Rockwell Automation’s outlook for its current fiscal year calls for sales to increase around $1.22 billion, which would put revenues above $8.22 billion for the year.
That growth isn’t so much a function of demand, there’s plenty of that. Rockwell received $2.5 billion in orders during its first quarter, a 40% increase and a quarterly record for the company.
“The demand is not the constraint and we don’t expect it to be for some quite some time to come,” Blake Moret, chairman and chief executive officer of Milwaukee-based Rockwell, said on the company’s earnings call.
The guidance for the full year is more the result of what Rockwell’s supply chain will allow it to produce and ship to customers. In addition to software and services, Rockwell makes a lot of products used in the automation of factories and other industrial processes. Those products are increasingly loaded with technology to gather data and perform other “smart” tasks, meaning they’re full of semiconductors.
“Right now, the bottleneck is the chips and we’re working through that,” Moret said.
Rockwell’s products are in demand as companies expand operations and add capacity and Moret said even with challenges facing global supply chains, customers aren’t backing off their plans.
“I haven’t seen any evidence that people are not moving forward with their expansion plans because of supply chain constraints, they’re slowing them down but everybody’s trying to come out of the pandemic better positioned than their competitors in terms of capacity and new offerings and I don’t see that changing,” Moret said.
The supply chain situation is also constantly evolving. In the first quarter for instance, Rockwell was able to get more chips from suppliers than it anticipated. The result was a sales increase of 18.7% and net income of $241.5 million, beating expectations.
Still, the company didn’t change its outlook for the year, in part because it expects chip shipments will be a little worse in its current quarter.
In the longer term, things are looking good.
“We are still early in what we believe is going to be a multi-year period of economic expansion,” Moret said.
The supply chain challenges, highlighted by semiconductor shortages and illustrated by ships waiting outside of ports in California, has spurred talk by some that manufacturing will shift back to the U.S. from Asia.
Moret cautioned that is not exactly what is taking place.
“I don’t see people closing plants in Asia, for instance, and bringing them back as the majority of what’s driving demand, but I do see as people are planning new capacity … I see North America … as being an outsized beneficiary,” Moret said.