Rockwell Automation Inc. (ROK) reported better-than-expected results for the first quarter of the fiscal year 2010. The company posted quarterly net income of 54 cents per share, beating the Zacks Consensus Estimate of 35 cents. However, the first quarter net income was down 33% from the prior-year income of 81 cents per share.

Total sales for the quarter were $1,067.5 million, down 10% from $1,189.2 million reported a year ago, due to a 15% drop in organic sales partially offset by a 4% favorable foreign currency translation impact and a 1% contribution from acquisitions. The company continues to be plagued by low capacity utilization rates and cautious capital spending in the manufacturing sector.

Segment operating earnings were $136.8 million or 12.8% of sales, compared to $177.6 million or 14.9% of sales last year. The year-over-year decline was driven by lower revenue, partially offset by cost reductions.

Control Products & Solutions segment reported revenue of $598.5 million, down 12% from the prior year level of $682.8 million. This year-over-year sales decline was led by an 18% decline in organic sales, partially offset by a 4% favorable foreign currency translation impact and a 2% positive contribution from acquisitions. Operating earnings of the segment declined 44% year over year to $37.8 million and operating margin declined to 6.3% from 10.0% in the comparable quarter of fiscal 2009.

The Architecture & Software segment posted revenue of $469.0 million, down over 7% from $506.4 million recorded in the first quarter of fiscal 2009. Favorable foreign currency translation impact of approximately 5% was more than offset by organic sales decline of 13% due to global economic slowdown. Segment operating earnings were $99.0 million, down 10% from the year-ago level of $109.6 million. Operating margin in this segment was 21.1% compared to 21.6% in the prior-year quarter primarily due to significant decline in sales volumes.

Rockwell generated free cash flow of $108 million in the reported quarter. The company ended the quarter with cash and cash equivalents of $716.3 million on its balance sheet, compared to $643.8 million at the end of fiscal 2009.

Despite the uncertainty surrounding the manufacturing sector recovery, Rockwell raised its guidance for fiscal 2010. The company attributed the increased guidance to the first quarter performance and the signs of global economic recovery. Rockwell now forecasts fiscal 2010 earnings of $2.00-$2.40 per share on revenue expectations of $4.4-$4.6 billion, compared to the previous EPS guidance range of $1.25 to $1.75 on a revenue range of $4.1 billion to $4.4 billion.

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