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    ROK
    Earnings call· Dec 2025(Q1 FY26)

    ROCKWELL AUTOMATION Q1 FY26 earnings call ROK

    Feb 5, 2026 Source

    Executive summary

    Rockwell Automation Q1 FY26 — Exceeds Q1 Expectations on Product Demand & Margin Expansion

    Rockwell Automation delivered a strong Q1 FY26, surpassing expectations in sales, margin, and earnings, driven by double-digit organic growth and robust demand in core product lines like logics and motion. While large CapEx remains cautious, strategic investments in new U.S. production capacity and data centers are fueling growth, alongside significant productivity gains. The company raised its full-year adjusted EPS midpoint, maintaining its organic sales outlook, reflecting a prudent yet optimistic stance on market recovery.

    Highlights

    5

    • Sales, margin, and earnings all exceeded expectations, with double-digit year-over-year growth in both reported and organic sales.

    • Intelligent Devices organic sales grew 16% year-over-year, driven by strong performance in drives and Motion.

    • Software & Control organic sales grew 17% versus prior year, ahead of expectations, with Logix North American sales up over 25% year-over-year.

    • Total company segment margin was 20.7% and adjusted EPS was $2.75, both exceeding expectations.

    • E-commerce and warehouse automation sales grew over 60% in the quarter, and data centers contributed strong double-digit growth.

    Concerns

    5

    • Lifecycle Services organic sales declined 6% versus prior year, largely due to customers delaying and narrowing larger projects.

    • Large CapEx investments are still on hold for many customers, awaiting more stable market signals and clarity on trade policy impacts.

    • Tariffs resulted in a drag of about 30 basis points on segment margins year-over-year in Q1.

    • Free cash flow in Q1 was $170 million, $123 million lower than the prior year, primarily due to changes in working capital and incentive comp payments.

    • Life Sciences sales declined low single digits year-over-year, driven by several project delays in North America.

    Guidance & targets

    20
    CategoryTargetConfidence
    Organic sales growth
    2% to 6%
    high materiality
    Medium
    Recurring revenue growth
    High single-digit growth
    medium materiality
    High
    Full year segment margin expansion
    Over 100 basis points
    high materiality
    High
    Adjusted EPS
    $11.40 to $12.20
    high materiality
    High
    Free cash flow conversion
    Approximately 100%
    medium materiality
    High
    Sensia dissolution impact on Adjusted EPS
    No significant impact
    medium materiality
    High
    Sensia dissolution impact on annualized sales
    Reduction of approximately $250 million
    medium materiality
    High
    Sensia dissolution impact on total company segment margin
    Annualized improvement of approximately 50 basis points
    medium materiality
    High
    Total price contribution to sales growth
    2 points
    medium materiality
    High
    Full year incremental margins
    About 40%
    high materiality
    High
    Capital expenditures
    About 3% of sales
    medium materiality
    High
    Q2 sales growth
    Slightly up sequentially
    low materiality
    Medium
    Q2 total segment operating margin
    Modest sequential improvement
    low materiality
    Medium
    Q2 sales growth YoY
    Mid-single-digit growth
    low materiality
    Medium
    Q2 margin expansion YoY
    Less than 100 basis points
    low materiality
    Medium
    Q2 Adjusted EPS growth
    Low single digits sequentially
    low materiality
    Medium
    Corporate and other expense
    About $105 million
    low materiality
    High
    Net interest expense
    About $115 million
    low materiality
    High
    Average diluted shares outstanding
    About 112.7 million shares
    low materiality
    High
    Share repurchases
    Approximately $500 million
    high materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Intelligent Devices
    Organic sales growth was broad-based, with especially strong performance in drives and Motion. Margins improved due to higher sales, positive price-cost, and productivity, with a slight offset from FX and compensation.
    Margin increase: 240 bps YoYIncrementals: low 30s
    		—16%—17.3%
    Software & Control
    Organic sales grew ahead of expectations, driven by strong Logix momentum and growing adoption of next-generation software offerings. Margins were higher due to strong sales volume, particularly in Logix, partially offset by compensation.
    Margin increase: 610 bps YoYIncrementals: low 60sLogix North American sales growth: over 25% YoY
    		—17%—31.2%
    Lifecycle Services
    Organic sales declined largely in line with expectations, as customers continued to delay and narrow the scope of larger projects. Margins were better than expectations as the team executed well against projects and drove productivity.
    Book-to-bill: 1.16Margin increase: 160 bps YoY
    		—-6%—14.1%
    Discrete Industry
    Sales led by continued strength in e-commerce and warehouse automation. Automotive CapEx environment remains subdued, but brand owners are advancing MES, digital twin, and AI-enabled modernization. Data centers saw increased demand for industrial-grade controls.
    Automotive sales growth: mid-single digitsE-commerce and warehouse automation sales growth: over 60%Data center business growth: strong double-digit
    		—low double digits——
    Hybrid Industry
    Sales led by food and beverage and home and personal care. Customers focused on operational efficiency and brownfield modernizations, with some greenfield projects in the U.S., Eastern Europe, Southeast Asia, and India.
    Food and beverage sales growth: double-digitHome and personal care sales growth: double-digit
    		—high single digits——
    Life Sciences Industry
    Sales declined year-over-year, driven by several project delays in North America. Despite temporary pushouts, the pipeline continues to expand across strategic areas like GLP-1, radiopharma, and med devices, with expected full-year growth.
    		—low single digits——
    Process Industries
    Sales saw strong growth in chemicals (specialty chemicals sector), water, and energy (oil and gas, power, renewables). The company continues to gain share with its PlantPAx control platform, including a greenfield win with FS Bioenergia.
    Chemicals sales growth: strongWater sales growth: strongEnergy sales growth: strong
    		—10%——

    Operational metrics

    18
    Reported sales growth
    12%YoY
    Q1 FY26
    Organic sales growth
    double-digitYoY
    Q1 FY26
    Annual recurring revenue growth
    7%
    Q1 FY26

    In line with expectations, with strong performance in recurring software.

    Total company segment margin
    20.7%
    Q1 FY26

    Exceeded expectations, driven by higher volume, favorable mix, and strong productivity.

    Adjusted EPS
    $2.75
    Q1 FY26

    Exceeded expectations.

    SG&A spend
    flatYoY
    Q1 FY26

    Reflecting strong cost discipline and productivity.

    Engineering development spend
    10%YoY
    Q1 FY26

    In line with organic sales growth, keeping innovation spend at about 8% of sales.

    Segment margin expansion
    360YoY
    Q1 FY26

    Driven by gross margin expansion and SG&A leverage.

    Tariff impact on segment margins
    -30YoY
    Q1 FY26

    Neutral impact on total company earnings in Q1, but a drag on segment margins.

    Adjusted effective tax rate
    17%slightly lower than last year
    Q1 FY26

    Lower than expected due to discrete tax items, primarily stock option exercises, contributing $0.09 to adjusted EPS.

    Adjusted EPS year-over-year increase from core performance
    $1.00YoY
    Q1 FY26

    Volume drove about half, productivity was next largest, price and mix also solid contributors, partially offset by inflationary costs.

    Compensation spend year-over-year increase
    $0.10YoY
    Q1 FY26

    Impact on adjusted EPS.

    Q2 Adjusted effective tax rate
    20%sequential headwind of $0.10
    Q2 FY26

    Expected, up from 17% in Q1.

    Corporate and other expense
    $105M
    FY26

    Expected for full year.

    Net interest expense
    $115M
    FY26

    Expected for full year.

    Average diluted shares outstanding
    112.7M
    FY26

    Assumption for modeling.

    Share repurchases target
    $500M
    FY26

    Targeted during the year.

    Logix units
    at or slightly above pre-pandemic levels
    FY26

    Expected for the full year.

    Industry KPIs

    5
    MetricValueDetails
    Equipment pricing3 points
    Book to bill ratio1.16
    Service attach mix7%%
    Data center exposure pipelinestrong double-digit growth%
    Incremental flow through margin50%%

    Product announcements

    2
    ProductTypeDetails
    L9 controllerlaunch
    AI-enabled troubleshooting agentmilestone

    Deals & partnerships

    1
    SLBdivestiture

    Plans to end the Sensia joint venture are on track, returning the profitable process automation business to full Rockwell control. Certain Sensia assets and liabilities classified as held for sale will go to SLB. A tax gain on the GAAP P&L is related to a recapture of tax losses.

    Capital programs

    2
    New manufacturing facility in New Berlin, Wisconsinunderway
    Start: announced November (Automation Fair)

    Benefit: factory of the future

    Aligned with announced investments in plants, talent, and digital infrastructure, underscoring commitment to the U.S. market.

    Purchase of Mequon, Wisconsin facilitycompleted$60 million

    Transaction closed in Q2 FY26. Recorded on December balance sheet as a finance lease, accounted for in financing cash flows, excluded from operating CapEx.

    Risks & headwinds

    8
    Geopolitical uncertaintycurrent

    heightened

    Mitigation: disciplined, execution-focused mindset

    Delayed large CapEx investmentscurrent

    many customers

    Mitigation: focus on product portfolio demand (logics and motion), customers modernizing operations

    Customer project delays due to trade policy uncertaintycurrent

    larger projects

    Tariff impact on segment marginsQ1 FY26

    drag of about 30 basis points

    Lower free cash flow YoYQ1 FY26

    $123 million lower

    Life Sciences project delaysQ1 FY26

    low single digits decline

    Mitigation: pipeline continues to expand across strategic areas (GLP-1, radiopharma, med devices); expect growth for full year

    Low oil prices impacting capital spendingcurrent

    fairly low

    Tax rate headwind in Q2Q2 FY26

    about $0.10 sequential headwind

    Q&A highlights

    6

    Reconcile Rockwell's cautious comments on CapEx with broader S&P optimism; are customers underspending or delaying?

    Management described the approach as "prudent," noting optimism in some areas and good discussions, but lacking broad-based order release to raise full-year guidance. Inventory levels at distributors and machine builders are back to normal.

    “I think the overarching term would be prudent here... But we haven't seen that turn into the broad-based release of orders that we need to see before we start centering more on the higher end of that guide.”

    asked by Scott Davis · answered by Blake Moret

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Exceeds Expectations

    Rockwell Automation delivered Q1 FY26 results exceeding expectations across sales, margin, and earnings. The company reported double-digit year-over-year growth in both reported and organic sales, driven by strong demand in core offerings and verticals, particularly in logics and motion. This performance was supported by effective execution and ongoing structural productivity actions.

    02

    Productivity and Margin Expansion

    The company made additional progress on productivity initiatives, spanning commercial spend, direct material, and supply chain efficiency, with AI adoption providing further opportunities. Gross margins expanded due to positive price-cost, productivity, and favorable mix. SG&A spend was flat year-over-year, reflecting strong cost discipline, contributing to a 360 basis points segment margin expansion.

    03

    Strategic Growth Verticals

    Rockwell saw robust growth in key strategic areas. E-commerce and warehouse automation sales surged over 60% YoY, driven by labor shortages and network modernization. The data center business also contributed strong double-digit growth, with demand for industrial-grade controls in power and advanced cooling accelerating due to AI-driven power constraints.

    04

    Software and AI Integration

    Annual recurring revenue grew 7%, with strong performance in recurring software, especially Plex. The company highlighted significant customer wins for Plex and OT cybersecurity. Rockwell's AI strategy is delivering customer value, exemplified by Thermo Fisher selecting Rockwell for an AI-enabled troubleshooting agent to reduce downtime.

    05

    New Capacity Investments

    The company noted strong growth in orders related to new U.S. production capacity, reinforcing confidence in its differentiated offerings combining traditional value with digital services, edge computing, and cloud-native software. This includes investments in a new manufacturing facility in New Berlin, Wisconsin, and the purchase of its Mequon facility.

    06

    Sensia Joint Venture Dissolution

    Plans to end the Sensia joint venture are on track for an April 1 close, returning the profitable process automation business to full Rockwell control. The dissolution is expected to result in an annualized sales reduction of approximately $250 million and an annualized segment margin improvement of about 50 basis points, with no significant impact on adjusted EPS.

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