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ROCKWELL AUTOMATION, INC - Quarter Report: 2023 December (Form 10-Q)

  ))) )  ) ) ) $  $   Pension contributions()()Changes in assets and liabilities, excluding effects of acquisitions and foreign
currency adjustmentsReceivables ()Inventories()()Accounts payable()()Contract liabilities  Compensation and benefits()()Income taxes  Other assets and liabilities()()Cash provided by operating activities  Investing activities:Capital expenditures()()Acquisition of businesses, net of cash acquired()()Proceeds from sale of investments  Other investing activities()()Cash used for investing activities()()Financing activities:Net issuance of short-term debt  Repayment of short-term debt ()Cash dividends()()Purchases of treasury stock()()Proceeds from the exercise of stock options  Other financing activities()()Cash provided by (used for) financing activities ()Effect of exchange rate changes on cash  Decrease in cash, cash equivalents, and restricted cash()()Cash, cash equivalents, and restricted cash at beginning of period  Cash, cash equivalents, and restricted cash at end of period$ $ Components of cash, cash equivalents, and restricted cashCash and cash equivalents$ $ Restricted cash, current (Other current assets)  Total cash, cash equivalents, and restricted cash$ $ 
See Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY
(Unaudited)
(in millions, except per share amounts)
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossCommon stock in treasury, at costTotal attributable to Rockwell Automation, Inc.Noncontrolling interestsTotal shareowners' equity
Balance at September 30, 2023$ $ $ $()$()$ $ $ 
Net income (loss)— —  — —  () 
Other comprehensive income— — —  —    
Common stock issued (including share-based compensation impact)—  — —   —  
Share repurchases— — — — ()()— ()
Cash dividends declared (1)
— — ()— — ()— ()
Balance at December 31, 2023$ $ $ $()$()$ $ $ 
)    
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossCommon stock in treasury, at costTotal attributable to Rockwell Automation, Inc.Noncontrolling interestsTotal shareowners' equity
Balance at September 30, 2022$ $ $ $()$()$ $ $ 
Net income (loss)— —  — —  () 
Other comprehensive income— — —  —    
Common stock issued (including share-based compensation impact)—  — —   —  
Share repurchases— — — — ()()— ()
Cash dividends declared (1)
— — ()— — ()— ()
 $ 
Total purchase consideration, net of cash acquired$ 
We assigned the full amount of goodwill to our Lifecycle Services segment. We expect the goodwill to be deductible for tax purposes. The goodwill recorded represents intangible assets that do not qualify for separate recognition.
The allocations of the purchase prices to identifiable assets above is based on the preliminary valuations performed to determine the fair value of the net assets as of the acquisition date. The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but not to exceed 12 months following the acquisition date. Adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined.
Pro forma consolidated sales for the three months ended December 31, 2023 and 2022, were $ billion and $ billion, respectively, and the impact on earnings was material. The preceding pro forma consolidated financial results of operations are as if the preceding 2024 acquisitions occurred on October 1, 2022. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the transaction occurred as of that time.
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ROCKWELL AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 million. Total acquisition-related costs from all of the above 2024 acquisitions in the three months ended December 31, 2023, were material.
2023 Acquisitions
In October 2022, we acquired CUBIC, a company that specializes in modular systems for the construction of electrical panels, headquartered in Bronderslev, Denmark. We assigned the full amount of goodwill related to this acquisition to our Intelligent Devices segment.
In February 2023, we acquired Knowledge Lens, a services and solutions provider headquartered in Bengaluru, India. We assigned the full amount of goodwill related to this acquisition to our Lifecycle Services segment.
We recorded assets acquired and liabilities assumed in connection with these acquisitions based on their estimated fair values as of the acquisition dates of October 31, 2022, and February 28, 2023, respectively.
 Inventories Property Goodwill Other intangible assets All other assets Total assets acquired Less: Liabilities assumed()Less: Deferred income taxes()Net assets acquired, excluding cash$ Purchase ConsiderationTotal purchase consideration, net of cash acquired$ 
Pro forma consolidated sales for the three months ended December 31, 2022, were $ billion, and the impact on earnings was material. The preceding pro forma consolidated financial results of operations are as if the preceding 2023 acquisitions occurred on October 1, 2022. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the transaction occurred as of that time.
Total sales from all of the above 2023 acquisitions in the three months ended December 31, 2023 and 2022, were $ million and $ million, respectively. Total acquisition-related costs from all of the above 2023 acquisitions in the three months ended December 31, 2022, were material.
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ROCKWELL AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
6.
 $ $ $ Acquisition of businesses    Translation    Balance as of December 31, 2023$ $ $ $ Gross carrying value of goodwill    Accumulated impairment losses  ()()Goodwill$ $ $ $ 
We perform our annual evaluation of goodwill and indefinite life intangible assets for impairment during the second quarter of each year, or more frequently, if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We assessed the changes in events and circumstances during the first quarter of 2024 and concluded that no triggering events, which would require interim quantitative testing, occurred.
 $ $ Customer relationships   Technology   Trademarks   Other   Total amortized intangible assets   
Allen-Bradley® trademark not subject to amortization
 —  Other intangible assets$ $ $ 
 September 30, 2023
Carrying
Amount		Accumulated
Amortization		Net
Amortized intangible assets
Software products$ $ $ 
Customer relationships   
Technology   
Trademarks   
Other   
Total amortized intangible assets   
Allen-Bradley® trademark not subject to amortization
 —  
Other intangible assets$ $ $ 
Estimated total amortization expense for all amortized intangible assets is $ million in 2024, $ million in 2025, $ million in 2026, $ million in 2027, and $ million in 2028.
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ROCKWELL AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7.
 million, with a weighted average interest rate of percent, and a weighted average maturity period of days. We had no commercial paper borrowings as of September 30, 2023. In December 2022, Sensia entered into an unsecured $ million line of credit. As of December 31, 2023, and September 30, 2023, included in Short-term debt was $ million borrowed against the line of credit with an interest rate of percent and percent, respectively. Also included in Short-term debt as of December 31, 2023, and September 30, 2023, is $ million of interest-bearing loans from Schlumberger (SLB) to Sensia due December 31, 2024. $ $ $ Long-term debt    
We base the fair value of Long-term debt upon quoted market prices for the same or similar issues and therefore consider this a level 2 fair value measurement. The fair value of Long-term debt considers the terms of the debt excluding the impact of derivative and hedging activity. Refer to Note 9 for further information regarding levels in the fair value hierarchy. The carrying value of our Short-term debt approximates fair value.
8.
 $ Product warranty obligations  Taxes other than income taxes  Accrued interest  Income taxes payable  Operating lease liabilities  Other  Other current liabilities$ $ 
9.
 $ Equity securities (other)  Other  Total investments  
Less: Short-term investments (1)
()()Long-term investments$ $ 
(1) Short-term investments are included in Other current assets in the Consolidated Balance Sheet.
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ROCKWELL AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
 million and $ million, respectively. $ Net gain on equity securities (other)  Equity method gain (loss) on Other investments ()Change in fair value of investments  Total net realized gain on equity securities  Total net unrealized gain on equity securities$ $  )())()    )    )  )  20232022
Pension and other postretirement benefit plan adjustments (1)
     ))   ) $ 
Among other considerations, we evaluate performance and allocate resources based upon segment operating earnings before purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit, change in fair value of investments, interest expense, net, and income tax provision. Depending on the product, intersegment sales within a single legal entity are either at cost or cost plus a mark-up, which does not necessarily represent a market price. Sales between legal entities are at an appropriate transfer price. We allocate costs related to shared segment operating activities to the segments consistent with the methodology used by management to assess segment performance.
23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareowners of
Rockwell Automation, Inc.
Milwaukee, Wisconsin

Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated balance sheet of Rockwell Automation, Inc. and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive income, cash flows and shareowners’ equity for the three-month periods ended December 31, 2023, and 2022, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of September 30, 2023, and the related consolidated statements of operations, comprehensive income, cash flows and shareowners’ equity for the year then ended (not presented herein); and in our report dated November 8, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of September 30, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin
January 31, 2024

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”, “will”, “intend”, and other similar expressions may identify forward-looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:
•macroeconomic factors, including inflation, global and regional business conditions (including adverse impacts in certain markets, such as Oil & Gas), commodity prices, currency exchange rates, the cyclical nature of our customers’ capital spending, and sovereign debt concerns;
•the availability and price of components and materials;
•the severity and duration of disruptions to our business due to pandemics, natural disasters (including those as a result of climate change), acts of war, strikes, terrorism, social unrest or other causes, liquidity and financial markets, demand for our hardware and software products, solutions, and services, our supply chain, our work force, our liquidity and the value of the assets we own;
•the availability, effectiveness, and security of our information technology systems;
•our ability to attract, develop, and retain qualified employees;
•our ability to manage and mitigate the risk related to security vulnerabilities and breaches of our hardware and software products, solutions, and services;
•the successful integration and management of strategic transactions and achievement of the expected benefits of these transactions;
•laws, regulations, and governmental policies affecting our activities in the countries where we do business, including those related to tariffs, taxation, trade controls (including sanctions placed on Russia), cybersecurity, and climate change;
•the successful development of advanced technologies and demand for and market acceptance of new and existing hardware and software products;
•our ability to manage and mitigate the risks associated with our solutions and services businesses;
•the successful execution of our cost productivity initiatives;
•competitive hardware and software products, solutions, and services, pricing pressures, and our ability to provide high quality products, solutions, and services;
•the availability and cost of capital;
•disruptions to our distribution channels or the failure of distributors to develop and maintain capabilities to sell our products;
•intellectual property infringement claims by others and the ability to protect our intellectual property;
•the uncertainty of claims by taxing authorities in the various jurisdictions where we do business;
•the uncertainties of litigation, including liabilities related to the safety and security of the hardware and software products, solutions, and services we sell;
•our ability to manage costs related to employee retirement and health care benefits; and
•other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission (SEC) filings.
These forward-looking statements reflect our beliefs as of the date of filing this report. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. See Item 1A. Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2023, for more information.
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Non-GAAP Measures
The following discussion includes organic sales, total segment operating earnings and margin, adjusted income, adjusted EPS, adjusted effective tax rate, and free cash flow, which are non-GAAP measures. See Supplemental Sales Information for a reconciliation of reported sales to organic sales and a discussion of why we believe this non-GAAP measure is useful to investors. See Summary of Results of Operations for a reconciliation of Income before income taxes to total segment operating earnings and margin and a discussion of why we believe these non-GAAP measures are useful to investors. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for a reconciliation of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to adjusted income, adjusted EPS, and adjusted effective tax rate, respectively, and a discussion of why we believe these non-GAAP measures are useful to investors. See Financial Condition for a reconciliation of Cash provided by operating activities to free cash flow and a discussion of why we believe this non-GAAP measure is useful to investors.
Overview
Rockwell Automation, Inc. is the world’s largest company dedicated to industrial automation and digital transformation. Overall demand for our hardware and software products, solutions, and services is driven by: 
•investments in manufacturing, including new facilities or production lines, upgrades, modifications and expansions of existing facilities or production lines;
•investments in basic materials production capacity, which may be related to commodity pricing levels;
•our customers’ needs for faster time to market, agility to address evolving consumer preferences, operational productivity, asset management and reliability, and business resilience, including security and enterprise risk management;
•our customers’ needs to continuously improve quality, safety, and sustainability;
•industry factors that include our customers’ new product introductions, demand for our customers’ products or services, and the regulatory and competitive environments in which our customers operate;
•levels of global industrial production and capacity utilization;
•regional factors that include local political, social, regulatory, and economic circumstances; and
•the spending patterns of our customers due to their annual budgeting processes and their working schedules.
Long-term Strategy
Our strategy is to expand human possibility. Our vision is to create the future of industrial operations. As the world’s largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise® to life. We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise. As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation.
Rockwell Automation stands at the intersection of the technological and societal trends that are shaping the future of industrial operations. We see converging megatrends including digitization and artificial intelligence, energy transition and sustainability, shifting demographics, and an increased need for resiliency.
Our long-term profitable growth framework outlines how we will deliver accelerated growth while we continue to transform our company to meet stakeholder expectations over the longer term:
•achieve faster secular growth in traditional markets due to customer needs for resiliency (including cybersecurity), agility, sustainability, and mitigating impacts of labor shortages;
•grow share and create new ways to win through technology differentiation, industry focus, go to market acceleration, expanded offerings and new markets;
•accelerate growth in annual recurring revenue;
•add 1% growth from acquisitions annually; and
•deliver profitable growth within a disciplined financial framework.
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U.S. Economic Trends
In the first quarter of 2024, sales in the U.S. accounted for over half of our total sales. The various indicators we use to gauge the direction and momentum of our served U.S. markets include:
•The Industrial Production (IP) Index, published by the Federal Reserve, which measures the real output of manufacturing, mining, and electric and gas utilities. The IP Index is expressed as a percentage of real output in a base year, currently 2017.
•The Manufacturing Purchasing Managers’ Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S. According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting.
The table below depicts trends in these indicators since the quarter ended September 2022. These figures are as of January 31, 2024, and are subject to revision by the issuing organizations. The IP index declined in the first quarter of fiscal 2024 versus the fourth quarter of fiscal 2023. Manufacturing PMI results remained soft in the first quarter of 2024.
IP IndexPMI
Fiscal 2024 quarter ended:
December 202399.0 47.4
Fiscal 2023 quarter ended:
September 202399.649.0
June 202399.946.0
March 202399.546.3
December 202299.648.4
Fiscal 2022 quarter ended:
September 2022100.450.9
140.6 215.2 $384.0 1.86 $3.31 2.04 $2.46 115.5 %20.2 %
(1) See Note 15 in the Consolidated Financial Statements for the definition of segment operating earnings.
(2) Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit, change in fair value of investments, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments. We believe total segment operating earnings and total segment operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies.
(3) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure.
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Three Months Ended December 31, 2023, Compared to Three Months Ended December 31, 2022
Sales
Sales increased 3.6 percent year over year in the three months ended December 31, 2023. Organic sales increased 1.0 percent, currency translation increased sales by 1.2 percentage points, and acquisitions increased sales by 1.4 percentage points year over year in the three months ended December 31, 2023. Pricing increased total company sales by approximately 3 percentage points, realized in the Intelligent Devices and Software & Control segments. Volume decreased total company sales by approximately 2 percentage points.
The table below presents our sales, attributed to the geographic regions based upon country of destination, and the percentage change from the same period a year ago (in millions, except percentages). Asia Pacific was negatively impacted by the results of China, which experienced a high teens decrease in reported and organic sales.
Change vs.
Change in Organic
Sales (1) vs.
Three Months Ended December 31, 2023Three Months Ended December 31, 2022Three Months Ended December 31, 2022
North America$1,247.1 5.8 %4.2 %
Europe, Middle East, and Africa388.3 4.2 %(2.2)%
Asia Pacific275.6 (7.0)%(7.4)%
Latin America141.1 6.2 %(0.5)%
Total Company Sales$2,052.1 3.6 %1.0 %
(1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures. See Supplemental Sales Information for information on these non-GAAP measures.
Corporate and Other
Corporate and other expenses were $40.0 million in the three months ended December 31, 2023, compared to $27.3 million in the three months ended December 31, 2022. The increase includes the year over year impact of costs associated with the acquisition of Clearpath and mark-to-market adjustments related to our deferred and non-qualified compensation plans.
Income before Income Taxes
Income before income taxes was $259.6 million in the three months ended December 31, 2023, compared to $467.9 million in the three months ended December 31, 2022. The decrease was primarily due to the mark-to-market gains recognized in the first quarter of the prior year related to our previous investment in PTC and lower segment operating earnings.
Total segment operating earnings decreased 11.3 percent in the three months ended December 31, 2023, primarily due to higher investment spend and lower supply chain utilization.
Income Taxes
The effective tax rate for the three months ended December 31, 2023, was 18.1 percent compared to 19.1 percent for the three months ended December 31, 2022. The decrease in the effective tax rate was primarily due to tax effects in the prior year related to our previous investment in PTC. Our adjusted effective tax rate for the three months ended December 31, 2023, was 17.9 percent compared to 17.1 percent for the three months ended December 31, 2022. The increase in the adjusted effective tax rate was primarily due to the geographical mix of pre-tax income.
Diluted EPS and Adjusted EPS
2024 first quarter Net income attributable to Rockwell Automation was $215.2 million or $1.86 per share, compared to $384.0 million or $3.31 per share in the first quarter of 2023. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower pre-tax margin. Pre-tax margin was 12.7 percent in the first quarter of 2024 compared to 23.6 percent in the same period last year. The decrease in pre-tax margin was primarily due to mark-to market gains recognized in the first quarter of the prior year related to our previous investment in PTC and lower segment operating earnings. 2024 first quarter adjusted EPS was $2.04, down 17.1 percent compared to $2.46 in the first quarter of 2023, primarily due to lower segment operating margin. Total segment operating margin in the first quarter of 2024 was 17.3 percent compared to 20.2 percent a year ago, primarily due to higher investment spend and lower supply chain utilization.
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Intelligent Devices
Sales
Intelligent Devices sales decreased 1.0 percent year over year in the three months ended December 31, 2023. Organic sales decreased 4.5 percent year over year, the effects of currency translation increased sales by 1.2 percentage points year over year, and acquisitions increased sales by 2.3 percentage points year over year in the three months ended December 31, 2023. For the three months ended December 31, 2023, reported and organic sales decreased in all regions, except for North America.
Segment Operating Margin
Intelligent Devices segment operating earnings decreased 28.3 percent year over year in the three months ended December 31, 2023. Segment operating margin decreased to 16.2 percent in the three months ended December 31, 2023, from 22.4 percent in the same period a year ago, primarily due to lower sales volume, timing of prior-year investment spend, and the impact of acquisitions, partially offset by positive impact of price realization exceeding input costs.
Software & Control
Sales
Software & Control sales increased 5.3 percent year over year in the three months ended December 31, 2023. Organic sales increased 4.0 percent year over year and the effects of currency translation increased sales by 1.3 percentage points year over year in the three months ended December 31, 2023. For the three months ended December 31, 2023, all regions experienced reported and organic sales growth.
Segment Operating Margin
Software & Control segment operating earnings decreased 9.7 percent year over year in the three months ended December 31, 2023. Segment operating margin decreased to 25.0 percent in the three months ended December 31, 2023, from 29.2 percent in the same period a year ago, primarily due to timing of prior-year investment spend and lower supply chain utilization, partially offset by positive impact of price realization exceeding input costs.
Lifecycle Services
Sales
Lifecycle Services sales increased 10.5 percent year over year in the three months ended December 31, 2023. Organic sales increased 8.1 percent year over year, the effects of currency translation increased sales by 1.0 percentage point year over year, and acquisitions increased sales by 1.4 percentage points year over year in the three months ended December 31, 2023. For the three months ended December 31, 2023, all regions experienced reported sales growth. Organic sales increased in North America and Latin America, but decreased in Europe, Middle East, and Africa and Asia Pacific in the three months ended December 31, 2023.
Segment Operating Margin
Lifecycle Services segment operating earnings increased 123.5 percent year over year in the three months ended December 31, 2023. Segment operating margin increased to 10.4 percent in the three months ended December 31, 2023, from 5.2 percent in the same period a year ago, primarily due to higher sales volume, lower incentive compensation, and higher margins in Sensia.

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Supplemental Segment Information
Purchase accounting depreciation and amortization and non-operating pension and postretirement benefit cost are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):
 20232022
Purchase accounting depreciation and amortization
Intelligent Devices$9.3 $1.0 
Software & Control17.0 16.9 
Lifecycle Services9.1 7.8 
Non-operating pension and postretirement benefit credit
Intelligent Devices$(1.8)$(3.9)
Software & Control(1.8)(3.9)
Lifecycle Services(2.4)(5.3)
1,999.9 $1,981.0 
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Critical Accounting Estimates
We have prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Information with respect to accounting estimates that are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at December 31, 2023, there has been no material change to this information, except as noted below.
Acquisitions - Clearpath Intangible Assets Valuation
We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill. We engaged an independent third-party valuation specialist to assist with the fair value allocation of the intangible assets assumed through the acquisition of Clearpath. The intangible assets were valued using income approaches, specifically the relief from royalty method and multi-period excess earnings method. This required the use of several assumptions and estimates including forecasted revenue growth rates, margin, and cash flows attributable to existing customers, obsolescence factor, royalty rate, contributory asset charges, customer attrition rate, and discount rates. Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Clearpath management.
The key assumption requiring the use of judgement in the valuation of the $269.6 million technology asset was the obsolescence factor. The obsolescence factor of twelve years was calculated based on the depletion of existing technology using a variety of factors including research and development spend toward new product development and scheduled patent expiration. A two-year change in this assumption would result in a change of approximately $82 million in intangible assets. The key assumption requiring the use of judgement in the valuation of the $41.6 million trademark intangible asset was the weighted average royalty rate of 2.05 percent. This rate was based on royalty market data. A 100 basis point change in the royalty rate would result in a change of $20 million in intangible assets.
More information regarding these business acquisitions is contained in Note 5 in the Consolidated Financial Statements.
Environmental Matters
Information with respect to the effect of compliance with environmental protection requirements and resolution of environmental claims on us and our manufacturing operations is contained in Note 17 in the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at December 31, 2023, there has been no material change to this information.
Recent Accounting Pronouncements
See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information with respect to our exposure to foreign currency risk and interest rate risk is contained in Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at December 31, 2023, there has been no material change to this information.
Item 4. Controls and Procedures
Disclosure Controls and Procedures: We, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the quarter covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the quarter covered by this report, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting: There has not been any change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) during the quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to our legal proceedings is contained in Item 3. Legal Proceedings, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at December 31, 2023, there has been no material change to this information.
Item 1A. Risk Factors
Information about our most significant risk factors is contained in Item 1A. Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at December 31, 2023, there has been no material change to this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchases
The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended December 31, 2023:
Period
Total Number of Shares Purchased (1)
Average Price Paid Per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Approx. Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3)
October 1-31, 2023118,222 $279.11 118,222 $907,312,780 
November 1-30, 2023284,983 268.07 284,983 830,917,548 
December 1-31, 202337,137 294.78 37,137 819,970,467 
Total440,342 $273.28 440,342 
(1) All of the shares purchased during the quarter ended December 31, 2023, were acquired pursuant to the repurchase program described in (3) below.
(2) Average price paid per share includes brokerage commissions.
(3) On May 2, 2022, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock. Our repurchase program allows us to repurchase shares at management’s discretion or at our broker’s discretion pursuant to a share repurchase plan subject to price and volume parameters.
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Item 5. Other Information
During the quarter ended December 31, 2023, the following officers of the Company adopted Rule 10b5-1 trading arrangements that are each intended to satisfy the affirmative defense of Rule 10b5-1(c) promulgated under the Exchange Act, with such details of the arrangements as further follows:
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of February 28, 2025, or the execution of all trades in the trading arrangement. Mr. Buttermore’s trading arrangement covers the sale of (i) long shares of the Company's common stock and (ii) the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Fordenwalt’s trading arrangement covers the sale of the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Genereux’s trading arrangement covers the sale of (i) long shares of the Company's common stock and (ii) the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Ms. House’s trading arrangement covers the (i) exercise of stock options and the sale of the underlying shares of the Company's common stock and (i) the sale of the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of May 31, 2024, or the execution of all trades in the trading arrangement. Mr. Kulaszewicz’s trading arrangement covers the (i) sale of long shares of the Company's common stock and (ii) exercise of stock options and the sale of the underlying shares of the Company's common stock.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Miller’s trading arrangement covers the (i) exercise of stock options and the sale of the underlying shares of the Company's common stock and (ii) sale of the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of June 10, 2024, or the execution of all trades in the trading arrangement. Ms. Myers’ trading arrangement covers the sale of the number of shares of the Company’s common stock required to be sold to cover taxes on an upcoming restricted stock unit vest.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Nardecchia’s trading arrangement covers the (i) exercise of stock options and the sale of the underlying shares of the Company's common stock and (ii) sale of the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Riesterer’s trading arrangement covers the (i) exercise of stock options and the sale of the underlying shares of the Company's common stock and (ii) sale of the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.


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•, , a Rule 10b5-1 trading arrangement on , that will terminate on the earlier of December 31, 2024, or the execution of all trades in the trading arrangement. Mr. Woods’ trading arrangement covers the sale of (i) long shares of the Company's common stock and (ii) the number of shares of the Company’s common stock required to be sold to cover taxes on upcoming restricted stock unit and performance share vests.
For the arrangements above referencing transactions to sell shares to cover taxes on vests, the aggregate number of shares to be sold pursuant to each trading arrangement described above is dependent on the taxes on the applicable restricted stock unit and performance share vests, and, therefore, is indeterminable at this time.
During the quarter ended December 31, 2023, no director or officer of the Company or a “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, no director of the Company adopted or a Rule 10b5-1 trading arrangement, and no officer of the Company terminated a Rule 10b5-1 trading arrangement.
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Item 6. Exhibits
(a) Exhibits: 
—
—
—
—
—
Exhibit 101—Interactive Data Files.
Exhibit 104—Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
ROCKWELL AUTOMATION, INC.
(Registrant)
Date:January 31, 2024By
/s/ NICHOLAS C. GANGESTAD
Nicholas C. Gangestad
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date:January 31, 2024By
/s/ TERRY L. RIESTERER
Terry L. Riesterer
Vice President and Controller
(Principal Accounting Officer)
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