ROCKWELL AUTOMATION, INC (ROK)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 revenue was $1.881B, down 8.4% year over year; diluted EPS $1.61 and adjusted EPS $1.83 declined 13% and 10% respectively, while gross margin held at 38.4% .
• Segment operating margin was 17.1% (vs 17.3% LY); margin outperformance versus internal expectations was driven by early benefits from cost reduction and productivity actions and favorable mix in Software & Control .
• Guidance update: reported sales growth range lowered to (5.5)%–0.5% on ~1.5pt FX headwind; organic growth range (4)%–2% and FY adjusted EPS $8.60–$9.80 reaffirmed; diluted EPS $7.65–$8.85 reaffirmed .
• Orders improved ~10% YoY and mid-single digits sequentially; book-to-bill >1.0; management expects gradual sequential sales and margin improvement through FY2025 and highlighted tariff mitigation and U.S.-centric demand as catalysts .

What Went Well and What Went Wrong

What Went Well

• Early execution on cost reduction and margin expansion: ~$70M benefit in Q1, with manufacturing efficiencies and sourcing driving structural productivity; segment margin and adjusted EPS “well above expectations” .
• Orders momentum and backlog build: ~10% YoY growth, mid-single-digit sequential increase; orders exceeded shipments and new demand through distributors matching historical flow, indicating destock largely behind outside China .
• Software & Control resilience: segment margin 25.1% (flat YoY) despite 12% sales decline; price/cost and cost actions offset volume; Logix orders and sales up double digits sequentially vs prior quarter .

What Went Wrong

• Top-line softness: revenue down 8.4% YoY; Intelligent Devices and Software & Control sales down 13% and 12% respectively; lower sales volume drove declines in EPS and pre-tax margin .
• FX headwinds and macro uncertainty: ~0.9pt FX drag on Q1 sales; updated FY reported sales growth lowered by ~1.5pt FX; management cited policy/tariff uncertainty impacting capex timing .
• Lifecycle Services margin mixed: margin at 12.5% (up YoY) but slightly below expectations due to Sensia shipment mix; regionally, Europe and Asia-Pacific remained weak; China likely lags into Q2/Q3 .

Financial Results

Revenue, EPS, Margins (Prior year, prior quarter, current)

Note: Wall Street consensus estimates from S&P Global were unavailable due to request limits; estimate comparisons are not shown.

Segment Breakdown

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Q1 margins and EPS came in well above our expectations…early benefits of Rockwell’s renewed focus on operational excellence and cost discipline.” — Blake Moret, CEO .
• “Orders exceeded shipments in the quarter, giving us some additional backlog for the balance of the year.” — Blake Moret .
• “We are confident that we’re dealing with the recently announced tariffs…we do not expect these tariffs to have a material impact on our profitability for the full year.” — Christian Rothe, CFO .
• “We continue to expect a gradual sequential sales improvement…keeping our organic sales growth range of positive 2% to negative 4%…reaffirming our adjusted EPS of $9.20 at the midpoint.” — Blake Moret .

Q&A Highlights

• SKU rationalization: ~21,000 SKUs rationalized with minimal near-term top-line impact; ongoing program aims to streamline ops and manage pricing .
• Orders/book-to-bill and destock: Book-to-bill >1; distributor demand flow near historical norms; destock largely complete in North America/Europe, China lagging .
• Tariffs pricing strategy: Immediate price changes enacted for China; backlog repricing planned for potential Canada/Mexico tariffs; production shifts to leverage U.S. footprint .
• Margin cadence and Q2 setup: Expect ~100bp sequential segment margin expansion into Q2; EPS “in the neighborhood of $2” for Q2 .
• Regional performance: Americas strongest; EMEA recovery expected off low base; APAC weakest; China now <5% of revenue .

Estimates Context

• S&P Global Wall Street consensus for Q1 FY2025 revenue and EPS could not be retrieved due to daily request limits; therefore benchmark comparisons to consensus are unavailable for this recap. Values would normally be shown here with S&P Global as the source.

Key Takeaways for Investors

• Demand momentum and backlog: Orders outpaced shipments with broad-based sequential improvement, setting up for gradual sales recovery and margin expansion through FY2025 .
• Cost actions as near-term EPS support: Structural productivity (~$250M FY benefit) and temporary cost controls are offsetting FX and compensation headwinds; watch for continued margin resilience despite subdued volume .
• Software-led differentiation: Resilient S&C margins and ARR growth underscore recurring/software strength; Logix sequential recovery is a positive inflection indicator for product cycle .
• Tariff mitigation lowers risk: Pricing actions, production reallocation, and U.S. manufacturing footprint should cap tariff impact; potential pricing tailwind partially offsets FX .
• Segment mix dynamics: Lifecycle growth and S&C mix support margins; Intelligent Devices remains volume-sensitive and auto-exposed—monitor discrete end-market normalization and European machine builder recovery .
• Cash generation improving: Strong Q1 FCF ($293M) and 140% conversion driven by working capital and no incentive payouts; management targets 100% conversion for FY2025 .
• Guidance risk-reward: Reaffirmed EPS with lowered revenue guide on FX suggests margin levers intact; near-term trading: positive setup on orders/mix vs macro/policy uncertainty and China weakness .