Rockwell Automation Inc. today capped off a strong fiscal 2006 by reporting fourth-quarter results that were supported by strong overseas growth, a boost in power-related business activity, and continuing gains in internal operational efficiency, which offset a downturn in its core domestic automotive sector that was more severe than expected. For the quarter ended September 30, the company posted net earnings of $165.8 million or 94 cents per share, compared with $129.3 million, or 70 cents per share, in the like period of 2005. Revenues reached $1.45 billion in the quarter, a 9% increase from the like period last year. Fourth quarter 2006 free cash flow was $232.8 million compared with $135 million at the same time last year. Control Systems sales reached $1.19 billion in the quarter, an increase of 8% from the like period last year. Currency translation added nearly 2 percentage points to the growth rate, the company said. Revenues for Rockwell's mainstay Logix platform, meanwhile, grew 12% in the quarter, although the company did not provide specific sales figures. The Control segment's operating earnings were $228.6 million, an increase of 19% from the like period last year. The company attributed the earnings increase to higher volume, productivity efforts, lower restructuring costs, and price, partially offset by inflation. Control systems sales in the U.S. increased 3% in the fourth quarter, while non-U.S. sales increased 10%, excluding the effect of currency translation, the company said. Overall, adjusted for currency impact, revenues derived from Latin America grew 22% to $93 million, while Europe and Asia grew 15% and 11%, respectively, to $239 million and $158 million. U.S. sales increased 4% in the quarter to $963 million from the like period last year. Rockwell's financials come days after automation giant Honeywell International reported that its third-quarter revenues climbed 15% to $8 billion from the like period last year. The revenue surge was fueled by the company's Automation and Control Solutions (ACS) and Aerospace business units, Honeywell officials said. Rockwell officials, meanwhile, told financial analysts during a conference call late today that a steeper-than-expected decline in demand from the U.S. auto industry and related suppliers in the Great Lakes region subtracted three percentage points from domestic revenue growth. "It was weaker than we thought it would be when we talked about it [on the last analyst call]," noted Keith D. Nosbusch, Rockwell's chairman and chief executive officer. "We thought it would be similar quarter-over-quarter, but in fact it wasn't." Despite the continued domestic automotive downturn, Nosbusch said he was pleased by Rockwell's gains in internal productivity, which reached 6% in the quarter. "The management team put its heads down and worked aggressively to drive productivity in SG&A [selling, general, and administrative expenses] lines and cost of goods sold" he said. Nosbusch said cost reduction and operational efficiency initiatives had created a "productivity culture" that pervades Rockwell. "Our manufacturing and Six Sigma initiatives have never had more energy and expertise," he maintained. While the control systems business was impacted by turmoil in the automotive industry, Nosbusch pointed out that 40% of the unit's business is in power-centric industries where intelligent motor control and linkage to Rockwell's integrated automation architecture are critical for improving asset management and plant-floor operations. "We've seen great growth in those businesses over the last year," he said, pointing to segments such as oil and gas, and mining, which have flourished due in part to a chronic lack of investment over time. Pharmaceuticals and life sciences are also coming on strong for Rockwell as automotive declines as a percentage of overall revenue. Another segment, home health and beauty -- which Rockwell entered in fiscal 2006 as an extension of its consumer products initiatives -- has evolved more slowly than expected. "We expect to get more punch out of that [segment] going into 2007," Nosbusch said. Adoption of the company's FactoryTalk integrated architecture has also not met Rockwell's lofty expectations. "We're still not satisfied with the growth," Nosbusch said. Meanwhile, the planned sale of the company's power business is going well, noted James Gelly, Rockwell's CFO. "The divestiture is on schedule and our current thinking is if it stays on schedule, a deal can be done by December's end," he said, without offering specifics. For the full year, Rockwell's net income was $607 million, or $3.37 per share, compared to $540.0 million, or $2.88 per share, in fiscal 2005, which was a record for the company. Fiscal 2006 revenues were $4.56 billion, an increase of 10% from last year. For fiscal 2007, the company offered preliminary full-year guidance, inclusive of its power systems business, that calls for revenue growth of 7% to 8%, earnings per share of between $3.70 and $3.90, and free cash flow approximately equal to net income. The reason for including power systems, Gelly said, is that it's too early to say how much Rockwell will reap from the divestiture. After three years of double-digit revenue growth, Rockwell is prepared for decelerating gains, Nosbusch said. Ongoing product and market expansion, a generally strong domestic and overseas economy (measured by customer cash on the balance sheet, which fuels their appetite to make capital investments), and the impact of ongoing productivity initiatives should sustain near-term growth, albeit at slower rates, he noted. "We've had solid growth," Nosbusch said. "We have solid cash flow and productivity, which should contribute to another solid year." Honeywell's industrial controls business, meanwhile, contributed mightily to the company's strong third-quarter performance, and continues to show robust growth prospects, company officials said. Revenues generated by the company's ACS business unit grew 16% to $2.8 billion in the quarter ended September 30, contributing to a profit of $330 million for the segment, Honeywell said. For the same period last year, ACS reported $2.4 billion on profits of $300 million. While Honeywell did not break out the performance of the groups that comprise ACS (such as Process Solutions, under which the company's Experion PKS distributed control system falls), David Anderson, Honeywell's senior vice president and CFO, told financial analysts on a conference call that the Process Solutions group grew in the mid-teen percentage range for orders during the quarter. That strength came from wins such as a three-year, $41 million contract signed with Eskom, the national electricity utility of South Africa. While it's tough to pinpoint when new orders will turn into revenue, "It feels pretty good overall," said Honeywell Chairman and CEO Dave Cote during the conference call. Process Solutions is "one of those businesses that you don't just decide to work on and three months later see the benefit. It takes three to four years, but we are starting to see it click." Looking ahead to Honeywell's Q4 and 2007, ACS is expected to show continued growth, some of it coming from infrastructure spending that will drive demand for sophisticated products and services, Anderson asserted. Senior Editor Stephanie Neil contributed to this report.