Snapshot
Rockwell Automation, Inc reported $2.10B of revenue in Q1 2026, up 11.9% year over year, with diluted EPS of $2.69 and an operating margin of 17.4%.
- Revenue
- $2.10B
- YoY growth
- +11.9%
- Diluted EPS
- $2.69
- Operating margin
- 17.4%
What management said
- •Our actual results may differ materially due to a wide range of risks and uncertainties described in our earnings release and SEC filings.
- •We entered fiscal 2026 with a focus on delivering solid top-line performance while continuing to increase productivity and expand margins.
- •This quarter reflects additional progress on these fundamental objectives, with sales, margin, and earnings all exceeding our expectations.
- •Demand across our core offerings and verticals remained healthy in the first quarter, and our teams executed well.
- •We had double-digit sales growth and sustained momentum in our key product and software businesses.
- •The strong growth of orders related specifically to projects adding new U.S.
- •production capacity gives us confidence that the combination of our traditional sources of value with digital services, edge computing, and cloud-native software is differentiated.
- •Our Q1 sales came in slightly better than expected, with double-digit year-over-year growth in both reported and organic sales.
- •While large CapEx investments are still on hold for many customers, demand for our product portfolio remains strong, particularly in Logix and motion.
- •Annual recurring revenue grew 7% in the quarter and was in line with our expectations, with strong performance in our recurring software across automotive, life sciences, and energy verticals.
- •Another standout win in our recurring services was with Hindalco Industries, a global leader in aluminum and copper production.
- •Intelligent Devices delivered another solid quarter, with organic sales up 16% year-over-year and in line with our expectations.
What went well
- •First quarter sales, margin, and earnings all exceeded expectations, with double-digit year-over-year growth in both reported and organic sales.
- •Software and Control organic sales grew 17% year-over-year, ahead of expectations, with North American Logix sales up over 25% and segment margin of 31.2%, up 610 basis points year-over-year.
- •Intelligent Devices organic sales rose 16% year-over-year with especially strong performance in drives and motion, and margin of 17.3% up 240 basis points.
- •Total company segment margin reached 20.7% with 360 basis points of year-over-year expansion, and incremental margin on year-over-year sales growth was about 50% in the quarter.
- •Annual recurring revenue grew 7%, with software ARR (particularly Plex) growing above the company average, and Plex delivered its strongest quarter yet with wins such as R.H. Sheppard.
- •E-commerce and warehouse automation sales grew over 60%, data center-related business contributed strong double-digit growth, and process industries sales were up 10% led by chemicals, water, and energy.
What went wrong
- •Lifecycle Services organic sales declined 6% year-over-year as customers continued to delay and narrow the scope of larger projects pending clarity on trade policy.
- •Life sciences sales declined low single digits year-over-year, driven by several project delays in North America.
- •Large CapEx investments remained on hold for many customers, with broad-based release of orders not yet sufficient to raise the full-year organic guide.
- •Free cash flow of $170 million was $123 million lower than the prior year, primarily due to working capital changes and incentive compensation payments.
- •Tariffs were a drag of about 30 basis points on segment margins year-over-year, and inflationary costs including memory chips added some cost pressure.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales growth | FY2026 | 2%-6% | 2%-6% | Maintained |
| Adjusted EPS (midpoint) | FY2026 | $11.70 | $11.80 | Raised lower end to $11.40, midpoint up $0.10 |
| Segment margin expansion | FY2026 | over 100 bps | over 100 bps | Maintained |
| Adjusted effective tax rate | FY2026 | about 20% | about 19.5% | Lowered |
| Recurring revenue growth | FY2026 | — | high single-digit | On track |
| Incremental margins | FY2026 | about 40% | about 40% | Maintained (inclusive of tariff-based pricing) |
| Free cash flow conversion | FY2026 | approximately 100% | approximately 100% | Maintained |
| Adjusted EPS | Q2 2026 | — | about $2.85 (low single-digit sequential growth) | New |
| CapEx | FY2026 | — | about 3% of sales | Reaffirmed |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Software and Control (organic) | +17% | Strong Logix momentum with North American sales up over 25%, plus broad-based strength across ASEM, software, and networks. |
| Intelligent Devices (organic) | +16% | Broad-based growth, with especially strong performance in drives and motion. |
| Lifecycle Services (organic) | -6% | Customers continued to delay and narrow the scope of larger projects pending clarity on trade policy; book-to-bill was 1.16. |
| E-commerce and warehouse automation | +60%+ | Driven by labor shortages, network modernization needs, and increasing focus on sustainability and cybersecurity, led by North America. |
| Process industries | +10% | Strong growth in chemicals, water, and energy, with PlantPAx share gains and resilient specialty chemical exposure. |
| Hybrid | High single digits | Double-digit growth in food and beverage and home and personal care, driven by brownfield modernizations and productivity. |
| Automotive | Mid-single digits | Brand owners and tier ones advancing MES, digital twin, and AI-enabled modernization despite subdued CapEx. |
| Life sciences | Low single-digit decline | Several project delays in North America, though full-year growth still expected. |
| Reported sales | +12% | About 2 points from currency and 3 points of organic price (half underlying realization, half tariff-based pricing). |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Macro caution and waiting for orders to confirm sentiment | Stabilized at low level | Sentiment similar to slightly up, but prudent until broad-based order release | steady |
| Logix strength and L9 controller adoption | — | North American Logix up 25%+, L9 off to a great start, units expected at or above pre-pandemic for the year | rising |
| AI and software-defined automation (Copilot, Emulate3D, LogixAI, Plex) | — | Growing adoption with wins like Thermo Fisher AI troubleshooting agent; focus on application-specific value | rising |
| Data centers and microgrid power demand | — | Strong double-digit growth; AI-driven power constraints accelerating hyperscaler and colo adoption of gas-powered microgrids | rising |
| Productivity and margin expansion initiatives | Cost reduction and margin expansion program | Now embedded within core; productivity was second-largest driver of Q1 core performance | steady |
| New U.S. production capacity build-out | Double-digit 2026 order expectations at Investor Day | Very good year-over-year growth in new capacity, evenly split across business units | rising |
| Sensia joint venture dissolution | — | On track for April 1 close, returning process automation business to full Rockwell control | steady |
| Tariffs and trade volatility | — | Neutral on Q1 earnings but 30 bps drag on segment margins; still suppressing some capital spending | steady |
Q&A summary
Why the cautious tone when S&P CapEx budgets appear to be inching higher, and are distributors restocking?
Management called the posture prudent, noting optimism in several verticals but no broad-based release of orders yet to center on the higher end of guidance. Distributor and machine-builder inventory levels are back to normal, ending the destocking dialogue of 2024-early 2025, and distributors are optimistic but also prudent.
How will margin drivers play out across segments in Q2, including price/cost and memory chips?
Slight sequential sales improvement is expected across all segments, with modest margin expansion in Intelligent Devices and Software and Control; Lifecycle Services holding around 14% would be a good outcome. Merit increases factor into Q2. Year-over-year implies mid-single-digit growth and just under 100 bps margin expansion (about 35% flow-through), targeting roughly $2.85 EPS. Chip-related inflation is only single-digit millions of dollars.
Where does Logix stand on the volume cycle, and will hybrid strength persist?
Logix is benefiting from strong existing demand plus new products (process IO, L9 controller), with full-year units expected at or slightly above pre-pandemic levels. Food and beverage, the largest vertical, grew double digits driven by packaging at European OEMs; life sciences is expected to improve through the year, and AMR/production logistics interest is growing.
Could incrementals creep higher for the year if Logix stays strong, and update on Rock on Rock and dynamic pricing?
Strong Logix flow-through could help, but management relies on a broad base of profitable product lines plus productivity rather than volume alone, with strong gross margin expansion in Q4 and Q1. Rock on Rock learnings (labor efficiency, time to competency, reduced energy at Singapore) are being rolled into existing plants like Twinsburg.
Are short-cycle product trends still positive while big projects stay soft, and are new-capacity orders coming through?
Demand for modernizations and brownfield products remains strong; new-capacity business grew well year-over-year and is split relatively evenly across business units (much of it product, not just engineered solutions). Positive signals exist across e-commerce, hybrid greenfields, and life sciences, but orders have not come through at a speed and breadth to raise the full-year organic guide.
Is AI a competitive threat to the software business, and could AI features be more impactful sooner than expected?
Management deploys AI at all architecture levels focused on specific applications and workflow simplification (vision AI, LogixAI, Plex demand planning) rather than general models. The biggest prize is simplifying automation on the plant floor to grow share by fortifying existing systems, not large new standalone offerings, with benefits already seen in its own operations.