Rockwell Automation, Inc. (NYSE:ROK) Q3 2023 Earnings Call Transcript

Steve Tusa: Hey, can we just start – can you just remind us, I mean, you guys were relatively – we never really had this orders discussion before COVID, what, like, your book-to-bill was generally like around one back then, right? Is that about right?

Nick Gangestad: Yes, Steve, that, that is correct. The only exception is our lifecycle services business component that could have some nuances from quarter-to-quarter, but generally we were pretty much a one-to-one book-to-bill.

Steve Tusa: Right. So like eating in the backlog this quarter, you mentioned, so obviously your orders were like what were they like a little bit above two or something like that?

Blake Moret: Yes. We haven’t given the specific order value for Q3, but we gave the full year expectation of $8.5 billion to $9 billion of orders.

Steve Tusa: Okay. And when we look at this kind of like daily order volume, I mean, like that, that would kind of equate to the quarterly order numbers I would think, because that’s not like scaled or adjusted for seasonality or anything like that, right?

Nick Gangestad: That that is correct. We’re not adjusting for any seasonality here.

Steve Tusa: Yes. Okay. That, that, that’s fair. And then just the last question, just philosophically, you guys went from like not really giving orders to maybe not even – not disclosing them this year at one point, I think you guys were thinking about that. Now you’re disclosing them and now you’re kind of like forecasting them. I guess, are we going to continue to get this level of color as we go through the next couple of quarters? Like maybe like just philosophically any view on like maybe normalizing some of this disclosure billion it just seems like there’s more provided, but it’s in different forms and it just seems like it’s not particularly as straightforward as maybe it could be.

Blake Moret: So Steve, we’re continuing to provide the information that we think is most important to investors and over the last few years, as you said, orders have become a more important component as they have decoupled from shipments at different times. And so we felt it was important to provide that additional information. As we look at going forward, we’re going to continue to look at where orders remain material to investor decisions and to provide that kind of information. And we continue to look at how we’re making decisions about running the business going forward and providing you some insight into that. And that’s why it’s going to take some different forms as time goes on, because the value of it and the horizon of that I think are important.

So this quarter we made the decision to give a little bit of a view going forward and showing on that Slide 11, the relationship between orders and big macro events going forward so that you and investors can put that into perspective.

Steve Tusa: Yes. And it is helpful. So we thank you for all the extra disclosure here regardless. So thanks Aijana for that. Really appreciate it.

Operator: Our next question comes from Noah Kaye from Oppenheimer. Please go ahead. Your line is open.

Noah Kaye: Thanks for taking the question. I just want to go to lifecycle services, several quarters continuing of positive book-to-bill. You commented on margins for this year. How do we think about incremental margins going forward, especially as you start to get this sort of richer mix, right? I know a lot of revenue associated with what comes out of this ends up in SMC but just help us think about incremental margins going forward.