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ROCKWELL AUTOMATION, INC (ROK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $2.001B, down 6% YoY; adjusted EPS was $2.45 (-2% YoY). Both sales and EPS were above internal expectations, with total segment operating margin expanding to 20.4% (+140 bps YoY) and book-to-bill ~1.0 .
  • Versus S&P Global consensus, Rockwell delivered a beat: revenue $2.001B vs $1.971B consensus*, adjusted EPS $2.45 vs $2.12 consensus*, and EBITDA $422M vs $380M consensus* (driven by structural productivity and favorable price/cost) .
  • FY25 guidance raised: diluted EPS to $8.23–$9.23 (from $7.65–$8.85) and adjusted EPS to $9.20–$10.20 (from $8.60–$9.80); FX headwind trimmed to ~0.5% on sales, reported sales midpoint unchanged at ~$8.1B .
  • Management expects a return to YoY sales growth in Q3 and sees tariff-related costs fully offset by pricing and supply chain actions; segment margin target lifted to ~20% for FY25, with continued focus on productivity run-rate savings above $250M .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion: total segment operating margin reached 20.4% (+140 bps YoY) and adjusted EPS $2.45 beat internal expectations on strong execution and cost actions .
  • Software & Control resilience: sales essentially flat YoY ($568M), but operating margin rose to 30.1% (from 25.7%), aided by price realization and margin expansion programs; FactoryTalk Design Studio with GenAI Copilot saw sharply increased adoption .
  • Discrete strength & pipeline: e-commerce/warehouse automation grew >45% YoY with robust North America/EMEA demand; data center wins and machine-builder momentum underpin improving order intake, with book-to-bill ~1.0 .

Selected quotes:

  • “We are raising fiscal year 2025 margin and EPS targets based on strong execution…” .
  • “We expect to return to year-over-year sales growth in Q3.” .
  • “Our team's focus on productivity yielded another quarter of outperformance… we believe we’ll exceed our full year target of $250 million in year-over-year structural productivity.” .

What Went Wrong

  • Lifecycle Services softness: sales down 8% YoY to $537M, margin down 210 bps YoY to 14.5% on higher compensation and lower volume; project delays in automotive and energy and deferrals in digital services weighed .
  • Process markets: energy/process came in worse than expected as customers prioritized smaller productivity projects over large CapEx; tariff/macropolicy uncertainty delayed some projects .
  • Compensation headwind: higher incentive accruals lifted compensation costs; full-year compensation increase now ~$185M (up from ~$160M), a ~$0.25 EPS headwind in each of Q3/Q4 .

Financial Results

Quarterly Performance vs prior quarter and S&P Global consensus

MetricQ4 2024Q1 2025Q2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Billions)$2.036 $1.881 $1.971*$2.001
Diluted EPS ($)$2.09 $1.61 —$2.22
Adjusted EPS ($)$2.47 $1.83 $2.12*$2.45
Gross Margin (%)37.9% 38.4% —40.5%
Pre-tax Margin (%)13.5% 11.3% —14.9%
Total Segment Operating Margin (%)20.1% 17.1% —20.4%
EBITDA ($USD Millions)——$380*$422 [GetEstimates]*

Note: Values with an asterisk retrieved from S&P Global.

Year-over-Year (Q2 FY25 vs Q2 FY24)

MetricQ2 2024Q2 2025YoY Change
Revenue ($USD Billions)$2.126 $2.001 -6%
Diluted EPS ($)$2.31 $2.22 -4%
Adjusted EPS ($)$2.50 $2.45 -2%
Total Segment Operating Margin (%)19.0% 20.4% +140 bps

Segment Breakdown (Q2 FY25)

SegmentSales ($USD Millions)YoYSegment Op Earnings ($USD Millions)Margin (%)
Intelligent Devices$896 -8% $159 17.7%
Software & Control$568 ~0% $171 30.1%
Lifecycle Services$537 -8% $78 14.5%

KPIs and Cash Flow

KPIQ2 2025Prior Year/Quarter Reference
Book-to-bill~1.0 In-line historical ~1.0
ARR Growth+8% YoY —
Free Cash Flow ($USD Millions)$171 $69 (Q2 2024)
Adjusted Effective Tax Rate17.7% 14.8% (Q2 2024)
Share Repurchases~0.5M shares, $129M Authorization remaining ~$1.1B

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Sales MidpointFY25~$8.1B ~$8.1B Maintained
Organic Sales GrowthFY25(4)% to 2% (4)% to 2% Maintained
Currency TranslationFY25~(1.5)% ~(0.5)% Raised (less negative)
Reported Sales GrowthFY25(5.5)% to 0.5% (4.5)% to 1.5% Raised
Diluted EPSFY25$7.65–$8.85 $8.23–$9.23 Raised
Adjusted EPSFY25$8.60–$9.80 $9.20–$10.20 Raised
Segment Operating Margin targetFY25~19% (prior commentary) ~20% Raised
Effective Tax RateFY25~17% ~17% Maintained
Corporate & Other ExpenseFY25—~$150M New detail
Net Interest ExpenseFY25—~$145M New detail
Diluted Shares (avg)FY25—~113M New detail
DividendNext Payable—$1.31/share declared (payable Sept 10, 2025) Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/Tech initiativesFocus on cost actions and positioning; segment margin expansion in Lifecycle Services in FY24 Accelerating adoption of FactoryTalk Design Studio with GenAI Copilot; Smart Manufacturing AI investment pervasive (95% per report) Improving adoption/strategic relevance
Supply chain/resiliencyEntering FY25 with renewed operational excellence agenda Flexibility to move production, redundant lines; pricing/sourcing offset tariffs Strengthening resilience
Tariffs/MacroFY25 guide allowed for uncertainty Q2 tariff impact minimal; $125M 2H tariff exposure fully offset planned Managed/neutral to EPS
Product performance (Logix)Expect gradual sequential improvement through FY25 Logix recovery continues; units still below pre-COVID, share gains and innovation support growth Improving sequentially
Regional trendsNorth America best-performing market NA strongest region; supports backlog and 2H ramp Stable/positive
R&D executionStructural cost programs initiated; FY24 restructuring Company R&D ~6% of revenue; S&C R&D low-teens % of segment sales Sustained investment
Lifecycle/ProcessFY24 LS margin expansion; process exposure LS down YoY; process worse than expected; project delays in auto/energy Near-term pressure

Management Commentary

  • Strategic focus: “We are raising fiscal year 2025 margin and EPS targets based on strong execution… Structural productivity is helping us expand our margins and invest for the future…” .
  • Demand cadence: “Q2 marked another quarter of solid sequential improvement… book-to-bill in line with ~1.0. We expect to return to year-over-year sales growth in Q3.” .
  • Tariffs resolution: “We are positioned to fully offset our fiscal 2025 tariff costs through a combination of pricing and supply chain actions… Q2 impact was completely neutralized.” .
  • Cost discipline: “We saw excellent execution… resulting in a $0.65 tailwind [EPS]… savings realized ~$155M in 1H; compensation headwind now ~$185M for FY.” .

Q&A Highlights

  • Book-to-bill/Orders: Management aims to keep book-to-bill around 1 for FY25; dropping dollar orders disclosure as conditions normalized .
  • Lifecycle Services slowdown: Softness due to project delays in auto/energy and deferrals in digital services; some delayed projects resumed in April .
  • Reshoring vs macro: Customers optimistic long-term (especially U.S. exposure), but delays arise from tariff cost certainty, rates, demand visibility, and funding cycles (e.g., CHIPS) .
  • Tariff sensitivity: Estimated 2H tariff cost exposure ~$125M; USMCA compliance covers most Mexico/Canada imports; China is <4% of sales .
  • Q3 setup: Sequential sales up low-single digits from Q2; EPS “~$2.60-ish,” down slightly YoY; margin around FY target path .

Estimates Context

  • Q2 FY25 beats: Adjusted EPS $2.45 vs $2.12 consensus*; revenue $2.001B vs $1.971B consensus*; EBITDA $422M vs $380M consensus* .
  • FY25 trajectory: Management raised adjusted EPS range to $9.20–$10.20 and diluted EPS to $8.23–$9.23, with FX shifting to slight tailwind in 2H; consensus FY25 adjusted EPS 10.03* vs actual trajectory midpoint ~$9.70 per commentary .

Note: Values with an asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Margin-led upside: Structural productivity and price/cost are driving margin expansion despite lower volumes; watch for upward estimate revisions and potential multiple support on execution .
  • Near-term growth inflection: Management expects YoY sales growth to resume in Q3; FX becomes tailwind in 2H, while tariff recovery programs are designed to be EPS-neutral .
  • Segment mix matters: Software & Control margin over 30% and improving Logix demand support profitability; Intelligent Devices growing sequentially; Lifecycle Services faces timing-related project delays .
  • Discrete momentum: E-commerce/warehouse automation >45% YoY growth and data center wins underpin demand resilience, offering catalysts if project timing improves .
  • Capital returns: Active buybacks (~$300M YTD through early May) and dividend ($1.31/share payable Sept 10) provide shareholder support .
  • Modeling cues: Use ~20% segment operating margin target, ~17% ETR, corporate & other ~$150M, net interest ~$145M, ~113M avg diluted shares for FY25 .
  • Watch compensation and project timing: Elevated compensation headwinds and timing of large CapEx projects (auto/process) are swing factors for back-half margins and revenue cadence .

Appendix: Additional Data

Regional Organic Sales Reconciliation (Q2 FY25)

RegionReported Sales ($USD Millions)FX Impact ($USD Millions)Organic Sales ($USD Millions)
North America$1,288 $(7) $1,295
EMEA$358 $(9) $367
Asia Pacific$227 $(7) $234
Latin America$128 $(16) $144
Total$2,001 $(39) $2,040

Free Cash Flow by Quarter (selected)

QuarterCFO ($USD Millions)Capex ($USD Millions)FCF ($USD Millions)
Q2 2024$120 $(51) $69
Q1 2025$364 $(71) $293
Q2 2025$199 $(28) $171

FY25 Outlook Detail (from call)

ItemFY25 Expectation
Segment operating margin~20%
Corporate & Other expense~$150M
Net interest expense~$145M
Average diluted shares~113M
FX tailwind to EPS~$0.20 in 2H, split Q3/Q4
Tariff cost exposure (2H)~$125M; plan to fully offset

Other Relevant Press Releases (Q2 FY25)

  • “Rockwell Automation Reports Second Quarter 2025 Results” (details align with 8-K) .
  • “Rockwell Automation Declares Quarterly Dividend at $1.31 Per Share” (payable Sept 10, 2025) .
  • Smart Manufacturing/AI adoption report (95% of manufacturers investing in AI) .