What is the content intensity difference between productivity/modernization projects and larger-scale capital projects for Rockwell?

Blake Moret clarified that modernizations and brownfield expansions use the same products as new CapEx projects, including Logix and Intelligent Devices. He noted that larger capital projects might involve heavier Lifecycle Services, which is currently muting that segment's growth, but the product content remains similar. “the modernizations, the expansions of existing brownfields, it's the same products that ultimately go into the solutions as when CapEx is being invested.”

Are you seeing a decent unlock in larger projects in CapEx-intensive end markets like semiconductor, energy, and chemicals, and what drives its durability?

Blake Moret confirmed a broadening of capital investment in e-commerce, warehouse automation, data center, semiconductor, and energy. However, he emphasized that a wholesale unlock of capital is not yet seen in automotive and consumer packaged goods, where investment is still focused on modernizations and smaller projects, or new offerings like mobile robots. “we are seeing enough of a broadening in the capital being invested to make particular note of that. What I should mention, however, is that we're still not seeing a wholesale unlock of capital in some of our biggest end markets, namely automotive and consumer packaged goods.”

Given the strong operating leverage and 50% incremental margins for FY26, could Rockwell's core incrementals be higher than the previous long-term algorithm of 35%?

Christian Rothe acknowledged the strong productivity cadence and current high incremental margins, but reiterated comfort with the 35% long-term flow-through target for an industrial company. He stated that any revisit of the long-term algorithm would occur under the overall growth algorithm umbrella when discussing future targets. “Historically, we talk about 35% flow-through. I think when you think about a cycle and how the incrementals work through the cycle for us, we still feel very comfortable with that 35% that we've signed up for.”

ROK

Rockwell Automation (ROK) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q2 FY26)· Industrials· May 5, 2026

Source: earnings call transcript

Executive summary

Rockwell Automation, Inc. Q2 FY26 — Strong Operating Performance and Broadening Demand

Rockwell Automation delivered strong Q2 FY26 results, with sales, margins, and EPS all exceeding expectations, driven by broadening customer demand in e-commerce, data centers, and semiconductors. The company achieved significant operating leverage and margin expansion, while navigating persistent trade volatility and geopolitical uncertainties that continue to delay large capital investments in some sectors. Management is focused on managing inflationary pressures and accelerating new technology releases, including AI capabilities, to sustain growth and profitability.

Highlights

Q2 organic sales grew 9% year-over-year, exceeding expectations.
Adjusted EPS of $3.30 was up over 30% year-over-year, well above expectations.
Enterprise operating margin expanded 350 basis points year-over-year to 22.5%.
Orders grew double-digits year-over-year, with book-to-bill slightly above historical average.
Data center sales more than doubled year-over-year, becoming one of the strongest end markets.

Concerns

Lifecycle Services organic sales were down 1% year-over-year due to customers deferring larger projects.
Persistent trade volatility and geopolitical uncertainty continued to delay large capital investments in automotive and consumer packaged goods.
Memory costs are expected to represent a double-digit million dollar headwind in the back half of FY26.
Sequential margin pressure is expected in the second half of FY26 due to inflationary costs and mix shift.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year FY26 Reported Sales Growth	5% to 9% high materiality	FY26 · 2026	High
Full-year FY26 Organic Sales Growth	5% to 9% high materiality	FY26 · 2026	High
Full-year FY26 Positive Currency Contribution to Sales	1.5 points medium materiality	FY26 · 2026	High
Full-year FY26 Organic Annual Recurring Revenue (ARR) Growth	high single digits medium materiality	FY26 · 2026	High
Full-year FY26 Enterprise Operating Margin	21.5% high materiality	FY26 · 2026	High
Full-year FY26 Adjusted EPS	$12.50 to $13.10 high materiality	FY26 · 2026	High
Full-year FY26 Free Cash Flow Conversion	100% medium materiality	FY26 · 2026	High
Full-year FY26 Total Price Contribution	250 basis points medium materiality	FY26 · 2026	High
Full-year FY26 Capital Expenditures	about 3% of sales medium materiality	FY26 · 2026	High
Full-year FY26 Adjusted Effective Tax Rate (ETR)	19.5% low materiality	FY26 · 2026	High
Full-year FY26 Share Repurchases	approximately $850 million medium materiality	FY26 · 2026	High
Full-year FY26 Average Diluted Shares Outstanding	about 112.1 million shares low materiality	FY26 · 2026	High
Full-year FY26 Intelligent Devices Reported Revenue Growth	high single digits medium materiality	FY26 · 2026	High
Full-year FY26 Intelligent Devices Segment Operating Margin	around 20% medium materiality	FY26 · 2026	High
Full-year FY26 Software & Control Reported Revenue Growth	low double digits medium materiality	FY26 · 2026	High
Full-year FY26 Software & Control Segment Operating Margin	low 30s medium materiality	FY26 · 2026	High
Full-year FY26 Lifecycle Services Reported Revenue	down about $100 million medium materiality	FY26 · 2026	High
Full-year FY26 Lifecycle Services Segment Operating Margin	flat to slightly up year-over-year medium materiality	FY26 · 2026	High
Full-year FY26 Corporate and Other Expense	around $110 million low materiality	FY26 · 2026	High
Full-year FY26 Net Interest Expense	about $120 million low materiality	FY26 · 2026	High
Q3 FY26 Total Company Reported Sales	roughly flat sequentially medium materiality	Q3 · 2026	High
Q3 FY26 Enterprise Operating Margin	flat sequentially medium materiality	Q3 · 2026	High
Q3 FY26 Adjusted EPS	up about $0.05 sequentially or up mid- to high teens year-over-year medium materiality	Q3 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Intelligent Devices Organic sales grew 9% year-over-year, driven by strong growth in Motion, I/O, and Safety & Sensing businesses. Margin expansion was due to positive price/cost, higher sales volume, and favorable mix, partially offset by higher compensation. Segment Operating Margin: 20.9%YoY Margin Change: +320 bpsIncremental Margin: mid-40s	—	9%	—	20.9%
Software & Control Organic sales grew 17% year-over-year, well above expectations, driven by continued double-digit sales growth of Logix, especially in North America and with data center customers. Margin expansion was due to strong sales volume and positive price/cost, partially offset by compensation. Segment Operating Margin: 34.9%YoY Margin Change: +480 bpsIncremental Margin: high 50s	—	17%	—	34.9%
Lifecycle Services Organic sales were down 1% year-over-year, largely in line with expectations, as customers deferred larger projects. Margin was flat year-over-year due to good project execution and productivity, offset by higher compensation. The dissolution of the Sensia joint venture is complete. Segment Operating Margin: 14.6%YoY Margin Change: flatBook-to-bill: 1.07	—	-1%	—	14.6%
United States Organic sales in the U.S. were up 10% versus prior year, and North America is expected to be the strongest region in fiscal '26.	—	10%	—	—
Discrete Industries Sales grew mid-teens, led by better-than-expected growth in automotive, e-commerce, warehouse, and semiconductor. Data center business was a strongest end market, more than doubling sales. Automotive Sales Growth: mid-teens YoYE-commerce and Warehouse Automation Sales Growth: >30% YoYSemiconductor Sales Growth: high teens YoYData Center Sales Growth: >100% YoY	—	mid-teens	—	—
Hybrid Industries Sales grew high single digits, led by strong growth in food and beverage. Life Sciences grew low single digits year-over-year and double digits sequentially. Food & Beverage Sales Growth: high single digitsLife Sciences Sales Growth: low single digits YoY, double digits sequentially	—	high single digits	—	—
Process Industries Sales grew mid-single digits with solid growth across energy, metals, pulp and paper, and chemicals. Energy sales were above expectations, particularly in the Americas. Energy Sales Growth: mid-single digits	—	mid-single digits	—	—

ROK operating KPIs by quarter

ROK operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q1 FY25	Jun 2025 Q3 FY25	Sep 2025 Q4 FY25	Dec 2025 Q1 FY26	This call Mar 2026 Q2 FY26	Change vs prior quarter
Book-to-bill ratio Lifecycle Services	1.05 ratio Book-to-bill in this segment was 1.05, led by strong orders in our solutions business and tied to some of the larger multiyear project wins I mentioned earlier. Source: earnings call transcript	1.06 ratio Book-to-bill in this segment was 1.06 and was above 1.0 across all the contributing businesses. Source: earnings call transcript	0.9 ratio Book-to-bill in this segment was 0.9, consistent with our historical Q4 seasonality. Source: earnings call transcript	1.16 ratio Book-to-bill in this segment was 1.16. Source: earnings call transcript	1.07 ratio Book-to-bill in this segment was 1.07. Source: earnings call transcript	-7.8%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Company Book-to-bill ratio slightly higher than historical average Q2 FY26

Historical average corridor is between 0.95 and 1.1. For the first half, it was within that corridor, and full year is expected to be within that corridor. Orders were particularly strong, especially in products.

Lifecycle Services Book-to-bill ratio 1.07 Q2 FY26

Product announcements

Product	Type	Timeline	Details
Clock Tower Farms	launch	later this year

Deals & partnerships

Sensia divestiture

The dissolution of the Sensia joint venture is now complete and executed as planned on April 1, 2026.

BHP partnership

Strategic partnership to support BHP in advancing the next generation of autonomous operations in mining, combining Rockwell's leadership in automation and AI with BHP's operational expertise.

Risks & headwinds

Persistent trade volatility and geopolitical uncertainty

Delayed large capital investments

Mitigation:Managing cost increases in affected areas; accelerating new technology release.

Memory costs H2 FY26

double-digit million dollar headwind

Mitigation:Actively managing pressures, including increased safety stock to secure supply and protect operations; additional pricing actions.

Inflationary costs H2 FY26

step up

Mitigation:Additional pricing actions (250 bps total price for FY26); increased safety stock.

Middle East conflict

paused some near-term customer activity

Mitigation:Limited impact to results today; potential for reinvestment as customers restore operations over time.

Q&A highlights

Can you size the data center market for Rockwell and discuss its total addressable market, given its rapid growth?

Blake Moret stated that data center revenue is currently low single digits as a percentage of total sales. He explained that Rockwell's data center offerings come from power distribution (Cubic technology), industrial PLCs (Logix) replacing commercial-grade controls, and participation with HVAC customers. He noted that the company will review the numbers at year-end to determine if more explicit dimensioning is needed.

“data center for us comes from, I'd say, 3 main places in our offering. The first would be the power distribution, largely through our Cubic technology... The second would be the growing trend to replace commercial grade controls with industrial PLCs... And then participating with some of our large HVAC customers.”

asked by Scott Davis · answered by Blake Moret

2 min read 6 chapters

Detailed narrative

Market Dynamics & Demand Broadening

Rockwell Automation observed an improvement in customer demand across a broader range of industries in Q2 FY26, including e-commerce, warehouse automation, data center, semiconductor, and energy. This broadening demand contributed to double-digit year-over-year growth in orders, sales, and earnings. However, persistent trade volatility and geopolitical uncertainty continued to delay large capital investments in other industries, such as automotive and consumer packaged goods, despite good results in these verticals driven by modernizations and new offerings like autonomous mobile robots.

Operational Excellence & Margin Expansion

The company delivered strong margin performance in Q2 FY26, with enterprise operating margin expanding 350 basis points year-over-year to 22.5%. This was driven by higher volume, positive price/cost, favorable mix, and productivity initiatives. Beginning in Q2, Rockwell is reporting enterprise operating profit and margin, which include corporate expenses, due to SEC requirements.

This change is in presentation only and does not impact net income, EPS, or cash flow.

Strategic Wins & Technology Adoption

Rockwell secured several strategic wins, including supporting NASA's Artemis II mission with ground control systems and a significant OTTO AMR win with Subaru of Indiana Automotive. The company also saw strong performance with data center customers, exemplified by a win with ATS Automation for an AI data center in Texas using Logix PLCs.

Other notable wins include Prometeon Tyre Group selecting cloud-native Fix software, Agropur adopting digital services, and Butantan Institute expanding its PharmaSuite MES footprint, showcasing broad technology adoption across diverse industries.

Sensia Joint Venture Dissolution

The dissolution of the Sensia joint venture was completed as planned on April 1, 2026. This dissolution is expected to lower reported revenue, increase Lifecycle Services and total Rockwell margin percentages, and be EPS neutral for the full fiscal year.

The company provided pro forma information for the past four quarters to help update models, noting a $100 million reduction in the full-year reported sales guide due to Sensia, partially offset by a $200 million increase in organic sales forecast.

Productivity & Innovation Focus

Rockwell continues to prioritize productivity and innovation, with ongoing programs underpinning efficiency gains across the organization. The company is accelerating the release of new technology, including incorporating AI capabilities within months of their initial market release, leveraging investments in cloud-native software and modern development tools. This focus on continuous improvement and operational rhythm is expected to drive future productivity opportunities and sustain strong performance.

Regional Performance & Outlook

Q2 FY26 saw broad-based growth across most regions, with U.S. organic sales up 10% year-over-year, and North America expected to be the strongest region for the full fiscal year. Growth in Europe was largely driven by strong machine builder activity in Germany and Italy, including machinery bound for the U.S. and other global markets.

Asia saw growth in China, particularly in semiconductor, and other countries, primarily from systems integrators, engineering firms, users, and machine builders.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.