Rockwell Automation Reports Fourth Quarter and Full Year 2022 Results; Introduces Fiscal 2023 Guidance

The table below provides the calculation of free cash flow as a percentage of Adjusted Income ("free cash flow conversion") for fiscal years 2022 and 2021:

 

 

Year Ended

 

 

Sep. 30, 2022

 

Sep. 30, 2021

Free cash flow (a)

 

682.0

 

 

1,140.7

 

Adjusted Income (b)

 

1,110.7

 

 

1,105.9

 

Free cash flow conversion (a/b)

 

61

%

 

103

%

Return On Invested Capital

Our press release contains information regarding Return On Invested Capital (ROIC), which is a non-GAAP financial measure. We believe that ROIC is useful to investors as a measure of performance and of the effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate our performance. Our measure of ROIC may be different from that used by other companies. We define ROIC as the percentage resulting from the following calculation:

(a) Net income, before Interest expense, Income tax provision, and Purchase accounting depreciation and amortization, divided by;

(b) average invested capital for the year, calculated as a five quarter rolling average using the sum of Short-term debt, Long-term debt, Shareowners’ equity, and Accumulated amortization of goodwill and other intangible assets, minus Cash and cash equivalents, Short-term investments, and long-term investments (fixed income securities), multiplied by;

(c) one minus the effective tax rate for the period.

ROIC is calculated as follows (in millions, except percentages):

 

 

Twelve Months Ended

 

 

September 30,

 

 

 

2022

 

 

 

2021

 

(a) Return

 

 

 

 

Net income

 

$

919.1

 

 

$

1,344.3

 

Interest expense

 

 

123.2

 

 

 

94.6

 

Income tax provision

 

 

154.5

 

 

 

181.9

 

Purchase accounting depreciation and amortization

 

 

103.9

 

 

 

55.1

 

Return

 

$

1,300.7

 

 

$

1,675.9

 

(b) Average invested capital

 

 

 

 

Short-term debt

 

$

665.3

 

 

$

147.0

 

Long-term debt

 

 

3,346.3

 

 

 

2,275.0

 

Shareowners’ equity

 

 

2,826.6

 

 

 

2,124.3

 

Accumulated amortization of goodwill and intangibles

 

 

1,012.1

 

 

 

988.5

 

Cash and cash equivalents

 

 

(523.8

)

 

 

(730.6

)

Short-term and long-term investments

 

 

(5.3

)

 

 

(0.6

)

Average invested capital

 

$

7,321.2

 

 

$

4,803.6

 

(c) Effective tax rate

 

 

 

 

Income tax provision

 

 

154.5

 

 

 

181.9

 

Income before income taxes

 

$

1,073.6

 

 

$

1,526.2

 

Effective tax rate

 

 

14.4

%

 

 

11.9

%

(a) / (b) * (1-c) Return On Invested Capital

 

 

15.2

%

 

 

30.7

%


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