Nick Gangestad
CFO at Rockwell Automation
Thank you, Blake, and good morning everyone. I'll start on Slide 9, Fourth Quarter Key Financial Information. Fourth quarter reported sales were up 15% over last year. Q4, organic sales were up 12.6% and acquisitions contributed one point to total growth. Currency translation increased sales by 1.5 percentage points. Segment operating margin was 17.9% in line with our expectations. The 230 basis point decline was primarily related to higher planned investment spend, the reversal of temporary pay actions and the restoration of incentive compensation, partially offset by the impact of higher sales. Corporate and other expense was $33 million. The year-over-year increase was from deal costs associated with Plex acquisition. Adjusted EPS of $2.33 was better than expected and grew 21% versus the prior year. I'll cover a year-over-year adjusted EPS bridge on a later slide.
The adjusted effective tax rate for the fourth quarter was negative 3%, much lower than expected, compared to 15% in the prior year. The lower than expected rate was related to the cumulative impact of several one-time discrete items recognized in the current quarter. Free Cash Flow performance was in line with our expectations. We generated $150 million of Free Cash Flow in the quarter. The Free Cash Flow generation includes higher levels of working capital in the current year to support our increasing revenue and build inventory in anticipation of the accelerated revenue levels in fiscal year '22. One additional item not shown on the slide, we repurchased 200,000 shares in the quarter at a cost of $61 million. For the full year, our share repurchases totaled $301 million in line with our July guidance. On September 30th, $552 million remained available under our repurchase authorization.
Slide 10 provides the sales and margin performance of our three operating segments. Organic sales of both Intelligent Devices and Software & Control were up double digits. Lifecycle Services' organic sales were up sequentially and up 7% year-over-year, led by oil and gas, Life Sciences including beverage. All segments saw strong double-digit growth in orders. Compared to last year, Intelligent Devices margins were up 100 basis points on higher sales. This segment did see higher input costs both year-over-year and sequentially, however these costs were largely offset by price. Segment margins for the Software & Control segment declined 330 basis points compared to last year. With higher planned investment spend, partially offset by higher organic sales this segment benefited from positive price cost in the quarter. Lifecycle Services segment margin was 8.1% and declined 820 basis points driven by the reversal of temporary pay actions, the reinstatement of incentive compensation, as well as unfavorable mix partially offset by higher sales.
The next Slide 11, provides the adjusted EPS walk through Q4 fiscal '20 to Q4 fiscal '21. As you can see core performance was up about $0.70 on a 12.6% organic sales increase. Approximately $0.10 was related to non-recurring accelerated investments that we announced earlier this year. These investments are mostly in our Software & Control segment. The reversal of temporary pay actions and restoration of incentive compensation contributed negative $0.45. Acquisitions were a $0.15 headwind due to the deal costs associated with the Plex acquisition. As previously noted, our lower adjusted effective tax rate contributed $0.40.
Slide 12 provides a walk from our Q4 midpoint in our July guidance to our actual Q4 adjusted EPS results. We usually don't provide this information, but I wanted to show how the quarter played out relative to the midpoint of what we had guided back in July. The unforeseen impacts of the Delta Variance in Southeast Asia added incremental pressure to the supply chain. But the impact of the volume mix of $0.40 was mitigated to lower incentive compensation, further productivity and a favorable mix, all of which contributed $0.35. As previously noted, a more favorable tax rate benefited our EPS versus guidance by $0.25.
Moving to Slide 13, product order trends. This slide shows our average daily order trends for our products, which includes our software portfolio. As a reminder, the trends shown here account for about two-third of our overall sales. Order intake was broad based and improved sequentially for the fifth consecutive quarter. Q4 product order levels grew at about 40% versus the prior year and are well above pre-pandemic levels as customers are increasingly interested in investing in our core automation and software. Both of which are essential to drive the outcomes that come from digital transformation.
Slide 14 provides key financial information for the full year fiscal '21. Reported sales grew 10.5% including over one point coming from acquisitions. Organic sales were up 6.7% led by double-digit growth in our hybrid and discrete end markets and improving process verticals. Full year segment margins remained at about 20% including close to $30 million of onetime accelerated investments mostly in our Software & Control segment. R&D expense was up 14% compared to fiscal '20 and R&D as a percent of sales increased further to 6% of sales in fiscal '21.
Our core automation, which excludes the impacts -- excuse me, our core conversion, which excludes the impact of acquisitions, currency and our accelerated one time investments was 34%. Corporate and other was up just over $20 million, mostly related to acquisition costs associated with the Plex acquisition. Adjusted EPS was up 20%, a detailed year over year adjusted EPS walk can be found in the appendix for your reference. Free Cash Flow performance remained strong and was in line with our July expectations. Free Cash Flow conversion was 103% of adjusted income. Finally,ROIC remained well above our target of over 20%. For the year we deployed about $3.3 billion of capital towards acquisitions, dividends and share repurchases in fiscal '21. Our capital structure and liquidity remained strong.
Let's move on to the next Slide 15. Guidance for fiscal '22. As Blake mentioned, we are expecting sales of about $8.2 billion dollars in fiscal '22 up 17.5% at the midpoint of the range. We expect organic sales growth to be in the range of 14% to 17% and about 15.5% at the midpoint of our range. This outlook includes our latest assumptions on supply chain constraints. We expect full year segment operating margins to be about 21.5%. We expect positive price cost for the full year from the additional price increase we implemented this month. At the midpoint of our guidance assumes full year core earnings, conversion of between 30% and 35%. We believe we are in the early stages of a cycle of sustained growth and are making investments to fill this growth in '22 and beyond.
Our fiscal '22 segment margin and core conversion outlook includes our plans to increase R&D and other growth-related investments by double-digit. We expect the full year adjusted effective tax rate to be around 17%, we do not anticipate any material discrete items to impact tax in fiscal '22. This rate is under current tax law, should tax laws change, we would provide an updated outlook with the impacts from these changes. Our adjusted EPS guidance is $10.50 to $11.10. This compares to fiscal '21 adjusted EPS of $9.43. At the midpoint of the range, this represents a 15% adjusted EPS growth. I will cover a year over year adjusted EPS walk on the next page.
From a calendarization viewpoint based on our current supply chain availability, we expect our first quarter sales to be relatively flat compared to our Q4 and fiscal '21. Following the first quarter we expect sequential sales to improve over the balance of the year. We expect segment margins and the adjusted EPS to decline sequentially in Q1 and then improve throughout the year in line with our sales volume and the timing of price increases. We anticipate recent price increases to having more substantial benefit and subsequent quarter given the timing of when customer agreements are renewed throughout the year. Also as a reminder, fiscal '21 Q1 included a non-recurring $0.45 gain related to the settlement of a legal matter. Finally, we expect full year fiscal '22 Free Cash Flow conversion of about 90% of adjusted income. This reflects $155 million bonus payout for the fiscal '21 performance. $165 million of capital expenditures and funding higher levels of working capital to support higher sales. Our working capital is targeted to be aligned with our historic amount of about 12% of sale. A few comments, additional comments on fiscal '22 guidance. Corporate and other expense is expected to be around $125 million. Net interest expense for fiscal '22 is expected to be about $115 million. And finally, we're assuming average diluted shares outstanding of about $117.5 million shares.
The next Slide 16 provides the adjusted EPS walk from fiscal '21 to fiscal '22 guidance at the midpoint. Moving from left to right, core performance is expected to contribute $2.15 this includes the benefit of higher organic sales, we anticipate price realization will exceed input cost inflation by about $0.10. Our pricing philosophy is built on the high value that we bring our customers. In light of increasing input costs, we have taken several price adjustments this year to mitigate and we are prepared to take additional price actions as needed. The removal of the onetime accelerated investments made in fiscal year '21 will be about $0.20 benefit the one-time gain from a legal matter that was settled in the prior year is $0.45 headwind. Plex will be a $0.15 tailwind in fiscal '22 including the impact of incremental interest. We have included further information showing the impact of Plex in both fiscal '21 and fiscal '22 in our appendix. No real significant changes to what we showed in July. We expect about a $0.05 impact coming from share dilution and the higher tax rate is expected to be about a $0.75 headwind.
Moving on to the next Slide 17, I'll make a few comments on our capital deployment framework. Our long-term capital deployment priorities remain the same. Our first priority is organic growth. After that, we focus capital deployment on inorganic activities. And then, we focus on capital returns to shareholders through our dividend and then share repurchases. In addition to our organic and inorganic investments, our capital deployment plans for fiscal '22 include a focus on delevering. Dividend of about $520 million and share repurchases of $100 million. In summary, our guidance assumes a combination of order and backlog growth that drive 15.5% organic sales at the midpoint and reaches the total sales of over $8 billion. We continue to offset inflationary pressures through additional price actions yielding segment margins of 21.5%. We expect adjusted EPS growth of 15% and continued strong Free Cash Flow. With that, I'll turn it over to Blake for some closing remarks before we start the Q&A.
