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    ROK
    Earnings call· Jun 2026(Q3 FY26)

    ROCKWELL AUTOMATION Q3 FY26 earnings call ROK

    Aug 4, 2026 Source

    Executive summary

    Rockwell Automation Q3 FY26 — Strong Growth Driven by Data Center and Semiconductor Demand

    Rockwell Automation delivered a strong Q3 FY26, exceeding expectations with double-digit sales and earnings growth, primarily fueled by robust demand in semiconductor, data center, and e-commerce. While large capital projects remain cautious, the company's differentiated portfolio and disciplined execution are driving share gains and strong profitability, despite persistent inflation and geopolitical uncertainties.

    Highlights

    5

    • Reported sales were up 8% and organic sales were up 10% year-over-year.

    • Adjusted EPS of $3.49 was up more than 20% year-over-year.

    • Enterprise operating margin expanded 280 basis points year-over-year to 22.3%.

    • Free cash flow in Q3 was $654 million, $165 million higher than the prior year.

    • e-Commerce & Warehouse Automation sales were up 30% year-over-year, with Semiconductor and Data Center also showing strong growth.

    Concerns

    5

    • Lifecycle Services organic sales were down 2% versus prior year, with a book-to-bill of 0.97.

    • Organic annual recurring revenue grew 6% in the quarter, below expectations.

    • Mining sales were down mid-single digits, reflecting measured capital deployment and project timing delays.

    • Core price/cost was unfavorable in the quarter, reflecting rising costs and timing of price increases.

    • Inflation continues to be a growing headwind, noted as a double-digit million headwind for the second half of the fiscal year.

    Guidance & targets

    27
    CategoryTargetConfidence
    Full-year FY26 Reported Sales Growth
    7.5% to 9.5%
    high materiality
    High
    Full-year FY26 Organic Sales Growth
    7.5% to 9.5%
    high materiality
    High
    Full-year FY26 Organic Annual Recurring Revenue Growth
    mid-single digits
    medium materiality
    Medium
    Full-year FY26 Enterprise Operating Margin
    21.5%
    high materiality
    High
    Full-year FY26 Adjusted EPS
    $13.00 to $13.30
    high materiality
    High
    Full-year FY26 Free Cash Flow Conversion
    100%
    medium materiality
    High
    Full-year FY26 E&D as % of Sales
    about 8%
    low materiality
    High
    Full-year FY26 Adjusted Effective Tax Rate
    19.5%
    low materiality
    High
    Full-year FY26 Price Realization
    about 250 basis points
    medium materiality
    High
    Full-year FY26 Incrementals
    greater than 50% as-reported, high 40s organic
    medium materiality
    High
    Q4 FY26 Total Company Reported Sales Growth
    up low single digits sequentially
    medium materiality
    Medium
    Q4 FY26 Enterprise Operating Margin
    approximately flat sequentially compared to Q3
    medium materiality
    Medium
    Q4 FY26 Intelligent Devices Segment Margin
    up slightly from the third quarter
    low materiality
    Medium
    Q4 FY26 Software & Control Segment Margin
    lower sequentially on flat sales
    medium materiality
    Medium
    Q4 FY26 Lifecycle Services Segment Margin
    flat from the third quarter on higher seasonal sequential revenue
    low materiality
    Medium
    Full-year FY26 Intelligent Devices Reported Revenue Growth
    low double digits
    medium materiality
    High
    Full-year FY26 Intelligent Devices Segment Operating Margin
    around 20%
    medium materiality
    High
    Full-year FY26 Software & Control Reported Revenue Growth
    high teens
    medium materiality
    High
    Full-year FY26 Software & Control Segment Margin
    low 30s
    medium materiality
    High
    Full-year FY26 Lifecycle Services Reported Revenue
    decline about $150 million year-over-year
    medium materiality
    High
    Full-year FY26 Lifecycle Services Segment Operating Margin
    flat to slightly up year-over-year
    medium materiality
    High
    Full-year FY26 CapEx
    about 3% of sales
    medium materiality
    High
    Full-year FY26 Corporate and Other Expense
    around $115 million
    low materiality
    High
    Full-year FY26 Net Interest Expense
    about $120 million
    low materiality
    High
    Full-year FY26 Share Repurchases
    approximately $850 million
    medium materiality
    High
    Full-year FY26 Average Diluted Shares Outstanding
    about 112.2 million shares
    low materiality
    High
    FY27 CapEx
    more than this year, but still in 4% or south
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Intelligent Devices
    Organic sales grew 10% year-over-year. Margin increased by 120 basis points year-over-year, driven by higher sales, favorable currency and mix, partially offset by inflation. Full-year FY26 reported revenue expected to grow low double digits with segment operating margin around 20%.
    Segment incrementals: 30%
    		—10%—20%
    Software & Control
    Organic sales were up 18% versus prior year, driven by strong double-digit growth in Logix. Margin was up 320 basis points versus prior year, driven by strong sales volume, partially offset by inflation. Full-year FY26 reported revenue expected to grow high teens with segment margin in the low 30s.
    Segment incrementals: 50%
    		—18%—34.8%
    Lifecycle Services
    Organic sales were down 2% versus prior year, generally in line with expectations. Margin was up 180 basis points year-over-year, benefiting from good project execution, productivity, and the dissolution of Sensia, partially offset by lower sales volume. Full-year FY26 reported revenue expected to decline about $150 million year-over-year, with segment operating margin flat to slightly up.
    Book-to-bill: 0.97
    		—-2%—15.1%

    Operational metrics

    28
    Organic Sales Growth
    10%YoY
    Q3 FY26
    Reported Sales Growth
    8%YoY
    Q3 FY26
    Currency Impact on Sales
    1YoY
    Q3 FY26

    Currency contributed about 1 point of growth.

    Sensia Dissolution Impact on Sales
    -3%
    Q3 FY26

    Decreased sales by 3%.

    Enterprise Operating Margin
    22.3%up 280 bps YoY
    Q3 FY26

    Led by strong volume and favorable mix, partially offset by negative price cost. Sensia dissolution had a positive impact of about 40 basis points.

    Gross Margin
    49.5%up 70 bps YoY
    Q3 FY26

    Driven by higher volume, favorable mix and a margin benefit from the Sensia dissolution.

    SG&A Growth
    <1%YoY
    Q3 FY26

    Giving solid P&L leverage on baseline spending.

    Engineering and Development Growth
    5%YoY
    Q3 FY26

    Sales growth was faster than E&D spend.

    E&D as % of Sales
    8%
    Q3 FY26
    Adjusted Effective Tax Rate
    19.2%
    Q3 FY26

    Slightly lower than expectations.

    Total Rockwell Incremental Margin
    high 50s as-reported, over 40% organicYoY
    Q3 FY26

    Fourth consecutive quarter of incrementals above 40%.

    Core Performance Impact on Adjusted EPS
    $0.65
    Q3 FY26

    Driven by volume, mix and productivity, partially offset by price/cost.

    Tax Impact on Adjusted EPS
    -$0.20
    Q3 FY26

    Largely due to BEPS Pillar Two.

    Other Items Impact on Adjusted EPS
    $0.09
    Q3 FY26

    Positive impact.

    Price Contribution to Growth
    1
    Q3 FY26

    Price contributed approximately 1 point to growth.

    Share Repurchases
    $150M
    Q3 FY26
    Inflation Headwind
    double-digit millionsincreasing sequentially
    H2 FY26

    Still a double-digit million headwind for the second half, and a higher number than last quarter.

    Organic Annual Recurring Revenue Growth
    6%
    Q3 FY26

    Below expectations, high single-digit software growth partially offset by slow growth in recurring life cycle services.

    Discrete Sales Growth
    high teensYoY
    Q3 FY26

    Led by strong double-digit growth in semiconductor, data center and e-comm and warehouse.

    e-Commerce & Warehouse Automation Sales Growth
    30%YoY
    Q3 FY26

    Continued strong performance across regions and customer segments.

    Automotive Sales Growth
    low double digitsYoY
    Q3 FY26

    Marking another quarter of better-than-expected performance.

    Hybrid Industries Sales Growth
    mid-single digits
    Q3 FY26

    With good growth across all major verticals.

    Food and Beverage Sales Growth
    mid-single digits
    Q3 FY26

    Led by growth in North America, despite lack of inflection in large capital projects.

    Life Sciences Sales Growth
    10%
    Q3 FY26

    Broad-based growth across all regions and continued improvement at both machine builders and end users.

    Process Sales Growth
    high single digits
    Q3 FY26

    Led by growth in energy, metals and chemicals.

    Energy Sales Growth
    high single digits
    Q3 FY26

    Customer spending focused on brownfield expansions, asset modernization and production optimization.

    Mining Sales Growth
    mid-single digits decline
    Q3 FY26

    Reflecting measured capital deployment and some project timing delays, specifically in Latin America.

    North America Sales Growth
    12%YoY
    Q3 FY26

    Strongest region in the quarter, expected to be fastest-growing for full year FY26.

    Industry KPIs

    6
    MetricValueDetails
    Book to bill ratioinside normal corridor
    Orders bookings growth10%%
    M a acquisition contribution-3%%
    Backlog by segment end market0.97
    Data center exposure pipelinestrong growth
    Incremental flow through marginhigh 50s as-reported, over 40% organic%

    Orderbook & backlog

    2
    Lifecycle Services Book-to-Bill0.97Q3 FY26
    Company-wide Book-to-Billinside normal corridorQ3 FY26

    Product announcements

    5
    ProductTypeDetails
    PointMax I/Olaunch
    PowerFlex drives (additional offerings)launch
    Flex line motor control centerslaunch
    Emulate3D digital twin softwareupdate
    Integrated process control and MES platformupdate

    Deals & partnerships

    1
    SensiaDissolution of the joint venture

    The dissolution of Sensia was effective on April 1, 2026, and was completed smoothly and on schedule.

    Capital programs

    1
    New Berlin, Wisconsin Greenfield Projectunderway
    Start: FY27

    Investments will start at pace in FY27 and continue into FY28. Expected to have a strong ROI accretive to the organization.

    Risks & headwinds

    6
    Geopolitical Volatility and Trade Uncertainty

    Not quantified, but mentioned as persistent.

    Mitigation: Operating with discipline and prudence; planning for continued tariff volatility.

    Persistent InflationH2 FY26 and beyond

    Double-digit million headwind for H2 FY26, increasing sequentially.

    Mitigation: Driving top line growth, securing component availability, mitigating cost pressure through pricing, productivity, and disciplined spending.

    Lack of Capital Spending Recovery in Certain Industries

    Lifecycle Services organic sales down 2% YoY; organic ARR grew 6% (below expectations).

    Mitigation: Focusing on modernization and digital transformation initiatives; capitalizing on broader market recovery when it accelerates.

    Unfavorable Price/CostQ3 FY26

    Core price/cost was unfavorable in Q3 FY26.

    Mitigation: Implemented a price increase late in Q3 that will be realized in Q4; expecting positive price/cost for full year and Q4.

    Mining Sector WeaknessQ3 FY26

    Mining sales down mid-single digits.

    Mitigation: Customers continue to invest in productivity, autonomy, and digital transformation as demand for critical minerals grows.

    BEPS Pillar Two Tax ImpactQ3 FY26

    $0.20 headwind on adjusted EPS.

    What to watch in Q4 FY26

    5

    Large Capital Projects Recovery

    next quarter
    CurrentStill sluggish, constraining Lifecycle Services growth
    TargetSigns of broad-based recovery, especially in Food & Beverage and process industries

    Why it matters

    A recovery in large capital projects is crucial for accelerating growth in the Lifecycle Services segment and overall company performance.

    While we have yet to see a broad-based recovery in large capital projects, we are confident Rockwell is best positioned to capitalize as spending accelerates.

    Q&A highlights

    6

    Clarification on price components (tariff vs. underlying) and an update on Plex's deal model and performance.

    Christian clarified that the full-year price expectation of 250 bps includes 100 bps from tariff-based pricing and 150 bps from underlying price, with a late Q3 price increase impacting Q4. Blake stated Plex is performing well, contributing to high single-digit software ARR growth, adding new logos in automotive and consumer, and integrating with fleet management for orchestration.

    “Plex continues to add new logos, automotive tier suppliers, consumer, which at the very beginning, that was one of the fundamental hypothesis is that we could use our existing market access to help Plex expand into consumer packaged goods, and that's exactly what we've done.”

    asked by Scott Davis · answered by Blake Moret

    2 min read5 chapters

    Detailed Narrative

    01

    Market Dynamics & Growth Drivers

    Rockwell Automation is experiencing strong demand in Semiconductor, Data Center, and e-Commerce & Warehouse Automation, driving double-digit organic sales growth. The company is also seeing early signs of renewed project activity in Automotive and Life Sciences, indicating a broadening of customer investment beyond the core high-growth areas. Energy sales were up high single digits, contributing to a diverse growth profile.

    02

    Product & Software Outperformance

    Products and software offerings are outperforming longer-cycle solutions, with Intelligent Devices organic sales up 10% and Software & Control organic sales up 18%. New offerings like PointMax I/O, additional PowerFlex drives, and Flex line motor control centers are seeing strong adoption, particularly in e-Commerce, warehouse automation, and process industries. Logix controllers are exceeding pre-COVID unit volumes, indicating market share gains.

    03

    Data Center Strategy

    Rockwell's participation in the data center market spans three main areas: power distribution through its modular Cubic design, power control for chillers (motor control centers, big drives), and central utility plant control using Logix. Logix's inherent redundancy and safety characteristics are driving increased standardization by hyperscalers and contractors, who seek modular, repeatable designs to increase speed to capacity.

    04

    Inflationary Environment & Mitigation

    The company continues to face increasing inflationary headwinds, particularly in memory and other components, which are impacting cost and are expected to be a double-digit million headwind for H2 FY26. Management is actively mitigating these pressures through pricing actions, including a late Q3 price increase for Q4 realization, aggressive productivity initiatives, and securing component availability to ensure product shipments.

    05

    Lifecycle Services Headwinds

    Growth in Lifecycle Services remains constrained by a lack of capital spending recovery in industries like food and beverage and certain process sectors, where many of these offerings are deployed. This segment's book-to-bill was 0.97, and organic annual recurring revenue growth was below expectations at 6%, partially due to slower services growth and customer caution on deploying capital for large projects.

    AI-generated summary of the company’s earnings call. Not investment advice.