How will Q2 segment margins play out, considering mix and price/cost? What's the outlook for Logix volume and hybrid industry growth?

Expects slight sequential sales improvement across all segments, modest margin expansion for Intelligent Devices and Software & Control, and Lifecycle Services margin around 14%. Merit increases will impact Q2. Logix continues strong performance with new products and adoption in data centers, expecting full-year units to return to pre-pandemic levels. Hybrid industries (food & beverage) saw double-digit growth and are expected to continue benefiting. “Logix continues to be a great part of our product line... we expect that to continue to be a nice spot for us top line as well as, of course, the financial benefits of that.”

Given Q1 incrementals over 50%, could full-year incrementals exceed 40% if Logix remains strong? Update on productivity programs like "Rock on Rock."

Logix's strong profitability could influence flow-through, but the company relies on broad-based performance and productivity initiatives. Productivity remains central, with strong gross margin expansion driven by direct material cost control and supply chain efficiency. "Rock on Rock" learnings from Singapore are being applied to other facilities like Twinsburg to improve workflows and efficiencies. “the team continues to perform really well on our productivity initiatives... this organization has built a really good muscle strength around this.”

Update on semiconductor opportunities given market improvement. Can focus on bigger solutions help in the discrete market?

Semiconductor sales were down in Q1 due to a tough prior-year comparable. Rockwell participates in tooling, wafer transport (independent cart technology), software for energy management, cybersecurity, and environmental controls. CapEx is concentrated on AI build-out participants. Differentiated technology, including mobile robots and fixed automation integration, along with software tools like Emulate3D, helps win in automotive and food & beverage. “Our major competitors don't have mobile robots and they don't have the ability, even the competitors that have mobile robots don't have the huge capabilities in fixed automation and to bring that together has really captured the imagination of those customers.”

ROK

Rockwell Automation (ROK) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q1 FY26)· Industrials· Feb 5, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Organic sales growth	2% to 6% high materiality	FY26	Medium
Recurring revenue growth	High single-digit growth medium materiality	FY26	High
Full year segment margin expansion	Over 100 basis points high materiality	FY26	High
Adjusted EPS	$11.40 to $12.20 high materiality	FY26	High
Free cash flow conversion	Approximately 100% medium materiality	FY26	High
Sensia dissolution impact on Adjusted EPS	No significant impact medium materiality	FY26	High
Sensia dissolution impact on annualized sales	Reduction of approximately $250 million medium materiality	FY26	High
Sensia dissolution impact on total company segment margin	Annualized improvement of approximately 50 basis points medium materiality	FY26	High
Total price contribution to sales growth	2 points medium materiality	FY26	High
Full year incremental margins	About 40% high materiality	FY26	High
Capital expenditures	About 3% of sales medium materiality	FY26	High
Q2 sales growth	Slightly up sequentially low materiality	Q2 · FY26	Medium
Q2 total segment operating margin	Modest sequential improvement low materiality	Q2 · FY26	Medium
Q2 sales growth YoY	Mid-single-digit growth low materiality	Q2 · FY26	Medium
Q2 margin expansion YoY	Less than 100 basis points low materiality	Q2 · FY26	Medium
Q2 Adjusted EPS growth	Low single digits sequentially low materiality	Q2 · FY26	Medium
Corporate and other expense	About $105 million low materiality	FY26	High
Net interest expense	About $115 million low materiality	FY26	High
Average diluted shares outstanding	About 112.7 million shares low materiality	FY26	High
Share repurchases	Approximately $500 million high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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%	—	—

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	This call Dec 2025 Q1 FY26	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.

Product announcements

Product	Type	Timeline	Details
L9 controller	launch	early adoption
AI-enabled troubleshooting agent	milestone	Q1 FY26

Deals & partnerships

SLB divestiture

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

New manufacturing facility in New Berlin, Wisconsin underway

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 facility completed $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

Geopolitical uncertainty current

heightened

Mitigation:disciplined, execution-focused mindset

Delayed large CapEx investments current

many customers

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

Customer project delays due to trade policy uncertainty current

larger projects

Tariff impact on segment margins Q1 FY26

drag of about 30 basis points

Lower free cash flow YoY Q1 FY26

$123 million lower

Life Sciences project delays Q1 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 spending current

fairly low

Tax rate headwind in Q2 Q2 FY26

about $0.10 sequential headwind

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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