Snapshot
Rockwell Automation, Inc reported $2.32B of revenue in Q4 2025, up 13.8% year over year, with diluted EPS of $1.23 and an operating margin of 49.1%.
- Revenue
- $2.32B
- YoY growth
- +13.8%
- Diluted EPS
- $1.23
- Operating margin
- 49.1%
What management said
- •Our actual results may differ materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all our SEC filings.
- •With the top-line guidance range that included limited growth, we knew it would be a challenge to both absorb higher costs and expand margins.
- •With the very busy 12 months of fiscal year 25 in the books, I'm proud of the team's execution as we have returned to top-line growth and continued to reduce costs.
- •Rockwell is well positioned for sustained market-beating growth and profitability as we build on this success for fiscal 2026 and beyond.
- •We close the year with another strong quarter of outperformance versus our expectations, including double-digit year-over-year growth in both sales and operating earnings.
- •Free cash flow was also very good in the quarter and for the year.
- •As we will discuss, we're taking further steps to streamline the organization and increase efficiency in the service of customer value and expanded margins.
- •Both reported and organic Q4 sales were up double digits versus prior year.
- •While we did have favorable comps from a year-over-year standpoint, Q4 sales grew high single digits sequentially, which was better than we expected.
- •Organic year-over-year sales growth of 13% was led by continued strength in our product businesses.
- •On our last earnings call, we flagged the potential for Q4 pull-ins into Q3.
- •Based on our analysis of daily orders and sales trends, inventory levels in our channel, and machine builder surveys, pull-in orders were less than expected in Q3 and not evident in Q4.
What went well
- •Rockwell closed fiscal 2025 with a strong Q4, posting double-digit year-over-year growth in both sales and operating earnings, with reported sales up 14% and organic sales up 13%.
- •Software and control organic sales grew 30% year over year, led by continued Logix momentum, and the segment's margin expanded 880 basis points to 31.2% with incrementals in the high 50s.
- •Q4 segment margin reached 22.5% and adjusted EPS of $3.34 came in well above expectations on higher volume and strong productivity, with structural productivity savings exceeding $325 million for the year against an original $250 million target.
- •The company delivered record free cash flow of $1.4 billion with 114% conversion (119% excluding a $70 million voluntary pension contribution), and Q4 free cash flow was $405 million.
- •Discrete sales were up 20% year over year, with e-commerce and warehouse automation sales growing over 70% and standout wins including Stanley Electric (Plex across 25 sites) and GSK (Verve cybersecurity across 33 sites).
- •Full-year segment margin of 20.4% rose 110 basis points and was 140 basis points better than the original guide, while adjusted EPS of $10.53 was up 7% and over $1 above the initial guide midpoint.
What went wrong
- •CapEx activity in longer-cycle businesses remained muted, with customers delaying larger investments, and Lifecycle Services organic sales fell 4% year over year with a 0.9 book-to-bill.
- •The company and SLB agreed to an orderly dissolution of the Sensia joint venture after it did not meet long-term expectations, resulting in a $110 million non-cash impairment ($0.97 per share) and an annualized ~$250 million revenue reduction.
- •A change to asbestos defense cost accounting drove a one-time pre-tax charge of $136 million ($0.91 per share), and compensation was a $0.45 headwind in Q4 versus the ~$0.30 expected due to outperformance.
- •Intelligent Devices margin fell 90 basis points year over year to 19.8% due to a tough comparison against last year's Clearpath earnout reversal and higher compensation.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales growth | FY2026 | — | 2%-6% (4% at midpoint) | new |
| Reported revenue growth | FY2026 | — | ~5% at midpoint (incl. ~100 bps currency benefit) | new |
| Segment operating margin | FY2026 | — | ~21.5% (more than 100 bps higher YoY) | new |
| Adjusted EPS | FY2026 | — | $11.20-$12.20 ($11.70 midpoint) | new |
| Incremental margin | FY2026 | 35% long-term framework | Exceed 40% (inclusive of tariff-based pricing) | higher |
| Capital expenditures | FY2026 | — | ~3% of sales | new |
| Pricing | FY2026 | — | ~2 points (1 pt underlying, 1 pt tariff-based) | new |
| Sensia dissolution impact | FY2026 | — | Not yet in guide; will reduce revenue ~$250M annualized and add ~50 bps margin with no significant EPS impact | new |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Q4 reported sales | +14% | Outperformance versus expectations, with ~1 pt currency, ~4 pts price (1 pt tariff-based), and strong product/Software and control growth |
| Q4 organic sales | +13% | Continued strength in product businesses led by Logix, with favorable year-over-year comps |
| Software and control organic sales | +30% | Continued Logix momentum plus Plex and FiiX new-logo wins |
| Software and control margin | +880 bps to 31.2% | Outstanding 30% organic sales growth and good price realization |
| Intelligent Devices organic sales | +14% | Strong power control growth aided by the CUBIC acquisition and double-digit OTTO AMR growth |
| Intelligent Devices margin | -90 bps to 19.8% | Tough comparison versus prior-year Clearpath earnout reversal and higher compensation |
| Lifecycle Services organic sales | -4% | Project delays across the core business and Sensia as customers await trade/policy clarity; margin still up 30 bps to 17.5% on strong execution |
| Adjusted EPS | +32% (34% excluding definition change) to $3.34 | Higher volume, strong productivity, and price, led by Software and control |
| Annual recurring revenue | +8% | Large software and services wins despite some delayed discretionary services spending |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Long-cycle CapEx delays | Customers holding off on larger investments | CapEx remains muted with projects subject to higher approval thresholds still delayed; gradual sequential improvement expected through FY2026 without a big capital release assumed | stable |
| Sensia JV | Joint venture with SLB | Orderly dissolution agreed; Rockwell reabsorbs its process automation business for lower revenue but higher margin and simplified go-to-market | deteriorating then repositioned |
| Logix recovery | Below pre-COVID unit volumes for FY2025 | Touched pre-COVID unit volumes in the back half; FY2026 expected to return to pre-COVID levels plus market growth and share gains | improving |
| E-commerce and warehouse automation | — | Sales up over 70% in Q4 with broad contribution across Logix, drives, motion, OTTO AMRs, and software; multifaceted across data center, parcel, and CPG | improving |
| Data center demand | Relatively small business | Strong double-digit growth with multiple global wins; Logix and modular power distribution well positioned for AI data center cooling and control needs | improving |
| Margin expansion / cost reduction | $250M structural productivity target | Exceeded at $325M+; targeting FY2026 incrementals above 40% with additional opportunities, while keeping tariff pricing EPS-neutral | improving |
| Medium-term 23.5% margin target | 23.5% target | Approaching given 22.5% Q4 and Sensia tailwind; management focused on hitting current target before setting a new one | improving |
Q&A summary
Scott Davis (Melius) asked for the postmortem on why the Sensia JV did not gain expected traction.
Moret cited the challenging start of standing up the entity just before COVID hit energy markets, a broad scope that added cost, and the companies now having more technology capabilities, making it the right time to simplify for higher profitability.
Andrew Obin (Bank of America) asked where Logix volumes stand relative to pre-COVID and about the new product rollout's impact on margins.
Moret said Logix touched pre-COVID unit volumes in the back half (full-year still below) and expects FY2026 to return to those levels; the new L9 processor and Process I/O released ahead of schedule contribute to steady sequential growth rather than a big order swell.
Andrew Kaplowitz (Citi) asked whether book-to-bill near one can be sustained without larger CapEx orders improving.
Moret said product orders and shipments are right on top of each other and expected to continue, with Lifecycle Services offset by longer project lead times; gradual sequential improvement is expected and a capital release would push results toward the high end of the guide.
Julian Mitchell (Barclays) asked how the FY2026 top-line guide was constructed and about pricing.
Management cited mid-single-digit growth for discrete and hybrid, low single-digit for process, with high single-digit Q1 year-over-year growth and tougher comps later; FY2026 pricing is ~2 points (1 pt underlying, 1 pt tariff-based).
Christopher Snyder (Morgan Stanley) asked whether stronger order rates reflect cycle momentum, reshoring, or share gains.
Moret said all three contribute, with the U.S. the healthiest market and Rockwell's home field, higher capacity-expansion orders this year, strong product demand from brownfield optimization, and share gains from a leading portfolio.
Jeffrey Sprague (Vertical) asked why Sensia dissolution produces a charge but no earnings benefit, and whether corporate run rate of ~$100M is sustainable.
Rothe explained the JV's balance-sheet value required an impairment, with P&L, assets, and employees splitting between Rockwell and SLB for a modestly margin-accretive future state; the ~$100M corporate level is a good baseline as asbestos/environmental items and cost-reduction implementation costs roll off.