Rockwell Automation today revealed a double-digit drop in first-quarter revenue, even as executives said the company was seeing the first signs of stabilization.
For the fiscal 2010 first quarter, ended Dec. 31, 2009, Rockwell reported revenue of $1.06 billion, down 10% from $1.18 billion reported in the first quarter of 2009. Net income also fell significantly, to $76.6 million, from $118.4 million a year earlier. Still, officials said they were heartened by some sequential improvements in the business, and expect operating performance to improve as the year goes on.
Overall, first-quarter sales decreased just 1% from the fourth quarter. The company’s Architecture & Software (A&S) business unit reported $469 million in sales Q1 — a 7% year-over-year decrease but an 11% increase over the fourth quarter’s $424.1 million.
Rockwell’s Control Products & Solutions unit experienced a tough first quarter, with revenue down 12% year over year to $598.5 million, and down 8% sequentially compared with the fourth quarter of fiscal 2009.
Rockwell officials said the fiscal first quarter benefited from what they called an ”unusual” spike in customer spending at the end of the calendar year, normally a slow period for sales, especially around the holidays. The spending, which was focused on products, including motion controls and Logix processors, was likely due to customers consuming unused budgets before the end of the year, the company said.
“There had been such a reduction in normal operating spending in our second and third quarters, and into the fourth, [but] because industrial production picked up, there was a natural rebound there,” Rockwell Chairman and CEO Keith Nosbusch told analysts on a conference call today.
Much of the incremental investments came from the automotive and tire industry. Ford, for example, has continued to make investments even in the downturn, Nosbusch said. Key wins in Q1 included a $1 million production management software contract at a Chinese automotive manufacturer and a $10 million order from a machine builder, the company said.
Rockwell officials said the recession has hit bottom and that demand will remain flat or trend upward from here.
“We believe we are at the early stage of recovery,” Nosbusch told analysts. “We continue to effectively manage our cost structure, while appropriately investing in key technologies and growth opportunities. We are well positioned to take advantage of the recovery…”
Rockwell reported $108 million of free cash flow in the quarter, which the company said it will use where appropriate.