our question and answer session today. I will now turn the call back to Ms. Aijana Zellner for closing remarks. Thank you, everyone, for joining us today. That concludes our call.

And ladies and gentlemen that concludes our question and answer session today, and we'll now turn the call back to MS. <unk> Zellmer for closing remarks.

Yeah, everyone for joining us today that concludes alcohol.

Speaker 1: Ladies and gentlemen, at this time you may disconnect. Thank you for your participation.

Maybe he's in gentleman at this time you may disconnect. Thank you for your participation.

Speaker 15: Please wait, the conference will begin shortly. Please wait, the conference will begin shortly. Please wait, the conference will begin shortly. Please wait, the conference will begin shortly.

Please wait the conference will begin shortly.

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