Blake Moret
Chairman and Chief Executive Officer at Rockwell Automation
Thanks, Aijana, and good morning, everyone. Thank you for joining us today. Let's turn to our fourth quarter results on slide 3. We delivered strong double-digit growth this quarter, with both sales and adjusted earnings growing by over 20% year-over-year. Our solid execution and improving supply chain helped us exceed our Q4 expectations, resulting in double digit sales growth across all regions and business segments.
With lead times significantly improving across our product lines, we were able to deliver products to customers faster than expected this quarter, contributing to over $2.5 billion in total sales. This record shipment reflects Rockwell's continued capacity investments and demonstrates our organization's ability to scale for sustained growth. Total sales were up 20.5% versus prior year. Organic sales grew almost 18% year-over-year. Currency translation and acquisitions each contributed about a point and a half of growth in the quarter. Consistent with prior quarters, the split of our sales by business segment, region and industry was largely driven by the composition of our backlog.
In our Intelligent Devices business segment, organic sales increased 18% versus prior year, with strong growth across all regions. Within this segment, Independent Cart Technology had another strong quarter, finishing this fiscal year with over 50% growth in sales. This offering continues to be an integral part of our advanced material handling and production logistics offering. We are excited about our latest addition to this differentiated portfolio with our acquisition of Clearpath Robotics, and I will cover some strategic highlights of this deal later on the call.
Software and Control organic sales grew 23% year-over-year. We continue to innovate in both the software and hardware portions of our architecture with significant new offerings such as High Availability, Process I/O, FactoryTalk Optix and FactoryTalk DataMosaix. We are pleased with how our organic and inorganic investments in this business are delivering new customer value and continued share gains.
Lifecycle Services organic sales were up over 10% year-over-year. Book to bill in this segment was 0.97 and above the historical average for Q4. Within this segment, our Sensia joint venture had a strong finish to the year with over 50% year-over-year order growth in the quarter. This growth was driven by strategic wins in process automation and artificial lift control systems, positioning this business for continued double digit growth and improved profitability in fiscal year '24.
Information Solutions and Connected Services sales grew 10% versus prior year. One of the largest information solutions wins ever was with Prometeon Tire, a global leader in tire manufacturing headquartered in Italy. This customer was already using our cloud native Plex Quality Management System, and has recently selected our on prem MES software to digitize the manufacturing processes at a number of their global sites.
This win not only demonstrates the standalone differentiation of our modular offerings, but also highlights the value from integration of our entire portfolio, making it easier for customers to standardize their global operations.
Within Connected Services, we continue to grow our cybersecurity practice with Q4 sales growing 30% year-over-year. Our industrial cybersecurity software and expertise, along with differentiated partnerships on the IT security front, are helping us grow our cybersecurity services into a business of well over $100 million this fiscal year, with a significant portion of this being recurring revenue.
Total annual recurring revenue grew 16% year-over-year, that's a good number, and ARR is a meaningful contributor to our future growth framework. Segment margin of 22.3% was in line with our expectations.
Adjusted EPS of $3.64, which is a company record for quarterly earnings, grew almost 20% year-over-year, significantly improving lead times in our Q4 shipment over-performance contributing to rapid backlog production in the quarter. We are ending the year with over $4.1 billion in backlog over 40% coverage of annual sales, which is still well above pre-pandemic levels. A return to superior customer service remains our highest priority.
Let's now turn to slide 4 to review key highlights of our Q4 end market performance. Our discrete sales grew over 15% versus prior year. Within discrete, automotive sales were up 30% year-over-year, reflecting continued strength of our offerings in both electric vehicle and battery.
Our EV business was close to 40% of our total automotive revenue in the quarter, growing double digits both year-over-year and sequentially. One of our strategic battery wins was with Nanotech Energy, a startup with new and innovative energy storage technologies. Nanotech has chosen Rockwell as their exclusive automation partner to build new battery gigafactories.
Semiconductor sales grew high single digits. We continue to take share in facilities management control system applications at major semiconductor companies across the globe. In addition to our existing portfolio, we continue to win and build down a strong funnel of advanced wafer transport solutions, leveraging our Independent Cart Technology across customers Greenfield and Brownfield projects.
We're also participating in the rapid build down of data centers to support cloud computing and artificial intelligence. Our control systems are used to control and optimize the environment and safety systems in these facilities, and our recent cubic acquisition extends our reach into the power distribution portion of data centers. We've seen some strategic wins in Asia and in the U.S. in the quarter, with more to come.
In our e-commerce and warehouse automation vertical, sales declined mid-single digits versus prior year. After several quarters of customer delays and cancellations in the e-commerce portion of this vertical, we're starting to see new investments, especially in North America, positioning us for low single digit year-over-year growth in fiscal year '24.
Turning to our hybrid industries, strong sales in this segment were paced by good growth in food and beverage, our largest customer vertical. Food and beverage sales grew low double digits versus prior year. In addition to continued cybersecurity and infrastructure modernization wins in this vertical, we had several wins in Q4 incorporating generative AI functionality where our digital services business is helping our CPG customers use real time AI assistance as they develop new products, formulations and recipes.
Life Sciences sales grew mid-single digits in the quarter. This vertical is a great example of how we are delivering expanded customer value through a combination of software, hardware and digital services capabilities. This quarter, our PlantPAX system was selected by Beijing [Phonetic], a global biotechnology company, developing innovative and affordable cancer medicines for their process control and environmental monitoring solutions at a greenfield site in New Jersey.
Tire was up high teens in the quarter with multiple wins across the globe, including the large software deal at Prometeon Tire, I mentioned earlier on the call.
Moving to process. Sales in this industry segment grew over 25% year-over-year, led by strong growth in oil and gas, mining and metals. Oil and gas sales were up over 30% in the quarter. This growth was driven by a combination of digital oilfield solutions, including process safety and lift control in EMEA and Asia, as well as several new carbon capture wins in North America.
We continue to grow our process industry footprint with a combination of Sensia and Rockwell oil and gas capabilities. We had a notable win this quarter at Multitex Filtration Engineers, an India headquartered global EPC company working on onshore and offshore projects. This was a competitive DCS win for Rockwell, with one of the largest government owned oil and gas explorer and producers in India, and we are excited to partner with Multitex as they increase their footprint in the US. and Middle East.
Turning now to slide 5 in our Q4 organic regional sales. Once again, our sales by region in Q4 and for the full year fiscal year '23 reflect a composition of our backlog rather than the underlying customer demand. Our full year orders in the Americas outperformed the rest of the world. North America organic sales were up over 12% year-over-year. Both Latin America and EMEA sales grew over 20% in the quarter, and Asia Pacific was up over 31%. While we saw strong sales growth in China in fiscal year '23, we continue to see high order deferrals and cancellations in China.
Let's move to slide 6 for key highlights of fiscal year 2023. We had a record year of sales and earnings, with our total sales exceeding $9 billion. We achieved this milestone ahead of the timeframe we anticipated when we introduced our framework for accelerated profitable growth at Investor Day in 2019.
Both reported and organic sales grew 17% this year, well above our original expectations. Information solutions and connected services were up 9% year-over-year, reaching over $870 million, demonstrating our customers accelerated adoption of new digital offerings. This is almost three times what this figure was in 2018.
Total ARR grew 16%, with strong growth in both our Software as a Service and recurring services offerings. Our strong operating performance resulted in 140 basis points of segment margin expansion versus prior year. Adjusted EPS of $12.12 was up 28%.
We generated a record $1.2 billion of free cash flow this year. The much better free cash flow conversion in the quarter was primarily driven by improved working capital. This represents 86% free cash flow conversion for the year, and Nick will provide more detail in his remarks.
And last but not least, we continue to invest in key areas of growth. In the last few months, we made two acquisitions -- Clearpath and Verve, to further expand our value and accelerate top line growth.
While we'll talk more about both investments at our upcoming Investor Day, let's turn to slide 7 and take a few minutes to share why we are excited about the impact Clearpath will have on both our near and longer-term growth. As we've shared with you earlier in the quarter, Clearpath is a leader in autonomous mobile robots, or AMRs, serving customers across many industry segments. Their differentiated portfolio of auto brand AMRs is focused on the production logistics space where customers traditionally have relied on manual labor to move raw materials and subassemblies to the right place on production lines, and also to move finished goods to shipping docks and warehouses. These workflows have been identified by many automotive companies, semiconductor fabs and consumer packaged goods suppliers as their top opportunity for efficiency and increased safety.
Given the workforce shortage and skills gap along with the overall move to more autonomous operations, the market for industrial mobile robots in factory floor applications is expected to grow over 30% for the next five years, and we believe no one is better positioned to capitalize on this growth than Rockwell and Clearpath. Together, we are the only end to end provider of autonomous operations in this space. We'll bring together our FactoryTalk design capabilities to configure and simulate the production environment, including these AMRs, integrate with our cloud native operations management software like Plex and Fiix, and optimize the production process with our Logix and embedded AI capabilities, all with one technology platform. This is an important milestone for Rockwell, and you will see more of what this can do for industrial operations at Automation Fair and Investor Day next week.
We closed this acquisition in early October, and expected to contribute about a point of growth to our top line performance in fiscal year '24.
As we move to slide 8, let's review our fiscal 2024 outlook. Consistent with what we shared with you on our last earnings call, our orders continue to decrease through fiscal 2023, reaching what we believe to be a trough in our 4th-quarter. Orders for the full year were $8.2 billion. We expect fiscal year '24 orders to increase low single digits year over year.
Order growth is expected to be highest in the Americas. Asia orders are expected to be down year-over-year due to China. However, our relatively low exposure to China helps reduce the impact on our global results.
The lead times on our products have largely returned to pre-pandemic levels, with the remainder of our SKUs getting back to normal lead times around the end of our fiscal Q1. This addresses the final golden SKU constraints to shipping past due backlog and clearing committed inventory at our distributors.
Based on our analysis of lead time reduction by product line, distributor inventory and underlying demand at our largest machine builders and end users, we expect orders to begin to recover in Q1 and build in Q2. Customers continue to move forward with plans for both Greenfield and Brownfield capacity investments, and also with resilience projects requiring increased cybersecurity and digitization.
In the U.S., we've been adding commercial resources specifically focused on projects that are incented by recent stimulus authorized by legislation including Infrastructure, IRA and the Chips and Science Act. This team won new business during the second half of fiscal year '23, with a strong funnel of additional projects expected to close in fiscal year '24.
Our fiscal '24 guidance assumes total reported sales of about $9.4 billion at the midpoint. Organic sales are projected to grow 1% at the midpoint. Currency is expected to increase sales by 1.5%, and acquisitions are slated to contribute about a point of growth.
We are projecting ARR to have another year of double-digit growth. Segment margin is expected to increase slightly versus prior year. Nick will cover this in more detail later.
Adjusted EPS is slated to grow 5% year-over-year at the midpoint. At a high level, we expect strong conversion on slightly higher year-over-year organic sales. Good performance in reducing backlog during Q4 of fiscal '23 pulled forward about $100 million of revenue and $0.25 of earnings. Clearpath is expected to reduce fiscal year '24 adjusted earnings by a similar amount.
Let me turn it over to Nick to provide more detail on our Q4 performance and financial outlook for fiscal '24. Nick?
